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Crypto Report Says ‘Alameda Gap’ Is Gone After Bitcoin Rally, What This Means

In its most recent research newsletter, crypto research firm Kaiko alluded to an ‘Alameda Gap,’ which has been massively impacting the Bitcoin and crypto market for some time now. However, that seems to be in the past, as Kaiko stated that the gap no longer exists. 

What The Alameda Gap Is About

According to the report, the ‘Alameda Gap’ is the gap in liquidity that existed after the collapse of the collapse of the defunct crypto exchange FTX and its sister company Alameda Research. Alameda was one of the most prominent market makers then and provided massive liquidity to the market. 

Following Alameda’s collapse, this liquidity gap is said to have persisted as market makers “waited on the sidelines for sentiment and trading activity to recover.” Now, the market looks to have moved past this, as Kaiko revealed that, as of last week, the market depth has almost fully recovered and is back to its pre-FTX average. 

The research firm added that the Bitcoin 2% market depth is up 40% year-to-date (YTD) and briefly surpassed its pre-FTX average of $470 million. This increase is said to have been mainly due to the surge in Bitcoin’s price, which has risen faster than the market liquidity since the SEC approved the Spot Bitcoin ETFs in January. 

Bitcoin is up about 50% YTD and has already hit new highs since the beginning of the year, including a new all-time high (ATH) of $73,750. Meanwhile, the improvement in liquidity is also evident in the fact that the cost of trading has declined on the three major US crypto exchanges: Coinbase, Kraken, and Bitstamp. 

How Bitcoin Is Outperforming Gold

Kaiko also highlighted in its report that the Bitcoin-to-Gold ratio, which measures both assets’ relative performance, is inching closer to its ATH, which it last hit in November 2021. Interestingly, this increase means that BTC is outperforming Gold, even though both assets have recorded ATHs these past few weeks. 

Furthermore, funds linked to these assets show how Bitcoin has outperformed Gold. Kaiko noted that Bitcoin ETFs have attracted $11 billion since they launched in early January. Meanwhile, the largest physically-backed Gold ETFs (SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) have registered outflows during the same period. 

Kaiko suggested that this could mean that investors were moving towards Bitcoin as the “new global store of value.” Interestingly, the CEO of Jan3 and Bitcoiner, Samson Mow, while giving reasons why Bitcoin will hit $1 million, also mentioned that people will start demonetizing Gold and substitute it for BTC at some point.  

Bitcoin price chart from Tradingview.com

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Alameda Research’s Worldcoin Investment Hits All-Time High, Exceeding $50M As WLD Price Climbs

Worldcoin, the digital identity token ERC-20 project on the Ethereum (ETH) blockchain, has garnered significant attention. Its native token, WLD, emerges as the top performer among the top 100 cryptocurrencies by market capitalization. 

The token has experienced a remarkable 31% uptrend in just 24 hours and a staggering 217% surge over the past fourteen days. This surge not only marks a new all-time high for WLD but also positively impacts Alameda Research, the now-bankrupt trading arm of the defunct FTX exchange, which holds a substantial stake in Worldcoin.

Alameda Research’s Stake In Worldcoin Reaches $186 Million

According to on-chain data, Alameda Research, a cryptocurrency trading firm co-founded by Sam Bankman-Fried and Tara Mac Aulay in 2017, has witnessed a surge in its Worldcoin holdings. 

As WLD reached a new all-time high of $7.9788 on Monday, the trading firm’s investment in the project surged by $50 million, reaching a new record. Currently, Alameda Research holds 25 million WLD tokens, valued at $186 million, representing 33% of their total portfolio. 

Worldcoin

This portfolio also includes other digital assets such as Bitcoin (BTC), BitDAO (BIT), Ethereum (ETH), Stargate Finance (STG), and the FTX token FTT.

Whale Activity And AI Hype Drive WLD’s Price Surge

Analysts such as Zameer Attar attribute the WLD price spike to strong whale activity, with one notable whale wallet withdrawing 2.09 million WLD tokens ($5.82 million) from Binance.

