[HN Gopher] Three Arrows Capital has defaulted on a loan worth m...
___________________________________________________________________
Three Arrows Capital has defaulted on a loan worth more than $670M
Author : misiti3780
Score : 310 points
Date : 2022-06-27 15:21 UTC (7 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| [deleted]
| 55555 wrote:
| I really don't understand the business model of making massive
| fiat loans to "firms" to buy bitcoin. If crypto goes up, you get
| a small amount of interest. If crypto goes down, you lose
| everything. What? Lol. Just spend a fraction of the sum on
| bitcoin and do something safe with the rest. What was the plan?
|
| Edit: I guess when someone has "20 billion dollars" a 700mm loan
| doesn't seem like a big risk.
| nikanj wrote:
| If it goes up, I gain money. If it goes down, you lose money.
| They're gambling with someone else's cash and keeping the
| winnings
| andruby wrote:
| Perhaps they also own a lot of bitcoin/crypto and the goal of
| this investment is to prevent the price from dropping (due to
| firms going down).
| HWR_14 wrote:
| > Just spend a fraction of the sum on bitcoin and do something
| safe with the rest. What was the plan?
|
| On the other hand, I can see _investing_ in firms that then
| take out huge loans to buy crypto. The math reverses itself.
| Crypto goes up, and you make far more than buying BTC without
| leverage. Crypto goes down and you lose your entire investment,
| but are limited to that (as opposed to taking out the loans
| yourself).
|
| I suppose if they felt the loans were collateralized by
| something that was more solid than crypto, that makes sense.
| Like, yes I'll loan you money backed your MSFT shares or
| whatever, and you can spend it on crypto or whatever.
| jsemrau wrote:
| Similar to CDOs in 2008 the risk of staked Eth was not well
| understood.
| spamizbad wrote:
| I think a lot of these projects are less rational and more
| ideological. People are desperate for applications of crypto,
| because the survival of the ecosystem depends on it, so they're
| willing to chase down high risk / low reward ventures to keep
| the music going.
| doopy1 wrote:
| Firms like 3AC exist only to funnel as much money as possible
| into the crypto economy, most of it raised from ultra-high
| net worth individuals that won't miss this money at all. They
| place huge bets, because it's a land grab and the folks that
| work there got paid already.
| atwood22 wrote:
| It's called picking up pennies in front of a steam roller.
| a4isms wrote:
| Also "picking up nickels off of railroad tracks."
|
| It's very seductive. I like the railroad tracks analogy
| because in my real-world experience, railroad tracks can be
| seldom-used, and look like they've been abandoned. But every
| once in a while, something does come driving down it, be it a
| full train or maybe a pickup truck outfitted with bogeys,
| belonging to the company.
|
| But only once in a while. If you don't see one for months,
| you convince yourself you'll never see one.
| wollsmoth wrote:
| There's probably enough collateral involved that they come out
| ok either way. In other words you'd secure the loan against
| some bitcoin you already have that's maybe worth 2x what you're
| borrowing. So now you're holding 3x that amount. Ideally
| bitcoin goes up, you sell, then repay the loan and take
| profits.
|
| If btc drops too much, you need to dump your coins and repay
| the loan.
|
| My guess anyway.
| gowld wrote:
| The people making the loans are also speculating on crypto with
| other funds. The loans exist to pump the price up by fooling
| "technical" traders. It's market manipulation.
| frankharv wrote:
| I think using the word 'traders' for these scammers is
| generous.
|
| Should reddit be allowed to present financial advice via
| their forum.
|
| That to me is a problem. Free Speech or financial system
| rules.
|
| People can say things on a forum with no repercussions. True
| or not.
|
| AMC is a shit stock now and it was 5 years ago. Gamestock
| too.
|
| Elon Musk says one thing wrong and is attacked by SEC. Not
| fair at all.
|
| Crypto should have been snuffed out by regulation many years
| ago.
| celticninja wrote:
| So anti regulation for Elon, pro regulation for crypto and
| Reddit. That's definitely a weird take.
| Seattle3503 wrote:
| A better firm would have performed better, regardless of what
| happens to crypto. Short selling should be a part of any
| sophisticated strategy. But this firm bet the farm on the price
| going up. I thought hedge funds were smarter than that, bit
| apparently not this one.
| CoastalCoder wrote:
| I always have mixed feelings when someone is warned about the
| riskiness / foolishness / stupidity of a course of action, and
| then suffers for it.
|
| On the one hand, there's a certain satisfaction or Schadenfreude
| in the sense of vindication. And it's pleasant to feel like my
| own wisdom or self-control has been validated.
|
| OTOH, I know that _everyone_ has limited wisdom / self-control /
| intelligence, including me. So it seems hypocritical to mock
| someone who trips, knowing that I'm just lucky to sometimes avoid
| the hazards that would trip _me_ up.
|
| In the end, about the only conclusions I'm really confident in is
| that trouble besets us all, and usually it's good to default to
| kindness and sympathy.
|
| EDIT FOR CLARIFICATION: I'm not saying that I want swindlers to
| succeed. I want such predation crushed into dust. My comment is
| about the people who don't intend harm to others.
| [deleted]
| BenoitEssiambre wrote:
| Note that the longer this lasts, the more people are going to
| get hurt in scams, the earlier it all collapses the more will
| be saved. It does make sense to be pleased when a societal
| danger is reduced, not to mention the environmental impact,
| money laundering etc.
| blackoil wrote:
| It is in line of 'a death is tragedy, a million statistics.'
| when thousands of people are losing it in a ponzi scheme, it
| becomes a matter of memes and I told you so.
| Tao3300 wrote:
| Something Stalin may have said regarding the Soviet war dead
| is irrelevant here.
|
| Hypothetically speaking, if I really did warn someone, and
| they told me to "have fun staying poor!" or I pointed out the
| potential for a catastrophic collapse and the founder
| dismissed it as "r_tarded" and comparable events came to
| pass...
|
| I say bring on the memes for those people.
| cosmodisk wrote:
| That's exactly what I got told. Then there was something
| about yachts and champagne. Yeah, right
| arcticbull wrote:
| All that 'ngmi' culture is coming home to roost.
|
| This isn't a bunch of kind old grandmothers getting suckered in
| by Madoff.
| datavirtue wrote:
| I'm seriously waiting for my grandmother to tell me about how
| her broker just got her into crypto.
| toomuchtodo wrote:
| Hot take: It's fine when it happens to extreme hubris with
| paper wealth. It is not fine when it was someone
| unsophisticated chasing the herd who lost a meager sum that was
| meaningful to them. Comedy vs tragedy.
|
| Same thing with Archegos (Bill Hwang) and their rapid failure.
| It's the hubris that makes it fun to poke fun, the sun blastin'
| Icarus' wings clean off.
|
| (no crypto exposure)
| Tao3300 wrote:
| One of the things I noticed in the whole Terra/Luna drama is
| that there were _lots_ of people on Twitter who seemed
| downright confused. People who didn 't know where their money
| went or why. People who had complicated arrangements where
| their holdings were in the wrong kind of thing to get the 2.0
| airdrop who hardly seemed to understand what they were
| talking about well enough to ask coherent questions.
|
| Those people make me sad. They got fleeced. Maybe they got
| lured in by the promise of easy money and should have known
| better, but that doesn't make it pleasant to watch lambs
| driven to the slaughter.
|
| The _other_ kind, the ringleaders and the ones gloating
| "HFSP" during more bullish times. That's comedic gold.
| DaveExeter wrote:
| HFSP = Have fun staying poor
| jasonwatkinspdx wrote:
| Crypto marketing is now so pervasive, particularly in
| online spaces, that a ton of people just assume it must not
| be a scam.
|
| I mean there's a streamer I follow and generally like, but
| that interviewed Do Kwon on their stream, just a few weeks
| before it depegged. I wonder how many of their followers
| were the ones that lost the game of musical chairs. The
| halo effect is real.
|
| And that's not even getting into the craven scumbags
| leveraging influencer marketing, like Stake.
| harmon wrote:
| > Hot take: It's fine when it happens to extreme hubris with
| paper wealth. It is not fine when it was someone
| unsophisticated chasing the herd who lost a meager sum that
| was meaningful to them. Comedy vs tragedy.
