[HN Gopher] We're discontinuing the Stablegains service. Please ...
___________________________________________________________________
We're discontinuing the Stablegains service. Please withdraw
remaining funds
Author : mkeeter
Score : 179 points
Date : 2022-05-21 20:48 UTC (2 hours ago)
(HTM) web link (blog.stablegains.com)
(TXT) w3m dump (blog.stablegains.com)
| axiosgunnar wrote:
| This is huge news, isnt it? A YC startup going bankrupt because
| of the Terra collapse?
| lupire wrote:
| A fraudulent company going bankrupt because the fraud
| collapsed.
| xvector wrote:
| Source on the company being fraudulent?
|
| Source on Terra being a fraud?
|
| Please provide sources for your ad-hominems.
| JumpCrisscross wrote:
| > _Source on the company being fraudulent?_
|
| See [1]. If you sell a deposit-like product by saying "you
| will not lose your funds," and then lose the funds, you go
| to jail. (First you lose your money.)
|
| [1] https://news.ycombinator.com/item?id=31462617
| npc12345 wrote:
| (I upvoted you btw, I don't like to censor).
|
| I'm a maximalist and even I am not that disingenous.
| braingenious wrote:
| I'd probably assume somebody looked at "15% interest" as a
| sales pitch and "losing all of your money" as the actual
| thing that happened and concluded that it was fraud.
|
| What exactly is fraud by your estimation?
| xvector wrote:
| There is intent behind fraud.
| kadoban wrote:
| So if you intend for the con to survive longer than it
| did you're in the clear? Interesting.
| nrmitchi wrote:
| The "intent" that is necessary is the intent to benefit
| from the known misrepresentation, which in this case
| Stablegains did by obtaining investment from these
| customers.
|
| It would be ludicrous to suggest that Stabelgains needed
| to "intend" the end result (ie, "catastrophically fail
| and lose all of their customers funds") for it to be
| fraud.
| lupire wrote:
| Source: https://en.m.wikipedia.org/wiki/Do_Kwon
| nrmitchi wrote:
| > Inspired by the possibilities across DeFi, our aim was to
| go beyond Anchor and to integrate with multiple protocols
| so that users could have easy access to multiple tools and
| allocate their assets across all of them based on their
| judgment of the benefits, costs, and risks of each option.
| Unfortunately, we didn't get there in time.
|
| Their previous marketting said (or at least implied) that
| they were spread across different defi products to protect
| against this exact risk.
|
| That is not the same thing as "we planned to get there
| eventually, but didn't in time". This is borderling to an
| institution saying "We're FDIC insured!" but actually
| meaning "We hope to be FDIC insured at some point in the
| future".
|
| Lying to customers about what you're doing with their
| investment funds is 100% illegal and literally what Martin
| Shkreli was in prison for (and that case didn't even end
| with him losing all of his investors money)
| xvector wrote:
| Do you have a source for the misleading marketing?
|
| Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using
| Anchor Protocol, a decentralized lending market."
|
| This is in a giant blue block right above a "get started"
| link. There is no mention of anything other than Anchor
| being used to store investor funds.
|
| It seems to me that you are trying to twist the post-
| crash retrospective into a marketing statement that
| didn't simply exist before the crash. Where, exactly, is
| the lie?
|
| [1]: http://web.archive.org/web/20220203225905/https://st
| ablegain...
| Tao332 wrote:
| That's not an ad hominem.
|
| The circular relationship between Terra and Luna is really
| fishy. It's probably not really a scam today, but similarly
| structured schemes should probably be classified as such
| and criminalized in the future.
| somewhereoutth wrote:
| The best explaination Ive seen (from HN I think) was that
| the Terra/Luna thing was an attempt to tranche the
| 'asset'. So Luna (junior tranche) has the risk and
| potential returns, whereas Terra is supposed to be less
| risky, less returns (Senior tranche). See MBS, CDO,
| CDO^2, etc.
| Jasper_ wrote:
| Anybody promising low-risk, high-return investment is a
| fraud. After all, why would they have to convince you to
| invest money if they could just do it themselves?
| xvector wrote:
| > After all, why would they have to convince you to
| invest money if they could just do it themselves?
|
| Capital. Taking a 5% cut of billions of dollars is going
| to be worth a lot more than 20% of whatever tiny amount
| of capital you are able to muster yourself.
| Jasper_ wrote:
| If you're so sure of your low-risk, high-reward strategy,
| get a bank loan. And then once you make more money, get
| an even bigger bank loan.
|
| There are ways of getting capital that don't involve the
| public's money.
| nrmitchi wrote:
| This works _sometimes_ , but banks don't want to be
| overexposed (even if something is very low risk).
|
| There's the old saying "If you own the bank $1m, that's
| your problem, but if you owe the bank $100M, that's the
| bank's problem".
|
| This kind of stuff happens in other industries (like real
| estate) all the time. Even with bank financing, you'll
| need another source of funds (typically LPs) to meet loan
| requirements.
| peter422 wrote:
| Fwiw a lot of YC companies have had large collapses. For
| example Homejoy which is a lot bigger than this company. It
| happens. Startups are risky. Not huge news.
| formerkrogemp wrote:
| Meh YC backs a lot of scams masquerading as businesses. This
| period of easy money and wealth concentration has fostered much
| in the way of misallocation of capital. Y-Combinator exists to
| make its owners money. Their primary concern is bloody
| Benjamins, not morality and the public interest.
| gsibble wrote:
| As I've said elsewhere, having dealt with them and seen who
| they invest in, morality does not seem to be an important
| aspect of YC investments.
| tyrfing wrote:
| Interestingly, they removed their prominent YC branding very
| recently after the collapse. Compare:
|
| https://twitter.com/stablegains/status/1523874916206059525
|
| https://web.archive.org/web/20220510035811/https://twitter.c...
| 1270018080 wrote:
| Least corrupt crypto company.
