A former software engineer of Alameda Research, Aditya Baradwaj, unveiled a series of security lapses that led to the loss of $190 million. The sister firm to the now-defunct FTX crypto exchange, under the co-leadership of the embattled crypto pioneer Sam Bankman-Fried, encountered a devastating $100 million loss post a mere click on a phishing link by a trader.
According to Baradwaj, this incident merely scratched the surface of the firm’s security blunders, painting a picture of a trading entity prioritizing speed over secure practices.
Tidal wave of financial misfortunes exposes Alameda’s vulnerabilities
Baradwaj recently took to X, narrating how Bankman-Fried’s relentless push for agility superseded the adherence to essential engineering and accounting standards common in tech and financial circles. Consequently, this oversight laid the groundwork for monumental financial losses that rocked the trading firm to its core.
The former Alameda software engineer has recently shared various accounts on social media about what happened at the trading firm.
Moreover, the narrative grows murkier as Caroline Ellison, the former CEO of Alameda Research, divulged to a New York Court that Bankman-Fried directed her to engage in unlawful activities.
Baradwaj described a culture where the urgency to act swiftly overshadowed the necessity to conduct thorough code testing and balance accounting in FTX. Hence, safety checks for trading operations were introduced only on a piecemeal basis.
Significantly, he revealed that blockchain private keys and exchange API keys of the company were negligently stored in plaintext, and accessible to multiple employees, which is a deviation from standard security protocols.
Delving into specifics, Baradwaj recounted three distinct episodes that encapsulated the financial quagmire Alameda Research found itself embroiled in. Besides the phishing debacle, a yield farm creator once ensnared Alameda in a scam, making away with $40 million.
Additionally, the leak of an outdated version of Alameda’s plaintext keys file enabled an adversary to misappropriate funds and place erroneous orders, leading to a staggering loss of $50 million.
Baradwaj also revealed that he lost more than 90% of his liquid assets when FTX collapsed.
These disconcerting revelations underscore a narrative of a tech-driven trading firm ensnared in a whirlpool of security lapses, with a hefty price tag attached. However, the ramifications extend beyond mere financial loss, casting a long shadow on the reputation of the co-founder, Bankman-Fried.