FTX Extended 2020 : The Line of Code That Let Alameda Borrow $65 Billion - File 165 T1

<p></p><p>This episode is part of Financial Forensics Labs — two shows, one forensic methodology: The Due Diligence Files traces how institutions collapse, The Signal Files traces how the good calls get made. Built from primary-record research by a 15-year capital markets professional.</p><p>Get to know the framework, the other show, and the tools built from it — all in one place.</p><p>Explore </p><p><a href="https://www.financialforensicslabs.com.ar/">⁠⁠⁠Financial Forensics Labs — Forensic Finance Intelligence⁠⁠</a></p><p></p><p><br></p><p>One line of code, buried among millions of others, let a single trading account do something no other account on the exchange was ever allowed to do. This is the financial autopsy of FTX and Alameda Research — how an exchange, its founder&#39;s own trading firm, and a token created out of nothing combined to lose roughly $8 billion of customer money in about ten days.</p><p>Sam Bankman-Fried built FTX into one of the largest crypto exchanges in the world while publicly insisting that Alameda Research, the trading firm he also founded, received no special treatment on the platform. Internally, the opposite was true. In mid-2020, FTX&#39;s own code was quietly rewritten to exempt Alameda&#39;s account from the automatic liquidation engine every other customer was subject to — allowing Alameda to run a negative balance, drawing on customer deposits without adequate collateral, up to a figure later testified in court to have reached $65 billion.</p><p>We trace the mechanism from the beginning: the 2019 launch of FTT, FTX&#39;s self-issued token with no underlying business behind it; the coded exemption that let Alameda borrow customer funds indefinitely; the engineers at LedgerX who discovered the exemption in 2022 and were ignored; and the ten days in November 2022 that ended it all, starting with a leaked balance sheet showing Alameda&#39;s FTT holdings were worth more on paper than the entire circulating supply of the token itself.</p><p>We cover the full timeline — the November 2nd CoinDesk report, Binance&#39;s decision to dump its FTT holdings, Caroline Ellison&#39;s public denial, the collapsed Binance acquisition, the November 11th bankruptcy filing, and what John Ray — the same executive who oversaw Enron&#39;s wind-down — found when he took over: expense approvals made by emoji reaction, company real estate registered in employees&#39; personal names, and financial controls he called the worst he&#39;d seen in ov