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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

#271

Post by fredgrott »

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staff to track FTX customer assets and liabilities was programmed so it would not take into account that Alameda had withdrawn the client funds, according to two of the people and a screenshot of the portal that Reuters…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

That does not fly with the restrictions of US based customers, which is both SDNY and SEC's point

Re: A software change allowed FTX to use client money

#272

Post by omarfarooq »

papito wrote: post #193
adrr wrote: post #146

Earlier quoted context omitted.

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.

SBF, through his industry connections, was able to figure out how to take the difference while trading Bitcoin between different countries, as the premiums are different. It's basically a legal money printer. I am baffled by why fraud was necessary. I guess it's just means to an end for "effective altruism".

Kimchi premium was arbed away.

Re: A software change allowed FTX to use client money

#274

Post by mitjam »

galaxyLogic wrote: post #191
creato wrote: post #151

Earlier quoted context omitted.

I assume this is a reference to other engineering disciplines, where an engineer signing off on something has real meaning.

Right, "software engineer" is often used just as a synonym for "Programmer". That's just how the industry is, currently. There are no regulations as to who can develop what software as far as I know. Whereas there are for who can design a bridge, act as your lawyer, or prescribe you medicine.

Yes and when we as software engineers / programmers act as if we don‘t care we should not be surprised if software engineering / programming gets regulated, too.

Re: A software change allowed FTX to use client money

#275

Post by danjac »

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…

Old Russian proverb: "when fish begins to rot, it starts from the head".

Yes these crypto bros are young grifters out for the big score with zero integrity or morals and hopefully they will look forward to spending their best years in a jail cell. But they are enabled and encouraged by a good old boys network of VCs, journalists, and other influential figures in the tech community. Madoff at least picked rich people as his marks; the media have blown up the likes of SBF as geniuses and encouraged ordinary people to invest money they can't afford to lose in crypto.

Re: A software change allowed FTX to use client money

#276

Post by drunkpotato »

MonkeyMalarky wrote: post #81
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.

I don't know about finance but for HIPAA and CCPA, the answer is yes. Is there an accounting equivalent to the yearly, mandatory 20 minute compliance training videos?

Yes, in US fintech there are mandatory courses in anti-money laundering and know your customer laws that programmers are required to take along with everyone else.

I don’t know what exists in the crypto world operating in the Bahamas, but I’m not going to lose a lot of sleep if the FTX director of engineering winds up going to prison for this.

Re: A software change allowed FTX to use client money

#277

Post by mirchibajji »

laserlight wrote: post #269
t0suj4 wrote: post #257

Earlier quoted context omitted.

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

Why not? Why do we keep Apple responsible for Foxconn's labor practices? Isn't Foxconn an independent company after all? The reason is because we don't want evil to spread by externalizing the responsibility to third parties.

Which specific engineers or individuals from Apple did you have in mind?

Re: A software change allowed FTX to use client money

#278

Post by batmenace »

siegecraft wrote: post #28
neilv wrote: post #8

Earlier quoted context omitted.

> I doubt they'll end up with liability, When you should know it's criminal, "just following orders" isn't a great defense. > but I do hope they at least recognize and think about how their actions enabled this whole mess. They should get lawyers. And be prepared to sing like canaries.

how would they know it's explicitly criminal though? i doubt most devs have enough understanding of their business domain, much less the regulatory frameworks to be able to confidently refuse to implement something because it's illegal.

At the very least they should be aware enough of potential wrongdoing to raise questions, and do so in written form. When you write exceptions that specifically only benefit one party and no others, there is always a reason to at least be suspicious.

Re: A software change allowed FTX to use client money

#279

Post by oesexe »

School-Cotton wrote: post #264
creato wrote: post #151

Earlier quoted context omitted.

I assume this is a reference to other engineering disciplines, where an engineer signing off on something has real meaning.

People gatekeeping the word “engineer” is a bit annoying, since the word “engineer” dates to at least 1380 and originally just means someone who works on engines. “Engineer” as a legally super special class of job is a thing that came much later and only ever applied to certain jurisdictions anyway. “Software engineer” is just a synonym for “programmer”, in the actually existing practice of the English language.

In Denmark you need to hold a degree of engineering for you to call you an engineer of any kind. It's a protected term. As I remember, in the US it is not protected and anyone can call themselves engineers.

Re: A software change allowed FTX to use client money

#280

Post by batmenace »

smadge wrote: post #130

Imagine doing code review for this change. How do you say “I think this is illegal” without getting fired? Not that I would work for FTX.

You probably start by saying 'Hey I think this might not be fully compliant?' And if your boss comes back with anything other than a reasonable justification, you know there's something going on, and you should flag it higher up/leave that place
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