Before FTX collapsed it was assumed that Alameda Research was one of the top quantitative trading firms and market makers within the industry. However, much of that perception may have been a facade as a recent report details that Alameda suffered from financial troubles as early as 2018. People familiar with the matter said Alameda was losing money back then and a massive loss from a failed xrp trade in mid-2018 cut the company’s assets by more than two-thirds.
Sam Bankman-Fried’s (SBF) Alameda Research reportedly lost large sums of money as early as 2018, according to a report published by the Wall Street Journal (WSJ). Alameda Research was a quantitive trading firm that was officially launched in Sept. 2017 with Tara Mac Aulay. Prior to launching Alameda, SBF worked for Jane Street and he traded international exchange-traded funds (ETFs) until he started his position as the director of development at the Centre for Effective Altruism.
Reports detail that when SBF started Alameda, the trading firm was making millions by via arbitrage. As an arbitrageur, SBF claimed that opportunities stemmed from countries like Japan and South Korea as bitcoin (BTC) was trading for a premium in those regions. Because of the so-called “Kimchi premium” in South Korea, SBF said BTC was 30% higher at times and in Japan, it was 10% higher. There’s a slew of reports that highlight Alameda making millions from crypto arbitrage, but a recent report from the Wall Street Journal published on Dec. 31, 2022, details Alameda’s trades were not always profitable.
The report says that while SBF stepped down as chief executive from Alameda, he was still very much in control of the company until the very end. The WSJ reporter Vicky Ge Huang detailed that Alameda “took big gambles, winning some and losing plenty.” Further, the WSJ report says SBF continuously borrowed money to bolster such bets and he promised investors double-digit returns if they helped him. According to Austin Campbell, Citigroup’s former co-head of digital assets rates trading, the firm was looking to partner with market makers like Alameda, but Campbell said he grew skeptical of SBF’s firm.
“The thing that I picked up on immediately that was causing us heartburn was the complete lack of a risk-management framework that they could articulate in any meaningful way,” Campbell detailed.
According to people familiar with the matter and Alameda’s trading, the arbitrage opportunities quickly stopped and Alameda’s trading algorithm allegedly made a lot of bad bets. In the spring of 2018, Alameda took a huge hit betting on xrp (XRP) losing over two-thirds of Alameda’s assets. So SBF reportedly started to solicit loans again with pitches promising 20% returns, the people familiar with the matter explained. A document reviewed by the WSJ shows SBF’s lawyer explained how Alameda was a top market maker in one specific pitch to a lender, but the lawyer did not reveal any financial information.
Other people familiar with the matter said SBF sought lenders in Jan. 2019 at a Binance Blockchain Week event in Singapore. While Alameda sponsored the event with $150K, the conference was allegedly used by SBF to solicit lenders and a pamphlet was handed out to potential investors. The pamphlet claimed Alameda held $55 million in assets under management (AUM) but whether or not that data was factual remains to be seen. By Feb. 2019, SBF decided to move Alameda from California to Hong Kong. Former associates said that during the crypto bull run in 2021, Alameda made roughly $1 billion in profits, but when the bull run ended, SBF’s bets began to sour.
Reports also show that Alameda’s former CEO Caroline Ellison had a significant negative balance on FTX in May 2022, months before the FTX fallout. Complaints from the indictment in Manhattan, the U.S. Securities and Exchange Commission (SEC) charges, and the lawsuit filed by the Commodity Futures Trading Commission (CFTC), indicate that Alameda’s losses were so large, it pushed SBF to allegedly borrow funds from FTX customers to bolster the company after the losses. The WSJ further notes that SBF contemplated shutting Alameda down months before the two companies collapsed but the idea never came to fruition.
What do you think about the report that says Alameda Research was suffering from bad bets as early as 2018? Let us know your thoughts about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Following a Brief Fee Spike, Gas Prices to Move Ethereum Drop 76% in 12 Days
Transaction fees on the Ethereum network are dropping again after average fees saw a brief spike on April 5 jumping to $43 per transfer. 12 days later, average ether fees are close to dropping below $10 per transaction and median-sized ... read more.
Before FTX collapsed it was assumed that Alameda Research was one of the top quantitative trading firms and market makers within the industry. However, much of that perception may have been a facade as a recent report details that Alameda suffered from financial troubles as early as 2018. People familiar with the matter said Alameda was losing money back then and a massive loss from a failed xrp trade in mid-2018 cut the company’s assets by more than two-thirds.
Sam Bankman-Fried’s (SBF) Alameda Research reportedly lost large sums of money as early as 2018, according to a report published by the Wall Street Journal (WSJ). Alameda Research was a quantitive trading firm that was officially launched in Sept. 2017 with Tara Mac Aulay. Prior to launching Alameda, SBF worked for Jane Street and he traded international exchange-traded funds (ETFs) until he started his position as the director of development at the Centre for Effective Altruism.
Reports detail that when SBF started Alameda, the trading firm was making millions by via arbitrage. As an arbitrageur, SBF claimed that opportunities stemmed from countries like Japan and South Korea as bitcoin (BTC) was trading for a premium in those regions. Because of the so-called “Kimchi premium” in South Korea, SBF said BTC was 30% higher at times and in Japan, it was 10% higher. There’s a slew of reports that highlight Alameda making millions from crypto arbitrage, but a recent report from the Wall Street Journal published on Dec. 31, 2022, details Alameda’s trades were not always profitable.