|
| I think this is overlooking why people are engaging in these
| types of investments to begin with: they're greedy
| speculators who got caught up in a get rich quick scheme.
| They don't know what this tech is, why it is or isn't useful,
| or how it works. They don't know what the investment risks
| are and don't make any attempt at mitigating risk. They don't
| seek expert assistance. Instead of doing basic research to
| make informed decisions, they see dollar signs and yolo with
| their life savings. I don't feel bad for them in the same way
| that I don't feel bad for people who fall for 419 scams. If
| you participate in get rich quick schemes that you don't
| understand, there is a high probability of getting owned.
| This exact same collapse in value happened only 5 years ago,
| how could people be caught flat footed twice?
| mywittyname wrote:
| These two things are related though.
|
| The people with the hubris understand deep down that they are
| involved in a ponzi scheme, and the only way up and out is to
| herd the unsophisticated investor. Not that there's explicit
| malice here (though, sometimes it is), but there's the
| understanding that driving demand is what drives up the
| price.
|
| There's a reason that so many fad "investments" follow this
| _exact same path_ , time and time again.
| DIARRHEA_xd wrote:
| That take is far from hot. Tragedy has two inputs: What
| happened, and who it happened to.
| mellavora wrote:
| And comedy has two inputs: pain, and distance
| [deleted]
| siskiyou wrote:
| This is why the industry is functionally begging for government
| regulation
| cjbgkagh wrote:
| A fool and their money are soon parted. The real problem is
| that swindlers have made a huge amount of money and can use
| that money to corrupt politicians so it affects the rest of us.
| It's not just the extra tax of having to care for the newly
| impoverished.
|
| My former local community went all in on a bitcoin scam, they
| made commissions on new entrants so I never heard the end of
| it. I only talked about it when asked but my warnings not only
| fell on deaf ears I was effectively ostracized as people were
| worried that I would talk new entrants out of it. "Don't talk
| to that guy, he's a no-coiner who doesn't want you to be rich,
| he's ngmi". It was worse than Amway. Even after the crash many
| of them still avoided me, I guess now out of embarrassment, or
| worry that I would shove it in their faces like they did to me.
| I would never. It destroyed the community and many local
| businesses.
|
| Edit: just found out which one it was, it was USI Tech. It
| failed 4 years ago so it's not even part of the latest crop.
| Just sad that it keeps happening.
| rngname22 wrote:
| Could you expand a bit? It sort of sounds like you're
| describing a small town or a social circle / social scene
| where everyone got involved in some particular altcoin or
| something and invested a ton of their personal savings into
| it while encouraging others to do so as well, is that
| essentially it? Crazy if so.
| cjbgkagh wrote:
| That's essentially it, a small town where everyone knew
| each other and all hung out in the same bars. I didn't pay
| attention to which one it was, I do remember hearing crazy
| interest, like >40%. I think you also got a cut from new
| entrants as well, so it reeked of pyramid + ponzi.
| zeven7 wrote:
| I'm fascinated that some kind of place like this existed.
| I've only lived in large cities and the picture I've
| gotten of small towns from trips and media hasn't
| prepared me for the idea of a whole community that
| collectively buys into a get rich quick scheme.
| cjbgkagh wrote:
| The town is mostly retirees and it was mostly the
| retirees that got suckered into it. Inflation eating away
| at fixed incomes and low interest rates undermining their
| investments.
| Barrin92 wrote:
| In Utah "Network Marketing" or more plainly MLM schemes
| are literally the second biggest industry in the state.
| Strongly influenced by the Mormon culture you have stay
| at home moms do direct sales and multilingual
| missionaries using their skills for that kind of stuff.
| There's entire software companies that just build tools
| for MLM companies.
| acdha wrote:
| This is especially common in churches because in addition
| to having an existing trust relationship, in many more
| conservative denominations you also have a large
| population of women who are expected to be mothers first
| and working second but are also expected to be the frugal
| wife running the household like a small business (there
| are several scriptures like Proverbs 31 which mention
| this in contexts which make more sense if your household
| is a small farm & you're selling your surplus). Those
| pitches explicitly borrow from that tradition and they
| always refer to it as being a small business owner, which
| sounds a lot better than working part-time at Starbucks
| even if the latter tends to pay considerably better, and
| that's also appealing to the people who see working
| outside the home as being out in the world exposed to all
| kinds of dangers and temptations since you can tell
| yourself that you'll mostly sell to people you already
| know.
|
| What tends to happen is that the first person who picks
| up some new scam does fairly well because there's no
| exact competition for whatever they're selling. They tell
| their friends, who are likely to join because they made
| an enviable amount of money, but returns drop off rapidly
| because most of the people who want whatever that company
| is selling already bought it from the first person (whose
| social network overlaps considerably) and at some point
| most of the money is coming from the people buying the
| initial inventory which will mostly sit in their garage.
|
| The social dynamic also means that _nobody_ will ever
| admit that they lost money or made the equivalent of
| $2/hour even as they're giving away that unsold
| merchandise at baby showers for the next 5 years.
|
| Cryptocurrencies have largely been the brilliant idea of
| capturing this dynamic for a different demographic
| (libertarian men).
| _jal wrote:
| It happens a lot, and isolation can help keep scams
| going.
|
| In case anyone has any illusions about how bad financial
| scamming can get, pyramid schemes famously led to civil
| war in Albania not that long ago.
|
| https://en.wikipedia.org/wiki/Pyramid_schemes_in_Albania
| joseph8th wrote:
| Oh boy, have I got a story for you.
|
| Around 1999, my hometown (pop. ~600) fell for a conman.
| Like, the actual Town government, and almost everyone in
| it.
|
| Pudgy, balding, middle-aged white dude breezed into town
| and seduced the owner of one of the motels. She kicks her
| husband out and starts taking Conman to town board
| meetings, etc. Eventually divorced husband.
|
| Guy claims to be Hollywood connected, a wealthy promoter
| or agent, scouting locations for future filming, etc.
|
| This goes on all summer, and the town manager and county
| administrator, and the whole board and chamber of
| commerce totally buy it, lock, stock, and barrel. Conman
| claims he can bring in some big country music star he
| knows. I don't remember who. I can't stand country, so
| why would I remember? Big star. Not Dolly big, but Boot
| Scooting Boogie big.
|
| He convinced the town to foot the bill, that he would pay
| for everything once they had the final bill... and this
| podunk nowheresville town 60 miles from the nearest
| traffic light pays to fly this star in on a private jet,
| sets up a huge stage for her, and all like 50 of us that
| show up get a private concert. It sucked.
|
| This whole time... Everyone in town is talking about this
| guy, right? And nobody is asking if he's legit. I mean, I
| did, but I had long hair and was a nobody, so...
|
| Spoiler: he wasn't. Not even a month after the big
| concert, he disappeared with motel lady's (and her
| husband's) life savings, and obviously skipped on the
| million-odd bill for Peggy Rae or whoever TF it was.
|
| Everyone looked like a moron. Motel lady declared
| bankruptcy and left town. I gloated mercilessly.
|
| Idiots. They all voted Trump, too. Some people never
| learn.
| xiaolingxiao wrote:
| This should be a movie.
| zeven7 wrote:
| Wild.
|
| > pays to fly this star in on a private jet, sets up a
| huge stage for her, and all like 50 of us that show up
| get a private concert. It sucked.
|
| The concert actually happened? That's the craziest part
| of all of it.
| bombcar wrote:
| It happens _all the time_ but often the community and the
| physical community don 't overlap, but check out /r/MLM
| or other similar subreddits and there's whole groups of
| scammers who target particular groups (church, social,
| retired, veterans, etc) with particular pitches designed
| for that group.
|
| Because if some rando tells you to join Amway or invest
| in AmCOIN(tm) you will tell them to get bent, but if it's
| a trusted friend, you're much more likely to be open.
|
| It's disgusting, but it happens. And in a small town,
| likely _everyone_ goes to the same church or two, hangs
| out at the same bar, etc. It can spread like wildfire,
| though usually after the first few scams it becomes known
| and starts to die out a bit.
