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Alameda lost tens of millions because of a fat fingering mistake

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Re: Alameda lost tens of millions because of a fat fingering mistake

#101

Post by josu »

NelsonMinar wrote: post #22
josu wrote: post #17

Here is a good analysis of the flash crash from that day: https://twitter.com/austerity_sucks/status/14523324727258194... - It lasted 12 seconds. - Total BTC traded was 290.54 - Only 2% of that was at price of 10K or below. - Most volume happened in $20-30K range, over 50% discount to mkt. Here is a tweet from someone (rightly) speculating that it had been Alameda: https://twitter.com/TheoryBitcoin/status/14523454117…

The good news is that the world's Bitcoin network can only process ~100 transactions in 12 seconds.

The Bitcoin blockchain processes a block of transactions every 10 minutes on average. Each block usually contains 2k-4k transactions. The maximum capacity is around 4k, equating to 7 transactions per second or 84 transactions per 12 seconds. (Note that 12 seconds is the confirmation time of the Ethereum blockchain).

That being said, the Lightning Network was deployed on the Bitcoin blockchain in 2018. It allows for thousands of transactions per second, thanks to a very elegant solution[1]. Unlike traditional blockchains, the Lightning Network is not blockchain-based, freeing it from the limitations we are all familiar with. However, it inherits all the security properties of its underlying blockchain. While the Lightning Network has its fair share of shortcomings, its scalability remains an open question. Nonetheless, it has been working great for over 5 years.

[1] https://lightning.network/lightning-network-paper.pdf

Re: Alameda lost tens of millions because of a fat fingering mistake

#103

Post by noduerme »

ziml77 wrote: post #95
testfoobar wrote: post #77

Earlier quoted context omitted.

Would you mind explaining the second story? I don't play casino blackjack. Isn't the goal of the house to get blackjack? So if the dealer had Ace face up and King down, isn't he assured to win the hand and collect all the stakes?

If the house starts with a blackjack they collect the initial wagers from anyone who doesn't also have a blackjack.

Yes... and this is a net benefit for players who might otherwise double down or split without knowing they were already beaten. Some parts of the world take away this player advantage.

Re: Alameda lost tens of millions because of a fat fingering mistake

#104

Post by NSMutableSet »

Tao3300 wrote: post #76
paxys wrote: post #71

Earlier quoted context omitted.

Bitcoin has a market cap of $530B and at its peak was over $1.3T. That is not a "toy" but a very real financial market.

> the total (ostensible) value of all coins that have been mined in a given cryptocurrency. These values should be taken with a hefty grain of salt, as they are considerably larger than the total value that could be realized if holders of a currency decided to try to cash out.

You realize that this is how valuations for publicly-traded companies are calculated, right? Also the networths of people whose vast majority of wealth is tied to publicly-traded shares.

Re: Alameda lost tens of millions because of a fat fingering mistake

#105

Post by noduerme »

johndhi wrote: post #90
noduerme wrote: post #75

Earlier quoted context omitted.

Hah. That's posh. They used to have apartments all around NYU stuffed with slot machines they brought up from Atlantic City. Club members got a key to let them just go play slots. But I never played or dealt downtown. This gem was in a basement in Harlem up on Malcolm X, steel door and heavy security, 2 blackjack tables, a couple poker tables and some slots. I knew the manager because he came every morning for breakf…

Wild. The slots thing - seems so easy for someone to rat on them and then so easy for the cops to break it up. The Manhattan one was poker only. Steel door with a camera, get buzzed into a second door where you talk to somebody and they only buzz you up if they recognize you. The poker room had two nice tables and a little bar where you could buy drinks. TVs playing sports. Seemed to be Asian-run.

Similar setup, this was Italian.. but yeah they used to get rooms busted by cops all the time. They had trucks full of slots. No one even sat in those places, they just went to pick up the cash every day (I know this because I accompanied someone on their rounds to pick up cash from the slot machine apartments once, and was kinda shocked that some of them had no one inside at all. Just like, some studio apartment on 14th and another on Canal and another on Ave B. Wall to wall with slightly used slots hah)

[edit] There was also one night I showed up to work only a few hours after the cops had raided the poker room, and they were just getting back up and running.

