Reports from a crypto compliance firm shows that Alameda, supposed to be distinct from its sister company FTX, bought up tokens before they were publicly listed.
Crypto compliance firm Argus says that Alameda Research had used prior knowledge of tokens in purchasing tokens that were to be listed on FTX, prior to public announcements, in order to sell for a profit.
Argus’ analysis points out that between the beginning of 2021 and March 2022, Alameda held $60 million worth of 18 different tokens, all eventually listed on FTX.
Alameda Research, known as FTX’s VC arm, is a quantitative trading firm founded by Sam Bankman-Fried in 2017. After starting up FTX operations in 2019, he stepped down from operations in Alameda in 2021.
Bankman-Fried has always maintained that both Alameda and FTX were two separate companies, but after sources revealed that a large amount of Alameda’s balance sheet was made up of FTT, FTX’s native token, things went haywire.
This led to FTX a bank run last week, which made FTX suspend withdrawals, and resulted in FTX’s filing for bankruptcy.
Regarding the findings of FTX and Alameda’s market manipulation, Argus co-founder Omar Amjad says “[…] they’ve basically almost always in the month leading up to it bought into a position that they previously didn’t.
It’s quite clear there’s something in the market telling them they should be buying things that they previously hadn’t.”
Argus, founded last year, is a London-based crypto compliance firm that is currently being bankrolled by leading VCs like Y Combinator and Charles River Ventures.
If allegations of insider-trading against Alameda Research are proven to be true in further investigation, Alameda’s frontrunning efforts would prove to be that of a bigger scale than previous charges.
What’s happened with FTX and Alameda has also shown up at other places in the industry – including leading NFT marketplace OpenSea, and publicly traded crypto exchange Coinbase.
According to the US Department of Justice, former OpenSea product manager Nate Chastain was recorded as the first digital-asset trader who was charged for an insider-trading scheme.
Chastain allegedly used internal information that noted which NFT collections were about to be featured on OpenSea’s homepage, in order to financially benefit.
Although being arrested and charged in June, Chastain attempted to appeal to the judge where the case should be dismissed, as NFTs “are neither securities nor commodities.” The judge denied his motion.
This April, Crypto Twitter mainstay Cobie flagged an Ethereum wallet that purchased $400,000 worth of tokens, right before a public blog post from Coinbase announcing the sale was published.
Two weeks later, Coinbase CEO Brian Armstrong published that the company will no longer identify assets that it is considering on listing.
A few months later in July, the US DOJ and the US SEC respectively charged former Coinbase project manager Ishan Wahi for conspiracy to commit wire fraud, and then for sharing unpublished token listing announcements with his brother Nikhil Wahi, and a friend Sameer Ramani.