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Alameda Research

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Summary

Alameda Research LLC was a quantitative cryptocurrency trading firm founded in November 2017 by Sam Bankman-Fried that served as the primary vehicle for one of the largest financial frauds in U.S. history. Alongside FTX, which Bankman-Fried founded in 2019, Alameda secretly borrowed and misappropriated approximately $8 billion in FTX customer deposits, using the funds for risky trading, venture investments, real estate, and political donations. The collapse of FTX and Alameda in November 2022 triggered criminal convictions for multiple executives, a 25-year prison sentence for Bankman-Fried, and a $12.7 billion CFTC judgment.

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Overview and Founding

Alameda Research LLC was co-founded in November 2017 by Sam Bankman-Fried following his departure from Jane Street Capital, alongside co-founder Tara Mac Aulay. The firm was initially headquartered in Berkeley, California and focused on quantitative cryptocurrency trading and arbitrage. In early 2019, Alameda relocated to Hong Kong, coinciding with Bankman-Fried's launch of the FTX cryptocurrency exchange in April 2019. From its founding, Alameda presented itself publicly as an independent trading firm, though in practice it operated in close coordination with FTX under Bankman-Fried's control. Caroline Ellison, who had worked under Bankman-Fried, eventually rose to CEO of Alameda Research. At its peak the firm claimed to manage over $14.6 billion in assets.

Sources

The Core Fraud: Commingling and Misappropriation of Customer Funds

According to U.S. federal prosecutors, the CFTC, and testimony at trial, Alameda Research was secretly granted access to FTX customer deposits on a massive scale. FTX customers depositing funds were directed to bank accounts owned by Alameda, which then commingled those assets with its own trading capital. Bankman-Fried directed engineers Gary Wang and Nishad Singh to embed a hidden feature in FTX's codebase — the 'allow_negative' flag — that exempted Alameda's accounts from standard overdraft and liquidation checks applicable to all other FTX users. This effectively granted Alameda an undisclosed, effectively unlimited line of credit against FTX's customer asset pool. At the time this code change was made, Bankman-Fried publicly stated on Twitter that Alameda's account was 'just like everyone else's.' The scheme is alleged to have resulted in the misappropriation of over $8 billion in FTX customer deposits. Gary Wang testified at trial that Alameda began drawing on customer funds as early as 2019, the year FTX launched.

Sources

Use of Misappropriated Funds

According to court filings and trial testimony, the approximately $8 to $9 billion in misappropriated FTX customer funds routed through Alameda Research were deployed across several categories of expenditure. Venture investments included over $500 million into Anthropic, over $1 billion into Genesis Digital Assets (a cryptocurrency mining firm), and $200 million into K5 Global. Political donations funded through Alameda and FTX executives totaled in the tens of millions of dollars, including $5 million to Future Forward USA in 2020 and large contributions to Guarding Against Pandemics. Endorsement and sponsorship spending included approximately $205 million paid to rename the Miami Heat's arena to FTX Arena. Luxury real estate in the Bahamas was purchased using commingled funds. A forensic accountant engaged during the FTX bankruptcy proceedings estimated total misuse of customer funds at approximately $9 billion across these categories.

Sources

The Collapse: November 2022

The unraveling of Alameda Research and FTX began on November 2, 2022, when CoinDesk published a report revealing the contents of Alameda's balance sheet. The document showed that Alameda's largest single asset was $3.66 billion of 'unlocked FTT' — FTX's own native exchange token — and a further $2.16 billion in FTT used as collateral. This circular exposure raised immediate concerns about the independence and solvency of both entities. On November 6, Binance CEO Changpeng Zhao announced Binance would liquidate its holdings of FTT, triggering a market sell-off. Caroline Ellison publicly offered to purchase Zhao's FTT position at $22 per token in an attempt to stabilize the price, but the market continued declining. Binance briefly signed a non-binding letter of intent to acquire FTX on November 8 but withdrew after a day of due diligence, citing concerns about mishandled customer funds and regulatory investigations. Within 72 hours of Binance's initial announcement, FTX faced approximately $5 billion in withdrawal requests it could not fulfill. On November 11, 2022, FTX Trading Ltd., Alameda Research LLC, and over 100 affiliated entities filed for bankruptcy. Sam Bankman-Fried resigned as CEO. John J. Ray III, who previously oversaw the Enron bankruptcy, was appointed as FTX's new CEO and described FTX's internal controls as 'unprecedented' in their failure.

