Honest question: How do you determine that something like this was an honest mistake?
Once, when I was much younger, I had a side gig dealing poker at an underground club in NYC. One morning at the end of 10 hours dealing, I accidentally exposed a burn card which turned out to be something one of the players was representing (bluffing), with about $10k on the table. It was an honest mistake - literally a fat finger mistake. I was tired and my dexterity slipped. The player jumped up, upset the chips and started shouting that I was cheating and in league with his opponent.
The manager came over to calm things down. He was the young son of a mob boss, whose portfolio encompassed a variety of entertainment franchises. In order to calm the player, he pulled me off the table, told me he believed it was an honest mistake, and then threatened my life if it ever happen again. I quit then and there. Only after I had quit and refused to come back do I think he actually knew for certain that I wasn't pulling a scam.
[edit] I'm really enjoying that people are enjoying this post, but I want to clarify what I was getting at: The original article assumes that SBF et. al. concluded by some internal mechanism that this was an "honest mistake", and that this is sufficient. That assumption belies the way criminal organizations actually work, which is to say, they wouldn't assume it was an honest mistake, but they'd happily say it was one and let off a patsy if they had orchestrated it. I kind of hope I can tilt the conversation toward this aspect of the OP's revelation?
> Only after I had quit and refused to come back do I think he actually knew for certain that I wasn't pulling a scam.
In interactions of bluff, bluff, and double bluff suspicion never dies.
Quitting indignantly on principal is either a sure sign of innocence or a true con artist cutting and putting distance from a 'scam', staying can be just as ambiguous.
I'm not doubting your innocence here, just doubting that there was any action you could take that would convince a suspicious mind that you were clean.
I dare say had you stayed then eventually something else would have happened around you down the track (that's just life). Parting ways and moving on saved you from that at least.
Then they tried to get the DAO to vote to give them back their lost tokens, without even admitting who it was that lost the tokens... and everyone voted against it.
That moment where they got scammed by a hacked frontend was when I realised they were extremely incompetent and told everyone to get their funds out immediately.
Moving millions of dollars customer funds around via a browser wallet is insanely bad, they should have had well tested scripts that interact with the smart contracts directly.
A lot of the "genius" credit given to FTX, Alameda, Sam are all during a time when crypto was soaring, probably partially because people were home more and got free checks in the mail. The fact that a single person could absolutely tank the entire company with a single trade shows how reckless they all were. But it worked because the market was going up. That's it. The market slumped for like a week and their behavior dropped them to 0.
> According to SBF, the utility we gained by moving fast outweighed the occasional costs we paid due to poor risk checks, hacks, and the like. This was SBF's work philosophy, and it drove the culture he created at Alameda and FTX.
Moving fast is great, but you need structure to support it. If you front load your development with guard rails that ensure you're always on track, then you "aim small, miss small" so to speak. If you do none of that and just hope that you can respond to problems as they arise then you've really not aimed at all and can potentially hit a target, but likely also hit a house.
And this is why this sort of thing will always keep happening, especially in new fields. It's like an anthropic principle of competition. If you're willing to cut corners in a way that could blow up the whole company, you can get ahead, therefore the leaders in a new field most likely cut a lot of corners and may be at risk of blowing up.
> The story of how a misplaced decimal point at Alameda Research caused a market crash that echoed around the world
Hang on a second. It caused a dip in the price of Bitcoin, that is not a "market crash". Bitcoin is a toy and not a real market, its price is set almost entirely by bullshit wash trades and other forms of fraud.
It was true from Sam's perspective, where all of those holes provided cover for fraud, embezzlement, and self-dealing (possibly up to and including the large “oops, unattributable hack” loss right as Sam was about to be shoved out the airlock.)
But that's because the holes were actually directed added utility from that perspective.
This happens all the time at traditional finance firms also. For example, last May an investor in the Nordic region sold off hundreds of thousands of shares of an index fund leading to an 8% drop in dozens of stocks https://www.bloomberg.com/opinion/articles/2022-05-03/citi-d...
Reading stories like this makes me wonder why I don't have a long term trade in place for a low amount and hope to fish a good one during a flash crash.
Seen them on the stock market too. Back in my day I wrote a few trading bots, they never went anywhere positive after about a week of profit.
Seems to me now that the smartest robo-trader algorithm is...
I was trading crypto back in 2016-2017. Making a few thousand here and there. Mostly just from time in the market during the run-up of ethereum. The whole thing drove me crazy because I thought it was so stupid, like gambling. So in 2017 I withdrew my several thousand dollars and put in a trade on coinbase pro for 5 etherum at $100. (I had left $500 to do this, the most I was willing to risk at the time) On 2018-11-25 this trade was executed in a flash crash.
I had totally forgotten about this trade and when I was going to buy a house in 2021 I was looking for any change in the seat cushions thinking I may have left a small amount in these accounts. Well imagine my shock when the amount was just short of $18,000.
