Alameda Research

Alameda Research was a quantitative cryptocurrency trading firm and liquidity provider founded in 2017 by Sam Bankman Fried and Gary Wang. The company operated as a major participant in digital asset markets, running arbitrage strategies, market making operations, and investment activities across centralized and decentralized trading venues. Alameda became one of the most visible trading firms in the crypto sector until its collapse in 2022 alongside the failure of the FTX exchange.

Overview

At its peak, Alameda Research was known for high volume trading, cross exchange arbitrage, and active participation in early stage token markets. The firm engaged in proprietary strategies that sought to capture inefficiencies in global digital asset pricing. Alameda also acted as a significant liquidity provider, helping support order book depth on many exchanges. Its operations spanned Bitcoin and other major assets, as well as emerging tokens and derivatives products.

Despite its early reputation for technical sophistication, the company came under scrutiny due to its relationship with FTX, particularly regarding shared leadership, commingling of funds, and internal risk practices. These issues became central to regulatory investigations following the failure of both entities.

History and Background

Alameda Research was established in 2017, initially focusing on quantitative strategies and arbitrage opportunities between Asian and Western crypto exchanges. One widely discussed example involved exploiting price differences between markets during periods of high demand, including opportunities in markets with capital controls.

As the cryptocurrency sector expanded, Alameda broadened its scope into derivatives trading, venture investments, and liquidity provisioning. The founding team later established FTX in 2019, a centralized exchange that quickly grew in global prominence. Alameda continued to operate independently on paper, although overlapping leadership and shared resources later became a subject of regulatory examination.

The company’s trajectory changed sharply in November 2022 when public reporting raised questions about Alameda’s balance sheet and its reliance on the FTT token issued by FTX. Liquidity pressures escalated, contributing to a rapid loss of confidence in FTX and ultimately leading to Chapter 11 bankruptcy filings for both entities. Alameda ceased active trading operations as part of the restructuring process.

Core Activities and Services

Alameda Research operated across a wide range of trading and investment functions. Key activities included:

• Market making, providing liquidity across centralized exchanges and supporting token issuers seeking stable trading environments.
• Arbitrage strategies, including cross exchange price discrepancies and quantitative models designed to identify short term inefficiencies.
• Venture investments, backing early stage blockchain projects and participating in token launches.
• Derivatives trading, including perpetual swaps, futures, and structured products.

The firm also maintained close integration with FTX, including serving as a liquidity partner. This relationship later became central to the financial collapse and subsequent legal actions.

Technology and Trading Infrastructure

Alameda relied on proprietary trading systems designed for low latency execution across global markets. Its infrastructure included algorithmic strategies, automated order routing, and risk management systems intended to adjust positions dynamically based on market conditions.

The firm traded across a broad array of assets including Bitcoin, Ethereum, and tokens associated with networks such as Solana. Alameda was known for active participation in new token markets, especially during periods of rapid ecosystem growth in decentralized finance and exchange issued tokens.

Use Cases and Market Position

Before its collapse, Alameda was considered one of the largest quantitative crypto trading firms, regularly ranking among the highest liquidity providers on several exchanges. The firm’s activities contributed to price discovery, market depth, and active trading volume across platforms.

Its investment activities also influenced market development, with Alameda providing funding, token support, and operational liquidity for numerous early stage blockchain projects. This influence contributed to concerns about conflicts of interest after the collapse of FTX and the disclosure of shared financial exposures.

Funding and Leadership

Alameda Research did not operate in a conventional venture funded model. Instead, its trading profits reportedly supported both internal operations and certain activities related to FTX. Sam Bankman Fried served as the public face of the broader enterprise until stepping down from leadership positions in November 2022. Caroline Ellison served as a chief executive of Alameda during later operational phases.

Following the bankruptcy process, restructuring professionals and court appointed teams began unwinding Alameda’s positions, recovering assets, and conducting forensic accounting to determine liabilities and creditor recoveries.

Risks and Considerations

Alameda Research is now primarily relevant as a case study in risk management, governance, and regulatory oversight within digital asset markets. Key issues include insufficient separation between entities, inadequate internal controls, and reliance on volatile collateral structures. These factors contributed significantly to the financial instability that led to the collapse of both Alameda and FTX.

The bankruptcy proceedings, regulatory actions, and criminal cases that followed have influenced ongoing discussions about compliance standards, exchange governance, and the role of proprietary trading firms in crypto markets.