Alameda sent $4.1B of FTT tokens to FTX before crash: Nansen report

October 4, 2023 Coin Telegraph

Alameda

Nansen analysts observed “unusual transactions between FTX and Alameda” in the days leading up to FTX’s bankruptcy.

Blockchain data analysts from Nansen have revisited the days leading up to the collapse of FTX, including the transfer of $4.1 billion worth of FTT tokens between the exchange and Alameda Research.

A Nansen report shared with Cointelegraph reveals unique observations from the blockchain analytics firm, highlighting the close relationship between the two companies founded by Sam Bankman-Fried as the former FTX CEO appears in court to face a litany of charges relating to the collapse of the exchange.

The collapse of FTX is widely reported to have been sparked by initial reports that flagged the significant 40% share of Alameda’s $14.6 billion in assets held in FTT tokens in September 2022.

Nansen analysts revealed that they had observed dubious on-chain interactions between FTX and Alameda before these reports came to light. Between Sept. 28 and Nov. 1, Alameda sent $4.1 billion FTT tokens to FTX and several continuous transfers of United States dollar-pegged stablecoins amounting to $388 million.

*Net FTT flow from Alameda to FTX. Source: Nansen*

On-chain data also indicated that FTX held around 280 million FTT tokens (80%) of the total 350 million FTT supply. Blockchain data reflects “considerable” proportions of FTT trading volume amounting to billions of dollars flowing between various FTX and Alameda wallets.

Nansen also highlights that most of the FTT token supply, consisting of company tokens and unsold non-company tokens, was locked in a three-year vesting contract. The lone beneficiary of the contract is an Alameda-controlled wallet, according to the analysts.

Given that the two companies controlled around 90% of the FTT token supply, Nansen suggests that the entities were able to prop up each other’s balance sheets.

The report also suggests that Alameda most likely sold FTT tokens over-the-counter, as well as for collateral for loans from cryptocurrency lending firms.

“This theory is backed by historical on-chain data where we observed regular large inflows and outflows between FTX, Alameda and Genesis Trading wallets with transfer volumes up to $1.7 billion as seen in Dec 2021.”

The collapse of the Terra ecosystem and subsequent bankruptcy of Three Arrows Capital (3AC) likely led to liquidity issues for Alameda due to the drop in value of FTT, which led to a covert, $4 billion FTT-backed loan from FTX.

“Our on-chain data indicates that this may have happened. Amidst the collapse of 3AC in mid-June 2022, Alameda sent ~163m of FTT to FTX wallets, worth ~$4b at that time.”

The researchers claim that the $4 billion transaction volume coincided with a $4 billion loan figure that close associates of Bankman-Fried had divulged in an interview with Reuters.

*Alameda wallet balances. Source: Nansen*

Blockchain data also reflects how Alameda would not have been able to make good on an offer to buy FTT tokens from Binance at $22 on Nov. 6. This was after Binance CEO Changpeng Zhao announced that the exchange would offload its tokens following disparaging reports about Alameda’s balance sheet.

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Optimism network transactions surged 67% following Bedrock upgrade — Nansen

June 26, 2023 Coin Telegraph

Coin Telegraph

The Optimism layer-2 network saw less than 300,000 transactions per day around the time of the upgrade, but this number increased to over 500,000 afterward.

Transactions on the Optimism network surged 67% following its June 7 “Bedrock” upgrade, according to a June 26 Twitter thread from blockchain analytics firm Nansen. The network had been seeing less than 300,000 transactions per day before the upgrade, but this figure increased to over 550,000 by the middle of June.

Since Optimism's Bedrock upgrade on June 6

Its daily transactions have increased by about 67% to ~500k

And gas fees are reduced by about 50% to ~$50k pic.twitter.com/9ACIMMFHbl
— Nansen (@nansen_ai) June 26, 2023

Optimism, a layer 2 of Ethereum, implemented its Bedrock hard fork on June 6. It was intended to reduce deposit times and fees, as well as increase the network’s security. According to the June 26 Nansen report, daily fees have fallen from $80,000 worth of Ether (ETH) directly before the upgrade to only $50,000 as of late June.

Optimism saw a sharp increase in transactions immediately following the hard fork, rising to over 400,000 from approximately June 5 to 9. Volume rose slower after the initial spike, reaching a peak of over 550,000 on or around June 15. It then started to fall slowly, reaching 500,000 transactions per day by the end of the time data was collected around June 23, according to a chart posted in Nansen’s Twitter thread.

The top Optimism app leading up to the report was the decentralized credential protocol Galxe, which saw over 528,000 transactions during the week. The USD Coin (USDC) stablecoin had the second-highest transaction count at over 170,000. The remaining top five apps on Optimism included the Stargate Finance cross-chain bridge, the Perpetual Protocol futures trading app and the Gnosis Safe multisignature wallet.

The Bedrock upgrade was part of a broader set of proposals to create a “Superchain” consisting of multiple blockchain networks that rely on the same software for security and interoperability. Coinbase confirmed that its Base network would join Optimism as part of the Superchain. The Base team announced its “Path to Mainnet” preliminary roadmap on May 24.