Re: Alameda lost tens of millions because of a fat fingering mistake

#106

Post by mvdtnz »

anonymoushn wrote: post #97
mvdtnz wrote: post #60

> The story of how a misplaced decimal point at Alameda Research caused a market crash that echoed around the world Hang on a second. It caused a dip in the price of Bitcoin, that is not a "market crash". Bitcoin is a toy and not a real market, its price is set almost entirely by bullshit wash trades and other forms of fraud.

Prices are basically set by takers, like in every other market.

Prices are set by people stupid enough to believe that the "market price" is a market price.

Re: Alameda lost tens of millions because of a fat fingering mistake

#107

Post by function_seven »

cperciva wrote: post #36
noduerme wrote: post #27

Honest question: How do you determine that something like this was an honest mistake? Once, when I was much younger, I had a side gig dealing poker at an underground club in NYC. One morning at the end of 10 hours dealing, I accidentally exposed a burn card which turned out to be something one of the players was representing (bluffing), with about $10k on the table. It was an honest mistake - literally a fat finger m…

Not a poker player, so maybe I'm missing something obvious, but: How did he think you were cheating? You had no way of knowing what that card was, right? And if you did somehow know what it was, surely you could have pre-arranged more subtle ways to tip off a player you were conspiring with?

Let's assume the poker dealer is working a scam with one of the players, "Sam." On this particular hand, the scam is falling apart. Maybe Sam didn't pick up on a signal, or he has gotten out of sync with the plan.

The dealer sees the tragedy coming down the pike, and as a last ditch effort he spoils the whole game to prevent an even larger loss from occurring after the river card.

For example, on this particular hand, maybe the cards were preloaded into the deal to actually harm Sam. This was done deliberately because we need to keep some volatility across hands to make the cheating more subtle. So, on this hand, Sam is supposed to bet a little bit early, then fold. He loses some of his money, but the whole game seems on the up-and-up.

Except, oh no!, Sam appears to think this is one of the planned winning rounds, so he just keeps betting! Sam has made an error, and may lose big. I (the dealer) am going to suck it up and pretend to make a mistake. I'll get yelled at in public, but the bosses will thank me later for rescuing Sam.

Re: Alameda lost tens of millions because of a fat fingering mistake

#108

Post by TimJRobinson »

latchkey wrote: post #11

Celsius lost millions in dumb mistakes like that too. Someone at Celsius manually approved a bogus transaction on a hacked website... https://www.coindesk.com/markets/2021/12/03/crypto-lender-ce... Badger later reimbursed Celsius with inflation on their token that would be released slowly over several years. "restitution". Someone at Celsius thought that they could sell that restitution token and ended up forfeiting…

That moment where they got scammed by a hacked frontend was when I realised they were extremely incompetent and told everyone to get their funds out immediately.

Moving millions of dollars customer funds around via a browser wallet is insanely bad, they should have had well tested scripts that interact with the smart contracts directly.

Re: Alameda lost tens of millions because of a fat fingering mistake

#109

Post by ycombobreaker »

paxys wrote: post #72
keyle wrote: post #32

Reading stories like this makes me wonder why I don't have a long term trade in place for a low amount and hope to fish a good one during a flash crash. Seen them on the stock market too. Back in my day I wrote a few trading bots, they never went anywhere positive after about a week of profit. Seems to me now that the smartest robo-trader algorithm is... 10 wait for human mistake... 20 goto 10

HFT algos are going to make quick work of the opportunity well before your broker can even think about executing your limit order.

You want your GTC order parked on-exchange, not sitting on a broker's private book. Find a better (more expensive) broker.

Re: Alameda lost tens of millions because of a fat fingering mistake

#110

Post by TimJRobinson »

andirk wrote: post #13

A lot of the "genius" credit given to FTX, Alameda, Sam are all during a time when crypto was soaring, probably partially because people were home more and got free checks in the mail. The fact that a single person could absolutely tank the entire company with a single trade shows how reckless they all were. But it worked because the market was going up. That's it. The market slumped for like a week and their behavio…

It also helped that they couldn't be margin called because of a secret system setup at FTX (which is why FTX imploded).

Just leverage long 50x forever until they're all billionaires or FTX is bankrupt.

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