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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

#211

Post by jnsaff2 »

galaxyLogic wrote: post #178
CSMastermind wrote: post #167

Earlier quoted context omitted.

I don't know, we hold other engineers responsible for the consequences of their work, personally I think the industry would be better off if we had more accountability for programmers.

But we don't hold the gun-industry accountable for mass-shootings. Maybe we should. But situation is a little bit similar here. The engineer created the gun. He didn't use the software to shoot people. Or maybe he did. The question is did he personally benefit from the change made more than his usual salary? Or think about people who build bridges. They just follow the orders they get from higher ups. Bridge collapse…

A `DELETE FROM` function can be used for good or bad. A gun can be used for good or bad (see the war in Ukraine, it can be used to murder or protect your family from murderers).

A code change excluding a known, named entity from safety checks is more like rigging a bridge to explode when your enemy crosses the bridge.

Zero ambiguity.

Re: A software change allowed FTX to use client money

#212

Post by tomnipotent »

martingoodson wrote: post #210
tomnipotent wrote: post #206

Earlier quoted context omitted.

There's a big difference between the HN crowd shouting "they should know the laws!" vs. licensed and controlled professionals like architects and structural engineers that "follow the law" via established codes, which have clear boundaries that can be evaluated and prosecuted when violated. > When it's something seemingly egregious like this You don't even know what "this" is. So the BI engineer that stitches togethe…

‘clear boundaries that can be evaluated and prosecuted when violated.’ Have you ever looked at media law or libel law? It does not have clear boundaries, but journalists are still expected to follow the law. Journalists are not absolved of the responsibility because it’s complicated. You just need to not break the law. It’s how it works. If you don’t want exposure to liability, you need to acquaint yourself with rele…

> It does not have clear boundaries

They absolutely have boundaries that a lawyer or prosecutor can use to make a case in a court of law. How do you think the law works? Interpretation of laws is a big part of how the common law system works.

Re: A software change allowed FTX to use client money

#214

Post by zopa »

galaxyLogic wrote: post #178
CSMastermind wrote: post #167

Earlier quoted context omitted.

I don't know, we hold other engineers responsible for the consequences of their work, personally I think the industry would be better off if we had more accountability for programmers.

But we don't hold the gun-industry accountable for mass-shootings. Maybe we should. But situation is a little bit similar here. The engineer created the gun. He didn't use the software to shoot people. Or maybe he did. The question is did he personally benefit from the change made more than his usual salary? Or think about people who build bridges. They just follow the orders they get from higher ups. Bridge collapse…

> The question is did he personally benefit from the change made more than his usual salary?

That’s not the question — as in, it won’t be an element of any of the crimes he’s eventually charged with. The question is whether he was knowingly or recklessly involved in a scheme to defraud people.

And just generally, legal reasoning does frequently use analogies but they need to be tighter than the ones you’re using. This case isn’t much like building a faulty bridge.

Re: A software change allowed FTX to use client money

#215

Post by db48x »

RF_Savage wrote: post #204
db48x wrote: post #131

Earlier quoted context omitted.

It’s potentially a defense for the engineer though, if he had nothing to do with the advertising. Of course it’s all just idle speculation; the real interesting stuff will come out in the trial, years upon years from now.

The engineer would have a hard time claiming ignorance with multiple widely reported public statements about how Alameda had no special priviledges.

Possibly. On the other hand, I’m not sure I’ve ever read any of my own company’s press releases. Was this guy an officer of the company?

Re: A software change allowed FTX to use client money

#216

Post by ciropantera »

galaxyLogic wrote: post #178
CSMastermind wrote: post #167

Earlier quoted context omitted.

I don't know, we hold other engineers responsible for the consequences of their work, personally I think the industry would be better off if we had more accountability for programmers.

