Alameda Research, a quantitative crypto trading firm founded by Sam Bankman-Fried (SBF), has reportedly come under legal scrutiny for comments made in 2018 that promised investors “no risk” returns.
According to a report by The Block, the trading firm, which helped create liquidity for SBF’s now bankrupt FTX Group, was delivering slide decks to potential investors in 2018 that included offers for loans that had “no downside,” and high returns with “no risk.” The Block was able to obtain several messages and a slided eck shared through Telegram group chats soliciting new investors for the firm.
The report claims the 2018 Alameda deck included investment opportunities with a 15% annualized fixed rate loan, including higher rates available to investors willing to put down more with the firm.
The deck reads:
These loans have no downside — we guarantee full payment the principal and interest, enforceable under U.S. law and established by all parties’ legal counsel. We are extremely confident we will pay this amount. In the unlikely case where we lose more than 2% over a month we will give all investors the opportunity to recall their funds.
Tyler Gellasch, president and CEO of markets integrity nonprofit Healthy Markets, told The Block Alameda’s claim could raise “major legal red flags.” He noted that entrepreneurs soliciting investors are required to disclose risk, and that the language of the slidedeck was “bound to give rise to criminal and civil investigations.”
Sam Bankman-Fried, who stepped down as CEO of FTX on November 11 in the wake of the exchange filing for Chapter 11 bankruptcy, lamented the language of the 2018 investor pitch.
He said of the slide deck’s hasty preparation:
That doesn’t excuse us, we still shouldn’t have done it. And in particular I should have proofread the final version way more carefully before it was released. Saying no risk was a fuckup, we should not have put that in our deck.
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