Former Alameda engineer discloses Alameda lost several hundreds of millions because of lack of seriousness

Aditya Bhardwaj revealed that Alameda Research lost nearly $550 million worth of crypto assets because of three incidents and also revealed that the company failed to maintain the all works properly.

Alameda Research was the FTX’s sister firm. Following the liquidity crisis in Nov of last year, FTX exchange filed for bankruptcy in a US court along with 120+ subsidiaries, including FTXUS, and Alameda Research. Sam Bankman-Fried (SBF) was a 70% stakeholder in the FTX exchange & 90% in Alameda Research and allegedly he is the main culprit behind FTX downfall.

On 12 Oct 2023, Aditya Bhardwaj, a former Alameda Research engineer, took to X (Twitter) to share three incidents that the Alameda firm faced during the days when he was working there.

In all those three incidents, Alameda lost a total of $550 million worth of crypto assets. 

According to Aditya, the management work like accounting & security management was very poor in both (FTX & Alameda) of the companies. Even both of the companies were holding crypto wallet’s private keys in a simple text file and many of their employees were able to access them without any effort.

Aditya explained the first incident in which an Alameda trader was trying to complete a Defi transaction but unfortunately clicked a fake link & that had been promoted to the top in the Google search. In that incident, Alameda lost $100 million.

Incident #1:

An Alameda 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

Cost: $100M+

Postmortem: Implemented extra checks on our internal wallet software

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

In the second incident, Alameda’s team tried to start yield farming on a new blockchain but soon the creator of the blockchain ended up holding Alameda’s funds hostage. After several months of negotiation, Alameda faced a net $400 million loss. 

In the third incident, Aditya explained that a former Alameda employee mistakenly exposed the private key of the wallets and a hacker successfully took the advantage to drain $50 million worth of crypto assets.

According to Aditya, these are only some examples of how the Alameda team was working in very bad ways, where they were not following any rules or ethics. 

These are just a few incidents – there's many more, including from before my time at the company.

FTX had its own issues, including the MobileCoin fiasco that Gary recently testified about during the trial.

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

Read also: US State regulators support SEC in the suit against Coinbase