In a series of transactions, wallets linked to now-bankrupt Alameda Research revived million dollar FTT transfers. These transactions woke up wallets that were previously untouched, a blockchain security firm reports.
The transfers were sent to decentralized exchanges that receive funds from anonymous accounts without user registration. These platforms are often used by cybercriminals to hide their history of cryptocurrency transactions.
FTX’s bankruptcy has left crypto customers facing a massive hole in their wallets. While the FTX Debtors have recovered more than $5 billion in different assets, including $425 million in crypto held by the Securities Commission of the Bahamas, customers remain worried about whether the company will be able to pay them their full claims.
One of the biggest problems is FTX’s reliance on FTT tokens as collateral for loans, according to legal filings. The FTT tokens were essentially stock in FTX and its affiliated businesses, which means that when people got nervous about FTX’s finances and Alameda’s liquidity, those tokens lost value.
As a result, FTX’s debtors are now facing huge credit losses and have racked up negative equity in their accounts. This situation is comparable to MF Global and Refco, two well-known examples of leveraged financial institutions that went into bankruptcy after losing large sums of money to their customers.
Another problem with FTX’s reliance on FTT as collateral is that the exchange never made any effort to verify its customers’ identities or track their transactions. This has created a big vulnerability to fraud and theft, as hackers can simply take advantage of the lack of verification by using forged or fraudulent credentials.
The good news is that there is a solution to this problem. If FTX can get back to being popular and profitable again, then it will have money to pay back its customers.
It’s possible that FTX could make this happen by restarting its exchange business, reactivating it as an important part of the crypto industry, and attracting retail and institutional customers again. That would mean making billions of dollars in trading fees, and that money would be available to pay back customers.
Meanwhile, if FTX could use the tokens it had been lending to Alameda as collateral for loans to recover their value, then those magic beans might also be used to help pay off customers and fill the void in FTX’s balance sheet. But the odds of this happening are very small.
But in the meantime, it seems as though FTX’s customers should be cautious about sending their funds to Alameda wallets or any other decentralized exchanges. The reason is that the decentralized platforms can be used as “crypto mixers” to hide a customer’s true identity. Moreover, some of these decentralized exchanges do not require a user registration or payment method, which makes them easier to hack into and steal coins.
Crypto wallets linked to defunct Alameda Research, a company connected to Sam Bankman-Fried, have suddenly revived and transferred millions of FTT (FTX’s native token) in what has become an unprecedented turn of events. A number of wallets have been spotted transferring the money to decentralized exchanges such as FixedFloat and ChangeNow.
The activity has been spotted by data journalist Martin Lee from the Nansen Project. The two wallets together received more than $1.6 million in ether, with half coming from wallets linked to Alameda Research and the other half from accounts that Lee said are not known.
According to Lee, the wallets have been transferring the funds to platforms that are not known for being regulated. These include instant and private exchanges that do not require registration, like FixedFloat and ChangeNow.
These exchanges are often considered “crypto mixers.” In other words, they are used to reroute and conceal the transaction history of coins. This process is commonly used by cybercriminals who want to avoid being identified as the origin of the funds.
This activity is a cause for concern in the crypto community, especially since it comes after FTX’s bankruptcy filing. It also demonstrates the need for more rigorous regulations and enforcement in the crypto industry.
Bankman-Fried’s bail was initially set at $250 million, which is a huge amount when compared to other federal white-collar bonds. In fact, it is more than double the bond set for Bernard Madoff and other high-profile defendants.
However, it is not clear whether Bankman-Fried is able to secure the remaining two non-parental co-signers of his bail by January 5, when the deadline is up. Nevertheless, he will have to do so or risk being put back behind bars while awaiting trial on charges of fraud.
In an effort to keep the names of the wealthy backers who backed Bankman-Fried’s bail out of the public eye, his attorneys have filed a motion asking a New York judge to unseal them. This move comes after the media organizations Insider, The Wall Street Journal, Bloomberg and Washington Post filed a suit to get these names unsealed.
The iconic Alameda Theater hasn’t seen much action in the past few decades, but a reactivation and revival could bring much-needed attention to San Antonio’s oldest performing arts venue. An agreement between the City of San Antonio, Bexar County, and Texas Public Radio (TPR) could pave the way for a long-term partnership that would help restore the historic building to its former glory.
The theater, located on Houston Street in the heart of the Spanish-speaking community, is a treasured part of local culture. Its grand lobby, colorful interiors, and Spanish-language performances have inspired generations of Latinos to come together and celebrate their heritage. But the venue’s status as a cultural icon and the memories it inspires are at risk of being lost in the shuffle.
As for the future of the venue, a revitalization plan is in the works, and officials are eying multimillion dollar investments from the City and County to get the ball rolling on renovating the iconic building. A strategic alliance with TPR could be the catalyst for an Alameda Theater that will serve as a hub of cultural activity for both young and old.
A look at Alameda’s cryptocurrency holdings revealed that it has more than 222 million cryptocurrencies in 56 Ethereum wallets, according to on-chain researcher Lookonchain. Some $35 million of the funds are in a DeFi-based wallet called Abracadabra, while another $6.11 million is in the form of SUSHI tokens, also known as XOS.
As FTX’s bankruptcy proceedings continue to play out, there are questions about what the transfers mean and how law enforcement agencies may access them. In the meantime, crypto investors will likely keep a close eye on Alameda Research’s activities and the potential impact of its transactions on the wider industry.
FTX’s liquidation has caused billions of dollars to evaporate from the crypto market, with Bitcoin crashing to two-year lows. This has left many investors wondering what to do with the money they lost, and how to make sure this doesn’t happen again.
Among the possibilities is to revive the exchange business that FTX used to be successful at, and use the billions in trading fees it made to pay back customers. That could work, but there are some downsides to it, and it might not be a good solution for everyone.
One of the most notable downsides to reviving FTX is that it would mean selling off billions of FTT tokens, which are basically the magic beans that FTX made that were supposed to represent shares in the company. When people got nervous about FTX and Alameda, the FTT tokens that they held started to lose value, and that’s what caused the FTX bankruptcy.
But if FTX had kept on being popular and profitable, then those tokens might have recovered their value. It would also have helped to bring in more customers, which might have helped to make the exchange solvent again.
In addition to FTT, other tokens like SRM and MAPS were created by FTX that were also designed to represent stock in FTX. They were essentially bets on the continuing popularity and success of FTX.
What’s more, it appears that a large part of the hole on Alameda’s balance sheet was caused by FTX using customer money to fund these holdings of magic beans. It’s possible that customers did these trades specifically because they liked the prices they were getting on FTX, and because they thought that they might be able to get their funds back at a later date.
But it’s also possible that the customers who had been funding those magical beans were doing so in order to prop up the value of FTX, which was basically a Ponzi scheme. It’s possible that if they had continued to deposit more and more customer money, then those magical beans might have eventually recovered some of their value and paid back a lot of the customers who had lost money.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
