Well-known author Michael Lewis published a new book "Going Infinite" last week about the character of FTX founder Sam Bankman-Fried (SBF), which attracted a lot of criticism. In his defense, SBF, a former billionaire, rarely attracted criticism when he reached the peak of his life. Only Tara Mac Aulay, the co-founder of FTX sister trading company Alameda Research, raised criticism.
Ole and SBF jointly established the hedge fund Alameda Research in 2017. According to Michael Lewis's new book, Ole was among the first to express doubts about SBF.
Ole resigned in April 2018, along with the rest of the management team, in part because of her "concerns about Alameda's risk management and business ethics" and the company's multi-million dollar U.S. dollar funds "disappeared out of thin air."
Ole said on social platform X in November last year that she had not spoken to SBF since 2018. Michael Lewis says in his new book that Ole "has long believed that he (SBF) was dishonest and a control freak".
Alameda's early days
Ole and SBF met when the former worked at the Center for Effective Altruism, a charity organization in Berkeley, California that focuses on maximizing monetary benefits.
It is reported that SBF is one of the organization's largest donors, and Olay attracted the attention of SBF due to his successful arbitrage trading in the cryptocurrency market in his early years.
Alameda Research was established with $500,000 left over from bonuses SBF received from its former employer, Wall Street trading firm Jane Street. Within just a few months, Ole and SBF managed to convince wealthy altruists to give them $170 million to trade cryptocurrencies.
However, problems erupted at Alameda in early 2018. The SBF makes many demands of the more than 20 effective altruists he employs. Most of these people are in their 20s, and only one of them has financial experience. "Most people don't understand or care about cryptocurrency." These early employees embraced the SBF’s contention that cryptocurrencies were “extremely inefficient markets” in which billions of dollars could be made through “Jane Street-style operations.”
Alameda is trying to profit from arbitrage like Ole, that is, making money from the price difference of cryptocurrencies between exchanges in Asia, but the transaction size is much larger.
SBF often misses meetings and doesn’t shower for weeks.
Ole said that working with SBF is not easy. "He requires and expects everyone to work 18 hours a day and give up all normal schedules." But on the other hand, SBF often misses meetings, doesn't take a shower for weeks, and the table is often full of food. There was leftover food and chaos, and it was common to fall asleep at the desk.
Much of the team's time is spent fighting SBF's insatiable desire to trade. "The entire management team wants to leave," said Ben West, one of the five-person management team.
In one example, SBF compromised by agreeing to use his trading bot to trade 24 hours a day on multiple exchanges to conduct arbitrage on hundreds of different cryptocurrencies. He promised to only use it when trading with an observation system so that he could cut his losses promptly in the event of a major loss. Instead, he fell asleep and let the machine trading system operate for hours without human supervision.
From that point on, Ben West said, the entire management team no longer trusted SBF, and his neglect of risk management ultimately led to Ole's decision to leave the company.
Lost millions of dollars and didn't care.
By early 2018, Alameda's financial situation was in "a state of disarray" and it had lost millions of dollars, but employees were unable to quantify the exact number. The book mentions that Alameda's trading system lost about $14 million in early 2018, equivalent to a daily loss of $500,000, and some millions of dollars simply disappeared.
An Alameda employee once noticed that $4 million worth of Ripple (XRP) coins had disappeared, but SBF was not worried at all. Instead, it believed that these tokens would appear on their own after a while. The management team did not believe SBF's story, and later stopped trading for two weeks in an attempt to recover the funds, but in the end it was still in vain, and they became increasingly worried about SBF's behavior. Ole asked: "If 10% of our transactions are missing, how can we pass the audit?"
Ole and its entire management team and half of its employees left Al ameda on April 9, 2018, receiving a severance package of between US$1 million and US$2 million.
After Ole left, he founded Lantern Ventures, a trading firm with about $400 million in assets under management, and several former Alameda employees joined the company. The company was founded to "do things differently," she said in November.
Ole publicly stated after the FTX collapse last year: "I am shocked and, frankly, angry." "Sam's behavior distorts everything that cryptocurrency supports."
Pharos Fund, an affiliate of Lantern Ventures, may have avoided FTX, but it has been tied up by another cryptocurrency company, which was the largest creditor of bankrupt lending platform Celsius and was owed about $81 million.
