In mid-2020, FTX's chief engineer made a secret change to the cryptocurrency exchange’s software.
He tweaked the code to exempt Alameda Research, a hedge fund owned by FTX founder Sam Bankman-Fried, from a feature on the trading platform that would have automatically sold off Alameda's assets if it was losing too much borrowed money.
The SEC and a spokesperson for Bankman-Fried declined to comment for this story. Singh did not respond to several requests for comment. Bankman-Fried has apologized to customers, but said he didn't personally think he had any criminal liability. He did not tell lawmakers about the software change to exempt Alameda. Indeed, he told investors that Alameda received no preferential treatment from FTX, the SEC complaint said.
To explain the change, Singh, the chief engineer, inserted a comment into the code: “Alameda would be liquidating, prevented.” He included a warning “not to liquidate the PMM."
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