[HN Gopher] Binance to acquire FTX
___________________________________________________________________
Binance to acquire FTX
Author : jmsflknr
Score : 355 points
Date : 2022-11-08 16:13 UTC (6 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| ramish94 wrote:
| I'm a little ignorant to the whole crypto ecosystem, so can
| someone give me a quick rundown on the chain of events that led
| to this? Seems a little out of left field.
|
| BTX, from the outside looking in, looked to be one of the more
| well run, stable crypto exchanges. $1.02 billion in revenue with
| $388M in net income in 2021. They didn't go on any crazy hiring
| spree when they didn't have to. Liquidity crisis implies that
| people are withdrawing cash they do not have, but if so, where
| did it go?
| JumpCrisscross wrote:
| FTX bet customer funds through the CEO's hedge fund on an FTX
| token [1]. The token price fell when this was revealed [2].
|
| The hedge fund, and thus FTX, had less money than they owed
| lenders and customers. FTX found a bail-out in Binance;
| otherwise everyone would have lost their money.
|
| [1] https://www.coindesk.com/business/2022/11/02/divisions-in-
| sa...
|
| [2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets-
| as-...
| gitfan86 wrote:
| It isn't officially a bailout. They just said they intend to
| acquire FTX. But, once they look at the books they may
| backout out the deal, especially if most customers want to
| take their money out. What is the point of buying an exchange
| that has no customers?
| rhaway84773 wrote:
| The point is the same reason why FTX bought all the smaller
| crypto firms that were about to collapse.
|
| Preventing exposing the entire crypto currency ecosystem as
| fraud.
| JumpCrisscross wrote:
| > _isn 't officially a bailout. They just said they intend
| to acquire FTX_
|
| That's a bailout.
|
| > _once they look at the books they may backout_
|
| It's not a done deal. But the proposal is a bailout,
| through and through.
| anonu wrote:
| I can't help you but all I can say is empires rise and fall
| faster than a house of cards in this space.
| colinmhayes wrote:
| FTX's ceo also runs a prop trading firm which is the real
| source of his wealth. FTX loaned the trading firm billions of
| its own token FTT. FTX also gave binance billions of dollars of
| FTT because binance invested in them. Over the weekend FTX's
| ceo and Binance's ceo got in a fight on twitter and binance
| sold all of their FTT which collapsed the price. FTX's assets
| are tied up in the loans to their trading firm which are
| denominated in the now essentially worthless FTT and so they
| can't convert the FTT to cash which means can't process
| withdrawals.
| shawabawa3 wrote:
| > so they can't convert the FTT to cash which means can't
| process withdrawals.
|
| That implies they embezzled customer funds (customer deposits
| should never be invested or loaned or intermingled with
| company funds)
| hanniabu wrote:
| https://techcrunch.com/2022/11/07/heres-the-rundown-on-the-b...
| [deleted]
| max_ wrote:
| Its funny how a few days back some people on HN were saying FTX
| is unlikely to be illiquid because SBF is a genius from
| JaneStreet.
| asdajksah2123 wrote:
| And people who knew what they were actually talking about were
| pointing out that it's unlikely anyone would have voluntarily
| left Jane Street as early as he did. But they were largely
| ignored.
| eddsh1994 wrote:
| Leaving Jane Street to become a Billionaire seems like a
| weird criticism
| Bootvis wrote:
| It seems likely that the Kimchi arbitrage (arbitraging
| between exchanges in Korea an the rest of the world) was
| indeed massively profitable. He took a wrong turn later.
| nullc wrote:
| When I saw that he was using that as the claimed origin of
| his wealth I wrote him off as an almost certain fraud.
| Bootvis wrote:
| Why? He must have had some money of his own and some rich
| friends to set it up. So he had the means. Also, the
| difference was there and it was persistent so he had the
| opportunity as well.
| nullc wrote:
| There was _very_ little volume available on those pricing
| discrepancies, making thousands per day without erasing
| the arb would have been a challenge but perhaps not
| impossible. The public is expected to believe he made
| over $10 million dollars per day on average on that
| trade. It 's not credible.
| astrange wrote:
| Maybe he likes Haskell better than OCaml.
| type-r wrote:
| I read he was there for over 4 years, is that abnormally
| short? Seems like a pretty normal period of time to me.
| whymauri wrote:
| Seems like a weird critique to me. Some people join out of
| college and realize that, for a variety of reasons, that
| sector isn't for them (yes, even at Jane Street). Maybe
| they get overly enamored by an internship; maybe they don't
| want to live in NYC. My impression is they are pretty 'open
| door' about rehiring if you leave on good terms or decline
| an offer anyway.
| wmf wrote:
| He sacrificed FTX but kept his real baby Alameda.
| [deleted]
| acgt23 wrote:
| Alameda won't be worth nearly as much without FTX - it was so
| successful because FTX fed it as much market data as it
| wanted and gave it priority market making etc. Also seemed to
| be sending it its own printed FTT tokens to secure loans for
| trading which was the cause of the insolvency rumors.
|
| Neither of those things benefit the owner of FTX unless they
| are also the owner of Alameda
| ww520 wrote:
| Not sure how safe Alameda is. $6 billion out of $14 billion
| of Alameda assets is FTT based. With FTT tanking, its asset
| balance shrunk greatly. It might well has its own liquidity
| problem.
|
| Also with Biannce buying FTX, it can call back the loaned FTT
| from Alameda.
| perlgeek wrote:
| Wasn't there a post hitting the HN front page just yesterday or
| two days ago about how FTX was close to being illiquid, and most
| of the top comments were about how wrong that analysis was?
|
| Or was that another crypto trader?
|
| If anybody could help my sieve-like brain, that would be very
| appreciated :-)
| teuobk wrote:
| Yup, here's the HN thread:
| https://news.ycombinator.com/item?id=33464494
| jaywalk wrote:
| Yep, it was FTX.
| jo6gwb wrote:
| https://dirtybubblemedia.substack.com/p/is-alameda-research-...
| wmf wrote:
| Yes, concerns about Alameda's insolvency infected FTX. In
| retrospect these "concerns" may have been disinfo designed to
| destroy FTX.
| throwaway4good wrote:
| So wouldn't this trigger and potentially be blocked by CFIUS?
| Given Binance's Chinese roots and the general anti-China
| sentiment in US politics.
|
| Here is an article about the twitter acquisition also with
| Binance/CZ onboard - this would similar or worse, no?:
|
| https://www.brookings.edu/research/the-national-security-gro...
|
| The national security grounds for investigating Musk's Twitter
| acquisition
| ajaimk wrote:
| "Note that http://FTX.us and http://Binance.us - two separate
| companies-are not currently impacted by this."
| redox99 wrote:
| Isn't ftx.com[1] from the bahamas, and binance from the cayman
| islands?
|
| [1] Not ftx.us, which is not getting bought
| throwaway4good wrote:
| This is article says it is only the non-US part of FTX that is
| in play:
|
| https://www.cnbc.com/2022/11/08/binance-offers-to-buy-ftxs-n...
|
| Binance offers to buy FTX's non-U.S. operations to fix
| 'liquidity crunch'
|
| The acquisition impacts only the non-US businesses, FTX.com.
| FTX.us will remain independent of Binance. The deal, according
| to Tweets from both Zhao and Bankman-Fried, rests on a non-
| binding letter of intent, pending full due diligence.
| JumpCrisscross wrote:
| > _it is only the non-US part of FTX that is in play_
|
| The U.S. subsidiary had to follow rules that made FTX's
| shenanigans more difficult.
| drak0n1c wrote:
| CZ has shut down the China branch, and was essentially banned
| since their crypto crackdown. He has been publicly critical of
| the CCP government too. The gov may not have much leverage over
| him.
