[naijaboiler]

Almeda was also the market-maker backstopping FTX. They were using Alameda to provide backstop liquidity to FTX, i.e. absorb losses when prices went backwards quickly. Unfortunately, they were also loaning out huge margins, which means people on their platforms could rack up losses pretty quickly.

There he is a blog authored by SBF himself from like 2018 where he was touting their innovative market superior market-making approach, which ultimately boils down, they had automated circuit-breakers, and if the worst came to the worst, some robust 3rd-party entity will come in absorb the losses. He never explained why anyone would want to do that. (I wish I can find that article where he explained it). He probably was using Alameda as that 3rd-party entity to absorb the losses. And since they were also recklessly handing out margin loans for people to trade with, those losses can get really large really quickly if crypto prices went down and stayed down. If they rebounded, they will make a killing. Which is why hyping crypto and SBF so prices rebound is their only play.

yes, I am sure there was some frivolous spend there. But my strongest hunch is that majority of the funds Alameda lost was from backstopping FTX when prices went south. He thought he was too smart. he basically reinvented the wheel. he reinvented the entire financial system with himself and his company playing the role of the Feds, larger bank, smaller bank, and retail bank, stock market exchange all in one. The FED has the economic and political and military might backing him. Alameda has funds deposited by users, and some guy who thinks he is too smart.