Sam Bankman-Fried: Navigating Risk in Crypto Trading

Discover Sam Bankman-Fried's near-loss of millions & rise as Alameda Research & FTX founder. Read "Going Infinite" by Michael Lewis now!
Sam Bankman-Fried

Sam Bankman-Fried, the founder of Alameda Research, experienced a near loss of millions of dollars from the first tranche of funds raised. He managed to raise almost $170 million from investors in the Effective Altruism community, intending to invest in the rapidly growing and inefficient crypto markets. However, the initial stages of Alameda Research were marked by setbacks and challenges.

Early Struggles and Losses

In its first few months, Alameda Research faced significant losses amounting to millions of dollars. Some of these losses were attributed to poor fund management, which led to the disappearance of trading funds. One of the primary culprits was a bot called Modelbot. This bot was programmed to trade nearly 500 tokens on around thirty exchanges but turned out to be a dud initially.

Sam Bankman-Fried’s intention was to capture price differences across various markets and develop high-frequency trading strategies that would pick up pennies every few seconds. Unfortunately, most of these strategies were losing bets from the start. Alameda Research found itself losing over $500,000 every day throughout one month.

Turning the Tide: Gary Wang and Nishad Singh Join Alameda Research

The fortunes of Alameda Research began to change when Gary Wang and Nishad Singh joined the firm. Wang, a talented coder, developed a quantitative trading system that finally started to generate profits for Alameda. On the other hand, Singh took on the role of managing the company and put it on the right track, leading to the eventual creation of the crypto exchange FTX.

Under the leadership of Wang and Singh, Alameda Research began to recover from its initial losses and find success in the competitive world of cryptocurrency trading.

Alameda Research’s Growth and Success

With the new quantitative trading system in place and improved management, Alameda Research started to see positive results. The company’s strategies began to yield profits, and the previously lost funds were gradually recovered.

Sam Bankman-Fried’s vision of capturing price differences across markets and creating high-frequency trading strategies began to materialize. The company’s innovative approach to trading and its focus on the rapidly growing crypto market allowed it to carve out a niche for itself.

Lessons Learned from the Early Challenges

The initial struggles faced by Alameda Research serve as a valuable lesson for other entrepreneurs and investors in the crypto space. It highlights the importance of having a solid foundation in terms of management, strategy, and technology before diving into the complex world of cryptocurrency trading.

Sam Bankman-Fried’s experience also underscores the significance of perseverance and adaptability in the face of challenges. Despite the initial setbacks, he remained committed to his vision and continued to seek ways to improve the company’s performance.


In conclusion, the story of Sam Bankman-Fried and Alameda Research is one of resilience and determination. The company’s initial struggles and near loss of millions of dollars could have easily spelled the end for the venture. However, with the right people on board and a willingness to learn from their mistakes, Alameda Research managed to turn things around and find success in the competitive cryptocurrency market.

Today, Alameda Research stands as a testament to the importance of perseverance, adaptability, and strategic thinking in the world of business and finance. Sam Bankman-Fried’s journey serves as an inspiration for other entrepreneurs and investors looking to make their mark in the rapidly evolving world of cryptocurrencies.