Alameda Research, a leading cryptocurrency trading firm and sister company to FTX, lost nearly $200 million in trading funds due to a series of security breaches, according to a former engineer at the firm.
Aditya Baradwaj, the former engineer who turned whistleblower, wrote in a Medium post on October 12, 2023, that Alameda’s “breathtaking” agility led to “major security incidents” as often as every few months.
Phishing Attack
One of the most notable security incidents involved a trader at Alameda Research falling victim to a phishing attack, losing $100 million after mistakenly clicking on a deceptive link while attempting to complete a DeFi transaction.
Liquidity Mining Scam
Alameda Research also lost $40 million in a liquidity mining scam, which promised high returns but ultimately turned out to be fraudulent.
Leaked Key File
In another incident, a plaintext key file containing access to Alameda Research’s cryptocurrency wallets was leaked, resulting in the theft of $50 million worth of cryptocurrency.
Cowboy Culture
Baradwaj criticized Alameda Research’s “cowboy culture” and lack of risk management controls, which he claimed contributed to these security incidents. He also alleged that the firm has been slow to address these issues, even after suffering significant losses.
Alameda Research has not yet publicly commented on Baradwaj’s allegations. However, CEO Sam Bankman-Fried has previously acknowledged that the firm has experienced security breaches in the past. In a 2022 interview, Bankman-Fried said that Alameda Research had lost “tens of millions of dollars” to hacks and scams.
Also read: Crypto Scams: How to Protect Yourself from These Online Threats
Lessons Learned
The allegations made by Baradwaj are a reminder of the risks associated with investing in cryptocurrency. Investors should always do their own research and exercise caution before investing in any cryptocurrency project or platform.
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