{"id":467876,"date":"2022-06-27T00:00:00","date_gmt":"2022-06-26T21:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\/"},"modified":"2022-06-27T00:00:00","modified_gmt":"2022-06-26T21:00:00","slug":"crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\/","title":{"rendered":"# Crypto conspiracy theories abound, but prop traders are just doing its job"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3bbb6c12edb\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3bbb6c12edb\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\/#%E2%80%9D_Crypto_conspiracy_theories_abound_but_prop_traders_are_just_doing_its_job_%E2%80%9C\" >&#8221; Crypto conspiracy theories abound, but prop traders are just doing its job &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\/#What_is_a_proprietary_trading_firm\" >What is a proprietary trading firm?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\/#Whats_liquidity_provision\" >What\u2019s liquidity provision?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\/#What_is_Alameda_Researchs_involvement_with_crypto\" >What is Alameda Research\u2019s involvement with crypto?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_Crypto_conspiracy_theories_abound_but_prop_traders_are_just_doing_its_job_%E2%80%9C\"><\/span>&#8221; Crypto conspiracy theories abound, but prop traders are just doing its job &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p style=\"float:right;margin:0 0 10px 15px;width:240px\"><img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDYvNTYyYjZiNTctYzU0My00MjZlLWFhYWMtNjY3Nzg2YmQzNjZlLmpwZw==.jpg\" class=\"type:primaryImage\"><\/p>\n<pre><code>                FTX founder Sam Bankman-Fried and Alameda Ventures made recent headlines for bailing out a handful of CeFi crypto platforms this week, but what exactly do market makers do? \n                &lt;p&gt;Alameda Research is a cryptocurrency trading firm and liquidity provider founded by crypto billionaire Sam Bankman-Fried (SBF). Before founding his firm in 2017, SBF spent three years as a trader at the quantitative proprietary trading giant Jane Street Capital, which specializes in equity and bonds.\n<\/code><\/pre>\n<p>In 2019, SBF founded the crypto derivatives and exchange FTX, which has quickly grown to become the fifth-largest by open interest. The Bahamas-based exchange raised $400 million in January 2022 and was valued at $32 billion.<\/p>\n<p>FTX\u2019s global derivatives exchange business is separate from FTX US, another entity controlled by SBF, which raised another $400 million from investors\u00a0including the Ontario Teachers Pension and SoftBank.<\/p>\n<p>The self-made billionaire has big dreams, like\u00a0purchasing finance giants like Goldman Sachs,\u00a0and in July 2021, he previously mentioned that \u201cM&amp;A [mergers and acquisitions] is going to be the most likely use of the funds,\u201d raised from investors.<\/p>\n<p>On June 18, crypto brokerage Voyager Digital announced that Alameda Research had agreed to give the company a 200 million USD Coin (USDC) loan and a \u201crevolving line of credit\u201d of 15,000 Bitcoin (BTC) worth $319.5 million at current prices.<\/p>\n<p>During an interview with NPR on June 19, SBF stated that Alameda Research and FTX \u201chave a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion.\u201d<\/p>\n<p>In the interview, SBF noted that his companies had done this \u201ca number of times in the past,\u201d including a $120 million loan to the then financially-troubled Japanese crypto exchange Liquid.<\/p>\n<p>This <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> raises some interesting questions, but more importantly, traders should understand what a proprietary trading firm is and how market makers work in the crypto industry.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_a_proprietary_trading_firm\"><\/span>What is a proprietary trading firm?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Proprietary trading means the investment firm or vehicle uses their own money instead of seeking commissions from clients\u2019 trading. Banks and financial institutions use this trading strategy to make profits, carving risk from their balance sheet.<\/p>\n<p>By <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lying sophisticated modeling and trading software, quantitative firms resort to diverse strategies to find a competitive advantage over regular traders and investors, including arbitrage, derivatives and high-frequency market access.<\/p>\n<p>Also known as \u201cprop trading,\u201d this activity is a popular concept in traditional finance, bonds, stocks, commodities and debt instruments.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Whats_liquidity_provision\"><\/span>What\u2019s liquidity provision?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Entities that provide liquidity facilitate trading in financial instruments by offering their own resources so that buyers and sellers can easily trade. Liquidity is the ability to convert an asset into cash, so, essentially, \u201cliquidity providing\u201d means market-making.<\/p>\n<p>Market makers are regulated entities in traditional finance. Their job is to keep a minimum bid and ask for quotes at all times so that investors find the necessary liquidity when entering or exiting a market. <\/p>\n<p>This process is usually handled by specialized trading firms, but the activity can also be carried out independently. Official market markets have access to lower trading fees and funding, but anyone can run arbitrage trades at their own expense and risk.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Alameda_Researchs_involvement_with_crypto\"><\/span>What is Alameda Research\u2019s involvement with crypto?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Alameda Research, Jump Trading and DRW Cumberland, are some of the leading prop trading firms that provide liquidity for centralized exchanges and decentralized finance (DeFi) usage.<\/p>\n<p>These businesses aim to generate profit for their respective shareholders, but sometimes this means creating direct exposure to crypto assets and inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ries. In a nutshell, they take on risk for a potential longer-term gain \u2014 risk is a key part of the liquidity-providing business.<\/p>\n<p><em>The views and opinions expressed here are solely those of the <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/noshitcoins\"><em>author<\/em><\/a><em> and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.<\/em><\/p>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/crypto-conspiracy-theories-abound-but-prop-traders-are-just-doing-its-job\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; Crypto conspiracy theories abound, but prop traders are just doing its job &#8220; FTX founder Sam Bankman-Fried and Alameda Ventures made recent headlines for bailing out a handful of CeFi crypto platforms this week, but what exactly do market makers do? &lt;p&gt;Alameda Research is a cryptocurrency trading firm and liquidity provider founded by crypto&#8230;<\/p>\n","protected":false},"author":1,"featured_media":467877,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDYvNTYyYjZiNTctYzU0My00MjZlLWFhYWMtNjY3Nzg2YmQzNjZlLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,74863,74860,127181,74868,79248,71939,73785,70934,71407],"class_list":["post-467876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-cryptocurrencies","tag-cryptocurrency-exchange","tag-cryptocurrency-investing","tag-defi","tag-trading101","tag-banks","tag-markets","tag-regulation","tag-trading"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/467876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=467876"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/467876\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/467877"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=467876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=467876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=467876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}