|
| Sometimes you recognize the situation and decide to
| "participate" (read: lose some small amount of money in
| the scam) to stay in the community.
| dtmmax33 wrote:
| You can also check out behindmlm.com which exposes most
| of the more popular scams.
| Taylor_OD wrote:
| In the smallest version of this... My weekly poker group
| talks about stocks and crypto often. It's a mix of guys
| who work in tech and engineering and a handful who just
| want to get rich quick. We've all bought a few yolo
| stocks and coins together and 100% of the time the
| investments have gone to zero or close to it.
|
| Thankfully no one in the group is dumb enough to go all
| in on this hyper risky investments but I can see how it
| would be easy to be talked into something if you're in an
| echo chamber.
|
| Before anyone gets too worried I'm talking about spending
| a few hundred dollars each on stupid investsments over
| the course of a few years.
| bombcar wrote:
| The danger is when they _don 't_ go to zero, and you
| suddenly thing you're stock picking geniuses - or you
| then decide to put it all in on the next one.
|
| https://en.wikipedia.org/wiki/Beardstown_Ladies
| seoaeu wrote:
| Amusing quote from that page: "This revelation led to a
| class action lawsuit against publisher Hyperion, a
| division of The Walt Disney Company, which settled the
| case by offering to swap the Beardstown Ladies books for
| other Hyperion books."
| bombcar wrote:
| Considering I'd estimate something like 99% of investment
| book purchases are "for entertainment purposes" (i.e.,
| the buyer either doesn't read it, or never bothers trying
| to implement any of it) this may be a decent option.
| cjbgkagh wrote:
| A common strategy for binary auction scams is to rig the
| market in your favor so that you think your a genius and
| then you go all in. Then they rig the market against you
| or simply block withdrawals.
| [deleted]
| DwnVoteHoneyPot wrote:
| There is a recent movie called Dream Horse based on true
| story: "Twenty years ago, one woman convinced her
| neighbours to buy, rear and train a thoroughbred racehorse,
| Dream Alliance. Now their unlikely story is relived in a
| feelgood film"
|
| https://www.theguardian.com/film/2021/may/30/against-all-
| odd...
| cosmodisk wrote:
| I had similar at work: neverending stories about how crypto
| will reach Mars and then some. When asked the very basics on
| certain claims, the answers were always how don't get,how
| innovative it is and etc. I haven't heard a single word about
| crypto since it all gone down substantially. Everyone's smart
| when the rocket is going up, but at some point the fuel ends.
| jjoonathan wrote:
| > The real problem is that swindlers have made a huge amount
| of money and can use that money to corrupt politicians
|
| Yes! It's not just crypto, either, this problem seems to be
| endemic in our political and economic power structures.
| mlcrypto wrote:
| Yea who do you think benefits most from the Fed's printing
| press?
| MrMan wrote:
| People in tech
| jgalt212 wrote:
| > The real problem is that swindlers have made a huge amount
| of money and can use that money to corrupt politicians so it
| affects the rest of us.
|
| Exactly this. Can you imagine what regulatory capture by the
| NFT crowd would look like?
| Hallucinaut wrote:
| We're already closer to idiocracy than I thought possible
| before the last decade, so I'm good without an
| OwMyBallsCoin
| adrr wrote:
| UK is talking about backstopping the stable coins is an
| example of influence. I assume they are referring to Tether
| which hasn't completed an audit.
|
| https://www.cnbc.com/2022/05/31/uk-plans-new-safeguards-
| for-...
| JumpCrisscross wrote:
| > _UK is talking about backstopping the stable coins_
|
| London's talking about regulating and ringfencing them. Not
| backstopping.
| tootie wrote:
| The threat is always systemic risk. That's why we need such a
| massive and seemingly unfair bailout of financial firms in
| 2007-8. Or the S&L crisis in the 80s. At some point, other's
| peoples bad decisions affect everyone else. I don't think the
| crypto market is big enough to have the same affect yet but
| it could. And it really shouldn't be allowed to get to that
| point until the market submits to regulation.
| TheOtherHobbes wrote:
| The problem is the fintech industry - both crypto and
| mainstream - _exists to swindle_.
|
| The biggest rewards come from crossing the line and avoiding
| regulation/enforcement, either by legitimate or illegitimate
| means (including bribing enforcement officials).
|
| Next biggest are rewards for crossing the line and delaying
| enforcement until you can launder your rewards to a safe
| haven.
|
| If you're arrested and jailed - only likely in cases where
| you inconvenience certain very rich and powerful people, not
| ordinary folk - it isn't usually for long. And you can afford
| the best representation to minimise the risk.
|
| So the risk profile is very much slanted towards rewarding
| the unscrupulous.
|
| Example: Even after all the confusion around the $400m or so
| "missing" from Mt Gox, Mark Karpeles only received suspended
| sentences and spent no time in jail. Even after the recent
| crash, that's still more $1.5bn at 2022 values.
| hgomersall wrote:
| There are many fintech companies that I see as hugely
| important in disrupting finance, which is desperately in
| need of disrupting. The various new banks and companies
| like Wise are dragging the industry into the 21st century,
| though the incumbents are still failing disastrously.
| daniel-cussen wrote:
| The problem with fintech is it is about integrity, and
| cashing out on integrity is generally counterfactual. Like
| cashing out on Idealism. Well if it's strictly cash, it can
| be done, like if there's no interest in prostitution of the
| resources, merely a form of liquidity and cooperation, yes.
|
| But to buy a Lamborghini? Only with an excellent,
| satisfying reason.[1] Like anything. Are you a man who
| wants to have sex with a girl who is underage? You can, if
| you marry her. But she's not an adult, so there's no
| possibility of a prenuptial agreement, you can marry her if
| you can accept that.
|
| "Half."
|
| --Eddie Murphy
|
| [1] And not in the way people imagine it, like the hedonism
| of the noughts, showing off like that horrible show "MTV
| Cribs." Yeah they're literally cribs, not masochists like a
| real man ie fasting and running track and field. That's
| exactly what they are, cribs for babies. And then, on a
| recurring reddit post, they tell you all those cribs you
| saw were fake, when really many of them were real--telling
| you on blogs that "only Red Man's crib was his true living
| conditions"--just pulling the rug under you. They filmed
| actual places, they were all different, they didn't have
| the tech to fuck with that back then. Yeah they rented some
| houses for a week, but those houses were still meant to be
| cribs for babies. And it's a demonic show--a demonic
| channel--yeah it looks like MTV is beautiful but...no yeah
| suppose they're beautiful, that's the fastest way to learn
| what's up.
| ac29 wrote:
| > Mark Karpeles only received suspended sentences and spent
| no time in jail
|
| He was in jail from August 2015 to July 2016, if his
| wikipedia article is correct. The suspended sentence came
| after that.
| 100721 wrote:
| I would argue that the risk:reward is still very heavily
| weighted toward reward.
|
| I would happily spend a year in jail for $1bn+
| mbar84 wrote:
| Worse than paper shuffling about and numbers changing in a
| computer is when peoples behaviours change due to such
| foolishness. People who thought they could retire early but
| should have been continuing to work. People who bought cars and
| propped up an industry that should have been shrinking, freeing
| up resources for other parts of the economy to grow. People who
| built houses with resources that could have been put to better
| use and which now stand empty.
| jjtheblunt wrote:
| Maybe you're feeling that there's a repressed positivity in a
| lesson learned?
| dgudkov wrote:
| People may not have a choice about being wise or not. But being
| greedy or not is definitely a choice. Let's not pretend that
| obscene ROI promised by the cryptoindustry didn't play a role
| in seducing so many "uneducated" people to put their money into
| coins. These people deliberately decided to suppress their gut
| feeling that told them "it's too good to be true" and you
| didn't.
| christopherbalz wrote:
| Not your keys, not your coins.
| theknocker wrote:
| yieldcrv wrote:
| This has been a slow motion trainwreck across crypto twitter
| (echoed sometimes in financial publications) and this is the
| first mainstream source out there. Finally.
