Is Crypto Whale Alameda Research in Financial Trouble?

Is Crypto Whale Alameda Research in Financial Trouble?

Key Takeaways

  • Alameda Analysis, the quantitative buying and selling agency co-founded by Sam Bankman-Fried, reportedly had $14.6 billion in belongings and $7.4 billion in liabilities final June.
  • A detailed take a look at the numbers, nonetheless, suggests a lot of the agency’s belongings had been made up of illiquid Solana-based tokens.
  • Alameda’s monetary scenario could have been one of many causes Bankman-Fried stepped as much as cease contagion throughout the crypto market in the course of the summer time.

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In line with new reporting, Alameda Analysis’s stability sheet was largely composed of illiquid FTT and SOL tokens final summer time. This growth casts doubt on the agency’s means to repay its excellent money owed if required.  

Operating the Numbers on Alameda’s Stability Sheet

Even Alameda Analysis has been hit by the crypto bear market, based on new reporting digging into the agency’s funds. 

A Wednesday CoinDesk report quoting an unnamed supply has claimed that the quantitative buying and selling agency held greater than $14.6 billion in belongings on June 30, in opposition to $7.4 billion in liabilities. Alameda was co-founded by crypto billionaire Sam Bankman-Fried in 2017, two years earlier than he launched his wildly profitable cryptocurrency change, FTX.

Alameda is named certainly one of crypto’s largest whales, however a detailed take a look at the numbers quoted within the CoinDesk article suggests that the agency could also be in a way more precarious scenario than onlookers would have anticipated.

In line with the report, the $14.6 billion the agency held on June 30 included $3.66 billion in unlocked FTT, $2.16 billion in FTT collateral, $2 billion in equities, $3.37 billion of “crypto held,” and $134 million in money. That equates to $11.32 billion, with $3.28 billion unaccounted for.  

In the meantime, Alameda’s loans come to $7.4 billion, which embrace $292 million in locked FTT and $863 million in locked SOL. Apparently, CoinDesk claims that Alameda valued these two liabilities at 50% decrease than the honest market worth as a result of the tokens are locked. Treating them at honest market worth would add greater than $1.1 billion to Alameda’s liabilities.

Because of this Alameda at present has over $6.11 billion in FTT on its books, $5.82 billion of which it counts as belongings. FTT is a coin launched by FTX that merchants can stake to unlock reductions (from 3% to 60%) on buying and selling charges. FTT is likely one of the largest cash within the crypto ecosystem, however based on FTX’s official website, there are at present 197,091,309 FTT in circulation, placing the coin’s market capitalization at $4.87 billion. Which means the present FTT market is totally illiquid so far as Alameda is worried. It’s holding $5.82 billion value of a token that it might’t promote with out cratering its worth. 

There are additionally different factors of concern surrounding the corporate’s stability sheet. In line with the report, Alameda counted Solana-based tokens like SOL, SRM, FIDA, MAPS, and OXY amongst its $3.37 billion in crypto belongings. Since these had been the tokens talked about by title on the stability sheet, it might be honest to imagine they constituted Alameda’s largest holdings. Whereas the precise quantity of every token the agency is holding is unknown, most of them have posted woeful performances all through the bear market. SRM, FIDA, MAPS, and OXY are all down over 93% from their peaks with markets which can be certain to grow to be extremely illiquid. If these tokens are consultant of Alameda’s mixed crypto holdings, the agency would battle to money in on its $3.37 billion in crypto belongings if it ever needed to.

Crypto Briefing’s Take

There are a couple of caveats to this evaluation. First, Crypto Briefing didn’t achieve entry to Alameda’s stability sheet—these figures are primarily based on CoinDesk reporting. Second, even when these numbers had been appropriate on the finish of June, Alameda has had 4 months to make modifications to its holdings. Lastly, Alameda’s monetary statements could include unknown data that places the agency’s place in a a lot better mild.

However, taking these numbers at face worth, it appears that evidently Alameda is in a tough scenario. The agency has $7.4 billion in liabilities, but it surely appears obvious from the numbers that it doesn’t have sufficient belongings to pay them off. 

After all, the scenario is more likely to be extra complicated. Whereas Bankman-Fried stepped down as Alameda’s CEO some time in the past, the agency has a decent relationship with FTX. Given FTX’s historical past of providing bailouts this 12 months, it’s not onerous to think about the change stepping in to assist Alameda if wanted. 

However the agency’s obvious monetary difficulties shed new mild on Bankman-Fried’s cavalier perspective in the course of the summer time. All through Might and June, brutal market circumstances worn out crypto hedge fund Three Arrows Capital, which occurred to owe billions of {dollars} to a number of main crypto lenders, together with Voyager and BlockFi. Bankman-Fried shortly provided to bail out struggling corporations, citing the necessity to reaffirm buyers’ belief within the markets. By his actions, Bankman-Fried earned a popularity as crypto’s lender of final resort; he even proclaimed in July that he had over $2 billion able to deploy to forestall additional contagion.

This reported stability sheet, nonetheless, could also be telling a distinct story. If Alameda was caught in illiquid tokens because the market was tanking, there’s a risk that Bankman-Fried determined to step up not for the sake of the crypto market itself, however merely to avoid wasting Alameda. On this situation, stabilizing the market, decreasing panic, and exhibiting power may have been a method to reassure Alameda collectors—and forestall them from asking the agency to pay again its loans. 

Disclaimer: On the time of writing, the creator of this piece owned BTC, ETH, and a number of other different crypto belongings.

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