Alameda Collapse was Predestined, Even Before FTX was Formed: WSJ

A report from Wall Street Journal (WSJ) claims that Alameda Research, an FTX-linked cryptocurrency trading platform, was wavering from the time it was founded. 

According to the report that quoted numerous sources, including former employees, Alameda’s collapse was inevitable and the crisis started even before the FTX’s existance. 

According to the study, Alameda’s first significant transaction was an arbitrage move in Japan, where Bitcoin was being sold for more money than in other countries. 

Alameda took advantage of that chance to generate profits of $10 million to $30 million just before the pricing differential slammed shut in the beginning of 2018.

Alameda was allegedly suffering significant losses from its cryptocurrency trading algorithm because it misjudged price changes, yet declaring that it had made enormous gains from its trading activity. 

A significant decline in XRP pricing contributed to the corporation losing nearly two-thirds of its assets by the middle of 2018.

The founder and former CEO, SBF, promised annual profits of up to 20% in order to attract money from a number of lenders and investors to save the faltering company. 

He introduced the cryptocurrency exchange FTX in April 2019, positioning it as a secure sanctuary for investment firms looking to invest in cryptocurrencies. 

As Alameda became the key market builder for FTX, Bankman-Fried exploited the trading company to push the exchange’s expansion.

Additionally, recent cases have shown that FTX and Alameda have collaborated throughout their operations. 

According to recent lawsuits, to lure the customers to FTX, Bankman-Fried also instructed his co-founder to create codes that would enable Alameda to keep a negative balance on FTX no matter how much collateral it maintained with the exchange.

FTX Founder to Plead Not Guilty

Meanwhile, his decision to enter a not guilty plea to financial fraud in his next hearing was recently published. Gary Wang, a co-founder of FTX, and Caroline Ellison, a former CEO of Alameda Research, have already entered guilty pleas to all counts linked to FTX’s demise.