A software change allowed FTX to use client money • Hacker News Board

Re: A software change allowed FTX to use client money

#141

Post by qwertyuiop_ » Wed, Dec 14, 2022, 5:21 AM UTC

Is lying to Congress going to be added to his charges ?

In congressional testimony on May 12, he called FTX’s software “safe, tested and conservative.” By quickly unwinding the riskiest, most undercollateralized positions, the risk engine prevents build-up of credit risk that could otherwise cascade beyond the platform, resulting in contagion,” Bankman-Fried testified. He did not tell lawmakers about the software change to exempt Alameda. Indeed, he told investors that Alameda received no preferential treatment from FTX, the SEC complaint said

Re: A software change allowed FTX to use client money

#142

Post by sifar » Wed, Dec 14, 2022, 5:28 AM UTC

gruez wrote: post #30

anon291 wrote: post #27

Earlier quoted context omitted.

People need to understand that money is debt. That is the source of all currency (yes, even gold and other 'hard' currency). If people cannot freely create it, then it's useless. The key is that you ought to be able to gauge the money creator on their trustworthiness, which hopefully you know as a member of a small community. Or, if you are creating money on the open market to large numbers of people, often it's usef…

>But at the end of the day, expecting code to replace the core human emotion of trust, the source of money, is ridiculous. No, the point is for code to replace the institutions/people that people trust (ie. trusting the bitcoin network's consensus code, rather than a central bank), not "replace the core human emotion of trust".

>> No, the point is for code to replace the institutions/people that people trust

Knowing how computing hardware and software works, I wouldn't put more trust in code either - in fact it would be less.

Re: A software change allowed FTX to use client money

#143

Post by bogomipz » Wed, Dec 14, 2022, 5:30 AM UTC

CuriousCosmic wrote: post #77

gcr wrote: post #45

Earlier quoted context omitted.

Remember what happened with the 2016 Ethereum DAO? Even expert programmers aren't able to check smart contracts for all possible issues.

That's what happens when you decide to write your smart contract language in what is basically javascript and your smart contracts are interpreted in a stack based VM. Doubly so when your contract execution is entirely determined by the order in which Tx happen to get accepted. It's actually sane when your contract is written in a non-turing-complete language with strong typing and the smart contract system has deter…

>"That's what happens when you decide to write your smart contract language in what is basically javascript and your smart contracts are interpreted in a stack based VM."

What was the language and why did running it in a stack based VM lead to this? I'm curious about the intersection of the language and the type of VM it ran in.

Re: A software change allowed FTX to use client money

#144

Post by Animats » Wed, Dec 14, 2022, 5:31 AM UTC

totalZero wrote: post #87

andrewstuart wrote: post #85

Earlier quoted context omitted.

A license should be required to prove you understand your ethical obligations to handle anyone else's money. It's sad that the entire crypto industry happened too fast for the regulations to keep up, with the unsurprising result that vast amounts of customer money have been lost and stolen - the precise reason for regulation. I would not be surprised if many people have taken their own lives as a result of crypto los…

I totally agree. Licenses/certifications do exist. SBF had the FINRA Series 7 and 55. https://brokercheck.finra.org/individual/summary/6204362 The loophole is that employees at hedge funds and investment advisers don't face the same licensing requirements as employees at banks and brokerages who deal directly with customers. There are people who trade billions of dollars of customer funds a week without any required…

He had a series 7? Did not know that. But, right, he was a trader with Jane Street, so he had to have a Series 55 and probably the Series 7, which is for brokers. (Everybody in finance takes the SIE, the "securities industry essentials" exam. That should be required for programmers in finance.)

So he knew what he was supposed to be doing.

Re: A software change allowed FTX to use client money

#145

Post by fellellor » Wed, Dec 14, 2022, 5:31 AM UTC

So happy this PoS and his crew are getting arrested. May they rot away in prison till they die.

Re: A software change allowed FTX to use client money

#146

Post by adrr » Wed, Dec 14, 2022, 5:32 AM UTC

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…

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.

Re: A software change allowed FTX to use client money

#147

Post by cramjabsyn » Wed, Dec 14, 2022, 5:33 AM UTC

arcbyte wrote: post #36

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.

Developers need to know the business better than the business people. Always. Otherwise you can't implement the software very well.

I’m sorry, what?

Re: A software change allowed FTX to use client money

#148

Post by TuringNYC » Wed, Dec 14, 2022, 5:39 AM UTC

alar44 wrote: post #31

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…

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.

Re: A software change allowed FTX to use client money

#149

Post by jack_pp » Wed, Dec 14, 2022, 5:41 AM UTC

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.

Arrogance, they thought they were smarter than the market.

There are people who make a living playing poker that are not intellectually gifted. Their secret? Do as you say, play boring, safe strategies that will guarantee you will make money in the long run. They might not run up 1000$ to 10000$ very often but they sure do win. However, remove discipline, add intellectual ability and an abundance of overconfidence and you get FTX and Alameda Research.

Re: A software change allowed FTX to use client money

#150

Post by vel0city » Wed, Dec 14, 2022, 5:43 AM UTC

geoduck14 wrote: post #125

steveBK123 wrote: post #73

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 is not dissimilar.

>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…

$10M ona 40 year term and a 2% rate is like $30k/mo in payments. I wouldn't say most people would think of $30k a month a super low payment.

And now that the bank has new ownership they might be able to refinance again and continue to kick the can down the road, but they're less likely to get as favorable of terms I'd imagine.