Re:Alameda lost tens of millions because of a fat fingering ...
by jmyeet on Wednesday September 20, 2023 @09:04PM
(#37592052)
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.
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.