This withdrawal caused a 25% surge in the price of Worldcoin, resulting in the whale’s holdings reaching an impressive $8.03 million. Additionally, the launch of OpenAI Sora by Sam Altman, one of the founders of Worldcoin, has triggered bullish action in WLD tokens. 

Interestingly, Sora can create videos of up to 60 seconds with highly detailed scenes, complex camera movements, and multiple characters with emotions, which surrounding the hype of artificial intelligence (AI) has spurred investor interest, leading to more bullish sentiment surrounding WLD.

Worldcoin, founded by Sam Altman, Alex Blania, and Max Novendstern, aims to revolutionize the global identity and financial network by creating a public utility known as World ID. 

This privacy-preserving identity network enables users to verify their humanness online while maintaining their privacy through zero-knowledge proofs. The project has garnered significant funding, raising over $250 million across various funding rounds from investors, including a16z, Khosla Ventures, Bain Capital Crypto, Blockchain Capital, and Tiger Global.

The combination of whale activity and positive market sentiment surrounding AI technologies has contributed to the considerable surge in Worldcoin’s price.

Worldcoin

Featured image from Shutterstock, chart from TradingView.com 

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FTX And Alameda Addresses Move $80 Million In Crypto Over The Past Week – Details

According to the latest on-chain data, wallet addresses linked to the now-bankrupt FTX exchange and Alameda Research have transferred substantial amounts in crypto assets over the past week. This series of funds movement was first brought to the limelight by prominent blockchain analytics firm Nansen, who reported that more than $60 million had been moved.

However, further on-chain revelation shows that nearly $80 million has been moved from FTX- and Alameda-linked addresses in the previous week.

Nansen Uncovers FTX And Alameda’s $60 Million Transfer

On Friday, October 27, Nansen disclosed – via a series of posts on X (formerly Twitter) – that FTX has been transferring millions in digital assets, including Chainlink (LINK), Solana (SOL), Ethereum (ETH), Polygon (MATIC), etc, to various exchange addresses. 

Prior to this development, the analytics firm initially reported that around $8.6 million were moved to a Binance address. According to the latest Nansen data, FTX subsequently moved $24.3 million in various tokens to different addresses on Coinbase and Binance. 

The now-defunct exchange would later transfer 943,000 SOL (worth around $32 million) from its cold storage wallet on Friday. Based on Nansen’s data as of October 27, the total funds moved from FTX and Alameda wallets was above $60 million.

Has There Been More Transfers?

On Saturday, October 28, another blockchain data tracker, Lookonchain, offered an update on the recent transfer activities of the FTX- and Alameda-associated addresses. In a post on the X platform, the analytics platform revealed that FTX and Alameda moved an additional $20 million in crypto assets on Saturday.

FTX

According to Lookonchain, FTX addresses transferred 309,185 SOL (worth around $10 million), 2 million Band Protocol tokens (equivalent to $3.15 million), 3.82 Perpetual Protocol tokens (worth about $2.3 million), amongst other crypto assets. Using Lookonchain’s data, this brings the total value FTX has moved this week to $78.7 million.

While the purpose of these transfers is unknown, it remains to be seen whether they are associated with the exchange’s bankruptcy proceedings. And it comes after the FTX estate recently staked $122 million worth of Solana tokens.

FTX exchange has been looking to conclude its pending Chapter 11 court case, with a recent proposal offering customers more than 90% of their missing assets toward the end of Q2 2024. Meanwhile, former CEO Sam-Bankman Fried is currently on trial for seven counts of fraud-related offenses.

FTX

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Chinese Developers Eager To Build On Solana: Will SOL Breeze Past $30?

China developers are active and willing to build on leading blockchain platforms if statistics from Solana Hyperdrive Hackathon submission details are anything to go by. In an X post on October 17, Matty Taylor, the Head of Growth at the Solana Foundation, said there were far more developers from China who submitted applications, willing to participate in the Solana Hyperdrive hackathon than from the United States. 