| thepasswordis wrote:
| I am _extremely_ bullish on crypto, and have been for the last
| decade.
|
| That said: the sooner we can get rid of these weird centralized
| exchanges and weird messiah figures the better.
|
| The next thing I thing will explode is Cardano, which appears to
| function approximately like a cult, with no actual product (as
| far as I can tell).
|
| Ethereum, LINK, and Bitcoin. Everything else is a distraction.
| rapsey wrote:
| Crypto would be perfect. If only humans were robots.
| boc wrote:
| Not really, quite the opposite in fact. If humans were robots
| they'd trust each other completely, meaning all financial
| transactions could be done instantly with a simple database.
|
| Humans are messy, so the solution we've arrived at is a
| database _enforced by_ a complicated legal system + state
| power /violence (and arguably private power/violence via the
| mob). This works pretty well and powers trillions of dollars
| around the world.
|
| Crypto is a fundamental misunderstanding of what makes modern
| finance hard. It's not about trust, it's about enforcement. I
| don't need to trust my bank, but I need to trust that
| somebody will make things right if my bank takes my money.
| That allows me to trust my bank with my life savings, even
| though I've never met my banker or even know a single
| employee at the bank.
|
| Crypto is missing this point and it's why, despite following
| it since the beginning, I've never thought it has a future.
| It's fundamentally solving the wrong problem.
| short_sells_poo wrote:
| That's a very eloquent way of putting it, thank you. It's
| possibly even worse than just a misunderstanding though.
| I'm sure there are people in the Crypto industry who see
| core issue of enforcement, because the second wave (after
| Bitcoin first became mainstream) was all about smart
| contracts. E.g. there was an effort to move the subject of
| enforcement into the framework. After all, if the contracts
| that need enforcement are part of the crypto system, then
| enforcement can also happen in the same system. Right?
|
| Of course, this still falls short because no amount of
| mathematics will bridge that gap. At some point, the
| financial system (whether classical or based on
| blockchains) has to interact with the mind boggling mess of
| the real world. In the real world, 2+2 is not certain or
| deterministic at all. It can be debated, social
| implications weighed and the judge might say it's 4 and a
| bit, or slightly more than a pie.
|
| In some sense it feels like crypto would work perfectly in
| a world that is completely deterministic, measurable and is
| populated wholly by algorithms interacting with each other.
| The second order question then is: would such a world even
| need crypto?
| paulpauper wrote:
| The time to have been bullish was a decade ago. Now it looks
| like the bubble finally burst. No bottom in sight. No adoption
| either. The government has made crypto obsolete or unusable.
| Everything is traced and tracked.
| m00dy wrote:
| reducesuffering wrote:
| SBF tweets for more clarification:
| https://twitter.com/SBF_FTX/status/1590012124864348160
|
| Apparently this is for the international exchange business,
| FTX.com, but not FTX.us or Alameda quant trading firm.
| gringoDan wrote:
| Some level-headed commentary on the developing situation via Cas
| Piancey and Bennett Tomlin:
| https://www.youtube.com/watch?v=B2UFswUMQqI
| paulpauper wrote:
| And total market meltdown continues. Not good enough.
| adam_arthur wrote:
| The ultimate shell game...
| thedangler wrote:
| I don't know if this is posed yet but FTX.com is different than
| FTX.us which GameStop Partnered with. I've seen lots of confusion
| and FUD arround this.
| zaps wrote:
| The umps get new jackets!
| bob234 wrote:
| blueblisters wrote:
| This is probably going to have ripple effects in unrelated
| industries - FTX Foundation, presumably funded by
| FTX/Alameda/SBF's personal wealth, has been been the biggest
| funder of AGI projects and labs this year. They were the biggest
| funder (in a $500M fundraise) for Anthropic, which is (atm) a
| non-profit AI alignment lab. They also funded a bunch of esoteric
| EA projects which likely rely on them for continued funding -
| https://ftxfuturefund.org/our-grants/
| dabeeeenster wrote:
| It's a pyramid all the way down. So surely when there's only 1
| exchange left standing, who is going to catch it when it falls?
| 2OEH8eoCRo0 wrote:
| Don't catch a falling knife.
| kevmo314 wrote:
| Build new exchanges faster than they fall. It's the only way to
| keep the ponzi going.
| Analemma_ wrote:
| Easy to do in a world of 0% interest rates, not so much now.
| I think the entire crypto ecosystem is about to crash and
| burn hard as the Fed just keeps the rate hikes coming.
| three_seagrass wrote:
| Yeah the music stops when the naive outsiders stop having
| the extra cash into the system.
| Scoundreller wrote:
| Pretty sure the last remaining counterparty will be the
| mysterious and shadowy # # # #, # # of Elbonia.
| boppo1 wrote:
| Gemini is doing fine last I checked.
| ushakov wrote:
| How much?
| [deleted]
| b0sk wrote:
| [deleted]
| [deleted]
| whatifs wrote:
| smells like a crypto pump and dump to me, we shall see
| Sysctl232 wrote:
| More like a dump and pump
| LatteLazy wrote:
| Might be the first hostile takeover via crypto...
| polygamous_bat wrote:
| On an unrelated note, I really hope to never see this clown's
| (SBF) face or name in any of the Effective Altruism
| docs/post/communications. Really irks me to see some new age
| robber baron to be the face of twenty-first century altruism,
| notwithstanding my other issues with EA.
| mjr00 wrote:
| So after SBF came out yesterday and said FTX was totally fine..
| it turns out they _were_ insolvent and needed to get bailed out
| to cover withdrawals?
|
| Never a dull moment in the world of crypto.
| pranshum wrote:
| "Every banker knows that if he has to prove he is worthy of
| credit, in fact his credit is gone." - Bagehot
| oldgradstudent wrote:
| They claim to be an exchange, not a bank, not investing user
| assets.
|
| https://twitter.com/SBF_FTX/status/1589598285798707202
|
| The Bagehot quote is not SUPPOSED to apply.
| matheusmoreira wrote:
| > They claim to be an exchange, not a bank
|
| They're liars. They are literally banks with all of the
| drawbacks and none of the benefits. They do fractional
| reserve banking with user deposits.
| oldgradstudent wrote:
| I'm not sure why you are ruling out a Ponzi scheme so
| quickly.
| matheusmoreira wrote:
| I don't think a Ponzi scheme adequately explains the
| problems with centralized cryptocurrency exchanges.
| They're just banks. There are plenty of scammers in this
| space, I just don't think Binance is one of them.
|
| The problem is they leverage user deposits as gambling
| money. These corporations can't bear to watch a pile of
| money sitting around doing nothing while in their
| custody. They just need to loan it out.
| colinmhayes wrote:
| Did anyone actually believe they weren't loaning out user
| funds? How were they funding their massive leverage
| programs? How were they loaning all that money to SBF's
| trading firm?
| matheusmoreira wrote:
| Crypto? This is nothing but a good old bank run.
| JumpCrisscross wrote:
| > _nothing but a good old bank run_
|
| Exchanges aren't subject to bank runs. If an exchange (or
| even broker) cries run, they were taking novel risks.
| matheusmoreira wrote:
| They aren't brokerages, they're banks pretending to be
| exchanges. They do fractional reserve banking with user
| deposits.
| arcticbull wrote:
| Fractional reserve in the context of banking is
| completely different because the FDIC backstops runs and
| the Fed backstops the FDIC.
|
| Nobody backstops FTX or any other crypto exchange so its
| better described here as 'the yolo lifestyle'.
|
| A modern day bank run in traditional finance is
| functionally impossible* (up to the FDIC insurance
| limits, and often higher in practice - there were no
| imposed limits at WaMu for instance).
