Alameda Research, the hedge fund sibling of FTX, allegedly lost around $190 million to avoidable scams, as revealed by former engineer Aditya Baradwaj.
On October 12, in a post titled “The Hacks”, Baradwaj, turned whistleblower, stated that Alameda’s rapid operational pace resulted in significant security breaches almost every few months.
One incident described by Baradwaj involves an Alameda trader who mistakenly clicked a malicious link on Google Search, leading to a loss of over $100 million.
The trader was finalizing a decentralized finance transaction at the time. In another instance, Alameda ventured into yield farming on a dubious blockchain, incurring over $40 million in losses.
Baradwaj points out that FTX founder, Sam Bankman-Fried, prioritized speed for Alameda and FTX, often sidelining standard engineering and accounting measures.
Consequently, coding was rarely tested, balance accounting was frequently left unfinished, and security checks for trading were only implemented when deemed necessary.
Disturbingly, sensitive data such as blockchain private keys and exchange API keys were stored in unencrypted files, accessible by multiple employees.
This lax security resulted in a major breach where an old plaintext file containing Alameda’s keys was exposed.
READ MORE: Bitcoin Forecast to Reach $750K-$1M by 2026
This breach alone led to a loss of over $50 million as attackers managed to drain funds from some exchanges.
Baradwaj mentioned that incidents like these weren’t isolated; many more had occurred before his tenure.
The engineer’s revelations come in the backdrop of Alameda and FTX’s downfall in November the previous year.
Baradwaj criticized Bankman-Fried’s justification of dubious actions, labeling them as being driven by the “Effective Altruism” philosophy.
The ongoing fraud trial against Bankman-Fried has seen ex-CEO of Alameda, Caroline Ellison, testify.
Previous days witnessed former associates, Adam Yedidia and Gary Wang, presenting substantial evidence against him. Wang confessed to creating code that granted Alameda virtually unlimited credit from FTX.
Ellison detailed FTX’s alleged fund mingling with Alameda. Despite these claims, Bankman-Fried has pleaded not guilty and asserts his innocence.
Other Stories:
Bitstamp to Temporarily Halt Services in Canada Amid Global Expansion Strategies
NASAA Supports SEC’s Stance on Digital Assets, Challenges Coinbase’s Views on Securities Laws