Yes we call this a stink bid, and it’s a valid strategy. Keep one open just in case. Most exchanges have slippage protection in place but some are better at it than others.
> According to SBF, the utility we gained by moving fast outweighed the occasional costs we paid due to poor risk checks, hacks, and the like.
When I was young I "moved fast and broke things", then had brushes with the law that fortunately didn't result in jail. Silicon Valley prides itself on second and third order thinking, but do people ever consider what might come after "moving fast and breaking things"
In personal banking, at least of those I've experienced, the numbers are displayed in both plain language ("forty-two thousand sixty-nine") as well as numerals ("42,069"). Wonder if this would help prevent this kind of mistake as well.
Seems like a bunch of kids who were born into borderline fraudulent culture... and now damage control pieces (ordered from SBF's jail cell maybe, ha) are being tolerated... maybe with the tacit support of a culture which would rather think of these as things that 'everyone does.' Somewhat akin to the Stanford or Harvard data integrity issues, maybe? This is just business as usual and sometimes it spills over. Who cares as long as you are headquartered in the Caymans, right? To be sure, all of these 'oopsies! SBF is such a sweet, gentle soul' articles of late look a little weird. Dude threw his GF under the bus in obvious fashion.
> What they missed was the decimal point was off by a few spaces. Rather than selling BTC at the current market price, they sold it for pennies on the dollar. The result was immediate. The price of BTC shot from a high of $65k to as low as $8k on some venues.
Wouldn't this sell just be gobbled up quickly by buyers? Why would it move the BTC price so dramatically to the downside? Surely this couldn't have been that much volume at near all-time highs of BTC in 2021?
Yes, it would, but at what price(s)? Think about what would happen if the size of the (very low priced) sell order was >= the size of all resting buy orders priced >= the price of the sell order.
> So naturally, we had sanity checks in place to make sure that the orders being sent were reasonable relative to current market prices. Not so for manual trades, which were by nature discretionary.
This seems to imply that risk checks are somehow either unnecessary or impractical for manual trades, which is completely untrue. This is 100% a case of 'we chose not to implement that'.
> we had sanity checks in place to make sure that the orders being sent were reasonable relative to current market prices. Not so for manual trades, which were by nature discretionary.
I guess we have different definitions of "invisible"
[+] [-] noduerme|2 years ago|reply
Once, when I was much younger, I had a side gig dealing poker at an underground club in NYC. One morning at the end of 10 hours dealing, I accidentally exposed a burn card which turned out to be something one of the players was representing (bluffing), with about $10k on the table. It was an honest mistake - literally a fat finger mistake. I was tired and my dexterity slipped. The player jumped up, upset the chips and started shouting that I was cheating and in league with his opponent.
The manager came over to calm things down. He was the young son of a mob boss, whose portfolio encompassed a variety of entertainment franchises. In order to calm the player, he pulled me off the table, told me he believed it was an honest mistake, and then threatened my life if it ever happen again. I quit then and there. Only after I had quit and refused to come back do I think he actually knew for certain that I wasn't pulling a scam.
[edit] I'm really enjoying that people are enjoying this post, but I want to clarify what I was getting at: The original article assumes that SBF et. al. concluded by some internal mechanism that this was an "honest mistake", and that this is sufficient. That assumption belies the way criminal organizations actually work, which is to say, they wouldn't assume it was an honest mistake, but they'd happily say it was one and let off a patsy if they had orchestrated it. I kind of hope I can tilt the conversation toward this aspect of the OP's revelation?
[+] [-] defrost|2 years ago|reply
In interactions of bluff, bluff, and double bluff suspicion never dies.
Quitting indignantly on principal is either a sure sign of innocence or a true con artist cutting and putting distance from a 'scam', staying can be just as ambiguous.
I'm not doubting your innocence here, just doubting that there was any action you could take that would convince a suspicious mind that you were clean.
I dare say had you stayed then eventually something else would have happened around you down the track (that's just life). Parting ways and moving on saved you from that at least.
[+] [-] latchkey|2 years ago|reply
Someone at Celsius manually approved a bogus transaction on a hacked website...
https://www.coindesk.com/markets/2021/12/03/crypto-lender-ce...
Badger later reimbursed Celsius with inflation on their token that would be released slowly over several years. "restitution".
Someone at Celsius thought that they could sell that restitution token and ended up forfeiting it... which was another $22m loss...
https://www.thismorningonchain.com/articles/defi/celsius-mad...
Then they tried to get the DAO to vote to give them back their lost tokens, without even admitting who it was that lost the tokens... and everyone voted against it.
[+] [-] TimJRobinson|2 years ago|reply
Moving millions of dollars customer funds around via a browser wallet is insanely bad, they should have had well tested scripts that interact with the smart contracts directly.
