8 ms·
FTX – The fraud was in the code
- albert_e 3y agoOff-topic: The "listen to the article" feature on this blog post ... is it using an AI voice trained specifically on the author's real voice? Or is it a real recording by any chance?
- RockRobotRock 3y agoYou can google and listen to her giving talks. It's clearly her real voice.
- caroooline 3y ago[flagged]
- ttamslam 3y agoWild to see some actual code from the FTX repo. Laughed at the takeaway of making sure you at least hide your fraud behind some messy code.
- mmcwilliams 3y agoOr more realistically compiled code where your fraudulent methods exist in patches you don't commit to git.
- darepublic 3y agoI remember working somewhere as a contractor and given a legacy piece of code to update. And then that went ok so later they approached me again but this time with much less clear requirements. It became a stalemate, me asking them to clarify, them pointing to their watches and saying when can this be done. Eventually they tried to pressure me into basically add a backdoor. I almost did this but eventually explained in my pr why the code want not safe and would lead to possibility of unauthorized crap. Everybody else was extremely junior and seemed to be unaware of this.
- Centigonal 3y agoThe code snippet where they generated the FTX backstop fund's "current balance" displayed on the website by multiplying the exchange's daily trading volume by a random normal number is NUTS! This was the supposed crypto wonder-platform!
- bmitc 3y agoIt is insane how there wasn't a single shred of accountability. I just wonder who was giving them tens and hundreds of millions of dollars without any auditing or due diligence. It seems even the most superficial audit would have revealed it to be a sham.
- jhobag 3y agoSequoia led their one of their rounds, everyone assumed sequoia did enough due diligence, everyone goes in and fills the round; it's assumed its a trustworthy platform for retail
- jjeaff 3y agoThat's exactly how most funds operate. They don't want to spend the time and money to do due diligence so they just wait around for one of the bigger funds to supposedly do the due diligence. So if they see them invest, they will join the round. it's so much easier to fill out a round one you get your first big VC on board.
- bmitc 3y agoI honestly feel Sequoia should be held partially responsible for funding and marketing such a blatant criminal enterprise. I'm a little tired of these venture capitalists claiming all innonence when they should have a burden of responsibility. They want all the upsides and none of the downsides to throwing millions at people.
- deleted 3y ago[deleted]
- porkbeer 3y agoAll banking is becoming like a casino where the house alone knows the code.
- ethanbond 3y agoNo, this is just extremely blatant fraud. Banks in general don’t do this.
- thsksbd 3y agoHow would we know? The code is not open source
- cuteboy19 3y agoThe code is not relevant. The fund position is transparent to the regulators
- injeolmi_love 3y agoThe position is visible to regulators via code - if the code is fraudulent or buggy, the regulators will believe false information.
- smt88 3y agoFinancial audits of public firms are not done through code. They're done by CPAs who copy files and generally run everything through generic Microsoft applications that aren't going to commit fraud for a bank.
- injeolmi_love 3y agoAt least at the firms I’ve worked with, new records were digitized and old files were undergoing digitization. Maybe it’s different in your country? There’s always some process a firm must use to make digital records available to an auditor - it’s at this point in the step code must be trusted even if it’s supposed to be as simple as “make everything available “.
- bmitc 3y agoPretty insane that Sam Bankman-Fried decided to plead not-guilty. And it's interesting that their defense is an implication that a witness is committing perjury for a lighter sentence without any evidence backing it up. And just what in the world were any of these people thinking? Sam Bankman-Fried isn't remotely charismatic, so I just don't understand why people would follow his demands and actively participate in such obvious fraud. How do you reason with yourself about randomly generating an insurance fund's balance that has been testified, under oath to Congress and various other binding contracts I'm sure?
- xwolfi 3y agoPerjury* Sam is highly charismatic, especially when all you want to hear is that you send 2000$ and will receive 100k$ if only you listen to him and use his product. He's part of the mumbo jumbo guru crowd. I'm a programmer in finance: I understand nothing when SBF talks, it's like complete random BS, totally different from the traders I work with who would use complex concepts but with always a visible thread: utility -> transformation adding value -> profit, with SBF it's all so fuzzy and unclear, it's like he pretends to talk like we're idiots to hide the fact he's the idiot who forgot that you need to sacrifice potential upside for downside insurance...
