• Alameda Research, the trading firm founded by Sam Bankman-Fried, recorded huge losses from its investments in the ripple payment network and wrong price predictions from its trading bot by 2018 spring.
• The company was able to make up to $30 million in profits from BTC arbitrage before the technique dried up four years ago.
• The crypto bull market in 2021 made up for the losses, as Alameda pulled in $1 billion in profits that year before declaring bankruptcy in November 2021.
Alameda Research, a trading firm founded by Sam Bankman-Fried, has been facing its fair share of financial troubles over the last few years. Sources have revealed that these issues were already present as early as 2018, with the company having suffered significant losses by the spring of that year.
At the time, Alameda was relying heavily on its investments in the ripple payment network, as well as its trading bot, which was making wrong price predictions. This resulted in the firm’s losses reaching 65 percent of its assets, leaving them with just $30 million worth of assets.
Prior to this, Alameda was able to make up to $30 million in profits from BTC arbitrage. This involved buying BTC at lower prices and selling them in Japan, where the digital asset’s price was higher than elsewhere. However, after four years of profiting from this technique, the costs of transactions became too high and the profits too low.
The cryptocurrency bull market of 2021 came as a blessing for Alameda, with the firm pulling in $1 billion in profits that year. Unfortunately, this was not enough to save the company from bankruptcy, which it declared in November 2021.
The story of Sam Bankman-Fried’s rise and fall is one of the most spectacular disasters in the history of cryptocurrency. Despite Alameda’s reputation for trading, it appears that its investment prowess was not as high as the firm made many believe.