Solana Attracting Chinese Developers

The hackathon has a prize pool of $1 million, and all submissions had to be submitted by October 15. It is an online event aiming to “nurture and expand” the Solana ecosystem. 

Developers from 68 countries submitted, with the highest numbers coming from China and Vietnam. The rest were mainly from the United States, India, Mexico, Turkey, and Germany.

That notable participation from Chinese developers can be a massive boost for Solana, indicating that the blockchain could be popular in the Asian economic powerhouse. China remains pro-blockchain and believes that the technology can give them an edge and even improve efficiency in some critical sectors, like agriculture, healthcare, governance, and finance, that the country seeks to enhance gradually. 

However, China has banned crypto trading and mining, citing the “need to go green, protect consumers, and ensure financial stability.” The Chinese central bank, PBoC, said cryptocurrencies could pose a risk to the country’s financial system.

Unlike Ethereum, Solana permits fast transaction processing and is relatively scalable with decent activity. Although the project suffered following the collapse of FTX in November 2022, there has been a revival in price and on-chain activity.

The Revival, Will SOL Breach $30?

To illustrate, non-fungible token (NFT) trading activity on Solana has steadily risen over the past few months. While there was a spike, the network didn’t halt, as in previous instances, especially in 2022. 

Instead, the high reliability seems to have inspired activity, directly helping revive SOL prices that collapsed by over 90%, worsened by news that Sam Bankman-Fried and Alameda Research allegedly embezzled customer funds. FTX had invested in Solana and has a considerable share of SOL, which will be liquidated and reimbursed to impacted clients.

Solana price on October 17| Source: SOLUSDT on Binance, TradingView

At spot rates, SOL is up 36% from September 2023 lows and overly firm. Looking at the candlestick arrangement in the daily chart, SOL is trading at October and 2023 highs and could break higher if bulls press on. The October 16 bull bar is wide-ranging, has marked trading volumes, and could anchor the next leg towards July 2023 highs of around $32.

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BlockFi CEO’s Key Testimony: Insights Into Alameda’s Financial Stability In FTX Trial

The trial against FTX co-founder Sam Bankman-Fried took an intriguing turn as Zac Prince, the CEO of defunct crypto lender BlockFi, provided testimony in a Manhattan federal courtroom. 

Prince’s appearance provided valuable insights into the intricate relationship between BlockFi, FTX, and Alameda Research.

BlockFi’s Bankruptcy Rooted In Alameda And FTX

According to a Bloomberg report, Prince revealed that BlockFi had substantial exposure to Alameda and FTX, estimated at around $1 billion, at the time of BlockFi’s failure in November 2022. 

Prince asserted that if the loans to Alameda were still in good standing and the funds on FTX were available, BlockFi would not have filed for bankruptcy. This statement suggests that BlockFi’s financial troubles were closely tied to the collapse of Alameda and FTX.

Prince’s testimony diverged significantly from Caroline Ellison, the government’s star witness, who portrayed Bankman-Fried as the mastermind behind a fraudulent scheme using FTX customer funds for speculative trading at Alameda. 

Prince’s account positioned BlockFi as a victim of Bankman-Fried’s alleged schemes, claiming that BlockFi made loans to Alameda based on misleading balance sheets. 

Defense lawyers sought to emphasize that BlockFi willingly provided the loans to Alameda, with knowledge of the associated risks.

Creditors Accuse BlockFi Of Inadequate Due Diligence

Prince discussed BlockFi’s due diligence process regarding Alameda’s collateral, comprised of tokens affiliated with FTX. The judge requested plainer terms during Prince’s explanation, prompting an analogy using car loans. 

Per the report, the prosecution questioned the adequacy of BlockFi’s due diligence, as creditors accused the company of failing to recognize warning signs before offering substantial loans to Alameda.

