UNEARTHED

FTX Staff Found Alameda’s ‘Backdoor’ Before Exchange Imploded: Report

Sam Bankman-Fried is accused of stealing FTX customers’ money in a scheme partly enabled by the secret feature.

Months before Sam Bankman-Fried’s FTX collapsed, some of the company’s employees found the “backdoor” in the exchange’s code which was allegedly used by Alameda Research to withdraw huge amounts of FTX customers’ funds, according to The Wall Street Journal. Ordinary FTX users would have their assets automatically liquidated if their balance fell below zero, but prosecutors claim SBF’s crypto trading firm, Alameda, was treated differently, being permitted to have a negative balance of up to $65 billion, in turn allowing Alameda to effectively use FTX as a slush fund. According to the Journal, a small group of FTX employees examining the exchange’s code base in spring 2022 realized that Alameda was receiving “special treatment,” and raised concerns. Despite the message reportedly reaching a member of SBF’s inner circle, it was never fixed, and FTX collapsed in November last year. Bankman-Fried has pleaded not guilty to all charges filed against him.