|
| Return is directly correlated to risk, so when a black box
| corporation is promising 15% returns and marketing itself as a
| "simple and safe" way for its users to benefit from "advances in
| financial technology." It's probably not safe, but it is very
| simple.
| nootropicat wrote:
| >Return is directly correlated to risk
|
| This is at least a weak EMH assumption. It's not a law. In
| crypto sometimes the opposite is true for short to medium
| periods of time because uninformed people are afraid of 'too
| high' returns. Best money is made on market inefficiencies like
| that.
| j-pb wrote:
| Any crypto or web3 startup contains an ad hoc, informally-
| specified, bug-ridden, slow implementation of "receive_funds.sh
| > /dev/null".
| somewhereoutth wrote:
| Thought you were about to say 'a Ponzi scheme'.
| Edmond wrote:
| >Return is directly correlated to risk
|
| This is really what should be required as the boldface
| disclaimer on every investment product.
|
| "10-15 % guaranteed return" has another name...fraud....even in
| the case of old-school imperial plunder, there is always the
| risk your target might fight back.
| Imnimo wrote:
| I guess they didn't get the memo about going default alive.
| unicornmama wrote:
| Hey these days we're going default ponzi :)
| [deleted]
| braingenious wrote:
| Seriously!
|
| I know this may be an unpopular opinion on this site in
| particular, but after seeing this I would never even consider
| raising money from YC. I would not be comfortable having the
| fate of my business in any way tied to a group of people that
| are so fucking dumb that they invested in the money version
| of a perpetual motion machine.
|
| Seriously, this is the fucking stupidest thing I've seen in
| _YEARS_
| Nextgrid wrote:
| On the other hand, this is your opportunity to make your
| own money-version of a perpetual motion machine and get
| lots of _real_ money as investment.
| pid-1 wrote:
| > Seriously, this is the fucking stupidest thing I've seen
| in _YEARS_
|
| C'mon, let's not forget about NFTs.
| braingenious wrote:
| Touche
| docmechanic wrote:
| Quiet! The kool-aid tray is coming round again.
| paulryanrogers wrote:
| Isn't the point that it can only go around once?
| Animats wrote:
| TerraUSD Price (UST) $0.05468
|
| So, 95% of the value is gone.
|
| Can anyone explain how the fork, airdrop, and other gyrations the
| Terra/USD promoter is proposing will work, and where any actual
| money comes from?
| lupire wrote:
| Terraform has $3B (ish, stores as Bitcoin) that they could use
| to try to buy back faith in their coin.
|
| Problem is, best they can do is reboot with a Bitcoin-
| collateralized coin. The whole Terra/Luna/Anchor "algorithmic
| stablecoin" had been exposed as a fraud or a fantasy, so such
| smaller fraction of suckers and scammers will buy in to that
| again, and everyone else _might_ buy in to a Bitcoin backed
| stablecoin, but there 's not much profit in that for Terraform,
| and the users have no reason to choose it over a more reliably
| backed coin like Tether or USDC or DAI.
| josu wrote:
| >Terraform has $3B (ish, stores as Bitcoin) that they could
| use to try to buy back faith in their coin.
|
| This is not correct. They used those bitcoins to try to
| defend the peg. Here you can see the actual treasury: https:/
| /datastudio.google.com/u/0/reporting/b31cc9e5-c54c-44...
| khuey wrote:
| > This is not correct. They used those bitcoins to try to
| defend the peg.
|
| My understanding is that its more likely that they were
| allowing connected insiders to cash out at face value
| rather than "trying to defend the peg" at the prevailing
| market rates.
| josu wrote:
| No public evidence of that as of now, but it could
| definitely be true. The interesting thing is that it
| doesn't really matter, those "insiders" would have dumped
| the coins in the open market breaking the peg even
| further. So yeah, maybe LFG could have sold the bitcoins
| a bit better in the open market, but I don't think that
| it would have made a difference.
| UncleEntity wrote:
| You're actually defending (alleged) collusion, (alleged)
| fraud and (alleged) insider trading on the basis that the
| ship was going to sink anyway?
| josu wrote:
| I'm not defending anything, just pointing out the
| obvious.
|
| But yeah, I'll be surprised if Do Kwon doesn't end up
| sitting in front of a judge
| fxtentacle wrote:
| That seems to be the spirit of most crypto advocates...
| prepend wrote:
| There's no public evidence that they were defending the
| peg. Statements from these charlatans aren't evidence and
| shouldn't be believed without clear evidence of
| transactions. And I don't there is any evidence of the
| transactions using the missing $3B.
| Tao332 wrote:
| > Terraform has $3B (ish, stores as Bitcoin) that they could
| use to try to buy back faith in their coin.
|
| _Had_. It 's gone.
| gruez wrote:
| What happened? Last I heard they transferred it to gemini
| but people weren't sure whether they actually sold it or
| not.
| sbierwagen wrote:
| LFG only said "a counterparty". https://twitter.com/LFG_o
| rg/status/1526126703046582272?ref_s... They transfered
| 52,189 BTC between May 7th and the 10th, and another
| 33,206 when UST hit $0.75. After the insiders were paid
| off, Terra was free to go to zero.
|
| Presumably we'll only find out what actually happened
| when Do Kwon is in jail and people start testifying
| against each other in return for lighter sentences.
| loopdoend wrote:
| What a great system they devised for using these funds in
| an emergency. /s
| ueco-jb wrote:
| It won't work. What they are trying to sell, is - community was
| stronger then only relying on UST. In one in a million chance,
| there could be a inflow of money and while users from snapshot
| wouldn't sell their tokens in an instant. So, basically, an
| utopia.
|
| Hype is lost, wave is over.
| swarnie wrote:
| Much the same way as this scam.
| ryanSrich wrote:
| The money comes from incredibly low IQ and poor people thinking
| they'll win the lottery. It's the same thing over and over.
