Blockchain

As October approaches, the crypto community will have their eyes set on the US Securities and Exchange Commission (SEC), as it has some key decisions to make that could invariably affect the crypto industry and everyone in it. 

SEC Appeal Incoming?

The SEC is expected to decide whether or not to appeal the ruling in its case against asset manager Grayscale, with the deadline for an appeal being October 13 (45 days from the court’s ruling). 

On August 29, Grayscale secured a landmark victory against the SEC as the District of Columbia Court of Appeals ruled that the regulator failed to provide a valid reason for denying Grayscale’s application and ordered that the SEC review the application once again. 

Following the decision, a spokesperson for the agency stated that they would review the decision before determining their next steps.

If the SEC chooses to appeal, it can do so at the US Supreme Court by filing a petition for a “writ of certiorari,” which is a document asking the Supreme Court to review the case, or it can ask for an “en banc” review where all the judges of the DC Court of Appeals will further review the case. 

An appeal by the SEC will undoubtedly dampen the mood in the crypto community as it could prolong the wait for a Spot Bitcoin ETF.

However, suppose the Commission chooses not to appeal, it will become law that the spot and futures market are correlated, and the SEC’s argument that the spot market is more susceptible to fraud and manipulation will no longer stick.  

Pending ETF Applications

The second deadline for several pending spot Bitcoin ETF applications is in October. The SEC must decide (approve, deny, or delay) on these applications. Some notable dates include October 16 and 17. The former is the second deadline for a decision on the Bitwise Bitcoin ETP Trust. 

Meanwhile, October 17 is the second deadline for the SEC to decide on the iShares Bitcoin Fund, VanEck Bitcoin Trust, Wisdomtree Bitcoin Trust, Invesco Galaxy Bitcoin ETF, and Wise Origin Bitcoin Trust.

It is expected that the SEC will again choose to delay its decision on these applications, with the next deadline for a decision coming next year.

If the SEC continues to stretch its decision on these applications, the earliest a final response can come is on January 10, 2024, the final deadline for the ARK 21Shares Bitcoin ETF.

There should, however, be some positives to take from October as the SEC is expected to allow the launch of the pending Ethereum futures ETF applications, with Volatility Shares projected to launch theirs on October 12 and others coming subsequently. 

Featured image from Hotcore

In recent weeks, Ethereum (ETH), one of the most valuable assets in the cryptocurrency market, has not enjoyed favorable sentiment due to its struggling price and unstable on-chain performance. The general market condition has not offered much reprieve either, as most altcoins have failed to maintain an upward momentum.  Fortunately, the latest on-chain revelation offers some hope for the price of Ethereum. 

Ethereum Average Fee Drops To Lowest Level In 2023

On-chain analytics have been helpful in providing real-time insights into crypto market trends. And the latest on-chain revelations have highlighted a plunge in Ethereum network fees, which might prove to be a turning point for the cryptocurrency’s market value and performance.

According to the on-chain analytics platform, Santiment, the Ethereum network fees have dropped to their lowest levels in 2023, with each transaction averaging about $1.15 as of this writing. This reflects a significant fall from the huge fees seen in 2021 and 2022, with demand for processing power causing the average fees to reach above $50.

Historically, such a decline in fees is a positive sign for Ethereum’s utility and adoption, as lower costs make it more profitable and worthwhile to use the network. Santiment also noted that rising utility is often the case due to Ether tokens becoming more affordable to circulate.

It is worth noting that the impact of this development can spread to the overall market value of the digital asset. Increased utility and adoption can contribute to the recovery of Ethereum’s market capitalization and value. 

The Effect On ETH Price?

Indeed, the plunging network fees positively benefit Ethereum and its users, especially as it can improve other network metrics and parameters. However, this development has not significantly impacted ETH price, as it seems to be struggling to break out from under the current selling pressure.

On Thursday, September 21, the cryptocurrency fell beneath the psychological $1,600 level for the second time this month. And the Ether token continues to trade below this price mark, with a roughly 2.6% decline in the past three days.

Investors will be watching to see if Ethereum can build positive network momentum while fees are low. However, it remains to be seen whether this will be enough to propel the ETH price out of consolidation, especially as there are no signs of buying pressure from Ethereum whales.

There are no signs of buying pressure from #Ethereum whales yet! pic.twitter.com/oqBbdbaOlb

— Ali (@ali_charts) September 21, 2023

Moreover, the dwindling number of major ETH holders adds zero optimism to this scenario. This is because such a decline in whale holdings can make the Ethereum price increasingly susceptible to downward pressure.

