Alameda bungled security, lost $190 million from hacks: former engineer

A former employee of Alameda Research claims the sister trading firm to the collapsed FTX crypto exchange at one point lost $100 million after a trader clicked on a phishing link. And that wasn’t the only time the firm, co-founded by the disgraced crypto mogul Sam Bankman-Fried, was duped and lost millions of dollars.

Bankman-Fried “believed that the single most important thing for a startup like Alameda … was being able to move very, very fast, so much so that he decided to ignore engineering and accounting practices that are considered standard at tech companies and financial services firms,” Aditya Baradwaj posted to X.

The former Alameda software engineer has recently been vocal about what went on at the trading firm, posting various accounts on social media. The latest details came as former Alameda Research CEO Caroline Ellison told a New York Court that Bankman-Fried instructed her to commit crimes.

Bankman-Fried’s rapid pace

Moving at Bankman-Fried’s rapid pace “meant virtually no code testing and incomplete balance accounting,” added Baradwaj. “Safety checks for trading would only be added on an as-needed basis, blockchain private keys and exchange API keys were stored in plaintext in a file that several employees could access.”

The company ending up losing at least $190 million, according to Baradwaj.

In the first example, Baradwaj said a trader “got phished while trying to complete a DeFi transaction by accidentally clicking a fake link” which resulted in a loss of $100 million. On another occasion, the creator of a yield farm held funds hostage in a scam that cost Alameda $40 million, said Baradwaj.

In his last example, Baradwaj said that, after the leaking of an older version of the Alameda’s “plaintext keys file,” an attacker was able to transfer funds “out of some exchanges and placed bad orders,” resulting in a loss of $50 million.

Baradwaj has said he lost more than 90% of his liquid assets when FTX collapsed.

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