- bmitc 3y agoI personally never found him charismatic at all, even before all of this got exposed. He has always seemed like a tweaker who thought himself smarter than he is, which is exactly what he turned out to be. I honestly struggle to understand how anyone would listen to him for any length of time.
- dilyevsky 3y agoWhat if he paid you to listen? You know, hypothetically speaking
- kristofferg 3y agoAsking for a friend?
- shrimpx 3y agoWas the exchange actually running on Python? Or was Python used for less intensive stuff?
- zinekeller 3y agoPython usage != incompetent financial institution. 1) even before the speedups done now on CPython, PyPy has always existed (and NumPy was HW-accelerated) and more importantly 2) It has a native arbitrary-precision decimal type. Even other languages seriously used in financial institutions like OCaml (https://discuss.ocaml.org/t/ocaml-needs-an-arbitrary-precision-decimal-type/6735 https://discuss.ocaml.org/t/ocaml-needs-an-arbitrary-precisi...) doesn't even provide it natively.
- shrimpx 3y agoThanks I appreciate the info. I love python and I use it for nearly everything. But it often gets dogged for perf, so I wonder about the reasoning in using it for high frequency trading despite the bad rap.
- rich_sasha 3y agoOCaml is used by Jane Street but no one else in this space (certainly no major player). Jane Street are a successful and respectable company but no giant, by any standard. If anything, I'd say their fame for using OCaml is greater than their fame as a trading firm. The benchmark would need to be Java or C++, which are the mainstay of the industry.
- russellbeattie 3y agoThis is besides the point, but is this actually valid Python? if not account.allow_negative: if (balance.available_ignoring_collateral if ignore_collateral else balance.available) < 0: raise BadRequest('Account does not have enough balances') Not sure what's going on inside that second if statement.
- vba616 3y agoI think it is? I don't have much python experience, but I think that inner expression is equivalent to ignore_collateral ? balance.available_ignoring_collateral : balance.available Personally I would agree that it would be clearer if the syntax was more differentiated between a conditional expression and a statement.
- a_e_k 3y agoYes, that's Python's ternary. https://docs.python.org/3/reference/expressions.html#conditional-expressions https://docs.python.org/3/reference/expressions.html#conditi...
- o11c 3y agoPython's (T if C else F) is most languages' (C ? T : F)
- EdwardDiego 3y agoPython ternary.
- vba616 3y ago"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
- ThinkBeat 3y agoA 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 that has a copy. Of course, the entire code base will probably be available on any laptop/pc/whatever that LE can seize, but it is less data than with git. I wonder if you could do the development all on ram drives on the development machine, that way if you shut down all the code is gone. Just make damn sure to stow/check in your code before doing so. I have partially done this myself a several years ago, but that was only to try and speed up compile times.
- jrpelkonen 3y agoTrue, but git also has pretty simple means to fake committer identity, rewrite commit history etc. Storing it to GitHub was definetely a major faux pas. However, it seems that the FTX people were not really bothered to cover their tracks.
- red-iron-pine 3y ago> I wonder if you could do the development all on ram drives on the development machine, that way if you shut down all the code is gone. Just make damn sure to stow/check in your code before doing so. or if you have any downtime you lose all of your shit
- ThinkBeat 3y agoIt is best practice to check in, or stow code regularly even on regular machines, in case the HD fails, the computer explodes, or whatever else. May have to be a bit more dilligent but not a big change.
- takinola 3y agoAt what point is it less work to just build something real rather than have all these workarounds to support a fraud?
- shapefrog 3y agoThere 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/ 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 https://en.wikipedia.org/wiki/National_Debt_Clock - Can I get any and all people behind this (and Similar Projectes) jailed for fraud?
- prettychill 3y agoIf 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.
- shapefrog 3y ago> 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.
- prettychill 3y agoIt is most certainly fraud to lie about protections in place to protect customer assets. That includes backstop insurance and auto-liquidation practices.
- deleted 3y ago[deleted]
- Analemma_ 3y agoYou’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.