Crypto Gloss

Alameda Research

Alameda Research was a quantitative cryptocurrency trading firm founded in 2017 by Sam Bankman-Fried (SBF) and Tara Mac Aulay in Berkeley, California — later relocating to Hong Kong and the Bahamas — that served as the financial engine behind FTX Exchange and whose misappropriation of FTX customer funds triggered the November 2022 collapse of both entities and SBF’s criminal conviction.

Ostensibly a market-making and arbitrage firm, Alameda exploited inefficiencies across global crypto markets (including the “Kimchi premium” and Japan/Korea arbitrage trades) and grew to manage billions in assets. Caroline Ellison became co-CEO alongside Sam Trabucco in 2021, then sole CEO in 2022, before cooperating with prosecutors and pleading guilty.

Background

SBF founded Alameda after working at Jane Street Capital, applying quantitative arbitrage strategies to cryptocurrency markets. Alameda was known for aggressive market making, large OTC trades, and influence over token prices for projects in which it held early positions. Caroline Ellison became co-CEO alongside Sam Trabucco in 2021, and then sole CEO in 2022, before cooperating with prosecutors and pleading guilty.

The Misuse of FTX Funds

Post-collapse investigation and court evidence revealed:

  • Alameda had a secret $65 billion credit line from FTX — funded by customer deposits — allowing it to borrow essentially unlimited capital
  • Alameda used these funds for speculative ventures, real estate ($300M+ in Bahamas properties), political donations, and leveraged trading positions that suffered massive losses in the 2022 bear market
  • When Alameda’s losses and the FTT balance sheet became public (the CoinDesk leak of Nov 2, 2022), the bank run was triggered
  • Alameda’s balance sheet showed $5.8B in FTT (FTX’s own token) as its primary collateral — a circular arrangement

Key Personnel and Legal Outcomes

Person Role Outcome
Sam Bankman-Fried Founder/CEO of FTX Convicted, sentenced to 25 years
Caroline Ellison CEO of Alameda Pleaded guilty, cooperating witness
Gary Wang CTO of FTX Pleaded guilty, cooperating witness
Nishad Singh Head of Engineering at FTX Pleaded guilty, cooperating witness
Ryan Salame Co-CEO of FTX Digital Markets Pleaded guilty

History

  • 2017 — Alameda Research founded by Sam Bankman-Fried and Tara Mac Aulay in Berkeley, CA. Initially focused on arbitrage and market-making.
  • 2018–2019 — Rapid growth. Alameda exploits the Kimchi premium (price gap between Korean and global Bitcoin exchanges) and other arbitrage opportunities. Grows to manage hundreds of millions.
  • 2019 — FTX founded. SBF founds FTX Exchange, with Alameda as the primary market maker and financial backer. The intertwined entities begin.
  • 2021 — Caroline Ellison becomes co-CEO. Sam Trabucco and Caroline Ellison serve as co-CEOs; Trabucco later departs.
  • 2022 (Bear Market) — Alameda suffers heavy losses. The 2022 crypto bear market causes massive losses in leveraged positions. Alameda draws heavily on FTX customer funds to cover.
  • November 2, 2022 — CoinDesk leaks Alameda’s balance sheet. The revelation that Alameda’s primary collateral is $5.8B in FTT (FTX’s own token) triggers a bank run.
  • November 8–11, 2022 — FTX and Alameda collapse. FTX halts withdrawals; Binance abandons rescue deal. FTX files for bankruptcy. Both entities implode.
  • November 2022–2023 — Criminal proceedings. SBF arrested in the Bahamas. Caroline Ellison, Gary Wang, and Nishad Singh plead guilty and cooperate with prosecutors.
  • November 2023 — SBF convicted on all counts. Found guilty of fraud and conspiracy. Sentenced to 25 years in federal prison in March 2024.

Common Misconceptions

“Alameda was just unlucky with the bear market.”

Court evidence established that Alameda’s secret $65 billion credit line from FTX customer funds was a deliberate arrangement, not a temporary emergency measure. Customer funds were systematically misused over an extended period.

“Alameda Research was a hedge fund.”

Alameda operated primarily as a quantitative trading firm and market maker, not a traditional hedge fund. It did not manage external client money in the conventional sense — its capital came from FTX’s customer deposits via the secret credit line.

Social Media Sentiment

  • r/CryptoCurrency / r/FTX_Creditors: Alameda Research is synonymous with the FTX fraud in community discussions. The collapse thread is one of the most-referenced events in crypto Reddit history. Ongoing bankruptcy proceedings continue to generate coverage.
  • X/Twitter: Alameda’s collapse is a major reference point in discussions about crypto exchange risk, self-custody, and “not your keys, not your coins.” SBF trial updates dominated CT in October–November 2023.
  • Mainstream media: Alameda/FTX received extensive mainstream press coverage — NYT, WSJ, The Guardian, Netflix documentary. One of the most widely covered financial fraud cases of the 2020s.

Last updated: 2026-04

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