According to a confidential document acquired, Alameda had $14.6 billion in assets as of June 30. Most of it, however, comes from FTX, another Bankman-Fried company that created the FTT token.
Does FTX Present a Systemic Risk Given Alameda’s Messy Balance Sheet?
FTX, the crypto exchange owned by billionaire Sam Bankman-Fried, and Alameda Research, his trading company, are the two primary components of his crypto empire. Both companies are market leaders in their respective fields.
However, despite being two distinct companies, the separation is evident in a crucial place: on Alameda’s balance sheet.
That balance sheet is loaded with FTX, mainly the exchange’s FTT token, whose holders receive a reduction in trading commissions on the exchange’s market.
While there is nothing inherently improper or undesirable about such, it does demonstrate that Bankman-trading Fried’s powerhouse Alameda is built mainly based on a coin that a sister firm created rather than an independent asset like a fiat currency or another crypto. The circumstance proves the strong relations between FTX and Alameda.
The Financials Support What Industry Observers Already Know
Alameda’s assets were $14.6 billion as of June 30. The sum of $3.66 billion in “unlocked FTT” is its most important asset. What is the accounting ledger’s third-largest entry under the heading “Assets”? a mass of “FTT collateral” valued at $2.16 billion.
Additional FTX tokens totalling $292 million in “frozen FTT” are included in its $8 billion liabilities. (Loans totalling $7.4 billion make up most of the liabilities.)
CEO Caroline Ellison of Alameda opted against making a statement. Requests for comment from FTX went unanswered.
On the balance sheet, there are also other significant assets such as $3.37 billion in “held crypto” and significant amounts of “unlocked SOL,” “locked SOL,” and “SOL collateral,” which are the native tokens of the Solana blockchain.
One of Solana’s first backers was Bankman-Fried. Other specifically referenced coins are FIDA, MAPS, OXY, and SRM (the coin from the decentralized exchange Serum that Bankman-Fried co-founded). A $2 billion “investment in equity securities” is also there, along with $134 million in cash and equivalents.
Furthermore, token values could be low. Alameda writes in the footnote that “locked tokens conservatively treated at 50% of fair value indicated to FTX/USD order book.”
The Solana blockchain’s native token, SOL, and substantial amounts of it—$292 million in “unlocked SOL,” $863 million in “locked SOL,” and $41 million in “SOL collateral”—are among the other notable assets shown on the balance sheet.
Together, they total $3.37 billion. Early investors in Solana included Bankman-Fried. SRM (the token from the Serum decentralized exchange, which Bankman-Fried co-founded), MAPS, OXY, and FIDA are other tokens that are specifically referenced.
Additionally, there is $2 billion in “investment in equity securities” and $134 million in cash and equivalents.
Due to the risky balance sheet structure, Alameda will experience insolvency if the market declines by more than 50%. (1) Due to heavy leverage and a precarious balance sheet structure, Alameda has significant issues. (2) The funding sources and expenditures of FTX and Alameda are highly dubious. (3) Defi/Cefi, which backs SOL/FTT as collateral, is at risk of collateral risk due to the high concentration of SOL/FTT.
CEO of Alameda’s Reply
Alameda Research CEO Caroline Ellison addressed the rumors on Twitter by claiming that the company has over $10 billion in assets that were “not reflected” on the balance sheet that had been leaked. Alameda, according to Ellison, had hidden hedges in place and had previously paid back most of its outstanding loans.
The selling of Binance’s FTT holdings, CZ continued, should not be seen as an insult to a rival exchange. CZ tweeted:
“We frequently keep tokens for a long time. And we’ve kept this token for so long, We maintain openness with our customers.”