According to Alameda Research, a $65 billion backdoor in FTX’s coding allowed for negative balances.
According to reports, FTX’s software provided a hidden backdoor to Alameda Research, allowing the hedge fund to have a negative balance of up to $65 billion.
Sam Bankman-Fried, creator of the cryptocurrency exchange FTX, is accused, among other things, of mixing business and personal finances.
Some LedgerX workers allegedly found a backdoor in FTX’s coding that granted Alameda Research, a crypto hedge fund, extra rights, as reported by The Wall Street Journal.
FTX.US purchased the derivative trading platform LedgerX in August of 2021, making it subject to regulation by the Commodity Futures Trading Commission (CFTC). In May of 2023, the court sanctioned FTX.US’s 83% loss on the sale of LedgerX.
“It’s worth noting that there are a couple of spots in the…code base where Alameda is currently being given preferential treatment,” the author writes.
Schoening reported the problem to Zach Dexter, the CEO of LedgerX, according to a WSJ story. Nishad Singh, who was very close to Sam Bankman-Fried, received the message from Dexter in the end.
In February 2023, Singh and other members of the inner circle pled guilty to fraud charges. According to reports, Singh commented on the FTX code.
In addition, Schoening, the team leader who identified the problem, was let go in August 2022, far before FTX went down.
Sam Bankman-Fried’s jury was picked on the second day of his trial, and it consisted of nine women and three males in their 30s, 40s, and 60s. It all started out on October 3rd, and the trial is anticipated to endure for at least six weeks. Sam Bankman-Fried faces a life sentence if he is found guilty on all counts.
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