|
| I definitely would like to see more things about specific
| organizations. Indictments about crypto as a whole just allows
| poorly run organizations to avoid scrutiny.
|
| Now if only there were mainstream news articles about all the
| things that go right in crypto.
|
| Its so peculiar and easy to tell when people have never
| considered anything aside from a barrage of negative headlines.
| Reminds me of the 90s when an older person at the time would say
| like "the 'puters always get viruses" as a reason to not explore
| the concept further, as if that was the whole experience.
| badcppdev wrote:
| > Now if only there were mainstream news articles about all the
| things that go right in crypto.
|
| Legitimate question. What things have gone right in Crypto? I'm
| excluding individuals getting rich as that can happen due to
| gambling, etc.
| yieldcrv wrote:
| > I'm excluding individuals getting rich as that can happen
| due to gambling, etc.
|
| The tools that allow that stuff to occur onchain are pretty
| phenomenal. Bridges, farms, yield aggregators, yield
| optimizers, AMMs, the rapid evolution of standardized classes
| in the codebases (really was a mess before OpenZeppelin). It
| is capital formation and that is valuable for many people, a
| lot of capital formation improvements in tradfi never caught
| on for failing to address more important pain points people
| encountered.
|
| For the aforementioned tooling, many of these services get
| hacked and take a lot of the capital inside of them, and many
| of them function really well and still are to this day. The
| velocity of permissionless deployment lets the
| market/conscious quickly see which ideas work well, and
| become a building block to try something else with. (I say
| "conscious" because the developers often aren't the market).
|
| The best example of a recent reporting asymmetry would be all
| the stablecoins that _aren 't_ failing, functioning
| seamlessly, and what can be done to improve even them for a
| model stablecoin. Reporting about active proposals and the
| progress being done. This stuff is reported, just not in
| mainstream news sources and it would be an okay fit as some
| of them also have dedicated crypto sections already.
|
| Another example would be the function of the insurance pools,
| or loss mitigation measures that work well preventing or
| during or after an attack.
| dudeinhawaii wrote:
| Most of what you mention seems to be loosely related to
| fintech. There's nothing wrong with that but it doesn't
| match your previous comparison to the internet.
|
| If phrased in reverse, what would you lose if you lost the
| Internet? Now, what would you lose if crypto as a tech
| disappeared? It seems more akin to a niche technology than
| a transformational one (at the moment anyway).
| pirate787 wrote:
| I doubt your claim about stablecoins like Tether will age
| very well.
| yieldcrv wrote:
| I wasn't referring to Tether
| Judgmentality wrote:
| The problem with his argument about stablecoins is he
| didn't actually mention Tether, he just said whatever
| isn't failing. So basically after Tether fails the goal
| posts are moved and now all the stablecoins that haven't
| failed yet are held up as an example of success.
|
| Speaking of Tether, it's lost 25% of its market cap since
| May.
|
| https://coinmarketcap.com/currencies/tether/
| randomhodler84 wrote:
| Yes, through redemptions. So we know $10s of billions is
| real -- at least!
|
| It's a stablecoin, so market cap is simply the amount
| printed.
| Judgmentality wrote:
| Keep investing in that hopium, cryptobro.
| randomhodler84 wrote:
| I prefer "Bitcoiner", I'm not into 'crypto', bro.
| Judgmentality wrote:
| HN needs more parody accounts. Thank you for your
| service.
| ntoskrnl wrote:
| One example: Ukraine's military has been using bitcoin to pay
| their suppliers. The bitcoin network is antifragile and not
| vulnerable to attack the way their traditional banking
| infrastructure has shown to be.
|
| When searching I mostly found results on crypto news sites
| (naturally), but here are some mainstream sources:
|
| https://time.com/6155209/ukraine-crypto/
|
| https://apnews.com/article/russia-ukraine-cryptocurrency-
| tec...
| roywiggins wrote:
| There's no real problems with donating fiat to Ukraine, you
| can send money to them no problem.
|
| https://u24.gov.ua/
|
| As far as I can tell the reason they bought a bunch of
| stuff with crypto is because crypto fans gave them a bunch
| of crypto, not because they need to route around actual
| problems with the banking system.
|
| Of course Ukraine would make noises about how much they
| like crypto, because anything that encourages crypto
| holders to donate is good for them. Even if they prefer
| fiat they probably won't complain- making crypto donors
| feel good about giving them money (because it is acting as
| an advertisement for crypto generally) is a good idea for
| Ukraine.
| ntoskrnl wrote:
| https://www.yahoo.com/video/ukraine-government-using-
| crypto-...
|
| > Chobanian says vendors are stepping up to accept crypto
| in exchange for supplies and crypto is proving to be more
| efficient than traditional payment methods.
|
| > "It's really difficult to [send money] using
| traditional methods. First of all, it takes a lot of
| time. Secondly, it's a lot of bureaucracy and so on.
| Here, we are really fast. So we receive money and we
| spend it almost immediately," Chobanian said.
|
| https://www.yahoo.com/video/least-14m-26m-donated-
| crypto-215...
|
| > "We're doing it really efficiently," Chobanian added.
| "The majority of spending is actually done in crypto."
| [deleted]
| roywiggins wrote:
| Of course he would say that it's super-efficient and
| better than using existing banks, Chobanian _runs a
| crypto exchange_.
|
| It's impossible to imagine a crypto exchange founder
| saying anything different.
| AlexandrB wrote:
| Ironically, getting money into/out of Russia is probably
| a better use case for crypto[1]. But most crypto backers
| don't mention that since it makes them look like the
| villain.
|
| [1] https://www.nytimes.com/2022/02/23/business/russia-
| sanctions...
| hackinthebochs wrote:
| Sure, there's no problem donating now 5 months into the
| war. But what about when the war just started? How would
| someone from the U.S. be able to donate money and be
| confident where it was going? It's not like the Ukrainian
| govt had a well-known paypal address.
| roywiggins wrote:
| How can you be confident where a BTC payment is going?
| Did they have a well-known BTC address? If it's a matter
| of a .gov.ua website posting a wallet address, that's not
| obviously better than a .gov.ua website posting an IBAN.
|
| To be clear, the Ukraine government posted payment
| information by March 1st:
|
| https://bank.gov.ua/en/news/all/natsionalniy-bank-
| vidkriv-sp...
| vkou wrote:
| > The bitcoin network is antifragile and not vulnerable to
| attack the way their traditional banking infrastructure has
| shown to be.
|
| The traditional banking infrastructure works just fine in
| Ukraine. You can send money in and out.
| ntoskrnl wrote:
| That may be true right now, but their banking system has
| had a lot of downtime this year.
|
| https://www.wsj.com/articles/how-crypto-is-helping-
| ukraine-r...
|
| > He noted that since "the national bank is not really
| operating, crypto is helping to perform fast transfers,
| to make it very quick and get results almost
| immediately."
| Finnucane wrote:
| >Now if only there were mainstream news articles about all the
| things that go right in crypto.
|
| "Actual value to society of crypto finally discovered!"
|
| No, wait, we'll never see that headline.
| groffee wrote:
| If you owe the bank $100 that's your problem. If you owe the bank
| $100 million, that's the bank's problem. J. Paul Getty.
| cwp wrote:
| A Civ VI fan, I see.
| bearjaws wrote:
| Will this force any other leveraged positions out? Really unclear
| what the ramifications are besides potentially dissolving the
| hedge fund.
|
| Crypto hasn't dropped too much as a result (~2% drop)
| 015a wrote:
| > As of Friday, Voyager said it had approximately $137 million in
| U.S. dollars and owned crypto assets.
|
| > Last week, Alameda (FTX founder Sam Bankman-Fried's
| quantitative trading firm) committed $500 million in financing to
| Voyager Digital, a crypto brokerage. Voyager has already pulled
| $75 million from that line of credit.
|
| Am I misunderstanding something, or: what kind of mismanagement
| could possibly lead to loans being given out to a single entity
| representing, like, over 70% of the entire value of your
| organization (pre-default)? Its excellent that FTX/Alameda
| stepped in to keep them solvent and not allow this to spiral
| further, but at the same time, its incomprehensible to me that
| Voyager allowed this to happen; so incomprehensible that it feels
| like I'm misunderstanding something.
