Alameda lost tens of millions because of a fat fingering mistake

https://www.adityabaradwaj.com/part-2-the-fat-finger/

by miohtama • 3 years ago

235 185 3 years ago

adityabaradwaj.com

kristjansson• 3 years ago

So like ~0.5% of their total losses?

taberiand• 3 years ago

~0.5% only needs the error to happen ~200 times to account for 100%

lokar3• 3 years ago

Or just reject the trade

pharmakom• 3 years ago

This happens in “proper” firms too

c7DJTLrn2• 3 years ago

Case in point: https://en.wikipedia.org/wiki/Knight_Capital_Group

xyzelement• 3 years ago

The number of things that had to go wrong at the same time in the Knight case was large as far as I remember.

HDThoreaun• 3 years ago

I believe that knight was not a fat finger

blibble• 3 years ago

on a sensible exchange that attempted match would trigger a circuit breaker and either halt the market for a short period or put it into an auction

(and members that create orders to do that a lot either get their membership removed or pay fines)

CaffeinatedDev• 3 years ago

"the utility we gained by moving fast outweighed the occasional costs we paid due to poor risk checks, hacks, and the like"

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.

paulpauper3• 3 years ago

it's not about the number of mistakes but the size of the mistake

dragonwriter• 3 years ago

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.

ftxbro• 3 years ago

It's wild to think that just one fat fingering mistake was responsible for the collapse of the whole FTX and Alameda ecosystem.

jacquesm• 3 years ago

It's wild because it isn't true.

k8svet• 3 years ago

Millions, billions, it's just one letter difference, right?

paulpauper3• 3 years ago

i don't recall this crash. must have been nanoseconds. I guess in hindsight that was the least of its problem. billions dollars missing makes ten million a drop in the bucket.

oooyay• 3 years ago

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.

cameldrv• 3 years ago

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.

latchkey4• 3 years ago

Celsius lost millions in dumb mistakes like that too.

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.

paulpauper3• 3 years ago

yeah a lot of "dumb" mistakes. whoops accidentally sent to wrong address, which i happen to own the private key too...

catchnear4321• 3 years ago

rookie mistake. have to send it to a family member’s address so you can claim it isn’t yours - truthfully.

latchkey4• 3 years ago

In this case, it wasn't anything like that.

Someone exploited a weakness in CloudFlare and was able to replace the Badger website. When someone clicked on the site to execute an approval transaction, it went to the attacker first, which gave the attacker full control over their wallet.

It did take a manual step on the part of Celsius though... which should have been checked more closely. The UX around that checking is really terrible though and when someone is trying to do something quickly, they aren't always going to check. This is a big failure of wallets these days.

Balancer.fi just had a similar attack happen to them where the .fi registry allowed a nameserver change.

https://twitter.com/Balancer/status/1704552288201883809

It is also clear that the frontends really need to be hosted in a way that they can't be modified.

TimJRobinson2• 3 years ago

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.

latchkey4• 3 years ago

How many people listened to you?

andirk2• 3 years ago

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.

johndhi5• 3 years ago

This is my sense too. What's kind of funny is we weirdly get caught up and excited by the hype... every single time

constantly• 3 years ago

“We” is doing a lot of heavy lifting. I am proud that I have never gotten burned by this sort of thing because I understand that if there’s a lot of hype it’s probably too good to be true.

dotnet002• 3 years ago

I always felt like SBF was a massive fraud. When someone is inflated as a genius and "the kindest billionaire" for superficial things like not driving an expensive car and not dressing appropriately, it sends alarm bells ringing to me. Acting like the exaggerated TV stereotype of a tech nerd screams "I'm covering something up", just like what happened with Theranos.

steveBK123• 3 years ago

also don't discount sporting events being closed/reduced and sports betting dollars moving to crypto

andirk2• 3 years ago

Haha mild sports betting is my 2nd main use of bitcoin, other than store of value/wealth/whatever we call it when you buy something low and now it's worth a lot.

TimJRobinson2• 3 years ago

It also helped that they couldn't be margin called because of a secret system setup at FTX (which is why FTX imploded).

Just leverage long 50x forever until they're all billionaires or FTX is bankrupt.

