March 27, 2024
Alameda Research's Untimely Collapse: A Tale of Insider Confessions and Financial Missteps
Latest Cryptocurrency News

Alameda Research’s Untimely Collapse: A Tale of Insider Confessions and Financial Missteps

According to a former engineer at the company who recently spoke with the media, insiders at Alameda Research were only made aware that the trading firm was in danger of collapsing due to a confession by former CEO Caroline Ellison, not because of internal warning flags.

“It pretty much seemed like business as usual, right up until the end. The days before the company collapsed, it just seemed like a few really busy days of trading,” Aditya Baradwaj, a former Alameda employee, stated. “We had no idea that anything was going on until the very last day, and that’s when Caroline pulled us aside and told us what had been going on behind closed doors.”

Sam Bankman-Fried, Caroline Ellison, and Sam Trabucco founded the Alameda cryptocurrency trading fund. Although Bankman-Fried tried to distance Alameda from its sister company, cryptocurrency exchange FTX, it was ultimately discovered that the two were intertwined when CoinDesk reported that the lines between the two companies were hazy because Alameda’s balance sheet included a sizable portion of FTX’s FTT exchange token.

In the end, such findings led to the demise of FTX and Alameda as well as the filing of criminal accusations against Bankman-Fried. On Wednesday, his fraud and conspiracy trial began.

The internal security procedures and checks and balances in the trading business, according to Baradwaj, were relatively lax, which led to a “fat finger” deal in 2021 that momentarily caused the price of bitcoin to drop by as much as 87%.

At the time, a huge deal that sold bitcoin for cents on the dollar went through due to a missed decimal.

“Alameda’s poor security and risk checks stood out, especially when you consider that traditional firms would’ve had these measures in place,” he explained during an interview. “The environment at both Alameda and FTX was one where huge monetary decisions were made with minimal oversight. While there were many issues, we never expected outright illegal activities.”

“FTX had switched off Alameda’s risk limits to make itself more appealing,” the author writes in Michael Lewis’ “Going Infinite,” adding later that the “losses caused by this unsettling policy were in any case trivial.”

Image: Freepik

Related posts

Don’t Anticipate a ‘Sexy’ Crypto Bull Run Regardless of Bitcoin ETFs: Concordium Founder 

Christian Green

South Korea’s Strengthened Sanctions Against North Korea: Tracking Crypto Assets to Disrupt Weapons Funding

Harper Hall

Digital Yuan App Adds Visa and Mastercard Top-Ups for Tourists

Harper Hall

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More