Alameda Research was a crypto hedge fund trading firm started by FTX exchange founder and former CEO Sam Bankman-Fried (SBF) and Tara Mac Aulay in 2017.

Bankman-Fried used various trading strategies to put Alameda on the map, including arbitrage trading, market-making, trading volatility, and yield farming.

SBF started Alameda after leaving Jane Street Capital in 2017, where he traded at their ETF desk.

Bankman-Fried made headlines in 2018 when it was reported that Alameda earned an estimated $20 million arbitrage trading the price differences of bitcoin on U.S. crypto exchanges when compared to Japanese crypto exchanges.

In its simplest form, arbitrage trading involves buying a digital asset at one price on one crypto exchange and selling it for a higher price on another crypto exchange, profiting from the difference between the two prices.  This trade is done over and over, as long as the price difference is large enough to realize a profit from the trade.

Japan was notorious, at the time, for pricing bitcoin at a higher price when compared to prices of bitcoin in the U.S.

Alameda was reported to have traded $25 million a day as part of this trade.

On November 2, 2022, Coindesk reported insider information related to Alameda’s balance sheet of $14 billion.  It was reported that most of the assets were in fact FTT, the native cryptocurrency of FTX, the cryptocurrency exchange started by Alameda’s Sam Bankman-Fried.

Sam and FTX created FTT as a rewards mechanism for its traders. By buying and holding FTT, FTX users were rewarded with trading discounts and other perks.

FTX controlled all aspects of the FTT cryptocurrency, and as FTT became more popular, its price increased and so did FTX and Alameda, as two of the largest holders of FTT within their companies.

As word got out that Alameda and FTX had closer financial ties than originally thought, FTX customers started withdrawing their money en masse, totaling $5 billion in the first 3 days.

Reports then emerged suggesting that SBF and other company executives moved $10 billion in customer funds from FTX to Alameda against the terms-of-service of FTX, in an effort to prop up Alameda and keep it from defaulting on loans it had taken out.

FTX halted customer withdrawals as it didn’t have the funds to cover the withdrawal requests from so many users all at the same time.  Alameda, similarly, saw its balance sheet decrease dramatically, and it couldn’t pay off the liabilities created by bad trades or investments it made in over 150 other crypto businesses.

Alameda filed for Chapter 11 bankruptcy on November 17, 2020.  The bankruptcy filing notes that Alameda has over $5 billion in liabilities that it owes to businesses and investors.

The Alameda website was taken offline on November 9th, 2022.  Two days later, Bankman-Friend announced that the company as a whole would be winding down.