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When you're running an apparent $10bn crypto trading firm.

CEO of Alameda Research is a 28-year-old Harry Potter fan

It's a bad day and week for millennials in crypto. 30-year-old Sam Bankman-Fried (SBF) has already lost 94% of his fortune and is facing questions as to the probity of his actions after the Wall Street Journal reported that his crypto exchange, FTX, lent $10bn to his affiliated trading firm, Alameda Research. Constance Wang, the 28 year-old ex-Credit Suisse analyst running the day-to-day operations of FTX is presumably sharing the pain. Caroline Ellison, another 28-year-old SBF protégé already appears to be out of a job. 

Ellison was CEO of Alameda Research, which is being wound down as of this afternoon. Alameda was a crypto market maker with a reputation for aggressive trading strategies. SBF confessed today that these were being funded by money customers had deposited in FTX for their own trading purposes. 

There's no indication that Ellison did anything illegal, and it's not clear which role she played in the use of FTX customer funds, if any, but she doesn't seem to have had a huge amount of experience prior to running a firm with an alleged $10bn of money sloshing around.

Before joining Alameda as a trader in March 2018, Ellison spent 19 months as a junior trader at Jane Street after graduating from Stanford University with a bachelor's degree in mathematics in 2016. In a podcast two years ago, Ellison explained that Jane Street was her first job out of college. A diehard mathematician and Harry Potter fan born of two economists, Ellison she hadn't wanted to go into trading but "just didn't really know what to do" with her life. 

She was persuaded to join Alameda by SBF, who also previously worked for Jane Street. When she quit Jane Street, Ellison said she felt bad for staying such a short amount of time. However, this feeling quickly dissipated when she arrived at Alameda and discovered that she had "kind of more trading experience than a lot of Alameda traders," anyway. 

In light of what has transpired, Ellison's podcast sounds a lot like a list of reasons why you need some experienced people around to help with decision-making. She says she was "kind of thrown into" making decisions at Alameda and that this was a shock after her 19 months at Jane Street where the decisions she'd made had been "pretty circumscribed."  By comparison, in a start-up like Alameda, Ellison said she found herself making "a bunch of decisions," a lot of which were "really uncertain," and that this was "terrifying." 

As FTX implodes and the crypto sector goes from winter to the potential eternal darkness and icy freeze of a heavily regulated black hole, financial services boomers are feeling some schadenfreude. Richard Handler, CEO of Jefferies, says on Instagram that he reached out to Sam Bankman-Fried with rescue advice in July. SBF didn't respond. "Just like a broken clock, even a boomer can be right sometimes," reflected Handler today.

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AUTHORSarah Butcher Global Editor
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  • po
    populist
    15 November 2022

    Crypto --> Klepto --> Apocalypto

    I've invested in an exchange by buying its shares, and the share price has tripled over the years. It's not a crypto exchange but a stock exchange, whose stock I bought with real money, and for which, if I sold it now, I could get three times as much real money as I paid, in addition to generous dividends every year.

    How can anyone in their right mind be as harebrained as to 1) part with their real money for Harry Potter Fantasy Money (aka "crypto"), and then 2) entrust (or rather "lend") that money to, of all possible trustees, a crypto exchange. Greed addles your brain (if you have one in the first place).

  • Ge
    Gen X guest
    14 November 2022

    It's sad to read some of these comments. You see blame for this meltdown because of their age, and political affiliation or some other damning criteria instead of the truth. These kids were older than the 20 year olds Steve Jobs or Bill Gates. What do you think the age and political party affiliation was for the executives at Enron, junk bond dealer Milkman, Countrywide Financial, AIG insurance (these last 2 almost crashed the US economy with the housing bubble and no one went to jail), stock market crash that led to great depression and a list of similar companies with poor governance framework due to vague or absent regulations. We learn at an early age about capitalism and the benefits of a laissez faire market economy. This industry was new and it was a type of Wild West mentality with limited/no rules,
    and it backfired badly. But instead of dealing with the source of the issue you hear people wanting to blame their age and political affiliation. Sad what the last 6 years has brought us to. Instead of listening to political or economic pundits go take a history class and open your eyes that history repeats itself in these situations and usually has a lack of checks and balances as the true culprit. But instead of investing in history classes at universities so the next generation can truly understand and learn about these pitfalls before they start out in life, some folks want to defund these programs. And before someone calls me names like RINO or something else juvenile, ask yourself where you learned that phrase. In school, or by some pundit whose aim is to hope you and your children don't go to school because then you can rely on them for a cartoon explanation spewing hatred. They want you to stay ignorant because it's in their best financial and political interests.

  • Mo
    Monica S
    14 November 2022

    Is this insane? This multibillion dollar hedge fund / crypto exchange was being run by a bunch of nerds in there 20's, who were barely teens during the last financial collapse..??? What a joke, all of this is!

  • @P
    @PlatinumTruthPT on Twitter
    13 November 2022

    A Democrat and RINO supporter ... i'm shocked. Nearly all democrats and their voters are frauds. They point fingers at others accusing them of being racists and fascists and they literally ACT like ones every single day of their lives and openly. The accuse Trump of being nasty and mean and a child then proceed to act the exact way toward him and conservatives. They say they follow the science then when the science shows masks, lockdowns, and vaccines are proven not to work they don't care about that science. They say their is no truth and everyone has their own truth then say conservative thinking and capitalism is evil. They pretend to be pro-women then support THE MOST anti-woman religion in the world. They say they are pro-lgbt then support the most anti-lgbt religion in the world. They want fair election then do everything possible to make them easily fraudulent. They say they are pro-worker then flood the nation with an over supply of cheap illegal labor thus making sure wages for workers remain low for generations. They say they are against millionaires and billionaires and want people to pay more taxes then they become millionaires and billionaires owning multiple hones and pay as little tax as possible using every tax loop hole possible. They say they are for women reaching high places then try to destroy every single conservative woman like amy coney barret, sarah sanders, and Melania trump and so many more. Should i go on with the hypocrisy of liberals, leftists, and democrats? I can go on for a year about these people's hypocrisy. All democrats do is destroy whatever they touch and that include their ignorant, gullible, naive, lazy, evil voters. Almost everything wrong with our society and culture is due to the left.

  • An
    Anna
    13 November 2022

    How is she being the CEO any worse than SBF?? Honestly they're around the same age and probably around the same level of maturity. People need to check their sexism smh.

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