Rapid Insights: Analyzing the Bank Run on FTX - UPDATED

Over the past few days, rumors started spreading regarding FTX’s solvency leading to concerns and panic among both retail and institutional investors. A quick timeline summary can be found below:   

The liquidity concerns stemmed from a CoinDesk report on Alameda Research’s large exposure to FTX’s native token (FTT) and Solana (SOL),  and a host of other highly illiquid assets on its balance sheet. Moreover, the leaked balance sheet was dated June 30, 2022, which, if true, could imply that Alameda’s holdings have taken a further hit before CoinDesk’s coverage. Naturally, this would cause uncertainty given that Alameda has been an integral entity in the crypto space. More specifically, Alameda had used FTT as collateral to borrow additional funds and if Alameda is unable to quickly call upon the capital for its various market strategies, it could cause a market turmoil that would negatively affect numerous parties in the crypto space.