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A software change allowed FTX to use client money

reuters.com

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Re: A software change allowed FTX to use client money

#31

Post by alar44 »

hn_throwaway_99 wrote: post #23

> 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by staff to track FTX customer assets and liabilities was programmed so it would not take into account that Alameda had withdrawn the client funds, according to two of the people and a screenshot of the portal that Reuters…

Really? I feel like intent would be really hard to prove.

"Hey, due to the way our accounting works I need you to subtract X from our dashboard."

"Ok boss."

Are programmers expected to know finance law? If I build a program for a dairy farmer am I supposed to know the laws of the interstate dairy trade? I can't believe that would be the case.

Re: A software change allowed FTX to use client money

#33

Post by hn_throwaway_99 »

alar44 wrote: post #31
hn_throwaway_99 wrote: post #23

> 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by staff to track FTX customer assets and liabilities was programmed so it would not take into account that Alameda had withdrawn the client funds, according to two of the people and a screenshot of the portal that Reuters…

Really? I feel like intent would be really hard to prove. "Hey, due to the way our accounting works I need you to subtract X from our dashboard." "Ok boss." Are programmers expected to know finance law? If I build a program for a dairy farmer am I supposed to know the laws of the interstate dairy trade? I can't believe that would be the case.

Nishad Singh wasn't some low-level coder. He was FTX's Director of Engineering.

> "Hey, due to the way our accounting works I need you to subtract X from our dashboard."

That is not what happened here. The fact alone that very few people knew about Alameda's special treatment, and, importantly, deliberately conspired to keep that treatment secret is a pretty strong indicator that he knew it was wrong.

Re: A software change allowed FTX to use client money

#34

Post by echelon »

alar44 wrote: post #31
hn_throwaway_99 wrote: post #23

> 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…

Really? I feel like intent would be really hard to prove. "Hey, due to the way our accounting works I need you to subtract X from our dashboard." "Ok boss." Are programmers expected to know finance law? If I build a program for a dairy farmer am I supposed to know the laws of the interstate dairy trade? I can't believe that would be the case.

> Are programmers expected to know finance law?

Working on fintech and transaction rails? Probably. I had to know regulations when I worked in fintech. Plus, you don't have to know the law to be found guilty of breaking it.

The engineers working on this are innocent until proven guilty, but you'd better believe all internal comms, meeting notes, and commit messages will be scrutinized.

Someone had to ask for the system to behave this way, and that will have produced certain artifacts.

Engineers with knowledge may be cut deals to testify against the bigger players.

Re: A software change allowed FTX to use client money

#35

Post by jerrysievert »

alar44 wrote: post #31
hn_throwaway_99 wrote: post #23

> 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…

Really? I feel like intent would be really hard to prove. "Hey, due to the way our accounting works I need you to subtract X from our dashboard." "Ok boss." Are programmers expected to know finance law? If I build a program for a dairy farmer am I supposed to know the laws of the interstate dairy trade? I can't believe that would be the case.

i worked for a fintech startup in a similar space:

> Are programmers expected to know finance law?

in our case, we were. it was drilled in, and tested, reviewed, and audited. i’m not saying that something like this couldn’t have happened, but in my case anyone who would have been involved would definitely have known the legality.

Re: A software change allowed FTX to use client money

#36

Post by arcbyte »

alar44 wrote: post #31
hn_throwaway_99 wrote: post #23

> 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…

Really? I feel like intent would be really hard to prove. "Hey, due to the way our accounting works I need you to subtract X from our dashboard." "Ok boss." Are programmers expected to know finance law? If I build a program for a dairy farmer am I supposed to know the laws of the interstate dairy trade? I can't believe that would be the case.

Developers need to know the business better than the business people. Always. Otherwise you can't implement the software very well.

Re: A software change allowed FTX to use client money

#37

Post by tedk-42 »

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…

Money is money. Debt is money from the future. Seems you don't understand.

Re: A software change allowed FTX to use client money

#38

Post by throwaway4837 »

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.

Do you currently keep up with every clause in every contract and law? Doesn't seem like a new problem.

Re: A software change allowed FTX to use client money

#39

Post by ClumsyPilot »

tedk-42 wrote: post #37
anon291 wrote: post #27

Earlier quoted context omitted.

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…

Money is money. Debt is money from the future. Seems you don't understand.

there is no money, it is all debt, he is right. Unless you carry around golden coins.

Re: A software change allowed FTX to use client money

#40

Post by BurningFrog »

swiper_lux wrote: post #17

Brings up a question: what is the chance of blaming some of this on an "innocent" coding error? Can you get jail for not writing unit tests, swallowing an exception, a type conversion you did not expect?

Interesting.

The perfect crime would be to add a natural looking bug in the code that can be exploited by someone else, and then we split the money!

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