July 21, 2024
Ex-Alameda Research Engineer Reveals Security Breaches and $190 Million Losses
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Ex-Alameda Research Engineer Reveals Security Breaches and $190 Million Losses

Aditya Baradwaj, a former software engineer at Alameda Research, detailed how FTX’s sister fund struggled with several security breaches and finally lost at least $190 million in trading money in yet another extensive thread on X.

According to reports, one of the biggest shenanigans described by Baradwaj involves an Alameda trader who lost more than $100 million of the company’s money.

When the trader clicked on a fraudulent link for a DeFi program that had been promoted to the top of Google Search results, the incident started to take place.

Another example cited by Baradwaj revolved around Alameda’s involvement in yield farming on a blockchain of “questionable legitimacy.” This venture resulted in losses crossing $40 million, as “the creator ended up holding our funds hostage, and we had months of prolonged negotiations.”

According to Baradwaj, yet another instance included the disclosure of an older version of Alameda’s unencrypted keys file by a former employee. Alameda lost an additional $50 million as a result of the attacker making erroneous orders and moving money out of various exchanges.

“These are just a few incidents—there’s many more, including from before my time at the company,” stated Baradwaj.

The company simply added more checks to its internal wallet software, opted to be more cautious about the protocols it was trading on, or moved secret keys to a more secure storage system as a response to the aforementioned instances.

“Was the tradeoff worth it?” asked Baradwaj. “Sam certainly seemed to think so. Even after all these incidents, no serious attempt was made to change the way we operated. It’s the kind of risk-taking that seems to work… until it doesn’t.”

The former Alameda employee claimed that the trading company prioritized speed, which was a viewpoint shared by FTX founder Sam Bankman-Fried.

This strategy frequently caused the corporation to disregard technical and accounting best practices.

Baradwaj said that code testing was practically nonexistent and that safety checks for trade were only put in place when considered essential.

“These decisions allowed us to move at breathtaking speed. Developer velocity that would make any Silicon Valley software engineer shed tears of joy,” stated Baradwaj. “However, the flip side of this tradeoff was that we’d have a major security incident once every few months.”

On the sixth day of Bankman-Fried’s fraud trial in New York, Caroline Ellison, a former CEO of Alameda, entered the witness stand to testify against him. As she did so, Baradwaj made a statement.

She provided further information regarding the company’s interactions with FTX, including the former co-CEO of Alameda hiring Thai sex workers to recover $1 billion in cash that the Chinese government had blocked.

Image: Freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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