JumpCrisscross2• 3 years ago

the "genius" credit given to FTX, Alameda

The hype cycle marketing was targeted by geography and social class.

gavinsyancey• 3 years ago

The fact that a single person could absolutely tank the entire company with a single trade shows how reckless they all were.

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-...

MichaelDickens• 3 years ago

This can't be the whole story because Alameda started a few months before the big 2018 BTC crash and made it through just fine.

josu3• 3 years ago

Here is a good analysis of the flash crash from that day: https://twitter.com/austerity_sucks/status/14523324727258194...

- 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• 3 years ago

The good news is that the world's Bitcoin network can only process ~100 transactions in 12 seconds.

Vecr• 3 years ago

(Most) trading's not done on chain, it's settled later. Alameda could absolutely trade faster than that.

zdw• 3 years ago

Has this improved as of late? Maybe with other blockchain systems?

josu3• 3 years ago

The Bitcoin blockchain processes a block of transactions every 10 minutes on average. Each block usually contains 2k-4k transactions. The maximum capacity is around 4k, equating to 7 transactions per second or 84 transactions per 12 seconds. (Note that 12 seconds is the confirmation time of the Ethereum blockchain).

That being said, the Lightning Network was deployed on the Bitcoin blockchain in 2018. It allows for thousands of transactions per second, thanks to a very elegant solution[1]. Unlike traditional blockchains, the Lightning Network is not blockchain-based, freeing it from the limitations we are all familiar with. However, it inherits all the security properties of its underlying blockchain. While the Lightning Network has its fair share of shortcomings, its scalability remains an open question. Nonetheless, it has been working great for over 5 years.

[1] https://lightning.network/lightning-network-paper.pdf

noduerme21• 3 years ago

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?

keyle4• 3 years ago

Great story! Thanks for sharing.

noduerme21• 3 years ago

Heh. I love being able to pseudonymously tell HN my crazy stories from time to time. It's the only online chatter I indulge in. Sadly I have no colleagues who I can both talk shop with and also talk about my previous lives.

"Build what makes you happy..." is a darn good philosophy, btw.

0xDEAFBEAD• 3 years ago

How does the hand end in a case like that?

Horffupolde• 3 years ago

On the house, especially if players are usual customers.

tapotatonumber9• 3 years ago

They take you out back and cut it off with a circular saw. At least then there’s no more “fat fingering” to worry about.

cperciva• 3 years ago

Not a poker player, so maybe I'm missing something obvious, but: How did he think you were cheating? You had no way of knowing what that card was, right? And if you did somehow know what it was, surely you could have pre-arranged more subtle ways to tip off a player you were conspiring with?

umanwizard4• 3 years ago

You must not know many gamblers. They’ll invent any insane story to explain why they lost, no matter how implausible.

lacrimacida4• 3 years ago

You can deduce odds by seeing a burn card. It could help more or less in certain situations

noduerme21• 3 years ago

I guess they thought I produced the bluffing player's card to prevent the other player from folding. But you're right that a dealer who was trying to do that could've done so in any number of subtle ways. I couldn't really figure out why they were accusing me at the time, or what I would've gained from it, but it all happened very fast.

There are dealers who are true shuffle mechanics and either know for sure or have a very good idea of who has what. I'm not that skilled.

I re-watched the movie "Casino" recently, and there's a scene where the Joe Pesci character cans a floor man for not stopping a slot machine run after the first or second time someone hits a jackpot in a night. Paraphrasing the movie: "Either he was in on or he's a fucking moron, either way we can't have him here". To bring it back to the original topic, I think in the gambling world, the default assumption is that there's a scam and the employee is guilty until proven innocent. I wonder why that wouldn't apply to a shady firm like Alameda, too, unless management was "in on it". Come to think of it, I guess that's the point of my story, which I didn't realize when I wrote it.

sneak2• 3 years ago

It sounds like he didn't think he was cheating and that it was a honest mistake.

An escalation (though obviously not to violence) makes perfect sense for a second error of that type, however. It's the kind of mistake that seems innocent enough but if it's deployed in a pattern it can obviously assist the bluffee.

