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Alameda Research Moves $370 Mln To FTX, More Bailouts Incoming?

coingape.com 23 June 2022 15:26, UTC
Reading time: ~2 m

Crypto broker Alameda Research, which is owned by FTX founder Sam Bankman-Fried, was seen transferring nearly $370 million to the exchange this week.

On-chain data firm PeckShield flagged a series of transactions between Alameda and FTX, where the broker moved several tokens, including BUSD, USDC and ETH to the exchange’s wallet.

While it was not immediately clear what the purpose behind the transactions was, they come after FTX bailed out at least two major crypto lenders.

The exchange has supplied credit lines totalling over $700 million to Voyager Digital and BlockFi. Both the lenders were facing a liquidity crunch amid a severe drop in crypto prices.

FTX wants to stem contagion

Founder Sam Bankman-Fried said in a recent interview that the exchange- which is one of the largest crypto players- has a responsibility to “stem contagion.” But the move is also giving FTX a much larger stake in the crypto market, with the Voyager deal reportedly making Fried the largest shareholder in the firm.

Fried is also a 7.6% stakeholder in trading app Robinhood, which has a recent, but sizeable presence in the crypto industry.

FTX’s bailouts come on the heels of a potential insolvency in crypto hedge fund Three Arrows Capital (3AC), which Voyager and BlockFi were both exposed to. Concerns over contagion from the insolvency have spread across the market, bringing down crypto prices.

But while Fried has attributed the crypto market weakness to interest rate hikes by the Federal Reserve, there appear to be more factors at play.

Alameda behind market weakness?

A bulk of 3AC, and crypto lender Celsius’ insolvency risks stem from weakness in the prices of Lido Staked Ethereum (stETH).

Both 3AC and Celsius had used the token as collateral, and when its prices fell, they were exposed to margin calls they could not meet. This in turn liquidated their positions, dumping tokens into the market.

But stETH weakness coincided with Alameda swapping about $57 million of the token on Curve, causing a liquidity pool imbalance and denting the token’s peg to Ethereum.

FTX CEO Fried has denied speculation over the matter, calling it  a “dumb conspiracy theory.”

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