Alameda Research was founded in 2017 by Sam Bankman-Fried. Alameda began as a proprietary trading firm dabbling in cryptocurrencies but quickly expanded its business model to tap into more traditional investment opportunities.
They made money by buying and selling cryptocurrencies, and they made lots of it. Soon Sam decided he wanted to do more than just trade crypto—he also wanted to help others learn how trading works.
So he and his friend (in 2018-19) built an exchange called FTX. Exchanges provide a platform where users can trade cryptocurrencies. If you want to sell something, they’ll find a buyer. If you're looking for something to buy, they'll find the seller.
And every time FTX processed a transaction, it made money. It also gave customers loans if they were willing to bet big—but of course, the exchange imposed interest on this.
In 2020, SBF got rich off FTX and Alameda—the two companies netting $350 million and $1 billion in profit, respectively.
Bankman-Fried's net worth dropped to $16 billion this week, though it was once as high as $26 billion.