Did Terra pull the pin out of the FTX grenade?

Sahana Kiran
Source – Unsplash

The crypto-verse was witness to a plethora of projects biting the dust. One after the other, prominent crypto platforms were seen filing for bankruptcy. FTX’s collapse certainly took the cake. While several were busy calling out Sam Bankman-Fried for mismanagement and fraud, a recent report highlighted how Terra could have triggered the dramatic downfall of the SBF’s empire.

As per an elaborate report by Nansen, a blockchain analytics platform, the crash of FTX could be linked to Do Kwon’s infamous project Terra. Alameda Research and FTX were never clearly separated, according to the report. It should be noted that FTX’s plan to keep Alameda alive began to fall apart around the time TerraUSD crashed.

The report read,

“Piecing together the pieces from our on-chain investigation, it was evident that the Luna/Terra collapse revealed a deep flaw between Alameda and FTX’s muddled relationship. There were significant FTT outflows from Alameda to FTX around the Terra-Luna/ 3AC situation.”

FTX and Alameda Research

Before the exchange started functioning back in May 2019, wallets belonging to Alameda Research which was co-founded in 2017, were connecting with wallets that would subsequently fall under FTX’s ownership.

The researchers stated in their blog post that, despite the relatively small volume of $160k, the data clearly shows that either Alameda was significantly involved in the creation of the exchange or that there was no obvious distinction between Alameda and FTX then, and potentially, even both.

While the association between the aforementioned companies was time and again contested, it was brought to light that Alameda’s balance sheet entailed $5 billion worth of FTT.

Alameda would have had few choices to repay the recalled loans following the Terra collapse, therefore it may have borrowed from the exchange, according to the Nansen analysts. According to on-chain statistics, there was a $4 billion FTT influx from Alameda to FTX at around the same time Terra lost its peg and lost $40 billion.