According to WSJ, a team working with the cryptocurrency exchange FTX discovered months ago that the exchange’s relationship with Alameda Research was not secure.
A team working with FTX’s US arm discovered a backdoor connecting FTX and Alameda Research before the stock market crash in November 2022.
Alameda Research used customers’ funds thanks to a code placed in FTX’s system. to 65 billion dollars up to size to negative balance He could have it. FTX’s other customers can use their accounts couldn’t make it go negative and in such a situation they were liquidating.
According to the Wall Street Journal, this backdoor was acquired by FTX US in 2021. By LedgerX’s team was discovered. The team used the system FTX was using for its international platforms at the time, Regulations in the USA He was checking to see if it was suitable for him.
LedgerX’s Chief Risk Officer, Julie Schoening, met with LedgerX’s manager, Zach Dexter, to close this backdoor. Dexter then reported the matter to Nishad Singh, who ran FTX’s engineering unit.
However, according to WSJ news this problem is not solved and Schoening, who expressed his concerns about the incident, He was fired from the company in August 2022.
This backdoor between FTX and Alameda is Bankman-Fried’s for his case also plays an important role. Bankman-Fried, who is charged with multiple fraud charges, has pleaded not guilty.
Singh, who works closely with Bankman-Fried, is currently crime of fraud he accepted. Singh is expected to be a key witness against Bankman-Fried.