Prince’s testimony highlighted that providing “unaudited balance sheets” is an industry norm for borrowers seeking loans. The defense sought to establish that BlockFi knew the risks of lending to Alameda and acted within industry norms.

Zac Prince’s testimony in the trial against Sam Bankman-Fried provided a deeper understanding of the intertwined relationships within the crypto industry. BlockFi’s exposure to Alameda and FTX and its subsequent bankruptcy offered insights into the potential repercussions of alleged fraudulent activities. 

The differing narratives presented by the prosecution and defense underscore the complexities of the case. As the trial unfolds, the court will continue to examine the details surrounding BlockFi’s lending practices and the extent of Bankman-Fried’s involvement in the alleged schemes.

It is important to note that BlockFi can no longer be utilized for crypto-related activities, as the company declared bankruptcy and suspended withdrawals in November 2022. The bankruptcy filing indicates that BlockFi owes between $1 billion and $10 billion to over 100,000 creditors.

FTX

Featured image from NBC, chart from TradingView.com

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Alameda Research Accused Of Bribing Chinese Officials To Recover $1 Billion In Exchange Accounts

During the trial of Sam Bankman-Fried, the founder of crypto exchange FTX, shocking revelations emerged from the testimony of former Alameda Research CEO Caroline Ellison. 

According to a TechCrunch report, Ellison testified that the crypto trading firm paid Chinese officials to unlock their Alameda trading accounts on OKX and Huobi in China.

Judge Lewis Kaplan clarified that Bankman-Fried was not charged with bribery in this case. Still, the evidence was presented to demonstrate trust, confidence, and motive between Bankman-Fried and Ellison.

Alameda Research Former CEO Exposes Hidden Payments To Chinese Officials

According to Ellison’s testimony, while Bankman-Fried was CEO in 2020, the accounts valued at approximately $1 billion were frozen. 

In November 2021, Bankman-Fried claimed that a colleague, David Ma, who had connections in China, found a way to unfreeze the accounts. 

Ellison, who had become co-CEO of Alameda by then, made crypto transfers totaling around $100 million to $150 million to reopen the accounts, unaware that the payments were made to Chinese officials. 

Ellison stated that Bankman-Fried and Sam Trabucco instructed her through a Signal chat to make the payments.

Before the accounts were reopened, Ellison revealed that Alameda employees explored various strategies to unlock the accounts, including involving lawyers and government officials. 

Ellison testified that they even considered using Thai prostitutes to open accounts on the exchanges to facilitate fund transfers, but these efforts were unsuccessful.

One Alameda trader, “Handi,” resigned in early January 2022 due to her objection to paying bribes to Chinese officials, as her father held a government position. 

Courtroom Clash

Ellison testified that Handi had a heated argument with Bankman-Fried about the matter, during which he allegedly told her to “shut the fuck up.” A month after Handi’s resignation, Trabucco asked in a Signal chat if Handi’s father had immediately reported them, to which Bankman-Fried responded with “lol.”

Ellison shared a list with prosecutors containing notes, one of which referred to a payment of “150m from the thing?” about the money transferred to regain the accounts. 

Per the report, Ellison explained that she did not want to explicitly state in writing that the payment was made to China to unlock the accounts, fearing that it could be leaked and used against Alameda Research in court.

Bankman-Fried’s defense lawyer, Mark Cohen, attempted to strike Ellison’s statement about avoiding written evidence of the payments, but Judge Kaplan overruled the request.

The trial continues to uncover new details and allegations, shedding light on the actions and motivations of the individuals involved, and the cryptocurrency community eagerly awaits further developments and the subsequent outcome of the trial.

Alameda Research

Featured image from Shutterstock, chart from TradingView.com 

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No Love For FTX: Ex-Girlfriend Delivers Scathing Testimony Against Sam Bankman-Fried

The trial of the former CEO of the defunct crypto exchange FTX, Sam Bankman-Fried (SBF), resumed on October 10. As expected, the prosecution called Alameda Research’s ex-CEO and SBF’s ex-girlfriend, Caroline Ellison, to testify against the defendant.   

