Alameda Research

Alameda Research LLC was a digital-asset trading firm founded by Sam Bankman-Fried in 2017, two years before he founded the exchange FTX. According to the Commodity Futures Trading Commission, Bankman-Fried controlled both from at least May 2019 until November 11, 2022, and Alameda "operated as a primary market maker on FTX."¹

The Line of Credit

The CFTC's complaint of December 13, 2022, alleged that FTX customer assets "were routinely accepted and held by Alameda and commingled with Alameda's funds," and that Alameda, Bankman-Fried and others used them for "luxury real estate purchases, political contributions, and high-risk, illiquid digital asset industry investments." At Bankman-Fried's direction, FTX employees built into the exchange's code an "allow negative flag" and an "effectively limitless line of credit" that let Alameda withdraw billions of dollars in customer assets, features not disclosed to the public; the commission put customer losses at more than 8 billion dollars.¹ On December 21, 2022, the Securities and Exchange Commission charged Alameda's chief executive, Caroline Ellison, and FTX's co-founder and chief technology officer, Gary Wang, alleging that from 2019 to 2022, at Bankman-Fried's direction, Ellison had bought up FTX's exchange token, FTT, to prop up its price because FTT served as collateral for undisclosed loans of customer assets from FTX to Alameda, and that Wang had written the software that allowed the diversion. Both agreed to settle, and both pleaded guilty and testified against Bankman-Fried, who was convicted on seven counts on November 2, 2023, and sentenced on March 28, 2024, to twenty-five years.²³

Effective Altruism and Anthropic

Bankman-Fried had founded Alameda after William MacAskill recruited him to the "earning to give" wing of effective altruism; in 2018 colleagues including Tara Mac Aulay raised concerns with MacAskill about his honesty and management.⁴ In 2022 Bankman-Fried put about 500 million dollars, through Alameda, into the AI company Anthropic.⁵ In March 2024 the FTX bankruptcy estate agreed to sell most of that stake for 884 million dollars. The largest buyer was a group aligned with Mubadala, the sovereign wealth fund of the United Arab Emirates; Saudi Arabia, CNBC's sources said, had been ruled out on national-security grounds. The second largest was Jane Street, where both Bankman-Fried and Ellison had worked, buying almost 100 million dollars of shares, with its head of quantitative research, Craig Falls, proposing to buy about 20 million dollars personally; HOF Capital, the Ford Foundation and funds managed by Fidelity also bought.⁶