Usually, winters are known for their extreme climate. The crypto winter is no different but relentless and ruthless. Quite interestingly, the core of the problem was illiquidity. For example, 3AC had an illiquidity problem, and so did Voyager. Now Alameda joins the long list! But each of these situations badly affected the crypto space as a whole and was responsible for landslide moves in Bitcoin and alts. 

The community is now worried for the titans - FTX and Alameda. The concerns that FTX and Alameda may go under because of liquidity issues and insolvency are alarming. 

Alameda Research is in alarming straits, and the platform has undertaken a few risky moves. There are fears of insolvency as most of its assets are illiquid. Even worse is that the lion's share of the assets is in FTT.

Alameda research (as of June 30) has $14.6 billion in assets and $8 billion in liabilities. The assets included:

• $3.66B of unlocked FTT tokens

• $3.37B of "crypto held"

• $2.16B of FTT collaterals

The assets also include considerable amounts of SOL (SBF was an early investor in Solana):

• $292M of unlocked SOL

• $863M of locked SOL

• $41M of SOL collateral

It means around $250 million worth of Solana can end up in the market, intensifying the sell pressure.

Other tokens include MAPS, OXY, FIDA, and SRM from the Bankman Fried co-founded Serum decentralized exchange).

Over $7.4 billion in loans make up most of Alameda's liabilities, which total around $8 billion. $292 million of it is locked FTT. Alameda also has a $2 billion "investment in equity securities" and $134 million in cash and equivalents.

The $2 billion in equity securities might be equity in FTX and likely some of the crypto firms that Alameda has invested. It could be the go-to liquidity when the situation goes out of control.

The illiquid asset held by FTX and Alameda warrants the concern of whether the company's foundation is sound. It is hard to sell illiquid assets due to the lack of speculators and buyers. It could potentially lead to insolvency if not handled correctly.

Besides the illiquid assets that raise eyebrows, the company holds most of these assets in altcoins. These illiquid altcoins are even more risky and volatile.

FTX, an exchange, and Alameda Research, a trading company, are the two primary components of cryptocurrency tycoon Sam Bankman Fried's empire. Both companies are titans in their respective fields.

Alameda rests on a foundation that is not an independent asset like a fiat or a detached crypto but rather a coin its sister company created.

Clearly, Alameda Research has immense exposure to FTX, and it financially benefits from the fees at FTX (These fees go into buying and burning FTT tokens).

The FTT token on Alameda's balance sheet is nearly one-third of the company's total assets and 88% of its net equity. The bulk of the net equity in Alameda is just FTT, which is centralized, and printed out of thin air.

1. The biggest asset is $3.66 billion of unlocked FTT.

2. The third-largest is a $2.16 billion pile of FTT collateral.

3. $292 million of its $8 billion of liabilities is also FTT.

4. Some portion of $2 billion in equity securities may be its ownership in FTX.

The total reported Alameda assets amount to $5.82B of FTT. And according to CoinGecko, FTT's current market cap is $2.9B, which is only half of what Alameda owns. The company has more than 180% of the total circulating supply of the token. Absurd right?

Binance used to hold a minority stake in FTX. And the exchange received $2.1 billion in FTT and Binance USD when it exited the investment last year.

CZ, the CEO of Binance, announced its total exit from its FTT holdings. CZ confirmed a transfer of nearly $584 Million worth of FTT tokens to Binance as part of the liquidation process. It is equivalent to 17% of the circulating supply of FTT.

https://twitter.com/cz_binance/status/1589329217874931712?s=20&t=YroA2L-X1VshD2VIjwbpEA

The sale could impact the loans backed by the FTT token. But CZ revealed that he would liquidate FTT gradually to lessen the impact on the market.

Moreover, he emphasizes that this is not an attempt to harm FTX. CZ clarified that the action is only post-exit risk management, citing the LUNA token experience.

Alameda CEO Caroline Ellison shot back at CZ by tweeting the hedge fund could buy all $584M FTT at $22 each. Sam Bankman-Fried insists that he respects what CZ has given to the crypto sphere. He believes industry leaders should focus on building blockchain rather than going to war.

https://twitter.com/carolinecapital/status/1589287457975304193?s=20&t=ZvdusDGVmD2A7me4_-OURg

The two cryptocurrency goliaths, FTX and Binance, have the whole cryptocurrency community on edge. However, CZ and SBF are attempting to downplay the issue.

However, the FTX token has not been left unfazed. It came under additional pressure after CZ tweeted the selloff.

Amid the back-and-forth Twitter exchange, speculation regarding the FTT token caused extreme price volatility.

