Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet

Billionaire Sam Bankman-Fried’s cryptocurrency empire is officially broken into two main parts: FTX (his exchange) and Alameda Research (his trading firm), both giants in their respective industries.

However, despite officially being separate businesses, the division breaks down in a key place: on Alameda’s balance sheet, according to a private financial document reviewed by CoinDesk. (It is conceivable the document represents just part of Alameda.)

That balance sheet is full of FTX – specifically, the FTT token issued by the exchange, which grants holders a discount on trading fees at its marketplace. While there is nothing per se untoward or wrong about that, it shows Bankman-Fried’s trading giant Alameda rests on a foundation largely made up of a coin that a sister company invented, not an independent asset like a fiat currency or another crypto. The situation adds to evidence that the ties between FTX and Alameda are unusually close.

The financials make concrete what industry-watchers already suspect: Alameda is big. As of June 30, the company’s assets amounted to $14.6 billion. Its single biggest asset: $3.66 billion of “unlocked FTT.” The third-largest entry on the assets side of the accounting ledger? A $2.16 billion pile of “FTT collateral.”

There are more FTX tokens among its $8 billion of liabilities (which are dominated by $7.4 billion of loans): $292 million of “locked FTT.”

“It’s fascinating to see that the majority of the net equity in the Alameda business is actually FTX’s own centrally controlled and printed-out-of-thin-air token,” said Cory Klippsten, CEO of investment platform Swan Bitcoin, who is known for his critical views of so-called “alt-coins,” generally taken to mean cryptos other than bitcoin (BTC).

Alameda CEO Caroline Ellison declined to comment. FTX didn't respond to a request for comment.

Other significant assets on the balance sheet include $3.37 billion of “crypto held” and large amounts of the Solana blockchain’s native token: $292 million of “unlocked SOL,” $863 million of “locked SOL” and $41 million of “SOL collateral.” Bankman-Fried was an early investor in Solana. Other tokens mentioned by name are SRM (the token from the Serum decentralized exchange Bankman-Fried co-founded), MAPS, OXY and FIDA. There is also $134 million of cash and equivalents and a $2 billion “investment in equity securities.”

Also, token values may be low. In a footnote, Alameda says “locked tokens conservatively treated at 50% of fair value marked to FTX/USD order book.”

Owners of the FTT token get discounts on FTX trading fees, increased commissions on referrals and earn rewards. The value of FTT is maintained by FTX’s rolling program of buying back and burning tokens, a process that eats up a third of the exchange’s trading commissions, which will continue until half of all tokens are burned, according to FTX.

There are about 197 million FTT tokens worth $5.1 billion in circulation, according to FTX’s website.

Tracy Wang and Oliver Knight contributed reporting to this story.

UPDATE (Nov. 2, 2022, 15:00 UTC): Adds that Alameda's CEO declined to comment, and a comment from Cory Klippsten.