Bankrupt FTX Sends Thousands and thousands in Stablecoins to Market Makers: Liquidity Play or Arbitrage?

• FTX transferred 105K USDC tokens to Wintermute by way of the Polygon community.
• Alameda Analysis transferred 2.3 million DAI to Wintermute by way of Avalanche.
• 47K DAI had been despatched to market maker Cumberland by Alameda Analysis.

Bankrupt crypto alternate FTX and its affiliated buying and selling agency Alameda Analysis have transferred $2.5 million in stablecoins to crypto market makers Wintermute and Cumberland. Blockchain safety platform PeckShield recognized the transfers, which had been executed utilizing 4 totally different addresses and three blockchain networks.

In a put up on X (previously Twitter), PeckShield said that FTX and Alameda transferred 2.5 million DAI and USDC to the market makers. Particularly, an Alameda pockets transferred 2.3 million DAI to Wintermute by way of the Avalanche community, whereas one other Alameda pockets despatched 47,000 DAI to Cumberland by way of the Ethereum community.

Moreover, FTX transferred 94,000 USDC to Wintermute by way of the Polygon community, and one other switch of 11,000 USDC was made utilizing the identical community. These stablecoin transfers might have been meant to supply liquidity. Giant market makers like Wintermute and Cumberland help buying and selling quantity by rising liquidity within the markets. Entities can enter into agreements with Wintermute to supply liquidity and share within the revenue that these platforms earn from market making.

Additional, by sending stablecoins to those market-making platforms, FTX and Alameda can doubtlessly take part in arbitrage methods. Wintermute makes use of these stablecoins to benefit from value discrepancies throughout totally different exchanges, and the ensuing earnings are shared with the stablecoin suppliers. Market makers actively purchase and promote to make sure value stability and slender spreads.

Whereas the rationale for sending the stablecoins stays unclear, FTX and Alameda have been actively offloading property to repay their collectors. As beforehand reported, FTX has recovered near $7.3 billion in liquid property, together with round $1.2 billion in money. The bankrupt agency is about to start repaying collectors and clients in money, not crypto, primarily based on the worth of their holdings in 2022, when the alternate collapsed.The $7.3 billion was recovered by way of the sale of stake in synthetic intelligence startups, in Robinhood, and the sale of Sam Bankman-Fried’s Bahamas penthouse, amongst different property. Sam Bankman-Fried (SBF) is presently incarcerated, serving a 25-year sentence.