Sources

Regulatory and Criminal Actions

On December 13, 2022, the CFTC filed a complaint against Samuel Bankman-Fried, FTX Trading Ltd., and Alameda Research LLC in the U.S. District Court for the Southern District of New York, charging fraud and material misrepresentations relating to digital commodity sales. The complaint asserted that defendants caused the loss of over $8 billion in FTX customer deposits. The same day, the U.S. Department of Justice and the SEC filed parallel charges. The DOJ indicted Bankman-Fried on eight criminal counts including wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud, conspiracy to commit commodities fraud, and conspiracy to commit money laundering. The SEC separately charged Bankman-Fried with defrauding FTX investors. On November 2, 2023, a jury in the Southern District of New York found Bankman-Fried guilty on all seven counts presented at trial. On March 28, 2024, Judge Lewis Kaplan sentenced Bankman-Fried to 25 years in federal prison and ordered $11 billion in forfeiture. On August 8, 2024, the U.S. District Court entered a consent order against FTX Trading Ltd. and Alameda Research LLC requiring payment of $12.7 billion in total monetary relief: $8.7 billion in restitution to victims and $4 billion in disgorgement. The CFTC described this as its largest recovery in agency history.

Sources

Executive Guilty Pleas and Sentencing

Multiple Alameda Research and FTX executives entered guilty pleas and cooperated with federal prosecutors. Caroline Ellison, CEO of Alameda Research, pleaded guilty on December 18, 2022 to seven counts including conspiracy to commit wire fraud on FTX customers, conspiracy to commit wire fraud on Alameda lenders, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering. Ellison served as the government's primary witness at Bankman-Fried's trial, and prosecutors described her testimony as the 'cornerstone of the trial.' On September 24, 2024, Ellison was sentenced to two years in federal prison and ordered to forfeit $11 billion. She was released in January 2026 after serving approximately 14 months. Gary Wang, co-founder and former chief technology officer of FTX, pleaded guilty in December 2022 to four counts including wire fraud and conspiracy. Wang testified at trial and was described by prosecutors as a critical cooperating witness. On November 20, 2024, Wang was sentenced to time served with three years of supervised release and $11 billion in forfeiture. Nishad Singh, former director of engineering at FTX who implemented the 'allow_negative' code change at Bankman-Fried's direction, pleaded guilty to six criminal counts in February 2023. On October 30, 2024, Singh was sentenced to time served with three years of supervised release and $11 billion in forfeiture. Ryan Salame, co-CEO of FTX Digital Markets, pleaded guilty in September 2023 to conspiracy to defraud the FEC and operating an unlicensed money transmitting business. Salame did not cooperate with prosecutors against Bankman-Fried and was sentenced to 7.5 years in federal prison.

Sources

Systemic Red Flags and Internal Controls Failures

Post-collapse investigations and trial testimony revealed multiple systemic failures at Alameda Research and FTX. The two entities shared executive leadership under Bankman-Fried while publicly presenting as separate, independent businesses. FTX had no independent board of directors and no meaningful financial controls. Customer deposits were directed into bank accounts owned by Alameda without disclosure. The 'allow_negative' backdoor in FTX's software was created at Bankman-Fried's direction and was unknown to FTX customers and most staff. Alameda held concentrated positions in FTT, FTX's own native token, creating circular and undisclosed balance sheet risk. John J. Ray III, appointed CEO of FTX following its bankruptcy, stated in a court filing that he had never seen 'such a complete failure of corporate controls' in his decades of restructuring experience, which included overseeing the Enron bankruptcy.

Sources

Timeline

2017-11-01

Sam Bankman-Fried co-founds Alameda Research in Berkeley, California as a quantitative cryptocurrency trading firm.

Alameda Research - Wikipedia

2018-01-01

Alameda executes a bitcoin Japan-US arbitrage trade, earning an estimated $10–$30 million.

