[naijaboiler]

This is what likely happened!! These group of inexperienced guys thought they had found a better way to market make, they even had a blog explaining their better strategy. But 5 minutes of reading it immediately becomes obvious that it can easily be exploited and leave alameda holding the bags.

You can't be the exchange, the person loaning out huge margins, and the person backing up the entire system, all in one. Too many conflicts of interests, that leads to making suboptimal decisions. One part of you has to keep the process propped up, so that the value of margin loans you gave out don't fall, which means eating up a lot of lot of losses from the people you gave margin loans too. And you can't stop eating up the losses, or the whole thing collapses.

This was always going to fail. The only play they had was to keep the crypto hype going so that something other than them will drive the prices up and they can exit all the losses they took on from market making quietly. And that was the play they were going for. Hence all the SBP hype, the superbowl ads, the naming of sports arena. Excess crypto hype was their only play. And that's all they did the last few months. Find ways to get publicity for crypto, SBF etc