What’s going on with Alameda?

Over the past few days a large number of ERC-20 tokens have been exchanged for Bitcoin, Etherium and Tether. According to Decrypt sources, the equivalent of the transactions amounted to at least $1.7 million. A crypto-enthusiast under the nickname ErgoBTC also tweeted about it.

Transactions from Alameda Research wallets

Alameda’s transaction chain was further traced by renowned cryptocurrency researcher ZachXBT. According to him, converted cryptocurrencies from the firm’s wallets went first to exchange addresses and then sent to cryptomixers. It is not yet clear who is behind these transfers, but ZachXBT believes it is unlikely that any liquidator would use tools like FixedFloat and ChangeNow. Which means it’s not all clear in this situation either.

Transactions from Alameda Research’s wallets


As a reminder, Alameda Research is a trading firm founded by former billionaire Sam Bankman-Friede, who is currently under house arrest in California. He was previously extradited from the Bahamas, where Sam spent several days in Fox Hill prison.

Two of his former colleagues at the top of Alameda and FTX, represented by Gary Wang and Caroline Allison, have already pleaded guilty to the collapse of Alameda and the crypto exchange, and are actively cooperating with the investigation. In particular, Allison has already confirmed that it was Bachman-Fried who approved the illegal use of user funds for FTX and Alameda representatives.


Ex-CEO of Alameda Research Caroline Ellison

One of the allegations alleges that Bankman-Fried used customer funds to make risky transactions through Alameda, which ultimately led to the collapse of his entire crypto empire. Overall, since the FTX collapse in November, there have been numerous mysterious movements of funds associated with the platform. In addition, on the night the company filed for bankruptcy, hundreds of millions of dollars were stolen from the exchange in a hacking attack.

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Is it even possible to control what happens inside a cryptocurrency exchange to prevent a possible crash like FTX? Representatives from Chainalysis, a large analytics platform that works with many governments around the world, shared their comments on this matter. In an exclusive interview with Cointelegraph, they stated that there is currently no effective tool to track funds on trading platforms. Here is the relevant rejoinder.

Chainalysis or any other analytics platform cannot track funds through a specific centralised service. The way these platforms store and manage user funds inherently makes further coin tracking inaccurate. Even if you could track the flow of funds through a centralised exchange, their legitimacy cannot be determined.

Alameda’s leaked balance sheet was one of the first warning signs of the collapse of the company and the FTX exchange as a whole

In other words, blockchain analysis can track deposits on exchanges, but there is no way to access their liabilities. Nansen platform analyst Andrew Thurman emphasised this.

FTX stopped withdrawals when it still had over a billion dollars in various digital assets. We now know that they had a much larger amount in commitments.

Thurman also noted that proving the exchange’s reserves is a “half-measure”, although effective in some cases. So the problem remains – to fully assess the financial stability of a centralised platform you need information about its debts. It is not yet possible to verify it fully via blockchain, so auditors must be used.

Ex-CEO of FTX Sam Bankman-Fried

But there are pitfalls here too. Previously, auditor Mazars, which has worked with Binance, refused to work further with cryptocurrencies, citing the complexity of such contracts. Accordingly, the niche will have to find a way to attract auditors with more credibility to their business to ensure full transparency. Then perhaps the crypto industry will become much more popular with big investors.

Fortunately, the FTX bankruptcy case does have early positive results for customers. The day before, it became known that users of the Japanese division of the trading platform called FTX Japan will start receiving their first compensation as early as mid-February 2023.

Management of the division has already set a timetable for the withdrawal of funds: if everything goes smoothly, FTX Japan will be a rare example of a relatively fast compensation procedure for aggrieved customers. As a reminder, the bankrupt crypto exchange owes its 50 largest unsecured creditors worldwide a total of $3.1 billion.

FTX Japan

Representatives from FTX Japan said a system is being developed that will allow customers to withdraw their assets through the Liquid Japan site, a platform acquired by FTX management this year to strengthen its own local market presence. The statement explains the three-step process for returning assets to customers, which includes opening an account with Liquid Japan in mid-January, followed by a balance check and the ability to withdraw funds in mid-February.


We don't think there is any clarity to be found in the FTX and Alameda case. After all, the company's executives have done a lot of unethical things and have previously conducted illegal transactions with users' crypto-assets. So you can expect all sorts of things from them - even now.


FTX Japan has about $94.5 million in crypto assets and $46 million in traditional currency in designated customer accounts. Stay tuned for developments and compensation progress in our Millionaire Crypto Chat.