How did so many Jane Street traders wind up at FTX?

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Established in 1999, quantitative trading firm Jane Street has grown to become a multi-billion-dollar Wall Street giant. The firm employs thousands of employees and, even though it’s not required to file public financials, it disclosed $7.8 billion in earnings on $17 trillion worth of securities trades after its fiscal year 2020.

However, perhaps the most interesting thing about the New York-headquartered company is that it employed five workers who subsequently went on to participate in Sam Bankman-Fried’s ill-fated FTX empire.

It employed Sam Bankman-Fried (SBF) himself and Caroline Ellison, the criminally indicted CEOs of Alameda Research.
Jane Street also employed Duncan Rheingans-Yoo, and SBF’s former romantic partner, Xiaoyun “Lily” Zhang. The pair received a combined $400 million dollars from SBF.
The company also employed SBF’s brother, Gabe Bankman-Fried. Gabe would later quit to run political donations through ostensibly non-profit organizations funded by SBF, namely ‘Guarding Against Pandemics’ and ‘Building a Stronger Future.’

Based on bankruptcy filings, substantially all money that SBF used to pay these people came from deposits by FTX customers.

Although these people met at Jane Street, all of them had left by the time they began working at FTX. There’s no evidence that Jane Street had any involvement in their FTX-related misdeeds.

SBF invited former colleagues to join him at FTX

After joining Jane Street in 2013, SBF claimed to have specialized in trading international ETFs. He started as a Jane Street intern and then joined as a full-time trader after college.

However, he maintained close ties with his former co-workers. For example, his brother became a trader and it’s public knowledge that he had romantic relations with at least two: Lily and Caroline. Shortly before the collapse of Bankman-Fried’s companies, Alameda Research “invested” another $300 million atop its prior $100 million investment into Bahamas-based Modulo Capital (not to be confused with Brazil’s giant conglomerate Módulo).

SBF’s former Jane Street colleagues Xiaoyun “Lily” Zhang and Duncan Rheingans-Yoo operated Modulo Capital. Precluding any doubt about this obvious connection, Modulo Capital established its headquarters in the same Albany resort as SBF’s personal residence.

SBF’s once-lover and former Alameda Research CEO Caroline Ellison left Jane Street to join his lawless operation in March 2018. In a Forbes feature, she misleadingly described her departure from Jane Street as SBF recruiting her over a cup of coffee in California.

Jane Street as a firm has not publicly commented on the activities of five of its former employees. Again, Protos is not aware of any evidence linking Jane Street to the misdeeds of FTX. Head of institutional strategy Mina Nguyen said a variety of institutions remain confident in Jane Street’s expertise in legitimate participation in the digital asset industry.

Crypto becoming more important for Jane Street

By 2017 and with nearly two decades of experience in market-making, Jane Street started trading cryptocurrencies. It expanded its market-making operations on the world’s crypto exchanges. Recently, it has discussed plans to offer liquidity and trade on decentralized exchanges.

Predictably, as crypto has become more profitable, the company has expanded its operations. While the company doesn’t delineate how much money it makes specifically from digital asset trading, it does generate reports for its investors. Naturally, its digital asset-related activity comes with overhead, like hiring people to handle the complicated accounting and back-office functions. Dozens of Jane Street employees either trade digital assets or handle the associated tax, custody, and record-keeping.

We’ve reached out to Jane Street for a comment and will update this story accordingly if and when it responds.

Update: This article has been updated to remove an outdated quote from a company spokesperson regarding 2021 that was misdated to 2023. References to Robinhood have also been removed.

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