What Is Happening With Sam Bankman-Fried’s FTX And Alameda Research?

The crypto world was shocked on the news that one of the biggest crypto exchange in the world, FTX and its investing arm Alameda Research is going through a difficult time.

Many investors are also speculating about FTX and Alameda being insolvent right now. News about the situation on Alameda Research was first broke by Coindesk where they provided some information on the supposedly trouble crypto hedge fund company.

Alameda Research Balance Sheet

A Coindesk report published on November 2nd provided some critical financial details about Alameda Research, the crypto hedge fund owned by crypto mogul Sam Bankman-Fried (“SBF”). A copy of the hedge fund’s Q2 balance sheet was obtained by Coindesk.

The firm’s balance sheet consist of a $14.6 billion total asset which is comprised of FTT token, Solana token, others unidentified “crypto held”, and investment in equity securities. Moreover, they have $8 billion in total liabilities, with $7.4 billion in loans and $292 million in FTT token owed.

As noted by Dirty Bubble Media, Alameda owns hundreds of millions of dollars worth of tokens from other SBF projects. These are Serum (SRM), Oxygen (OXY), MAPS, and FIDA.

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Based on the purported leak of Alameda’s financials, its largest asset is FTX Tokens (FTT), issued by FTX Exchange, operated by SBF.

Approximately 1/3 of Alameda’s assets and 88% of the company’s net equity are represented by the FTT token on its balance sheet.

Essentially, the firm’s largest asset is crypto token issued by SBF’s other company, with other related parties’ tokens accounting for a significant portion of other assets. As if SBF had hacked the financial system, he printed billions of dollars and used them to borrow massive sums from unknown counterparties.

Binance To Liquidate FTT and Others Assets Connected to FTX

Changpeng Zhao of Binance announced on Sunday that he would liquidate the remaining FTT tokens acquired in effort to quit from Alameda’s sister company FTX last year, following the drama surrounding the Alameda Balance Sheet.

“As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books,” Zhao wrote in response to CoinDesk’s report that Alameda holds $3.66 billion in unlocked or illiquid FTT tokens.

He said the liquidation may take a few months; market conditions and limited liquidity will make it difficult. He said the liquidation will be planned with a minimum impact on FTT.

In addition, he also wrote, “We will try to do so in a way that minimizes market impact. Due to market conditions and limited liquidity, we expect this will take a few months to complete.”

As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4

— CZ 🔶 Binance (@cz_binance) November 6, 2022

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Response From FTX SBF On Rumors About Insolvency

1) A competitor is trying to go after us with false rumors.

FTX is fine. Assets are fine.

Details:

— SBF (@SBF_FTX) November 7, 2022

In a thread, Bankman-Fried explained about the situation on rumors going about his company. He reiterated that the company is doing fine and the rumors circulating are not true. Bankman-Fried stated that they have enough to cover all client holdings and will continue to process withdrawals. FTX has enough to cover all client holdings. We don’t invest client assets (even in treasuries). We have been processing all withdrawals, and will continue to be.” he tweeted

He ended with “I’d love it, @cz_binance, if we could work together for the ecosystem.”. 

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