It had to do with lack of internal controls that safeguard the organization and its custodied assets from both employee mistakes and fraud. That's a part of engineering high-assurance high-integrity systems and SOP at big exchanges, banks, and similar orgs.
SBF has just been convicted of committing intentional fraud, not just "lack of internal controls". Was it an oversight to use rand() to generate your deposit insurance figures, or add that switch to allow Alameda unlimited rights to dip into the customer fund kitty?
Lack of internal controls will cause some peon that you employ to steal money from you/lose your money.
Lack of internal controls isn't the reason for why the CEO and owner of FTX is funneling billions of its customer dollars into a company he owns - Alameda.
Loose, or rather non existant, controls also allow you, as senior management to get away with even worse fraud without one of your employees realizing.
He's not senior management. He's the owner. It doesn't matter what your controls are, if he wants you to eat paste and hand him over the keys to the production database so that he could delete it, you can comply, or he can fire you.
You should probably let some other adult, (and the FBI) know if the owner asks you to do that, but you can't physically stop him. It's his company. He has complete power over it. It's not a democracy, there's no checks and balances on the power of an owner-CEO.
That's what internal controls are there for to prevent. Especially for owner-CEOs. FTX set up shop somewhere in the carribean just to avoid that kind of oversight and control. I can hardly imagine a bigger red flag than that.
That people just accept that founder CEOs are allowed to do everything with their companies, and their companies money, is troubling. Because, as soon as said company is a seperate legal entity, it is the companies assets and not the founders anymore.
Maybe even CompSci graduates shoupd get some basics of business, legal and ethics during their studies.