It is clear that once the $22 mark of FTT breaks down, there is nothing SBF can do to prevent a total catastrophe. 

FTX had to sell most of its SOL and ETH holdings to create a buy wall for FTT. It reminds us of Do Kwon selling everything to save his brainchild - UST. If not for the history that repeats itself, SBF is sacrificing SRM and SOL to help FTT. 

The interesting question is, what should you not buy at this point?

1. Stay away from centralized exchange tokens. Yes, BNB can be an exception because of BNB Smart Chain. Centralized exchanges tend to mint tokens out of the blue, collateralize it, borrow against it, and over-leverage, resulting in a big collapse.

2. Derivatives kill the product. Adding too many derivatives caused a lot of trouble for Luna. At some point, people staked UST, borrowed aUST, minted pLUNA, borrowed against and minted some other UST, and so on. It creates systemic risks that are unavoidable. Essentially, when the coin has too many derivatives, rethink investment. 

3. Tokenomics matter. In the bull market, we saw a lot of projects launching with extreme pump-nomics. That means a low initial circulating supply (10% of the total) with heavy vesting over a year. Since the cliff and vesting rounds are almost ready for many projects, we will see a further bloodbath. 

4. Projects with a market cap above 100 million and an FDV of 500 million shall be considered risky. Check whether the project has a working product and whether people are using the product. Also, find out whether the startup behind the project is making revenue. If NO is the answer, then there is no point in holding the token.

Let's take the example of Syscoin (https://www.coingecko.com/en/coins/syscoin). It is an old Bitcoin fork and currently has little to no relevance. It has a market cap of 100 million and is making no revenue to sustain the valuation. It makes you realize that the number of overleveraged hands and overvalued projects are surprisingly high. Treat each project as a startup and ask these questions to your HODL bag. 

The concept of liquidity is also crucial. When the project does not have enough trading volume, it is easy to manipulate the prices. The bets on such low-volume projects shall be risk-managed. Shrink your investments in favor of long-term holds. 

Let’s not forget that the macro doesn't look good. We appreciate the recent pump, thanks to the upcoming mid-term elections in the US and positive news from web2 companies. But CPI data is due on the 10th, and that could kickstart another leg of the bear market. 

So, invest wisely, and invest with a purpose.

Usually, winters are known for their extreme climate. The crypto winter is no different but relentless and ruthless. Quite interestingly, the core of the problem was illiquidity. For example, 3AC had an illiquidity problem, and so did Voyager. Now Alameda joins the long list! But each of these situations badly affected the crypto space as a whole and was responsible for landslide moves in Bitcoin and alts. 

The community is now worried for the titans - FTX and Alameda. The concerns that FTX and Alameda may go under because of liquidity issues and insolvency are alarming. 

Alameda Research is in alarming straits, and the platform has undertaken a few risky moves. There are fears of insolvency as most of its assets are illiquid. Even worse is that the lion's share of the assets is in FTT.

Alameda research (as of June 30) has $14.6 billion in assets and $8 billion in liabilities. The assets included:

• $3.66B of unlocked FTT tokens

• $3.37B of "crypto held"

• $2.16B of FTT collaterals

The assets also include considerable amounts of SOL (SBF was an early investor in Solana):

• $292M of unlocked SOL

• $863M of locked SOL

• $41M of SOL collateral

It means around $250 million worth of Solana can end up in the market, intensifying the sell pressure.

Other tokens include MAPS, OXY, FIDA, and SRM from the Bankman Fried co-founded Serum decentralized exchange).

Over $7.4 billion in loans make up most of Alameda's liabilities, which total around $8 billion. $292 million of it is locked FTT. Alameda also has a $2 billion "investment in equity securities" and $134 million in cash and equivalents.

The $2 billion in equity securities might be equity in FTX and likely some of the crypto firms that Alameda has invested. It could be the go-to liquidity when the situation goes out of control.

The illiquid asset held by FTX and Alameda warrants the concern of whether the company's foundation is sound. It is hard to sell illiquid assets due to the lack of speculators and buyers. It could potentially lead to insolvency if not handled correctly.

Besides the illiquid assets that raise eyebrows, the company holds most of these assets in altcoins. These illiquid altcoins are even more risky and volatile.

FTX, an exchange, and Alameda Research, a trading company, are the two primary components of cryptocurrency tycoon Sam Bankman Fried's empire. Both companies are titans in their respective fields.

Alameda rests on a foundation that is not an independent asset like a fiat or a detached crypto but rather a coin its sister company created.

