Alameda Research

In November 2017, Sam Bankman-Fried co-founded Alameda Research as a quantitative trading firm, after he left his job at Jane Street Capital.{{Cite news |last=Parloff |first=Roger |author-link=Roger Parloff |date=12 August 2021 |title=Portrait of a 29-year-old billionaire: Can Sam Bankman-Fried make his risky crypto business work? |work=Yahoo! Finance |url=https://finance.yahoo.com/news/ftx-ceo-sam-bankman-fried-profile-085444366.html |access-date=6 September 2021}} The firm was based in Berkeley, California, where Bankman-Fried moved that same year.{{Cite Q|Q120671792|access-date=2023-07-15}} He had recruited about 20 young effective altruists, most of whom had no experience trading in financial markets nor were aware of cryptocurrencies.{{Cite news |last=Lewis |first=Michael |author-link=Michael Lewis |date=October 4, 2023 |title=When Caroline Ellison Met Sam Bankman-Fried |url=https://www.wsj.com/finance/caroline-ellison-sam-bankman-fried-ftx-book-michael-lewis-675b1ce6 |work=The Wall Street Journal |url-access=subscription}} 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".{{Cite web |title=Sam Bankman-Fried and the spectacular fall of his crypto empire, FTX : Planet Money |url=https://www.npr.org/transcripts/1137054976 |access-date=2022-11-24 |website=NPR.org |language=en}}

In January 2018, Bankman-Fried organized an arbitrage trade to take advantage of the higher price of bitcoin in Japan versus in America.{{Cite news |last=Wallace |first=Benjamin |date=2 February 2021 |title=The Mysterious Cryptocurrency Magnate Who Became One of Biden's Biggest Donors |work=Intelligencer |url=https://nymag.com/intelligencer/2021/02/sam-bankman-fried-biden-donor.html |access-date=6 September 2021}}{{Cite news |date=31 March 2021 |title=The Ex-Trader Building a Multi-Billion Crypto Empire (Podcast) |work=Bloomberg |url=https://www.bloomberg.com/news/audio/2021-03-31/the-ex-trader-building-a-multi-billion-crypto-empire-podcast |access-date=1 October 2021}} The company earned between $10 million and $30 million before the price gap closed in early 2018.{{Cite Q|Q115943621|access-date=2023-01-01}} In early 2019, the firm moved its headquarters from California to Hong Kong. As of August 2021, Bankman-Fried owned approximately 90 percent of Alameda Research.

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, available to buy and sell with other customers, sometimes taking trading losses to attract customers to the exchange. 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.{{Cite web |title=Alameda Amassed Crypto Tokens Ahead of FTX Listings, Public Data Shows |url=https://www.wsj.com/livecoverage/stock-market-news-today-11-14-2022/card/alameda-amassed-crypto-tokens-ahead-of-ftx-listings-public-data-shows-z6KFN051ToEpFohTXA89 |access-date=2022-11-14 |website=The Wall Street Journal |language=en-US}}

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.{{Cite news |last1=Berwick |first1=Angus |last2=Wilson |first2=Tom |date=2022-11-10 |title=Exclusive: Behind FTX's fall, battling billionaires and a failed bid to save crypto |language=en |work=Reuters |url=https://www.reuters.com/technology/exclusive-behind-ftxs-fall-battling-billionaires-failed-bid-save-crypto-2022-11-10/ |access-date=2022-11-13}} Pantheri Asset Management made $10.7 million as a counterparty of Alameda.{{cite web |title=Digital Asset Firm Pantheri Asset Management profits $10.7 million through being Alameda Research Counterparty in Trade |url=https://financialbureau.org/2022/12/30/digital-asset-fund-pantheri-profits-10-7-from-alameda-research-downfall/ |website=The Financial Bureau |date=31 July 2022 |access-date=30 December 2022}} In August 2022, Alameda co-CEO Sam Trabucco resigned, and Caroline Ellison became the firm's sole CEO.{{Cite Q|Q119727121|access-date=2023-07-15}}

