Alameda Research is a cryptocurrency trading firm founded by Sam Bankman-Fried and Tara Mac Aulay.
The name Sam Bankmen Fried and Alameda had been making headlines for the past few months after witnessing the largest one-day drop in the history of the index, due to a solvency crisis at his firm.
The highest point of Sam’s wealth was recorded at $26 billion. While he was estimated to have a net worth of $10.5 billion in late October 2022, the Bloomberg Billionaire index reported Sam having no material wealth by the second week of November.
Before starting his own crypto trading firm, Sam Bankman Fried used to work at Jane Street Capital, which is a global proprietary trading company. Sam left his job at Jane Street and it was in 2017 that he decided to start a new firm of his own.
Alameda Research was co-founded by Sam along with Tara Mac Aulay in November 2017. The growth and profit of the company were earned through the arbitrage trade organized by Sam in January 2018.
The company took advantage of the price difference between Bitcoin in Japan and America. As per the reports, Sam Bankman-Fried and his company were able to make a profit of $20 million from the trade.
The company later shifted its headquarters to Hong Kong in 2018. Sam is also credited as the founder of the second-largest crypto exchange firm in the world. The company’s headquarters are located in The Bahamas.
Following the massive loss faced by the company in November 2022, both FTX and Alameda Research filed for Chapter 11 bankruptcy.
The close relationship between the two firms founded by Sam was questioned many times before but Sam assured that even though both the companies were founded by him, they both worked as two independent groups.
Upon the fall of FTX, shocking revelations were made, which made it clear that FTX has lent more than half of its customers’ funds to its sister company Alameda Research. This lending was deemed to be forbidden according to the terms of service by FTX.
While the news about the transfer of unlimited funds from FTX to Alameda was made public, Sam tried to counter the situation by arguing that it was a ‘poor judgment call.’
Even though Sam denied taking responsibility for the situation and accepted the fraud, The Wall Street Journal published a piece of information from the Alameda CEO Caroline Ellison that revealed that Sam and other senior officials at FTX were clearly aware of the transfer which took place between FTX and Alameda.
Upon the resignation of Sam Trabucco, Caroline Ellison became the sole CEO of the company in August 2022.
The relationship between the two companies was always under constant criticism but after Alameda’s balance sheet was revealed, it was understood that 40% of the company’s assets were denominated in FTT, which was the token of FTX.
The revelation that Alameda depended more on the tokens from FTX rather than any third-party currency made investors more curious about the company. It gradually led to a mass withdrawal of their investments from the company. As the rate of withdrawal was massive, the company was not able to keep up with it.
Even though the rivals of the company Binance made a deal to acquire the company, they withdrew from the deal at the last moment.
They stated that the mishandling that the firm made in the funds of the customers and also the investigation that was pending against the firm were the reasons for their withdrawal from the deal. After two days, the company Alameda and FTX filed for Chapter 11 bankruptcy.
Also Read:- Who Is New FTX CEO John Ray? Career, Roles At Enron & FTX
The recent report submitted by John Ray III, who was appointed by a judge to look into the affairs of FTX and its bankruptcy stated that FTX allowed the transfer of funds from FTX to Alameda Research without any effective limits which made it clear that the ties between the two companies were more strong that it seemed or stated by Sam.
It was, without a second thought, made clear that the corporate disaster faced by FTX lies at the center of the relationship between the two firms.
Ray added that the assets from FTX commingled with the assets from Alameda and that Alameda used the funds of their customers to participate in margin trading and the result of the trading was a great loss to the funds of the customers who invested in FTX.
The ultimate cause of the collapse was said to be the lack of experience of the small group of officials in the company who held power and authority.
On November 9, 2022, the website of Alameda was taken down and the Sam made an announcement that the facility was ending all its engagements in trading and that it will be closing down soon.
Read More:- Sam Bankman-Fried, FTX Founder, Arrested In The Bahamas