| Luna2 is just a scam. Do Kwon is a sociopath.
| civilized wrote:
| Why did YC fund this fairly obvious fraud?
| [deleted]
| spyder wrote:
| A great related article from last year about the "Inherent
| fragility of algorithmic stablecoins" it also mentions Terra:
| http://www.wakeforestlawreview.com/2021/10/built-to-fail-the...
| wutangisforever wrote:
| not that stable...
| echlebek wrote:
| lol. Even beanie babies were a longer-term investment vehicle
| than this. I just hope these recent very public and very
| embarrassing failures are enough to discourage the average person
| from wasting their money on these scams. I also hope the people
| behind this get investigated for fraud.
| loopdoend wrote:
| If Ty had come out with a Beanie Baby NFT project this whole
| thing would've come full circle. Do you think they'd have taken
| off or tanked at the height of the NFT Bubble?
| eternalban wrote:
| That was funny!
|
| > the average person
|
| So I'm riding the subway in NYC and there are these adds for
| yet another one of these crypto related "businesses" and copy
| iirc goes something like 'stop boring us at parties trying to
| explain crypto. just invest with us blah blah'. Pretty sure the
| irony is lost on the target demographic.
| cheaprentalyeti wrote:
| I thought there was already a big announcement back towards the
| middle of the week. (Checks mail spool) OK, Thursday.
| josu wrote:
| Previous discussion: YC W22 Stablegains is being sued for losing
| $42m in funds from 4878 customers
| https://news.ycombinator.com/item?id=31431224
| fakename wrote:
| So the options are to withdraw to USD at 5% value, or transfer
| the ust to another wallet to qualify for a "potential airdrop"
| but probably lose the 5% as ust goes to 0?
| Nextgrid wrote:
| True, however at this point it's not really up to StableGains -
| they are doing the right thing here (regardless of their
| initial - potentially false - advertising) of allowing you to
| withdraw your holdings and then be at the mercy of the market
| directly.
| [deleted]
| williamtwild wrote:
| Stablehains sounds like something from a 2am infomercial. I have
| no idea why people would fall for this garbage.
| Justsignedup wrote:
| people who bet early, made big money. people who came in on the
| hype lost everything. the definition of pyramid schemes.
|
| Oh well. We'll see, it might bounce back as these things do.
| capableweb wrote:
| Oh, by that definition, even AAPL is a pyramid schema.
|
| How about we leave the definition for pyramid scheme where it's
| already at?
|
| > Pyramid scheme: making money based on recruiting an ever-
| increasing number of "investors."
|
| > Oh well. We'll see, it might bounce back as these things do.
|
| No, it won't. It won't regain the trust of the community and
| the project is dead in the water now, no way it'll recover from
| this.
| paulryanrogers wrote:
| AAPL has physical and IP assets which could be sold to make
| investors whole. While I have big issues with them, they're
| not in the same ballpark as this 'stable' coin company or
| pyramid schemes.
| gruez wrote:
| >AAPL has physical and IP assets which could be sold to
| make investors whole
|
| While they might have _some_ "physical and IP assets",
| there isn't nearly enough to "make investors whole" (ie.
| pay them back). If you invested $100 in apple earlier this
| year and AAPL somehow needed to be liquidated, you're only
| getting a fraction of $100 back.
| JumpCrisscross wrote:
| > _Pyramid scheme: making money based on recruiting an ever-
| increasing number of "investors."_
|
| This is correct. While looking into this for a friend I came
| across: "for a full year, you'll earn 0.5% APY on what each
| person you refer deposits" [1]. Still not a pyramid scheme,
| since 0.5% is a small fraction of the total yield paid out,
| but pyramidesque.
|
| [1] https://stablegains.zendesk.com/hc/en-
| us/articles/4409440197...
| Liron wrote:
| Written as if no mistakes were made on their end. Paraphrasing:
|
| "We all thought UST and Anchor were a source of stable >10%/yr
| gains that you could trust for your corporate treasury. That the
| yield instead turned out to be -99% is quite disappointing, and
| makes this a natural time for us to bring our service to an end.
| It's been a pleasure to serve you."
| hinkley wrote:
| >-99%
|
| You know the scene in Office Space when Peter says, "I have
| eight bosses, Bob." And then Tall Bob (Dr Cox) leans forward
| with a surprised look on his face?
|
| I don't think I've ever empathized with Bob in that scene.
| Until just now.
| Liron wrote:
| May I suggest another Office Space clip for this situation:
| https://twitter.com/liron/status/1527376821045473304
| puranjay wrote:
| Even serious crypto people knew that UST was highly unstable
| lol
|
| How did these guys raise funding? They literally just built a
| fiat onramp
| ushakov wrote:
| > How did these guys raise funding?
|
| either the investors didn't do enough research or they were
| on it
|
| https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc-
| fu...
| gabereiser wrote:
| This article is spot on to what I saw in the VC space (I
| won't name where). Tons of little copycat crypto
| "companies" taking VC money for tokens which were
| collateralized with BTC. I know this article is going after
| a16z but it's not just them, it was pretty much everyone.
| TS, YC, a16z, and more.
| tootie wrote:
| Anybody who believes that kind of logic deserves to lose their
| stake. Crypto has spent most of it's formative years riding an
| historic bull market and claiming it's immune to market forces.
| Now we have pretty clear evidence that crypto is just a
| multiple of the Nasdaq.
| trixie_ wrote:
| UST, a stable coin not even pretending to be backed by the very
| thing it was pegged to fails. Unlike USDT, USDC or GUSD, there
| was a documented plan of attack to take UST down 6 months ago,
| someone just raised enough capitol to execute it.
| phire wrote:
| While there was a proposed attack, there is no evidence it (or
| any other attack) was executed.
|
| Which would be weird. Attacks on blockchains usually have
| detailed analysis within days, the blockchains are public and
| any evidence would be right there for people to examine.