| michael1999 wrote:
| Is it mismanagement? It's head-I-win-tails-you-lose. Why would
| Voyager be playing a radically different game than 3AC? That
| kind of leverage can mint a billionaire if the dice roll the
| right way.
| siskiyou wrote:
| Stepping in to support the wages of mismanagement may not seem
| so excellent if the situation worsens further
| [deleted]
| mirntyfirty wrote:
| I think it's a strange part of human psychology to ignore
| objective reality and double down to complete ruin. It seems
| remarkably common and with corporate power being so
| concentrated at the top it seems rather easy for these
| situations to happen.
| wjko21 wrote:
| I think the reason is that safety nets our system provides to
| big businesses (especially "too big to fail" ones)
| incentivizes them to take risks. If you have a 50/50 chance
| to strike gold or loose tons of someone else's money, why not
| take it. If it pans out, you get a lot of bonus $$$, if it
| doesn't - it's no skin off your back.
| gopher_space wrote:
| I see this in my industry. Above a certain level there
| isn't really a failure state that matters to an individual.
| chasd00 wrote:
| Yes, it's the throwing good money after bad problem. I think
| there's a real name for it, "sunk cost" fallacy maybe?
| [deleted]
| rchaud wrote:
| I'm thinking "lender of last resort"
| sp332 wrote:
| Those crypto assets might have been worth a lot more when the
| deal was made. And the interest rate is probably pretty high.
| qdog wrote:
| My understanding is that FTX probably holds a ton of
| cryptocurrency assets or is invested in other companies with
| cryptocurrency exposure and does not want a 'contagion' to
| spread. This might work, but I am not sure FTX has enough
| assets to stop it, for a similar scenario
| https://www.federalreservehistory.org/essays/ltcm-near-failu...
| Pv9KKy3 wrote:
| It's the lure of money. You did something, it worked, you made
| a killing. Very tempting to do it again (give 3AC more money
| etc etc).
| Hypocritelefty wrote:
| woah wrote:
| This doesn't have a whole lot to do with crypto really. The
| entities discussed in the article are all traditional investment
| funds who made some risky bets.
| myle wrote:
| In what was that risky bet?
| graeme wrote:
| That's like saying that banks making risky bets on CDOs in 2008
| had nothing to do with housing
| 2-718-281-828 wrote:
| Any news on Evergrande? I thought the world was supposed to go
| under last year ...
| chasd00 wrote:
| The thing about that is the Chinese government can just declare
| it's no longer a problem and then it's no longer a problem.
| Just like they can solve Covid outbreaks through starvation,
| separated families, and doors welded shut. When you're free
| from morality or repercussions then all problems are easily
| solvable.
| adam_arthur wrote:
| They can't really do that because Firm A may depend on Firm
| B's payment to stay afloat. So you can't just say Firm B
| doesn't have to pay A and all is well.
|
| Certainly it still may be possible to untangle the situation
| by shifting losses to those who can bear it (socialize them),
| but it's not as simple as you make it sound. Have to work out
| a whole graph of dependencies.
|
| Lehman Brothers had something like $50T of value in
| underwater derivatives. Good luck solving that
| jsemrau wrote:
| https://www.reuters.com/business/china-evergrande-faces-wind...
| adam_arthur wrote:
| Many Chinese property firms are distressed now, it remains to
| be seen how it ends.
|
| Here's an Evergrande bond that's trading at a 90% loss,
| implying chance of total failure/default is quite high:
| https://markets.businessinsider.com/bonds/china_evergrande_g...
|
| Of course, the Chinese government has a lot of power to try to
| socialize the losses and salvage things. When you have a
| spiderweb of liabilities that are jointly depended on, it's
| difficult to intervene and find a clean resolution, despite the
| gov having the authority to do so
| dmos62 wrote:
| Article has a refreshingly neutral tone. I wish all news were
| like this.
| jcstauffer wrote:
| I particularly like how they neutrally listed all the assets
| and lines of credit of Voyager Digital (the loan holder)
| without mentioning that they add up to just $655M (< $670MM),
| meaning that they are now insolvent.
| TameAntelope wrote:
| I don't think defaulting on a loan means you're going to pay
| $0.00 on that loan, just that you've missed a payment (plus
| whatever grace period is given).
| retcon wrote:
| Default means that you are or have been technically deemed
| incapable of making any further payments. This includes
| repaying the principal outstanding.
|
| You're confusing any potential amount ultimately
| recoverable in insolvency with some kind of imaginary ex
| gratia payment by a management of a imaginary going concern
| which absolutely doesn't exist in Ch.12. Its chapter12 in
| the circumstances conceived.
| happyopossum wrote:
| > Default means that you are or have been technically
| deemed incapable of making any further payments
|
| Nope, that's not correct. Loan default occurs when a
| borrower fails to pay back a debt according to the
| initial arrangement - it most assuredly does not mean
| that no further payments will ever come (or be extracted
| via judgement).
| jsemrau wrote:
| To expand a bit more. At least in the SOPs that I wrote,
| is a loan declared default if a repayment of (interest
| and/or principal) has not been received after a certain
| cutoff (30+, 60+, 90+) or the company has been declared
| bankrupt, dead, or similar (hard trigger events) For the
| latter, this is why petitions like these matter:
| https://www.reuters.com/business/china-evergrande-faces-
| wind...
| midislack wrote:
| Imagine giving your money to anarchists and then you get scammed.
| They have a hate symbol on their site, LOL.
| cm42 wrote:
| happyopossum wrote:
| > They have a hate symbol on their site, LOL.
|
| Care to elaborate? I see one graphic on the 3ac website, and
| it's not one I'm familiar with so I assume it's a corp logo?
| woodruffw wrote:
| I think the GP is claiming that the 3AC logo is a reference
| to the Three Arrows[1] logo, which was used by the SPD in
| Weimar Germany and by some flavors of contemporary
| anarchists. But I can't find any evidence that it's an
| intended reference, and they look pretty different to me
| (different colors and directions; the only similarity is that
| they both happen to have arrows).
|
| [1]: https://en.wikipedia.org/wiki/Three_Arrows
| [deleted]
| cm42 wrote:
| It's like word association for people who can't read.
| masswerk wrote:
| I don't get the hate part. There was about a single
| competing party who would have used that attribute, and
| this one proceeded to ban the associated party and to open
| the very first concentration camps for social democrats. We
| probably all know how things went from there.
| woodruffw wrote:
| Correct. They weren't a hate group, and the groups that
| currently use their symbology also aren't hate groups. I
| think the GP is probably misinformed.
| midislack wrote:
| They are indeed hate groups, it's a hate symbol, thanks
| for playing!
| woodruffw wrote:
| The SDP was and is a center-left party. You can look
| their platform up today, and confirm that it is neither
| historically nor currently hateful. Their existence
| during the 1920s and 1930s was primarily defined in
| opposition to both further left and further right
| political movements.
|
| (There's also no one modern group using the Three Arrows.
| It's a general symbol of the left, like the wildcat or
| the "A." It's not even clear who they'd be a "hate group"
| against.)
| tablespoon wrote:
| >> They are indeed hate groups, it's a hate symbol,
| thanks for playing!
|
| > The SDP was and is a center-left party. You can look
| their platform up today, and confirm that it is neither
| historically nor currently hateful.
|
| Words don't have any meaning anymore, so they mean
| whatever someone wants them to mean, so everything is
| true.
| braingenious wrote:
| What do they hate?
| LatteLazy wrote:
| I am confused: The only logical reason to borrow BTC is if you
| think it will go down. If Three Arrow really thought BTC was
| headed to 2.5m a coin, then they could never sell/spend the coins
| they borrowed, as the price of buying back to repay the loan
| would be too high.
|
| So logically they must have been shorting BTC.
|
| And if they were shorting BTC, they should have made ~30% profit
| in the last few months right?
|
| So what the fuck is actually happening here? Were they lying
| about being bullish on BTC? And they somehow made an even bigger
| loss somewhere else that means their BTC short isn't enough to
| counter that? Or what?
