On November 2, Coindesk caused the biggest crash in crypto history yet after it released the private financial documents of Alameda Research, a VC and trading firm owned by FTX founder Sam Bankman-Fried and closely associated with the exchange.
In the following week, 140M FTT flowed into Binance, and the token fell from $26 to below $2. This led to a run on FTX, a supposed “hack” draining $473 million from reserves, and the declaration of bankruptcy by the world’s second largest trading platform.
Summary of events
Nov. 2: Coindesk releases Alameda’s private financial documents Nov. 6: Binance founder CZ posts that Binance will sell all FTT coins on its book in the coming months. Alameda CEO Caroline Ellison is offering to sell all of Binance’s FTT holdings for $22.Nov. 6: FTT experiences its first sharp drop (10% down) and goes back to $24 after Ellison’s offer.Nov. 8: FTX International suspends withdrawals.Nov. 8: FTT drops to $5Nov. 8: Binance announces that it may be interested in FTX.Nov. 11: Acquisition terminated.Nov. 11: FTX files for bankruptcy and users’ funds disappear.
How the FTX Crash Affects the Entire Crypto Market
The collapse of FTX once again put the market in a state of extreme fear, with BTC falling to its lowest level of the year at $16,000.
At first glance, it would appear that Binance has come out the winner in this situation, with numerous memes jokingly showing CZ as the genius mastermind behind its top competitor’s fall. While BNB briefly jumped to $368 on November 8th, it quickly fell back to a near 3-month low of $264. The situation has made the entire industry look extremely unreliable, and centralized exchanges will suffer the most.
What on-chain data could have told us
Before the collapse of FTX was imminent, there were serious on-chain signals that pointed to trouble ahead.
On November 5th, 75M FTT were transferred from FTX, indicating a sell-off after this incident. We also saw two big dumps on FTT on November 8th and 13th, with around 110 million and 211 million respectively.
More than 140M of FTT tokens were transferred to Binance from Nov 2 to Nov 8. The jump in transaction volume started on the 5th and 6th, with around 45M and 42M, respectively.
Over $1.4B drained from FTX’s Ethereum balance.
FTX’s main tokens balance has dropped significantly.
According to 0xScope, most of the funds for FTX come from other exchanges, especially Binance.
Since no retailer will currently deposit their money, it should be FTX’s own capital, and we have not found any cold wallet transfer within two days.
This signal therefore strongly leads to a possibility that FTX moves the user’s deposited money to other exchanges for other purposes (Marketmaking by Alameda) and never has a cold wallet for emergency purposes.
Nov 7
November 8.
A long-term mix of assets and accounts for both SBF individuals and Alameda is also tracked through 0xScope’s entity graph.
As shown in the chart, SBF’s address shares three Binance/FTX deposit addresses with at least 7 other tagged Alameda Research addresses.
This process can apply to any address; the use case can be finding a relationship between a set of selected addresses, and identifying address groups, even sometimes, you can use this tool to find the addresses you already forgot.
This indicates that within Alameda there is no difference between SBF and the company. SBF controls Alameda’s funds and account to do what it wants.
By monitoring the chain data, it is possible to spot early warning signs and keep your funds safe, no matter which CEX or DEX you use. In the case of FTX, several key indicators pointed to a loss of confidence in the platform and insiders scrambling to get funds out.
Use on-chain data to track and keep your assets safe
FTX has invested in more than 57 projects in 187 investments. You can check the specific projects in the dashboard below.
Some critical indicators to monitor your signs include:
Monitor funds from other CEX wallet addresses
In a tweet on November 9, CZ said all cryptocurrency trading platforms must do Merkle Tree proof of reserve. Banks operate on fractional reserves. Binance will soon start doing proof of reserves, with full transparency. Several exchanges have since published the addresses of their corresponding reserve wallets.
Footprint has built some dashboards according to the announced wallet addresses by FTX and Binance. You can also check the reverse on the addresses announced by different exchanges.
Users can also enter selected addresses to monitor the following changes in the wallet:
Token balance spread24H net flowWallet daily net flow and daily balance
And with the upcoming SQL API supported by Footprint, everyone can customize their own wallet trackers on their websites.
Groups of addresses under the same entity to track related transactions are also available on 0xScope’s Watchers. 0xScope has tagged several addresses that include KuCoin, Binance, Gate, OKex, MEXC, Kraken, Huobi, Circle & FTX, Alameda, etc., and connects them with clustering entities to show the overall picture of how money flows through different stakeholders. Users can also access custom dashboards to monitor and analyze the unusual fluctuations in the market and set a reminder or alert.
This piece was contributed by Footprint Analytics and 0xScope Community in Nov 2022 by Sabrina
Data Source: Footprint Analytics Dashboards
The Footprint Community is a place where data and crypto enthusiasts worldwide help each other to understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the new world of blockchain. Here you will find active, diverse voices supporting each other and driving the community forward.
0xScope is the first Web3 Knowledge Graph Protocol. It solves the problem of Web3 data analyzing addresses instead of actual users by establishing a new identity standard —— the new Scope Entity from the data layer. And it unifies the standards of different types of Web2 data and Web3 data by using its knowledge graph capability, which greatly reduces the difficulty of data acquisition and improves data penetration ability.
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