Alameda Research's first tranche of funds raised by Sam Bankman

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Alameda Research's first tranche of funds raised by Sam Bankman

Millions of dollars from the first-ever tranche of funds raised by Sam Bankman-Fried were almost lost after trading firm Alameda Research was originally started in 2017, author Michael Lewis claimed in his biography of Bankman-Fried.

Bankman-Fried raised nearly $170 million from a group of investors ascribing to the community, a network of people who strive to find the best ways to serve the community, usually by donating or funding causes.

The then 26-year-old SBF intended to invest these cash in the expanding and inefficient crypto markets, observing price differences across markets and creating high-frequency trading strategies to pick up pennies every few seconds.

Most were losing bets from the start, with Alameda losing millions of dollars in its first months. It lost more than $500,000 every day throughout one such month, Lewis said, while some trading funds had'simply vanished' due to poor fund management.

The bot called Modelbot, which was programmed to trade nearly 500 tokens on some thirty exchanges, turned out to be yet another dud. It made no distinction between deeply-liquid crypto majors like bitcoin and ether and very thinly-traded memecoins - sparking concerns among early Alameda staff that it could end up evaporating all of the raised money.

As Gary Wang and Nishad Singh joined the firm, the tides were finally changing.

Wang is said to have coded a quantitative trading system that eventually began to make Alameda money, while Singh puts together the pieces to manage the company - putting it on track to what would eventually become the crypto exchange FTX.