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.{{Cite news |last=Hern |first=Alex |date=2022-11-08 |title=Binance to buy FTX in major cryptocurrency exchange merger |language=en-GB |work=The Guardian |url=https://www.theguardian.com/technology/2022/nov/08/binance-to-buy-ftx-in-major-cryptocurrency-exchange-merger |access-date=2023-08-30 |issn=0261-3077}} 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.{{Cite news |date=9 November 2022 |title=Crypto's golden boy Sam Bankman-Fried sees $14.6 billion wiped from his personal wealth overnight after agreeing to FTX bailout deal |work=Fortune |url=https://fortune.com/2022/11/09/sam-bankman-fried-14-billion-wiped-from-personal-wealth-overnight-ftx-bailout-deal-binance/ |access-date=9 November 2022}} 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."[https://techcrunch.com/2022/11/09/cryptos-biggest-acquisition-binance-ftx-exchanges-sbf-cz-alameda-unlikely-close/ Crypto’s biggest M&A deal, between Binance and FTX, looks unlikely to close] {{Webarchive|url=https://web.archive.org/web/20221109191316/https://techcrunch.com/2022/11/09/cryptos-biggest-acquisition-binance-ftx-exchanges-sbf-cz-alameda-unlikely-close/ |date=9 November 2022 }}, TechCrunch, 9 November 2022. Principal shareholder Bankman-Fried had an estimated net worth of $10.5 billion in October 2022{{Cite news |last=Kulish |first=Nicholas |date=2022-10-08 |title=How a Scottish Moral Philosopher Got Elon Musk's Number |work=New York Times |url=https://www.nytimes.com/2022/10/08/business/effective-altruism-elon-musk.html |access-date=2022-10-09 |issn=0362-4331}} and it dropped to approximately $1 billion according to the Bloomberg Billionaires Index following the crises and preliminary acquisition agreement on 8 November 2022.

Late in the day on 9 November, The Wall Street Journal reported that Binance was walking away from the FTX acquisition,{{Cite Q|Q115184738|access-date=2022-11-12}} blaming FTX's mishandling of customer funds and pending investigations of FTX.{{Cite web |last1=Sigalos |first1=MacKenzie |last2=Rooney |first2=Kate |date=2022-11-09 |title=Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse |url=https://www.cnbc.com/2022/11/09/binance-backs-out-of-ftx-rescue-leaving-the-crypto-exchange-on-the-brink-of-collapse.html |website=CNBC}} On 9 November 2022, Alameda's website was taken down.{{Cite news |date=9 November 2022 |title=Sam Bankman-Fried's Alameda Research website taken down amid FTX turmoil |work=Reuters |url=https://www.reuters.com/technology/sam-bankman-frieds-alameda-research-website-taken-down-amid-ftx-turmoil-2022-11-09/ |access-date=9 November 2022}} The next day Bankman-Fried said Alameda Research was winding down trading and would close.{{Cite web |last=Singh |first=Manish |date=2022-11-10 |title=Sam Bankman-Fried says FTX in talks to raise capital, Alameda Research to wind down trading |url=https://techcrunch.com/2022/11/10/sam-bankman-fried-says-alameda-research-to-wind-down-trading-ftx-attempting-to-raise-capital/ |access-date=2022-11-10 |website=TechCrunch |language=en-US}} Alameda Research, along with FTX and more than 130 affiliated entities, filed for Chapter 11 bankruptcy protection in November 2022.{{Cite news |last=Yaffe-Bellany |first=David |date=11 November 2022 |title=Embattled Crypto Exchange FTX Files for Bankruptcy |work=The New York Times |url=https://www.nytimes.com/2022/11/11/business/ftx-bankruptcy.html |access-date=13 November 2022}}

As a quantitative trading firm specializing in cryptocurrencies, Alameda's strategies included arbitrage, market making, yield farming, and trading volatility.{{Cite Q|Q120671707|access-date=2023-07-15}} During the 2020 United States presidential election, Alameda gave $5 million to Future Forward USA, a liberal political action committee (PAC) in support of President Joe Biden. In 2022, Alameda reportedly donated $5 million to Guarding Against Pandemics, a PAC run by Sam Bankman-Fried's brother, Gabe.{{Cite web |last=Schwartz |first=Brian |date=2022-12-19 |title=How former crypto king Sam Bankman-Fried and friends quietly donated to political groups and relatives |url=https://www.cnbc.com/2022/12/19/how-ftx-founder-sbf-and-friends-quietly-donated-to-political-groups-and-relatives.html |url-status=live |archive-url=https://web.archive.org/web/20221222201107/https://www.cnbc.com/2022/12/19/how-ftx-founder-sbf-and-friends-quietly-donated-to-political-groups-and-relatives.html |archive-date=2022-12-22 |access-date=2023-03-27 |website=CNBC |language=en}} The company provided financial support to the Worldwide Online Olympiad Training program by the Art of Problem Solving.{{Cite web |title=WOOT: Worldwide Online Olympiad Training |url=https://artofproblemsolving.com/school/woot |url-status=usurped |archive-url=https://web.archive.org/web/20220406115408/https://artofproblemsolving.com/school/woot |archive-date=2022-04-06 |access-date=2023-03-22 |website=Art of Problem Solving}}

{{Reflist}}

• [https://web.archive.org/web/20221107183850/https://www.alameda-research.com/ Alameda Research website], as archived by the Internet Archive on 7 November 2022

Category:American companies established in 2017

Category:Companies that filed for Chapter 11 bankruptcy in 2022

Category:Corporate scandals

Category:Corporate crime

Category:Cryptocurrency companies

Category:Financial services companies of Hong Kong

Category:Sam Bankman-Fried

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