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

Ambar Warrick
June 23, 2022
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CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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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.

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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.

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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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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn't trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns. You can reach him at [email protected]
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.