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Technology Billion-Dollar-a-Day Crypto Trader Finds Accolades Are Better Than Anonymity

04:35  13 november  2019
04:35  13 november  2019 Source:   bloomberg.com

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But while many crypto exchanges offer 100 times leverage -- letting traders borrow 100 times more than they put down on bets -- Alameda never uses more than four times margin The firm had just opened an over -the-counter trading desk, and wanted to be better known to exchanges and clients.

Nov 13 2019, 5:30 AMNov 13 2019, 7:43 PMNovember 13 2019, 5:30 AMNovember 13 2019, 7:43 PM. (Bloomberg) -- In the murky world of cryptocurrencies, most traders stay under the radar, betting that anonymity provides some protection against getting hacked, exposing strategies or worse.

(Bloomberg) -- In the murky world of cryptocurrencies, most traders stay under the radar, betting that anonymity provides some protection against getting hacked, exposing strategies or worse.

a red car: A cryptocurrency mining rig composed of Asus Strix machines operates at the SberBit mining 'hotel' in Moscow, Russia, on Saturday, Dec. 9, 2017.© Bloomberg A cryptocurrency mining rig composed of Asus Strix machines operates at the SberBit mining 'hotel' in Moscow, Russia, on Saturday, Dec. 9, 2017.

Alameda Research is taking the opposite approach, allowing the firm’s trading performance to be highlighted on a so-called leader board posted on the BitMex exchange where other users go by names such as Heavy-Autumn-Wolf and Honeysuckle-South-Rib. The results are eye-catching, with two Alameda accounts listed among the top 10 most successful traders by lifetime profits, boasting earnings of more than $60 million cumulatively.

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In the murky world of cryptocurrencies, most traders stay under the radar, betting that anonymity provides some protection against getting hacked, exposing strategies or worse.

Alameda Research is taking the opposite approach, allowing the firm’s trading performance to be highlighted on a so-called leader board posted on the BitMex exchange where other users go by names such as Heavy-Autumn-Wolf and Honeysuckle-South-Rib. The results are eye-catching, with two

“It’s often very hard from the outside to have a good sense of who is doing things in crypto,” said Sam Bankman-Fried, Alameda’s 27-year-old co-founder and chief executive officer. “One of the things about a leader board is, it’s actually quantifiable and verifiable. It’s something that made it stand out from other firms.”

Focusing on arbitrage and other strategies, the two-year-old firm now handles about $1 billion in trades daily, accounting for about 5% of volume worldwide, according to Bankman-Fried, who often sleeps on a bean bag by his desk in his Hong Kong office so as not to miss moves in the volatile market.

Bankman-Fried hasn’t always wanted to stand out. Instead of something with crypto in the moniker, he named Alameda after the California county he was in while starting the firm in his Berkeley apartment in late 2017 with his own money and funds borrowed from family and friends. He had just finished a three-year stint at the quantitative-trading firm Jane Street Capital. One of the trades in his first year was taking advantage of the over 30% premium Litecoin was selling for on the exchange Coinbase. He would buy Litecoin elsewhere and sell it at the premium on the biggest U.S. digital exchange, he said.

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Futures trading volume is larger than so-called spot trading of Bitcoin and grown in importance for exchanges as most cryptocurrency prices slumped in the second half of the year. Read More: Billion - Dollar - a - Day Crypto Trader Finds Accolades Top Anonymity .

Most crypto traders handling any kind of money know to take security seriously. For Alameda Research, a trading firm that found itself at the center of a Bloomberg story entitled “ Billion - Dollar - a - Day Crypto Trader Finds Accolades Are Better Than Anonymity ”, their reason is

Such simple arbitrage opportunities have since dried up, and Bankman-Fried’s operation has gotten more sophisticated. He has recruited former classmates from the Massachusetts Institute of Technology and friends from Wall Street to create an automated trading system tracking crypto prices worldwide and executing, on average, a trade per second. His co-founder, Gary Wang, 26, was a former MIT roommate, and previously developed price aggregation and serving systems for Google Flights.

Most of the 15 or so staffers working for Alameda -- from Hong Kong to Japan to Korea to California -- are also friends, or friends of friends. The private company still doesn’t accept outside capital, and invests only its own money and funds it has borrowed. But while many crypto exchanges offer 100 times leverage -- letting traders borrow 100 times more than they put down on bets -- Alameda never uses more than four times margin, Bankman-Fried said.

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Billion - dollar - a - day crypto trader finds accolades are better than anonymity . The oxygen mystery on Mars. Jeff Bezos Adds Record Billion in Single Day to His Fortune July 20, 2020, 6:13 PM EDT.

The “ crypto ” in cryptocurrencies refers to complicated cryptography which allows for the creation and processing of digital currencies and their transactions across decentralized systems. Alongside this important “ crypto ” feature of these currencies is a common commitment to decentralization

Manipulation Allegations

He is now trying to make 2 basis points per trade, and make lots of such transactions every day -- but that’s easier said than done. Some exchanges are hard to withdraw from. Others use a certain token symbol to mean one thing, while others -- another. Banks can be hard to work with as well.

The notoriety from being atop the leader board comes with some drawbacks. “We had internal discussions, are there countries I shouldn’t visit,” Bankman-Fried said, referencing examples of kidnapping and extortion in the crypto community.

And controversy. In a complaint filed on Nov. 8 in the U.S. District Court for the Northern District of California, Oakland Division, Alameda is being sued for $150 million and accused of manipulating the Bitcoin spot and derivatives markets and selling digital tokens to investors unlawfully. Bankman-Fried said the lawsuit has no merit, as trades the complaint cites as examples of violations don’t fit his firm’s strategy; he also said he didn’t offer the tokens to U.S. investors.

“When we get targeted for things, it’s a function of our increased brand size in crypto,” Bankman-Fried said.

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Day trading cryptocurrency could be an unbelievably profitable venture for those who put in the work and remember the golden rules of trading . When the limit it reached, your crypto will be automatically traded at this price. The beauty of a limit order is that you will either get a better price

Rather than use banks like Chase or Wells Fargo, in theory, customers might be able to hold their savings at a central bank. If that were to happen Despite denials, Tron Founder confirms investment in Poloniex crypto exchange (CoinDesk). Billion - dollar - a - day crypto trader finds accolades are

Alameda threw its anonymity to the wind in early 2019, when it decided to get listed on BitMex’s leader board. The firm had just opened an over-the-counter trading desk, and wanted to be better known to exchanges and clients. And it was preparing to launch its own crypto derivatives exchange, FTX, which debuted this spring.

“Exchanges all knew who we were, they saw our volumes; but other people didn’t,” Bankman-Fried said. The over-the-counter trading desk, which caters largely to Asian clientele, is trading in low eight figures a day, and has gotten more clients than expected, he said. The exchange is already trading a few hundred millions of dollars of derivatives a day, he said, adding that getting listed on the leader board definitely helped.

“For those companies that manage money, the leader boards can act as a type of track record that could be used to market their own services,” said Lex Sokolin, global financial technology co-head at ConsenSys, which offers blockchain technology. “While not as rigorous as an audited track record, it is still better than nothing.”

--With assistance from Luke Kawa.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Brendan Walsh

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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