Alameda Lost $190M to Hacks, Claims Former Engineer

• Former Alameda engineer Aditya Baradwaj said that the firm lost more than $190 in three incidents.
• More than $100 million was lost when a trader accidentally clicked a phishing link.
• $40 million+ were lost when the firm started yield farming on a new blockchain whose creator held its funds.
• Around $50 million was lost when an old version of the firm’s plaintext keys file was leaked.

Aditya Baradwaj, a former engineer at bankrupt crypto exchange FTX’s sister trading firm, Alameda Research, revealed that the firm lost close to $190 million to hackers in three separate incidents. Interestingly, these incidents were not publicly disclosed, among other things that are gradually coming to light amidst the trail of Sam Bankman-Fried, also known as SBF in the crypto space.

According to Baradwaj, Alameda Research lost $100 million in one incident where a trader clicked on a phishing link. These links are known for draining the wallets of the people clicking them while being disguised as genuine websites. However, the former engineer confirmed that this wasn’t the only time money was drained from SBF’s pockets.

Baradwaj took to social media platform X (formerly known as Twitter) to reveal that “the trader got phished while trying to complete a DeFi transaction by accidentally clicking a fake link that had been promoted to the top of Google Search results.” As a result, the engineering team had to implement extra checks on Alameda’s internal wallet software.

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

According to the former Alameda engineer, 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.”

Baradwaj added that while yielding on a new blockchain with “questionable legitimacy,” the creator of the blockchain held the funds belonging to Alameda hostage, costing the trading firm more than $40 million. Lastly, the engineer confirmed that an old version of the firm’s plaintext keys file was leaked, likely by a former employee. The attacker transferred funds out of some exchanges and placed bad orders, costing the firm more than $50 million

The former employee stated that “even after all these incidents, no serious attempt was made to change the way we operated.”

As earlier reported by Bitnation, SBF planned to raise capital via an investment from the Saudi Crown Prince, Mohammed bin Salman, according to the prosecutor’s key witness, Caroline Ellison. She added that despite her role as CEO of Alameda, SBF was actively managing both the company and FTX.