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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

#171
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…

This can't be the whole story because Alameda started a few months before the big 2018 BTC crash and made it through just fine.

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

#172

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…

> Only after I had quit and refused to come back do I think he actually knew for certain that I wasn't pulling a scam. In interactions of bluff, bluff, and double bluff suspicion never dies. Quitting indignantly on principal is either a sure sign of innocence or a true con artist cutting and putting distance from a 'scam', staying can be just as ambiguous. I'm not doubting your innocence here, just doubting that ther…

The value of a bluff - and the value of a hand - is all about what's in the pot. I made clear that my integrity and my life were worth a lot more than whatever fraction of $10k a crooked dealer would've gotten. There are plenty of guys who might try to do something like that for $5k, but I'm not one of them.

I'm sure the doubt remained. What you wrote kind of reinforces my point that it's very hard to be sure that an expensive mistake was an honest mistake.

Personally, though, I didn't quit to try to double-bluff. I'm a self-preservationist. I'm in the business of keeping myself alive, and I draw the line at working for someone who threatens me.

I'm aware that quitting could've seemed shady, but at that point it was the least of my worries. And I doubt it's the normal course of behavior, either, if someone were caught skimming. Someone who was guilty of malfeasance, who was offered to keep the job, would have almost certainly chosen to stay and lay low while finding some new way to scam them, because that person needs either the money or the frisson. I enjoyed 'em both but I didn't need either enough to risk my life on another accident.

Someone who lacks any trust will always find reasons to assume the worst, as you say. There's a bit of a corollary, though, in my experience, which is: People who choose to continue working around those people also mostly can't be trusted. And I feel like the trust-less parties are well aware of that.

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

#173

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…

I once watched a new (I assume) dealer make two large mistakes at a blackjack table, in Vegas, of all places. One, I had put down $500 in twenties, and he was giving me chips, except he was going to give me $1,250 in chips, like he thought they were fifties. Pit Boss looked at him, looked at the chips, "What are you doing??", let him fix the error. A couple of hands in, dealer gets an Ace, so he checks the hole card.…

Your $500 is such small potatoes to them they literally do not care. There’s probably someone betting $10,000/hand 20 feet away in the high stakes room. You can be sure that dealer never makes it to that room.

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

#174
I have a fair share of our story with Fat Fingers:

The Athlete's Glitch

Our client team had an amazing NFL season. But with the start of a new NFL season, but our NFL team was buzzing for a different reason – the unveiling of our off-season updates to the beloved iPad app used by one of the major NFL teams.

Our app, which was primarily used for training and past game analysis, had undergone a major overhaul, and we were proud of the sleek new UI/UX designs. But just as the athletes started to get into the grind of their training, our office started receiving some unexpected feedback.

"Hey! The app is taking me to the wrong sections!" one message read.

"I keep hitting the wrong button. Something's off," said another.

Confusion took over our team. We had spent months meticulously planning, designing, and testing these updates. Automated tests had been executed to perfection, internal testing hadn’t shown a single glitch. What was happening?

Then, a video came in. It was from a coach, showing one of the top athletes trying to use our app. We watched intently as his fingers moved over the screen. The problem became immediately apparent: his fingers, sculpted by years of athletic training and naturally larger than the average, were simply too big for our redesigned interface. Every time he tried to tap a specific function, his finger would unintentionally touch the adjacent ones.

Turns out, in our endeavor to create a sleeker, modern UI, we had inadvertently shrunk the size of the clickable buttons and packed them tightly in a grid. This might have looked aesthetically pleasing and worked perfectly for our testers, but for the athletes with their robust fingers, it was a recipe for frustration.

We convened an emergency meeting. Our lead designer, Marcus, broke the silence, "Our primary users are these athletes. We should've considered their physical attributes in our designs. It's my oversight."

Our project manager, Clara, nodded in agreement. "We need to fix this and roll out an update ASAP. We can't have the team struggling with this during their crucial training period."

The next few days were a blur of coding, designing, and testing. With feedback from some of the players, we reintroduced larger buttons and ensured enough space between them, all while maintaining the sleek look of our new design. It was a lesson learned the hard way, but it reiterated the importance of understanding our users' needs and physical attributes.

The next feedback we got was from the star quarterback, "Perfect! Back in the game with this. Thanks, TechTouch."

The NFL season kicked off with roaring crowds, and our app, now more user-friendly than ever, was right there with the athletes, assisting them every step of the way.

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

#175
post #76

Earlier quoted context omitted.

> 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.