|
| All evidence is that UST simply collapsed on under it's own
| weight because it's algorithmic nature was never stable. As
| soon as the price of LUNA started falling, it created a
| feedback loop which drove the price of LUNA to zero, destroying
| the very thing backing UST.
| djbusby wrote:
| Can you point to the docs? That seems an interesting read.
| syncsynchalt wrote:
| Might be referring to https://twitter.com/freddieraynolds/sta
| tus/14639606234029137...
| SemanticStrengh wrote:
| What's interesting is that Do Kwon(the founder) blatantly
| insulted the researcher at the time.. don't have the link but
| google it, it's on twitter
| [deleted]
| gloryless wrote:
| It's pathetic that regulators haven't stopped this nonsense.
| These scams don't even last 6 months anymore, it's a joke
| unyttigfjelltol wrote:
| It's pathetic that the U.S. Federal Reserve and Treasury
| allowed _anyone but the U.S. Government_ to _mint_ a _coin_
| 'tethered' to USD, and named anything remotely similar. It's
| bizarre and a complete reversal from prior practice.
| DelaneyM wrote:
| Plenty of countries have currencies which have a fixed
| exchange with USD, including my own (1 KYD = 1.2 USD).
|
| It just takes a shit-tonne of capital, and it helps to have a
| functioning internal economy and flexibility to be able to
| defend against malicious agents.
|
| I suspect there are other legal issues with creating an
| alternative currency in the us though, which is why these
| aren't currencies but securities. Which is still fine! A
| tethered coin is conceptually _similar_ to a 0-yield bond.
|
| Presenting it as being "safe" without it actually being so is
| the problem here.
| pid-1 wrote:
| IMO letting crypto die by itself is the best way to prove it
| sucks.
|
| If any blockchain was forbidden, there would be a huge PR
| stress and infinite arguments about their viabilities.
|
| Just let morons fail.
| IdEntities wrote:
| Yep. Too many regulators have been on the trail of Tether
| and its ilk for too long for any of what's about to come to
| take them by surprise. Crypto being strangled in the crib
| by regulators makes them look like exactly the villains all
| the crypto advocates portray them as. Crypto being
| detonated by a huge number of blatant Ponzi schemes, on the
| other hand, is nothing but upside for the regulators.
|
| Tether may also have been allowed to proceed as a sort of
| test bed for the CBDCs which seem to be on the agenda. Now
| the narrative can be "the public has already demonstrated
| strong demand for USD-type cryptocurrencies, we just need
| to supply an official version."
| xvector wrote:
| As long as someone pays for cryptocurrency somewhere in the
| world, you will be able to algorithmically mint a coin
| tethered to USD or any other asset, and there is absolutely
| nothing the US Government or anyone else can do to stop it.
| The Pandora's Box is open.
| [deleted]
| chx wrote:
| _All_ crypto is a scam and it 's _so_ simple to see, it 's
| astonishing anyone fell for this.
|
| Look.
|
| Imagine an otherwise empty room with a table and a few chairs.
| A couple people come in with some money in their pockets and
| cards. They play a few round of a card game, some lose, some
| win. When they leave, the room as it was before so it is
| crystal clear the _sum_ of their money couldn 't change. Some
| won, some lost but overall the change is zero. This still
| doesn't change if, for convenience, during the game, they use
| plastic chips to count wins and losses and at the end they
| exchange it for money.
|
| But if someone takes a small cut every time the plastic chips
| move then that person is _guaranteed_ to win and everyone else
| _together_ is guaranteed to lose. Now, a game where, without
| knowing anything about the game you can tell ahead of the time
| which group wins and which one loses is not a game, it 's a
| scam.
|
| Indeed, one of the best moves for players is not to play the
| game but to sell their chips -- and praise the game to increase
| the chance of a greater fool buying in. Those will sit on a
| greater loss than you did which might not materialize yet but
| it's certainly in the system.
|
| So, any crypto"currency" with transaction fees is a scam. Those
| who collect transaction fees are guaranteed to win and the rest
| are guaranteed to lose.
|
| And no, stocks aren't like this because they produce dividend.
| And no, gold is not like this either because there are uses of
| gold which transform your gold into higher value products than
| raw gold (integrated circuits, jewelry) which sell for real
| money. Neither _can_ happen with crypto "currencies", there the
| only interfacing with real money is exchange.
| risyachka wrote:
| Crypto is a tool.
|
| Is it often used for scam? Yes. But so is email.
|
| Just like stocks can fall 99% in a day. It stock s cam? No.
|
| The problem is that users dive into it without understanding
| the risks. Also, there should be (and will be) more
| regulations around it.
|
| But it is as far from the scam as it gets.
| gabereiser wrote:
| If I buy a share of a company, I own it. Buy enough of it,
| I can control it. Same can not be said for crypto. If I buy
| a token of BTC it guarantees me no voting rights, no
| shareholder rights, no FDIC insurance, no insurance
| whatsoever. When comparing investment instruments, crypto
| is the worst of all of them, including timeshares.
| toqy wrote:
| You're right, it's not always a scam. Sometimes it's just
| useless.
| planetsprite wrote:
| But what about crypto completely revolutionizing
| transactions, decentralizing the economy and providing a
| stable universally accessible data exchange medium? What
| about tracking the food you buy on the blockchain? What about
| web3? What about muh NFT monkeys?
| jdasdf wrote:
| > All crypto is a scam and it's so simple to see, it's
| astonishing anyone fell for this.
|
| No, it is not.
|
| Please try to set aside your hatred for all things crypto and
| understand that there is actual legitimate value in many of
| the crypto projects, and that the core proposition, that of
| decentralized peer to peer value transfer, is a legitimate
| and useful use case.
| chx wrote:
| > decentralized peer to peer value transfer, is a
| legitimate and useful use case.
