According to the acclaimed author Michael Lewis in his
biography “Going Infinite”, Bankman-Fried’s initial foray into crypto
trading was marked by huge losses, with the firm losing over half a million
dollars daily.
In 2017, Bankman-Fried secured an investment of nearly $170
million from a group of investors who subscribed to the ideology of effective
altruism. These investors were dedicated to finding ways to make a positive
impact on society, often through donations or funding noble causes.
Bankman-Fried, a 26-year-old at the time, had ambitious
goals for these funds. His plan was to enter the rapidly growing crypto
markets, leveraging differences in prices across various platforms and using
high-frequency trading (HFT) strategies to earn profits, even if they were just
small amounts every few seconds.
Alameda Research, under Bankman-Fried’s leadership, started
with a series of trades that seemed promising but quickly turned into significant
losses. During one particular month, the firm lost over $500,000 each day,
leading to serious concerns about its future viability. Some trading funds even
disappeared mysteriously due to poor management, Lewis narrated.
One of the notable disappointments was a trading bot known
as Modelbot. This bot, designed to navigate the trading of nearly 500 tokens
across about thirty exchanges, proved to be a significant letdown in its
initial phase. It showed no discrimination between popular cryptocurrencies
