How a software change let Sam Bankman-Fried's FTX use client funds

That tweak in the code got the attention of the US Securities and Exchange Commission (SEC), and charged Bankman-Fried with fraud

In 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 Sam Bankman-Fried, from a feature on the trading platform that would have automatically sold off Alameda’s assets if it was losing borrowed money.

In a note explaining the change, the engineer, Nishad Singh, emphasised that FTX should never sell Alameda’s positions. “Be extra careful not to liquidate”, Singh wrote in the comment in the platform’s code, which it showed he helped author. 

The exemption allowed Alameda to keep borrowing funds from FTX irrespective of the