Trading & Options · Profile from Trading and Options Research Companion
Alameda Research
The crypto trading firm Sam Bankman-Fried founded in Berkeley, California in late 2017. It began with a real, nameable edge: cross-border bitcoin arbitrage while capital controls and slow banking kept Asian prices above US prices. It became the main market maker and backstop liquidity provider on FTX, the exchange Bankman-Fried launched in 2019, and ended as the vehicle through which FTX customers' money was spent. Trial testimony said FTX's code gave Alameda an "allow negative" flag, an exemption from auto-liquidation and a line of credit that grew from about $1bn to $65bn. Alameda's leaked balance sheet at 30 Jun 2022 showed $14.6bn of assets, the largest line being $3.66bn of unlocked FTT, FTX's own token, against $8bn of liabilities (CoinDesk, 2 Nov 2022). The run that followed ended with FTX, Alameda and ~130 affiliates filing for Chapter 11 on 11 Nov 2022. Bankman-Fried was convicted on all seven counts on 2 Nov 2023 and sentenced on 28 Mar 2024 to 25 years with forfeiture of $11.2bn (Shared facts, S08; the DOJ release says "over $11 billion"). For a trading book Alameda is the clearest case of edge replaced by other people's money: the arbitrage edge was real but small and temporary, and the firm's later "returns" were funded by customers who never agreed to bear its risk. The exchange as a business — funding rounds, marketing, the estate's recoveries — is told in Finance: FTX; this profile takes the trading angle.
At a glance
- Founded
- Nov 2017 in Berkeley, California (Finance KB; Wikipedia's infobox — its lead says Sep 2017, so the month is uncertain)
- Founders
- Sam Bankman-Fried (formerly an ETF trader at Jane Street) and Tara Mac Aulay (Wikipedia, secondary); Gary Wang (ex-Google engineer) joined early and later co-founded FTX (Finance KB)
- Headquarters
- Berkeley (2017–18); Hong Kong from early 2019 (WSJ via Wikipedia); Nassau, The Bahamas from 2021 (Finance KB)
- Ownership / structure
- Private; Bankman-Fried owned ~90% by Aug 2021 (Yahoo Finance profile via Wikipedia, secondary). In the bankruptcy it is the "Alameda silo", one of four debtor groups (Finance KB)
- Type (this KB)
- Proprietary crypto trading firm and market maker; a fraud and blow-up case. 8 moves
- Leadership
- Bankman-Fried (CEO to Oct 2021, then owner); Caroline Ellison and Sam Trabucco co-CEOs from Oct 2021; Ellison sole CEO after Trabucco left in Aug 2022 (Bloomberg via Wikipedia; Finance KB)
- What it traded
- Cross-exchange and cross-border spot arbitrage; market making on FTX and other venues; perpetual-funding and basis trades; directional and token positions; crypto lending and borrowing; venture stakes
- Peak reported scale
- Balance sheet at 30 Jun 2022: assets $14.6bn, liabilities $8bn (of which loans $7.4bn), cash $134m, equity securities $2bn, unlocked FTT $3.66bn, FTT collateral $2.16bn, locked SOL $863m (CoinDesk, 2 Nov 2022)
- Price of the end
- FTX customer shortfall ~$8bn (trial evidence; the judge's loss finding at sentencing as reported); CFTC consent judgment $12.7bn against FTX and Alameda ($8.7bn restitution, $4bn disgorgement), 8 Aug 2024, subordinated in practice to the bankruptcy plan (CFTC release 8938-24 via press)
- Legal outcome
- Indictment unsealed 13 Dec 2022; Ellison and Wang pleaded guilty Dec 2022, Nishad Singh Feb 2023; trial 3 Oct–2 Nov 2023; Bankman-Fried convicted on all seven counts; sentenced 28 Mar 2024 (25 years; prosecutors sought 40–50) (DOJ; Finance KB); Second Circuit affirmed 12 Jun 2026 (Finance KB, reported)
8 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
2017
Founding and the Asia Premium Arbitrage
Founding / new strategy
2019
Allow Negative and the 65bn Credit Line
Rogue trade or control failure / leverage decision (failure)
2019
Market Maker and Backstop for FTX
Market-structure bet / affiliated market making (conflict of interest)
2020
FTT Serum and Sam Coins as Collateral
Leverage, sizing or collateral decision (failure)
2021
Venture Book Funded by Customer Money
Capital allocation / misuse of funds (failure)
2022
Balance Sheet Leak Run and Chapter 11
Loss, drawdown or blow-up; restructuring and bankruptcy (failure)
2022
Lender Recalls and the Alternative Balance Sheets
Loss response / misrepresentation to lenders (failure)
2023
Trial Sentence and CFTC Judgment
Regulatory, enforcement or legal action