| based69 wrote:
| You can borrow btc then use that btc to take 5x leveraged
| positions on btc.
|
| If number go up, you make billions. If number go down 20% you
| default on loan. Absolute scumbag behaviour of course.
| LatteLazy wrote:
| I guess that makes more sense. But then you're only 4x
| exposed to BTC (god help you). Why not borrow USD and do the
| same and get 5x leverage
|
| What's that thing about if you owe the bank 10k you're in
| trouble, but if you owe them 10m they're in trouble? :)
| akgoel wrote:
| Because BTC kept going up fast, and your 4X BTC bet meant
| you got keep borrowing more to plow back into BTC.
| timcavel wrote:
| rvz wrote:
| Good. Looks like this cycle has claimed tons of over leveraged
| VCs and deluded crypto bros and maxis thinking that Bitcoin will
| reach $100K last year. Instead they all got liquidated.
|
| We were overdue a wiping out of these gamblers and speculators as
| regulations will be formed to limit or prevent having another
| UST, USDD and Celsius.
|
| Either way the smart money takes advantage of the hype and
| prepares well in advance for the great possibility of a crash.
| arcticbull wrote:
| USDD isn't like Terra. It's not actually an algorithmic
| stablecoin, it's just 'His Excellency' Justin Sun messing with
| people. There's no redemption mechanism (which is what lead to
| the UST collapse) and the creation is limited to a few
| authorized participants - notably Alameda. Sun can restore the
| peg pretty much at will for a few million bucks.
|
| [edit] To be clear I maintain you should stay as far away as
| humanly possible, but shorting it is a suckers bet.
| randomhodler84 wrote:
| Yeah, don't short USDD (at least not yet). If Justin using
| His Excellencies personal wealth to bail out His Excellencies
| stablecoin sideproject, wait at least until the market cap
| goes beyond what he can bail out. It's currently 3x over
| collateralized, you will lose.
| arcticbull wrote:
| Sort of, I believe they count anything they put in their
| burn address towards the 'overcollateralization' - but my
| point is also that redemptions are turned off. No matter
| how much collateral they have there's no mechanism to turn
| 1USDD into 1USD worth of any collateral at all. Conducting
| open market operations (buying up USDD in the market) is
| significantly cheaper than redeeming them. Last I checked
| it would cost about $30M to restore the peg in open market
| operations.
| randomhodler84 wrote:
| Yeah, you are correct. The downward spiral mechanism is
| allowlisted, and the players won't bring this event.
|
| I have no love for HE, but indeed it is a pretty clever
| play to monetize HE's illiquid shitcoins. Ive always
| deeply distrusted HE but I may have underestimated him.
| tablespoon wrote:
| > If Justin using His Excellencies personal wealth to bail
| out His Excellencies stablecoin sideproject
|
| What's with this "His Excellencies" stuff? Is it an
| obnoxious nickname, or is this backed by some monarch or
| gulf sovereign wealth fund or something?
| dang wrote:
| Related:
|
| _Another Big Crypto Player Just Blew Up_ -
| https://news.ycombinator.com/item?id=31794111 - June 2022 (4
| comments)
|
| _Three Arrows Capital reportedly facing insolvency_ -
| https://news.ycombinator.com/item?id=31784602 - June 2022 (377
| comments)
|
| _Battered Crypto Hedge Fund Three Arrows Capital Considers Asset
| Sales, Bailout_ - https://news.ycombinator.com/item?id=31777441 -
| June 2022 (125 comments)
|
| _Crypto hedge fund Three Arrows fails to meet lender margin
| calls_ - https://news.ycombinator.com/item?id=31769163 - June
| 2022 (1 comment)
|
| _Rumors Swirl About Financial Stress at Three Arrows_ -
| https://news.ycombinator.com/item?id=31748345 - June 2022 (2
| comments)
| henning wrote:
| I'm sure the creditors will happily accept payment in Bitcoin in
| lieu of cash. it's dIgItAL gOlD except the digital gold can be
| copied and pasted to make a new kind of digital gold that is
| identical to the other gold, completely unlike actual physical
| gold.
| randomhodler84 wrote:
| 21 million Bitcoin. 2.1 Quadrillion Satoshi. For all time.
|
| Unlike gold which can be mined in the trillions from asteroids.
|
| Your argument that Bitcoin is trivially copyable was /an/
| argument in 2014. We are in a different place now.
| paywallasinbeer wrote:
| For anyone else enjoying the crypto meltdown, might I suggest the
| subreddit /r/buttcoin? It's quite enjoyable.
|
| https://old.reddit.com/r/Buttcoin/
| jklinger410 wrote:
| Celebrating another person's failure is for small minds.
| niclo wrote:
| > It's quite enjoyable.
|
| Not really, it's full of people hating and insulting and pretty
| much comparable to the average crypto bro subreddit.
| sweezyjeezy wrote:
| Even if it is trolling - that's orders of magnitude less
| harmful to society than a subreddit that offers dangerous
| financial advice.
| SV_BubbleTime wrote:
| Also less harmful than promoting the latest single waste of
| energy the world has ever seen... yet.
| ricochet11 wrote:
| theyve been telling us crypto has been melting down and
| bursting and dying for a many years, its still here. my bet is
| that itll still be here in ten years and theyll still be
| posting on buttcoin.
|
| seems much more interesting to explore, hack, risk, and learn
| by playing with crypto, id much rather to that than post
| "bitcoin ded" for a decade.
|
| prices go up and down, culture persists.
| rvz wrote:
| After looking at it for a moment, it's equally delusional as
| /r/cryptocurrency.
|
| I'm enjoying the meltdown because it flushed out those who
| believed in nonsense like _' This isn't even close to what will
| be the all time high'_ [0] 'Doge to $1 by September 2021' [1],
| etc. Where are they now?
|
| I won't be surprised to see Bitcoin go lower than $10K. This is
| before regulations and the Tether scam collapsing.
|
| [0] https://news.ycombinator.com/item?id=26840923
|
| [1] https://news.ycombinator.com/item?id=27046019
| randomhodler84 wrote:
| I don't think tether is going to collapse. The money is there
| and the demand is high.
|
| Nobody is trading suitcases of fiat bills behind closed doors
| anymore, it's all in USDT.
| mertd wrote:
| Can you point to a source for "the money is there"?
|
| Nothing surrounding Tether passes the smell test.
| [deleted]
| paulgb wrote:
| > After looking at it for a moment, it's equally delusional
| as /r/cryptocurrency.
|
| There can be some serious discussion there but it's first and
| foremost a joke subreddit. Without knowing what you're
| labeling delusional, there's a good chance it's meant to be
| taken with a sense of irony.
| SilasX wrote:
| A joke sub wouldn't have a detailed guide for how to
| productively disagree with its followers:
|
| https://www.reddit.com/r/Buttcoin/comments/p8uv0h/helpful_g
| u...
|
| Be careful not to get snared by Poe's Law.
| ntoskrnl wrote:
| It gets old quick. I remember joining when bitcoin was around
| $100 and it looks exactly the same now as it did back then.
| rafale wrote:
| Why would u enjoy people losing their life savings? Just
| because they told you to have fun staying poor on the way up?
| jpambrun wrote:
| People with crypto coins needs other people to be willing to
| buy them at higher price just slightly later. They keep
| exploiting fomo for their own gain. I don't think this is
| moral and a bit of karma is always welcomed.
| idiotsecant wrote:
| This isn't necessarily true. A lot of people have held
| crypto since you could purchase it for single digit
| American dollars because they believe in the fundamental
| tenants of crypto - permissionless world financial exchange
| where the levers and dials of the economic systems are not
| controlled by world governments.
| jpambrun wrote:
| It is probably true that 99.9% of people with crypto use
| it as a speculative investment. The remaining 0.1% true
| crypto idealist may exist, but I have never met one. So
| it makes the previous statement very much mostly true.
|
| This type of disingenuous argument is why some of us
| rejoice at the crypto meltdown.
| Zpalmtree wrote:
| Most people in crypto I know like crypto and the cool
| tech it is developing, and also want to make money. What
| is wrong with that?