According to CoinGecko data, the Ether token trades for $1,593, reflecting a 2.6% price dip in the past week. Ethereum is currently the second-largest cryptocurrency, with a market capitalization of $191.6 billion.

Polkadot (DOT) is making strategic moves to propel its development forward as bearish market conditions continue to cast a shadow over the crypto landscape. In recent weeks, the network has shifted its focus away from speculation, opting instead to double down on its commitment to technological advancement. 

This move was evident in the multiple presentations it delivered, shedding light on its ongoing efforts and its ambitious goal of achieving 1,000 parachains.

A Paradigm Shift In Polkadot’s Strategy

In a landscape where various blockchain networks are fiercely vying for cross-chain dominance, Polkadot is emerging as a formidable contender. The Sub0 developer conference served as a platform for the network, reaffirming Polkadot’s commitment to cross-chain integration and the immense potential it holds.

GM diligent #Web3 BUIDLers & #crypto degens!
#Polkadot is aiming for the stars !!
Announced at #sub0, developers are introducing updates to support 1,000 #parachains, a tenfold increase!
“Asynchronous backing” will halve block time & augment block space, paving the… pic.twitter.com/74YZv8pcwS

— Orbiter One (@OrbiterOne) September 22, 2023

The implications of this move are profound. Polkadot envisions a future where parachains, interconnected through its innovative architecture, foster a thriving ecosystem of decentralized applications, each with its unique use cases and communities. This holistic approach to blockchain interoperability opens up vast opportunities for developers and users alike, promising seamless interactions between disparate blockchain ecosystems.

Navigating Choppy Waters: DOT’s Price And Sentiment

DOT price has been navigating choppy waters since February. As of the latest data, DOT is trading at $4.01, according to CoinGecko, with a 24-hour movement of 0.1% and a seven-day decrease of 4.3%. This downtrend has led many to wonder if DOT can regain its bullish momentum in a bearish market.

On-chain data cited in a report suggests a glimmer of hope, indicating a slight improvement in DOT’s weighted sentiment over the last three weeks. This uptick in confidence among traders suggests that some believe in DOT’s potential for an eventual upswing, though it has yet to manifest in price action. 

Looking Ahead: DOT’s Prospects In A Bearish Altcoin Market

As cryptocurrency analyst Benjamin Cowen suggests, altcoins, including DOT, may face challenges throughout the remainder of 2023, a pattern often observed in pre-halving years. Nevertheless, Polkadot’s recently unveiled plans and its unwavering commitment to technological innovation position it favorably for the long run.

The network’s vision of a cross-chain future, with an expanding parachain ecosystem, could serve as a catalyst for renewed investor interest and a potential bullish reversal.

(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).

Featured image from Shutterstock

In a battle to recover billions of dollars following the collapse of FTX, Chief Executive and Restructuring Officer John J. Ray III, is intensifying efforts just weeks before FTX founder Sam Bankman-Fried faces trial in what has been labeled one of the largest financial frauds in American history.

Bankruptcy court proceedings kicked off the week as FTX filed a lawsuit against Bankman-Fried’s parents, Allan Joseph Bankman and Barbara Fried. 

The suit aims to reclaim millions of dollars allegedly fraudulently transferred and misappropriated by the couple, who purportedly took advantage of their access and influence within FTX to enrich themselves at the expense of debtors and creditors.

Continuing the pursuit of recovery, FTX Trading Ltd. subsequently filed a lawsuit on Thursday against four former employees of Alameda Ltd., an FTX affiliate based in Hong Kong. 

The complaint alleges that these employees received $153 million in transfers shortly before the collapse of the crypto trading platform. 

According to Bloomberg, these individuals allegedly leveraged personal connections to prioritize the withdrawal of their funds and digital assets from FTX once it became evident that the company was facing financial turmoil.

FTX CEO Ramps Up Efforts To Reclaim Assets

Per Bloomberg’s report, the bankruptcy proceedings have attracted the attention of outside investors and speculators, including prominent distressed-debt investors like Silver Point Capital, Diameter Capital Partners, and Attestor Capital. 

These entities have seized the opportunity to acquire discounted FTX claims, anticipating that the protracted bankruptcy process will uncover additional valuable assets. 

Court records show that they have already purchased over $250 million worth of FTX debts since the beginning of the year, according to a Bloomberg analysis.

While legal actions are in progress, some funds are being voluntarily returned. Stanford University, where Bankman and Fried held teaching positions and enjoyed reputations as legal scholars, announced its decision to return millions of dollars received from FTX and its associated entities. 

