Report Says Alameda Research ‘Didn’t Trade Crypto,’ Speculators Think SBF’s Political Connections Let FTX Fly Under the Radar

On Nov. 11, 2022, FTX Trading Ltd. filed a voluntary petition for Chapter 11 bankruptcy protection in Delaware. The news followed a few days of speculation and evidence that had shown the digital currency exchange was likely insolvent. The company’s bankruptcy filing and information concerning Sam Bankman-Fried’s (SBF) quantitative cryptocurrency trading firm Alameda Research shed some more light on the situation. Moreover, crypto proponents have questioned why U.S. regulators let FTX fly under the radar.

This past Friday, the general public and even FTX employees kept in the dark, were informed that FTX Trading Ltd. filed for Chapter 11 bankruptcy in the United States. The filing explains that it has more than 100,000 creditors and the firm’s estimated liabilities equate to $10 billion to $50 billion. The bankruptcy filing is signed by FTX’s new CEO John J. Ray III, an individual that worked on Enron’s bankruptcy proceedings.

The bankruptcy filing includes FTX Trading Ltd. and 134 affiliates of the debtor including Alameda Research, Atlantis Technology, Bitpesa, Blockfolio, Cedar Bay, DAAG Trading, Global Compass Dynamics, Hawaii Digital Assets, GG Trading Terminal, Ledger Holdings Inc., Liquid Financial, Western Concord Enterprises, FTX US Derivatives, FTX US Services, and FTX US Trading. The filing is authorized and signed by former FTX CEO Samuel Benjamin Bankman-Fried, otherwise known as SBF.

While the filing was registered on Nov. 11, SBF’s signature on the filing was dated Nov. 10, 2022. Out of the 134 affiliates, 11 share the Alameda name with Sam Bankman-Fried’s (SBF) quantitative cryptocurrency trading firm called Alameda Research. While Alameda claims to be a quantitative crypto trading company, it has been said that Alameda did nothing of the sort.

“Sam Bankman-Fried’s Alameda Research didn’t trade crypto so far as we can tell,” the investigative journalist and Twitter account @lordnefty wrote. “What did they do then? They ‘invested’ $8B across 448 venture-stage startups, most of which have ‘1-10’ employees and zero documentation. It only gets more crazy when you dig in to each and every one of the companies.” The journalist added:

A financial control feedback loop that ultimately ends with the all the money going to Sam Bankman-Fried controlled companies, companies with no owner or financial data, splash-page websites, etc.

While some claim Alameda didn’t really trade digital assets, it has also been said that Bankman-Fried and Alameda leveraged arbitrage schemes trading up to $25 million a day. The web portal crunchbase highlights the great number of portfolio companies associated with Alameda. Furthermore, on Nov. 2, 2022, Coindesk reporter Ian Allison published a story on Alameda’s balance sheet, which noted that the company held a massive amount of ftx (FTT) tokens in comparison to other assets held by the firm.

The report says Alameda’s CEO Caroline Ellison declined to comment. Alameda Research’s day-to-day affairs were run by Ellison, Nate Parke, Charlie Tsang, Christian Drappi, Aditya Baradwaj, Oliver Hamilton, and Sam Trabucco as an advisor. Ellison’s father is an MIT faculty member and an expert in economics, game theory, and technology adoption.

Following Coindesk’s Alameda balance sheet report, Binance CEO Changpeng Zhao (CZ) said his exchange would be dumping its FTT tokens.

Prior to CZ’s statements, on Oct. 31, 2022, Dirty Bubble Media (DBM) published a post that showed Alameda happened to be one of Celsius’ largest unsecured creditors and the crypto lender owes Alameda $12.8 million. The DBM report further highlights Celsius had another large unsecured creditor called “Pharos Fund SP.”