Alameda Research

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Alameda Research
FoundedNovember 2017; 6 years ago (2017-11)
Founders
FateFiled for Chapter 11 bankruptcy in November 2022
Headquarters
Hong Kong[1]
Key people
Caroline Ellison (CEO)[1]
Websitealameda-research.com

Alameda Research was a

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,[5][1] which was explicitly forbidden by FTX's terms-of-service.[6]

On 12 November 2022, The Wall Street Journal reported that anonymous sources had said that Alameda CEO Caroline Ellison said that she, Bankman-Fried, and other senior FTX officials were aware of that decision.[7] In December 2022, then Alameda CEO Caroline Ellison pleaded guilty to two counts of wire fraud and five conspiracy counts involving wire, securities and commodities fraud and money laundering, in relation to her activities at Alameda Research and FTX.[8]

History

Foundation

In November 2017,

effective altruists, most of whom had no experience trading in financial markets nor were aware of cryptocurrencies.[11] 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".[12]

In January 2018, Bankman-Fried organized an arbitrage trade to take advantage of the fact that the price of bitcoin was higher in Japan than in America.[9][13][14] The company earned between $10 million and $30 million before the price gap closed in early 2018.[15][16] In early 2019, the headquarters of the firm started moving from California to Hong Kong.[16] As of August 2021, Bankman-Fried owned approximately 90 percent of Alameda Research.[9]

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.[16] As a market maker, Alameda Research was available to buy and sell if other customers wanted to, sometimes taking the losing side of a trade to attract customers to the exchange.[16] According to public data reviewed by The Wall Street Journal, between early 2021 and March 2022, Alameda Research amassed crypto tokens ahead of FTX saying it would list them, totaling about $60 million worth of tokens in the Ethereum blockchain.[17]

Alameda Research suffered a series of losses in May and June 2022, which anonymous sources told The Wall Street Journal resulted in FTX lending the trading firm more than half of its customer's funds, a decision that the sources said FTX CEO Sam Bankman-Fried described as a poor judgment call.[5][1] Pantheri Asset Management made $10.7 million through being a counterparty of Alameda.[18] In August 2022, the co-CEO of Alameda Research Sam Trabucco resigned from his job and Caroline Ellison became the firm's sole CEO.[19]

Bankruptcy

On 8 November 2022, following a

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."[22] Principal shareholder Bankman-Fried had an estimated net worth of $10.5 billion in October 2022[23] and it dropped to approximately $1 billion according to the Bloomberg Billionaires Index following the crises and preliminary acquisition agreement on 8 November 2022.[21]

Late in the day on 9 November, The Wall Street Journal reported that Binance was walking away from the FTX acquisition.[24] Binance cited FTX's mishandling of customer funds and pending investigations of FTX as the reasons the firm would not pursue the deal.[25] On 9 November 2022, Alameda's website was taken down.[26] The next day Bankman-Fried stated that Alameda Research was winding down trading and would close.[27] Alameda Research, along with FTX and more than 130 affiliated entities, filed for Chapter 11 bankruptcy protection in November 2022.[4][28]

Activities and donations

As a

market making, yield farming, and trading volatility.[1][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.[29] The company provided financial support to the Worldwide Online Olympiad Training program by the Art of Problem Solving.[30]

