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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

#341

Post by michaelbuckbee »

IWillForgetThis wrote: post #335
fatnoah wrote: post #332

Earlier quoted context omitted.

> If you want to see what you should never do as a software engineer if you like not being in jail, this is it. Not quite the same level, but in my early days working on a payment system, a request from the product team was to create a summary screen where customer service reps could see payment histories AND THE CC INFORMATION USED FOR THE PAYMENTS. In my mind, there was no way that would end well, so I strenuously…

My first job out of college (2007) involved a lot of removal of early 2000s one-off custom payment processing code. Access DBs full of years worth of credit card numbers, code that just emailed the credit card details to the site owner without keeping a record, etc. It was definitely a different world. Most of them, I just switched to PayPal shopping cart and checkout. In retrospect, I didn't know wtf I was doing and…

If it's any consolation, the entire industry was in that state: poor controls, poor encryption, and security, etc.

Re: A software change allowed FTX to use client money

#342

Post by sealeck »

mudrockbestgirl wrote: post #237
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…

> Traditional banks, for the most part, have DNA built around protecting customer interests and customer money. I don't think we're living in the same world :) Traditional financial institutions are just as bad, if not worse, than most crypto companies. You just have look at all the financial system crashes and exchange frauds. A key difference is that the government is there to bail them out because they are tightly…

> I think it's also important to note the discrepancy in transparency. Yes, FTX was just a centralized exchange that had little to do with the blockchain, but you were still be able to see some of FTXs balance movements on-chain, simply because they are forced to use ETH/BTC/FTT/etc. If we hadn't, FTX may have gotten away with what they're doing a lot longer. Nobody may have found out.

I think people might have noticed that customers could not withdraw funds, and the exchange declaring bankruptcy in any case.

Re: A software change allowed FTX to use client money

#343

Post by tiahura »

headsoup wrote: post #293
mertd wrote: post #129

Earlier quoted context omitted.

I fail to see the equivalence. These are just loans with weirdly favorable terms. If the other bank had shareholders, then this would be a breach of the fiduciary duty. Otherwise it's just bad business? Bad business != fraud.

Isn't it fraud if you're telling you're customers you don't and can't do this?

No.

A car salesman telling you they can't sell you the new Buick for $42,000, when they sold one to their neighbor yesterday for $41,000 is not fraud.

Re: A software change allowed FTX to use client money

#344

Post by [deleted] »

notch656a wrote: post #13
roland35 wrote: post #12

And this is what really ruins crypto to me. With no actual legal protection, no trust, "code is law", am I expected to keep up with every pull request? And of course these exchanges are completely opaque on top of that.

Both criminal law and code are vast enough that the fraction I understand of either is closer to zero than the entirety.

[deleted]

Re: A software change allowed FTX to use client money

#345

Post by tiahura »

bigfudge wrote: post #254
waltergrump wrote: post #152

Earlier quoted context omitted.

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?

They probably weren't paying taxes on the overtime either. The IRS pays whistleblowers.

Re: A software change allowed FTX to use client money

#346

Post by tiahura »

oesexe wrote: post #279
School-Cotton wrote: post #264

Earlier quoted context omitted.

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.

It varies by state.

Re: A software change allowed FTX to use client money

#347

Post by baq »

denton-scratch wrote: post #281
baq wrote: post #186

Earlier quoted context omitted.

But if you only told someone to do it and haven’t actually done it yourself, are you guilty of breaking the law? Yes, you are. Splitting responsibility between those who give orders and those who follow them to avoid penalties is exactly why both are persecuted and put in jail.

> persecuted and put in jail. That sounds like Julian Assange. Did you mean "prosecuted"?

Yes a bad case of autocorrection…

Re: A software change allowed FTX to use client money

#348

Post by tiahura »

jiggawatts wrote: post #240
andrewstuart wrote: post #103

Earlier quoted context omitted.

>> You don't need integrity while "the line goes up". Integrity is how you behave when no-one is watching.

"Only in darkness are we revealed. Goodness is not goodness that seeks advantage. Good is good in the final hour, in the deepest pit, without hope, without witness, without reward." -- Nardole

Only when the tide goes out do you discover who's been swimming naked. - Warren Buffet.

Re: A software change allowed FTX to use client money

#349

Post by Tostino »

arealaccount wrote: post #340
fatnoah wrote: post #332

Earlier quoted context omitted.

> If you want to see what you should never do as a software engineer if you like not being in jail, this is it. Not quite the same level, but in my early days working on a payment system, a request from the product team was to create a summary screen where customer service reps could see payment histories AND THE CC INFORMATION USED FOR THE PAYMENTS. In my mind, there was no way that would end well, so I strenuously…

Do you mean not a conversation in the sense that we wouldn’t think of doing it, or in the sense that we wouldn’t think of questioning it?

I took it as "wouldn't think of doing it".

Re: A software change allowed FTX to use client money

#350

Post by tiahura »

totalZero wrote: post #80
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…

It's not just crypto. The entire fintech space has an ideology that lines up far better with Silicon Valley than with Wall Street. The Wall Street mentality would dictate a very different course of action than the Silicon Valley mentality in many of the situations described in the cases brought by the DoJ and the SEC, and yet the Silicon Valley mentality seems to have been the guideline used by SBF/FTX -- perhaps bec…

an ideology that lines up far better with Silicon Valley than with Wall Street.

An interesting observation. My take is that even though Wall Street has unfathomable levels of hubris and poor ethics, it understands CYA.

Fintech on the other hand...

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