Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

A software change allowed FTX to use client money

reuters.com

Post reply on HN
Print view View original

21–30 of 402 posts

Re: A software change allowed FTX to use client money

#21

Post by bb88 »

neilv wrote: post #8
falcolas wrote: post #4

> Bankman-Fried had directed subordinates to update the software in mid-2020 to enable Alameda to maintain a negative balance on its account, the SEC complaint said. And thus do we have another piece of evidence for why morals and ethics matter, even for software developers. I doubt they'll end up with liability, but I do hope they at least recognize and think about how their actions enabled this whole mess.

> I doubt they'll end up with liability, When you should know it's criminal, "just following orders" isn't a great defense. > but I do hope they at least recognize and think about how their actions enabled this whole mess. They should get lawyers. And be prepared to sing like canaries.

> When you should know it's criminal, "just following orders" isn't a great defense.

That's even true in the military if you're given illegal orders. It's called the "duty to disobey".

It's not enough that employees "should" know what's illegal and what's not in an exchange -- companies need to be held criminally negligent for employing people who don't know.

Re: A software change allowed FTX to use client money

#23

Post by hn_throwaway_99 »

> Only Singh, Bankman-Fried and a few other top FTX and Alameda executives knew about the exemption in the code, according to three former executives briefed on the matter. A digital dashboard used by staff to track FTX customer assets and liabilities was programmed so it would not take into account that Alameda had withdrawn the client funds, according to two of the people and a screenshot of the portal that Reuters has previously reported.

If you want to see what you should never do as a software engineer if you like not being in jail, this is it.

Singh will definitely get prison time as well, though I'm sure all the higher-ups in FTX are trying to point fingers to get deals. In the Madoff scandal, 2 of Madoff's programmers were sentenced to 2 1/2 years each. In this case, Singh has much more culpability as a higher-up (not to mention a pre-collapse billionaire).

Re: A software change allowed FTX to use client money

#24

Post by xwdv »

akavi wrote: post #15
andirk wrote: post #6

Earlier quoted context omitted.

The fact that the software was not audited speaks more about the big names who invested in this clown than the clown himself. So weird how he publicly touted the EXACT OPPOSITE of everything he did and stood for. He may ask the judge for a rebase.

I've been at many startups during a fundraising round, and I don't think I've ever seen or heard of an investor auditing the codebase.

I offer this as a service. Typically when there’s a big acquisition and an audit of the codebase is needed, I gather up a group of developers each paid about $250/hr to go through the codebase and conduct audits looking for any red flags and giving an estimation of existing technical debt.

Re: A software change allowed FTX to use client money

#25

Post by hn_throwaway_99 »

falcolas wrote: post #4

> Bankman-Fried had directed subordinates to update the software in mid-2020 to enable Alameda to maintain a negative balance on its account, the SEC complaint said. And thus do we have another piece of evidence for why morals and ethics matter, even for software developers. I doubt they'll end up with liability, but I do hope they at least recognize and think about how their actions enabled this whole mess.

> I doubt they'll end up with liability, but I do hope they at least recognize and think about how their actions enabled this whole mess.

Singh is going to jail. He was an executive, not just a low-level employee, and was a pre-collapse billionaire. I have no doubt the evidence like this will show that he knew what he was doing was willingly fraudulent. Madoff's programmers each got 2 1/2 years.

Re: A software change allowed FTX to use client money

#27

Post by anon291 »

rafale wrote: post #18
roland35 wrote: post #12

And this is what really ruins crypto to me. With no actual legal protection, no trust, "code is law", am I expected to keep up with every pull request? And of course these exchanges are completely opaque on top of that.

This is not crypto, this is Enron, Theranos and Madoff. In DeFi, you check the code once, and that's what gonna run (exception being proxy contracts, but those are a red flag in itself).

People need to understand that money is debt. That is the source of all currency (yes, even gold and other 'hard' currency). If people cannot freely create it, then it's useless. The key is that you ought to be able to gauge the money creator on their trustworthiness, which hopefully you know as a member of a small community. Or, if you are creating money on the open market to large numbers of people, often it's useful to make your case to a nexus of trust (i.e., a bank) so that more people will accept your money

Unfortunately what happened here is a fraudster latched on to a movement that decried centralized trust and said that he is trustworthy and, when asked, pointed to some code that no one could inspect or understand. Simpletons believed him because they believed in the 'trust the code' hype, and believed his money was real. They were wrong.

But at the end of the day, expecting code to replace the core human emotion of trust, the source of money, is ridiculous.

Re: A software change allowed FTX to use client money

#28

Post by siegecraft »

neilv wrote: post #8
falcolas wrote: post #4

> Bankman-Fried had directed subordinates to update the software in mid-2020 to enable Alameda to maintain a negative balance on its account, the SEC complaint said. And thus do we have another piece of evidence for why morals and ethics matter, even for software developers. I doubt they'll end up with liability, but I do hope they at least recognize and think about how their actions enabled this whole mess.

> I doubt they'll end up with liability, When you should know it's criminal, "just following orders" isn't a great defense. > but I do hope they at least recognize and think about how their actions enabled this whole mess. They should get lawyers. And be prepared to sing like canaries.

how would they know it's explicitly criminal though? i doubt most devs have enough understanding of their business domain, much less the regulatory frameworks to be able to confidently refuse to implement something because it's illegal.

Re: A software change allowed FTX to use client money

#29

Post by gruez »

roland35 wrote: post #12

And this is what really ruins crypto to me. With no actual legal protection, no trust, "code is law", am I expected to keep up with every pull request? And of course these exchanges are completely opaque on top of that.

There's many reasons to hate smart contracts, but this isn't one of them. The article is talking about changes to a codebase that's closed source and deployed with little scrutiny. None of this is applicable to reputable smart contract projects, which are open source and require some sort of consensus and/or vote for code changes. Using this as an argument against smart contracts makes as much sense as using the elections in russia as an argument against democracy.

Re: A software change allowed FTX to use client money

#30

Post by gruez »

anon291 wrote: post #27
rafale wrote: post #18

Earlier quoted context omitted.

This is not crypto, this is Enron, Theranos and Madoff. In DeFi, you check the code once, and that's what gonna run (exception being proxy contracts, but those are a red flag in itself).

People need to understand that money is debt. That is the source of all currency (yes, even gold and other 'hard' currency). If people cannot freely create it, then it's useless. The key is that you ought to be able to gauge the money creator on their trustworthiness, which hopefully you know as a member of a small community. Or, if you are creating money on the open market to large numbers of people, often it's usef…

>But at the end of the day, expecting code to replace the core human emotion of trust, the source of money, is ridiculous.

No, the point is for code to replace the institutions/people that people trust (ie. trusting the bitcoin network's consensus code, rather than a central bank), not "replace the core human emotion of trust".

Post reply on HN