The US Commodity Futures Trading Commission says that Sam Bankman-trading Fried’s firm, Alameda Research, had a secret speed advantage when processing orders on his now-defunct FTX cryptocurrency exchange.
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The CFTC says that Alameda was able to go around some parts of the system to get faster access. Even though the orders of institutional customers were still sent through the FTX system. So, transaction orders from institutional clients were received a few milliseconds faster.
It was said that Alameda had a clear trade speed advantage. Because it didn’t have to go through some automatic checks. Before making a transaction, it basically checked to see if it had money.
Alameda avoided automated procedures
CFTC says that these hidden benefits gave a “significant speed advantage.” The lawsuit says that because of the features of Alameda’s FTX account, it was able to avoid automated steps like making sure funds were available before executing a transaction.
But the CFTC said that if multiple orders were placed at the same time by other clients, these checks were done in order, allowing each transaction to be confirmed as valid. The Alameda account was not affected by this. Mark Botnick, who works for Bankman-Fried, refused to talk about the specific claims made by the CFTC about a speed advantage.
CFTC suing Bankman- Fried
Long ago, people in the crypto community thought that she was getting special treatment on FTX. Bankman-Fried says that Alameda sent orders and looked at customer information like other users did in September.
Bankman-Fried
The CFTC is suing Bankman-Fried, FTX, and Alameda Research for breaking federal commodities laws. On Tuesday, the Securities and Exchange Commission said that he had been cheating investors for years. On Monday, he was arrested in the Bahamas, and he is also facing criminal charges in the US.
Source: Google Trend