Last Updated on October 12, 2023 by Bitfinsider

Big-name dealers should make sure there are rigorous security standards and precautions in place to guard against hacking and phishing attempts, both of which are commonplace in the crypto sector.

Not Alameda Research though. According to recent allegations made by ex-employee Aditya Baradwaj, the troubled Sam Bankman-Fried managed trading company lost at least $200 million to a number of widespread attack vectors that run rampant in the industry.

Baradwaj earlier today stated on social media app X, “SBF believed that the single most important thing for a startup like Alameda or FTX was being able to move very, very fast,” This resulted in a dearth of code testing and insufficient balance accounting.

“Blockchain private keys and exchange API keys were stored in plaintext in a file that several employees could access,” Baradwaj added. courant. By examining his submitted paystubs, it was confirmed that Baradwaj was a worker for Alameda.

By yield farming on a “new blockchain of questionable legitimacy,” where the network’s developer held the company’s assets hostage, Alameda lost $40 million. After several months of negotiations, it’s not apparent if these cash were ultimately recovered.

Supplying tokens to a financial application on a blockchain is a common approach to receive rewards. However, programs created by malevolent parties might prevent withdrawals after luring a substantial sum of money, which would result in losses.

Private keys or a password to a secure crypto storage were exposed, which was another security blunder caused “likely by a former employee.” In various tokens, the attack cost Alameda more than $50 million.

The biggest loss, though, came from Alameda, which was duped into clicking on a bogus phishing link in a Google Ad. The false link, which had been elevated to the top of Google searches, was probably imitating a DeFi protocol.

These occurrences were just a few of many security errors at Alameda, according to Baradwaj.

According to Michael Lewis’s recently published history of Bankman-Fried, the company’s founder lost at least $500,000 a day in the early days and once lost XRP tokens worth more than $4 million.

These losses demonstrate Alameda’s insufficient security procedures and staff members’ apparent carelessness when taken as a whole. If private keys were kept more securely and DeFi transactions were thoroughly examined before shifting millions of dollars in capital, each of these attacks could have been prevented.

These losses weren’t only in Alameda. The other business owned by Bankman-Fried, the cryptocurrency exchange FTX, suffered a $400 million loss immediately after filing for bankruptcy in November 2022. Poor private key management was the root of the attack, which could have cost the company upwards of $1 billion.