A look at the rise and fall of Alameda Research, whose troubles began well before the crypto crash as it took big gambles, winning some and losing plenty

Trading firm took big gambles, winning some and losing plenty; ‘complete lack of a risk-management framework’

Wall Street Journal 2023-01-01

Context & Ripple Effects

The account connects Alameda’s collapse to patterns that predated the broader crypto downturn: employees had raised concerns about risky investments in its early years, while the firm later absorbed an FTX trading loss that erased its 2021 profits. Reporting that FTX customer money was lent to Alameda makes the stated absence of a risk-management framework consequential beyond the trading firm itself.

First-order effects

Alameda’s losses and risk controls are reframed as an internal operating failure rather than a disruption caused solely by the crypto crash.
FTX is directly implicated because Alameda’s risk-taking was supported by customer funds that, according to related reporting, were lent from the exchange.

Second-order effects

The earlier employee concerns over risky investments and the MobileCoin loss strengthen scrutiny of whether affiliated trading firms and exchanges can isolate one another’s losses.
Customers and creditors of the linked businesses face a weaker basis for treating trading-firm exposure as separate from exchange-level risk when losses can be shifted across affiliates.

Third-order effects

The episode points to a crypto-market structure in which weak governance at a proprietary trading affiliate can become a platform-wide solvency risk when controls over customer assets and related-party lending fail.

The trend: Alameda’s trajectory is one example of the crypto legitimacy gap, where opaque affiliated entities and weak risk controls turn trading losses into broader trust failures.

Discussion

@ryder_ripps Ryder Ripps on x
yuga better find some new lawyers, i wouldnt doubt Fenwick gets disbarred/dissolved by our trial in June. “We know the owner of Alameda and consider him of the highest reputation in the industry,” -Fenwick https://www.wsj.com/...
@misruleoflaw Mark Pulliam on x
Lawsuits to follow. ""We know the owner of Alameda and consider him of the highest reputation in the industry," Daniel Friedberg wrote on the letterhead of his law firm, Fenwick & West LLP. He later took a job as FTX's chief regulatory officer." https://www.wsj.com/...
@realjonbovi JonBovi on x
He was pushing the CFTC to institute a change in margin methodology that he deliberately skirted on his own exchange. Demonstrates what he thinks of the margin methodology. Fraud. Troubles at Sam Bankman-Fried's Alameda Began Well Before Crypto Crash https://www.wsj.com/... https…
@eliotwb Eliot Brown on x
Always good to have a supportive lawyer on your side deep dive on Alameda - SBF's hedge fund that wasn't so great at hedging https://twitter.com/...
@ceostroff Caitlin Ostroff on x
“We know the owner of Alameda and consider him of the highest reputation in the industry,” Dan Friedberg wrote to one prospective lender to Alameda. He later became FTX's chief regulatory officer. w/@kowsmann, @Vlajournaliste, @GZuckerman, @eliotwb https://www.wsj.com/...
@wsj @wsj on x
Sam Bankman-Fried has said Alameda prospered until it was tripped up in a crypto crash. Its troubles were much deeper than that. https://www.wsj.com/...
@pauly0x Pauly on x
Fenwick & West is the same law firm that is suing @ryder_ripps and I on behalf of YugaLabs. https://twitter.com/...
@MikeElgan@mastodon.social Mike Elgan on mastodon
WSJ says Sam Bankman-Fried likely to plead not guilty. That's what Silk Road founder Ross Ulbricht did, even though he was offered a plea deal that would likely have given him a 10-year sentence. …
@sbf_ftx @sbf_ftx on x
None of these are me. I'm not and couldn't be moving any of those funds; I don't have access to them anymore. https://cointelegraph.com/...
@trengriffin Tren Griffin on x
Everyone knows that the tooth fairy has access to these wallets (formerly known as SBF's wallets). https://twitter.com/...
@gerberkawasaki Ross Gerber on x
When does the abuse end? It's insane this criminal is out on fake bail. #ftx https://twitter.com/...
@pixelatedboat @pixelatedboat on x
No one in history has been more committed to tweeting through it and you have to respect that https://twitter.com/...
@cryptomanran Ran Neuner on x
Um... how do you lose access to a wallet? If you have the keys , you have access! https://twitter.com/...
@renato_mariotti Renato Mariotti on x
Nearly every defendant pleads “Not Guilty” at their arraignment. It's not surprising that SBF will. Unfortunately for him, it appears unlikely that he will obtain anything less than a judgment of Guilty on multiple felony counts by the end of this case. https://twitter.com/...
@bitfinexed @bitfinexed on x
“SBF is also accused of defrauding the FEC starting in 2020 by conspiring with others to make illegal contributions to candidates and political committees in the names of other people”. No way he has bank accounts in other peoples names, right...right? https://www.wsj.com/...
@lukewearechange Luke Rudkowski on x
Should be a bigger story https://twitter.com/...
@marcslove Marc Love on x
Didn't he like already confess? Many times? And on camera? https://twitter.com/...
@iansherr Ian Sherr on x
For those keeping track at home: This is the man at the center of one of the biggest criminal fraud cases in history. https://twitter.com/...
@danprimack Dan Primack on x
Hadn't really considered him taking the other path... https://twitter.com/...
@cgasparino Charles Gasparino on x
He is a risk taker but he also hasn't bet right in a long long time — Sam Bankman-Fried is likely to enter a plea of not guilty Sam Bankman-Fried is likely to enter a plea of not guilty https://www.wsj.com/...
@mikeelgan Mike Elgan on x
WSJ says Sam Bankman-Fried likely to plead not guilty. That's what Silk Road founder Ross Ulbricht did, even though he was offered a plea deal that would likely have given him a 10-year sentence. Now he's serving two lifesentences plus 40 years, with no possibility of parole.
@bitboy_crypto Ben Armstrong on x
What about these accounts? 1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ 1LQoWist8KkaUXSPKZHNvEyfrEkPHzSsCd And this newly $236M funded address: 1JHceFenZHACSRPD6tE4bfU6yJ83wTG6kH https://twitter.com/...
@teddyschleifer Teddy Schleifer on x
Sam has his Twitter back https://twitter.com/...
@laurashin Laura Shin on x
Martin Shkreli is back on Unchained to discuss Sam Bankman-Fried's chances in court. Topics: 👨🏻‍⚖ ️ why he thinks SBF's new judge is a “7” 📖 different strategies SBF might try if he pleads not guilty 📲 how Martin learned about crypto while in prison + more! https://unchainedpodca…

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