Shares give you rights and have a fundamental value. If the market undervalues them, you can buy the company and make lots of money when proven right (by virtue of the cash the real business makes and pays out in dividends). That’s fundamentally different from crypto which has no fundamental value, but only sentiment behind it. When the sentiment is gone, the value is gone. Unlike, again, shares.

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

#176

Earlier quoted context omitted.

Based on the second mistake, on pure speculation, I think that might've been a dealer who recently came from Eastern Europe, where typically dealer blackjacks are not announced until the end of the hand (a significant loss in EV for the players). Since never exposing a card early is the one thing that's most drilled in, exposing one is counter to training, and that might be a hard habit to break. A lot of Eastern Eur…

Then why would he have checked the card?

There are some places I've seen in Europe that do deal the hole card, and check it (for reasons unknown), but they don't stop the hand and flip it if it's a blackjack. They just ask for insurance, and the insurance sits there while they let the hand play out. It's quite disconcerting.

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

#177

Earlier quoted context omitted.

IBM is still worth money if their stock gets delisted. Real estate, buildings, equipment, patent portfolios. Bitcoins is worth $0.

Those buildings and equipment and patents may have value, but less than the bonds, loans, and other liabilities IBM also has. Not only could IBM be worth $0, it could be worth less than that. Things are worth whatever people are willing to pay. Bitcoin may be the original sin of crypto bros, but it still appears to be worth money, because it's impossible to make one for free, or obtain one for free. And it has utilit…

SVB became worthless by virtue of real changes in the real economy. Of course it can happen that a company goes bankrupt, and then its fundamental value is zero or negative. But the point is that there is a fundamental value that is realised over time. The market value is a good estimate of that fundamental value according to the EMH, but if you have a better analysis and better estimate of the fundamental value you can trade and then realise that difference over time if you were right.

> a company is just as fictitious as bitcoin

Nonsense.

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

#178

Earlier quoted context omitted.

I once watched a new (I assume) dealer make two large mistakes at a blackjack table, in Vegas, of all places. One, I had put down $500 in twenties, and he was giving me chips, except he was going to give me $1,250 in chips, like he thought they were fifties. Pit Boss looked at him, looked at the chips, "What are you doing??", let him fix the error. A couple of hands in, dealer gets an Ace, so he checks the hole card.…

> after two mistakes like this in a matter of minutes, the dealer wasn't pulled off the table. Does anyone know what the dealer training looks like in practice? I assume people will make silly mistakes for a while. Are they expected to practice until perfection before they start working?

Dealing requires an exceptional amount of concentration. You need to do every player's calculations faster than they do, while also controlling the game. But it's a lot of rote repetition, physically and memorization. Any person can be taught to deal over a week or two, if they can concentrate. It's just practice. But like suddenly driving a car on the other side of the road, it's hard to switch your automatic reactions. I grew up in a family of Vegas dealers, part of the genesis of my conversation with the guy who got me dealing poker. Blackjack is the easiest... mostly it's just simple additions, which you do the moment you deal the cards. Poker is much more about nuance and controlling and monitoring the game.

Would love to have a properly trained Vegas dealer weigh in here.

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

#179
post #154

Earlier quoted context omitted.

> It is also clear that the frontends really need to be hosted in a way that they can't be modified. Years ago the advice was IPFS and IPNS. I agree. This is not the Web3 dream everyone was promising us when frontends and nft media assets themselves are mutably stored on some server relying on serveral entities in the DNS chain to maintain security, behave, and stay available.

I wish there was a way we could almost hash a website or a piece of the critical path code running the site so that you know the content on the page was not modified and that the code that is executed is what the site intended. We kind of have the 'secure lock' with https doing part of the work, but it is kind of irrelevant if DNS is pointing to some hackers site. This isn't just crypto... it is your bank too.

That's kinda what IPFS is - every webpage is identified by its hash. But then updates are impossible so IPNS steps in to give a mutable name -> hash relationship. Just like a git commit, if you have the IPFS hash you are guaranteed for it to be correct. How you find that hash - IPNS or some other method, has been the major challenge.

Further we used to have HPKP to further protect the security chain but it ended up being dangerous for various reasons. Monitoring certificate transparency logs for any re-issuences of your domain's certificates is the current detection method as http is pretty heavily penalized in todays browsers.

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

#180

Earlier quoted context omitted.

I thought the real market also has circuit breakers in place. If the market falls X% too quickly, trading is halted for some amount of time.

That applies to the whole market, not necessarily a single stock.

It definitely can apply to single stocks, depending on the exchange. For example I believe NYSE has single-stock circuit breakers that kick in around 15%, then subsequent further breakers once trading resumes.
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