Alameda Research - Wikipedia

2019-04-01

FTX cryptocurrency exchange is founded by Bankman-Fried. Alameda relocates to Hong Kong. According to later trial testimony, Alameda began drawing on FTX customer funds as early as this year.

Alameda Research used customer funds as early as 2019, Gary Wang testifies (Protos)

2022-11-02

CoinDesk publishes a report revealing Alameda Research's balance sheet, showing its largest asset is $3.66 billion of FTX's own FTT token, raising questions about the independence and solvency of both entities.

Divisions in Sam Bankman-Fried's Crypto Empire Blur on Alameda's Balance Sheet (CoinDesk)

2022-11-06

Binance CEO Changpeng Zhao announces Binance will sell its FTT holdings. Caroline Ellison publicly offers to buy Zhao's FTT at $22 per token. A bank run on FTX begins.

The Epic Collapse of FTX: A Crypto Markets Timeline (CoinDesk)

2022-11-08

Binance signs a non-binding letter of intent to acquire FTX. Within hours, Binance withdraws after due diligence reveals the extent of mishandled customer funds.

Bankruptcy of FTX - Wikipedia

2022-11-11

FTX Trading Ltd., Alameda Research LLC, and over 100 affiliated entities file for Chapter 11 bankruptcy in Delaware. Bankman-Fried resigns as CEO of FTX. John J. Ray III is appointed CEO.

Bankruptcy of FTX - Wikipedia

2022-12-12

Sam Bankman-Fried is arrested in the Bahamas at the request of U.S. authorities.

Sam Bankman-Fried - Wikipedia

2022-12-13

The CFTC files a complaint against Bankman-Fried, FTX, and Alameda Research for fraud and material misrepresentations. The DOJ and SEC file parallel charges the same day.

CFTC Charges Sam Bankman-Fried, FTX Trading and Alameda with Fraud (CFTC)

2022-12-18

Caroline Ellison and Gary Wang plead guilty to multiple criminal counts in the Southern District of New York and agree to cooperate with prosecutors.

FTX co-founder and former Alameda CEO plead guilty to fraud (NBC News)

2023-02-01

Nishad Singh pleads guilty to six criminal counts including fraud and conspiracy and agrees to cooperate with prosecutors.

Former FTX executive Nishad Singh spared prison for cooperation (Al Jazeera)

2023-09-07

Ryan Salame pleads guilty to conspiracy to defraud the FEC and operating an unlicensed money transmitting business.

Ex-FTX Executive Ryan Salame Pleads Guilty to U.S. Criminal Charges (CoinDesk)

2023-11-02

A federal jury in the Southern District of New York finds Sam Bankman-Fried guilty on all seven criminal counts presented at trial.

Trial of Sam Bankman-Fried - Wikipedia

2024-03-28

Judge Lewis Kaplan sentences Sam Bankman-Fried to 25 years in federal prison and orders $11 billion in forfeiture.

Samuel Bankman-Fried Sentenced to 25 Years in Prison (DOJ)

2024-08-08

The U.S. District Court for the Southern District of New York enters a $12.7 billion consent judgment against FTX Trading Ltd. and Alameda Research LLC — the CFTC's largest-ever recovery — comprising $8.7 billion in restitution and $4 billion in disgorgement.

CFTC Obtains $12.7 Billion Judgment Against FTX and Alameda (CFTC)

2024-09-24

Caroline Ellison is sentenced to two years in federal prison and $11 billion in forfeiture for her role in the FTX fraud.

Caroline Ellison sentenced (CNBC)

2024-10-30

Nishad Singh is sentenced to time served and three years of supervised release, with $11 billion in forfeiture, in recognition of extensive cooperation with prosecutors.

FTX's Nishad Singh gets no jail time (CNBC)

2024-11-20

Gary Wang is sentenced to time served and three years of supervised release, with $11 billion in forfeiture, for his role in building the fraudulent FTX infrastructure.

FTX co-founder Gary Wang avoids prison time (CNBC)

2026-01-22

Caroline Ellison is released from federal custody after serving approximately 14 months of her two-year sentence.

Caroline Ellison released after 14 months (CoinDesk)

model: claude-code-investigator

generated: 5/7/2026, 5:14:24 AM

last updated: 5/7/2026, 5:14:24 AM

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