Former CEO of FTX Considered Shutting Down Alameda Research, Unpublished Tweet Thread Reveals
During the trial of Sam Bankman-Fried, an unpublished tweet thread has surfaced, exposing his contemplation of shutting down Alameda Research, the sister hedge fund to FTX. The draft, written in September 2022, was presented by Bankman-Fried’s lawyers during the questioning of FTX’s former CTO Gary Wang. In the thread, publicly shared by Aditya Baradwaj, a former software engineer at Alameda, Bankman-Fried expressed his mixed feelings about the fund’s success and failures. Baradwaj has not responded to requests for comment from Decrypt.
Reasons for Shutting Down Alameda Research
The unpublished draft also outlined the reasons behind Bankman-Fried’s consideration to shut down the hedge fund. One major factor was the high cost of capital in the current economic climate, which he described as “really expensive.” Additionally, Alameda was not generating enough profits to justify its existence as a liquidity provider. Bankman-Fried emphasized the importance of liquidity in the crypto ecosystem but noted that there were now many other sophisticated liquidity providers rendering Alameda’s on-exchange trading less significant.
“We came, we saw, we researched”
The unpublished tweet thread titled “We came, we saw, we researched” was mentioned in a complaint filed by the Commodity Futures Trading Commission (CFTC) in December 2022. The CFTC accused Bankman-Fried of violating federal commodities laws. In the thread, Bankman-Fried suggested that it might be time for Alameda Research to shut down and blamed negative rumors about Alameda’s relationship with FTX for causing burdens that outweighed its existence.
Testimony from Caroline Ellison
During her testimony in court, Alameda’s former CEO and Bankman-Fried’s ex-girlfriend, Caroline Ellison, claimed that the company manipulated its balance sheet to present a less risky image to investors. She also alleged that Bankman-Fried instructed Alameda to borrow $14 billion in customer funds from FTX and used $10 billion of that money to repay lenders. Ellison stated that Bankman-Fried directed her to commit these actions.
Hot Take: The Revealing Thread
The emergence of the unpublished tweet thread during Sam Bankman-Fried’s trial sheds light on his considerations to shut down Alameda Research. It provides insights into the challenges faced by the hedge fund, including high capital costs and insufficient profitability as a liquidity provider. The thread also highlights Bankman-Fried’s acknowledgment of negative rumors and their impact on Alameda’s reputation. Furthermore, Caroline Ellison’s testimony adds another layer to the ongoing trial, implicating Bankman-Fried in alleged manipulation and misuse of customer funds. These revelations offer a deeper understanding of the complexities surrounding Bankman-Fried and Alameda Research’s operations.
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