Nansen: FTX crisis linked to Terra collapse

Experts from the Nansen analytical company believe that the events that occurred with Terraform Labs in the spring and the current situation with FTX and Alameda Research are connected.

According to the Nansen report, FTX’s strategy to keep Alameda afloat began to unravel around the same time that TerraUSD collapsed.

“We pieced together the snippets of network research, and it became apparent that the Terra/Luna crash revealed a deep flaw between Alameda and FTX’s tangled connections. Due to the collapse that happened in the spring, there was a significant outflow of FTT from Alameda to FTX,” Nansen analysts write.

Alameda-owned wallets interacted with wallets controlled by FTX before the exchange launched in May 2019. Despite the small amount of funds – approximately $ 160,000 – this suggests that either Alameda was actively involved in the work of FTX, or there was no clear separation between Alameda and FTX at that time.

Nansen’s analysis also claims that FTX controls roughly 80% of FTT’s supply, despite reports that the exchange only owns half of the 350 million tokens. This resulted in the company being unable to sell large quantities of its FTT inventory without cutting prices. Therefore, Alameda took out a loan from Genesis against its FTT in September 2021.

After Terra’s collapse, Alameda had little ability to repay its loans and had to borrow from FTX. On-chain data shows that around the time Terra lost its peg and wiped out $40 billion, there was a $4 billion FTT influx from Alameda to FTX.

Earlier, the new CEO of FTX, John J. Ray, appeared before the court, where he criticized the miscalculations of the previous administration and the management style of the former head of the exchange Sam Bankman-Fried (Sam Bankman-Fried).