Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

FTX – The fraud was in the code

newsletter.mollywhite.net

Post reply on HN
Print view View original

81–90 of 101 posts

Re: FTX – The fraud was in the code

#81

Post by fakedang »

nyokodo wrote: post #36
fallingknife wrote: post #28

Earlier quoted context omitted.

The downside of throwing millions of dollars at someone is losing those millions, which they did. You are basically suggesting that a fraud victim should be punished more than the money they lost because they were too stupid to see the fraud.

> You are basically suggesting that a fraud victim should be punished more than the money they lost Their actions brought in more victims, and therefore investors ought to be wary of listening to them in future. They ought to be also punished by a hit to their reputation i.e. by being held partially responsible.

They didn't "bring" in more victims, more victims joined in because they were lazy, just like most of the VC industry.

Re: FTX – The fraud was in the code

#82

Post by [deleted] »

shapefrog wrote: post #71

There has obviously been some bad stuff going on over at FTX, but is the counter on a website really the "most" proof that they could find? https://www.ycombinator.com/ Is every number on that page real time accurate? Is the combined value $600bn - if it is 599bn or even 601bn then ding ding ding we have ourselves fraud. https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and…

[deleted]

Re: FTX – The fraud was in the code

#83

Post by Analemma_ »

shapefrog wrote: post #71

There has obviously been some bad stuff going on over at FTX, but is the counter on a website really the "most" proof that they could find? https://www.ycombinator.com/ Is every number on that page real time accurate? Is the combined value $600bn - if it is 599bn or even 601bn then ding ding ding we have ourselves fraud. https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and…

You’re missing the broader context here. The prosecution is alleging massive fraud, while SBF’s defense is that he wasn’t committing fraud, he was just incompetent. So a lot of the trial hinges on presenting evidence one way or the other for the fraud-or-incompetence question. Things like the counter, which was clearly deliberate and specifically engineered to lie to customers, establish a pattern of deception and make it very hard to allege incompetence. The counter is unimportant in and of itself, it’s how it undermines SBF’s defense.

Re: FTX – The fraud was in the code

#84

Post by bmitc »

shapefrog wrote: post #71

There has obviously been some bad stuff going on over at FTX, but is the counter on a website really the "most" proof that they could find? https://www.ycombinator.com/ Is every number on that page real time accurate? Is the combined value $600bn - if it is 599bn or even 601bn then ding ding ding we have ourselves fraud. https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and…

The backing of that number was testified to, under oath, to Congress, which by itself is a felony.

I haven't been following the trial though, and I'm unsure of how much testimony was given. What's reported on this blog does seem like it is a little small given Gary Wang's large role.

Re: FTX – The fraud was in the code

#85

Post by shapefrog »

prettychill wrote: post #78
shapefrog wrote: post #71

There has obviously been some bad stuff going on over at FTX, but is the counter on a website really the "most" proof that they could find? https://www.ycombinator.com/ Is every number on that page real time accurate? Is the combined value $600bn - if it is 599bn or even 601bn then ding ding ding we have ourselves fraud. https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and…

If you actually look at the article the very first code sample shows how certain customers (Alameda) are directly exempt from auto liquidation & can carry negative balances at FTX.

> certain customers (Alameda) are directly exempt from auto liquidation

Certain customers (including Alameda) - I understang other customers had similar arrangements, and why wouldnt they? Every account was trading on margin and high leverage - the reason you auto liquidate is so they dont run off owing you money.

Is it fraud for a company to extend credit to another company? Any company that issues a invoice and allows say 14 days to settle is extending credit to the other party.

Re: FTX – The fraud was in the code

#86

Post by colpabar »

jhobag wrote: post #17
lindq181 wrote: post #13

Earlier quoted context omitted.

As someone relatively involved in the crypto space the past few years, no one saw FTX as anything to be proud of. It was a centralized exchange, basically a web2 company that handled crypto. Only the TradFi VCs (the Mr. Wonderfuls of the world) spouted rhetoric like that. The engineers building out the chain ecosystems & protocols on top of it never thought much of it other than another place to trade with orderbooks…

the funniest part about FTX was how utterly awful it was. books were thin, and everyone knew alameda was hunting customers in the books, while listing perps for their farm and dump investments. really just a sham of an exchange/casino, so around average by crypto standards, but KOLs and mainstream comms praised them.

> KOLs and mainstream comms praised them

I know this will just get me labelled a conspiracy theorist but I refuse to believe his well-connected parents had nothing to do with the praise FTX received in the mainstream media.

