SBF and Caroline Ellison conspired to keep Bitcoin under $20K, but did it work?

1 year ago

On Oct. 11, Caroline Ellison, the erstwhile caput of the now-defunct Alameda Research, informed a U.S. tribunal that she received instructions from FTX's co-founder and CEO, Sam "SBF" Bankman-Fried, to merchantability Bitcoin (BTC) if its terms remained supra $20,000.

This admittance came arsenic a daze to the full crypto industry, but the 2 conspiring to suppress BTC price, versus really doing it are 2 antithetic things.

While determination are nary details disposable regarding the size and timing of these trades, the timeframe apt falls wrong September and October 2022, conscionable weeks earlier Alameda and FTX collapsed.

Determining whether Alameda efficaciously acted to suppress Bitcoin's terms beneath $20,000, arsenic alleged by immoderate analysts and traders is challenging, if not impossible. Nevertheless, it is imaginable to measure the value of FTX's Bitcoin holdings successful examination to different exchanges and the full trading volume.

Look astatine the Bitcoin wallets

Currently, the lone reliable publically disposable accusation pertains to the BTC wallets that antecedently constituted the exchange's reserves, amounting to little than 47,000 Bitcoin by September 2022, according to Glassnode data. It's imaginable that Alameda Research held different addresses directly, but fixed the important indebtedness of the trading company, it's improbable they had immoderate liquid reserves.

One should not presume that FTX utilized its full stack of Bitcoin from users since the speech continued processing lawsuit withdrawals until its last time connected Nov. 8, 2022. Moving these assets abruptly would person aroused suspicion, perchance accelerating their insolvency. Nevertheless, it's worthwhile to analyse the value of FTX volumes and holdings.

As of July 2022, FTX reported a spot Bitcoin measurement of $30 billion, equivalent to $1 cardinal per time connected average. However, relying connected these numbers is not advisable, fixed the exchange's past of information manipulation, arsenic demonstrated by their falsified security money calculation methodology.

Assuming the income mentioned by Ellison occurred connected FTX, a 4,000 BTC order, valued astatine $80 cardinal astatine the time, would correspond lone 8% of the exchange's mean regular volume. Furthermore, erstwhile considering the full Bitcoin measurement from large exchanges, Alameda's speculated bid size becomes adjacent much inconsequential.

According to Messari's "real volume" methodology, which excludes lavation trading, the aggregate Bitcoin measurement was beneath $3.5 cardinal per time betwixt September and October 2022. Even if Alameda attempted to merchantability 25% of their 47,000 BTC holdings successful a azygous day, that $240 cardinal would correspond lone 7% of the regular measurement crossed large exchanges.

For comparison, successful April 2022, MicroStrategy announced the acquisition of 4,167 Bitcoins astatine an mean terms of $45,714, totaling $190 million. This apt occurred successful precocious March, with Bitcoin's terms expanding by 6%, from $44,580 to $47,270.

Two notable aspects of the terms enactment during MicroStrategy's acquisition basal out. First, the terms dropped beneath $46,000 connected the aforesaid time arsenic the authoritative announcement connected April 5, 2022. More importantly, the $48,000 highest appears to correspond to the levels wherever MicroStrategy completed its execution, resulting successful the $45,714 mean price.

However, erstwhile examining the broader picture, Bitcoin was trading astir $39,500 successful the 2 weeks starring up to MicroStrategy's enactment and decreased to $39,500 a fewer weeks later. There is nary crushed to judge that a azygous entity could efficaciously suppress the terms for longer than a week, whether it's Tesla unloading $936 cardinal worthy of Bitcoin oregon Alameda liquidating FTX clients' deposits.

To supply immoderate context, Binance held 623,000 Bitcoin successful reserves successful August 2022, portion Coinbase had astir 690,000 BTC. These 2 exchanges combined held astir 28 times much Bitcoin than FTX. This information underscores the constricted interaction of SBF and Caroline's task successful presumption of effectual firepower.

In essence, determination whitethorn person been a fewer days wherever Alameda exerted unit successfully, causing their income to suppress Bitcoin's terms beneath $20,000. However, considering their reserves and the terms enactment of likewise sized orders, the lawsuit was improbable important erstwhile analyzing a play longer than a month.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

View source