| matheusmoreira wrote:
| > modern day bank run in traditional finance is
| functionally impossible
|
| Not at all. Bank runs still happen, the backstops just
| soften the blow with liquidity injections. Every time you
| see a withdrawal limit, there is no doubt a bank run is
| occurring.
| JumpCrisscross wrote:
| > _you see a withdrawal limit, there is no doubt a bank
| run is occurring_
|
| This is not accurate. Withdrawal limits are there to
| control fraud.
| matheusmoreira wrote:
| Signs on the ATMs of a failing bank explaining that you
| can only withdraw $500 a day weren't put there due to
| concerns about fraud.
| astrange wrote:
| A failing bank in the US will be taken over by another
| healthy bank over the weekend (or overnight) with help
| from the FDIC. You're not really at risk, at least if
| you're the kind of person who can take their whole
| account out in cash. The reason they'd put those signs up
| is that the government doesn't feel like loosening fraud
| regulations just because there's a bank run on.
| guepe wrote:
| Matt Leving from Money Stuff discussed it today (!). If
| exchanges provide leverage products to customers, they
| become banks (providing leverage, through funding
| typically by other customer's deposit). So bank runs are
| possible.
| arcticbull wrote:
| Ah will take a listen! Thanks!
| JumpCrisscross wrote:
| > _exchanges provide leverage products to customers_
|
| Levine spoke about brokerages. When brokerages extend
| credit, they can be subject to run dynamics. Not
| exchanges.
| lordnacho wrote:
| What happens if an exchange extends credit?
|
| There's a reason the perp exchanges have a fund, it's the
| capital that protects them from losing money on
| overleveraged customers. Or rather it's the rainy day
| fund that they lose out of when the delev happens.
|
| Not sure this is related though, mechanics of today are
| not clear to me from what I've been able to find.
| epa wrote:
| It seems that Citadel may have short squeezed FTX's token and
| created this.
| snapcaster wrote:
| Please don't tell me you own GME stock and blame Ken Griffin
| for everything bad that has ever happened. Can't you people
| just stay in your subreddits?
| cheeze wrote:
| Proof?
| isthisthingon99 wrote:
| you're getting downvoted by people who didn't get the joke.
| Yizahi wrote:
| kristjansson wrote:
| Why is it apparently so difficult to run a solvent crypto
| exchange? On the face, it shouldn't be too hard, just take
| deposits, stick them in a wallet, and swap client balances in a
| database.
|
| Is the temptation to maintain a reserve ratio < 1 just too great?
| Do operators try to earn small, low-risk return on client funds
| only to find there are no low-risk, positive-return assets in
| crypto? Are the extending margin to clients or explicitly
| stepping in as counterparty, and get exposed to losses as prices
| move?
| tim333 wrote:
| The majority of crypto exchanges failing has been due to them
| being hacked or assets stolen. It seems to be an ongoing
| problem. It's kind of inherent to crypto transfers not being
| reversible. In a regular stock exchange if a crook tries to
| transfer the assets somewhere you can freeze or reverse the
| transaction. Crypto not so much.
|
| The FTX issues seem to be something else - it's a bit unclear
| what exactly at the moment.
|
| I've got some assets with FTX so I'm curious. As well as
| holding crypto they do futures trading on it and I wouldn't be
| surprised if Alameda Research, their privately held prop
| trading fund is a counterparty to some of those and may have
| gone bust.
| [deleted]
| fshbbdssbbgdd wrote:
| Running a reserve ratio < 1 is a convenient way of funding
| advertising to get more people to use your exchange.
|
| So the question you should be asking is: if there is a solvent
| crypto exchange, how would I ever find out about it?
| espadrine wrote:
| Storing money costs money: at least the bank fees, if not the
| negative interest rates.
|
| Processing money costs even more money: operations must be
| scrutinized, international movements require validation and
| communication, and various AML/CFT/Fraud procedures must
| perform investigations etc. You have accounts in various
| currencies, perform conversions to maintain liquidity...
|
| So I can see why they would start dipping their toes into
| investments. Once they start, they probably don't consider
| enforcing Basel III to their procedures, and things just
| unfold.
| theptip wrote:
| > Why is it apparently so difficult to run a solvent crypto
| exchange?
|
| Running a stock exchange is a hard business too; you are the
| market maker, you set the spread, and the most sophisticated
| investors in the world are trying to arbitrage you. Any mistake
| can potentially ruin you. If you do you job right you take a
| tiny sliver of profit from each transaction.
|
| Now consider crypto, where your ability to pause the market or
| unwind clearly-erroneous transactions is reduced or removed.
|
| Sounds excruciatingly hard to me.
| Bootvis wrote:
| That's why you get outsiders on your exchange to make markets
| and you just charge commissions and access fees.
| JumpCrisscross wrote:
| > _Running a stock exchange is a hard business too; you are
| the market maker, you set the spread, and the most
| sophisticated investors in the world are trying to arbitrage
| you_
|
| Normal markets aren't as centralised as crypto. The exchange
| and market maker are separate.
| pcthrowaway wrote:
| It's pretty uncommon for exchanges to do all their market
| making directly, and many of the ones that do still rely on
| outside market making.
|
| FTX was almost the exception since Alameda spun out of it
| IIRC
| JumpCrisscross wrote:
| > _pretty uncommon for exchanges to do all their market
| making directly_
|
| Point is, in real finance, it's pretty uncommon for
| exchanges to do _any_ of their market making. Largely to
| ensure they can project confidence in crises. Market
| makers blow up. Exchanges shouldn 't.
| SXX wrote:
| This is just not the case. At least on Binance there are
| number of market makers other than Binance itself and there
| is a lot of tech built around this. I guess every major
| crypto exchange after MtGox is as complex as normal
| markets.
| joyfylbanana wrote:
| > Now consider crypto, where your ability to pause the market
| or unwind clearly-erroneous transactions is reduced or
| removed.
|
| These should be quite possible, no? Exchanges have
| mainteinance pauses now and then, however if they had them
| regularly that would drive customers away. Unwinding
| transactions inside crypto exchanges is also not unheard of I
| think.
| chis wrote:
| Probably the insolvent exchanges are able to offer lower costs
| and better promotions to users. For instance Coinbase has
| always charged way higher fees than FTX for simple buying and
| selling of coins.
| from wrote:
| Sometimes they offer to cover withdrawal fees too. Still it
| seems like they should be making money hand over fist.
| favflam wrote:
| Asset heavy. The computer systems to run one are expensive.
| Compliance is expensive. Your return on assets are probably
| lower than 5% in a regulated market.
|
| If you don't take extra risks to spruce up returns, you lose
| money.
| skippyboxedhero wrote:
| From Twitch, interview with Wintermute CEO (another big crypto
| MM) - https://www.twitch.tv/videos/1647004406?t=1h39m38s - had no
| idea this coming either (who got hacked for $100m recently).
|
| Later in the video Martin Shkreli tells Do Kwon that prison isn't
| so bad.
|
| Interesting interview.
| [deleted]
| [deleted]
| spelunker wrote:
| I thought Binance essentially caused all of this by dumping (and
| advertising dumping) FTT tokens? And now that FTX is in distress
| they're going to swoop in and buy a competitor? Kind of reminds
| me of Luxottica buying out Oakley...
| SevenNation wrote:
| The slashdot piece just links to the real article:
|
| https://techcrunch.com/2022/11/08/binance-signs-letter-of-in...
|
| > Zhao (pictured above) said Binance reached the decision after
| FTX asked the crypto behemoth for help. "To protect users, we
| signed a non-binding LOI, intending to fully acquire FTX and help
| cover the liquidity crunch. We will be conducting a full DD in
| the coming days," he said in a tweet.