Clearly, Alameda Research has immense exposure to FTX, and it financially benefits from the fees at FTX (These fees go into buying and burning FTT tokens).

The FTT token on Alameda's balance sheet is nearly one-third of the company's total assets and 88% of its net equity. The bulk of the net equity in Alameda is just FTT, which is centralized, and printed out of thin air.

1. The biggest asset is $3.66 billion of unlocked FTT.

2. The third-largest is a $2.16 billion pile of FTT collateral.

3. $292 million of its $8 billion of liabilities is also FTT.

4. Some portion of $2 billion in equity securities may be its ownership in FTX.

The total reported Alameda assets amount to $5.82B of FTT. And according to CoinGecko, FTT's current market cap is $2.9B, which is only half of what Alameda owns. The company has more than 180% of the total circulating supply of the token. Absurd right?

Binance used to hold a minority stake in FTX. And the exchange received $2.1 billion in FTT and Binance USD when it exited the investment last year.

CZ, the CEO of Binance, announced its total exit from its FTT holdings. CZ confirmed a transfer of nearly $584 Million worth of FTT tokens to Binance as part of the liquidation process. It is equivalent to 17% of the circulating supply of FTT.

https://twitter.com/cz_binance/status/1589329217874931712?s=20&t=YroA2L-X1VshD2VIjwbpEA

The sale could impact the loans backed by the FTT token. But CZ revealed that he would liquidate FTT gradually to lessen the impact on the market.

Moreover, he emphasizes that this is not an attempt to harm FTX. CZ clarified that the action is only post-exit risk management, citing the LUNA token experience.

Alameda CEO Caroline Ellison shot back at CZ by tweeting the hedge fund could buy all $584M FTT at $22 each. Sam Bankman-Fried insists that he respects what CZ has given to the crypto sphere. He believes industry leaders should focus on building blockchain rather than going to war.

https://twitter.com/carolinecapital/status/1589287457975304193?s=20&t=ZvdusDGVmD2A7me4_-OURg

The two cryptocurrency goliaths, FTX and Binance, have the whole cryptocurrency community on edge. However, CZ and SBF are attempting to downplay the issue.

However, the FTX token has not been left unfazed. It came under additional pressure after CZ tweeted the selloff.

Amid the back-and-forth Twitter exchange, speculation regarding the FTT token caused extreme price volatility.

It is clear that once the $22 mark of FTT breaks down, there is nothing SBF can do to prevent a total catastrophe. 

FTX had to sell most of its SOL and ETH holdings to create a buy wall for FTT. It reminds us of Do Kwon selling everything to save his brainchild - UST. If not for the history that repeats itself, SBF is sacrificing SRM and SOL to help FTT. 

The interesting question is, what should you not buy at this point?

1. Stay away from centralized exchange tokens. Yes, BNB can be an exception because of BNB Smart Chain. Centralized exchanges tend to mint tokens out of the blue, collateralize it, borrow against it, and over-leverage, resulting in a big collapse.

2. Derivatives kill the product. Adding too many derivatives caused a lot of trouble for Luna. At some point, people staked UST, borrowed aUST, minted pLUNA, borrowed against and minted some other UST, and so on. It creates systemic risks that are unavoidable. Essentially, when the coin has too many derivatives, rethink investment. 

3. Tokenomics matter. In the bull market, we saw a lot of projects launching with extreme pump-nomics. That means a low initial circulating supply (10% of the total) with heavy vesting over a year. Since the cliff and vesting rounds are almost ready for many projects, we will see a further bloodbath. 

4. Projects with a market cap above 100 million and an FDV of 500 million shall be considered risky. Check whether the project has a working product and whether people are using the product. Also, find out whether the startup behind the project is making revenue. If NO is the answer, then there is no point in holding the token.

Let's take the example of Syscoin (https://www.coingecko.com/en/coins/syscoin). It is an old Bitcoin fork and currently has little to no relevance. It has a market cap of 100 million and is making no revenue to sustain the valuation. It makes you realize that the number of overleveraged hands and overvalued projects are surprisingly high. Treat each project as a startup and ask these questions to your HODL bag. 

The concept of liquidity is also crucial. When the project does not have enough trading volume, it is easy to manipulate the prices. The bets on such low-volume projects shall be risk-managed. Shrink your investments in favor of long-term holds. 

Let’s not forget that the macro doesn't look good. We appreciate the recent pump, thanks to the upcoming mid-term elections in the US and positive news from web2 companies. But CPI data is due on the 10th, and that could kickstart another leg of the bear market. 

So, invest wisely, and invest with a purpose.