| jaywalk wrote:
| There's nothing wrong with wanting to make money. The
| problem is that many (most? the vast majority?) of the
| ways to make money with crypto are basically pyramid
| scheme-type scams.
| randomhodler84 wrote:
| Pleased to meet you jpambrun!
|
| I am one of those 0.1% idealists.
| idiotsecant wrote:
| As am I!
| Rebelgecko wrote:
| If they believed in crypto as a unit of financial
| exchange, wouldn't they be actually using it for
| transactions instead of going full-HODL?
| idiotsecant wrote:
| Cuyrrently (and at a few points in the past) it's a
| little hard because the value of crypto is fluctuating so
| wildly but a lot of early adopters have continuously been
| using and advocating adoption of crypto for a decade now.
| ejanus wrote:
| Same with most company shares
| ironlake wrote:
| You are wrong. No value can be added to crypto except
| through fiat deposit. Publicly traded companies create
| value by their activity. For example, if I own a share of
| AT&T, the value of that share goes up if AT&T runs a
| successful marketing campaign to get new users to sign
| up.
|
| Crypto has no utility and no underlying value.
| randomhodler84 wrote:
| Not quite! Shares of AT&T go up because people spend fiat
| on buying them. The activity makes it a more attractive
| buy, but unless the company buys back it's own shares
| they don't go up when they make money. It's not magic,
| it's a market like anything else.
|
| Note: AT&T is a dividend share, so it has yield.
| Cryptocurrencies generally don't, they are more like tech
| stocks. Amazon shares don't go up when Amazon makes money
| (unless they spend earnings on stock), or the market buys
| more Amazon stock.
| secondcoming wrote:
| That's not the full story. A company's share price drops
| when it pays a dividend - because it now has less money.
| So when a company makes money its share price does go up.
|
| SharePrice = CompanyValue / NumberOfShares
|
| Now it's true that trading activity can affect the share
| price too, for example a short squeeze. But this is due
| to market taking advantage of a desperate buyer rather
| than anything to do with the company's performance as
| such.
| randomhodler84 wrote:
| I think it is the full story. Company performance is the
| driver, but it doesn't set the price. It not right to say
| it's irrelevant, it is, but the most important thing is
| what the market is willing to pay.
|
| The dividend price drops occurs only because the market
| believe this and reduces the price of their orders. It's
| driven by the market responding to the loss of cash, the
| fact the cash was spent cannot impact share price unless
| there is buying and selling. The company doesn't set the
| share price except for IPO.
|
| It is compounded by Dividend Reinvestment Programs, where
| the dividends end up buying more stock.
|
| Additionally, I think your equation is wrong. Company
| Value = assets - liabilities.
|
| Market cap = n shares * price.
|
| Market cap != company value.
|
| Big tech stock is very similar to cryptocurrency. It's
| all about the greater fool who will buy it from you.
| jpambrun wrote:
| And I would feel the same if a massive amount of people
| were pushing for it, were deceptive and exploitative
| about it.
| paywallasinbeer wrote:
| There's a subreddit for that too!
|
| https://old.reddit.com/r/gme_meltdown/
| jpambrun wrote:
| Yes! GME stock was exactly the same and just as scummy.
| Thanks for pointing that out.
| krapp wrote:
| It's a common human trait to enjoy when bad things happen to
| bad people, and crypto bros are the worst.
| [deleted]
| asimpletune wrote:
| I don't think anyone should act hateful to anyone else.
| However, seeing that specific bubble deflate though, and a
| return to, I don't know, sanity, is a welcome change. It's
| just a shame that so many people have to suffer though as a
| part of that process.
| JumpCrisscross wrote:
| It's also, quite frankly, the market reallocating economic
| decision making power. After a decade of beanstalk
| economics, it's reassuring to see the system at least
| attempting to correct itself.
|
| I have no sympathy for the people losing money. For the
| young people who invested precious years into what
| increasingly looks like an economically useless skill set,
| I feel badly. That said, those who picked up technical or
| sales chops can likely pivot to a position above the median
| American's wages.
| [deleted]
| [deleted]
| dmos62 wrote:
| A fall in price doesn't mean that people are losing their
| savings. They might be short and thus gaining savings.
| rngname22 wrote:
| Maybe because crypto is burning enormous amounts of fossil
| fuels at a time when humans are literally destroying the
| biosphere and for 90% of people involved their motivation is
| speculation and greed (get rich) not technology or real world
| applications.
| antiverse wrote:
| So you finally got to the root of human nature, you're
| clearly disappointed, and this is your response?
| jpambrun wrote:
| Being happy at the prospect of reduced energy consumption
| is a reasonable and appropriate response.
|
| That greedy people took a high risk investment in
| something purely speculative and lost money is
| inconsequential..
| faefox wrote:
| > Just because they told you to have fun staying poor on the
| way up?
|
| I mean, yes? The level of hubris so many crypto bros
| exhibited was truly incredible. And if that weren't enough
| the negative externalities (the truly shockingly wasteful
| nature of proof-of-work mining, the diversion and scalping of
| GPUs) should make anyone glad that the bubble burst.
| pastor_bob wrote:
| Always sad to see, but these people actively perpetuated
| falsehoods about things like regulation. Go look at a celsius
| thread on reddit when NY said it must cease operations in NY.
| acchow wrote:
| When this crypto thing turned into a ponzi scheme, it was
| already guaranteed that many people would lose everything. We
| can only hope it collapses earlier so there are fewer
| victims.
| M2Ys4U wrote:
| >Just because they told you to have fun staying poor on the
| way up?
|
| Yes. Frankly these people need to have a check to their egos.
|
| Mocking people who just want a return on an investment but
| don't understand what cryptocurrencies are and falling prey
| to arseholes (correctly) assuming they are a Greater Fool is
| definitely in bad taste.
|
| But the people who went "Line goes up, stay poor, I am very
| smart" _despite the warnings they were engaged in a scam_...
| yeah, I have no sympathy for them. They 're the get rich
| quick, fuck you I got mine libertarians who _deserve_ to be
| taken down a peg or two.
| puranjay wrote:
| Because you'd have to be a real dumbass to actually put your
| life savings in crypto.
|
| When I first bought crypto, I put in just enough that if I
| were to lose it all, it would mean one vacation less and a
| fewer more meals at home for a few months.
|
| The returns are absurd enough that a $10k investment can be
| life changing. Anything beyond that is just greed and
| stupidity.
| sp332 wrote:
| >Because you'd have to be a real dumbass to actually put
| your life savings in crypto.
|
| Not all the scams are that obvious. Once a company has a
| lot of money, it is assumed they have some stability.
| Celebrity endorsements don't hurt either. There were even
| stadiums named for the stuff. And Stablegains said in large
| print that the investments were diversified while the small
| print said they were putting everything into Luna and would
| diversify later.
| gowld wrote:
| For a lot of people, losing $10K is life-changing
| postalrat wrote:
| $1.50 can also be life changing when someone does
| something stupid over it.
| nonamenoslogan wrote:
| Ahh, I see you just watched "Web of Make Believe" too.
| randomhodler84 wrote:
| $10k can't even buy a car. I don't know where you are in
| this crazy world but where I but $10k isn't life changing,
| it's more like a month of fancy dinners.
|
| I guess I'm a real dumbass. :-)
| mellavora wrote:
| he said the *returns* can be life-changing, not the
| investment.
|
| some people 100xed on crypto
| randomhodler84 wrote:
| Some even did better than that ;-)
|
| My life is completely unchanged. I still work everyday.
| puranjay wrote:
| I work everyday too. But not having debt and enough cash
| cushion to do nothing for years gives you a sense of
| freedom and confidence that can help you make life
| changing decisions.
| randomhodler84 wrote:
| True. I was able to make riskier investments knowing that
| I would be able to eat if things went badly.
|
| I'm just waiting for the collapse of civilization now
| myself.
| puranjay wrote:
| most who were active during 2018-19 before the current
| run 1000xed. Many lost 80% of that but are still wildly
| in profit.
|
| Most of the good traders I know managed to cash out
| 30-90x. All within two years.
| duxup wrote:
| I think people can be interested in how something plays out
| without " enjoy people losing their life savings".
