Alameda Research Loses $190 Million Due to Scams, Says Whistleblower
A former engineer at Alameda Research, the sister hedge fund of FTX, has revealed that the firm lost at least $190 million in trading funds due to avoidable scams. In a post titled “The Hacks,” whistleblower Aditya Baradwaj claims that the firm’s agility led to major security incidents occurring every few months.
Exploits and Losses
Baradwaj provides examples of some of the biggest exploits. In one incident, a trader lost over $100 million after clicking on a malicious link promoted on Google Search. Another example involved yield farming on a blockchain of questionable legitimacy, resulting in losses of more than $40 million.
Negligence in Engineering and Accounting Practices
According to Baradwaj, Alameda’s focus on speed meant ignoring industry-standard engineering and accounting practices. This included minimal code testing and incomplete balance accounting. Key security measures were only implemented when necessary.
Inadequate Security Measures
Baradwaj highlights another security incident where old versions of plaintext files containing keys to Alameda’s wallets were leaked. The attacker transferred funds from certain exchanges, resulting in losses exceeding $50 million.
Additional Incidents and Trial Testimonies
Baradwaj states that there were many more incidents similar to those he described, including issues at FTX. These incidents occurred both before and during his time at the company. His revelations come as former Alameda CEO Caroline Ellison testifies against FTX founder Sam Bankman-Fried in his fraud trial.
Hot Take: Alameda Research’s Security Lapses Result in Massive Losses
The revelations made by the whistleblower shed light on the significant security lapses and avoidable scams that have led to losses of millions of dollars for Alameda Research. The firm’s emphasis on speed and agility appears to have compromised crucial engineering and accounting practices, leaving vulnerabilities that scammers exploited. These incidents not only highlight the importance of robust security measures in the crypto industry but also raise questions about the leadership and management of Alameda Research. As the fraud trial against Sam Bankman-Fried continues, it remains to be seen how these revelations will impact the outcome.
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