|
| This appears to be an admission of running a fractional reserve.
| Otherwise where could a "liquidity crunch" come from.
|
| Hilariously, this is the origin story of Bitcoin. Can't trust
| banks. Create electronic cash. Users are clueless about what to
| do with the cryptographic material needed to secure electronic
| cash. Users park funds at exchange. Exchange operator is a
| criminal who embezzles the money away, or an incompetent boob who
| just loses it. Exchange freezes withdrawals, temporarily at
| first, while continuing to accept deposits. Mayhem ensues. Rinse
| and repeat.
|
| The entire FTX team belongs behind bars. The VC team that backed
| this hair-brained venture deserves everything coming to them.
| lordnacho wrote:
| What's the background of the liquidity crisis at FTX?
| edf13 wrote:
| CZ said it's dumping all their tokens from Binance...
|
| FTX starts to fail...
|
| CZ snaps it up for a song
| lordnacho wrote:
| I heard that as well, but how did FTX put themselves in a
| position where that can happen? Leveraging up in your own
| token?
| spaceman_2020 wrote:
| apparently they were playing VC with user deposits.
|
| This is why regulations exist.
| v8xi wrote:
| There was a report that came out a few days ago claiming
| that Alameda Research (SBFs company) was insolvent / did
| not have enough cash to cover their FTT liabilities[1]. CZ
| begins dumping their FTX token to de-risk and that led to
| them actually being insolvent.
|
| [1] https://dirtybubblemedia.substack.com/p/is-alameda-
| research-...
| drummer wrote:
| Kids, this is why you never leave your crypto on an exchange.
| robswc wrote:
| absolutely wild how "fast" this happened.
| bogomipz wrote:
| Interesting just 6 weeks ago the news was that FTX was buying
| Voyager Digital's assets for 1.4 billion dollar after winning a
| bankruptcy auction. In July the news was that FTX provided
| BlockFi with a $400 million line of credit and an option to buy
| the company for 240 million.[1][2] Now the crypto bailout savior
| is being bailed out?
|
| [1] https://www.cnbc.com/2022/09/27/bankrupt-crypto-lender-
| voyag...
|
| [2] https://techcrunch.com/2022/07/01/ftx-us-deal-with-
| troubled-...
| flanfly wrote:
| Impressive. I wonder how much of this was planned by CZ.
| [deleted]
| 55555 wrote:
| Anyone here remember when SBF was offering Elon Musk a billion
| dollars to help him buy Twitter? What the hell was he thinking?
| colinmhayes wrote:
| He was probably thinking the offer would leak and give him
| publicity, which it did.
| polygamous_bat wrote:
| To be completely frank, it worked too (at least on me). If
| you asked me two weeks ago which company would go bankrupt
| first between FTX and Coinbase, I would be hard pressed to
| answer, even though we all have access to the financial
| documents of Coinbase and all we have from FTX is SBF glamor
| and hot air.
| Scoundreller wrote:
| Are you sure they didn't make the deal?
| reducesuffering wrote:
| Yes, SBF didn't get a stake: https://danluu.com/elon-twitter-
| texts/#equity-financing-comm...
| dQw4w9WgXcQ wrote:
| Will be interesting to see how this assertive prediction from
| "someone in the industry" a few days ago plays out:
|
| >> Regardless if FTT collapses, it wouldn't matter cause
| insolvency both the asset and liability side of the balance sheet
| would go down. [1]
|
| We got our FTT collapse today, let's see if the "experts" are
| correct.
|
| [1] https://news.ycombinator.com/item?id=33467429
| guelo wrote:
| Lol wouldn't be surprised if dcolkitt is SBF or someone near
| him
| DEDLINE wrote:
| Was just thinking about this comment
| [deleted]
| jo6gwb wrote:
| SBF yesterday:
|
| "FTX is fine. Assets are fine."
|
| Can't trust a word out of this guy's mouth.
| xur17 wrote:
| If I've learned anything, the moment you start seeing posts
| like "funds are safe", "withdrawals are flowing" from an
| exchange, it's game over, and time to gtfo if it's not already
| too late.
| kwere wrote:
| Funds are Safu -Bizonacci
| pranshum wrote:
| "Every banker knows that if he has to prove he is worthy of
| credit, in fact his credit is gone." - Bagehot
| AlexMoffat wrote:
| +1 That's a great book.
| BLanen wrote:
| "Exchanges"(Exchanges and brokerages in one) are not supposed
| to be banks. Everything can be withdrawn from brokerages
| without them being insolvent.
| pranshum wrote:
| If the brokerage provides leverage to its customers, it can
| be subject to the same sort of bank runs that a normal bank
| can.
| edouard-harris wrote:
| Indeed. And in this case, it was from one day to the next.
| ploppyploppy wrote:
| I'm really glad this shyster is having light shed on his
| behaviour. It's always been odd to me how FTX made it so big so
| quickly.
| ww520 wrote:
| The assets are fine. Just the value of the assets is not sure.
| v8xi wrote:
| Assuming due diligence goes through. I'm sure Binance won't know
| precisely where to locate any deal-tanking skeletons.
| dang wrote:
| Url changed from
| https://slashdot.org/story/22/11/08/1612256/binance-to-acqui...,
| which points to this.
|
| Submitters: " _Please submit the original source. If a post
| reports on something found on another site, submit the latter._ "
|
| https://news.ycombinator.com/newsguidelines.html
|
| Edit: we changed the URL again--this time from
| https://techcrunch.com/2022/11/08/binance-signs-letter-of-in...
| to a different one that seems to give more background and more
| explanation. (via https://news.ycombinator.com/item?id=33523192,
| but no comments there)
| ilrwbwrkhv wrote:
| All of these folks need to be in prison along with Andreeson
| Horowitz. All bloody crooks the lot of them. The largest ponzi
| scheme in the history of humanity and they wonder why the world
| is not getting better.
| beambot wrote:
| _Largest_ might be a stretch. I suggest spending some time
| reading about John Law, the South Sea Bubble, and the
| Mississippi Company. When you realize that all of these ponzi
| schemes ultimately resulted in modern central banking, you
| might reasonably contend that the largest ponzi scheme is still
| sitting right here in plain sight -- with crypto illuminating
| (mocking?) the essence of fiat-denominated "wealth" and
| "money".
| rottencupcakes wrote:
| Is it really a ponzi scheme if it's enforced via threat of
| violence?
| beambot wrote:
| Perhaps -- in the same way that the difference between a
| religion & a cult is really just a matter of scale and mass
| acceptance.
|
| To be clear: I'm not advocating against the model of money
| as we know it today... All models are wrong, but some are
| useful.
| boppo1 wrote:
| Can you give us a TL;DR on how those schemes resulted in
| modern central banking? It's challenging to find solid info
| on the introduction/acceptance of central banking as the
| status quo. Lots of it veers hard into conspiracy theory and
| information that I can tell is wrong from a handful of
| college finance courses.
|
| I know this is the second (or third) central banking paradigm
| that has existed in the US. The last one got shut down by ol'
| AJ, but I don't really understand how that all went down and
| how it's different (or similar) to what we have now.
| beambot wrote:
| The ~1 hour YouTube series _The History of Paper Money_ by
| _Extra Credit_ is a good, factual starting point presented
| in an entertaining fashion:
| https://www.youtube.com/watch?v=-nZkP2b-4vo
| dibt wrote:
| Did AH take money from retail investors? I suppose you can
| claim they pumped these products. I'm not convinced it's any
| different than what happens with an IPO that started with VC
| money. I'm not saying it's good, just that it's as bad as
| anything that's regulated.
| wolski wrote:
| https://www.youtube.com/watch?v=kSXQgCP3WQw&t=1620s A good
| explanation on how these schemes usually work out.
