13 Comments
Oct 9Liked by Molly White

The random number code is damning indeed. Not sure how they expect to explain that one.

Also, having some programming experience myself, I agree with your footnote that you probably aren't the best judge of how readable this code is to Joe Q. Public. I enjoyed your suggestion to write messier code when planning to Do Crimes, regardless. ;-)

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I appreciate you taking the extra time to put a voiceover on this!

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Oct 10Liked by Molly White

Re: 2 -- Very likely. I suspect he meant to type 65536 * 1000000 and mistyped 65356 * 1000000 and the "missing $6" is a rounding error from whatever he used to calculate or input it to the database.

It seems these people were so arrogant that it never occurred to them to try to hide or obfuscate any of this... just amazing...

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founding
Oct 10Liked by Molly White

What I saw reported of the cross examination isn't that they spent a lot of time in the code. The Defense did get , as you note, that a few accounts got large (~$10 million) margin accounts.

I feel that defense strategy here is to confuse the juror by pretending these things are normal and using technical terms to make things sound official or correct.. But they are not. Margins a normal thing in some brokerages. But all margin is, is a loan, collateralized by an accounts existing holdings. If an account exceeds margin limits, it's supposed to require either more collateral (crypto or cash, in these cases) or selling existing collateral in the account. Margin should also subject to interest payments. Was Alameda exempted? Were the other large accounts or other traders?

As to the stable coin stuff, they were getting at that Alameda needed allow_negative because Alameda was a Market Maker for FTX. But Market Makers don't take customer account funds to do their buying and selling. That's not how it should work.

I feel the Prosecutors need to put an expert on the stand to really define and explain terms like Market Makers and Margin, and how FTX and Alameda weren't operating like normal entities due fulfilling these functions.

I also feel they eventually need to put someone on the stand to explain how bad FTX and Alameda were as businesses (I think Ben McKenzie wrote about that in Slate at the beginning of the trial.

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I have no words. Well summarized Molly!

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Oct 10Liked by Molly White

Wow putting in the audio excepts made this a full fledge podcast. Thanks for working so hard on this.

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It would be fascinating if any of the big financial institutions were required to divulge this level of detail in court.

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Most of them did but they got bailed out.

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Those star defense lawyers are making some pretty unconvincing weaselly statements there.

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