FTX employees found Alameda's $65 billion backdoor long time before collapse

Before the #cryptocurrency exchange crashed in November 2022, a group of FTX U.S.-based employees discovered a backdoor for its linked trading firm Alameda Research, according to the Wall Street Journal, which cited people familiar with the situation.

The backdoor allowed Alameda to use customer cash to have a negative balance of up to $65 billion, according to earlier court filings that exposed hidden code in FTX's systems. Other FTX customers could not have negative balances since they would be automatically liquidated if they did.

The staff apparently informed their division manager of the discovery, who spoke with Nishad Singh, a lieutenant of former #FTX CEO Sam Bankman Fried, but the problem was never handled. Instead, the team captain who voiced the worry was sacked.