Re: FTX – The fraud was in the code

#87

Post by shapefrog »

bmitc wrote: post #84
shapefrog wrote: post #71

There has obviously been some bad stuff going on over at FTX, but is the counter on a website really the "most" proof that they could find? https://www.ycombinator.com/ Is every number on that page real time accurate? Is the combined value $600bn - if it is 599bn or even 601bn then ding ding ding we have ourselves fraud. https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and…

The backing of that number was testified to, under oath, to Congress, which by itself is a felony. I haven't been following the trial though, and I'm unsure of how much testimony was given. What's reported on this blog does seem like it is a little small given Gary Wang's large role.

> The backing of that number was testified to, under oath, to Congress, which by itself is a felony.

He did not testify that the number on the website was real. He testified to the existence of the insurance fund and the single biggest daily drawdown from the fund.

"which by itself is a felony" - wouldnt you mention that as the prosecution??? Or are they aiming for a mistrial on the grounds of incompetence?

> Prosecutors haven’t mentioned it, but Sam Bankman-Fried would go on to testify under oath in front of the U.S. Congress in May 2022 that “the insurance fund has paid out a net total of $9.5 million” in the preceding three years, and that “the single biggest daily drawdown from the FTX.com insurance fund was $4.7 million.”

Actual testimony. https://www.congress.gov/event/117th-congress/house-event/11...

> Finally, prosecutors questioned Wang about the FTX “insurance fund”, which was ostensibly supposed to protect both FTX and its customers from trades that went badly even more quickly than the exchange’s risk engine could account for.

> One such example was in 2021, when a trader was able to exploit a bug in FTX’s margin system that allowed them to take out a massive position in the MobileCoin cryptocurrency. They were eventually liquidated, and FTX suffered a loss of “several hundred million dollars,” according to Wang.

The losses to the exchange from a failure of the code should be borne by the exchange not from any "insurance fund" whos purpose is the make good slippage losses for customers. There are grounds to ask why they passed the loss off to Alameda (in which case FTX co was defrauding Alemada co for an FTX mistake).

I see the narative that the prosecution is trying to push, but unless SBFs laywers are idiots they should be pointing out that they are trying to connect two distinctly different dots.

Re: FTX – The fraud was in the code

#88

Post by shapefrog »

Analemma_ wrote: post #83
shapefrog wrote: post #71

There has obviously been some bad stuff going on over at FTX, but is the counter on a website really the "most" proof that they could find? https://www.ycombinator.com/ Is every number on that page real time accurate? Is the combined value $600bn - if it is 599bn or even 601bn then ding ding ding we have ourselves fraud. https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and…

You’re missing the broader context here. The prosecution is alleging massive fraud, while SBF’s defense is that he wasn’t committing fraud, he was just incompetent. So a lot of the trial hinges on presenting evidence one way or the other for the fraud-or-incompetence question. Things like the counter, which was clearly deliberate and specifically engineered to lie to customers, establish a pattern of deception and ma…

They guy had a personal net worth of ~$100bn; lost all that and $8bn of other peoples money. The prosecution have cracked open the books, turned every single employee, and this is their smoking gun?

I will at least say, "goes to character", is absoultely an excellent and as I see it the only logical answer. If however, they have to play that game and that is all they have then they are going to struggle to make a legitimate case.

Maximum entertainment value from the sidelines will be not guilty with all the other FTX employees having plead out!

Re: FTX – The fraud was in the code

#89

Post by takinola »

ThinkBeat wrote: post #67

A tip: If you intend to commit fraud or other illicit activity dont host / store your code on Microsoft GitHub. Hmm in fact dont use git at all. Law enforcement only need to find a single developer pc/laptop/whatever and they will have the entire history, comments, who did it, and code. Having it all in a centralized system that is configured to be easily nuked is safer, than trying to nuke every laptop/pc/whatever t…

At what point is it less work to just build something real rather than have all these workarounds to support a fraud?

Re: FTX – The fraud was in the code

#90

Post by shapefrog »

Macha wrote: post #62
vba616 wrote: post #41

"Some have wondered why Wang chose such a seemingly arbitrary number as $65,355,999,994" int((2^16 - 180) * 999999.9999 + 1) = 65,355,999,994

This proposed explanation just moves the abitrariness to "why 180" and "why that amount of 9s"?

(65,355,919,909 + 80,085) = 65,355,999,994 obviously /s
Post reply on HN