A former employee at Alameda Research shared details about three instances where the firm lost hundreds of millions of dollars due to inadequate risk management structures.
Aditya Baradwaj, a former engineer at the now defunct trading firm, revealed that incomplete balance accounting and “virtually no code testing” resulted in safety checks for trading being incorporated only on 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...
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