On Friday, Sam Bankman-Fried’s bankrupt trading company Alameda Research deposited over $30 million into Binance.
Given that Bankman-Fried is currently serving a 25-year prison sentence for orchestrating fraudulent schemes at FTX related to Alameda Research, the transfer immediately raised questions about Alameda’s assets.
Specifically why, if almost all of these bankruptcy estate assets are supposed to be returned to victims of Bankman-Fried’s schemes, does it have any money left?
Unfortunately, the finances of FTX and its sister trading company have been a mess since the conglomerate filed for bankruptcy in November 2022.
As a result, figuring out how much money FTX and Alameda Research still leads to a bit of a rabbit hole.
A bankruptcy mess worse than Enron
John J. Ray III, who cleaned up the mess of Enron and other massive bankruptcies like Nortel Networks, described the state of accounting at FTX as far worse.
Executives like Bankman-Fried kept loose and incomplete records about numerous transfers between FTX, Alameda Research, affiliated companies, and workers.
FTX once held FTT tokens worth over $20 billion, but it now holds less than $250 million. Bankman-Fried also repeatedly borrowed from non-consenting FTX customers to fund Alameda Research’s trades.
For context, from a peak value of over $64 billion, according to estimates by Arkham Intelligence, FTX’s wallets excluding Alameda today are worth less than $600 million.
Separately, Alameda Research’s crypto wallets hold $1.2 billion worth of digital assets — most of which comprises about $1 billion worth of solana (SOL).
However, Alameda’s large SOL holdings are not the denomination of Friday’s curious transfer.
Instead, a bitcoin (BTC) address controlled by Alameda and labeled “WBTC Merchant Deposit” received and immediately sent 250 BTC worth about $30 million to Binance.
Although the dollar amount is substantial, movements from FTX and Alameda Research aren’t uncommon. This year alone, there have been dozens of transfers from FTX and Alameda Research wallets.
Two obvious explanations for Alameda Research transfers
First of all, FTX is actively making repayments to victims.
Indeed, this year alone, billions of dollars worth of repayments occurred in April, May, and September, including repayments to victims through exchanges like Kraken and Bitgo.
Per claimants’ instructions, conversions through exchanges like Binance or elsewhere are needed to pay USD equivalent amounts as of the bankruptcy filing date.
Importantly, recipients are located in various countries around the world, and Binance is often the largest exchange in many international jurisdictions.
Read more: What did Alameda Research do with $40B in USDT?
Secondly, the FTX bankruptcy estate is incurring substantial legal fees. Conversion of digital assets through exchanges are necessary to make payouts to various lawyers and contractors assisting with the bankruptcy proceedings.
Post-bankruptcy, the FTX bankruptcy estate has held more than $16 billion worth of assets.
After substantial legal fees, billions of dollars worth of repayments to victims, and volatile digital asset prices, Arkham Intelligence estimates $590 million worth of crypto assets held by FTX plus $1.2 billion by Alameda Research.
These digital asset holdings are in addition to cash, real estate, equity investments, and other assets recovered by the bankruptcy team.
