Sam Bankman-Fried has received a lot of attention recently. He is a former trader turned crypto entrepreneur who controls FTX, one of the major crypto exchanges, as well as Alameda Research, one of the top crypto trading organizations. Prior to its insolvency,&nbsp; FTX has spent millions of dollars in recent months on naming rights to the Miami Heat's arena, big ad campaigns, and signing Tom Brady (and giving him shares in the company) to be the exchange's face. Simultaneously, SBF has spent millions of dollars pushing US legislators to pass crypto-friendly laws. The insolvency of FTX is a big shock to anyone in this crypto industry. However, if we dig a bit deeper, we can see some relationships between FTX and the firm which went insolvent before it - Celsius.<h2>Some key facts</h2>Bailing out other companies is nothing new to FTX as it rescued crypto lending startup BlockFi for $400 million in a transaction that offers the exchange the opportunity to buy the whole company. FTX also purchased nearly all of the assets of the insolvent crypto lender Voyager Digital in an attempt to lure their former clients to the FTX exchange. However, we should learn more about the numerous connections between Celsius Network and Sam Bankman-Fried. Celsius and Sam had a unique and complicated connection, according to public documents, media sources, and blockchain research.<ul><li>Celsius was able to manipulate CEL token markets thanks to FTX. Celsius appears to have acquired far over 40 million CEL tokens on FTX in 2021 in order to drive up and sustain the CEL price. This time period corresponds with the completion of due diligence and the disclosure of Celsius' $750 million equity raising from Westcap and La CDPQ.</li><li>After halting withdrawals, Celsius used FTX to liquidate hundreds of millions of dollars in client assets. In addition to repaying DeFi debts, the funds were used to pay off a $104 million loan from FTX during this time period.</li><li>Celsius may have used FTX as a clearinghouse to distribute loans to its institutional creditors by sending hundreds of millions of dollars in borrowed stablecoins via this exchange. Celsius appears to have used FTX to fund the defunct cryptocurrency hedge fund (Ponzi scheme) Three Arrows Capital.</li><li>One of Celsius' biggest debt holders is Alameda Research. And Celsius' biggest unsecured creditor, "Pharos Fund," is run by a former Alameda Research co-founder.</li><li>SBF and Celsius Network are intimately connected to Tether, the suspicious stablecoin issuer.</li></ul><h2>CEL token manipulation</h2>Both authorities and a former employee have claimed that Celsius fraudulently kept CEL token prices high by purchasing CEL on the market. Celsius allegedly utilized client deposits and collateral to acquire CEL tokens since they were not earning enough return to pay clients' yield.Celsius boosted their net holdings of CEL token by 41.7 million between May and December of 2021, according to a report released by Vermont state securities inspectors in Celsius' bankruptcy:<img src="https://cdn.builder.news/news/11ed6ed49f34f489a8e6023f659fee92.jpg" alt="vermont report" title="vermont report" width="600" height="158" class="lykafe0">Source: Ethan McLaughlinAt the same time, the CEL token balance in FTX's primary exchange wallet grew by a similar amount. Surprisingly, this rise looks to be linear; it's almost as if some entity was buying a comparable quantity of tokens at regular intervals over this time.<img src="https://cdn.builder.news/news/11ed6ed49f35012da8e6023f659fee92.jpg" alt="CEL token balance" title="CEL token balance" width="600" height="263" class="lykafe1">Source: EtherscanIn August 2021, the CEL balance on FTX reached its initial maximum of about 60 million tokens. Then, Celsius withdrew 14 million tokens, of which 10 million flowed to the Celsius OTC address, which the firm utilized to sell CEL tokens to clients directly. After that, the CEL balance on FTX kept increasing, albeit more slowly, until the end of December 2021, when it once again reached almost 60 million tokens. Then, between December and February 2022, Celsius sent around 55 million more CEL tokens to this wallet through a series of transactions. Those tokens are still stored at that address.In May 2021, the CEO of blockchain analysis firm Nansen noticed an unusual buildup of CEL tokens on the FTX exchange. SBF did not directly answer the issue of why so many tokens were kept by FTX's wallet, instead responding to a response on the mechanism of CEL being used as collateral on the exchange. It's worth noting how the price of the CEL token fluctuated throughout this time period. The token's price skyrocketed shortly after the first significant CEL transfers in late March. During the first phase of CEL accumulation, from March to August, the price remained at this higher level. The price of CEL begins to fall as the rate of accumulation looks to slow after August. And once the expansion slows in December, the price of CEL swiftly plummets. It's almost as though Celsius purchasing enormous quantities of the token on the market was the only thing that kept the price stable.&nbsp;<img src="https://cdn.builder.news/news/11ed6ed49f3506a6a8e6023f659fee92.jpg" alt="celsius price" title="celsius price" width="600" height="343" class="lykafe2">Source: CoinMarketCapFinally, Celsius' participation in CEL markets on FTX correlates to the company's significant equity raising in 2021. In October 2021, Celsius announced a $750 million capital raising with Westcap and La CDPQ, valuing the company at $3 billion. At that moment, the corporation would have held approximately 300 million CEL tokens, with a market worth of $1.5 billion. According to the Vermont filing and other investigations, the firm was insolvent if the CEL token was not included on the balance sheet. One can ask if the company was compelled to keep the CEL price high enough to entice these big investors. It is also worth noting that the CEL price remained over $5 until October 2021, when the token's price began to decrease.<h2>Celsius froze users’ assets and sold them on FTX</h2>Celsius moved hundreds of millions of dollars in cryptocurrency to FTX in the six weeks before filing for Chapter 11. The majority of the assets were never transferred back to Celsius' wallets. Instead, Celsius got almost $1 billion in USDC from FTX, which was used to pay off debts to DeFi protocols and free up collateral.In other words, it looks like Celsius was forced to sell user assets in order to pay off their other debts. Celsius choose FTX for this reason. According to Celsius' bankruptcy papers, a $104 million debt from FTX was also canceled during this time period. These transfers appear to fit the threshold for preferential payments, and one has to ask why Celsius opted to repay SBF rather than its own clients.This time of transfers coincided with a large drop in crypto values, with some thinking that Celsius' selling was a contributing cause.