| shuckles wrote:
| Would you consider cashing out pre-ICO tokens for bogus
| projects to "accredited investors" (ie retails) as "taking
| money"?
| dibt wrote:
| I have no doubt that anybody that had access to pre-release
| allocations were well aware of the risks. Net worth was
| likely checked. They don't need to be treated like a child.
|
| Probably a civil matter anyway - no expectation of jail,
| which was what the parent commenter referenced.
| shuckles wrote:
| I was referring to insiders selling at ICO to retails.
| I'm sure insiders were savvy and made plenty of money.
| havefunbesafe wrote:
| There was a looming liquidity crunch because the people running
| exchanges are... well... lying about reserves.
| ploppyploppy wrote:
| Kraken aren't: https://www.kraken.com/en-gb/proof-of-reserves
| locallost wrote:
| As Matt Levine just pointed out in his newsletter, FTX was doing
| the same to bail out other failing crypto companies in the
| summer. Now it needs a bail out itself.
|
| What will happen to Binance in a few months if the system is now
| unwinding? That's the question right, if it's a system problem or
| FTX was greedy and over leveraged. For me it smells like a system
| issue because it's all based on funny money.
| JumpCrisscross wrote:
| Ha, in exchange for extending a non-binding LOI, Binance got a
| competitor to admit they're illiquid.
| polygamous_bat wrote:
| Which seems like a huge L for FTX... until you start thinking
| about what the alternative must have been if this is what they
| chose.
| JumpCrisscross wrote:
| > _what the alternative must have been_
|
| It's clear it would have involved everyone losing their money
| and Bankman Fried being on the run a la Do Kwon.
| polygamous_bat wrote:
| I mean, that could still happen. I am not ready to give up
| hope yet.
| wslh wrote:
| How is Solana positioned in this context? Breakpoint Solana was a
| big event these days [1]
|
| [1] https://solana.com/breakpoint
| SilverBirch wrote:
| So this is presumably going to stop the bleeding for customer
| deposits at FTX. I wonder how this all shakes out with Alameda -
| because it looked extremely likely that Alameda and FTX were
| doing a fair amount of business between each other, and now
| Alameda likely will be forced to unwind a load of illiquid
| shitcoin positions, CZ isn't going to want those loans
| outstanding (or maybe he will - pull the same move again and hold
| a gun to Alameda's head ready to force liquidition whenever he
| likes)
| dibt wrote:
| I think Alameda only held those positions in service to their
| market making operations, not FTX operations.
|
| The line between where FTX starts and Alameda ends always
| confused me.
| ww520 wrote:
| Bitcoin balance on FTX Exchange have gone negative [1]. The
| withdrawals have been disabled on FTX. It's probably the AltCoins
| bought with the BTC by FTX have gone down in value and the BTC
| are gone for good. When people withdraw against BTC, there aren't
| enough.
|
| [1] https://cryptoslate.com/bitcoin-balance-on-ftx-exchange-
| goes...
| steveBK123 wrote:
| This is great, he was lecturing how stock exchanges should work &
| on the cover of Fortune as the next Warren Buffet all of what.. 8
| weeks ago?
|
| SV fintech keeps reinventing all the mistakes of 19th century
| banking.
|
| BNPL is the next explosion btw.
| steveBK123 wrote:
| Found it:
|
| Speaking with the Financial Times on July 14, Bankman-Fried
| stated that if FTX can become the top crypto exchange and
| supplant rivals such as Coinbase and Binance, the idea of
| purchasing giants such as Goldman Sachs and CME group is not
| off the table:
|
| "If we are the biggest exchange, [buying Goldman Sachs and CME]
| is not out of the question at all."
|
| https://cointelegraph.com/news/billionaire-sbf-says-ftx-may-...
| 22SAS wrote:
| >"If we are the biggest exchange, [buying Goldman Sachs and
| CME] is not out of the question at all."
|
| JFC, what an arrogant twat!
| mamonster wrote:
| BNPL has already exploded though, but good call. Klarna is down
| about 90% in the private markets, Affirm about the same from
| all time high.
|
| Another good candidate is "AI-powered" insurance i.e Lemonade.
| skippyboxedhero wrote:
| Insurance is already "AI-powered"...insurance companies
| employ statisticians to build prices, and they have been
| using low-cost distribution since the 90s.
|
| Speaking generally, insurance was one of the first industries
| to deploy technology effectively in their core business. They
| are still doing that.
|
| The issue with companies like Lemonade is that they are
| rebranding the same product as "AI" (afaik, Lemonade is just
| taking share by offering cheaper prices...doesn't sound quite
| as appealing as "AI").
| rhaway84773 wrote:
| This. I'm not sure what Lemonade does differently from
| other insurers than providing a nicer UI.
|
| They likely also have lower costs due to eliminating the
| middle men whose job is to translate text on the screen
| into words spoken to a customer.
|
| So their lower costs could actually be legitimate.
| skippyboxedhero wrote:
| Obviously this does vary because retail insurance is
| usually sold locally but the middle men were eliminated
| years ago.
|
| First, it was phones. This happened in the early 90s.
| Then it was internet which was largely finished by the
| early 2010s. The only exception for this is that online
| price-comparison websites have added back some
| distribution costs...but you still need to spend on
| marketing if you are online (generally speaking, online
| ads aren't cheap, I know insurers in my market that have
| moved away from price-comparison/online advertising
| because of the cost).
| weswilson wrote:
| There are still plenty of middle men in insurance. There
| are Carriers, MGA's, Agency Networks/Aggregators, and
| Brokers.
|
| Large insurance carriers (think Geico, etc) with enough
| market share (and captive agents) have the vertical
| integration that eliminates the middle men, but there is
| a whole world of insurance that most people don't realize
| each taking their cut.
| skippyboxedhero wrote:
| Which is why I said it depends on local situation. None
| of those exist where I am.
| FormerBandmate wrote:
| Their stock value is down, but they still are financially
| solvent. Lehman didn't explode when it fell from $60 to $6,
| it exploded when it went bankrupt. They're a lot closer to it
| now then a year ago, however
| twelve40 wrote:
| they are losing like what, $700 mil a year? with the
| current cost of capital, probably not solvent for very
| long.
| FormerBandmate wrote:
| Yeah, they're fucked. They're just not dead (yet)
| boppo1 wrote:
| How do you keep track of private markets? Are you involved in
| the business?
| steveBK123 wrote:
| ZIRP is a hell of a drug. There's not a lot of innovation to
| be had on lending that is actually going to be considered
| legal. Unless they obfuscate it with AI, they are going to
| run afoul of some sort of anti-discriminatory laws.
|
| Credit score&history, income, capital.. go.
|
| Most of what BNPL actually turned out to be was just dumb
| money.
| mamonster wrote:
| Its also the fact that in a bear market / recessions
| usually most correlations go to 1(on the way down) and
| whatever risk metric you used previously justify having low
| default provisions suddenly doesn't work anymore.
|
| Wonder whether we will ever see the actual datasets that
| BNPL founders saw that made them decide it is a safe
| business. Probably like you said ZIRP,bullmarket
| delinquency percentages.
| astrange wrote:
| Part of the supposed appeal of BNPL is that if the market
| gets risky, you have much more choice about how much new
| credit you can offer, since you're free to offer it per-
| purchase not per-customer.
|
| It makes more sense for a large retailer to run it
| themselves, though; there's not necessarily any value in
| a dedicated company selling it straight to customers.
| steveBK123 wrote:
| Yes, though they were already taking on serious credit
| losses before any normal creditors were.
| janmo wrote:
| Title is incorrect, they signed a non-binding LOI. They will
| first do a lot of Due Diligence and might back out of the deal
| anytime.
