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Alameda's Messy Balance Sheet Raises Concerns About FTX Does It Pose Systemic Risk?
Preface: CoinDesk's report on Alameda found that its largest single asset, a large amount of collateral are FTX's platform coin FTT (most likely borrowing from FTX), a large number of opaque affiliate transactions between Alameda and FTX, previous financial products with interest rates beyond the norm, as well as large investments and acquisitions in the market, once again raising concerns. After the CoinDesk article was sent out, SBF Alameda FTX and others have not responded in detail, also from another angle to aggravate the outside world's doubts.
3AC and Tether are the institutions that outsiders like to compare FTX to. Once FTX crash, it could become a larger 3AC, posing a systemic risk to the industry. There is also a view that Bitfinex has a similar relationship with Tether as FTX and Alameda, and that Tether's transparency is starting to put it on the right track. In fact, the latter is more similar to an exchange that also has a "gold-sucking beast". The only way to dispel the doubts is to respond positively, and SBF should issue regular, open and transparent audit reports on its two institutions.
According to a private financial document reviewed by CoinDesk, As of June 30, Sam Bankman-Fried's (SBF) asset management firm Alameda Research assets amounted to $14.6 billion. Its single biggest asset: $3.66 billion of “unlocked FTT.” The third-largest entry on the assets side of the accounting ledger? A $2.16 billion pile of “FTT collateral.”
There are more FTX tokens among its $8 billion of liabilities: $292 million of “locked FTT.” (The liabilities are dominated by $7.4 billion of loans.)
“It’s fascinating to see that the majority of the net equity in the Alameda business is actually FTX’s own centrally controlled and printed-out-of-thin-air token,” said Cory Klippsten, CEO of investment platform Swan Bitcoin, who is known for his critical views of altcoins, which refer to cryptocurrencies other than bitcoin (BTC).
Alameda CEO Caroline Ellison declined to comment. FTX didn't respond to a request for comment.
Other significant assets on the balance sheet include $3.37 billion of “crypto held” and large amounts of the Solana blockchain’s native token: $292 million of “unlocked SOL,” $863 million of “locked SOL” and $41 million of “SOL collateral.” Bankman-Fried was an early investor in Solana. Other tokens mentioned by name are SRM (the token from the Serum decentralized exchange Bankman-Fried co-founded), MAPS, OXY and FIDA. There is also $134 million of cash and equivalents and a $2 billion “investment in equity securities.”
Also, token values may be low. In a footnote, Alameda says “locked tokens conservatively treated at 50% of fair value marked to FTX/USD order book.”
Researcher of Huobi Incubator 0xLoki
Alameda's balance sheet composition is very dangerous and if the market falls by more than 50% Alameda will face an insolvency situation. (1) Alameda has serious problems with high leverage and a very dangerous balance sheet composition. (2) FTX and Alameda's sources and uses of funds are very suspicious. (3) The excessive concentration of SOL/FTT poses a collateral risk to Defi/Cefi, which backs them as collateral.
Binance Co-Founder Yi He
Binance co-founder Yi He said of the incident, "Binance does not give unsecured loans, does not participate in transactions, does not blindly buy companies, does not blindly spend money on sponsorship, 20% of FTX's equity has been sold, heads up, heads down."
21stParadigm Co-Founder Dylan Leclair
We don’t have insight into what the liabilities are denominated in. If it’s primarily USD, Alameda is in DEEP trouble. The asset side of their BS is entirely illiquid. If it’s loans denominated in ‘crypto’, it’s better, but still not great.
FTX/Alameda puffed their feathers out in a big way at the bottom of the summer deleveraging… Were they really just swimming naked this entire time?
Famous Twitter KOL Cobie
The funniest part of this to me is not the insanity of Alameda owning almost all of the float of FTT, but it’s that significant assets on their balance sheet include “MAPS, OXY and FIDA”(WuBlockchain Note: All three are small cap Token, MAPS $6.25 million, OXY $1.69 million, FIDA $130 million)
Cinneamhain Ventures Partner Adam Cochran
Alameda had $8B in loans against their assets,$5.82B of which was FTT, and there is all the locked SRM and SOL.This is a lot of leverage backed by illiquid tokens.Cause who is loaning someone $8B against that kind of collateral?
Makes sense why they aggressively wanted to buy out the bankrupt lending platforms though, had any of that FTT been liquidated it would have hit these loans bad.