References

  1. ^
    Wikidata Q115175398
    . Retrieved 6 December 2022.
  2. ^ "Bankrupt crypto firm Celsius's biggest creditor linked to FTX founder Sam Bankman-Fried". Fortune. 14 July 2022. Retrieved 30 November 2022.
  3. ^ Nicolle, Emily; Irrera, Anna; Griffin, Donal (14 July 2022). "Celsius Bankruptcy Filing Shows Long Reach of FTX's Sam Bankman-Fried". Bloomberg. Retrieved 12 November 2022.
  4. ^
    Wikidata Q115175397
    . Retrieved 6 December 2022.
  5. ^ a b Berwick, Angus; Wilson, Tom (10 November 2022). "Exclusive: Behind FTX's fall, battling billionaires and a failed bid to save crypto". Reuters. Retrieved 13 November 2022.
  6. ^ Salmon, Felix (13 November 2022). "FTX's terms-of-service forbid trading with customer funds". Axios. Retrieved 13 November 2022.
  7. Wikidata Q115184709
    . Retrieved 1 December 2022.
  8. ^ Yaffe-Bellany, David; Goldstein, Matthew; Weiser, Benjamin (22 December 2022). "Two Executives in Sam Bankman-Fried's Crypto Empire Plead Guilty to Fraud". The New York Times. Retrieved 14 August 2023.
  9. ^ a b c Parloff, Roger (12 August 2021). "Portrait of a 29-year-old billionaire: Can Sam Bankman-Fried make his risky crypto business work?". Yahoo! Finance. Retrieved 6 September 2021.
  10. Wikidata Q120671792
    . Retrieved 15 July 2023.
  11. ^ Lewis, Michael (4 October 2023). "When Caroline Ellison Met Sam Bankman-Fried". The Wall Street Journal.
  12. ^ "Sam Bankman-Fried and the spectacular fall of his crypto empire, FTX : Planet Money". NPR.org. Retrieved 24 November 2022.
  13. ^ Wallace, Benjamin (2 February 2021). "The Mysterious Cryptocurrency Magnate Who Became One of Biden's Biggest Donors". Intelligencer. Retrieved 6 September 2021.
  14. ^ "The Ex-Trader Building a Multi-Billion Crypto Empire (Podcast)". Bloomberg. 31 March 2021. Retrieved 1 October 2021.
  15. ^
    Wikidata Q120671707
    . Retrieved 15 July 2023.
  16. ^
    Wikidata Q115943621
    . Retrieved 1 January 2023.
  17. ^ "Alameda Amassed Crypto Tokens Ahead of FTX Listings, Public Data Shows". The Wall Street Journal. Retrieved 14 November 2022.
  18. ^ "Digital Asset Firm Pantheri Asset Management profits $10.7 million through being Alameda Research Counterparty in Trade". The Financial Bureau. 31 July 2022. Retrieved 30 December 2022.
  19. Wikidata Q119727121
    . Retrieved 15 July 2023.
  20. ISSN 0261-3077
    . Retrieved 30 August 2023.
  21. ^ a b "Crypto's golden boy Sam Bankman-Fried sees $14.6 billion wiped from his personal wealth overnight after agreeing to FTX bailout deal". Fortune. 9 November 2022. Retrieved 9 November 2022.
  22. ^ Crypto’s biggest M&A deal, between Binance and FTX, looks unlikely to close Archived 9 November 2022 at the Wayback Machine, TechCrunch, 9 November 2022.
  23. ISSN 0362-4331
    . Retrieved 9 October 2022.
  24. Wikidata Q115184738
    . Retrieved 12 November 2022.
  25. ^ Sigalos, MacKenzie; Rooney, Kate (9 November 2022). "Binance backs out of FTX rescue, leaving the crypto exchange on the brink of collapse". CNBC.
  26. ^ "Sam Bankman-Fried's Alameda Research website taken down amid FTX turmoil". Reuters. 9 November 2022. Retrieved 9 November 2022.
  27. ^ Singh, Manish (10 November 2022). "Sam Bankman-Fried says FTX in talks to raise capital, Alameda Research to wind down trading". TechCrunch. Retrieved 10 November 2022.
  28. ^ Yaffe-Bellany, David (11 November 2022). "Embattled Crypto Exchange FTX Files for Bankruptcy". The New York Times. Retrieved 13 November 2022.
  29. ^ Schwartz, Brian (19 December 2022). "How former crypto king Sam Bankman-Fried and friends quietly donated to political groups and relatives". CNBC. Archived from the original on 22 December 2022. Retrieved 27 March 2023.
  30. ^ "WOOT: Worldwide Online Olympiad Training". Art of Problem Solving. Archived from the original on 6 April 2022. Retrieved 22 March 2023.{{cite web}}: CS1 maint: unfit URL (link)

External links

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