FTX employees uncovered Alameda Research's backdoor, allowing a negative balance of up to $65 billion, months before the exchange collapsed.
A group of FTX U.S.-based employees stumbled across a backdoor for its affiliated trading firm Alameda Research months before the crypto exchange collapsed in Nov. 2022, the Wall Street Journal reported, citing people familiar with the matter.
Bankman-Fried’s criminal trial relating to alleged fraud at FTX began in a New York federal court earlier this week.The employees, part of a team from LedgerX, a U.S. crypto-derivatives exchange acquired by FTX's U.S. arm in 2021, were examining the compatibility of FTX's international platform code against stricter U.S. regulations when they reportedly found the backdoor in spring 2022.
In turn, Schoening reported the concerns to LedgerX head Zach Dexter, who discussed the discovery with FTX Director of Engineering Nishad Singh, a key member of Bankman-Fried's inner circle. Whistleblowers who threatened to expose alleged fraudulent behavior were sometimes paid off by FTX, according to a court filing in June from the management team handling its bankruptcy.
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