SBF And Alameda Research Allegedly Using FTX In 'Infinite Money' Scheme

We should all know that billionaire Sam Bankman-Fried owns two main businesses that make up his empire: FTX (his exchange) and Alameda Research (his trading firm). A few days ago, Alameda's balance sheet information came into the public eye. And it either has some interesting curious points of note or some serious new flags, depending on who you ask.

Alameda owns assets that amount to $14.6 billion. Now, the single largest asset is $3.66 billion of “unlocked FTT.” and the third-largest, $2.16 billion pile of “FTT collateral". This means that just about 40% of the value of Alameda is made up of FTT tokens. The problem is that FTT token(FTX exchange token) is controlled and managed centrally by FTX, such that they may print it out of thin air at their whim and fancy. And since SBF owns both companies he can easily sell or loan at extremely favourable rates, if not outright gift tokens likely indirectly though another company or a loan that is never paid back, from FTX to Alameda (or basically give tokens from himself to himself) and balloon Alameda's asset value for basically nothing.

You may think that FTX excessively printing tokens is a suicide pact as it would drive the token price down and supply increases, but you would be wrong. Think about how burning works. Token burns generally increase token value by reducing the supply that is available on the market, as burnt tokens still 'exist', but are simply inaccessible. In the same way SBF and FTX can print however many tokens they so desire and it wouldn't affect price as long as those tokens don't hit the market, and they don't need to.

See SBF and Alameda can simply receive FTT tokens from FTX basically for free, and then take a loan against these tokens. In this way, the multitude of FTT tokens they print for nothing never hits the market and never negatively affect the price, however each of those tokens still hold their market value allowing SBF and Alameda to borrow against those FTT tokens and get...basically free money.

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Infinite Money Diagram

What lends strong credence to this is that on June 30th, Alameda's FTT token asset value was $6.1 Billion in FTT tokens but the circulating supply is only $3.6 Billion. Looks like somebody is printing tokens but not putting it on the market.

Now going back to their balance sheet, Alameda has 2.16 billion in 'FTT collateral'. This implies Alameda has gained $2.16 billion in loans where they used FTT tokens as collateral. They too have a further 3.66B in free FTT tokens to obtain another multi-billion dollar loan if they so choose. They also have 292 million in 'locked FTT'. Interestingly, the 'locked FTT' tokens are conservatively treated at 50% of their fair value, meaning that Alameda has cut their FTT liabilities(what they owe) in half with this simple accounting trick.

Of course, owners of FTT tokens gain massive discounts when trading on FTX. Just another gift from SBF's right hand to his left. Now we know how volatile prices and token holdings can be. Roughly estimating the token amounts held by Alameda on the timeframe the balance sheet info is dated reveals that Alameda alone and not FTX holds about 75% of total supply. I say total supply and not circulating supply. This is based on FTX's own FTT token data. As to why Alameda holds the majority and not FTX, it is probably a lot easier for Alameda to gain loans against these tokens(using them as collateral) than FTX since many lenders would be unwilling to lend to FTX knowing they have complete control over the token. This could be bypassed using Defi loans but is almost certainly an issue for Cefi loans that SBF may want. But for Alameda to solidly own somewhere between 70-80% of FTT tokens raises some HUGE red flags. If this doesn't validate many of the concerns I outlined above, I don't know what will.

EDIT: All of this also very much explains that in SBF's and FTX's $1.4 Billion purchase of Voyager, only $51 million of that amount is actually cash.

Research Sources:

https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/