Compile - Odaily
Last week, Michael Lewis, author of The Big Short, published his new book on SBF. In this book, he reveals many details about the early days of Alameda Research. It also revealed to us another side of the altruist SBF that is not well known. Odaily brings you more details about SBF’s past.
Mysterious early co-founder
Who is the co-founder of Alameda Research? Caroline Ellison is naturally the most well-known co-founder. In Alameda’s early days, the company had another co-founder who was not as well-known—Tara Mac Aulay.
Tara is recognized by SBF as an Effective Altruist. As everyone knows, SBF often promotes itself as altruistic, and Tara is also a believer in this spirit. Tara founded Alameda in 2017 in partnership with SBF.In April 2018, Tara resigned along with the management team.
Tara said she left because of concerns about risk management and business ethics. What’s even more bizarre is that its hedge fund evenmillions of dollars missing. Tara tweeted that she had not spoken to her co-founder, known as SBF, since 2018.
Tara had long since identified SBF as dishonest and found him to be a manipulative person.
When they first met, Tara worked at the Center for Effective Altruism at the University of California, Berkeley, which explores how to maximize the good you can do with the resources you already have. SBF is also one of the largest donors to this institution.
Before founding Alameda Research, SBF earned a large bonus from his former employer, the Wall Street trading firm Jane Street, of which approximately $500,000 was used as start-up capital for Alameda Research.
Taras early experience in arbitraging inefficiencies in crypto markets attracted SBF, leading them to co-found Alameda.
Millions of dollars mysteriously disappeared
Within a few months, the two founders managed to convince a few other altruists. some altruists lent them$170 million, as the principal for trading cryptocurrencies.
In 2018, Alameda Research encountered some problems when it was founded. SBF employs about 20 or so altruists as employees and makes a lot of demands on them. Most of these people were in their twenties, but only one had any financial experience, and mostneither know nor careCryptocurrency.
Some early employees accepted SBFs argument that the cryptocurrency market was a crazy inefficient market from which they could make billions through Jane Street (SBFs former employer)-style methods.
In markets in different regions, there are price differences for cryptocurrencies, especially in Asian markets. Tara has made some profits through arbitrage. Alameda Research also attempts to accomplish this goal through arbitrage, just like Tara once did. But what is different from other regions is that the size of the funds Alameda needs to trade is much larger than Tara personally.
SBF: Sloppy Workaholic
Tara noted that working with SBF was not easy.
He demands and expects everyone to work 18 hours a day and give up any normal life, Tara said of SBF. He also frequently missed meetings;Not taking a shower for weeks, surrounded by piles of leftovers. It is even more common to fall asleep directly at the desk.
For others at Alameda Research, much of the teams time is spent controlling SBFs insatiable desire to trade. Ben West, another early Alameda executive, also said, Everyone wanted to leave.
In order to satisfy its trading desire, SBF designed a trading robot that can trade hundreds of cryptocurrencies across multiple exchanges 24 hours a day. In order to prevent unpredictable risks, SBF assured the team that he would only use the robot if he maintained monitoring of the trading system.
But on one occasion, SBF fell asleep while the bot was running, so the bot system traded without supervision for several hours. From that moment on, the entire management team no longer trusted SBF.
run away
It was SBFs complete disregard for risk management that triggered the subsequent critical incident that led to Taras decision to quit.
As of early 2018, Alamedas finances remained in disarray. Alameda lost millions of dollars, but they didnt know exactly how much. Alamedas trading system lost about $14 million in February 2018, or about $500,000 a day. And on top of that, millions of dollars have mysteriously disappeared.
An Alameda employee discovered $4 million worth of XRP tokensmysterious disappearance, the XRP token is used as a payment rail by traders. SBF is not worried. He believes that these disappeared XRP will appear somewhere.
The management team didn’t believe the token would disappear, and over the next two weeks, Alameda ceased trading. They tried to find the missing token, but in the end theyStill looking forless thanThis $4 million.
By this point, the team was tired of SBFs unreliable behavior.
Tara questioned, “How are we going to pass an audit if we lose 10% of our transactions?”
Tara and the management team left Alameda on April 9, 2018, taking with them about half the staff. They received severance packages ranging from $1 million to $2 million. When asked why she left, Tara explained that it was the 100 little things SBF did wrong that made her decide to leave.
After leaving Alameda, Tara founded a trading firm called Lantern Ventures, which manages approximately $400 million in assets. Several former Alemeda employees have joined the company.
She said she founded Lantern Ventures to “do things differently.”
In November 2022, after FTX collapsed, Tara also made a public statement. Im shocked, shocked. Frankly, Im very angry. She believes that SBFs actions are a misrepresentation of everything that cryptocurrencies represent.
Although Tara’s Lantern Ventures avoided the brunt of the FTX collapse, the company was still affected by the crypto market meltdown. Pharos Fund, an affiliate of Lantern Ventures, is bankruptCelsiuss largest creditorsone. Celsius still owes the company about $81 million.
