Aditya Baradwaj, a former engineer at the bankrupt cryptocurrency trading firm Alameda Research, has revealed that the company was behind bitcoin’s 87% plunge in 2021.

Baradwaj explained the events that led to the sudden drop, saying the incident was a result of a work philosophy established by Alameda’s co-founder Sam Bankman-Fried (SBF), which maintained that the utility gained by moving fast outweighed the occasional costs paid due to a poor risk management system.

Alameda Behind BTC’s 87% Drop 2 Years Ago

On October 21, 2021, BTC experienced a flash crash after skyrocketing to $67,000. While the leading digital asset had plummeted by a small amount on several exchanges, Binance.US, the American arm of the world’s largest crypto exchange, saw the worst of it.

On trading platforms like Kraken, FTX, and Bitstamp, BTC dropped to $54,100, $58,500, and $63,600, while it nosedived to $8,200 on Binance.US. The plunge was corrected within a few minutes, and the asset’s price returned to its pre-drop levels; however, the cause of the decline remained unknown.

Binance.US released an update on the incident about 24 hours later, claiming that the flash crash was caused by a trading algorithm bug from one of its institutional traders.

In a surprising turn of events, Baradwaj disclosed that Alameda was the institutional trader Binance.US was referring to and that a misplaced decimal point caused the incident.

Waiting Until Something Broke

The former Alameda engineer explained that the firm’s trading was done in automated and manual systems. The former was Alameda’s main mode, and it entailed using semi-systematic strategies to set model parameters that controlled the automated system. This meant traders were not placing actual bets but fine-tuning an algorithm that decided how to execute the trades at high frequency.

Nevertheless, the traders needed to manually send trades occasionally, especially if Alameda’s automated systems were affected by market