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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

#221

Post by malandrew »

salawat wrote: post #118
stickfigure wrote: post #105

Earlier quoted context omitted.

"For testing purposes, these 10 account numbers should be allowed to remove cash from any of our ATMs. The testers will put the money back." It doesn't sound that nefarious. If you told me this is how ATMs are currently being tested in the industry, I wouldn't be able to contradict you.

...A bench test of an ATM probably doesn't involve real money. No one in finance is stupid enough to use real money on production environments for testing purposes. There is test... And there is PROD. Never do the two meet. Ever. If someone out there does, please make yourself known so we can get the investigators over there ASAP.

You can test in production if you have multi-tenancy aware services, where tenancy is some string value like Foo to make sure reads to Foo can only read data that was written to Foo.

Re: A software change allowed FTX to use client money

#222

Post by oshkarr »

barbariangrunge wrote: post #137
hn_throwaway_99 wrote: post #33

Earlier quoted context omitted.

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.

Director of engineering != product manager in charge of deciding what features to include. If somebody tells engineering, “we will not use this feature illegally,” then it’s the fault of the higher ups who are possibly (?) trying to scapegoat somebody to protect themselves

"I was just following orders" went out of style in 1946. Software engineers are not mindless drones.

Re: A software change allowed FTX to use client money

#223

Post by zopa »

notyourwork wrote: post #134
geoduck14 wrote: post #125

Earlier quoted context omitted.

>If Jamie Dimon asked a developer at the bank "hey can you have Chase ATMs allow these 10 accounts that are in my name to withdraw unlimited funds?" everyone involved would be in jail. This isn't true I worked for a large bank. I managed data for their mortgages. We bought another bank and processed their mortgages with our systems. There were several thousand accounts that we called "friends of the " because they ha…

In english it means the terms are 40 years to repay the loan at a 2% rate. Not sure how that translates to never really due.

I’m assuming the poster meant refinance with the same terms. So the borrower can get another 40 years to pay back the remaining balance anytime they like.

Re: A software change allowed FTX to use client money

#224

Post by grogenaut »

8note wrote: post #86
xwdv wrote: post #24

Earlier quoted context omitted.

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.

This sounds both really painful and really fun. Is there a line item for "this code feels like there's something wrong, but I can't tell what" ?

When I did code dilligence, I just add it to a list of possible risks... or areas we'd like deeper investigation. Usually go back over it in follow up.

Re: A software change allowed FTX to use client money

#225

Post by martingoodson »

tomnipotent wrote: post #212
martingoodson wrote: post #210

Earlier quoted context omitted.

‘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.

If there are clear boundaries, there would be no need for interpretation. Interpretation is needed to resolve questions that arise because the boundaries are not clear.

Re: A software change allowed FTX to use client money

#226

Post by narism »

tomnipotent wrote: post #212
martingoodson wrote: post #210

Earlier quoted context omitted.

‘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.

Interpretation is exactly where the boundaries become fuzzy.

Re: A software change allowed FTX to use client money

#227

Post by [deleted] »

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?

[deleted]

Re: A software change allowed FTX to use client money

#228

Post by paganel »

lmm wrote: post #112
jeroenhd wrote: post #89

Earlier quoted context omitted.

This is why I'm very wary watching foreign developments in the payment space. Living in a country where contscyless payments and free instant transactions were a thing long before Apple and Google arrived with their products, these services seem to add very little except for a foreign third party. Sure, PayPal was around in case you needed to buy something online in another country, but I don't believe it's as deeply…

> How much can you really trust a company built on profiting off the failings of a basic institution underlying almost all commerce? Meh. Being a middleman, or doing something better than companies do themselves, is the foundation of most economic value creation.

> of most economic value creation.

As Schumpeter observed, value creation is accompanied by creative destruction, and right now it looks like we're in the "creative destruction" phase when it comes to fintech.

It was one thing when in the early 2000s creative destruction was involving entities like pets.com, no-one was really hurt by those companies going down, but it's another thing when the company going down might hold your "savings" or owe you money as a SME, like Revolut or Klarna.

Re: A software change allowed FTX to use client money

#229

Post by tomnipotent »

martingoodson wrote: post #225
tomnipotent wrote: post #212

Earlier quoted context omitted.

> 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.

If there are clear boundaries, there would be no need for interpretation. Interpretation is needed to resolve questions that arise because the boundaries are not clear.

> If there are clear boundaries, there would be no need for interpretation

You can't prosecute someone for murder just for insulting you. You can't prosecute someone for robbery if all they did was jaywalking. Media laws have clear boundaries sufficient for legal professionals to do their job. Building codes have clear boundaries sufficient for legal professionals to do their job.

Re: A software change allowed FTX to use client money

#230

Post by thombat »

TuringNYC wrote: post #148
alar44 wrote: post #31

Earlier quoted context omitted.

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? https://adage.com/article/marketing-news-strategy/tom-brady-... I'm surprised that even Football players are being expected to have evaluated the company's legitimacy, which seems unreasonable.

Interesting article! So Brady took "an equity stake in the company and [got] a signing bonus in crypto", then went on to make advertisements even though "The NFL has banned cryptocurrency and NFT sponsorships for its teams". Seems that he, or likely his lawyer and/or financial adviser, will have been evaluated the legitimacy since he's deep into caveat emptor territory. Like innocently buying a stolen car: you're unlikely to be in legal peril but you will lose the car (and gain a claim against the thief that sold it to you)
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