According to court documents, Stanford received gifts totaling approximately $5.5 million from FTX-related entities between November 2021 and May 2022.

Bankman-Fried Family Turns To Risky Strategy

According to a Fortune Magazine report, The Bankman-Fried family has adopted a risky strategy in their legal battle, shifting blame onto prominent law firm Sullivan & Cromwell. 

They argue that the firm failed to act in its best interests, downplaying its involvement in FTX’s downfall. This move aims to establish an “advice of counsel” defense, painting Sam Bankman-Fried as a well-meaning individual who received “poor legal advice”.

Criticism of Sullivan & Cromwell’s substantial legal fees, exceeding $100 million in the FTX bankruptcy case, raises ethical concerns but not necessarily legal wrongdoing. 

Per the report, the family’s strategy may backfire, as it could provide prosecutors with access to new evidence by waiving attorney-client privilege.

Furthermore, the defense’s focus on blaming the law firm invites scrutiny of Bankman-Fried’s father, an active participant in key business decisions. Additionally, Bankman-Fried’s father received $10 million in FTX funds that he has yet to return, potentially for his son’s legal defense.

The Bankman-Fried family’s attempt to discredit Sullivan & Cromwell introduces complexity to the case. However, its effectiveness remains uncertain. As the legal proceedings continue, the implications of these strategies on the case and public perception of the family remain to be seen.

Featured image from Shutterstock, chart from TradingView.com 

CRV, the native currency of Curve Finance, the decentralized exchange focused on stablecoins, is shaking off August’s weakness and printing higher highs when writing on September 22. Trackers reveal that CRV is up 22% in the past two weeks, adding 10% in the last week alone.

Coincidentally, there has been increased activity from a whale moving CRV from Binance, the world’s largest crypto exchange by client count.

Whale Offloads CRV From Binance To Curve Finance

According to The Data Nerd, a tracker, a whale transferred 1.542 million CRV, worth roughly $684,000, from Binance. Afterward, the whale, only identified as “0x171,” added liquidity to Curve Finance.

Over the last week, the whale has been actively supplying liquidity to Curve Finance, providing 5.36 million CRV worth $2.27 million.

CRV is the governance token in CurveDAO, the decentralized autonomous organization (DAO) behind Curve Finance. Since the exchange is decentralized, CRV holders have voting rights. Moreover, they can receive rewards whenever they supply liquidity to any of Curve Finance’s pools. 

Curve Finance used an automated market maker (AMM) model for the trustless swapping of stablecoins, including DAI, USDT, USDC, and other tokens like ETH and wrapped Bitcoin (wBTC). However, to function optimally, Curve Finance relies on liquidity pools where users can supply liquidity and get a share of fees distributed in CRV. 

The withdrawal of coins from Binance to a non-custodial wallet is a vote of confidence for CRV. The token has been free-falling in Q3 2023. To illustrate, CRV crashed by 32% in August alone. 

The draw-down was worsened by the broader contraction in crypto occasioned by waning momentum around the approval of several complex derivatives for Bitcoin and Ethereum. At the same time, regulatory actions, especially from the Securities and Exchange Commission (SEC), significantly impacted sentiment and token prices.

CRV Sold Off After Hack

The free-fall of CRV can be directly pinned to an exploit of multiple Curve Finance liquidity pools in late July 2023. In a re-entrancy attack, a hacker exploited a vulnerability in the older version of a Vyper compiler, draining over $61 million worth of tokens from Curve Finance’s pools.

Through the re-entrancy attack, the hacker could infinitely withdraw deposited tokens from Curve Finance’s pools, resulting in losses.

Curve Finance has since patched the vulnerability, but CRV prices are yet to recover despite the recent pump. Also, its co-founder and CEO, Michael Egorov, had to liquidate a big chunk of CRV that he had used to secure loans on multiple platforms, including Aave. 

By early August, Egorov had sold 106 million CRV via over-the-counter (OTC) trades at a discount to multiple entities. Top buyers included Justin Sun, the co-founder of Tron, who bought 2 million CRV, and Jeffrey Huang, who acquired 3.75 million CRV.

Shiba Inu has seen an impressive recovery in its burn rate after recording a slow start to the week. The recent acceleration could suggest that investors are once again rousing and choosing to actively contribute to the reduction of supply which could lead to an increase in price.

