Reef Finance and Alameda Scrap Over Failed Deal

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  • A war of words has erupted over a failed deal between Reef Finance and Alameda Research
  • Reef Finance claimed last week that Alameda Research had become “a significant stakeholder” after buying $20 million worth of REEF tokens
  • Alameda Denied this, saying Reef Finance reneged on the deal

Reef Finance’s REEF token endured a 30% selloff yesterday as Alameda Research accused the project of reneging on a $20 million deal. Reef Finance announced last week that Alameda Research, owned by FTX and SushiSwap owner Sam Bankman-Fried, had invested the sum into the project by buying up a huge number of REEF tokens OTC. Alameda initially denied this and then admitted it, leading to a war of words between the pair.

Reef Finance Claims $20 Million Investment

Reef Finance is a Polkadot-powered cross-chain DeFi operating system that has been gaining a lot of popularity among the crypto Twitterati, and last week they sent a press release to a number of crypto news outlets to reveal that Alameda Research had “made an investment of $20 Million into REEF Finance by purchasing REEF tokens” and as such had “become a significant stakeholder in the REEF Ecosystem.”

This was naturally billed by the company as affirmation of the project, and even called it a “collaboration”, with Reef Finance CEO Denko Mancheski saying he was “delighted to welcome Alameda Research to the Reef Finance budding ecosystem”, adding that the company was “excited to incorporate this investment to further our trajectory and for the development of the Reef chain for DeFi applications of the future.”

Alameda Research Rejects “Collaboration” Linkup

It soon appeared that Reef Finance may have jumped the gun with the announcement…or the entire shooting range. Sam Trabucco of Alameda Research denied any such deal on Twitter yesterday, posting a five-point rebuttal of the announcement:

Trabucco added that Reef Finance only “officially reneged on the deal a few minutes before my tweet”, prompting questions to be asked of Reef Finance’s PR department who announced the “collaboration” before any deal was actually signed. In a later tweet, Trabucco said that Alameda did in fact buy the $20 million worth of REEF tokens of which they retain “the great majority”, somewhat undermining his initial claims.

This clarification could have been a preemptive strike against a forthcoming Reef Finance statement which arrived later that day and claimed that not only did Alameda Research edit and approve the communication over the deal, they also immediately sold the initial $20 million REEF investment on Binance once the deal was done. This led Reef deciding not to “move forward with the additional $60M tranche due to doubts around Alameda’s long-term interest in being a strategic investor.”

Reef Finance also said that the actions of Alameda are precisely why they went for a decentralized model:

…with the advent of DeFi, no centralized entity such as Alameda can destroy a crypto project. REEF has strong volume on decentralized exchanges such as Uniswap. The possibility of threats around market manipulation by CeFi players was actually the reason why we wanted to launch a DeFi platform in the first place.

The entire unseemly episode will now hopefully be forgotten, with the REEF token likely to rebound to prior levels given that nothing fundamental has changed about the project.