US CFTC reveals that Alameda has a strategic advantage in processing orders.
The CFTC also filed lawsuits against Bankman-Fried, FTX, and Alameda Research for violating federal commodities laws.
That Alameda Research, Sam Bankman's trading firm, had a hidden speed advantage when processing orders on his now-defunct crypto exchange FTX.
According to the CFTC, Alameda was able to bypass some parts of the system and gain faster access. Despite the fact that orders from institutional customers were still processed through the FTX system. Transaction orders were thus received several milliseconds earlier than those of other institutional clients.
In terms of transaction speed, Alameda apparently had a distinct advantage. Because it was not subject to certain automated verification methods. It basically looked into whether it had funds before executing a transaction.
CFTC noted that these benefits resulted in a "significant speed advantage." The lawsuit argues that Alameda was able to sidestep automated procedures such as ensuring that funds were available before conducting a transaction due to the features of Alameda's FTX account.
However, the CFTC noted that if other clients made numerous orders at the same time, these checks occurred in sequential order, allowing each transaction to be confirmed as legitimate. This was not the case with the Alameda account. Mark Botnick, speaking on behalf of Bankman-Fried, declined to address the CFTC's specific assertions about a speed advantage.
There have long been concerns in the crypto community that she was getting preferential treatment on FTX. According to Bankman-Fried, Alameda sent orders and accessed client data in September in the same way that other users did.
The CFTC has filed lawsuits against Bankman-Fried, FTX, and Alameda Research for violating federal commodities laws. The Securities and Exchange Commission charged him on Tuesday with conducting a multi-year plan to mislead investors. He was arrested in the Bahamas on Monday and is also facing criminal charges in the United States.
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