Alameda’s Former Co-CEO Used Poker, Blackjack Strategies in Crypto Trading
Alameda’s enthusiastic embrace of risk helped lead to the firm’s demise, dragging the FTX exchange and the rest of Sam Bankman-Fried’s crypto empire down with it.
(Bloomberg) -- He has a degree from MIT and cut his teeth as a trader at Susquehanna International Group. Yet the former co-head of Alameda Research made it clear that poker and black-jack tables were where he honed the gambler’s instincts he applied to cryptocurrency trading.
“I may or may not be banned from 3 casinos for this,” Sam Trabucco once tweeted about counting cards at black jack tables.
While the exact details are yet to be fleshed out, it’s now clear that Alameda’s enthusiastic embrace of risk helped lead to the firm’s demise, dragging the FTX exchange and the rest of Sam Bankman-Fried’s crypto empire down with it. Trabucco, who hasn’t publicly been accused of any wrongdoing, abruptly stepped down as co-chief executive officer in August, leaving Caroline Ellison as Alameda’s sole CEO.
Trabucco’s own tweets are presented as a lesson in the importance of aggressiveness in gambling and trading alike. In happier times, the 30-year-old frequently revealed how much he applied what he learned at the card tables to the crypto market.
“Bigger is Bigger (when Betting is Better),” he wrote in a Jan. 12, 2021, tweet thread explaining how gambling strategies were applied to Alameda’s trades. “Getting it in good is a poker term referring to the idea that, when your odds are best.... you wanna bet more.” It was the same series of posts in which Trabucco bragged that he may -- or may not -- have been banned from three casinos.
A post from July of this year showed a poker table with chips on it, with the comment: “I should stick to trading.” The next post revealed Trabucco was in Las Vegas.
Trabucco said Alameda employed Vegas-like risky bets in the firm’s business, too. Months ago, when exchange Okx paused withdrawals, Alameda aggressively started buying out positions of people wishing to reduce exposure to the exchange, Trabucco said. “Not only are we not sellers, we’re HUGE buyers -- even though it’s risky -- because, in fact, we can take the risk and this trade is GREAT according to what we know -- was crucial, and it’s something we’re always aiming to do,” he said in a January post.
When Ripple’s XRP token plunged amid speculation over a Securities and Exchange Commission’s investigation, “we basically just bet as big as liquidity would let us on momentum on the way down, which ended up great,” he wrote in January of 2021. “We made a list of all the bad news announcements we thought were likely, and we just kinda waited for then to come out. Bittrex delisting? Hit. Grayscale removing? Hit. Etc. We got less short once these ‘seemed over’ (this was more about intuition on timing than anything).”
‘Really Don’t Tilt’
Speaking on a YouTube UpOnly episode in 2021, Trabucco talked about playing poker in college and two years afterward. “Now I really don’t tilt very much,” he said, referencing a poker term for when players let emotions overwhelm them. Trabucco said he now tries to avoid tilting, but admitted to sometimes making impulsive purchases.
“This watch, I quite literally don’t remember buying this watch,” Trabucco said on UpOnly.
Trabucco earned a degree in math with computer science from Massachusetts Institute of Technology in 2015, according to his LinkedIn profile. He was into creating crossword puzzles for a while. He even had one published in the New York Times while in college. He interned at State Street, and was a trader at Susquehanna International Group before joining Alameda in 2019, about two years after Bankman-Fried started the trading firm.
Trabucco didn’t return requests seeking comment.
Much is still unknown about the exact details of Alameda’s troubles and how its losses helped send it, FTX and more than 130 related entities into bankruptcy court.
Alameda may have held a lot of hard-to-trade coins and had liquidity issues earlier this year, according to a report from crypto analytics provider Nansen. FTX may have bailed out Alameda with a loan using illiquid tokens as collateral, Nansen said. FTX didn’t immediately return a request for comment about the Nansen report.
In August, Trabucco announced he was stepping down from Alameda after several months of having “significantly reduced my role” -- purportedly to have more normal work hours and to relax on his new boat.
Hints of Alameda’s troubles only emerged publicly in early November, when a CoinDesk story raised questions about Alameda’s solvency, which Trabucco took to Twitter to debunk.
Perhaps he was employing one of the most risky strategies in poker: the bluff.
“Bonkers how people just instantly 100% believe every shitty ‘news’ story they see,” he tweeted about the Nov. 2 article.
Less than two weeks later, almost all of Bankman-Fried’s crypto empire had filed for bankruptcy protection. Alameda tilted after all.
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