| alphabetting wrote:
| Yeah. Binance seems to have all the leverage.
|
| https://twitter.com/ClarityToast/status/1590016720923930628?...
| wmf wrote:
| FTX needs cash right now and either Binance will provide it
| right now or they won't.
| janmo wrote:
| It seems withdrawals are halted, and there is no clarity of
| weather or not they have resumed after the announcement.
|
| Without withdrawals FTX will loose in importance and value
| every single hour.
|
| It is hard to build trust as a crypto exchange, but it is
| very easy and can be quick to lose it.
| Scoundreller wrote:
| > It is hard to build trust as a crypto exchange
|
| Iunno, it seems a lot easier than I ever expected
|
| (I don't run one, just observing others)
| Bubble_Pop_22 wrote:
| Lots of stuff changed since the Middle Ages, antibiotics took the
| place of leeches, we know that the Earth revolves around the Sun,
| we can take pictures of Black Holes...
|
| What hasn't changed is that given the opportunity everybody wants
| to be a banker, invest other people's money and pocket the
| difference.
| neonate wrote:
| https://archive.ph/I7ZRD
| sherlock_h wrote:
| Wow. What an outcome to the whole saga. I wonder what happened
| behind the scenes
| datalopers wrote:
| CZ triggered it, destroyed FTX, and now gets to be the hero.
| JumpCrisscross wrote:
| > _CZ triggered it_
|
| Binance called attention to the weakness. The underlying
| issues were all caused by FTX.
| returnInfinity wrote:
| This exactly, blame FTX
| shapefrog wrote:
| I cant believe that horrible charity triggered the collapse
| of Bernie Maddoff by asking for their money back.
| SilverBirch wrote:
| You know what this makes me kind of wonder... back earlier in the
| year SBF made a big show of coming in and investing in a bunch of
| the companies that were collapsing due to the LUNA/3AC/Celsius
| problems. He stepped in and to some extent halted the unwinding
| of some of these issues. It turns out now that it's likely FTX is
| underwater, and Binance is basically doing the same thing -
| coming in, picking them up cheap and preventing them from really
| having to unwind.
|
| So It's perfectly possible this action does the exact same thing
| as last time - simply stalls the unwinding of this catastrophe,
| which in the end could possibly even prove Binance insolvent. At
| the end of the day we just end up in a situation where Binance
| itself has pricing power over tonnes of coins, and if the market
| comes back they'll be fine, but if the market continues to slide
| at some point they won't be able to support the market any more.
| fdgsdfogijq wrote:
| In retrospect, something very shady about those deals they
| made. There may have been more contagion than let on. Or FTX
| themselves was financially tied to those assets, and was the
| true actor swindling people through ponzi yield farming
| schemes.
| shapefrog wrote:
| Pure speculation - but I am going to go ahead and speculate
| that they lost most of the money when everything collapsed a
| few months ago in the defi blow up.
|
| They doubled down and bought up distressed assets for cents on
| the dollar, hoping to make it back. A few months on, these bets
| are worth $0 and there is a $5bn hold in the balance sheet.
|
| If binance havent been f'ing around on the side gambling on the
| price, and just collect their brokerage on their exchange they
| will have plenty of cash to make FTX customers whole, restore
| some faith in the system and dominate the market place.
| FormerBandmate wrote:
| Binance has serious legal issues (governmental investigations)
| and isn't based out of any jurisdiction. A Binance failure
| would have consequences that are very hard to predict
| from wrote:
| Binance reminds me of https://en.wikipedia.org/wiki/Bank_of_C
| redit_and_Commerce_In... but I don't think they're stealing
| customer money. It is amazing that they have evaded American
| regulators so long. I think one day they are going to disable
| trading in dollars.
| FormerBandmate wrote:
| Honestly, I think FTX is biting off way more than they can
| chew. They're really well-connected for the crypto
| industry, knifing them will definitely get the attention of
| regulators and that could blow up the entire thing. Their
| only real asset is being perceived as too big to fail but
| they're not exactly acting in ways that endears them to the
| federal government
| pjc50 wrote:
| Unless Mr CZ is on the moon, he very much is based out of
| some jurisdiction. It just might not be extraditable to the
| US.
| FormerBandmate wrote:
| He keeps moving around. I think he's based out of Dubai
| now, but there's been seven countries or so over the past 5
| years
| idiotsecant wrote:
| I'm not sure that binance has a reason to exist in the
| current world where defi is a thing.
|
| Things like Coinbase etc are your place to go if you want a
| fiat to crypto on-ramp or off-ramp or if you want a
| reasonably safe place to park crypto if you don't want to own
| it yourself.
|
| There are innumerable decentralized exchanges where a person
| can be absolutely (for some definition of the word) sure that
| the exchange won't be shutting down and taking your money
| before you're done doing your transaction. There are L2 DEX
| even that are approximately the same cost and same level of
| inconvenience as something like Binance.
|
| Why does it matter if Binance goes away? I'm not sure if it
| does!
| [deleted]
| searchableguy wrote:
| Binance is the biggest exchange by a _huge margin_. It
| dwarfs coinbase and FTX.
|
| They are also huge investors in crypto and any winding up
| will have an impact on a significant number of companies.
|
| They control a significant portion of stablecoin, defi, and
| chain market too.
|
| Their impact would be felt outside the crypto space if they
| ever go down.
| rhaway84773 wrote:
| All the more reason for them to go down sooner rather
| than later because they're eventually gonna go down, so
| better now where they will have less impact outside the
| crypto world than they would a few months or years later.
| TomSwirly wrote:
| If it's going to happen, better sooner than later.
| eftychis wrote:
| I mean we are wishing here for an economic catastrophe.
| What am I missing?
| pasttense01 wrote:
| It's not an economic catastrophe: currently the real
| economy is not strongly affected by what happens in the
| crypto-economy--and we need to keep it that way!
| rideontime wrote:
| So, report back here for the same thread in a few months?
| Who'll it be next?
| warinukraine wrote:
| Yes, because the entire space is predicated on some magic beans
| having intrinsic value, which they don't. And then people
| realize that magic bean number N is also worthless, everyone
| exposed to magic bean number N goes bankrupt.
| rhaway84773 wrote:
| This is the crypto ponzi falling apart. First the smaller
| ponzis fall apart so the larger ponzis need to step in so the
| fact that the entire thing is one big Ponzi doesn't get fully
| exposed.
|
| The Ponzi falling and subsequent cover up by the bigger Ponzi
| keeps going up the chain until those at the top of the Ponzi
| food chains collapse.
|
| Right now it looks like that might be Binance.
| eftychis wrote:
| I think the title is incorrect (someone else noted too!). It
| should be "Binance sends non-binding Letter of Intent [to buy] to
| FTX."
|
| Less sexy, more accurate.
|
| Also, extremely likely they are trying to consolidate power and
| they orchestrated this situation I'd say. This "smells" hostile
| takeover, but in a currency setting. a) They sold FTT in a
| "dumpy"/reevaluate its price way b) they were asked for a loan or
| partial buy to add influx c) they sent a "we will just buy
| you."d) They sent messages that would erode the trust to the eyes
| of the world.
|
| Rings a bell? (Spoiler: see Twitter.)
| WhiteOwlEd wrote:
| There is an interesting irony to this in that SBF had contributed
| $38 million to PACs as part of this election cycle.
| partiallypro wrote:
| What if Binance looks under the hood (this is not a binding
| acquisition yet) and just says it's not worth it? What happens to
| everyone's deposit?
|
| I find it ironic that the "decentralized" nature of crypto is
| becoming more and more centralized. If FTX dies, beit via
| acquisition or just utter collapse, Binance would be a near
| monopoly.
