CoinDesk has obtained financial documents belonging to Alameda Research that provide an unprecedented view into its financial position and entangled relationship with sister company FTX.
As of June 30, Alameda had approximately $14.6 billion in assets with approximately $8 billion in liabilities, documents reveal.
This balance sheet may not represent the entirety of Alameda, but it paints a picture of a trading firm whose apparent growth and success has come from investments in assets very closely tied to FTX, the cryptocurrency exchange run by its founder Sam Bankman-Fried.
Alameda Research owns a lot of FTT tokens
Currently, tokens on Alameda’s balance sheet that have a market on FTX are valued 50% less than the current price on FTX.
FTT, or the FTX Token, is an exchange token issued by FTX which allows users to receive a discount on the trading fees they pay, and can earn additional commissions on referrals. FTX regularly buys and burns tokens equivalent to one third of all fees generated.
Using this metric, Alameda Research had $3.66 billion worth of unlocked FTT and an additional $2.16 billion in FTT collateral. As of June 30, a total of $5.82 billion in FTT token alone stood on its balance sheet. However, the market cap of FTT was $3.32 billion on that day.
Alameda Research was valuing the FTT it held at approximately 160% of the total market cap of FTT, which suggests that the true value of those assets are much less. Although, this difference is partially due to variances between how CoinMarketCap and FTX calculate ‘circulating supply.’
Regardless, it seems that it was over-valued on the balance sheet, especially considering the difficulty in finding adequate buyers in a market where Alameda would be forced to sell.
Amidst fears that exchange tokens could be considered securities, Protos filed a Freedom of Information Act Request with the Securities and Exchanges Commission (SEC) for any documents related to investigations of FTX US for selling unregistered securities. Our request was denied — the SEC cited an exemption which protects files compiled for law enforcement purposes.
Sam Bankman-Fried has not hesitated to use his platform to promote FTT. As recently as October 10, he tweeted a screenshot of the FTX interface that shows an order of $2,732,437.50 worth of FTT. Bankman-Fried did make sure to disclose the post was “not financial advice,” but it remains to be seen how much that protects him.
Alameda Research clearly has immense exposure to the exchange that was started by its co-founder, and financially benefits from the fees at FTX which are used to buy and burn FTT token. It’s important to highlight that the investment activities of Alameda Research are separate from the investment activities of FTX Ventures, another crypto venture capital firm linked to FTX.
FTX, FTX Ventures, and Alameda all maintain that they operate independently, though there is clearly reason to cast doubt on the nature of that independence.
The rest of the assets also leave questions as to their true value. The exact contents of the ‘crypto held’ are not made clear, but CoinDesk did say that SRM, MAPS, OXY, and FIDA are mentioned. SRM is the token for Serum, which was co-founded by Bankman-Fried. SRM, MAPS, and OXY have all lost large portions of their value since the end of June, yet FIDA is somewhat up.
In addition, Alameda also holds a large amount of SOL — $863 million worth ‘locked’ and another $292 million worth unlocked.
|Market cap on June 30th
|Market cap on November 2nd
It’s not clear what the $2 billion in equity securities are made up of, or what they might be worth now. It’s possible that some portion of that is ownership in FTX, and another portion is likely some of the crypto firms that Alameda has invested in.
Many crypto companies, both public and private, have seen their valuations struggle over the recent crypto winter. It’s also not clear how much of it is in public equities which could easily be liquidated, and what would be more challenging to liquidate.
Against these assets, and others that were not revealed in the CoinDesk report, Alameda has approximately $8 billion in liabilities, dominated by $7.4 billion in loans.
Protos previously reported on some of Alameda Research’s counter parties for loans including at one point having borrowed $1.6 billion from Voyager, but we do not know the identities of all its counter parties. It’s not clear what the specific terms are for these loans, or when they would be at risk of liquidation.
The relative illiquidity of Alameda is somewhat surprising against the spate of rumored and in-progress acquisition bids that have been entered by Alameda and FTX across the ecosystem. However, previous analysis by Protos has shown that many of these offers are structured carefully to reduce the overall investment needed by Alameda, Sam Bankman-Fried, and FTX.
Alameda Research is one of the most important trading firms in all of cryptocurrency, with previous Protos investigations revealing that Alameda was one of the two largest issuers of the controversial tether token, receiving in excess of $31 billion worth of tether as of November 2021.
The crypto markets are still recovering from the collapse of another trading firm, Three Arrows Capital (3AC). It was liquidated by multiple lenders after ghosting, who found themselves unable to pay their lenders as cryptocurrency markets plummeted following the inevitable collapse of the Terra-Luna system. Voyager and BlockFi cited 3AC’s inability to pay creditors as a direct contributor to their current difficulties.
Hopefully, all lenders who maintain exposure to crypto trading firms have recognized the risks and are being much more cautious with the loans that they are issuing to firms that are not 3AC.