Fool me once, fool me twice, etc. It's not uncommon for dealers to be in on scams, obviously.

function_seven2• 3 years ago

Let's assume the poker dealer is working a scam with one of the players, "Sam." On this particular hand, the scam is falling apart. Maybe Sam didn't pick up on a signal, or he has gotten out of sync with the plan.

The dealer sees the tragedy coming down the pike, and as a last ditch effort he spoils the whole game to prevent an even larger loss from occurring after the river card.

For example, on this particular hand, maybe the cards were preloaded into the deal to actually harm Sam. This was done deliberately because we need to keep some volatility across hands to make the cheating more subtle. So, on this hand, Sam is supposed to bet a little bit early, then fold. He loses some of his money, but the whole game seems on the up-and-up.

Except, oh no!, Sam appears to think this is one of the planned winning rounds, so he just keeps betting! Sam has made an error, and may lose big. I (the dealer) am going to suck it up and pretend to make a mistake. I'll get yelled at in public, but the bosses will thank me later for rescuing Sam.

gexla• 3 years ago

He said the player was attempting to bluff. In a given set of community cards, you're calculating the possibilities in which you can get beat. You're also watching your opponents actions to see if their lies (bluffing) are plausible.

Let's say you have a seriously strong hand, and there's only one way you could see that you could be beat. The opponent may have that hand now, or they may be hanging around in an attempt to upgrade to that hand while bluffing in the meantime.

In some cases, the above scenario is obvious. Everyone at the table knows well enough what each player is attempting to project. Every player knows which cards to look for to be revealed. It can be devastating to the bluffing player for that card to be accidentally exposed as a burner card.

Given there was a burner card exposed, then there was at least one more card to be added to the community cards. At this point, the bluffing player would be in a tough spot. The player with the stronger hand would likely be raising / re-raising to call the bluff and / or get more chips into the pot.

Continuing the game after the exposed card would have been pointless. You also feel stupid getting exposed on a bluff, when you otherwise might not have had to show your cards. You're probably going to be very pissed.

Edit: The dealer would have had no way of knowing what the burner card was, but the dealer could have known what card the bluffing player was looking for. However, I don't see how it would make sense to expose that card intentionally as a cheating move. Maybe the dealer could have used that as a signal to expose the bluff. My guess is the bluffing player was bluffing in an attempt to make their hand (fake it until you make it) and the other player sensed that. Maybe the other player wasn't convinced and would have won the hand regardless. But at the point of seeing the exposed card, they both knew it was over.

NOTE: We would have to know more about how this played out to do much more speculation than the above.

quickthrower22• 3 years ago

If there is a bluffer on the table, revealing a burn card is going to be net neutral or negative for them. Then add in the meta game! A mob bosses son won't want to look like they did nothing in a situation like this. They need to show they are not a pushover.

charlieyu1• 3 years ago

I played poker at casino and these kinds of mistakes happen all the time.

pclmulqdq• 3 years ago

Yeah, play just continues usually. High stakes dealers are usually more experienced and less likely to make these kinds of mistakes, but at 1/2 or 2/5 games (max buy-in around $500 at these stakes, so pots tend to stay under $1k), this sort of error isn't uncommon in my experience.

sneak2• 3 years ago

Honest question: How do you determine that something like this was an honest mistake?

Good question. It's not like the errant trader couldn't have had a friend of a friend put in a bunch of $10k limit buys the day before, knowing the price would recover nearly instantly...

noduerme21• 3 years ago

Right, this was my original question and I'm wondering how SBF would've gotten to the bottom of it. What I'm speculating is that a gangster would've either punished the employee or been in on it.

FireBeyond• 3 years ago

I once watched a new (I assume) dealer make two large mistakes at a blackjack table, in Vegas, of all places.

One, I had put down $500 in twenties, and he was giving me chips, except he was going to give me $1,250 in chips, like he thought they were fifties. Pit Boss looked at him, looked at the chips, "What are you doing??", let him fix the error.

A couple of hands in, dealer gets an Ace, so he checks the hole card. Satisfied, he continues, and we all bet and play out the hand, until he goes to turn over the hold card... and has Blackjack with a King.

