Alameda Research and FTX: when a trading firm and an exchange share a balance sheet
The essentials in 30 seconds
- Alameda Research, founded in 2017, was the main market maker on FTX, an exchange founded in 2019.
- CoinDesk reported on 2 November 2022 that 40% of Alameda’s $14.6 billion in assets was FTT, the FTX token.
- The Wall Street Journal reported that FTX lent Alameda more than half of its customers’ funds in May and June 2022.
- Caroline Ellison, who led Alameda, pleaded guilty on 21 December 2022.
- A trading firm and an exchange need separate balance sheets.
Alameda Research and FTX were 2 companies tied by one founder, one token and, according to court testimony, one pool of customer money. A balance sheet is the list of what a company owns and owes, and a shared one turns a trading loss into a customer loss. This page, part of the FTX collapse guide, sets out the documented ties as of October 2026. This page is general information, not investment advice.
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What was Alameda Research before the FTX collapse?
Alameda Research was a quantitative trading firm that Sam Bankman-Fried co-founded in 2017. It traded crypto assets for its own account and earned money from price differences across markets. Caroline Ellison became co-chief executive in October 2021 with Sam Trabucco, and she led the firm alone from August 2022 after he resigned.
A trading firm is a normal part of a crypto market, and its trades supply liquidity to exchanges. The risk comes from the link to the exchange. When the same owner stands behind the trader and the platform, the trader’s gains and losses can reach the platform’s customers.
Why did Alameda Research trade so much on FTX?
Alameda was the main market maker on FTX, which means it placed buy and sell orders so that other customers could trade at any time. It sometimes accepted trading losses to attract customers to the exchange. TechCrunch described the exchange as unusually intertwined with its sister firm.
A market maker needs funding, and it needs a fair place in the order book. When the market maker is a sister firm, outsiders cannot easily tell whether it receives better terms than other traders. That question about equal treatment is a standard test for any exchange, and it applies in the same way to a platform in Singapore, Hong Kong or elsewhere in ASEAN.
How did FTT tie the Alameda balance sheet to FTX?
FTT was the token created by FTX. CoinDesk reported on 2 November 2022 that 40% of Alameda’s $14.6 billion in assets was FTT, whether unlocked, locked or used as collateral. A large share of the trading firm’s value therefore depended on the health of the exchange that issued the token.
On 8 November 2022, FTT lost 80% of its value. The assets of the trading firm shrank at the same moment the exchange needed confidence, and the 2 balance sheets fell together. This is the plainest example of what a shared balance sheet means in practice.
What did the reports say about FTX lending to Alameda Research?
The Wall Street Journal, citing anonymous sources, reported that FTX lent Alameda more than half of its customers’ funds to cover losses in May and June 2022. On 10 November 2022 it reported that Alameda owed FTX some $10 billion. These are press reports, and they describe the direction of the money.
A customer deposit belongs to the customer. A loan from deposits to a related firm turns that claim into a risk on the related firm. If the borrower loses money on trades, the exchange cannot return the deposit, and the customer discovers the loan only when withdrawals stop.
What did the court record say about Alameda Research and FTX?
Caroline Ellison pleaded guilty to wire fraud and conspiracy charges on 21 December 2022 and agreed to cooperate with federal investigators. At the trial of Sam Bankman-Fried in October 2023, she testified that she was one of his main accomplices in channelling FTX customer funds into Alameda.
On 2 November 2023, the jury found him guilty on all 7 counts. The verdict makes the link between the 2 firms a legal finding. For a reader, the useful step is to separate 3 levels of evidence: press reports, official filings and court findings.
How did Alameda Research end when FTX filed for bankruptcy?
After Binance stepped back on 9 November 2022, the Alameda website went down. On 10 November, Sam Bankman-Fried said that Alameda would wind down trading. On 11 November, Alameda, FTX, FTX US and more than 100 affiliates filed for Chapter 11 bankruptcy in Delaware.
The 2 firms ended together, which confirms the logic of the shared balance sheet. A problem at one firm was a problem at the other, and no part of the group stood apart to absorb the shock.
Which questions test whether FTX treated Alameda like other traders?
4 questions apply to any exchange with a trading arm. Does the arm pay the same fees as outside traders? Does it face the same limits on borrowing and on losses? Does it see order information that others cannot see? Does an independent party review its accounts? Written answers to these 4 questions turn a worry into evidence.
The reports on Alameda describe a firm that sometimes took trading losses to attract customers and that held a large quantity of the exchange token. Those facts do not answer the 4 questions by themselves, but they show why a customer has reason to ask them before a deposit and not after a freeze.
Why should a crypto exchange keep its trading firm apart?
Separation protects the customer in 3 ways. Customer deposits stay in accounts that the trading firm cannot reach. The exchange treats every trader on the same terms. Independent auditors can test both claims. A group that meets all 3 gives outsiders something to verify.
The EQOS Asia method page explains how such structural checks feed a score, and the contact page lets you bring a counterparty question. For the wider picture of crypto failures, the crypto crash hub links every branch of this series.
See also in this guide
Frequently asked questions
What was Alameda Research?
Alameda Research was a quantitative crypto trading firm co-founded by Sam Bankman-Fried in 2017. It was the main market maker on FTX. Caroline Ellison led it from August 2022 and pleaded guilty to fraud charges on 21 December 2022.
How were Alameda and FTX connected?
They shared a founder, and Alameda held a large amount of FTT, the token created by FTX. CoinDesk reported that 40% of Alameda’s $14.6 billion in assets was FTT. The Wall Street Journal also reported loans from FTX customer funds to Alameda.
Did FTX lend customer money to Alameda?
The Wall Street Journal, citing anonymous sources, reported that FTX lent Alameda more than half of its customers’ funds. At the trial, Caroline Ellison testified that customer deposits were channelled to Alameda, and the jury convicted Sam Bankman-Fried on all 7 counts.
Why does a shared balance sheet matter?
Because a loss at the trading firm becomes a loss for the exchange and its customers. Separate accounts, equal terms for all traders and independent audits keep that loss from spreading, and they give outsiders something to verify.
Test your knowledge
1. What was Alameda Research’s main role on FTX?
- Auditor
- Market maker
- Regulator
Show the answer
Market maker.
2. What share of Alameda’s assets did CoinDesk say was FTT?
- 40%
- 4%
- 94%
Show the answer
40%.
3. Who testified that deposits were channelled to Alameda?
- Changpeng Zhao
- John J. Ray III
- Caroline Ellison
Show the answer
Caroline Ellison.
4. What does a balance sheet list?
- What a company owns and owes
- Staff holidays
- Website visits
Show the answer
What a company owns and owes.
5. How many affiliates filed with FTX in Delaware?
- Fewer than 10
- More than 100
- Exactly 50
Show the answer
More than 100.
About the author
Stéphane Jambu
President, EQOS Forecast Asia
Stéphane Jambu leads EQOS Forecast Asia and works as a consultant in e-commerce, search visibility, and AI. LinkedIn profile
Sources: EQOS Asia method page (eqos-asia.com/method.html) and contact page (eqos-asia.com/contact.html), en.wikipedia.org/wiki/Alameda_Research, en.wikipedia.org/wiki/Collapse_of_FTX, en.wikipedia.org/wiki/Sam_Bankman-Fried, consulted on 23 October 2026. Page updated on 23 October 2026.