Shiba Inu Burn Rate Rises 627%

Thursday, September 21, has proven to be one of the best weeks for the meme coin in terms of its burn rate. According to Shiba Inu burn tracking website Shibburn, the cryptocurrency saw a 6277% jump in its burn rate in the space of 24 hours.

This acceleration in the burn rate has seen more than 194 million tokens incinerated in the one-day period across multiple transactions. A number of these transactions carried reasonable amounts of tokens in the millions. However, one transaction stands out as the major reason behind the spike in burn rate.

A single transaction was seen carrying over 137 million tokens to the burn addresses. This transaction alone was enough to match the previous day’s figures, and with more contributions from the community, the total tokens burned in the last 24 hours is closing in on 200 million.

The burn rate is also up 31.62% in the last week as well. Shibbrun reports that more than 653 million tokens have been burned in this seven-day period. As of the time of writing, there are 410,659,642,147,703 SHIB tokens sitting in the burn address.

HOURLY SHIB UPDATE$SHIB Price: $0.00000727 (1hr -0.01% ▼ | 24hr -0.37% ▼ )
Market Cap: $4,282,495,643 (-0.34% ▼)
Total Supply: 589,340,357,852,296

TOKENS BURNT
Past 24Hrs: 194,116,333 (627.43% ▲)
Past 7 Days: 653,032,836 (39.5% ▲)

— Shibburn (@shibburn) September 22, 2023

Shibarium Takes Center Stage

The recovery in burn rate could be attributed to the rising interest in the Ethereum Layer 2 blockchain Shibarium. Launched less than a month ago, the blockchain has already marked some impressive milestones since then.

One of the major milestones is the fact that the total transactions on the network have already crossed the 3 million mark. Additionally, wallet addresses on the blockchain crossed 1.25 million with daily transactions sitting above 42,000.

The network has, so far, produced more than 760 blocks while gas fees remain low at 1.55 Gwei. The network also saw a spike in new verified contracts earlier in the week, suggesting that more developers are choosing to build on the network.

Shiba Inu lead marketer Lucie also took to X (formerly Twitter) to urge investors to use decentralized exchanges (DEXes) on the network instead of centralized exchanges. According to her, doing so would help accelerate the SHIB burn since the burns are set per transaction. So a rise in usage and transactions would translate to more tokens being burned.

In a notable discovery, Arkham Intel, a leading blockchain intelligence platform, has identified $25 billion worth of Bitcoin (BTC) reserves held by Coinbase, the prominent US-based cryptocurrency exchange. 

This revelation puts Coinbase at the forefront of the Bitcoin landscape, positioning it as the largest Bitcoin entity in the world alongside the enigmatic Satoshi Nakamoto. The uncovered reserves amount to nearly 5% of the total Bitcoin supply.

Coinbase Emerges As Top Bitcoin Holder

Arkham Intel’s comprehensive analysis has successfully tagged over 36 million Bitcoin deposits and holding addresses associated with Coinbase. Remarkably, Coinbase’s largest cold wallet alone contains around 10,000 BTC, serving as a testament to the scale of their holdings.

However, Arkham Intel suggests that Coinbase’s actual Bitcoin reserves may extend beyond the identified addresses. Based on Coinbase’s recent financial reports, it is highly likely that the exchange possesses thousands more BTC that have yet to be tracked and labeled.

Moreover, Arkham Intel’s platform reveals that Coinbase holds substantial amounts of other cryptocurrencies beyond Bitcoin. 

The US-based exchange is reported to possess approximately 1.68 million ETH (Ethereum) valued at around $2.69 billion. Additionally, Coinbase holds 68.59 million LINK (Chainlink) tokens, estimated at $471 million. 

The stablecoin USDC (USD Coin), pegged 1:1 to the US dollar, is also part of Coinbase’s portfolio, with holdings totaling 222 million USDC. Lastly, Coinbase holds a 921,000 BNB (Binance Coin) valued at approximately $194 million.

Base Emerges As Top Contender Surpassing Solana In TVL Rankings

In a noteworthy development for the exchange and its new Layer-2 (L2) blockchain, Base has emerged as a formidable contender, surpassing Solana in terms of Total Value Locked (TVL). 

According to the latest statistics from Defillama, Base, Coinbase’s L2 solution boasts a TVL of $370 million, surpassing Solana’s $310 million. This achievement signifies an important milestone for Base, highlighting its growing prominence and influence in the industry.

Notably, Base’s TVL positions it ahead of prominent blockchains such as Cronos, Kava, Defichain, Bitcoin, Fusion, Pulsechain, and Cardano. With its current TVL, Base accounts for approximately 0.96% of the overall $38.14 billion TVL in the DeFi space.