| alphabetting wrote:
| September's cover of Fortune was quite the jinx
|
| https://content.fortune.com/wp-content/uploads/2022/07/COV.W...
| no_butterscotch wrote:
| Looks like it was the "Or crash and burn" from the cover. Bad
| move on his part.
|
| I was wondering why he was throwing rescue tubes to silly
| projects. It seemed like he had too much money.
| anonu wrote:
| I think SBF realized marketing is everything. Being the face of
| crypto, sponsoring sports stadiums, being on the cover of a
| widely distributed magazine, all part of the same playbook.
| skippyboxedhero wrote:
| The Superbowl ad curse.
| rhaway84773 wrote:
| Lots of crypto cokpanies that did not advertise in the
| Super Bowl or whose founders were not profiled by Forbes or
| Fortune have also collapsed.
| moneycantbuy wrote:
| I hope MLB umpires continue to wear the FTX logo plastered all
| over their uniforms for the coming years.
| davydog187 wrote:
| Short explainer on the backstory
| https://www.milkroad.com/p/binance-vs-ftx-heres-happened-wee...
| seaucre wrote:
| Would love to see Sorkin's version of the negotiation between SBF
| and Binance.
| skee8383 wrote:
| returnInfinity wrote:
| its related to tech and the valley
| skee8383 wrote:
| It's a slippery slope. i've ran a few IRC and matrix
| channels. once the crypto people show up it all gets turned
| into a crypto circus. they will take over this site if it's
| allowed to continue. this site will literally be
| indistinguishble from coindesk.
| willio58 wrote:
| Digital currency is the future even if 99% of the current
| ones out there are scams or scam-adjacent. To ban all talk
| about digital currency from a website all about the tech
| industry is just silly.
| caldarons wrote:
| This piece on Alameda Research (also owner by SBF) was on HN a
| few days ago. It might end up being quite insightful...
|
| https://dirtybubblemedia.substack.com/p/is-alameda-research-...
| adrr wrote:
| Question in the article is who holds the debt? My bet is that
| it is FTX.
| Bubble_Pop_22 wrote:
| Such an amazing theatrical play.
|
| So FTX is AIG and Binance gets to play the Fed.
|
| What happens in the second act when Binance transitions to its
| next role of Lehman but there is nobody to play the Fed?
| radicaldreamer wrote:
| It's not even binding, so Binance could take a look under the
| hood and say no thanks. No idea whether FTX can cover withdrawals
| at this point or what the collateral damage will be.
| dibt wrote:
| https://twitter.com/SBF_FTX/status/1590012133307478016
|
| >Note that http://FTX.us and http://Binance.us - two separate
| companies-are not currently impacted by this. http://FTX.us
| withdrawals are and have been live, is fully backed 1:1, and
| operating normally.
|
| I wonder if this means SBF will continue operating FTX.us as a
| competitor to other US-based exchanges.
| xxpor wrote:
| Really seems like vindication for the US's regulatory scheme
| that in that it keeps US customers out of these shenanigans.
| [deleted]
| blobbers wrote:
| Seems like a non-binding agreement. DD has not yet been done,
| deal could fall through.
|
| SBF just got Jack Ma'ed by CZ.
| JumpCrisscross wrote:
| Do we have a price/valuation?
| locallost wrote:
| Likely zero if FTX is not liquid enough to process withdrawals.
| [deleted]
| cm2012 wrote:
| Does ETH/ConsenSys win here?
| pbreit wrote:
| The current headline "Binance Acquires FTX" is wrong. There's
| only a "non-binding Letter of Intent" in place.
| squokko wrote:
| This entire market sector creates nothing of value: the way to
| parse this is something like "Daniel Negreanu wins $15 billion
| pot against Phil Ivey in non-televised hand."
| hericium wrote:
| BTW, what ever happened to Catherine Coley, CEO of Binance US?
| kuratkull wrote:
| Binance was threatening to dump a huge amount of FTT tokens on
| the market. FTX has a big+vulnerable position in FTT. FTX asked
| Binance to sell them the tokens for a fixed price, so as not to
| crash the FTT token price. Binance declined - this was
| yesterday/today. Of course the price of FTT crashed today. And
| now Binance buys FTX to help them out... smells like Binance
| played 4D chess all along.
|
| https://decrypt.co/113674/binance-moves-to-liquidate-its-ent...
|
| https://decrypt.co/113788/binance-ceo-declines-alamedas-bid-...
|
| https://decrypt.co/113866/battle-crypto-titans-ends-binance-...
| danrocks wrote:
| > FTX asked Binance to sell them the tokens for a fixed price,
| so as not to crash the FTT token price.
|
| Why would Binance decline this opportunity? If FTX, Binance,
| and the market knew FTT would just crash, it sounds like a
| given that Binance should take advantage of the fixed price
| instead of losing hundreds of millions of dollars "letting the
| market decide".
| colinmhayes wrote:
| Because they wanted to create a liquidity crisis in FTX that
| would force FTX to sell itself for a discount?
| mikekoscinski wrote:
| Presumably, it is more appealing to Binance to kill their
| largest competitor than it is to realize a return on a
| minority investment.
| oldgradstudent wrote:
| It depends on the fixed price offered by FTX.
|
| If FTX could pay the current market price, then they could
| have absorb whatever Binance sold on the open market.
|
| They probably offered a deep discount.
| pbreit wrote:
| That sounds like 1D chess.
| gowings97 wrote:
| colinmhayes wrote:
| FTT is not a stablecoin
| yieldcrv wrote:
| Okay, random non sequitur
|
| This isnt a thread about stablecoins
| andirk wrote:
| I earned $1,200 from Gemini's stablecoin GUSD's interest last
| year. Withdrew the extra and bought some nice pendant lights
| for my new kitchen.
| rchaud wrote:
| I understand many did well with Bitconnect too...
| andirk wrote:
| Not a stablecoin. Bitconnect is my favorite crypto scam
| so far! It was so obviously a scam, and the bros
| promoting it were even dumber than that shitcoin.
|
| A lot of crypto projects can appear scammy because a
| handful of people are working on something and their
| token goes through the roof then crashes with no
| wrongdoing on the part of the project. Invest in
| projects, not coins!
| [deleted]
| TravelTechGuy wrote:
| Some more background: the companies were engaged in fighting
| over regulations, and on a personal basis between the 2 CEOs.
| It went down to really childish levels at some point.
|
| But one thing is undeniable: SBF (FTX CEO) was trying to
| weaponize US regulation against his biggest rival CZ (Binance
| CEO). CZ retaliated by selling the FTT token, exposed the fact
| FTX was over-leveraged, and took over.
|
| This is, as the kids on Twitter say, the embodiment of the old
| "F#$k around, find out".
|
| Along the way every FTX client who couldn't withdraw, and every
| crypto user losing value got screwed - but why should these 2
| characters care? The space just became more centralized, and
| whatever smidge of trust was left after the Celsius debacle has
| evaporated.
| pjc50 wrote:
| > whatever smidge of trust
|
| Turns out the "trustless" in crypto means "you can't trust
| anyone".
| k2enemy wrote:
| Also turns out that "decentralized" in practice means
| "centralized"
| Jommi wrote:
| in which part of this discussion has anyone talked about
| something decentralized? This is about two centralized
| exchanges that hold custody of users cryptoassets
| m00dy wrote:
| Future is decentralized. Even CZ knows this :)
| ahzhou wrote:
| Centralization is more efficient than consensus building.
| joyfylbanana wrote:
| Nobody forces you to use Binance or FTX. I have been
| using Bitcoin for 10 years and I've always stored more
| 90% of my BTC in my own self-custody wallet, only used
| exchanges briefly.
| xmonkee wrote:
| What have you been "using" Bitcoin for, may I ask?