Ellison Does More Damage To Sam Bankman-Fried Defense

According to a thread on the X (formerly Twitter) platform by Inner City Press, which was present at the trial, Ellison confirmed what was already known as she stated that she and the defendant dated for a couple of years with their on-and-off relationship, beginning in the summer of 2020. 

However, any affection or feelings that she may have had for the defendant didn’t seem to hinder her as she lived up to the hype as the prosecution’s star witness, providing key insights into how Sam Bankman-Fried allegedly misappropriated FTX’s customers’ funds through Alameda which she headed before its collapse. 

During her testimony, she admitted that she had committed fraud alongside the defendant. Specifically, she stated that Sam Bankman-Fried directed her to commit these crimes. As to her involvement, she collaborated Wang’s testimony while stating Alameda (and her, by extension) took “several billions of dollars” from FTX customers and used these monies for investments. 

Meanwhile, Ellison confirmed that Sam Bankman-Fried was the one who set up the systems and directed the trading firm to take the money. Besides using FTX’s customers’ funds for investments, Alameda also took around $14 million to repay its lenders. She also manipulated Alameda’s balance sheets, making the firm look risky to potential lenders. 

FTX FTT Token price chart from Tradingview.com (Sam Bankman-Fried ex-girlfriend)

Prosecution Uses Ellison To Drive Home Major Allegations

In its opening statement, the Prosecution alleged that Sam Bankman-Fried diverted customers’ fiat deposits to a bank account linked to Alameda, which Ellison confirmed on the stand. She stated that FTX received money into Alameda’s bank accounts between 2021 and 2022. The total sum deposited was between 10-20 billion dollars. 

Alameda used some of these deposits to repay loans, investments, and stablecoin conversions like USDC. According to her, this summed up to about $2 billion. It didn’t stop there, though, as the trading firm used the other money for other Alameda-related purposes.

Sam Bankman-Fried and his lawyers have, at different times, tried to lay a foundation that SBF wasn’t in charge of Alameda and didn’t know what was going on at the trading firm after he stepped down as the CEO.

However, Ellison rebutted this on the stand as she stated that things didn’t change much, even when she became the co-CEO alongside Sam Trabucco, as she checked everything with Sam Bankman-Fried and directly reported to him. He also had the power to fire her. 

Wire fraud on lenders to Alameda Research and conspiracy to commit wire fraud on lenders to Alameda Research is part of the seven charges brought against SBF. As such, Ellison’s testimony is deemed critical (as someone with first-hand knowledge) in the prosecution’s bid to prove these crimes beyond reasonable doubt. 

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Here’s How Sam Bankman-Fried Allegedly Used Customer Funds On Alameda Research

On day four of the criminal trial of former FTX CEO Sam Bankman-Fried, Gary Wang, who co-founded the now-bankrupt crypto exchange and served as its former chief technology officer (CTO), testified. During his testimony, the former FTX executive revealed details about the connection between the cryptocurrency exchange and Alameda Research.

FTX’s Sam Bankman-Fried Allegedly Gave Alameda Research ‘Special Privileges’

According to various reports, on Friday, October 6, Wang appeared again in court and testified that Alameda Research’s account on FTX was allowed to trade more funds than it had available. The former FTX CTO reportedly said that Sam Bankman-Fried authorized the integration of a “allow negative” feature, which afforded Alameda “special privileges” on FTX.

Wang reportedly revealed that the “allow negative” feature enabled Alameda to hold a negative balance more than FTX’s revenue at some point in 2020 ($200 million against $150 million). According to reports, Wang claimed that he increased Alameda’s line of credit several times and up to $65 billion under Bankman-Fried’s instructions.

When the government’s prosecutors questioned where the money came from, Wang reportedly affirmed that it came from FTX’s customers’ funds. Based on the co-founder’s testimony, Bankman-Fried claimed that the “allow negative” feature was all about FTT, a native cryptocurrency “created to act as equity in FTX.”