Base has secured its place among the top protocols regarding TVL, ranking just behind Mixin, Polygon, Avalanche, Optimism, Arbitrum, BSC, Tron, and Ethereum. This accomplishment highlights the growing prominence of Coinbase’s L2 blockchain within the DeFi landscape.

Data from Dune Analytics reveals that since its L2 launch, Base has successfully bridged a total value of $426.81 million. Of this, 54.4% or $232.19 million comprises 143,467 ether, demonstrating strong support and adoption from the Ethereum community. Additionally, approximately 27.2% of the bridged assets to Base consist of 115,993,548 USDC stablecoins.

However, it is not all good news for the firm. Coinbase stocks, traded under the name COIN, are experiencing a significant decline that has been ongoing since July 20. 

The stocks have declined from the $111 level, followed by the lawsuit filed by the US Securities and Exchange Commission (SEC) against the firm and Binance. Presently, the exchange’s stocks are trading at $71.78.

Featured image from iStock, chart from TradingView.com 

Polkadot, a platform aiming to drive blockchain interoperability, wants to increase the number of parachains from 100 to 1,000 in a planned upgrade. The network, which remains one of the most valuable by market cap, has, like most layer 1 networks, suffered from dropping user activity over the past months. 

DOT Is Down Over 90%

The dip follows the crypto winter in 2022. However, the upcoming upgrade might catalyze demand, even supporting DOT, the native currency.

DOT is changing hands at $4 at spot rates, down by over 90% when prices soared to as high as $55 in the last bull market. Even though the contraction has significantly impacted prices, other altcoins, including Solana and Algorand, suffered the same fate. 

Even so, with the Asynchronous backing update, whether DOT will find support is yet to be seen. The reveal on September 21 didn’t move DOT, and the coin is edging lower, towards 2023 lows.

Polkadot developers are now setting their eyes on Asynchronous backing. Sophia Gold, the Engineering Lead at Parity Technologies, said the update is “the most significant evolution of parachain consensus since we launched parachains almost two years ago.”

Their goal is to increase the number of parachains to 1,000 by the end of 2024, effectively boosting the network’s transaction processing speeds to over 1 million.

Asynchronous backing enables flexible scheduling for our future scaling work through elastic scaling and instantaneous core time. We have a credible roadmap to get Polkadot to support 1,000 parachains and 1m+ transactions per second. The design is there – we know how to scale Polkadot for the indefinite future.

The Asynchronous Backing: What It Means For Polkadot

With this update, Polkadot is introducing a feature called “pipelining.” This means multiple parachain blocks can be processed simultaneously instead of waiting for one block to be fully validated and included on the relay chain before moving on to the next one. 

Accordingly, Polkadot would process more transactions every second at any instance, effectively scaling the network without relying on layer-2 solutions common in Ethereum or Bitcoin, for example. Since “pipelining” will enhance throughput, Polkadot will have a higher capacity. For this reason, the developer plans to half blockchain validation time from 12 to 6 seconds. 

A key feature about Asynchronous backing is that any parachain block that fails to be added to the “relay chain” on the first attempt can be reused. Developers note that this will significantly improve network efficiency due to reduced wastage.

It is the combination of pipelining and reusing of parachain blocks that Polkadot developers say opens the door for the number of Parachains to be increased from the current 100 to 1,000. With enhanced on-chain scalability, running more parachains can be more feasible.

Recently, Binance, one of the world’s leading crypto exchanges, witnessed an unusual pattern of withdrawals. Particularly, 4.7 million LINK tokens, equivalent to roughly $31.58 million, were suddenly withdrawn over a brief period by 81 newly minted wallets.

 The event is noteworthy due to the large number of tokens moved and the swift, simultaneous action across newly created accounts. This pattern of withdrawals raises questions about the strategies and intentions behind these movements and what they could spell for the token, LINK.

A Timeline Of The Puzzling LINK Withdrawals

On September 18, 2023, Lookonchain, an on-chain analytics platform, identified a bizarre spree of LINK withdrawals. Initially, the observation was limited to approximately 35 new wallets on Binance that had extracted 755,687 LINK, valued at roughly $5.08 million.

However, in just a day, the number of LINK tokens and the participating wallets increased, culminating in 81 wallets drawing out 4.7 million tokens.

It is worth noting that for those who follow the pulse of the cryptocurrency market, such huge withdrawals, especially from new wallets, don’t go unnoticed and could hint at the beginning of a bullish trend. 

