Alameda Research
| Company type | Private |
|---|---|
| Industry | Cryptocurrency trading |
| Founded | September 2017 |
| Founder | Sam Bankman-Fried, Tara MacAulay |
| Defunct | November 2022 |
| Fate | Filed for Chapter 11 bankruptcy |
| Headquarters | Berkeley, California (initially); later Hong Kong , United States; Hong Kong |
Key people | Caroline Ellison (CEO) |
| Products | Quantitative trading, arbitrage, market making, yield farming, volatility trading in cryptocurrency markets |
Number of employees | ~20 (initially) |
Alameda Research was a proprietary trading firm specializing in cryptocurrency, established in September 2017 by Sam Bankman-Fried alongside Tara MacAulay. In November 2022, its affiliated cryptocurrency exchange, FTX, encountered a liquidity crisis, prompting both entities to seek protection under Chapter 11 bankruptcy. Leaked information from unnamed sources indicated that FTX had transferred more than half of its clients' assets to Alameda, contravening FTX's own terms of service.
During the trial of Bankman-Fried, Alameda's CEO Caroline Ellison admitted to playing a central role in diverting customer funds from FTX to Alameda. Subsequently, in December 2022, Ellison entered a guilty plea on charges including wire fraud and conspiracy linked to operations at both Alameda and FTX.
Establishment
In November 2017, after departing from Jane Street Capital, Sam Bankman-Fried founded Alameda Research as a quantitative trading company. The firm was initially headquartered in Berkeley, California, following Bankman-Fried’s relocation there that same year. He assembled a team of about 20 young effective altruists, most of whom lacked prior experience in trading or cryptocurrency markets. The inclusion of the word 'research' in the company’s name was a deliberate choice aimed at minimizing regulatory attention and facilitating banking partnerships, according to Bankman-Fried.
By January 2018, Bankman-Fried implemented an arbitrage approach capitalizing on the disparity between bitcoin prices in Japan and the U.S., earning between $10 million and $30 million before this price differential diminished early that year. In early 2019, Alameda Research shifted its main office from California to Hong Kong. As of August 2021, Bankman-Fried held roughly 90% ownership of the company.
Inception of FTX
FTX, the cryptocurrency trading platform, was established by Sam Bankman-Fried in April 2019. Alameda Research played a crucial role in FTX's expansion, acting as its chief market maker and occasionally absorbing trading losses to draw in users. Analysis of public records by The Wall Street Journal revealed that between early 2021 and March 2022, Alameda amassed roughly $60 million worth of crypto assets, predominantly on the Ethereum blockchain, prior to their listing on FTX.
It was reported that Alameda incurred heavy losses during May and June 2022, which were offset by FTX lending Alameda over half of its client funds—a decision CEO Bankman-Fried later acknowledged as a mistake. Pantheri Asset Management gained $10.7 million as a counterparty to Alameda. In August 2022, Alameda’s co-CEO Sam Trabucco stepped down, leaving Caroline Ellison as the sole chief executive officer.
Bankruptcy Proceedings
On November 8, 2022, facing a liquidity shortfall at FTX, Binance and FTX entered into a letter of intent for Binance to acquire FTX. Following the disclosures and acquisition announcement, Alameda’s valuation plummeted by more than 90%. A significant portion of Alameda’s holdings consisted of FTT, the proprietary token of FTX, underscoring the intertwined financial relationship between the two companies.
Bankman-Fried’s net worth saw a dramatic decline from an estimated $10.5 billion in October 2022 to approximately $1 billion after the crisis and acquisition news. By late November 9, Binance retracted from the acquisition agreement, citing FTX’s mismanagement of client funds and ongoing investigations. On the same day, Alameda’s website was taken offline, and the firm announced its intention to cease trading operations.
In November 2022, Alameda Research filed for Chapter 11 bankruptcy protection alongside FTX and more than 130 related entities.
Operations and Philanthropic Contributions
Alameda Research operated as a quantitative trading firm with a focus on cryptocurrency markets, employing methods such as arbitrage, market making, yield farming, and volatility trading. During the 2020 U.S. presidential election cycle, Alameda donated $5 million to Future Forward USA, a liberal political action committee supporting President Joe Biden. In 2022, it reportedly contributed an additional $5 million to Guarding Against Pandemics, a PAC managed by Gabe Bankman-Fried, Sam Bankman-Fried's brother. The company also provided financial backing to the Worldwide Online Olympiad Training initiative run by Art of Problem Solving.
External links
- Archived version of Alameda Research website, captured by the Internet Archive on November 7, 2022