Alameda was founded by Bankman-Fried, formerly a trader at Jane Street, and Gary Wang, an engineer who’d previously worked at Google. They found a niche: arbitraging pricing differences in cryptocurrencies in different countries, and soon expanded into a range of quantitative crypto trading strategies.
It seemed highly profitable. Bloomberg in September reported the firm made about $1 billion in 2021. But questions remained about how FTX and Alameda interacted with each other.
FTT Fear
Then Zhao, known as CZ, helped bring about the demise of his chief rival and onetime disciple.
Crypto news site CoinDesk reported on Friday that a token issued by FTX, FTT, made up about a quarter of Alameda’s $14.6 billion in assets. Another item, labeled “FTT collateral,” accounted for $2.16 billion.
Apparently in response to the revelations, Zhao tweeted that his exchange would be liquidating its holdings of FTT. The token’s value has since sunk by about 80%.
As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1/4
— CZ ???? Binance (@cz_binance) November 6, 2022
CZ now looks poised to add FTX to his own empire. He is already the richest person in crypto, with a fortune estimated at $16.4 billion. His net worth peaked at $97 billion in January, according to the Bloomberg wealth index.
Binance’s acquisition doesn’t involve FTX.US, a separate exchange also majority-owned by Bankman-Fried. FTX.US was valued at $8 billion in a January fundraising round.
It’s unclear exactly what the implosion of its international affiliate will have on the U.S.-based exchange, but it shows “how fragile this world is,” said Paul Gulberg, a Bloomberg Intelligence analyst. It’s “very surprising, scary to some extent.”
—With assistance from Nur Dayana Mustak.
This article was provided by Bloomberg News.