Alameda Research Lost $200M to Several Phishing Attacks Due to “Poor Security Practices”: Ex-FTX Engineer

Alameda Research, the affiliate hedge fund of FTX, faced staggering losses exceeding $190 million due to avoidable fraudulent activities, according to allegations made by a former engineer, Aditya Baradwaj. Baradwaj’s claims, disclosed in a post titled “The Hacks” on platform X, shed light on the frequent security breaches resulting from Alameda’s rapid operational pace.

The whistleblower recounted a notable incident in which an Alameda trader inadvertently lost over $100 million of the firm’s funds after falling victim to a deceptive link, posing as a top search result on Google. The intention was to authorize a transaction within the decentralized finance sphere.

Baradwaj uncovered Alameda’s yield farming on a dubious new blockchain, resulting in losses exceeding $40 million.

Negligence in Financial Protocols and Accounting Standards

PART 3: THE HACKS

or

How poor security practices at Alameda Research caused the company to lose hundreds of millions of dollars

(1/n) 🧵#SBF #FTX pic.twitter.com/RFocE7w3Gx

— Adi (e/acc) (@aditya_baradwaj) October 11, 2023

He revealed Alameda’s agility focus, prioritized by FTX’s Sam Bankman-Fried, often surpassing industry-standard protocols. Consequently, the company did minimal code testing and incomplete balance accounting, implementing safety checks only when necessary.

The leak of outdated plaintext files led to unauthorized fund transfers, causing losses of over $50 million from multiple exchanges.

Baradwaj’s recent disclosures align with former Alameda CEO Caroline Ellison’s testimony against Bankman-Fried during his ongoing fraud trial. Other former colleagues, including Adam Yedidia and Gary Wang, have also provided substantial evidence against the former billionaire.

Bankman-Fried’s Assertions Amid the Trial

During the trial, Wang admitted to developing algorithms that facilitated Alameda’s trading with a vast credit line from FTX.

Despite the mounting evidence, Bankman-Fried maintains his plea of innocence against the charges leveled against him. The trial is ongoing, with further developments expected in the coming days.