A Former Employee Reveals Alameda Research’s Losses Due to Phishing Attacks
A former employee of Alameda Research, the sister trading firm to the collapsed FTX crypto exchange, has disclosed that the company suffered significant losses due to phishing attacks. One incident involved a trader clicking on a phishing link, resulting in a loss of $100 million. This was not an isolated case, as Alameda Research, co-founded by Sam Bankman-Fried, fell victim to several scams that cost them millions of dollars.
Bankman-Fried’s Prioritization of Speed over Security
According to Aditya Baradwaj, a former software engineer at Alameda Research, Bankman-Fried prioritized speed over security measures such as code testing and balance accounting. Safety checks for trading were only implemented when necessary, and sensitive information like blockchain private keys and exchange API keys were stored in plaintext files accessible to multiple employees. These practices resulted in losses amounting to at least $190 million.
Specific Examples of Losses
Baradwaj provided specific instances where Alameda Research incurred substantial losses. In one case, a trader fell victim to a phishing attack while attempting a DeFi transaction, resulting in a $100 million loss. Another incident involved a yield farm scam that cost the company $40 million. Additionally, after the leak of an older version of Alameda’s “plaintext keys file,” an attacker was able to transfer funds and place unauthorized orders, leading to a $50 million loss.
The Fallout for Baradwaj
Baradwaj revealed that he personally suffered significant financial losses when FTX collapsed, losing over 90% of his liquid assets.
Hot Take: Alameda Research’s Negligence Leads to Costly Mistakes
Alameda Research’s disregard for engineering and accounting practices, driven by a need for speed, proved to be detrimental. Their failure to prioritize security measures and implement proper safeguards against phishing attacks resulted in multimillion-dollar losses. These incidents serve as a cautionary tale for other crypto firms, highlighting the importance of maintaining robust security protocols and prioritizing risk management alongside rapid growth.
By
By
By