|
| I would contest even this. People don't want to transfer
| "value" they want to transfer _money_ , now to use, say,
| Bitcoin to transfer money you need to do the following
| steps:
|
| 1. Buy Bitcoin. Let's presume you are already set up with
| an exchange for this so all you need to do is transfer your
| money some way to the exchange.
|
| 2. Transfer Bitcoin and pay the transaction fee (note this
| an unknowable amount).
|
| 3. The receiver wants money. So let's again presume --
| despite this is a much shakier presumption -- they are
| already set up with an exchange then they need to exchange
| Bitcoin to real money and transfer their money from the
| exchange to their bank account. I am not mentioning here if
| they tarry then the exchange rate in #1 and #3 differs --
| that could be automated although as far as I am aware
| there's no service which currently does it.
|
| Turns out the challenge is not #2 but #1 and #3:
| integrating with every national banking system in the
| world. Wise (nee Transferwise) shows this can be done and
| #2 completely cut from the process, creating transparency
| and predictable fees.
| andreilys wrote:
| Sounds like you're describing the Visa/Mastercard duopoly
| that charges high interchange fees to merchants so they can
| bankroll their own rewards programs.
| cmeacham98 wrote:
| > Imagine an otherwise empty room with a table and a few
| chairs. A couple people come in with some money in their
| pockets and cards. They play a few round of a card game, some
| lose, some win. When they leave, the room as it was before so
| it is crystal clear the sum of their money couldn't change.
| Some won, some lost but overall the change is zero. This
| still doesn't change if, for convenience, during the game,
| they use plastic chips to count wins and losses and at the
| end they exchange it for money.
|
| Does this not describe CC fees/taxes/online marketplaces/etc?
| Or is your argument all those are scams as well?
|
| I agree crypto projects are generally a scam but I fully
| disagree the reason for that is transaction fees (which I
| assume is what you're alluding to here as the "small cut").
| nemothekid wrote:
| > _Does this not describe CC fees /taxes/online
| marketplaces/etc? _
|
| No, because CCs exchange dollars and the dollars themselves
| are not worthless (or, rather are given worth via a nuclear
| arsenal).
|
| The coins themselves are worthless, but accrue "fees" in
| fiat (ex. when you exchange USD for UST).
| rvz wrote:
| > It's pathetic that regulators haven't stopped this nonsense.
|
| As a result of the ICO scams in 2017 for example the infamous
| Ethereum DAO hack, perhaps that is why at least in the US, the
| SEC banned unregistered ICOs [0]; more countries to follow.
|
| They have done 'something' about it, but it is not going to _'
| completely'_ stop otherwise they would have 'totally' banned
| all of them, including even registering an ICO with the SEC.
|
| I won't be surprised to see stable-coin regulations this year
| with only a few of them still surviving.
|
| [0] https://www.whitecase.com/publications/alert/regulation-
| init...
| ushakov wrote:
| nowadays they don't even do ICOs
|
| find a VC who'd buy coins at low prices and then dump into
| public by placing on Coinbase/Binance
|
| spend that VC cash on marketing
| badkitty wrote:
| Let's be clear: YC needs to quit financing ponzi scams. Or
| better yet, be punished for it.
| dvt wrote:
| Yawn, brand new account, take this virtue signaling back to
| reddit and give me a break: YC can invest in whatever they
| want to, it's their money. Stablecoin farming may not be
| sustainable, but it's not a Ponzi scheme, unless you have no
| idea how a Ponzi actually works.
| ushakov wrote:
| farming is literally a ponzi
|
| https://m.youtube.com/watch?v=C6nAxiym9oc
| Jasper_ wrote:
| The thing is that a Stablecoin is either stable, and
| provides no returns, or it's volatile, and provides 15%
| returns. You can't have a stablegain that continually goes
| up in price, that's not stable then!
|
| Stablegains, by their own admission, _only invested in
| stablecoins_ : https://stablegains.zendesk.com/hc/en-
| us/articles/4402687671...
|
| > We do not engage in speculation on the prices of volatile
| cryptocurrencies like Bitcoin or Ether. We only offer
| deposits in stablecoins whose value is pegged to one
| dollar.
|
| > Regardless if crypto markets are soaring or crashing, the
| value of assets under our management remains stable.
|
| This is hypocritical _on its face_. You can 't have any
| returns if the assets are stable!
|
| Sure, YC can do whatever they want with its money, but we
| can all be very disappointed and sad that VC funds are
| engaging with any of this. YC has been slowly been losing
| their image for years now, along with the other VC firms,
| and this just cements it for me.
| dvt wrote:
| I completely agree with all of this. Stablecoin farming
| often uses a "secondary" coin which happens to be
| volatile (or some form of lending/leverage). The risk is
| obfuscated, but it's still there. My point was only that
| calling it a Ponzi is just lazy and wrong.
| eatonphil wrote:
| The shorter the term the harder I would imagine it to be for
| regulators to act.
|
| Governments tend to do things at their own pace.
| ryanSrich wrote:
| IMO, every single exchange is at least partially responsible for
| misleading users. Binance.US and OKCoin specifically marketed UST
| as a stablecoin that you could earn 20%. Marketing it as a
| stablecoin is a very clear signal that it has less risk.
|
| Yes, users should inform themselves, but exchanges (as well as
| companies like Stablegains) need to be held accountable.
| bmm6o wrote:
| Obviously I'm a little out of the loop, but what is the "attack"
| they talk about in the new plan? I thought the coin just death
| spiraled.
| deutz_allis wrote:
| http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-...
|
| These guys discuss some details (that were known as of this
| publish date). It closely resembles the 'attack' on GBP in the
| 90's by a billionaire.
| celticninja wrote:
| The thoughts are that someone borrowed lots of BTC and UST,
| started selling UST to depeg, then started selling BTC as they
| tried to regain the peg, the joint selling of BTC lowered the
| price making it harder, actually impossible,to regain the peg.
