This article comes fromDecrypt, original author: Stacy Elliott
Odaily Translator | Nian Yin Si Tang
Odaily Translator | Nian Yin Si Tang
According to compliance firm Argus, Sam Bankman-Fried’s (SBF) crypto trading arm Alameda Research used insider information to hoard $60 million in tokens ahead of FTX’s listing.
Argus told Decrypt on Tuesday that Alameda Research appears to have front-runner traded 18 assets ahead of FTX’s listing, including BitDAO, Eden Network, The Sandbox, LooksRare and Immutable X.
Argus co-founder Owen Rapaport told Decrypt that the firm compared Alameda’s on-chain transactions of ERC-20 tokens on the Ethereum network to FTX’s listing announcements between February 2021 and March 2022.
Alameda Research is a quantitative trading firm founded by SBF in 2017. He went on to found FTX in 2019 before exiting Alameda's day-to-day operations in 2021. SBF maintains that the two companies are separate entities, but the bank run that forced FTX to suspend withdrawals last week and ultimately file for bankruptcy arose from the fact that a significant portion of Alameda’s balance sheet is made up of FTT.
Now, Argus, a New York-based firm founded last year, says the two firms are sharing information so that Alameda can preemptively trade listing tokens.
Argus provides anti-insider trading and employee compliance software services. In simple terms, this means that the company helps financial institutions monitor the trading activity of employees to ensure that insider information is not used to gain an unfair advantage in the market.
Argus shared its analysis yesterday with The Wall Street Journal, which reported that former FTX CEO SBF told the Journal in February that Alameda had no inside information about FTX’s planned token listing.
“Alameda’s front-running ahead of FTX’s listing over the past few months has certainly been much larger compared to the federal filings we’ve seen so far, reflecting their role as a much bigger player in the ecosystem. The big players, they have more capital to deploy in order to make money here," Rapaport said on a conference call Tuesday morning.
The full list of tokens Alameda accumulated prior to FTX listing was provided to Decrypt by Argus, including IndiGG, LooksRare Token, Guild of Guardians, Render Token, Boba Token, Gala, Immutable X, Gods Unchained, BitDAO, Spell Token, Eden, RAMP DEFI, Orbs, DODO bird, Convergence, SAND, Linear Token, and BaoToken.
It is important to note, however, that Alameda does not always purchase tokens prior to listing on FTX. At times, Alameda has had issues disclosing when it received tokens for investment projects before they were listed on FTX.
For example, on Aug. 3, three weeks before EDEN tokens began trading on FTX, a wallet at Alameda Research received 2.5 million EDEN from the EDEN Network private investment distribution wallet (flagged by blockchain analytics firm Nansen) Token. The wallet then deposits EDEN into the liquidity pool of Sushi, a decentralized cryptocurrency exchange.
Liquidity pools are an essential element of decentralized finance (DeFi). By definition, a DEX or decentralized exchange does not have a centralized entity that facilitates the buying and selling of assets. Instead, they rely on individual traders to deposit their crypto assets into liquidity pools, with incentives to incentivize them to do so. Generally speaking, the increase in returns is related to the amount of capital and the length of time people are willing to keep assets in the pool.
Data from Etherscan shows that over a 21-day period, the Alameda wallet doubled its reserves in EDEN by reconfiguring liquidity provider rewards on Sushi.
By the time FTX announced on August 24 that it would list EDEN, Alameda already had 5.8 million EDEN tokens. On the same day that FTX listed the token, the original Alameda wallet split EDEN to two other internal wallets.
One of the wallets received 4.8 million EDEN and transferred it to FTX the same day the token went live.
It's hard to say what will happen to tokens once they hit exchanges. But it is widely believed that institutions do not move their holdings to exchanges unless they intend to trade them.
Another 1 million EDEN went to another internal wallet of Alameda, which is gradually transferring it to FTX, and as of Tuesday, it has transferred all but 263 tokens. EDEN was trading at $0.07 on Tuesday, according to CoinGecko.
But last year was very different. A few days after EDEN went live, its price hit an all-time high of $9.27, a 170% jump from the day FTX announced its launch.On the same day, Eden Network announcedReceived $17.4 million in financing
, and disclosed that this round of financing was led by Multicoin Capital, with participation from Alameda Research and Jump Capital.
In other cases, such as BitDAO's BIT token, an Alameda wallet accumulated 377,000 BIT on October 17, 2021. When BIT started trading on FTX on October 18, the wallet transferred its balance to another internal address, then sent the funds to FTX the same day.
BitDAO was launched last year by Singaporean exchange Bybit and is backed by Peter Thiel, Founders Fund founded by Thiel, Pantera Capital and Dragonfly Capital. It has since become one of the largest decentralized investment funds, with $2 billion in its coffers.But recently, the Alameda wallet has sparked controversy over BIT transfers. Just last week, the BitDAO communityAlameda Proof Required
It did not sell the 100 million BIT purchased in November 2021 for 3.36 million FTT.
This is because BitDAO has an agreement with Alameda Research which stipulates that the DAO cannot sell its FTT and Alameda cannot sell its BIT until November 2024.
It was unclear whether law enforcement would investigate or bring charges against what Argus said were alleged insider trading by Alameda employees. But there are already some precedents in the industry.
