Aditya Baradwaj, a former engineer at the now defunct trading firm Alameda, revealed that incomplete balance accounting and “virtually no code testing” resulted in safety checks for trading being incorporated only on an as-needed basis.
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
“These decisions allowed us to move at breathtaking speed. Developer velocity that would make any Silicon Valley software engineer shed tears of joy,” he said.
“However, the flip side of this tradeoff was that we’d have a major security incident once every few months.”
In one such instance, an Alameda trader lost $100 million by clicking a link to a phishing scam when completing a DeFi transaction. In another incident, the firm lost $40 million when yield farming on a new blockchain.
“The creator ended up holding our funds hostage, and we had months of prolonged negotiations,” said Baradwaj.
He shared a third incident with his followers on X, where Alameda lost $50 million after an old version of their plaintext keys file was leaked by a former employee. The attacker reportedly transferred Alameda’s funds out of some exchanges, and made bad trades, losing the firm a significant amount of money.
According to Baradwaj, these incidents are just a few of the many that came as a consequence of the way the firm operated.
This isn’t the first time the former Alameda employee has taken aim at his former workplace. Last month, Baradwaj spoke out against the “poor security and risk checks” at the firm in an interview with CoinDesk, where he also revealed that all employees at the firm had no reason to believe anything out of the ordinary was going on until the very end.
Meanwhile, the trial of former FTX CEO and Alameda founder Sam Bankman-Fried has seen witness testimony from members of his inner circle, including former Alameda CEO Caroline Ellison and FTX cofounder Gary Wang, who have given first-hand accounts that up the prosecution’s evidence against Bankman-Fried.
(Laura Shin details Caroline Ellison’s emotional testimony, including an alleged bribe to a Chinese government official, in this Unchained trial recap.)