There are a total of 81 fresh wallets created on Sept 15 started withdrawing $LINK from #Binance on Sept 18.

And these wallets have withdrawn a total of 4.7M $LINK ($31.58M) from #Binance so far.

Details: https://t.co/hSdkoncNgZhttps://t.co/AzUM8VleQQ pic.twitter.com/4IxdSHtv6C

— Lookonchain (@lookonchain) September 22, 2023

The details were further elaborated in a Google document shared by Lookonchain, which itemized every transaction, breaking down the amount of tokens withdrawn and their equivalent value in US dollars.

Among these transactions, the most substantial withdrawal saw a single wallet moving 280,567.67 LINK, translating to $1.88 million—moreover, four of these accounts extracted over 200,000 tokens over the monitored period. The list also highlighted that all the wallets had withdrawn only 5,000 LINK tokens.

Decoding The Implications For Chainlink

Given the sequence of events, Lookonchain hypothesized that there might be an ongoing whale accumulation. To Clarify, ‘whale accumulation’ refers to large-volume holders or “whales” acquiring a significant amount of cryptocurrency, typically indicative of their bullish sentiment.

However, it’s essential to approach such hypotheses with a balanced perspective. While the intent behind these transactions remains elusive, the broader implications for Chainlink and its native token, LINK cannot be ignored.

Such movements could influence market sentiment, either buoying confidence among potential investors or creating cautionary tales for the more risk-averse. But as with all crypto dynamics, one event seldom dictates the long-term trajectory. 

Meanwhile, LINK currently trades for $6.74 at the time of writing. The asset has been up by nearly 10% in the past week and currently has a market cap of $3.7 billion and a 24-hour trading volume of $146.8 million.

Featured image from iStock, Chart from TradingView

Bitcoin is known to be a very volatile digital asset as its price is often wont to rise and fall unexpectedly, and sometimes without a clear reason. One of these instances of the digital asset flash-crashing was back in 2021 when the price of Bitcoin had fallen 87% on some exchanges in a matter of minutes. However, the mystery behind this flash crash has been unveiled two years after it first occurred.

Former Alameda Research Engineer Spills Secret

Alameda Research is the sister company of the now-defunct FTX crypto exchange run by Caroline Ellison who served as CEO until it collapsed. Following the bankruptcy, employees at the trading firm have, at various times, come forward to tell stories of what took place at the company. This time around, an ex-engineer Aditya Baradwaj is telling the story of how a simple mistake caused the company to lose tens of millions of dollars.

Baradwaj took to his X (formerly Twitter) account to reveal how an Alameda employee had unwittingly triggered a Bitcoin flash crash in 2021. According to him, the error was a result of two trading systems operated at the company.

PART 2: THE FAT-FINGER

or

The story of how a misplaced decimal point at Alameda Research caused a market crash that echoed around the world.

(1/n) #SBF #FTX pic.twitter.com/jCykh6rg1o

— Adi (e/acc) (@aditya_baradwaj) September 20, 2023

The ex-engineer explained that Alameda had semi-systemic strategies in which a complex automated trading system was controlled by model parameters set by traders. The second was manual trading which would be done when the former could not execute a trade due to a number of reasons.

In the case of the trader who triggered the flash crash, they had to manually enter a trade to sell a large tranche of BTC using Alameda’s manual trading system. However, the trader had failed to realize that the decimal point in the trade was off by a couple of spaces, which meant that they were selling the BTC at much lower prices than the current price.

The result of this simple error was Alameda selling off a sizable portion of BTC at pennies on the dollar which resulted in a flash crash on multiple exchanges. The crash was most prominent on the FTX and Binance exchanges, where prices fell from $65,000 to $8,000 in a matter of minutes.

Covering Up The Bitcoin Crash

The aftermath of the flash crash, according to the ex-engineer, involved Alameda rushing to put in place sanity checks that should have been available before any manual trades were executed. He notes that this was not out of the ordinary as they were always waiting for things to break before fixing them at the company.

“That’s usually how things worked at Alameda – we would wait until something broke, and then rush to fix it,” he said. Baradwaj also referred to FTX founder Sam Bankman-Fried saying that the utility gained after the events outweighed the costs incurred from poor risk checks and hacks.

He also pointed to Binance commenting on the flash crash with a statement that blamed a bug in the trading algorithm of one of their institutional traders. “I guess Caroline had made some phone calls,” Baradwaj said, referring to Alameda’s CEO.