According to a new report, card-counting and other casino tricks figured heavily into the strategy of a former hedge fund chief whose risky bets contributed to the collapse of the FTX cryptocurrency exchange earlier this month.
Bloomberg News was the first to spot old Twitter threads from Sam Trabucco that clearly described how the 30-year-old former crypto exec applied his knowledge of gambling strategies to crypto trading and other business decisions. Trabucco resigned in August as co-CEO of Alameda Research, sister company to FTX.
The story provides insight into the mindset of those who artificially inflated crypto-currency into a bubble that encouraged millions to lose billions when it popped dramatically earlier this month.
‘Bet Big on the Way Down’
When XRP, the native cryptocurrency of the money-transfer network Ripple, plunged amid speculation of a Securities and Exchange Commission investigation, “we basically just bet as big as liquidity would let us on momentum on the way down, which ended up great,” Trabucco tweeted in January 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).”
In the same series of tweets, Trabucco alluded to counting cards at blackjack, posting: “I may or may not be banned from 3 casinos for this.”
While the veracity of Trabucco’s claim has yet to be investigated, his embrace of risk appears to have contributed to the losses that sent Alameda, FTX, and more than 130 related entities into bankruptcy court this month. In the span of 10 days, FTX plummeted from a $32 billion valuation to nothing as liquidity dried up and customers demanded withdrawals.
Although little is known for certain about the collapse, a report from crypto analytics provider Nansen suggested that Alameda may have held too many hard-to-trade coins that caused liquidity issues, and that FTX may have bailed out Alameda with a loan using the illiquid tokens as collateral.
Speaking on an episode of the YouTube show UpOnly in 2021, Trabucco recalled playing poker in his early 20s, while earning a degree in math and computer science from MIT and later trading at Susquehanna International Group.
“Now I really don’t tilt very much,” he said, referencing a poker term for when players let their emotions guide them. Though Trabucco said he now tries to avoid tilting, he admitted to sometimes buying impulsively.
A Trabucco tweet from July 2022 showed a poker table with chips on it, captioned with: “I should stick to trading.” Indeed, Trabucco posted his follow-up tweet from Las Vegas.
Trabucco, who has never been accused of any wrongdoing, stepped down as Alameda’s co-CEO in August, leaving Caroline Ellison as Alameda’s sole chief.
“If I’ve learned anything at Alameda, it’s how to make good decisions – and this is the right one for me,” he tweeted at the time.
When CoinDesk reported on Nov. 2 that Alameda – with $8 billion in liabilities and $14.6 billion in assets – was insolvent, Trabucco took to Twitter to debunk the story.
“Bonkers how people just instantly 100% believe every s***** ‘news’ story they see,” he tweeted.
Apparently, Trabucco was bluffing.
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