Alameda Research was a cryptocurrency hedge fund trading firm founded in 2017 by Sam Bankman-Fried (SBF), the creator of the FTX exchange, and Tara Mac Aulay. Bankman-Fried employed various trading strategies to establish Alameda's reputation, including arbitrage trading, market-making, trading volatility, and yield farming.

After leaving Jane Street Capital in 2017, where he worked on the ETF desk, SBF launched Alameda. In 2018, he gained media attention when it was reported that Alameda made approximately $20 million through arbitrage by capitalizing on the price discrepancies of bitcoin between U.S. and Japanese crypto exchanges.

Arbitrage trading, in its most basic form, involves purchasing a digital asset at a lower price on one exchange and selling it at a higher price on another, profiting from the price difference. This process is repeated as long as the price gap is sufficient to yield a profit. At that time, Japan was known for having higher bitcoin prices compared to the U.S.

Alameda was said to be trading around $25 million daily as part of this strategy. On November 2, 2022, Coindesk reported insider information regarding Alameda's balance sheet, which showed $14 billion in assets, most of which were in FTT, the native cryptocurrency of FTX, created by Sam Bankman-Fried.

FTX developed FTT as a rewards system for its traders, offering trading discounts and other benefits to users who bought and held FTT. FTX managed all aspects of the FTT cryptocurrency, and as its popularity grew, so did its price, benefiting both FTX and Alameda, which were among the largest holders of FTT.

As news spread about the closer financial connections between Alameda and FTX, FTX customers began withdrawing their funds en masse, amounting to $5 billion within the first three days. Reports surfaced indicating that SBF and other executives transferred $10 billion in customer funds from FTX to Alameda, violating FTX's terms of service, in an attempt to support Alameda and prevent it from defaulting on its loans.

FTX suspended customer withdrawals due to insufficient funds to meet the simultaneous withdrawal requests. Similarly, Alameda experienced a significant decline in its balance sheet and was unable to settle liabilities stemming from poor trades or investments in over 150 other crypto companies.

On November 17, 2022, Alameda filed for Chapter 11 bankruptcy, citing over $5 billion in liabilities owed to various businesses and investors. The Alameda website was taken offline on November 9, 2022, and two days later, Bankman-Fried announced that the company would be winding down while trying to maintain its structure as much as possible.