|Key People||Caroline Ellison, CEO; Sam Bankman-Fried, Founder|
Alameda Research is one of the largest crypto trading firms in the world and one of the largest market makers of digital tokens globally. It was founded by Sam Bankman-Fried and operates out of the Bahamas. Alameda conducts research on the crypto market in order to create algorithms that help them trade more effectively.
Caroline Ellison was named co-CEO of Alameda with Sam Trabucco in October of 2021. She became CEO in August 2022 when Trabucco stepped down from the role.
The firm made more than $1 billion in profit in 2021.
Sam Bankman-Fried co-founded Alameda, his first company, in 2017, when he was 25 years old. According to the New York Times, Alameda’s need for funds to run its trading business was a big reason Bankman-Fried created FTX in 2019. Alameda Research started out as an arbitrage trading firm. As a major player in digital currencies, Alameda traded frequently on FTX’s platform.
The nature of the relationship between FTX and Alameda meant that the troubles at FTX, which went bankrupt in November 2022, shook up Alameda as well, starting when crypto prices began to drop in the spring of 2019. In May and June of 2022, Alameda Research had a series of losses from deals, according to Reuters, including a $500-million loan agreement with the failed crypto lender Voyager Digital. Voyager filed for bankruptcy protection the following month, with FTX's U.S. arm paying $1.4 billion for its assets in a September auction.
FTX fell apart in Autumn of 2022 as reports of liquidity problems resulted in customers withdrawing billions of dollars a day from their accounts. FTX didn’t have the capital to honor those requests because it had used customer deposits for a variety of purposes, including for trading at Alameda Research.
Alameda and FTX
The blurring of lines between Alameda and FTX, which were supposed to be separate businesses, played a major role in FTX's collapse. According to CoinDesk, Alameda's balance sheet was "stuffed with FTX-issued tokens that led to questions about the company’s financial health, eventually snowballing into insolvency."
John J. Ray III, who took over as CEO of FTX on November 11, 2022 amid its collapse, characterized Alameda as a "crypto hedge fund" and said that a "secret exemption of Alameda from certain aspects of FTX.com’s auto-liquidation protocol” was one of a number of poor security and financial controls uncovered since he took control of the company.
Products and Services
- Crypto Quant Shop With Ties to FTX Powers Bankman-Fried's Empire. Bloomberg.
- Who is Caroline Ellison and how did she end up at center of FTX collapse?. FOX News.
- Sam Bankman-Fried’s Alameda Research Draws Increasing Attention. Bloomberg.
- How Caroline Ellison Found Herself at the Center of the FTX Crypto Collapse. The Wall Street Journal.
- How FTX’s Sister Firm Brought the Crypto Exchange Down. The New York Times.
- Exclusive: Behind FTX's fall, battling billionaires and a failed bid to save crypto. Reuters.
- Sam Bankman-Fried wanted to let retail investors borrow money to trade crypto derivatives: CFTC head. CNBC.