Ex-Alameda Engineer: It Was 'Business as Usual' Until FTX's Crypto Empire Implosion

Opening statements are expected today in FTX founder Sam Bakeman Fried's criminal trial over the expected six weeks of the trial. We'll hear from former friends and colleagues about the inner workings of sister companies, FTX and Alameda Research. Our next guest was a research engineer at Alameda Research and he says his life savings were lost in the collapse of the two companies. Welcome to the show, Aita Bar. A welcome to the show. Thanks for having me, Jen. Thank you. Thanks for being here. All right, let's start off with the basics. How long did you work at Alameda? And when so I was an engineer at Alameda starting mid to late 2021. And um right up until the end, so pretty much November of 2022. What was it like working with Sam Bank Fried and Caroline Ellison? It was, it was very interesting. I mean, I mean, all of you have heard the stories about, you know, Sam and Caroline and their personalities and, and, and kind of many of the crazy stories that happened um on the inside. Um It was a very interesting experience um and really unfortunate that it ended the way it did. Um Really, I'm just very excited for the trial to get started. Excited to see, you know, all the stuff that comes out there. Um, and I'm excited to see the consequences served, uh, to, uh, to the appropriate people. Did you say excited? But you also say you lost your life savings to this. So, is there like a mixed bag of emotions going on for you right now? And where does that excitement come from? Yeah, it, it, it's absolutely a mixed bag. Um You know, the thing is I've, I've had several months now to kind of just process everything that we all went through as employees of the company. Um It was a very intense experience and there was a lot of uncertainty in the moment about how things would pan out both for ourselves and also for uh the customers and investors who are affected. Um You know, at this point, it's, it's been about a year now and I'm just honestly look, you know, honestly trying to uh put this stuff behind me and move forward um and get on to the next thing. Have you been called as a witness or are you gonna be called as a witness? Have you, have you given any uh testimony? I mean, this is a criminal trial here going on. Uh And I assume as an engineer you're privy to some things going on. Uh I, how come you're on TV? And not in the courtroom, uh, testifying. Um, yeah, I'm, I'm, I'm, I'm not gonna be a witness. Uh, uh, but I do know that there's some former colleagues of mine, um, who are, who are gonna be doing that. Um, as for me, I'm just gonna be kind of on the sidelines uh passively watching, um, and seeing how things unfold. So I guess the big question that everybody wants to know is, is like, I mean, what, so what do you think of all this? Right? I mean, there's some very different, uh, stories out there. The defense is saying kind of like, oh, we didn't know it was a mistake. You know, there's, there's kind of, there's a lot of finger pointing, you know, Sam was saying like, oh, I didn't really know what, like Caroline was doing over at Alameda. I mean, what, what I guess, like, what is your take on, on what actually happened? Mhm. Yeah. Good question. You know, the thing is, I think, you know, e each of us who, who, who was an employee of the company, we have sort of a small piece of this whole story. Um, and so I have my piece but I don't really know, kind of the full picture of myself, right? And my point of view is, um, you know, we have some in some information just based on, uh, the confession that Caroline gave to us, um, the employees of Alameda, which has now been widely reported, uh, which would seem to imply that, you know, there was this, uh, clear decision that was taken by Sam and Caroline and the, and Gary, which involved, uh, fraudulent misuse of customer funds. Um, and so, you know, if, if, if we're to believe that then I guess that would, um, that would basically lead to all of them being guilty. But of course, I'm not a lawyer. Um, you know, don't, don't, don't, don't know much about the legal side of things. And so, really, I think we'll have to wait to see how everything unfolds in the courts. So you say that you didn't have a full picture? I mean, you know, was there any point when you were working there where you just had kind of like a, a bad feeling like something doesn't seem right here, this something seems off or was it just kind of like business as usual? Yeah, that's, that's the funny thing is, you know, it, it, it pretty much seemed like business as usual right up until the end. I mean, for all of us at Alameda, you know, the days before the company collapsed, it just seemed like a few really busy days of trading. Uh, we had no reason to believe that anything was going on basically until the very last day. And that's when Caroline pulled us aside and told us what had been going on behind closed doors. So, uh, speaking of, uh, pointing fingers. Uh There, there was an incident with a fat finger mistake, you said caused a uh uh uh a collapse in the price of Bitcoin temporarily on Binance. Uh explain a little bit of that. And more importantly, what is the role in Binance in relations to what Alameda did a, are they, were they involved in any way? Uh Was there any amount of bots or any side or it, it, it basically trading, that was, let's say not up to snuff as far as, you know, as an engineer, were there, were there, were there any things in terms of uh painting the tape, for instance, when it came to, um when it came to prices on either Binance or FTX? Yeah. So the uh uh the fat finger trade, which you mentioned is just one of many instances of really poor, um you know, security and risk checks at the company, um, checks that at any traditional trading firm would have probably been established long before trading had even started. Um And that's just one of many, right. Um And I think like, you know, a big part of why I wanted to share that story is just to kind of describe what the environment was on the inside at Alameda and obviously also at FTX, these were companies where, you know, there were decisions that were made with, you know, involving large amounts of money with uh very little, you know, checks and balances, involved. Um, and yeah, there was a ton of that kind of stuff but what we would have never expected, um, is, you know, sort of anything illegal or anything even close to the scale of, um, you know what Sam apparently was doing, uh, which was, you know, significant misuse of customer funds. Illegal. Illegal. I, I is questionable but, you know, when it comes to crypto there, there are arguments that, well, painting the tape isn't really illegal because it's crypto, it's not regulated. Did, did any of that happen here? Did, did, were, were you as an engineer at any time, uh, asked to do something which would, uh, basically print prices that weren't there or, or do anything that, that wasn't actually there. And also what is it, did you get a sense that there was a clear line difference between Alameda and FTX? Mhm. Yeah. Uh, uh, so, uh, to answer your first question. Um, no, not at all. Right. You know, and, and, and I know all of my former colleagues at Alameda, um, if any of us had ever been asked to do anything like that, we all would have quit on the spot. Um, that's the kind of environment that it was. Um, so, yeah. Yeah. Yeah, I mean, not, not to my knowledge, although, you know, it seems like there were many things going on at the company, um, that were not to any of our knowledge. AAA. And was there was there a clear difference between you and f between Alameda and FTX? Did, did you get a sense that you're working for separate companies or did it feel like you were working for the same company or were you asked to do, uh, things for FTX and Alameda at the same time? Uh, we were never asked to do things for the other company. Um, and, and, and, and there were, you know, kind of um separations set up, for example, in the Bahamas, we, we had physically distinct offices, um you know, different, different github uh code bases, different um access controls, things like that, that said, you know, both companies were at the end of the day, owned mostly by Sam mcman Fried and um the employees socially knew each other. So it was a joint social environment. Um Some of the office spaces were also joined in Hong Kong and Berkeley, for example. So it was a mixed bag, you know, um in terms of the finer details of like which of those things are improper and which of those are possibly illegal. I think it's up to up to the courts and the lawyers to decide that Audie, we got a wrap. But quickly, I wanna know, do you still plan on working in crypto? And do you hold any crypto? I do hold, I, I do hold some crypto. Um And, and yes, I am, I am working in crypto. Actually, we've just started a company that's building infrastructure for C for crypto markets. Um And the idea is to build something that's positive and lasting in this space. So I'm, I'm still very bullish and still working in this space. All right, Addie, thanks for joining us this morning. Thank you very much. Coin reached out to FTX Beris, defense attorney and Bin for comment ahead of Ait's appearance on this show. We have not yet heard back. All right. That was former Alameda research engineer, Aita Bar.