Exchanges pledged $2.5B to user protection funds amid FTX’s collapse: Report

June 15, 2023 Coin Telegraph

Exchanges pledged .5B to user protection funds amid FTX’s collapse: Report

Coin Telegraph

Not all exchanges have disclosed wallet addresses for the funds, however.

According to a new report published by blockchain analytics firm Nansen on June 14, most reputable cryptocurrency exchanges adopted user protection funds amid the collapse of FTX. Together, exchanges such as Binance, OKX and Bitget have more than $2 billion combined in nominal fiat protection funds. Meanwhile, Huobi’s insurance fund is collateralized by 20,000 Bitcoin (BTC), while Coinbase grants up to 150,000 British pounds ($189,140) worth of insurance to U.K. customers’ accounts. The Nansen researchers wrote:

“Proof of Reserves should become the minimum standard in the exchange industry, However, as stated above, these are both positive indicators for an exchange but do not guarantee its solvency.”

Among other items, Binance has maintained the top spot with regard to both spot and derivatives trading volume. In the spot sector, the exchange had an overall market share of 69% and a monthly trading volume of $209.5 billion in May. In the spot markets, Kraken’s trading volume increased the most, gaining 14.35% to reach $18.9 billion in the six months following FTX’s collapse, compared with the preceding six months. Meanwhile, Bitfinex’s trading volume fell the most, dropping 59.5% to $5 billion in the same period.

*Although many exchanges have user protection funds, not all have disclosed their on-chain addresses. Source: Nansen*

As for crypto derivatives, all exchanges saw declines amid FTX’s collapse except for Bitget, whose average six-month trading volume increased by 4.85% sequentially to $204.1 billion. Bitget, Bybit and Binance have performed relatively well since the FTX collapse, the researchers wrote. Nevertheless, Nansen cautioned that the uncertain regulatory environment in the United States casts a shadow on exchanges’ growth:

“The SEC Chair Gary Gensler has posited that nearly all tokens are securities. This has prevented many exchanges from operating in the US. If the US takes this official position, it could cause significant issues throughout the world for CEXs. It will be worth carefully monitoring the position taken here.”

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Ether hits 11-month high as post-Shapella withdrawals pass 1M ETH

April 17, 2023 Coin Telegraph

Beacon Chain

Since the Shapella hard fork on April 12, Ether has seen a price gain of nearly 10%.

Over 1 million Ether (ETH) worth $2.1 billion has now been withdrawn from Ethereum’s Beacon Chain within the first four days of the Shapella hard fork and Ether has pushed over $2,100 for the first time in 11 months.

The 1.03 million ETH withdrawals have come from 473,7000 withdrawal requests, with Saturday, April 15 being the largest withdrawal day at 392,800 ETH according to data from beaconcha.in.

Of the active validators, nearly 87% or 469,000 of the 540,000 are now able to withdraw their staked Ether.

*April 15 to 16 saw the largest Ether withdrawals processed so far, with 392,800 and 280,400 Ether withdrawn respectively. Source:* *beaconcha.in*

While members of the Ethereum community were split on what impact Shapella would have on the price of Ether, the first four days have produced close to a 10% rise.

*ETH has increased about 9% since the Shapella upgrade took effect late on April 12. Source:* *CoinGecko*

The figures are of little “surprise” to Lachlan Feeney, chief executive of blockchain consulting and development firm Labrys, who explained to Cointelegraph that many validators are re-staking Ether back onto the Beacon Chain:

“Much of the stake that has been withdrawn over the last few days is actually going straight back into The Beacon Chain as validators are looking to compound their interest. So much so that net stake is currently increasing.”

Given the current macroeconomic climate, Feeney explained that many early stakers wanted to liquidate after what has been nearly a 30-month wait for some.

Over the mid to long-term, Feeney believes the Shapella hard fork will only increase the amount of Ether staked, which of course will only strengthen Ethereum at the consensus level:

“Because Shapella is a massive de-risking event, over the medium to long-term more, not less, ETH will be staked. We anticipate that in the not too distant future, we will reach a record high of Ether being staked.”

Markus Thielen, the head of research at digital asset platform Matrixport explained to Cointelegraph that the closure of crypto exchange Kraken’s staking services may have contributed to the higher figures:

“It appears largely due to the Kraken's staking business being unwound. This will only have a temporary effect as we are also seeing a significant demand from investors who now are able to stake with more visibility on the liquidity of staked positions.”

Thielen said he expects a large amount of un-staked Ether from Kraken to be “recycled” back into the Beacon Chain through other entities.

While Thielen anticipates the positive price action to cool off this week amid increased selling pressure, he thinks Shapella will ultimately attract more institutional investors to stake on Ethereum.

The 1 million milestone is a 500% increase from an April 11 prediction by blockchain intelligence firm Glassnode, which estimated only 170,000 Ether to be un-staked after the first week of Shapella.

On-chain analytics firm Nansen slightly overshot the mark, predicting 1.4 million Ether would be withdrawn after the first few days of Shapella.

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