Australian woman Tara Mac Aulay spills on crypto king Sam Bankman-Fried’s fallen FTX empire

Former crypto king Sam Bankman-Fried is accused of one of the largest financial frauds ever. But before his stunning rise and shocking fall, a young Australian saw it coming.

When Sam Bankman-Fried started his cryptocurrency trading firm – which is now at the centre of what American prosecutors allege is one of the largest financial frauds in history – he didn’t know much about digital money.

In fact, Alameda Research wasn’t even really his company, let alone his idea. He co-founded it with an Australian pharmacist he had a crush on, according to author Michael Lewis’s new book on Bankman-Fried’s stunning rise and shocking fall.

Tara Mac Aulay’s partnership with Bankman-Fried didn’t last long. Seven months after placing their first trade, in October 2017 at a Californian house that doubled as their office, Mac Aulay walked out along with the firm’s management team and half the staff.

Why? It was “100 small things”, Mac Aulay told Lewis, but she decided Bankman-Fried was dishonest and manipulative. Alameda’s records were shoddy, investors were not always not told the truth, trading capital was mixed with the firm’s operational money, and millions of dollars had simply disappeared.

Australian woman Tara Mac Aulay. Her partnership with Sam Bankman-Fried did not last long. Picture: Instagram

But Mac Aulay’s departure did not slow Bankman-Fried down. Instead, without colleagues pushing him to implement proper corporate controls, he became the world’s $US26bn crypto king – until his empire crumbled last November.

Mac Aulay, who is not accused of wrongdoing, did not respond to an interview request. Other than the 33-year-old’s comments to Lewis, she has said little about her ex-business partner, other than tweeting when Alameda and Bankman-Fried’s FTX crypto exchange collapsed that she was “shocked, appalled, and frankly, angry”.

“Sam’s actions are a perversion of everything crypto stands for,” Mac Aulay posted.

Perhaps she also felt betrayed. Her connection to Bankman-Fried stemmed from their shared interest in effective altruism, the movement inspired by Australian philosopher Peter Singer’s advocacy for using evidence to find the best ways of doing good.

Sam Bankman-Fried. Picture: Lam Yik/Bloomberg

Before Alameda, Mac Aulay handled operations at the Oxford-based Center for Effective Altruism, and Bankman-Fried – a trader at mainstream firm Jane Street – was one of her biggest donors. The pair chatted regularly, according to Lewis, and Mac Aulay told him how she was making tens of thousands of dollars trading crypto as a side hustle on her laptop.

“The more Sam spoke with Tara, the more his interest drifted from her romantic appeal to her trading skills,” Lewis reported. Bankman-Fried even sent her a $US50,000 ($A78,710) cheque to increase her trades, although she never cashed it, questioning if she was just lucky.

It wasn’t that, but rather her prodigious ability to identify and exploit inefficiencies.

As a 15-year-old in Melbourne, Mac Aulay’s first job was making burgers at Oporto. Finding the work boring, Mac Aulay carried a stopwatch to compare how long she and her colleagues took to complete tasks, and created a predictive ordering system to determine how much food and how many staff the fast food restaurant needed.

She was soon made the manager, and when she cut costs by 30 per cent, Oporto asked her to help other franchises that were on the verge of closing. Speaking on the 80,000 Hours podcast, Mac Auley said her ways were not always popular – an employee once sprayed her with a water gun – but she rescued multiple restaurants.

As a 15-year-old in Melbourne, Mac Aulay’s first job was making burgers at Oporto. She created a predictive ordering system which cut costs by 30 per cent, resulted in her being made manager and being asked to assist other franchises.

By this point, the 16-year-old was working full time, having finished school and started studying Monash University. Upon graduating, the rookie pharmacist started at St Vincent’s Hospital, where she saved administrators millions of dollars by overhauling their drug distribution system of her own volition.

In California, Bankman-Fried believed Mac Aulay could do the same with crypto. He thought Alameda could be a billion-dollar hedge fund – combining her ability to exploit market inconsistencies and his automated trading skills – that funnelled huge profits into good causes.

By January 2018, Alameda had raised $US170m ($A267.62m) from effective altruism disciples, and they were making $US500,000 ($A787,100) from a quarter of a million trades every day.

The next month, however, they started losing similar amounts, and $US4m ($A6.3m) in Ripple’s XRP token vanished. (It later turned up in a South Korean crypto exchange.) Their automated system was temporarily shut off, Lewis reported, and staff wanted to tell their investors.

But Bankman-Fried disagreed. He wanted to unleash a more powerful program to exploit inefficiencies in overseas exchanges, sparking an argument with Mac Aulay, who agreed he could use it only if he monitored it. Bankman-Fried switched it on and fell asleep.

Sam Bankman-Fried arrives at Manhattan Federal Court on March 30 in New York City. He has been charged with criminal counts of fraud, conspiracy, bribery and money-laundering offences. Picture: Michael M. Santiago/Getty Images/AFP

It was the final straw. Mac Aulay was fed up with Bankman-Fried’s apathy for proper controls – she told Lewis she feared Alameda would fail a tax audit when 10 per cent of their trades were missing from their records – and his unwillingness to manage the firm.

“He was demanding and expecting everyone to work 18-hour days and give up anything like a normal life,” Mac Aulay said, “while he would not show up for meetings, not shower for weeks, have a mess all around him with old food everywhere.”

Alameda’s managers tried to force Bankman-Fried to leave with a $US1m ($A1.57m) buyout, according to the Wall Street Journal. But their hands were tied, as Time reported that he had reneged on earlier agreements and registered himself as Alameda’s sole owner.

So Mac Aulay left the company and the country. She now lives in London running Lantern Ventures, the purpose of which is the original Alameda vision: a crypto trading firm diverting half its profits to charitable causes.

Bankman-Fried is spending his days in Manhattan’s federal court and his nights in a Brooklyn jail cell. He has pleaded not guilty to charges that could see him locked up for life.