Alameda Research

Alameda Research was a cryptocurrency trading firm co-founded in September 2017 by Sam Bankman-Fried and Tara MacAulay.[2][3] In November 2022, FTX, Alameda's sister cryptocurrency exchange, experienced a solvency crisis, and both FTX and Alameda filed for Chapter 11 bankruptcy.[4] That same month, anonymous sources told The Wall Street Journal that FTX had lent more than half of its customers' funds to Alameda,[1] which was explicitly forbidden by FTX's terms-of-service.[5]

At Bankman-Fried's trial, Alameda CEO Caroline Ellison testified that she was one of Bankman-Fried's main accomplices in channeling FTX customer funds into Alameda's coffers.

History

Foundation

In November 2017, Sam Bankman-Fried co-founded Alameda Research as a quantitative trading firm, after he left his job at Jane Street Capital.[8] The firm was based in Berkeley, California, where Bankman-Fried moved that same year.[9] He had recruited about 20 young effective altruists, most of whom had no experience trading in financial markets nor were aware of cryptocurrencies.[10] Per a 2021 interview, the term 'research' was included in the name to avoid scrutiny, with Bankman-Fried saying, "if you named your company like We Do Cryptocurrency Bitcoin Arbitrage Multinational Stuff, no one's going to give you a bank account".[11]

In January 2018, Bankman-Fried organized an arbitrage trade to take advantage of the higher price of bitcoin in Japan versus in America.[8][12][13] The company earned between $10 million and $30 million before the price gap closed in early 2018.[14] In early 2019, the firm moved its headquarters from California to Hong Kong.[14] As of August 2021, Bankman-Fried owned approximately 90 percent of Alameda Research.[8]

Launch of FTX

Sam Bankman-Fried started his own crypto exchange in April 2019 under the name FTX. Alameda Research played a significant role in the growth of FTX, as it acted as FTX's main market maker,[14] available to buy and sell with other customers, sometimes taking trading losses to attract customers to the exchange.[14] According to public data reviewed by The Wall Street Journal, between early 2021 and March 2022, Alameda Research amassed crypto tokens ahead of FTX listing them for trading, especially on the Ethereum blockchain, with a value of about $60 million.[15]

The Wall Street Journal, citing anonymous sources, reported that Alameda Research suffered a series of losses in May and June 2022 which were covered by FTX lending the trading firm more than half of its customer's funds; FTX CEO Sam Bankman-Fried reportedly described this as a poor judgment call.[16][1]

Bankruptcy

On 8 November 2022, following a liquidity crisis at FTX, a large cryptocurrency exchange, Binance and FTX signed a letter of intent for FTX to be acquired by Binance.[19] The value of Alameda was affected, and was estimated to have dropped over 90 percent following the public disclosure of problems and the FTX acquisition deal.[20] Alameda held a large quantity of FTT, the native token of the FTX exchange, as assets on its books. TechCrunch reported that "the exchange was unusually intertwined with its sister entity, Alameda Research."[21] Principal shareholder Bankman-Fried had an estimated net worth of $10.5 billion in October 2022[22] and it dropped to approximately $1 billion according to the Bloomberg Billionaires Index

type	Private
industry	Quantitative trading, proprietary trading
founded	November 2017
fate	Filed for Chapter 11 bankruptcy in November 2022
founders	Sam Bankman-Fried Tara MacAulay
key people	Caroline Ellison (CEO)‡R1R‡
hq location city	Hong Kong‡R1R‡
website	https://alameda-research.com/

History

Foundation

Launch of FTX

Bankruptcy

Activities and donations

External links

References