FTX employees found $65B Alameda backdoor before collapse: WSJ

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By BitcoinWiki News

Key Takeaways:

– A group of FTX U.S.-based employees discovered a backdoor in the systems of its affiliated trading firm, Alameda Research.
– The backdoor allowed Alameda to have a negative balance of up to $65 billion using customer funds.
– The employees alerted their division boss and FTX CEO Sam Bankman Fried’s lieutenant but the issue was never resolved.
– The leader of the team who raised the concern was fired.
– The employees were part of the team from LedgerX, a U.S. crypto-derivatives exchange acquired by FTX’s U.S. arm.
– The backdoor was found while examining FTX’s international platform code against U.S. regulations.
– The concerns were reported to LedgerX head Zach Dexter, who discussed it with FTX Director of Engineering, Nishad Singh.
– LedgerX denies any knowledge of the reported code enabling Alameda to use FTX customer assets.
– LedgerX Chief Risk Officer, Julie Schoening, was fired allegedly for sending “inappropriate messages” but some sources claim the messages were doctored.
– Whistleblowers threatening to expose alleged fraudulent behavior were sometimes paid off by FTX.
– The backdoor is a key part of the prosecution’s case in Bankman-Fried’s trial.
– Bankman-Fried could serve decades in prison while Nishad Singh has pleaded guilty to fraud.
– FTX and LedgerX have not yet responded to requests for comment.


– A group of FTX U.S.-based employees discovered a backdoor that allowed affiliated trading firm Alameda Research to have a negative balance of up to $65 billion using customer funds.
– The employees alerted their division boss and FTX CEO Sam Bankman Fried’s lieutenant, but the issue was never resolved and the employee who raised the concern was fired.
– The discovery was made during an examination of FTX’s international platform code against U.S. regulations by employees from LedgerX, a U.S. crypto-derivatives exchange acquired by FTX’s U.S. arm in 2021.
– LedgerX Chief Risk Officer Julie Schoening reported the concerns to LedgerX head Zach Dexter, who discussed it with FTX Director of Engineering Nishad Singh.
– Schoening was later fired, allegedly for sending “inappropriate messages” to other employees. A settlement agreement between Schoening and FTX worth $5 million failed to complete before the exchange collapsed.
– Whistleblowers who threatened to expose fraudulent behavior were sometimes paid off by FTX.
– The backdoor plays a key role in the prosecution’s case against Sam Bankman-Fried, who faces multiple fraud charges and could serve decades in prison. Singh, a key witness, has pleaded guilty to fraud and allegedly helped create the backdoor.

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