Collapse of Sam Bankman-Fried: How Alameda Research lost $12 billion in 1 month

Uncovering the secrets of FTX

Shocking information came out from the trial against Sam Bankman-Fried (SBF), the founder of the failed crypto exchange FTX.

There have been many rumors that the sister company, the famous market maker Alameda Research, was losing money like crazy to supply liquidity on FTX at any cost, which ultimately led SBF to steal clients’ deposits to save his liquidity provider.

The government exhibit from the trial shows that Alameda Research lost $12 billion in 1 month!

The real reason for the ultimate fall of the FTX empire was the collapse of the Terra/LUNA ecosystem.

It is clearly shown in the evidence of the trial against SBF, that in 1 month period - around the collapse of Terra/LUNA - the market maker Alameda Research lost $12 billion (yes, that's a billion with a B!).

I have written a viral LinkedIn post - seen by more than 300'000 people - explaining what was the true cause of the collapse of FTX and Alameda Research:

1. Alameda Research was the main market maker on FTX, providing liquidity at all costs,
2. SBF gave Alameda Research a "non-liquidating" account, meaning that the market maker could go into infinite negative balance and losses,
3. When the Terra/LUNA collapse happened, Alameda Research was the liquidity provider of last resort, and it was buying all sell liquidation trades into a rapidly falling market (going to zero!).
4. That created a massive hole in Alameda Research's balance sheet, and SBF decided to steal billions of dollars of client deposits to save the market-maker.

The final death-blow was when CZ, the CEO of Binance, hinted that Binance would sell $584 million worth of FTT tokens.

This led to a "bank-run" on FTX and the crypto exchange collapsed overnight.

It is mind-blowing to find out that FTX & Alameda Research collapsed exactly as I described it almost a year ago, even though I had no access to detailed trading data, now available from the trail!

I guess my 10 years of experience in the crypto industry, running a crypto exchange and a market maker is worth a lot.

#ftx #alamedaresearch #sbf #cz #binance