But we don't hold the gun-industry accountable for mass-shootings. Maybe we should. But situation is a little bit similar here. The engineer created the gun. He didn't use the software to shoot people. Or maybe he did. The question is did he personally benefit from the change made more than his usual salary? Or think about people who build bridges. They just follow the orders they get from higher ups. Bridge collapse…

A gun has many purposes, some legitimate (law enforcement, "defense" etc), others less so. A code change that allows the company to do illegal things has no legitimate purpose.

I think what's up to debate is to what extent the developers were lied to regarding the purpose of the code. Maybe they were told it was for testing purposes only, or the higher ups managed to convince them that it's ok despite them questioning it. I suppose those things will come up during investigation and will certainly affect their sentences, but I don't think they will be off the hook that easily.

Re: A software change allowed FTX to use client money

#217

Post by im3w1l »

martingoodson wrote: post #194
megablast wrote: post #161

Earlier quoted context omitted.

> If you want to see what you should never do as a software engineer if you like not being in jail, this is it. Strange comment. Are the engineers who made the code change responsible?? Do engineers need to be lawyers and financial gurus too, and evaluate every ticket they are given for possible illegality in every country the software is used??

Yes of course they need to know the law. Anyone who might potentially break the law during the course of their work needs to know what that law is. ‘Just following orders’ is not a defence. This is very odd special pleading by programmers. Every industry needs to do this: journalists learn media law in their university degrees, architects have to learn the building regulations. Why is programming any different?

Holding people personally liable is the exception and not the norm. It makes sense too, like if the company lawyers say something is fine then you have to be able to trust them, unless it's something obviously wrong.

Re: A software change allowed FTX to use client money

#218

Post by [deleted] »

andrewstuart wrote: post #103
jiggawatts wrote: post #98

Earlier quoted context omitted.

> The real problem behind all these crypto companies is the people who make the money have no concept of what "integrity" is. You don't need integrity while "the line goes up". Integrity is only for when it goes down. Until recently, the line has been consistently going up. SBF was banking on it going up forever. If it had gone up forever, he would not have been caught! While the line goes up, integrity just eats int…

>> You don't need integrity while "the line goes up". Integrity is how you behave when no-one is watching.

[deleted]

Re: A software change allowed FTX to use client money

#219

Post by phire »

adrr wrote: post #146
helsinkiandrew wrote: post #93

Earlier quoted context omitted.

> Singh will definitely get prison time as well Remember Alamada wasn’t a normal customer. It was acting as a market maker/counterparty of last resort to many other FTX customers. In that case there could be situations where ‘normal customer liquidation rules’ shouldn’t apply - it can go in the red temporarily to enable others to trade (and FTX to make commission). From the facts in the article (which are obviously n…

I never understood why Alameda took risky bets when it could just make a bunch of cash off buy/ask spreads assuming trading volume was decent. Running the exchange they can front run any large trades and move the market.

Front running requires pretty invasive changes to the very performance critical parts of the trading engine. You have to analyse the queued trades, decide on a trading strategy and insert new trades, all without inserting too much latency.

It would be hard (but not impossible) to implement such functionality without dozens of software engineers being very aware of it's existence and the implications.

This kind of software change only touches the edges and can be done with much more plausible deniability. The exclusion to margin calls was a single if statement inserted by a single engineer with the justification Alameda were the primary market maker. The dashboard change might have been just a bug they avoided fixing (If you normally automatically margin call negative balances, why would your dashboard bother reporting negative balances?)

Re: A software change allowed FTX to use client money

#220

Post by rxhernandez »

RF_Savage wrote: post #204
db48x wrote: post #131

Earlier quoted context omitted.

It’s potentially a defense for the engineer though, if he had nothing to do with the advertising. Of course it’s all just idle speculation; the real interesting stuff will come out in the trial, years upon years from now.

The engineer would have a hard time claiming ignorance with multiple widely reported public statements about how Alameda had no special priviledges.

Should an engineer be tracking what their company is telling media outlets? No one else is tasked with looking at my code except other engineers; why should engineers spend their precious time making sure that other business units are performing their duties ethically?
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