FTX Chief Engineer Made Changes to FTX Code to Avoid Automatic Liquidation of Alameda Positions

According to Reuters, FTX chief engineer Nishad Singh made changes to the FTX code in mid-2020 to avoid automatic liquidation of Alameda positions.

In a note explaining the change, engineer Nishad Singh wrote that FTX should never sell Alameda's positions. In addition, Singh wrote in a comment to the platform's code, "Be extra careful not to liquidate."

The exemption allowed Alameda to keep borrowing funds from FTX irrespective of the value of the collateral securing those loans. That tweak in the code got the attention of the SEC, because it means Alameda had a "virtually unlimited line of credit."