| dwighttk wrote:
| But wouldn't that just be mr market, not a particular
| someone?
| rspeele wrote:
| Terra: you can always exchange 1 UST for $1 worth of Luna via
| this smart contract if you'd like to cash out.
|
| Users: OK, don't mind if I do.
|
| Terra: help we're under attack.
| dataflow wrote:
| > Stablegains is not accepting any new users or any new deposits
| on our platform. At this time, please DO NOT use your deposit
| addresses as any funds sent might not be recoverable.
|
| It boggles my mind that people don't see that the inability to
| block/reject payments is a fundamental flaw of cryptocurrency.
| devit wrote:
| You can do that with a smart contract if you plan ahead for the
| possibility that you want to do so.
| codehalo wrote:
| Are you saying that someone can't deposit money into random
| bank account?
| dataflow wrote:
| I'm saying people can close their bank accounts.
| dwighttk wrote:
| Unless Wells Fargo opens them back up
| wcoenen wrote:
| Why would there be a "fundamental" reason for an inability to
| block/reject payments in cryptocurrencies? Ethereum smart
| contract can already do that. Just exit with an error while
| processing an incoming payment.
| nrmitchi wrote:
| > While we have informed users that there are no absolute
| guarantees against risks
|
| I'm... uh.... fairly certain this was not the crux of their
| marketing which severly downplayed the underlying risk. There is
| also a huge spectrum between "we cannot guarantee that there is 0
| risk" (which seems to be what the above sentence is saying), and
| "there exists a risk that all of your funds disappears in 24
| hours".
|
| It seems like there is some _serious_ rewriting of history going
| on here.
|
| Question though, do the founders here have any potential criminal
| liability from this whole situation (including _apparently_ lying
| about what they were doing with their customers funds)?
| gruez wrote:
| >Question though, do the founders here have any potential
| criminal liability from this whole situation (including
| apparently lying about what they were doing with their
| customers funds)?
|
| While they're not exactly forthcoming with the risks, their
| marketing pages[1] were also careful to not make any explicit
| claims of safety (eg. "your principal is protected", or "you
| won't lose money"). The most that they claimed were "stable"
| returns. For good measure there's also a disclaimer mentioning
| the risks.
|
| >There is a range of safeguards in place to help secure your
| deposits, however holding and depositing stablecoins with
| Stablegains and third party lending platforms still carries
| significant risk. Please carefully read our Terms of Use and
| Risk disclosures in our Learning Center before making a
| deposit. Any deposit with Stablegains and third party lending
| platforms is entirely your responsibility. You understand that
| your principal is at risk.
|
| [1]
| https://web.archive.org/web/20220108232821/https://www.stabl...
| nrmitchi wrote:
| > careful to not make any explicit claims of safety (eg.
| "your principal is protected", or "you won't lose money").
|
| These are both explicit examples of explicit claims of safety
| that are still up on their documentation (at least as of 5
| minutes ago)
|
| - "You will not lose your funds because all loans are 100%
| asset-backed." (https://stablegains.zendesk.com/hc/en-
| us/articles/4402680425...)
|
| - "Regardless if crypto markets are soaring or crashing, the
| value of assets under our management remains stable."
| (https://stablegains.zendesk.com/hc/en-
| us/articles/4402687671...)
|
| Edit: Updating link to fix truncated urls
| gruez wrote:
| Thanks for unearthing this. In light of this, I'll admit it
| looks pretty bad for them.
| jdasdf wrote:
| And now those are gone.
|
| These people need to be in jail. Deleting evidence isn't
| going to look good in front of the judge.
| nrmitchi wrote:
| oh. my. god.
|
| Everyone pour one out for u/ushakov, hero of the hour:
| https://news.ycombinator.com/item?id=31462674
| gruez wrote:
| In this case it's just sloppy copy pasting (copying the
| truncated link?) breaking the link. The original links
| from his other comment still works:
|
| https://stablegains.zendesk.com/hc/en-
| us/articles/4402680425...
|
| https://stablegains.zendesk.com/hc/en-
| us/articles/4402687671...
| nrmitchi wrote:
| Yupp that was it. I guess that's the better result here.
|
| I updated the the parent comment with the correct urls
| menzoic wrote:
| The pages are gone... That was too fast.
| gruez wrote:
| See my other comment, the links were just improperly
| pasted, not taken down.
|
| https://news.ycombinator.com/item?id=31462851
| nrmitchi wrote:
| Further little notes from their documentation that, lets just
| say, "downplay the risk":
|
| - "You will not lose your funds because all loans are 100%
| asset-backed." (https://stablegains.zendesk.com/hc/en-
| us/articles/4402680425...)
|
| - "Regardless if crypto markets are soaring or crashing, the
| value of assets under our management remains stable."
| (https://stablegains.zendesk.com/hc/en-
| us/articles/4402687671...)
|
| It's kind of shocking really that these statements are still up
| give how many of their other docs have been editted in the last
| 10 days.
|
| ---
|
| Edit: u/ushakov is the hero of the hour for archiving those
| pages (https://archive.ph/O2lZV, https://archive.ph/ItERp)
| ushakov wrote:
| archived for future reference
|
| https://archive.ph/O2lZV
|
| https://archive.ph/ItERp
| Hamuko wrote:
| > _How long do you expect users can earn such high yields?_
|
| > _The basis for Stablegains ' rate is Anchor Protocol's
| yield. At the time of writing, Anchor yield is set at 18% -
| 20% APY and expected to remain so for a long time._
|
| > _We expect the rates of open finance protocols to beat
| those of traditional finance for a very long time._
|
| https://stablegains.zendesk.com/hc/en-
| us/articles/4402680471...
| nrmitchi wrote:
| Both of those were good to, but I didn't include them
| because both are either "expectations", or a reference to
| someone else's expectation/statement, and are not
| definitive statements.