|
| I don't mind seeing some of the pyramid schemes and such
| revealed for what they are.
|
| I like to think everything plays out and for a while more
| people don't risk and loses their money and maybe some bad
| guys go to jail even.
| arcticbull wrote:
| If they banked their future on libertarian magic beans fueled
| by wasting a mid-sized country worth of power e-waste, and
| each time you mentioned the obvious flaws in their half-baked
| schemes they made fun of you, implying that you're 'not going
| to make it' and telling you to have 'fun staying poor' --
| yep, a little. In the abstract of course.
| [deleted]
| codehalo wrote:
| No need to go there when 99% of HN comments provides the same
| material. And I wouldn't call it enjoyable. The comments are
| the same as when Bitcoin was $100. Frankly, I'd call it
| ignorant.
| antiverse wrote:
| Off topic, but that subreddit logo is patrician.
| rufusroflpunch wrote:
| I'm sure this doesn't apply to many here here, but: Do not trust
| leverage-trading crypto banks. Do not trade on leverage. These
| systems just recreate our current system of debt-based money that
| will inevitably collapse when the easy money dries up.
|
| If you believe Bitcoin has a future like I do, then buy some
| Bitcoin and hold it in cold storage for a long time, or try to
| jumpstart a circular economy where you use Bitcoin to buy and
| sell goods. Don't try to recreate the current system with fake
| decentralization.
| antiverse wrote:
| I don't believe whatever news are posted these days regarding
| crypto. After the whole gamestop charade of people cheering on
| the downfall of hedgefunds, it turns out they turned a healthy
| profit after all and none of what was originally claimed turned
| out to be true. Who the fuck knows who had a dog in that race to
| what extend and who was publishing so much misinformation. It
| even made it's way here, which is why I am writing this comment
| on HN. There's a slew of information that these articles
| omit/conceal that could completely change the narrative being
| portrayed.
|
| There are too many misdirection plays here. People are being
| screwed, yes, but not the people you think (or in some cases
| "hope".)
| jwmoz wrote:
| They were leveraged to the tits and paid the price.
| xwdv wrote:
| Without crypto what will be the next delusional get rich quick
| scheme people will cling to?
| woodruffw wrote:
| At least in the US, there are two sorts of schemes that people
| historically cling to: there's the goldbugs (who hoard precious
| metals because of the dollar's imminent collapse - any day
| now!) and the Amway types (who buy into pyramid _cough_
| multilevel schemes thinking that they 'll ultimately profit off
| of their social circle).
|
| Cryptocurrencies merge these two groups of chumps into one
| group of hyper-chumps. So it stands to reason that many will go
| back to the old schemes which, arguably, is an improvement in
| the state of affairs.
| danans wrote:
| What if crypto (in whatever form) is the ultimate get rich
| quick scam/scheme and there is always a baseline number of
| people willing to dump their money into it? Can an asset class
| be built on top of a seemingly endless hope of people hoping to
| get rich quick?
|
| Take out the asset class part, and it sounds a lot like a
| lottery, which is just a regulated get rich scheme (where most
| participants lose monetarily, but get "entertainment") that
| turns a reliable human fallibility into a social funding
| mechanism.
|
| Take out the social funding, and you have casinos, which also
| provide entertainment in exchange for the feeling you might get
| rich quick. Casino companies are publicly traded securities:
| https://www.cga.ct.gov/PS95/rpt/olr/htm/95-R-0426.htm
|
| Is there a form of crypto that could provide the same?
| mherdeg wrote:
| The downside with the lottery is that it's state controlled;
| if a group of talented engineers finds a way to play to
| extract positive expected value from other bettors,
| stakeholders in the government will call this outcome unfair
| and shut it down ( https://www.mass.gov/doc/letter-to-state-
| treasurer-steven-gr... ). Even if, on average, money goes
| from gamblers to social good, people will complain that
| sophisticated bettors are extracting an "unfair" profit.
|
| By contrast, the crypto markets provide an efficient funnel
| from low-information gamblers to sophisticated engineers. As
| long as a fair chunk of the profits are channeled to
| effective altruism causes (which I think is the status quo?)
| it's a good deal.
| danans wrote:
| > As long as a fair chunk of the profits are channeled to
| effective altruism causes (which I think is the status
| quo?)
|
| That's one heck of a qualification without a citation. The
| "altruism causes" channeled to would need to somehow
| outweigh the massive costs in terms of CO2 footprint and
| the loss of savings/security of an untold number of regular
| people (your "low-information gamblers") who bought into a
| big ponzi scheme.
|
| They can't be made whole (though society will
| definitionally pay for the subset who lost a significant
| portion of their life savings), but seems pretty legit to
| point a finger at those who scammed them.
| oldgradstudent wrote:
| Could be anything.
|
| Real estate is a sensible investment, but a housing bubble
| makes it a delusional get rich scheme.
|
| Combine the most reasonable investment with a lot of easy
| leverage and you get a delusional get rich scheme.
| 99_00 wrote:
| For asset managers high risk pays.
|
| Make amazing bonuses for many years. Have extended vacation or
| retire.
|
| Just don't use your own product and you will do well.
| Barrera wrote:
| > Prominent crypto hedge fund Three Arrows Capital has defaulted
| on a loan worth more than $670 million. Digital asset brokerage
| Voyager Digital issued a notice on Monday morning, stating that
| the fund failed to repay a loan of $350 million in the U.S.
| dollar-pegged stablecoin, USDC, and 15,250 bitcoin, worth about
| $323 million at today's prices.
|
| In other words, the $670 million that 3AC defaulted on was ~50:50
| USDC and bitcoin.
|
| Then later:
|
| > Zhu [3AC founder] is known for his incredibly bullish view of
| bitcoin. He said last year the world's largest cryptocurrency
| could be worth $2.5 million per coin. But in May this year, as
| the crypto market began its meltdown, Zhu said on Twitter that
| his "supercycle price thesis was regrettably wrong."
|
| This seems odd. How does a person convinced that bitcoin exchange
| is headed to $2.5 million take out a loan of 15K bitcoin if he
| actually thinks he'll be paying back it back at a higher exchange
| rate? Either the founder was bullish in principle but bearish in
| practice, or didn't have the first clue about what he was doing.
| rchaud wrote:
| > How does a person convinced that bitcoin exchange is headed
| to $2.5 million take out a loan of 15K bitcoin if he actually
| thinks he'll be paying back it back at a higher exchange rate?
|
| Part of being in crypto involves suspending disbelief, even
| your own.
|
| There's also the famous saying "It is difficult to get a man to
| understand something when his salary depends on his not
| understanding it". In this case, you don't build a following in
| crypto by being bearish, ever. It's all about kumbayah and
| spreading positive vibes in the "community"
| throw10920 wrote:
| RC_ITR wrote:
| Click on the time stamp to any comment, then click flag.
|
| If it breaks the rules it will be taken down.
|
| No need to publicly shame anyone (I understand the irony,
| but this at least feels somewhat couched in information).
| throw10920 wrote:
| There's no "shaming" happening. My remarks were about the
| subject of the _comment_ , not an attack on the _poster_
| (who is anonymous anyway).
|
| I already flagged the comment. The point in adding my own
| was to help set standards for HN, which both serves the
| purpose of allowing the poster to realize why their
| comment doesn't mean HN standards (if your comment gets
| flagged and dead and it's not clear why, that's not
| helpful for a good actor who just didn't know the rules),
| and to help others be aware that these kinds of comments
| shouldn't be allowed.
| risho wrote:
| the comment seemed relevant enough to me.
| RC_ITR wrote:
| Ok, maybe to be a little more direct then. You are
| incorrect, that comment did not violate any of HN's
| guidelines. Just because you disagree does not make
| something unthoughtful (as evidence by it not being
| removed post flag).
| anm89 wrote:
| I think you would have to know more about how the deal was
| structured before making these assumptions. You could hedge out
| directional risk in an asset while borrowing it. I think it's
| doubtful this position was net short bitcoin.
|
| Or you are right, they were unbelievably naive.
| vkou wrote:
| I think option #3 is the most likely one - they didn't
| actually believe what they were saying.
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