Wang reportedly acknowledged that the customers never authorized their funds to be used by Alameda Research. “The customers did not give us permission to use their accounts like this,” the former FTX chief technology officer allegedly said.

Did SBF Repeatedly Lie About Connections With Alameda?

During his testimony, Wang was asked whether he remembered Bankman-Fried making public statements about Alameda’s unusual connections with the FTX exchange. “Yes, he (SBF) said they (Alameda Research) were treated equally and didn’t use FTX funds,” the FTX cofounder allegedly affirmed.

Furthermore, the prosecutors showed Wang – and the court – a 2019 tweet from SBF claiming that Alameda was not using funds from FTX. Interestingly, Wang affirmed that Bankman-Fried ordered the addition of “allow negative” in the exchange’s codebase on the same day the tweet was made.

It appears that is not the only time Bankman-Fried lied about Alameda’s activities on the FTX exchange. The former FTX CTO testified that Bankman-Fried subsequently claimed on Twitter (now X) and on phone calls that customer funds were kept safe.

On Thursday, October 5, Gary Wang reportedly admitted to committing fraud-related crimes while at the FTX exchange alongside Sam Bankman-Fried, former Alameda CEO Caroline Ellison, and former engineering director Nishad Singh. With the trial expected to continue till November, it remains to be seen whether or when the other former top FTX and Alameda executives will take the stand.

Sam Bankman-Fried

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How An ‘Inconsequential’ Mistake Saw Bitcoin Crash To $8,000

Bitcoin is known to be a very volatile digital asset as its price is often wont to rise and fall unexpectedly, and sometimes without a clear reason. One of these instances of the digital asset flash-crashing was back in 2021 when the price of Bitcoin had fallen 87% on some exchanges in a matter of minutes. However, the mystery behind this flash crash has been unveiled two years after it first occurred.

Former Alameda Research Engineer Spills Secret

Alameda Research is the sister company of the now-defunct FTX crypto exchange run by Caroline Ellison who served as CEO until it collapsed. Following the bankruptcy, employees at the trading firm have, at various times, come forward to tell stories of what took place at the company. This time around, an ex-engineer Aditya Baradwaj is telling the story of how a simple mistake caused the company to lose tens of millions of dollars.

Baradwaj took to his X (formerly Twitter) account to reveal how an Alameda employee had unwittingly triggered a Bitcoin flash crash in 2021. According to him, the error was a result of two trading systems operated at the company.

The ex-engineer explained that Alameda had semi-systemic strategies in which a complex automated trading system was controlled by model parameters set by traders. The second was manual trading which would be done when the former could not execute a trade due to a number of reasons.

In the case of the trader who triggered the flash crash, they had to manually enter a trade to sell a large tranche of BTC using Alameda’s manual trading system. However, the trader had failed to realize that the decimal point in the trade was off by a couple of spaces, which meant that they were selling the BTC at much lower prices than the current price.

The result of this simple error was Alameda selling off a sizable portion of BTC at pennies on the dollar which resulted in a flash crash on multiple exchanges. The crash was most prominent on the FTX and Binance exchanges, where prices fell from $65,000 to $8,000 in a matter of minutes.

Covering Up The Bitcoin Crash

The aftermath of the flash crash, according to the ex-engineer, involved Alameda rushing to put in place sanity checks that should have been available before any manual trades were executed. He notes that this was not out of the ordinary as they were always waiting for things to break before fixing them at the company.

“That’s usually how things worked at Alameda – we would wait until something broke, and then rush to fix it,” he said. Baradwaj also referred to FTX founder Sam Bankman-Fried saying that the utility gained after the events outweighed the costs incurred from poor risk checks and hacks.

He also pointed to Binance commenting on the flash crash with a statement that blamed a bug in the trading algorithm of one of their institutional traders. “I guess Caroline had made some phone calls,” Baradwaj said, referring to Alameda’s CEO.

Bitcoin price chart from Tradingview.com (Bitcoin crash)