Pit Boss again, situation explained, voids the hand and returns everyone's stake to them.

What blew my mind was that after two mistakes like this in a matter of minutes, the dealer wasn't pulled off the table.

testfoobar• 3 years ago

Would you mind explaining the second story? I don't play casino blackjack. Isn't the goal of the house to get blackjack? So if the dealer had Ace face up and King down, isn't he assured to win the hand and collect all the stakes?

noduerme21• 3 years ago

Based on the second mistake, on pure speculation, I think that might've been a dealer who recently came from Eastern Europe, where typically dealer blackjacks are not announced until the end of the hand (a significant loss in EV for the players). Since never exposing a card early is the one thing that's most drilled in, exposing one is counter to training, and that might be a hard habit to break.

A lot of Eastern European casinos don't even deal the "down card" for the dealer until the players have finished.

viraptor• 3 years ago

after two mistakes like this in a matter of minutes, the dealer wasn't pulled off the table.

Does anyone know what the dealer training looks like in practice? I assume people will make silly mistakes for a while. Are they expected to practice until perfection before they start working?

jliptzin• 3 years ago

Your $500 is such small potatoes to them they literally do not care. There’s probably someone betting $10,000/hand 20 feet away in the high stakes room. You can be sure that dealer never makes it to that room.

jmyeet• 3 years ago

I'm skeptical about the "honest mistake" story as it's self-serving because an "honest mistake" isn't a crime, or at least it isn't as serious a crime.

I can easily believe that development was lax without proper monitoring, controls and testing. Typically for any kind of trading system there'll be multiple layers to help catch these kinds of errors or deliberate fraud. This could include some or all of:

1. A separate system that monitors and clears orders looking for pricing mistakes;

2. A risk management system that looks at your total position and can block orders if they would make your position too long or short;

3. Another system might monitor actual assets vs custodial assets to see if you ever "leak" assets.

To trade any US securities you'd have to go through SEC compliance to make sure you have sufficient systems and monitoring in place, particularly if your system is facing unsophisticated investors. Crypto has largely avoided this kind of scrutiny and rigor.

Part of all this is separate systems help prevent both accidents and fraud. A pricing check in a trading system could be broken by a code change or bypassed by a malicious change. Subverting an external system you may not have access to gets more difficult.

noduerme21• 3 years ago

Yeah, and - someone correct me - aren't at least some of the charges against SBF related to intentional backdoors in the code?

defrost• 3 years ago

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.

noduerme21• 3 years ago

The value of a bluff - and the value of a hand - is all about what's in the pot. I made clear that my integrity and my life were worth a lot more than whatever fraction of $10k a crooked dealer would've gotten. There are plenty of guys who might try to do something like that for $5k, but I'm not one of them.

I'm sure the doubt remained. What you wrote kind of reinforces my point that it's very hard to be sure that an expensive mistake was an honest mistake.

Personally, though, I didn't quit to try to double-bluff. I'm a self-preservationist. I'm in the business of keeping myself alive, and I draw the line at working for someone who threatens me.

I'm aware that quitting could've seemed shady, but at that point it was the least of my worries. And I doubt it's the normal course of behavior, either, if someone were caught skimming. Someone who was guilty of malfeasance, who was offered to keep the job, would have almost certainly chosen to stay and lay low while finding some new way to scam them, because that person needs either the money or the frisson. I enjoyed 'em both but I didn't need either enough to risk my life on another accident.

Someone who lacks any trust will always find reasons to assume the worst, as you say. There's a bit of a corollary, though, in my experience, which is: People who choose to continue working around those people also mostly can't be trusted. And I feel like the trust-less parties are well aware of that.

thaumasiotes2• 3 years ago

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.

Who said anything about quitting indignantly on principle? The sequence of events goes like this:

1. Dealer deals a round of cards, does not intend to reveal a card, but does anyway.

2. Dealer is informed that if that happens again, he'll be executed.

No amount of indignation is necessary to get the dealer to quit. All that's necessary is that the dealer believe the assurance he's given in step 2. The mistake is guaranteed to happen again -- if the dealer was able to avoid doing it, that's what would have happened in step 1.

