This has Dan Friedburg’s fingerprints all over it and is reminiscent of Ultimate Bet’s “god mode”.
Would not be surprised if this move was advised by their legal counsel.
A software change allowed FTX to use client money
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Re: A software change allowed FTX to use client money
#42Earlier quoted context omitted.
> 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.
ignorantia juris non excusat
Re: A software change allowed FTX to use client money
#43Earlier quoted context omitted.
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.
ignorantia juris non excusat
My understanding is they would have to prove criminal intent.
Re: A software change allowed FTX to use client money
#44And 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 elec…
Your very post says it -- "reputable." In this field, no matter the technology, reputation and trust are everything amidst fears of rug pulls and scams, and smart contracts don't replace the need for social trust.
It's hard to name any crypto organization that was seen as more reputable than FTX before this happened.
If we can't even trust someone with SBF's track record, what's left?
Re: A software change allowed FTX to use client money
#45And 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).
Remember what happened with the 2016 Ethereum DAO?
Even expert programmers aren't able to check smart contracts for all possible issues.
Re: A software change allowed FTX to use client money
#46They say the commit was made by someone with the email “admin@MacBook-Pro.local”. They’ve tried contacting them, but got no response so far.
Re: A software change allowed FTX to use client money
#47And 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 just old-fashioned fraud. SBF had a Jane Street (trad fi) background. FTX didn't operate a blockchain or develop any blockchain technology on their own. They operated a trading platform that was run on Python and SQL. Then they embezzled funds and hid the trail.
Re: A software change allowed FTX to use client money
#48> 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…
> 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
But how long? Jerome O'Hara and George Perez were arguably more complicit in Madoff's scheme than anyone, having written the computer software to generate the fake investment return reports and even actively helped dupe the investigating regulators but were only sentenced to two and a half years in prison.
Re: A software change allowed FTX to use client money
#49Brings 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?
I believe that really depends on (a) how much harm it caused downstream, (b) how much of it is caused by your actions. Per Matt Levine's column today, it's not the whole problem that FTX had sloppy accounting – rather that SBF went around advertising the "sophisticated risk engine" which in reality was crap. This action accounts for fraud. I don't see you being jailed for your random GitHub project being sloppy. Howe…
I hope it also depends on a reasonable expectation of oversight and access controls when you're working in high-risk fields. Finance engineers should probably be expected to be familiar with laws concerning what they do.
Re: A software change allowed FTX to use client money
#50It's amazing how fast the internal details are leaking out. It's very curious how Reuters could get hold of the source code and quickly identified the most relevant code. It seems someone inside FTX worked with Reuters.
After the Chapter 11 filing, all assets of FTX were seized from SBF and his former executive team was let go. John Ray, the interim CEO, the one who testified in front of Congress today, and his team are the likely source of the release.