[+] [-] paulpauper|2 years ago|reply
[+] [-] andirk|2 years ago|reply
[+] [-] gavinsyancey|2 years ago|reply
Sadly, this sort of thing happens in traditional trading firms as well.
https://en.wikipedia.org/wiki/Oil_futures_drunk-trading_inci... https://en.wikipedia.org/wiki/Knight_Capital_Group#2012_stoc... https://en.wikipedia.org/wiki/Nick_Leeson#Barings_Bank https://en.wikipedia.org/wiki/Rogue_trader https://www.foxnews.com/story/typing-error-causes-225m-loss-...
[+] [-] steveBK123|2 years ago|reply
[+] [-] TimJRobinson|2 years ago|reply
Just leverage long 50x forever until they're all billionaires or FTX is bankrupt.
[+] [-] MichaelDickens|2 years ago|reply
[+] [-] JumpCrisscross|2 years ago|reply
The hype cycle marketing was targeted by geography and social class.
[+] [-] johndhi|2 years ago|reply
[+] [-] finite_depth|2 years ago|reply
[deleted]
[+] [-] josu|2 years ago|reply
- It lasted 12 seconds.
- Total BTC traded was 290.54
- Only 2% of that was at price of 10K or below.
- Most volume happened in $20-30K range, over 50% discount to mkt.
Here is a tweet from someone (rightly) speculating that it had been Alameda: https://twitter.com/TheoryBitcoin/status/1452345411759398923
[+] [-] NelsonMinar|2 years ago|reply
[+] [-] oooyay|2 years ago|reply
Moving fast is great, but you need structure to support it. If you front load your development with guard rails that ensure you're always on track, then you "aim small, miss small" so to speak. If you do none of that and just hope that you can respond to problems as they arise then you've really not aimed at all and can potentially hit a target, but likely also hit a house.
[+] [-] cameldrv|2 years ago|reply
[+] [-] mvdtnz|2 years ago|reply
Hang on a second. It caused a dip in the price of Bitcoin, that is not a "market crash". Bitcoin is a toy and not a real market, its price is set almost entirely by bullshit wash trades and other forms of fraud.
[+] [-] CaffeinatedDev|2 years ago|reply
I think this may have potentially been true when everything was going up volume-wise, but as competition improves there's less margin for error.
[+] [-] dragonwriter|2 years ago|reply
But that's because the holes were actually directed added utility from that perspective.
[+] [-] paulpauper|2 years ago|reply
[+] [-] nightpool|2 years ago|reply
[+] [-] keyle|2 years ago|reply
Seen them on the stock market too. Back in my day I wrote a few trading bots, they never went anywhere positive after about a week of profit.
Seems to me now that the smartest robo-trader algorithm is...
[+] [-] denimnerd42|2 years ago|reply
I was trading crypto back in 2016-2017. Making a few thousand here and there. Mostly just from time in the market during the run-up of ethereum. The whole thing drove me crazy because I thought it was so stupid, like gambling. So in 2017 I withdrew my several thousand dollars and put in a trade on coinbase pro for 5 etherum at $100. (I had left $500 to do this, the most I was willing to risk at the time) On 2018-11-25 this trade was executed in a flash crash.
I had totally forgotten about this trade and when I was going to buy a house in 2021 I was looking for any change in the seat cushions thinking I may have left a small amount in these accounts. Well imagine my shock when the amount was just short of $18,000.
[+] [-] paxys|2 years ago|reply
[+] [-] gabcoh|2 years ago|reply
[+] [-] artursapek|2 years ago|reply
[+] [-] mertd|2 years ago|reply
[+] [-] thatguysaguy|2 years ago|reply
[deleted]
[+] [-] paulusthe|2 years ago|reply
[+] [-] pharmakom|2 years ago|reply
[+] [-] c7DJTLrn|2 years ago|reply
[+] [-] labrador|2 years ago|reply
When I was young I "moved fast and broke things", then had brushes with the law that fortunately didn't result in jail. Silicon Valley prides itself on second and third order thinking, but do people ever consider what might come after "moving fast and breaking things"
[+] [-] anonymoushn|2 years ago|reply
[+] [-] anonymoushn|2 years ago|reply
[+] [-] ponorin|2 years ago|reply
[+] [-] bluenomatterwho|2 years ago|reply
[+] [-] blibble|2 years ago|reply
(and members that create orders to do that a lot either get their membership removed or pay fines)
[+] [-] nodesocket|2 years ago|reply
Wouldn't this sell just be gobbled up quickly by buyers? Why would it move the BTC price so dramatically to the downside? Surely this couldn't have been that much volume at near all-time highs of BTC in 2021?
[+] [-] usefulcat|2 years ago|reply
[+] [-] kristjansson|2 years ago|reply
[+] [-] usefulcat|2 years ago|reply
This seems to imply that risk checks are somehow either unnecessary or impractical for manual trades, which is completely untrue. This is 100% a case of 'we chose not to implement that'.
[+] [-] 1970-01-01|2 years ago|reply
Saved!
[+] [-] vgatherps|2 years ago|reply
[+] [-] cwalv|2 years ago|reply
I guess we have different definitions of "invisible"