| perihelions wrote:
| Their more recent marketing ups the minimum collateral to
| 125%. (Your link is dated July 2021; this one is March 2022).
|
| - _" The key to all the DeFi lending enabled via Stablegains
| is that all loans are over-collateralized. In fact, all loans
| are collateralised by a minimum of 125%."_
|
| https://blog.stablegains.com/stablegains-for-business-
| earn-1...
| perihelions wrote:
| This was their old marketing:
|
| https://news.ycombinator.com/item?id=31431915
|
| - _" 15% interest. No surprises."_
| TheDudeMan wrote:
| To be fair, the collapse of an algorithmic stablecoin is no
| surprise ;)
| lmohseni wrote:
| 15% interest? No, surprises!
| puranjay wrote:
| I can tell you right now that there is absolutely no safe
| yield in crypto currently that goes beyond 4% on a "safe"
| stablecoin like USDC. For truly safe (as in, huge value
| locked, never been hacked), the yield is more like 1.5-2%
|
| All the high yield is in algoponzis or new protocols that
| carry massive protocol risk
| elliekelly wrote:
| There is absolutely no safe crypto. Full stop.
| UncleEntity wrote:
| > "15% interest. No surprises."
|
| I'm honestly not surprised about how things turned out.
| gus_massa wrote:
| Was it 15% monthly or 15% annual?
| nrmitchi wrote:
| Well 15% monthly woud be ~535% annual and at that point
| you're well past "highly unlikely" and into "I'm printing
| money in my 20k sqft basement" territory.
| perihelions wrote:
| Annual.
|
| - _" Earn 15% APY. Interest paid daily."_
|
| https://blog.stablegains.com/stablegains-for-business-
| earn-1...
|
| That link also has some very topical marketing claims:
|
| - _" The main risk when lending out money for a yield is
| the risk of default. The risk that the borrower does not
| repay. The key to all the DeFi lending enabled via
| Stablegains is that all loans are over-collateralized. In
| fact, all loans are collateralised by a minimum of 125%. If
| the borrower does not repay, the protocol sells the
| collateral and repays the loan in full. This makes the
| default risk extremely low. We describe related risks and
| what we do to mitigate them here."_
| Terry_Roll wrote:
| Dont rely on any websites & webpages existing like this link.
|
| I can show you links where even the Wayback machine has
| removed content, most people will know how Google Cache has
| removed content, so print all copies and have hard copies
| safely stored away where they cant be destroyed. Houses will
| be broken into in order to destroy evidence, I know I've had
| it done to me!
|
| This may be your only chance to out the criminals that run
| the world!
| gruez wrote:
| >Houses will be broken into in order to destroy evidence, I
| know I've had it done to me!
|
| >This may be your only chance to out the criminals that run
| the world!
|
| Given that the screenshot is an (instagram?) ad, there's
| probably such a huge papertrail that can be subpoenaed that
| you don't have to worry about the founder breaking into
| your house to destroy the only copy of the marketing
| materials.
| Terry_Roll wrote:
| midasuni wrote:
| Maybe you could store it on the blcokchain...
| fartcannon wrote:
| That would quite legitimately work.
| Terry_Roll wrote:
| I love the hubris people have in technology.
| [deleted]
| nrmitchi wrote:
| Thank you! I was looking for that image (which I'd seen
| before) but couldn't find it.
|
| Will be interesting to hear the argument "Well technically
| there were no surprises here, because customers should not be
| surprised when they lose all their money investing in risky
| assets. Therefore, technically, we did not lie."
| sedatk wrote:
| I recommend skimming over the list of blog posts shared over the
| course of a year about the rise and decline of a crypto startup.
| It's a great post-mortem: https://medium.com/@kamil.ryszkowski
| jmyeet wrote:
| What's funny about this is that I can recall discussions here and
| elsewhere from only a few months ago questioning the "guaranteed"
| super-high returns. I forget who said this but someone awhile ago
| said in finance said that if someone is promising you consistent
| above-market returns it's either a scam or there is unknown or
| undisclosed risk.
|
| And the Crypto Andys were all like "you just don't understand
| DeFi!" to which the retort is "No, _you_ just don 't understand
| finance".
|
| Finance is the way it is for many reasons. There are thousands of
| years of lessons that have made the system the way it is. I get
| the innovator mentality of sweeping away the old but there seems
| to be a fine line between innovation and ignorance.
|
| I'm just sitting on the sidelines watching people relearn all the
| lessons of finance the hard way, some because they think they
| understand finance because because they understand merkle trees
| and consensus protocols but really most just want to get rich
| quick.
| vmception wrote:
| Usually there is an answer, I'm not familiar with the
| stablegains service but usually there is enough information for
| you to tell objectively why to use or avoid a service according
| to your risk profile.
|
| There was enough in the terra ecosystem to come to a conclusion
| of avoiding completely
| samhw wrote:
| Consider what we see if there _isn 't_ enough information:
| https://en.wikipedia.org/wiki/The_Market_for_Lemons And on a
| totally separate note, consider what we see in DeFi.
| JumpCrisscross wrote:
| > _There was enough in the terra ecosystem to come to a
| conclusion of avoiding completely_
|
| There is enough information in a ten or 20% yield to come to
| a conclusion. That doesn't stop unsophisticated investors
| from getting screwed. When they do so because they bought
| magic beans, I have no sympathy. When are lied to and sold
| deposit-like products, it's infuriating.
| koheripbal wrote:
| What most people don't understand about finance is that there
| are fundamental rules that you really cannot break without
| consequences.
|
| Anyone who has studied quantitative finance knows that it is a
| HARD science. I worked with a Nobel prize winner in economics,
| and the math dominated. There was no politics, no opinions, no
| ethics involved. It really is a science.
|
| Most social media characterize finance as some ethical vice or
| organized political power structure - and those people simply
| don't understand finance.
