Odd Lots Understanding the Collapse of Sam Bankman-Fried's Crypto Empire
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Nov 17, 2022 Evgeny Gaevoy, founder of Wintermute, and James Block, an independent researcher behind the Dirty Bubble Media newsletter, dive deep into the catastrophic collapse of Sam Bankman-Fried’s empire. They discuss the intricate relationship between FTX and Alameda Research, shedding light on market-making dynamics and liquidity challenges in crisis. Gaevoy shares firsthand insights while Block revisits his early warnings about the disaster. Together, they explore the implications for crypto regulation, trust, and the push toward decentralization in finance.
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Wintermute's Role in Crypto
- Evgeny Gaevoy, CEO of Wintermute, explains his company's role as a crypto market maker.
- They provide liquidity on centralized and decentralized exchanges, trading billions daily.
Alameda's Perceived Advantage and Hidden Losses
- Before FTX's implosion, Alameda Research's relationship with FTX was unclear, with some suspecting an unfair trading advantage.
- The lack of Alameda's presence on FTX's volume leaderboard raised questions about their market share and potential losses as a market maker.
Mitigating Risks in Crypto
- Play it safe by withdrawing assets from lower-tier exchanges and waiting for due diligence.
- Consider self-custody or using high-quality exchanges to mitigate risks.