{"id":85626,"date":"2023-10-12T12:00:46","date_gmt":"2023-10-12T09:00:46","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=85626"},"modified":"2025-09-13T00:28:49","modified_gmt":"2025-09-12T21:28:49","slug":"former-alameda-employee-recounts-190m-loss-due-to-lax-security","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/former-alameda-employee-recounts-190m-loss-due-to-lax-security\/","title":{"rendered":"Former Alameda employee recounts $190m loss due to lax security"},"content":{"rendered":"<p>Alameda Research, Sam Bankman-Fried&#8217;s firm, lost at least $190 million due to a lax approach to security, according to former trading-firm programmer Aditya Baradwaj.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">PART 3: THE HACKS<\/p>\n<p>or<\/p>\n<p>How poor security practices at Alameda Research caused the company to lose hundreds of millions of dollars<\/p>\n<p>(1\/n) ?<a href=\"https:\/\/twitter.com\/hashtag\/SBF?src=hash&#038;ref_src=twsrc%5Etfw\">#SBF<\/a> <a href=\"https:\/\/twitter.com\/hashtag\/FTX?src=hash&#038;ref_src=twsrc%5Etfw\">#FTX<\/a> <a href=\"https:\/\/t.co\/RFocE7w3Gx\">pic.twitter.com\/RFocE7w3Gx<\/a><\/p>\n<p>\u2014 Adi (e\/acc) (@aditya_baradwaj) <a href=\"https:\/\/twitter.com\/aditya_baradwaj\/status\/1712181985844600913?ref_src=twsrc%5Etfw\">October 11, 2023<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The specialist noted that after <a href=\"https:\/\/forklog.com\/en\/news\/ftx-group-files-for-bankruptcy-sam-bankman-fried-resigns-as-ceo\">the collapse of FTX and affiliated Alameda<\/a> there was much discussion about shortcomings in risk-management structures at both companies. John Ray, who led the exchange through bankruptcy, <a href=\"https:\/\/forklog.com\/en\/news\/ftx-ceo-accuses-former-leadership-of-favouring-alameda-research\">described the situation<\/a> as &#8216;a complete failure of corporate governance&#8217;.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Sam believed that the single most important thing for startups like Alameda or FTX was the ability to move very, very fast. So much so that he decided to ignore <span data-descr=\"software development, debugging, verification and deployment technology\" class=\"old_tooltip\">software engineering practices<\/span> and accounting practices that are considered standard at tech companies and financial services firms,&#8221; noted Baradwaj.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">SBF believed that the single most important thing for a startup like Alameda or FTX was being able to move very, very fast<\/p>\n<p>So much so that he decided to ignore engineering and accounting practices that are considered standard at tech companies and financial services firms<\/p>\n<p>\u2014 Adi (e\/acc) (@aditya_baradwaj) <a href=\"https:\/\/twitter.com\/aditya_baradwaj\/status\/1712181988390519139?ref_src=twsrc%5Etfw\">October 11, 2023<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>According to him, the approach indeed allowed growth at a dizzying pace. But the downside was security incidents that occurred every few months.<\/p>\n<p>In one case, an Alameda trader was subjected to a phishing attack, resulting in the firm losing $100 million. While attempting to complete a DeFi transaction, an employee clicked on a fake link that a Google search had returned at the top, Baradwaj explained.<\/p>\n<p>The second incident occurred when the company began <a href=\"https:\/\/forklog.com\/en\/news\/what-is-yield-farming\">yield farming<\/a> on a new blockchain of questionable legitimacy. As a result, the protocol developers simply appropriated assets worth more than $40 million, the programmer said.<\/p>\n<p>In another example, Baradwaj described a leak of an old version of a text file containing Alameda&#8217;s keys into the network. As a result, the attacker could transfer funds from some exchanges and place &#8216;bad orders,&#8217; resulting in losses of more than $50 million.<\/p>\n<p>Baradwaj stressed that there were many more such cases, including before his arrival at the company. At Alameda, responses were reactive, patching risk-management and security systems on the fly.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Was the trade-off worth it? Sam, it seems, thought so. Even after all these incidents, there were no serious attempts to change the way we worked. It seems that such risk works&#8230; until it doesn&#8217;t,&#8221; the programmer wrote.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\" data-conversation=\"none\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Was the tradeoff worth it?<\/p>\n<p>Sam certainly seemed to think so. Even after all these incidents, no serious attempt was made to change the way we operated.<\/p>\n<p>It&#8217;s the kind of risk-taking that seems to work\u001et until it doesn&#8217;t.<\/p>\n<p>\u2014 Adi (e\/acc) (@aditya_baradwaj) <a href=\"https:\/\/twitter.com\/aditya_baradwaj\/status\/1712181994224792025?ref_src=twsrc%5Etfw\">October 11, 2023<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Earlier, Baradwaj <a href=\"https:\/\/forklog.com\/en\/news\/former-alameda-employee-reveals-cause-of-87-bitcoin-drop-on-binance-us-in-2021\">disclosed<\/a> that this was the cause of Bitcoin&#8217;s 87% drop on the Binance.US platform in 2021.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Alameda Research, Sam Bankman-Fried&#8217;s firm, lost at least $190 million due to a lax approach to security, according to former trading-firm programmer Aditya Baradwaj.<\/p>\n","protected":false},"author":1,"featured_media":85627,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1435,1403],"class_list":["post-85626","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-alameda-research","tag-sam-bankman-fried"],"aioseo_notices":[],"amp_enabled":true,"views":"27","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/85626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=85626"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/85626\/revisions"}],"predecessor-version":[{"id":85628,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/85626\/revisions\/85628"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/85627"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=85626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=85626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=85626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}