MaxfordAndSons3• 3 years ago

Funny that the top comment here is about poker - there's a rumor in the poker world that SBF was a whale in some of the biggest private app games, and owed the game runners north of $10m when he went down, which the winners in that game (apparently including legend of the game Dan "Jungleman" Cates) are now never going to see.

SilasX• 3 years ago

Don’t they generally have ties to the underworld/extralegal means of reprisals against people who owe them money? So wouldn’t they have acted by now if this were true (even if not “successful”)?

noduerme21• 3 years ago

That's an interesting coincidence... it wouldn't surprise me in the least. Never heard he had a bad losing poker habit, though. Sounds juicy if it comes out.

fsckboy• 3 years ago

let off a patsy if they had orchestrated it

the patsy in that scenario would have been the guy screaming the game was rigged

or you, if they had popped you in front of the gambler to prove they took his allegations seriously

the patsy is not "in on" what's happening. They might let you off if they thought it was intentional but that somebody more important had put you up to it

wiktionary

patsy: (informal, derogatory) A person who is taken advantage of, especially by being cheated or blamed for something.

nightpool• 3 years ago

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...

lokar3• 3 years ago

And if you are waaaay off the exchange just shuts down your port for the day.

patio11• 3 years ago

Interestingly the Tokyo Stock Exchange did not countermand an order from Mizuho in 2005 which flipped order quantity and price in yen, a rather catastrophic thing to do when the intended trade was one share for about 600,000 yen.

Regulators were… not pleased.

(Quick English summary of incident: https://www.foxnews.com/story/typing-error-causes-225m-loss-... )

keyle4• 3 years ago

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...

    10 wait for human mistake...
    20 goto 10

mertd• 3 years ago

I believe, the traditional exchanges either won't fill outrageous trades or would undo them if the counterparty can prove it was an honest mistake.

artursapek• 3 years ago

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.

gabcoh• 3 years ago

If you aren’t paying attention you just might end up trading on a real crash too.

Tao33003• 3 years ago

Which I guess is why it has to be so low you don't care.

paxys3• 3 years ago

HFT algos are going to make quick work of the opportunity well before your broker can even think about executing your limit order.

ycombobreaker• 3 years ago

You want your GTC order parked on-exchange, not sitting on a broker's private book. Find a better (more expensive) broker.

fbdab103• 3 years ago

I thought the real market also has circuit breakers in place. If the market falls X% too quickly, trading is halted for some amount of time.

denimnerd42• 3 years ago

I made 17.5k doing this by dumb luck.

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.

keyle4• 3 years ago

Glad it worked out for you! Thanks for sharing.

az226• 3 years ago

Interesting to see Binance lie and say it was an algo mistake as opposed to a human one.

hnfong• 3 years ago

Could be Alameda misrepresenting the situation. Doubtful that Binance would be able to tell whether Alameda's accounts were running an algorithm or manually trading

mvdtnz2• 3 years ago

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.

paxys3• 3 years ago

Bitcoin has a market cap of $530B and at its peak was over $1.3T. That is not a "toy" but a very real financial market.

Tao33003• 3 years ago

the total (ostensible) value of all coins that have been mined in a given cryptocurrency. These values should be taken with a hefty grain of salt, as they are considerably larger than the total value that could be realized if holders of a currency decided to try to cash out.

anonymoushn3• 3 years ago

Prices are basically set by takers, like in every other market.

mvdtnz2• 3 years ago

Prices are set by people stupid enough to believe that the "market price" is a market price.

peyton2• 3 years ago

Not sure how wash trading sets price. My understanding is miners sit on BTC and cash, then occasionally collude using cash to pump price, short perps at the top, then offload BTC and ride the perps down.

henry2023• 3 years ago

Then short it

paulusthe• 3 years ago

Running a system that allows a fat fingering mistake like that to go through is yet another sign of their gross incompetence.

1970-01-01• 3 years ago

The tricky thing about risk is that it's usually invisible, right up until it comes around and bites you in the ass.

