Alameda co-founder reveals: SBF early anecdotes

Compiled | Odaily Planet Daily

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 Planet Daily brings you more details about SBF in the past.

Mysterious early co-founder

Who is the co-founder of Alameda Research? Caroline Ellison is naturally the most well-known co-founder. In the early days of Alameda, the company also had another co-founder who was not as well-known-Tara Mac Aulay.

Tara is an "effective altruist" recognized by SBF. 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 together 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 even missed millions of dollars. 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, Wall Street trading firm Jane Street, of which approximately $500,000 was used as start-up capital for Alameda Research.

Tara's early experience in arbitraging inefficiencies in crypto markets attracted SBF, leading them to co-found Alameda.

The mysterious disappearance of millions of dollars

Within a few months, the two founders managed to convince a few other altruists. Some altruists lent them $170 million as the principal to trade cryptocurrencies.

In 2018, Alameda Research encountered some problems when it was founded. SBF employs about 20 or so altruists as employees and places a lot of demands on them. Most of these people are in their twenties, but only one has any financial experience, and most of them neither know nor care about cryptocurrencies.

Some early employees accepted SBF’s argument that the cryptocurrency market was a “crazy inefficient market” from which they could make billions through “Jane Street (SBF’s 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 is also trying to accomplish this goal through arbitrage, just like Tara once did. But what is different from other areas is that the size of the funds Alameda needs to trade is much larger than Tara personally.

SBF: Sloppy Workaholic

Tara points out that working with SBF is not easy.

"He demands and expects everyone to work 18 hours a day and give up any normal life." Tara expressed her dissatisfaction with SBF. "He also often missed meetings, wouldn't take a shower for weeks, and was surrounded by piles of leftovers. It was even more common for him to fall asleep directly at his desk."

For others at Alameda Research, most of the team's time is spent controlling SBF's "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 on multiple exchanges 24 hours a day without stopping. 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 SBF's complete disregard for risk management that triggered subsequent important events, which in turn made Tara decide to quit.

As of early 2018, Alameda's financial situation remained in disarray. Alameda lost millions of dollars, but they didn't know exactly how much. Alameda's trading system lost approximately $14 million in February 2018, or approximately $500,000 per day. And on top of that, millions of dollars have mysteriously disappeared.

An Alameda employee discovered that $4 million worth of XRP tokens, used as payment rails by traders, were mysteriously missing. But 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 they still couldn't find the $4 million.

**At this point, the team is tired of SBF's "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, along with approximately half of the staff. They received severance packages ranging from $1 million to $2 million. When asked about the reason for leaving, 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 herself said that Lantern Ventures was established to "do things differently."

In November 2022, after FTX collapsed, Tara also made a public statement. "I'm shocked, shocked. Frankly, I'm very angry." She believes that "SBF's 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 one of the largest creditors of bankrupt Celsius. Celsius still owes the company about $81 million.