Alameda Research lost $190M to scams and ‘questionable’ blockchains: Whistleblower

Share This Post

Former Alameda Research engineer Aditya Baradwaj says one trader lost more than $100 million after clicking on a fake link.

FTX’s sister hedge fund, Alameda Research, lost at least $190 million of its trading funds due to arguably avoidable scams, according to a former engineer at the firm.

In an Oct. 12 post to X titled “The Hacks,” former Alameda Research engineer turned whistleblower Aditya Baradwaj claims that the firm’s “breathtaking” agility led to “major security incidents” as often as every few months.

In an example of one of the biggest exploits, Baradwaj claims a trader at Alameda once lost more than $100 million of the firm’s funds after clicking a malicious link promoted to the top of Google Search results.

The trader was attempting to sign off on a decentralized finance transaction, said Baradwaj.

In another example, he said Alameda was yield farming on a new blockchain of “questionable legitimacy” — a move that saw the trading firm eventually rack up losses of more than $40 million.

Baradwaj wrote that FTX founder Sam Bankman-Fried believed that the “single most important thing” for Alameda and FTX was their ability to move quickly. This ethos led to Alameda routinely ignoring industry-standard engineering and accounting practices for such firms, he said.

“This meant virtually no code testing and incomplete balance accounting. Safety checks for trading would only be added on an as-needed basis,” wrote Baradwaj.

“Blockchain private keys and exchange API keys were stored in plaintext in a file that several employees could access.”

This led to another security incident that cost the firm millions after an old version of the plaintext files containing keys to Alameda’s wallets were leaked.

The attacker transferred funds out of “some exchanges,” and the incurred losses tallied up to more than $50 million, explained Baradwaj.

He said that Alameda suffered through “many more” incidents of similar scope to the ones he’d described, but many of these were before his time at the company.

Related: Former FTX CEO Sam Bankman-Fried trial [Day 6] — Latest updates

The former engineer has been speaking publicly about the many faults of Alameda and FTX in the wake of their collapse in November last year, telling Cointelegraph how its founder, Sam Bankman-Fried, justified many of his “ridiculous” actions under the guise of an idealistic philosophy known as Effective Altruism.

Baradwaj’s comments come amid former Alameda CEO Caroline Ellison taking the stand to testify against Bankman-Fried on the sixth day of his fraud trial. In the preceding days, a number of former colleagues, including Adam Yedidia and Gary Wang, have brought a wealth of new evidence against the former billionaire.

Wang has admitted to writing in specific code that allowed for Alameda to trade with a near-unlimited line of credit from FTX, while Caroline Ellison has explained the intricate details of FTX’s alleged commingling of funds with Alameda.

Bankman-Fried has pled not guilty to the charges brought against him and maintains his innocence in the ongoing trial.

Magazine: ‘AI has killed the industry’ — EasyTranslate boss on adapting to change

Read Entire Article
spot_img
- Advertisement -spot_img

Related Posts

Bitcoin Technical Analysis: Bulls Eye $110K After All-Time High Breakout 

Bitcoin’s price, now hovering between $105,025 to $105,269, showcases a lively market with a 24-hour trade volume hitting $82 billion and a market cap soaring to $208 trillion Bitcoin On the

Kraken Slammed With $5.1 Million Fine for Regulatory Breach in Australia

An Australian court fined Kraken $51 million AUD for offering a margin lending product to Australian customers without proper regulatory approval Unlawful Credit Facility An Australian court has

Bitcoin Blasts Past $105,000, Setting New Record High

Bitcoin, the flagship cryptocurrency, soared past the $105,000 mark on Dec 15, 2024, reaching an intraday peak of $105,149 per coin This represents a 4% increase against the US dollar within the day,

Bitcoin Breaks Barriers: Network Hashrate Smashes 800 EH/s as BTC Eyes New Price Highs

According to the latest stats, Bitcoin’s network hashrate has soared past the 800 exahash per second (EH/s) mark, based on the seven-day simple moving average (SMA) The network’s

Solana Investors Double Down: New Long-Term Holders Signal Confidence In 2024 Rally Continuation

Solana’s investor base is demonstrating unwavering confidence as the network sees a shift in the profile of its long-term holders According to on-chain data from Glassnode, many more Solana

Strike CEO Drops Bombshell: Trump Eyeing US Bitcoin Reserve on Day One via Executive Order

This week, Jack Mallers, the CEO and founder of Strike, dished on President-elect Donald Trump’s plan to establish a strategic bitcoin reserve on his very first day in office via an executive