Saved!

vgatherps3• 3 years ago

Invisible can equally mean “actually invisible” but often means “we told the people shouting and screaming about this risk to shut up”

cwalv2• 3 years ago

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"

sharadov• 3 years ago

It's not a mistake - it shows the sheer lack of safeguards at a terrible company with a narcissistic child-leader and his cohort of children at the helm! Hope he rots in prison and is made an example of.

labrador• 3 years ago

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"

anonymoushn3• 3 years ago

Contacts who worked at Alameda claim that this guy did not work at Alameda, or if he did, they never met.

anonymoushn3• 3 years ago

Turns out that the author of TFA did work at Alameda as confirmed by court documents.

Dwedit• 3 years ago

They managed to successfully get money for cryptocurrency.

cwalv2• 3 years ago

Is that a difficult thing to do?

ebcase• 3 years ago

Alameda is a city (and an island) in Alameda County, California.

Perhaps the title could be updated to reflect that this article is not referring to the city?

komali22• 3 years ago

I used to do some work for a company called Captech, then called Capital, I think it's called Hum Capital or something now, but I was always waiting to see how they'd handle it in the news if someone did an article on it when it was called Capital.

nodesocket• 3 years ago

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?

usefulcat2• 3 years ago

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.

usefulcat2• 3 years ago

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'.

trogdor• 3 years ago

I used to work in operational risk management at a major investment bank. This kind of thing is not at all unusual.

Fat finger errors would often result in unintentional gains. We incorporated them into our models as if they were losses of the same magnitude.

ponorin• 3 years ago

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.

desaiguddu• 3 years ago

I have a fair share of our story with Fat Fingers:

The Athlete's Glitch

Our client team had an amazing NFL season. But with the start of a new NFL season, but our NFL team was buzzing for a different reason – the unveiling of our off-season updates to the beloved iPad app used by one of the major NFL teams.

Our app, which was primarily used for training and past game analysis, had undergone a major overhaul, and we were proud of the sleek new UI/UX designs. But just as the athletes started to get into the grind of their training, our office started receiving some unexpected feedback.

"Hey! The app is taking me to the wrong sections!" one message read.

"I keep hitting the wrong button. Something's off," said another.

Confusion took over our team. We had spent months meticulously planning, designing, and testing these updates. Automated tests had been executed to perfection, internal testing hadn’t shown a single glitch. What was happening?

Then, a video came in. It was from a coach, showing one of the top athletes trying to use our app. We watched intently as his fingers moved over the screen. The problem became immediately apparent: his fingers, sculpted by years of athletic training and naturally larger than the average, were simply too big for our redesigned interface. Every time he tried to tap a specific function, his finger would unintentionally touch the adjacent ones.

Turns out, in our endeavor to create a sleeker, modern UI, we had inadvertently shrunk the size of the clickable buttons and packed them tightly in a grid. This might have looked aesthetically pleasing and worked perfectly for our testers, but for the athletes with their robust fingers, it was a recipe for frustration.

We convened an emergency meeting. Our lead designer, Marcus, broke the silence, "Our primary users are these athletes. We should've considered their physical attributes in our designs. It's my oversight."

Our project manager, Clara, nodded in agreement. "We need to fix this and roll out an update ASAP. We can't have the team struggling with this during their crucial training period."

The next few days were a blur of coding, designing, and testing. With feedback from some of the players, we reintroduced larger buttons and ensured enough space between them, all while maintaining the sleek look of our new design. It was a lesson learned the hard way, but it reiterated the importance of understanding our users' needs and physical attributes.

The next feedback we got was from the star quarterback, "Perfect! Back in the game with this. Thanks, TechTouch."

The NFL season kicked off with roaring crowds, and our app, now more user-friendly than ever, was right there with the athletes, assisting them every step of the way.

mouzogu• 3 years ago

Never attribute to stupidity that which is adequately explained by malice.

dustypotato• 3 years ago

isn't it fat finger and not fat fingering .... which sounds something nsfw?

jjslocum3• 3 years ago

This description of SBF does evoke a Netflix "I was in a cult" documentary. A larger-than-life leader, with huge vision. I wonder how much of his success was due to his charisma and the ability to steamroll (and sidetrack) people with over-the-top world-changing vision.

bluenomatterwho• 3 years ago

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.

Alameda lost tens of millions because of a fat fingering mistake

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