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FTX stored private keys to crypto assets in plaintext, without access controls

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Re: FTX stored private keys to crypto assets in plaintext, without access controls

#91

Post by lern_too_spel »

reisse wrote: post #22
skyechurch wrote: post #5

When reading crypto clownworld stories like this, it is easy and fun to observe that cryptocurrency is a satire of the real (or "fiat", if you prefer) financial system. Less fun, but far more important, is to note how incredibly (infinitely?) subtle this satire is: https://news.ycombinator.com/item?id=22352840

One thinks about crypto as a clownworld only until one had to work with or inside the real financial system. Techincally, it is in no way better than crypto. The only difference is that in real financial system there is a strong legal cover for all the technical and security fuckups. Like, stealing from bank by exploiting their 10-years old Windows XP ATM connected to the internet is 10-years-in-jail offence, while s…

The reason for this is cross-border controls. If North Korea steals your crypto, you have no recourse.

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#92

Post by datadata »

sublinear wrote: post #89
datadata wrote: post #78

Earlier quoted context omitted.

I agree that it is a feature, but that feature didn't come with any downsides initially when the speed of everything else was also slow. The downsides are now substantial as the customer expects higher speeds. The downsides of not having the option to have final settlement quickly also seems to be a source of many other problems. We also don't even need to change this aspect of traditional banking in order to add str…

> The downsides are now substantial as the customer expects higher speeds. Why would they expect this? It seems like the slowness is the only thing keeping the game from growing legs and walking away from the humans playing it.

Ask anyone waiting for an emergency withdrawal to settle from a failing institution like FTX or SVB.

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#93

Post by [deleted] »

datadata wrote: post #53

It is fantastic that a company operating with such horrific practices is dead. While we are at it, when can we fix similar issues below with mainstream financial systems that millions of people are still using? - Social security numbers are used as a secret for identification, despite being in plaintext and having so low entropy as to be guessable, and originally issued on a card literally saying "Not for Identificat…

[deleted]

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#94

Post by lxgr »

thephyber wrote: post #83
datadata wrote: post #53

It is fantastic that a company operating with such horrific practices is dead. While we are at it, when can we fix similar issues below with mainstream financial systems that millions of people are still using? - Social security numbers are used as a secret for identification, despite being in plaintext and having so low entropy as to be guessable, and originally issued on a card literally saying "Not for Identificat…

Each one of these systems has a better replacement, but not all of the industry has moved to it. The largest related issue I believe is that the use of “knowledge databases” by credit bureaus (and all of the companies and governments that trust credit bureaus). Each of these has been solved, but until the last system using the inferior authentication is upgraded, they all remain weak points. I have argued that the US…

> Estonia’s “digital residency card”

The EU is actually federating systems like that under an umbrella of regulations and technical services called eIDAS [1]. I haven't been able to use it in too many places yet, but if it takes off (which is a pretty load-bearing "if", to be clear), I think it could be an important step towards making these systems usable internationally.

Especially the US, which seems to prefer to handle ID card issuance at the state or even municipal level, could benefit from a federated approach like that – assuming that people would be willing to trust their local/state government to that extent, in any case.

[1] https://en.wikipedia.org/wiki/EIDAS

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#95

Post by hef19898 »

kerblang wrote: post #58

Stupid & Evil are best friends - if you're looking for one, the other is often nearby. There's going to be a mix of incredibly stupid and incredibly crooked behavior all through this. It's not a surprise that this "genius" is a delusional, pathetic dolt who couldn't operate a frozen banana stand properly, much less a multi-million dollar company. It's also not a surprise that he truly thinks he's innocent on all char…

It is hard to accept, at least for me sometimes, that the answer to the question "Are those people stupid or fraud?" is more often than not is "both". It does explain a lot so.

