Is Alameda Research on thin ice? According to reports, the Sam Bankman-Fried-led trading firm has most of its assets held in illiquid stablecoins.
However, a key point to note is that most of those are held in FTT, the token created by its sister concern, the FTX Exchange.
A Divided Crypto Empire
Billionaire Sam Bankman-Fried is well-known in crypto, leading two of the most important companies in the space. Bankman-Fried’s crypto empire can be distinguished into two parts: FTX, the cryptocurrency exchange, and Alameda Research, the trading firm. Both companies are well established in their respective niches and both completely different entities.
However, the clear division gets blurry when you look closely at Alameda’s balance sheet, according to a “private financial document.”
On Shaky Ground?
A closer inspection of the balance sheet shows that Alameda Research has most of its assets held in illiquid altcoins. Additionally, it is all-in on FTT, the token created by its sister concern, the FTX Exchange. If such a scenario is indeed true, Alameda Research could be on shaky ground. If a company as significant as Alameda Research falls, its impact could devastate the crypto space.
However, it still needs to be determined if the report in question gives the complete picture. The report in question is a “private financial document,” and the publication itself concedes that the document potentially only represents a part of Alameda Research’s financials. The report states that Alameda Research has $14.6 billion in assets and $8 billion in liabilities.
All In On FTT
While there is nothing wrong with investing in one particular asset if its fundamentals are strong, it raises some concern because when the investment is your own token, it opens a pandora’s box of risks. It also shows that the foundation on which Alameda Research rests is made up of a token invented by a sister concern.
The FTT token is similar to the BNB token by Binance. It acts as the utility token for the FTX ecosystem, offering holders an array of benefits and discounts regarding trading and transition fees. A noted analyst, Dylan LeClair, gave a breakdown of Alameda Research’s assets on Twitter, commenting that most of the company’s net equity is tied to illiquid altcoins.
“WOW. Per CoinDesk, Alameda research has $14.6 billion of assets against $8b of liabilities. For assets: $3.66b FTT, $2.16b “FTT collateral,” $3.37b crypto ($292m SOL, $863m “locked SOL”), $134m & $2b “equity securities. Most net equity tied in completely illiquid altcoins.”
Details Of The Balance Sheet
Apart from FTT, other significant assets on the Alameda Research balance sheet include $3.37 billion of “crypto held,” $292 million of “unlocked SOL,” and $863 million of “locked SOL.” Additionally, $41 million of SOL is held as collateral. The large amount of SOL is not surprising, as Bankman-Fried was an early investor in Solana. Other tokens included on the balance sheet are SRM, OXY, MAPS, and FIDA. There is also $134 million in cash and an investment worth $2 billion in equity securities.
Is Alameda In Trouble?
The report states,
“The financials make concrete what industry-watchers already suspect: Alameda is big. As of June 30, the company’s assets amounted to $14.6 billion. Its single biggest asset: $3.66 billion of “unlocked FTT.” The third-largest entry on the assets side of the accounting ledger? A $2.16 billion pile of “FTT collateral.”
According to LeClair, Alameda Research’s assets are comprised of $5.8 billion worth of FTT, and with the token’s market cap currently at $3.3 billion, it is not an ideal scenario. LeClair tweeted,
“We don’t have insight into what the liabilities are denominated in. If it’s primarily USD, Alameda is in DEEP trouble. The asset side of their BS is entirely illiquid. If it’s loans denominated in ‘crypto,’ it’s better, but still not great.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.