<h2>Suspicious transfer</h2>Prior to Celsius's demise, FTX was one of the loan firm's major beneficiaries of stablecoins. Celsius, for instance, borrowed around $1.2 billion in USDC from the DeFi protocols Aave and Compound between June and October of 2021. FTX was the greatest recipient of these assets, obtaining around $750 million in USDC during that time period. Between 2019 and 2021, FTX got at least $437 million in USDT (Tether) stablecoin from CelsiusDuring the same time period, Alameda Research was reported to get $83 million.In exchange, hundreds of millions of dollars in assets were transferred back from FTX to Celsius Network during that time period. Overall, the transfers here are quite complicated and are still being investigated. To summarize, no other exchange received or returned a comparable number of stablecoins during Celsius' lifespan, as far as we can tell.What happened to these large transfers of dollar equivalents once they arrived on FTX? It appears that USDC was moved to an institutional borrower via FTX in at least one case. According to bankruptcy records, Three Arrows Capital (3AC), an insolvent crypto hedge fund, borrowed $75 million in USDC from Celsius Network.Celsius sent $240 million in USDC to FTX across numerous transactions on January 25th, 2022. One transfer was worth $50 million, while the other was was for $25 million. A few hours later, 3AC withdraws $100 million from FTX and deposits it in the Luna Reserve Guard account (Luna is another Ponzi scheme).This implies that Celsius was utilizing FTX as a distribution center to transfer loans to institutional borrowers. We have not been able to discover any additional addresses that got payments in the same manner as 3AC, but the patterns are the same, and the flow of funds strongly implies this.<h2>Almeda appears to be one of the biggest creditors of Celsius</h2>Alameda Research, one of Celsius' major unsecured creditors, is presently owing $12.8 million. This adds to the proof that Celsius and Alameda were doing business together, supporting the claim based on blockchain data that the two companies were moving funds between themselves.According to their filings, Celsius' largest unsecured creditor is a mystery Caymans-based fund named the "Pharos Fund SP," which was not publicly recognized prior to the Celsius petition. It is administered by Lantern Ventures, which has likewise mainly remained under the radar during its history. According to a Bloomberg article, Tara Mac Auley, the CEO of Lantern, claimed to be a co-founder of Alameda Research. Mac Auley also served as the CEO of the "Center For Effective Altruism," and Sam Bankman-Fried is a member of its associate group. You can see Sam is an altruist in his Twitter bio.<h2>The relationship with Tether</h2>Tether, the issuer of the world's largest stablecoin, USDT, has several intimate links to both Celsius Network and SBF. Tether has been hounded by charges of fraud for years, most notably lying about the reserves underpinning its over $60 billion in issued USDT. Tether has routinely misled about their reserves and general financial status since 2017, according to a report issued by the New York State Attorney General in 2021. One especially egregious case occurred in 2018, when the assets of their "banking partner," an unlicensed entity named Crypto Capital Corp, were confiscated for providing money laundering operations to drug cartels. Tether is now a defendant in many lawsuits and may be the subject of an investigation by the US Department of Justice.Tether was the first equity investor in Celsius, contributing $10 million in June 2020. Tether would have received an 8% ownership in Celsius as a result of this transaction. Tether ultimately became one of Celsius Network's top debtors, lending the company almost $1 billion in USDT in 2021. Celsius could no longer make payments or deliver extra collateral to avoid a liquidation on the $841 million outstanding debt in May 2022. Celsius agreed to an orderly liquidation and resolution of its debt, which resulted in a $97 million loss. In other terms, Tether profited $97 million from this deal. Not bad at all.SBF's relationship with Tether is well-established, as his company is their largest customer. According to Protos, Alameda Research was the biggest recipient of USDT in 2021, receiving $36.7 billion in USDT. A total of $30 billion was sent directly to SBF's FTX exchange. As Protos pointed out: The USDT minted by Tether has grown exponentially since Bankman-Fried founded FTX in 2018. In addition,&nbsp; Sam Bankman-Fried has always been an outspoken supporter of Tether.ConclusionFrom the above, it should be evident that Celsius Network and Sam Bankman-Fried had a long and intimate connection that impacted many facets of Celsius company. This link must be thoroughly studied. Celsius ended up with a $2.4 billion hole in its financial sheet, and a sizable portion of that money appears to have gone through the FTX market. The largest exchange for CEL token trading was FTX, and Celsius did nothing to disguise the fact that they utilized FTX to buy up tens of millions of their token in order to keep their value. Furthermore, prior to filing bankruptcy, FTX appears to have aided the disposal of huge quantities of Celsius' assets.The recent insolvency of FTX is just another firm evidence of the style of using the flywheel scheme to build up property by Celsius, Alameda, and FTX.&nbsp; The common mistake made by these entities is using user assets to invest, gamble, and leverage without sufficient risk management. No bailout from Binance implies an end to all hope of the users who still has their fund stuck there. These users are likely to lose all their deposits - just like what happened to Celsius clients a few months ago.<div class="pr-block-special">Disclaimer: This article is intended for and only to be used for reference purposes only. No such information provided constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific name.</div>

Celsius and FTX of Sam had a unique and complicated connection, according to public documents, media sources, and blockchain research.

The link between Celsius and FTX