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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

#251

Post by jwmoz »

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staff to track FTX customer assets and liabilities was programmed so it would not take into account that Alameda had withdrawn the client funds, according to two of the people and a screenshot of the portal that Reuters…

My claim to fame is that I dealt with SBF and Nishad to get some Python code for their api client merged in, the first non-FTX committer. I coded up a lot of the api functionalities that were missing. They never gave me a tip. A couple years later when I pitched for investment they declined it as they "were looking for more volume".

Re: A software change allowed FTX to use client money

#252

Post by uwuemu »

martingoodson wrote: post #239
uwuemu wrote: post #231

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. 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?

Because to be criminally liable for something requires both a) actually doing something that is against the law and b) doing so with intent (i.e. you knew what you're doing is against the law and you did it anyway... because you thought you will not get caught or just didn't care). It is then up to the prosecution to prove, beyond reasonable doubt, that you actually intended to break the law. (With the exception of strict liability crimes, which are limited in scope to minor infractions and things like drunk driving or statutory rape.)

You can still get sued in civil court of course, but that's not the state trying to put you in a cage and so the standard goes from beyond reasonable doubt to most likely.

If you're a coder coding shady shit for your shady employer, you most likely know you're doing so and there's typically some trace or record left. But coders are not investment bankers and in fact may not even know anything about investment laws and regulations. And it's completely unreasonable to expect them to know. I worked on many projects, including medical and education... if I had to question and investigate every executive decision impacting my work then I wouldn't get anything done.

Re: A software change allowed FTX to use client money

#253

Post by ummonk »

r_hoods_ghost wrote: post #233
barbariangrunge wrote: post #137

Earlier quoted context omitted.

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.

Holding the title "director of X" doesn't mean you're necessarily on the board of directors.

Re: A software change allowed FTX to use client money

#254

Post by bigfudge »

waltergrump wrote: post #152
deathanatos wrote: post #79

Earlier quoted context omitted.

IME, it depends on your chain of command. I've literally been reprimanded in my career for asking questions. My boss at that time was crap. I didn't choose him. Asking questions can very likely get you fired. Also got reprimanded for disobeying an order at once; my boss — same one as above — would not take "no, we are in a regulated industry, and I cannot do that" for an answer. I ended up going behind his back, gett…

I'm in an industry with a lot of migrant workers, I was asked to write software that would change the time records for migrant workers so they never get overtime. I said I wouldn't do it unless they showed me the legal advise saying that it was ok. The office sycophant piped up and said "I'll do it". From then on I stopped being invited to meetings and my job transitioned into answering the phone and then out the doo…

(especially) if you have left this business you should blow the whistle on this. Have you thought about doing it? What are the main barriers?

Re: A software change allowed FTX to use client money

#255

Post by teawrecks »

db48x wrote: post #131
edouard-harris wrote: post #124

Earlier quoted context omitted.

> 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 This might be a reasonable argument in a vacuum, except that: > [SBF] told investors and prospective investors that FTX had top-notch, sophisticated automated risk measures in place to prot…

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.

It is interesting how commit author could function here as a tech equivalent of "convincing some sucker to sign off on a legally dubious action".

Re: A software change allowed FTX to use client money

#256

Post by jahnu »

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…

> If you want to see what you should never do as a software engineer if you like not being in jail, this is it.

Exactly. And if you suspect you _are_ doing stuff like this right now, speak to a lawyer, today.

Re: A software change allowed FTX to use client money

#257

Post by t0suj4 »

TheNorthman wrote: post #243
rxhernandez wrote: post #220

Earlier quoted context omitted.

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?

Probably because the whole Topf & Söhne debacle doesn't need repeating? Engineers are of course partly responsible for the things they implement.

Why should be someone responsible for how the product of their labor is being used?

Re: A software change allowed FTX to use client money

#258

Post by brazzy »

elvinyung wrote: post #162
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…

https://calpaterson.com/bank-python.html > One of things that tends to boggle programmer brains is while most software dealing with money uses multiple-precision numbers to make sure the pennies are accurate, financial modelling uses floats instead. This is because clients generally do not ring up about pennies.

No, it's because models are not accounts. They're not expected to add up exactly because they're based on approximations anyway.

Re: A software change allowed FTX to use client money

#259

Post by grog454 »

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.

When an executive level manager is paid multiple times (or orders of magnitude) what an engineer is paid, I feel there should be a different assignment of responsibility and exposure to risk.

Re: A software change allowed FTX to use client money

#260

Post by hackerlight »

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.

You can't "just make a bunch of cash" by market making. It is extremely competitive and it wouldn't surprise me if they weren't capable of doing it.
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