{"id":362699,"date":"2023-10-05T18:20:50","date_gmt":"2023-10-05T17:20:50","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=362699"},"modified":"2023-10-05T18:06:21","modified_gmt":"2023-10-05T17:06:21","slug":"ftx-backdoor-reportedly-discovered-by-us-based-employees-wsj","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/ftx-backdoor-reportedly-discovered-by-us-based-employees-wsj\/","title":{"rendered":"FTX backdoor reportedly discovered by US-based employees: WSJ"},"content":{"rendered":"<p>Some U.S.-based employees of <a href=\"https:\/\/cryptoslate.com\/companies\/ftx\/\">FTX<\/a> reportedly knew that the exchange had a backdoor that allowed Alameda to withdraw customers' funds, <em>The Wall Street Journal (WSJ)<\/em> <a href=\"https:\/\/www.wsj.com\/finance\/ftx-employees-found-alamedas-secret-backdoor-months-before-collapse-7f983fcd?mod=e2tw\">reported<\/a> on Oct. 5.<\/p>\n<p>According to the report, the employees stumbled upon this backdoor while examining the feasibility of replicating the code used by FTX International for FTX US. These employees were part of the LedgerX team, which FTX acquired in 2021.<\/p>\n<p class=\"s3\">After discovering the backdoor, Julie Schoening, the Chief Risk Officer at LedgerX, brought it to the attention of Zach Dexter, the company's CEO. Dexter reportedly forwarded this information to Nishad Singh, Director of Engineering at FTX. Despite the discovery, the issue was not fixed. However, <em>WSJ<\/em> added that the issue eventually led to Schoening's retrenchment in August 2022.<\/p>\n<p class=\"s3\">Meanwhile, a statement from <a href=\"https:\/\/cryptoslate.com\/companies\/ftx-us-derivatives\/\">LedgerX's<\/a> new owners, Miami International Holdings, denied that their employees knew of the backdoor. They wrote:<\/p>\n<blockquote>\n<p class=\"s6\"><span class=\"s5\">\u201cFollowing a thorough internal investigation, LedgerX has found no evidence that any of its employees were aware of any reported code enabling Alameda to take FTX customer assets, and firmly denies any contrary allegation.&#8221; <\/span><\/p>\n<\/blockquote>\n<h2 class=\"s6\"><span class=\"s7\">Alameda, FTX execs knew of customer funds' usage<\/span><\/h2>\n<div class=\"group w-full text-token-text-primary border-b border-black\/10 gizmo:border-0 dark:border-gray-900\/50 gizmo:dark:border-0 bg-gray-50 gizmo:bg-transparent dark:bg-[#444654] gizmo:dark:bg-transparent\" data-testid=\"conversation-turn-8\">\n<div class=\"p-4 justify-center text-base md:gap-6 md:py-6 m-auto\">\n<div class=\"flex flex-1 gap-4 text-base mx-auto md:gap-6 gizmo:gap-3 gizmo:md:px-5 gizmo:lg:px-1 gizmo:xl:px-5 md:max-w-2xl lg:max-w-[38rem] gizmo:md:max-w-3xl gizmo:lg:max-w-[40rem] gizmo:xl:max-w-[48rem] xl:max-w-3xl }\">\n<div class=\"relative flex w-[calc(100%-50px)] flex-col gap-1 gizmo:w-full md:gap-3 lg:w-[calc(100%-115px)] agent-turn\">\n<div class=\"flex justify-between empty:hidden lg:block\">\n<div class=\"text-gray-400 flex self-end lg:self-center justify-center gizmo:lg:justify-start mt-2 gizmo:mt-0 visible lg:gap-1 lg:absolute lg:top-0 lg:translate-x-full lg:right-0 lg:mt-0 lg:pl-2 gap-2 md:gap-3\">\n<div class=\"flex flex-grow flex-col gap-3 max-w-full\">\n<div class=\"min-h-[20px] flex flex-col items-start gap-3 whitespace-pre-wrap break-words overflow-x-auto\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>This report comes in the wake of previous statements from FTX and Alameda executives, confirming their knowledge of the use of customer funds.<\/p>\n<p>Caroline Ellison, the former CEO of <a href=\"https:\/\/cryptoslate.com\/companies\/alameda-research\/\">Alameda Research<\/a>, purportedly informed certain employees that she, Nishad Singh, and Gary Wang were privy to the transfer of customer funds to Alameda.<\/p>\n<p>These funds were purportedly borrowed to address Alameda's financial obligations, with reports suggesting they amounted to as much as $10 billion.<\/p>\n<p>These developments occur against the backdrop of the ongoing trial of the former FTX CEO, Sam Bankman-Fried. Before the trial's commencement, several executives from the defunct exchange had already pleaded guilty and were expected to provide testimony in court.<\/p>\n<p>Bankman-Fried has maintained his innocence and <a href=\"https:\/\/cryptoslate.com\/sbf-cannot-rely-on-us-unclear-crypto-regulatory-regime-in-trial-doj-says\/\">currently faces seven charges<\/a> related to the alleged fraudulent activities.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Some U.S.-based employees of FTX reportedly knew that the exchange had a backdoor that allowed Alameda to withdraw customers&#8217; funds, The Wall Street Journal (WSJ) reported on Oct. 5. According to the report, the employees stumbled upon this backdoor while examining the feasibility of replicating the code used by FTX International for FTX US. These [&hellip;]<\/p>\n","protected":false},"author":720,"featured_media":362702,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[77901,39],"tags":[76833],"prediction_market_topic":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FTX backdoor reportedly discovered by US-based employees: WSJ<\/title>\n<meta name=\"description\" content=\"Some bankrupt FTX employees knew that the exchange had a backdoor that allowed Alameda to withdraw customers&#039; funds.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/ftx-backdoor-reportedly-discovered-by-us-based-employees-wsj\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FTX backdoor reportedly discovered by US-based employees: WSJ\" \/>\n<meta property=\"og:description\" content=\"Some bankrupt FTX employees knew that the exchange had a backdoor that allowed Alameda to withdraw customers&#039; funds.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cryptoslate.com\/ftx-backdoor-reportedly-discovered-by-us-based-employees-wsj\/\" \/>\n<meta property=\"og:site_name\" content=\"CryptoSlate\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-05T17:20:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-05T17:06:21+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/10\/ftx-alameda.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Oluwapelumi Adejumo\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:site\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Oluwapelumi Adejumo\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/cryptoslate.com\/ftx-backdoor-reportedly-discovered-by-us-based-employees-wsj\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/cryptoslate.com\/ftx-backdoor-reportedly-discovered-by-us-based-employees-wsj\/\"},\"author\":{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/oluwapelumi-adejumo\/#person\",\"name\":\"Oluwapelumi Adejumo\",\"url\":\"https:\/\/cryptoslate.com\/author\/oluwapelumi-adejumo\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/oluwapelumi-adejumo\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/oluwapelumi-adejumo\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2025\/12\/profile-photo-oluwapelumi-adejumo-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2025\/12\/profile-photo-oluwapelumi-adejumo-300x300.jpg\",\"caption\":\"Oluwapelumi Adejumo\"},\"jobTitle\":\"Senior Reporter\",\"description\":\"Oluwapelumi values Bitcoin's potential. 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