Lessons from Alameda: When Exceptions Become the Rule

Goat News — Episode #122

Goat News
3 min readOct 12, 2023

GM, Web3 fam

Today, we’re delving into a cautionary tale from the crypto universe that’s less about code and more about conduct.

Grab your coffee; this is a lesson you won’t want to skip.

Goat News — The GOATED Crypto News
Goat News — The GOATED Crypto News

Lessons from Alameda: When Exceptions Become the Rule

Today, we’re zeroing in on the downfall of Alameda Research, but not in the way you’d expect. We’re looking at how letting ‘exceptions’ sneak into your routine can spell disaster. Trust me, you’ll want to read this one to the end.

We’ve all been there — hitting the snooze button just one more time, skipping the gym for a Netflix binge, or even cheating a little on our diet. But what happens when these so-called ‘exceptions’ become your norm? Americans alone waste $397 million annually on unused gym memberships.

But it’s not just about wasted money; it’s about wasted potential, missed opportunities, and, most importantly, a routine that slowly drifts from its intended course. The saying, “We are what we repeatedly do,” holds more truth than we often care to admit.

You may think you’re an early riser because your alarm is set for 6 a.m., but if you consistently hit snooze until 6:30, guess what — you’re not a 6 a.m. riser; you’re a 6:30 one. These ‘exceptions’ become your new rule, slowly shifting your reality and, in extreme cases, leading to the undermining of your goals and values.

The problem gets compounded when we talk about teams or organizations. Here, exceptions can lead to systemic issues — security lapses, financial mismanagement, or, worse, a toxic culture.

The implications can be far-reaching and devastating. Alameda Research was once a big player in the crypto world. One reason they went bankrupt was their cavalier attitude towards security. They lost $200M, a significant chunk of their downfall, largely due to playing it fast and loose with security protocols.

  • They ventured into yield farming on a questionable blockchain, losing $40M.
  • They had a security leak that cost them $50M because private keys were saved in plaintext.
  • They fell for a phishing link and lost $100M.

These weren’t isolated incidents; they were patterns that formed from a culture of exceptions becoming the norm.

The downfall of a crypto giant like Alameda wasn’t the result of one cataclysmic event. It was the accumulation of smaller, seemingly ‘exceptional’ mistakes that became ingrained habits.

What else is trending in crypto today?

  • FED keeps interest rates high, jolting Bitcoin and the crypto market
  • Israeli conflict impacts the crypto landscape; SSV takes a 6% hit.
  • Bitcoin loses $27K mark as consumer inflation data rattles the market.

Final thoughts

In the words of Aristotle, “We are what we repeatedly do. Excellence, then, is not an act but a habit.”

Alameda Research serves as a stark reminder that bad habits, even those that start as exceptions, can lead to catastrophic failures, and what you may consider an ‘exception’ today could become a life-altering habit tomorrow.

So, crypto fam, what kind of habits are you forming?

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Cheers n Goat out~