|
| Talking to people who are looking to just tear down modern
| finance are no different than climate change deniers, antivax,
| or flat earthers... and yes, they even exist in crypto (and on
| HN).
| throwk8s wrote:
| Is the math meaningful though?
| JumpCrisscross wrote:
| > _Is the math meaningful though?_
|
| "Meaningful" is squishy. Is it strongly predictive, and in
| some cases, definitive? Yes.
| reflexco wrote:
| The 20% APY provided by Anchor was way above the average yields
| for safe DeFi lending. Which indicated that even among crypto
| users, this was considered a _degen_ play!
|
| The whole Terra saga was a typical example of speculative
| bubble. Everyone knew it was risky, but its sheer size and the
| caliber of people endorsing it
| (https://twitter.com/novogratz/status/1478535972560195585) was
| providing an aura of safety. Too big to fail.
|
| It's also similar to the stock market as a whole before it
| started correcting. Everyone knew valuations were detached from
| every fundamental except liquidity, yet everyone went along
| thinking the music just had to keep going.
| JumpCrisscross wrote:
| If you are in the U.S. and lost money, please write to your
| state's Attorney General [1].
|
| The company is Stablegains, Inc. and the people to name are Kamil
| Ryszkowski and Emil Rasmessen, co-founders and, I think, Board
| members. Copy Ken Paxton, Office of the Attorney General, P. O.
| Box 12548, Austin, Texas as well as his challenger George P. Bush
| at P. O. Box 26677, also in Austin. (Stablegains and its founders
| are in Texas. They are spearheading the criminal complaint.)
|
| [1] https://www.usa.gov/state-attorney-general
| truthwhisperer wrote:
| SnowHill9902 wrote:
| What should you write exactly?
| perihelions wrote:
| Hopefully the A.G. will recuse himself. He's under indictment
| for the same crime.
|
| https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fr...
| hprotagonist wrote:
| yeah, Ken Paxton is ... let's go with "not clear and free of
| scandal".
| chmod775 wrote:
| Creating a public permanent record of having fallen for the
| latest crypto shitcoin will likely be too embarrassing for
| some. But then again I'm having trouble relating.
|
| Successful "crypto startups" hardly exist, and most of those
| are selling shovels to suckers. What was the expectation here?
| gruez wrote:
| Isn't it already "a public permanent record" because it's
| already in the news?
| nvr219 wrote:
| It's in the news about this company, but it's not in the
| news that I fell for the scam for example.
| t-3 wrote:
| A blockchain is already a public permanent record in the
| first place.
| lumost wrote:
| It won't be once it shuts down. Blockchains are as
| permanent as the miners that power them.
| adventured wrote:
| There's no such thing as a blockchain permanent public
| record. Some entity has to keep that up forever,
| maintained, public & accessible, for it to be such -
| that's not going to happen. Nearly all of them will fail
| and be wiped by time.
|
| And certainly all of them can go away, they're mere
| digital storage systems. There's nothing permanent about
| any of it, not by any stretch of the imagination.
|
| They're particularly, almost pathetically, temporary
| records. Most of these garbage coins will have no
| comprehensive financial records remaining several decades
| from now. By contrast, I know a lot of small businesses
| that have elaborate financial records going back 30-40
| years, and the country is surely filled with similar (and
| most large corporations will have such).
| giantg2 wrote:
| For what it's worth, they are also a YC backed company.
| JumpCrisscross wrote:
| > _For what it 's worth, they are also a YC backed company_
|
| Severely disappointing. I respect PG too much to believe he
| would knowingly condone this. The partner who did this didn't
| understand what they were investing in or should be decoupled
| with haste.
|
| At the very least, the Alaska RMB, U of M Endowment,
| Bloomberg's family office and SMC should be asking why their
| capital is backing what should have been clear as day _ex
| ante_ a fraud. Anyone living in Alaska, going to or an alumni
| of U of M or Stanford, or working for Bloomberg should be
| asking the same question.
| sergiomattei wrote:
| Let's not even get started with Sama pushing Worldcoin, a
| pretty exploitative attempt at getting everyone's irises
| with a pre-mined currency supposed to revolutionize world
| finance.
| majormajor wrote:
| The VC drive to jump into the crypto world was startling
| to me. People hold varying opinions on various crypto
| products, but so many of the ones getting investment are
| making claims that should gather _extreme_ scrutiny from
| a crowd that should be familiar with finance and returns.
| "We expect 10%+ returns for a long time"? Folks investing
| in companies instead of banks should know firsthand that
| guaranteed market-beating returns are almost
| definitionally suspect!
|
| Even if you think it's not fraudulent on the part of the
| founders, the industry is frothy and unproven and fraud-
| adjacent enough that investing in many companies in the
| space should appear to be a huge potential reputational
| risk beyond just losing some invested money. The people
| putting up the cash should be looking long and hard at
| this whole story.
|
| And then once you get into the details, the moment you
| hear about one of the main use cases for defi lending
| leading to these high interest rates being "put up crypto
| collateral to borrow to buy even more crypto since it's
| appreciating rapidly"... run!
| davidgerard wrote:
| VCs promoting this sort of blatant and obvious Ponzi - and
| there are _many_ VCs getting into ponzinomic crypto
| enterprises - is a good reason to start making some of the
| investors more liable.
| sillysaurusx wrote:
| Take it from someone who lost his father's money (all $11,000
| of it) in 2014: it's easier to just get over it as quickly as
| possible.
|
| None of this will amount to anything, and you'll feel awful
| until you give up. Then the healing can begin.
|
| On the other hand, I'm not sure if I was mentally capable of
| hearing this advice back then, so...
|
| But it's true. It's 2022 now. That's almost a decade ago. In
| fact I forget when exactly Gox collapsed, which is how little
| it matters to me now. But back then, it felt like the end of
| the world.
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