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#96

Post by unaesthetic »

AnimalMuppet wrote: post #42
cs702 wrote: post #2

Wait, what ? Private keys were stored in unprotected plaintext files regularly opened by multiple people at the company? WTF? That crosses the line and goes deep into "willful negligence" territory, in my view. The physical equivalent would be stacking customer assets like dollar bills and gold bars in big piles inside a heavily trafficked room that has no lock. The term "irresponsible" doesn't quite do justice to it…

"Sufficiently advanced incompetence is indistinguishable from malice." I don't recall who said it, but it seems to fit.

Hanlon's razor is an adage or rule of thumb that states, "Never attribute to malice that which is adequately explained by stupidity."

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#97

Post by jrockway »

amanj41 wrote: post #87
jrockway wrote: post #80

This sounds like your standard startup-y security stack. Bonus points for trying to use your cloud provider's hardware key storage and keeping secrets in 1password. It ain't great but you could do worse. (I've worked at startups and we did better. No access to the cloud provider without a time-based escalation. Secrets in secrets managers. Passwords rotated regularly. Mandatory 2FA. Signed commits. But it would proba…

What's particularly astounding about the case of FTX is that it was rolling in cash (unlike many startups), and yet never cared enough to throw money at hiring tons of security-minded staff and engineers

Very good point. Spending the money on security engineers at a crypto company sounds like a no-brainer to me. They have a lot of good ideas and the work is essential.

(Demanding that crypto keys be stored in Google Drive is the kind of suggestion you'd make if you were planning on stealing all the money, I guess.)

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#98

Post by SoftTalker »

logicalmonster wrote: post #23
cs702 wrote: post #2

Wait, what ? Private keys were stored in unprotected plaintext files regularly opened by multiple people at the company? WTF? That crosses the line and goes deep into "willful negligence" territory, in my view. The physical equivalent would be stacking customer assets like dollar bills and gold bars in big piles inside a heavily trafficked room that has no lock. The term "irresponsible" doesn't quite do justice to it…

> That crosses the line and goes deep into "willful negligence" territory, in my view. A lot of people are making the assumption that gross incompetence reigned supreme with FTX, and that does seem like the likeliest explanation, but another potential explanation is deeply devious criminal activity. They could have preplanned this behavior. If they were ever caught doing anything really bad, they had "plausible denia…

It is not plausible that he didn't know better. No jury would believe that claim.

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#99

Post by UncleEntity »

datadata wrote: post #92
sublinear wrote: post #89

Earlier quoted context omitted.

> The downsides are now substantial as the customer expects higher speeds. Why would they expect this? It seems like the slowness is the only thing keeping the game from growing legs and walking away from the humans playing it.

Ask anyone waiting for an emergency withdrawal to settle from a failing institution like FTX or SVB.

According to both of them that’s what sank them and not the blatant shenanigans going on.

If there were more of a delay, like the maturity rate of whatever bonds, SVB would be fully functional today.

FTX, as long as nobody looked too hard they probably could have lost the few billion they had left while keeping everyone happy.

Bank runs… always blame the customers.

Re: FTX stored private keys to crypto assets in plaintext, without access controls

#100

Post by datadata »

themagician wrote: post #88
datadata wrote: post #78

Earlier quoted context omitted.

I agree that it is a feature, but that feature didn't come with any downsides initially when the speed of everything else was also slow. The downsides are now substantial as the customer expects higher speeds. The downsides of not having the option to have final settlement quickly also seems to be a source of many other problems. We also don't even need to change this aspect of traditional banking in order to add str…

Honestly, I don't really see this. Small personal transactions happen via Cash, Venmo, PayPal, Zelle, etc. without much issue or friction. As far as the general consumer is concerned it is instant. Large business transactions generally (not always, obviously) do not have the sense of urgency that would require fast settlement. There's some market maker stuff that benefits from fast settlement, but that's not exactly…

You are imagining a false dichotomy where things like fast and final settlement, or self custody are forced onto every user, and pointing out the obvious problems with that scenario. They are not good defaults, but they are great to have as options to protect customers against a fraudulent or over leveraged system. It is a bit like any protected right-- you don't have to directly make use of it for it to be valuable, the real value is in the optionality you have to be able to use it, and the risk that optionality poses to those who would exploit the absence of the right.
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