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

Quick Take

  • Former Alameda Research software engineer Aditya Baradwaj gave details about three security incidents he says cost the firm $190 million.

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."


Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

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.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

RT Watson is a senior reporter at The Block who covers a wide array of topics including U.S.-based companies, blockchain gaming and NFTs. Formerly covered entertainment at The Wall Street Journal, where he wrote about Disney, Netflix, Warner Bros. and the creator economy while focusing primarily on technological disruption across media. Previous to that he covered corporate, economic and political news in Brazil while at Bloomberg. RT has interviewed a diverse cast of characters including CEOs, media moguls, top influencers, politicians, blue-collar workers, drug traffickers and convicted criminals. Holds a master's degree in Digital Sociology.


To contact the editor of this story:
Nathan Crooks at
[email protected]