The report says that while SBF stepped down as chief executive from Alameda, he was still very much in control of the company until the very end. The WSJ reporter Vicky Ge Huang detailed that Alameda “took big gambles, winning some and losing plenty.” Further, the WSJ report says SBF continuously borrowed money to bolster such bets and he promised investors double-digit returns if they helped him. According to Austin Campbell, Citigroup’s former co-head of digital assets rates trading, the firm was looking to partner with market makers like Alameda, but Campbell said he grew skeptical of SBF’s firm.
“The thing that I picked up on immediately that was causing us heartburn was the complete lack of a risk-management framework that they could articulate in any meaningful way,” Campbell detailed.
According to people familiar with the matter and Alameda’s trading, the arbitrage opportunities quickly stopped and Alameda’s trading algorithm allegedly made a lot of bad bets. In the spring of 2018, Alameda took a huge hit betting on xrp (XRP) losing over two-thirds of Alameda’s assets. So SBF reportedly started to solicit loans again with pitches promising 20% returns, the people familiar with the matter explained. A document reviewed by the WSJ shows SBF’s lawyer explained how Alameda was a top market maker in one specific pitch to a lender, but the lawyer did not reveal any financial information.
Other people familiar with the matter said SBF sought lenders in Jan. 2019 at a Binance Blockchain Week event in Singapore. While Alameda sponsored the event with $150K, the conference was allegedly used by SBF to solicit lenders and a pamphlet was handed out to potential investors. The pamphlet claimed Alameda held $55 million in assets under management (AUM) but whether or not that data was factual remains to be seen. By Feb. 2019, SBF decided to move Alameda from California to Hong Kong. Former associates said that during the crypto bull run in 2021, Alameda made roughly $1 billion in profits, but when the bull run ended, SBF’s bets began to sour.
Reports also show that Alameda’s former CEO Caroline Ellison had a significant negative balance on FTX in May 2022, months before the FTX fallout. Complaints from the indictment in Manhattan, the U.S. Securities and Exchange Commission (SEC) charges, and the lawsuit filed by the Commodity Futures Trading Commission (CFTC), indicate that Alameda’s losses were so large, it pushed SBF to allegedly borrow funds from FTX customers to bolster the company after the losses. The WSJ further notes that SBF contemplated shutting Alameda down months before the two companies collapsed but the idea never came to fruition.
What do you think about the report that says Alameda Research was suffering from bad bets as early as 2018? Let us know your thoughts about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Draft Law Regulating Aspects of Crypto Taxation Submitted to Russian Parliament
A bill updating Russia’s tax law to incorporate provisions pertaining to cryptocurrencies has been filed with the State Duma, the lower house of parliament. The legislation is tailored to regulate the taxation of sales and profits in the country’s market ... read more.
The status of the Venezuelan gold currently being held by the Bank of England might fall into regulatory limbo after the dissolution of the interim government of Juan Guaido. The 31 tons of gold have been the subject of dispute between the current president Nicolas Maduro and Juan Guaido since 2019, when Guaido integrated a parallel government.
The status of the Venezuelan gold stash guarded in the vaults of the Bank of England in London is uncertain after the dissolution of the interim government of the country. The 31 tons of gold (1.02 millon troy ounces), valued at more than $1.85 billion, were disputed by the two governments of the country, one presided over by Nicolas Maduro, and the other by interim president Juan Guaido, who integrated a provisional government in 2019 after disputing the legality of the presidential ballot.
While U.K. courts had decided in favor of Guaido in July, the dissolution of the government executed in a session of the Legislative Assembly elected back in 2015, casts doubts on the possible future of this gold and other Venezuelan properties offshore, with some legislators claiming that might open the doors for Maduro to have a valid claim on these.
Deputy Freddy Guevara hinted at this possibility during the session. He stated:
There was no prior consultation with the international community on the recognition of this reform. They have clearly told us abroad that, with this reform, the protection of foreign assets is not guaranteed. How is it possible to take a leap into the void?
72 deputies voted to disintegrate the interim government, while 29 were against this measure, and eight deputies abstained.
While the interim government was disbanded, the parallel Legislative Assembly constituted a Board of Directors and Asset Protection, that would have the task of safeguarding and organizing Venezuelan properties and companies abroad. The board, which will be integrated by five members, will have ample powers to deal with these responsibilities, supported by the legality of the assembly.
However, this structure is new and does not figure in any of the 52 trials all over the world where there is more than $40 billion in dispute between the two governments. Deputy Juan Miguel Matheus criticized this idea, stating that these assets were not in danger because they were under the custody of governments that back the “democratic struggle” that the Venezuelan people are currently fighting.
This, however, brought heavy criticism from other deputies, who argued that the interim government was the only warranty of recovering these assets due to the international recognition that Guaido had.
What do you think about the future of the 31 tons of Venezuelan gold held in the U.K.? Tell us in the comments section below.
Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Central Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year
The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.
Source From : News