The US Commodity Futures Trading Commission asserts that Sam Bankman-trading Fried’s firm Alameda Research had a covert speed advantage when processing orders on his now-defunct FTX cryptocurrency exchange.
According to the CFTC, Alameda was able to bypass certain portions of the system and gain faster access. Even though institutional customers’ orders were still routed through the FTX system. Transaction orders were thus received several milliseconds quicker than those of other institutional clients.
Alameda allegedly had a distinct advantage in terms of trade speed. Because it was exempt from some automated verification processes. Basically, it checked to see if it had funds before completing a transaction.
Alameda avoided automated procedures
According to CFTC, these benefits, which were kept a secret, produced a “significant speed advantage.” The lawsuit claims that Alameda was able to avoid automated procedures like confirming that funds were available before executing a
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