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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

#231

Post by uwuemu »

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?

> 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.

Complete nonsense. This is criminal law. Google "Mens rea".

Re: A software change allowed FTX to use client money

#232

Post by ellen364 »

tomnipotent wrote: post #197
martingoodson wrote: post #194

Earlier quoted context omitted.

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?

> Yes of course they need to know the law That's absolutely ridiculous, and no court would expect it.

In English courts, there’s some debate about a defendant’s ignorance of the law.

In this Chancery case from 2021, the judge mulls over what it means that a defendant is “unaware”. He considers the distinction between someone who knows about the relevant law and misunderstands it vs someone who doesn’t know at all. And the judge briefly wonders whether someone working in regulated activity (like finance) and completely unaware poses the most risk to the public.

The judge left the issue unsettled, but it raises the possibility that ignorance might count against a defendant. The Chancery Division handles business disputes, though, and I imagine the criminal courts have their own rules.

Paragraphs 22-25 are most relevant: https://www.bailii.org/ew/cases/EWHC/Ch/2021/995.html

Re: A software change allowed FTX to use client money

#233

Post by r_hoods_ghost »

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

Directors have specific, well defined legal duties to their company which includes a duty of fiduciary responsibility. That is why they're directors rather than "head of product" or "VP of marketing" or whatever other meaningless title people bestow on themselves. Saying "my boss told me to do it so it is not my fault" is nonsense because you have no boss beyond your shareholders.

Re: A software change allowed FTX to use client money

#234

Post by quonn »

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?

Because programming is usually applied to different industries. Yes, you should know the laws of your own industry (in tech that would be privacy, licenses, export rules, copyright, some patent basics etc.) but you can‘t know the law of each industry you write software for.

Re: A software change allowed FTX to use client money

#235

Post by 3327 »

helsinkiandrew wrote: post #93
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…

> 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…

No post body was provided.

Re: A software change allowed FTX to use client money

#236

Post by 3327 »

helsinkiandrew wrote: post #93
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…

> 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…

No post body was provided.

Re: A software change allowed FTX to use client money

#237

Post by mudrockbestgirl »

andrewstuart wrote: post #75

The real problem behind all these crypto companies is the people who make the money have no concept of what "integrity" is. They aren't coming from a baseline assumption that their job is to protect and interests and the money of their clients. Traditional banks, for the most part, have DNA built around protecting customer interests and customer money. Crypto companies have none of that attitude - behind every one of…

> Traditional banks, for the most part, have DNA built around protecting customer interests and customer money.

I don't think we're living in the same world :) Traditional financial institutions are just as bad, if not worse, than most crypto companies. You just have look at all the financial system crashes and exchange frauds. A key difference is that the government is there to bail them out because they are tightly linked, and that traditional institutions know they'll be punished because of strict regulations. It's not about the actors, or some kind of fuzzy DNA/culture, but about government and regulation.

I think it's also important to note the discrepancy in transparency. Yes, FTX was just a centralized exchange that had little to do with the blockchain, but you were still be able to see some of FTXs balance movements on-chain, simply because they are forced to use ETH/BTC/FTT/etc. If we hadn't, FTX may have gotten away with what they're doing a lot longer. Nobody may have found out.

With traditional financial institutions you have almost no transparency. You have absolutely no idea what they're doing behind your back. All you can do is trust the government to eventually bail them out if they mess up. Or trust that they're scared enough of going to prison that they don't try shady things.

Re: A software change allowed FTX to use client money

#238

Post by chillfox »

joshlemer wrote: post #190
xg15 wrote: post #181

Earlier quoted context omitted.

"I was only following orders" is generally seen as a bad defense since the end of WW2.

This is why I don't get why the phrase/excuse/justification "I'm just doing my job" is so commonly used.

Because there’s not been a large obvious reminder for some time. In fact the last such reminder was before most currently living software developers were born.

Re: A software change allowed FTX to use client money

#239

Post by martingoodson »

uwuemu wrote: post #231
martingoodson wrote: post #194

Earlier quoted context omitted.

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?

> 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. Complete nonsense. This is criminal law. Google "Mens rea".

Stay civil.

This is not an argument against programmers, like other professionals, learning the aspects of the law which are relevant to their job. Why should programming be the one profession where this is not required?

Re: A software change allowed FTX to use client money

#240

Post by jiggawatts »

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.

"Only in darkness are we revealed. Goodness is not goodness that seeks advantage. Good is good in the final hour, in the deepest pit, without hope, without witness, without reward." -- Nardole
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