FTX\u2019s 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.<\/p>\n
In an Oct. 12 post to X titled \u201cThe Hacks,\u201d former Alameda Research engineer turned whistleblower Aditya Baradwaj claims that the firm\u2019s \u201cbreathtaking\u201d agility led to \u201cmajor security incidents\u201d as often as every few months.<\/p>\n
In an example of one of the biggest exploits, Baradwaj claims a trader at Alameda once lost more than $100 million of the firm\u2019s funds after clicking a malicious link promoted to the top of Google Search results.<\/p>\n
The trader was attempting to sign off on a decentralized finance transaction, said Baradwaj.<\/p>\n
In another example, he said Alameda was yield farming on a new blockchain of \u201cquestionable legitimacy\u201d \u2014 a move that saw the trading firm eventually rack up losses of more than $40 million.<\/p>\n
Baradwaj wrote that FTX founder Sam Bankman-Fried believed that the \u201csingle most important thing\u201d 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.<\/p>\n
\u201cThis meant virtually no code testing and incomplete balance accounting. Safety checks for trading would only be added on an as-needed basis,\u201d wrote Baradwaj.<\/p>\n
\u201cBlockchain private keys and exchange API keys were stored in plaintext in a file that several employees could access.\u201d<\/p><\/blockquote>\n
This led to another security incident that cost the firm millions after an old version of the plaintext files containing keys to Alameda\u2019s wallets were leaked.<\/p>\n
The attacker transferred funds out of \u201csome exchanges,\u201d and the incurred losses tallied up to more than $50 million, explained Baradwaj.<\/p>\n
He said that Alameda suffered through \u201cmany more\u201d incidents of similar scope to the ones he\u2019d described, but many of these were before his time at the company.<\/p>\n
Related: <\/em><\/strong>Former FTX CEO Sam Bankman-Fried trial [Day 6] \u2014 Latest updates<\/em><\/strong><\/p>\n
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 \u201cridiculous\u201d actions under the guise of an idealistic philosophy known as Effective Altruism.<\/p>\n
Baradwaj\u2019s 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.<\/p>\n
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\u2019s alleged commingling of funds with Alameda.<\/p>\n
Bankman-Fried has pled not guilty to the charges brought against him and maintains his innocence in the ongoing trial.<\/p>\n