| joemazerino wrote:
| You may not ;)
| joyfylbanana wrote:
| - Long term "Savings account" - a volatile one, of course
| - I buy stuff from online with it, household items (In
| country I live you can basically buy anything with BTC) -
| Travel, I book hotels/flight with it and once I rented a
| boat for a family trip
|
| In addition to that I now and then try to pay with
| Bitcoins at other stores. Last time got excited about
| boltcards (https://github.com/boltcard/boltcard) there
| are few places in my country which accept it, but it is
| quite a new thing.
| joemazerino wrote:
| Dexes like uniswap have been doing just fine
| m00dy wrote:
| So few people understand this. But, don't worry. Great
| inventions need some time to be realized.
| astrange wrote:
| Does anyone both use these and correctly report their
| taxes? The accounting seems like a pain.
| majani wrote:
| I'm glad a big government supporter such as SBF is out of
| crypto leadership. Crypto is an anarchist experiment and it
| should remain that way
| mrtksn wrote:
| Rest assured that the regulations are coming because the
| crypto simply did a speed-run of unregulated securities
| market and repeated every fraud or scam that the
| traditional markets went through over the history.
|
| In the process, huge fortunes were created and libertarians
| were empowered(but not enough to be the main political
| power). Congrats to them but there's nothing anarchist left
| in crypto, they even end up consolidated and centralised.
| No interesting business models or financing came out of it
| except for ransomware.
|
| The silver linings might be that the crypto regulations can
| be made with the current technology and globalisation in
| mind, hopefully.
| thr0wawayf00 wrote:
| Exactly, it's bizarre to read about the wildcat banking
| era in the US and why the Fed was created while
| simultaneously looking around at the rate of mainstream
| crypto scams and institutional failures nowadays.
|
| The Fed sure isn't without its issues, but it was created
| to solve the exact problems that we're now seeing
| proliferate via the crypto space.
| TeMPOraL wrote:
| > _the crypto simply did a speed-run of unregulated
| securities market and repeated every fraud or scam that
| the traditional markets went through over the history._
|
| I think the whole endeavor may end up _strengthening_ the
| traditional economy - crypto space repeating centuries of
| fraud in a decade is effectively a booster shot -
| suddenly it 's obvious _why_ all those laws ended up in
| the books in the first place.
|
| > _and libertarians were empowered(but not enough to be
| the main political power)_
|
| In a sense, they've discovered a novel way of attempting
| to gain power - I don't think many people expected
| someone could wish a parallel economy into being and
| leverage that to for political gain.
| caeril wrote:
| Regulations are coming? On a fully public ledger?
|
| You understand that BTC, ETH, and every derivative non-
| privacy-coin is exactly what the regulators have been
| salivating for, right? Why regulate a non-repudiable
| chain-of-custody that mathematically proves your
| serfs'/slaves' assets that you can seize at will?
|
| > libertarians were empowered(but not enough to be the
| main political power).
|
| You should re-examine the GOP, particularly the tickets
| on today's ballots. This ain't your grandfather's GOP.
| woodruffw wrote:
| > Crypto is an anarchist experiment and it should remain
| that way
|
| What exactly _makes_ it remain that way?
|
| I don't say this as a cheap "gotcha": what's the governance
| structure that _makes_ it an anarchist experiment,
| specifically, and not just a free-for-all?
| secretsatan wrote:
| Ha! One massive feudal lord just crushed another and all
| the serfs lost their money. This isn't anarchy, it's a
| monopoly
| World177 wrote:
| I wouldn't be so sure. The monopolist had a $100,000,000
| theft last month, [1] after a $1 billion dollar loss from
| LUNA in the summer. [2]
|
| [1] https://www.nytimes.com/2022/10/07/business/binance-
| hack.htm...
|
| [2] https://decrypt.co/100530/binance-ceo-says-exchange-
| never-so...
| nullc wrote:
| > a big government supporter such as SBF
|
| A supporter or another crook LARPing as pro-regulation
| because it makes some people ignore red-flags?
|
| Constantly braying about the "the law" is part of the the
| main act of the highest profile scammer claiming to have
| created Bitcoin.
|
| Fact is that saying a lot of vague "pro regulation" things
| doesn't likely subject you to any additional regulatory
| scrutiny, it's a free move even when you are waste deep in
| the cookie jar. But some people are going to notice it and
| consider it evidence that you're all above board.
| Eduard wrote:
| > Constantly braying about the "the law" is part of the
| the main act of the highest profile scammer claiming to
| have created Bitcoin.
|
| Whom are you alluding to?
| nullc wrote:
| Craig Wright. It's refreshing to encounter someone who
| hasn't seen that scammers circus.
|
| In the latest season we find Wright trying to steal
| literally billions of dollars worth of Bitcoin while
| constantly yelling that everyone who doesn't support him
| is a criminal. If he weren't financially ruining people
| with vexatious litigation it would all be pretty funny.
| matheusmoreira wrote:
| That experiment already failed to be honest.
|
| Cryptocurrencies were prophesized to get rid of banks.
| Instead exchanges reinvented banks with all the drawbacks
| and none of the benefits.
|
| Cryptocurrencies were supposed to be in wide circulation
| just like USD, eliminating the need for fiat on/off ramps.
| Instead we got these centralized corporations and endless
| KYC/AML surveillance with none of the regulation and
| government backing.
|
| _Real_ cryptocurrency is what you have in your wallet. How
| many of us hold our own coins? Pretty much everyone keeps
| "their" coins at the exchange...
| psychlops wrote:
| The coins have failed because the exchanges failed and
| people use them incorrectly. Got it.
| nyolfen wrote:
| "too soon to say"
| Geee wrote:
| Only about 10% (2M) of bitcoin are on exchanges:
| https://www.coinglass.com/Balance
| aeyes wrote:
| You also have to take the ~4M estimated coins with lost
| keys into account.
|
| If these stats are correct we closer to 15%. Which is a
| lot. I would have expected 0.1%.
| Geee wrote:
| It could be less, but it's not that much. People say
| often that "most" coins are held on exchanges, which is
| far from true.
| caeril wrote:
| No, there's still Monero and ZCash. And most holders do
| have their own non-custodial wallets. Or at least wallet
| seeds from intermediaries like MetaMask.
|
| The speculative frenzy with FedCoins like BTC and ETH
| will obviously fall to baseline, but the true use case
| for cryptocurrency still exists.
| andirk wrote:
| Why not both? Centralized where people trust, decentralized
| where people don't trust. In my interpretation, the Bitcoin
| white paper states that BTC is an answer to _the lack of
| regulation_ that allowed the fat cats to abuse the money
| supplies. It's kind of ironic, but to see crypto as purely
| anarchistic is to ignore that it is essentially
| _democratized_ money. Both: I use exchanges as well as cold
| storage.
| TremendousJudge wrote:
| I never understood. Where's the democracy here, exactly?
| A regular user cannot afford to participate in the
| decision making of the system in any meaningful way. In
| fact, today, most users don't even directly use it,
| instead relying on processors such as Coinbase. The "not
| your keys, not your coins" meme exists due to this. The
| original paper described a democratic system where people
| voted with their processors, but failed to take into
| account that people with more processors get more votes.
| I find it hard to argue that the system as it currently
| exists is more democratic than the currency emitted by
| the central bank of your country.
| m00dy wrote:
| well, honestly speaking, Bitcoin community looks to be
| committed to preserve 21million as max supply. That's a
| big promise and I love it.
| ballofrubber wrote:
| Arguably a lot of discussion is open to anyone (Bitcoin
| mailing list, Core github repo), where anyone is free to
| post their opinion on topics themselves.
|
| It is not democratic as in "you have a vote to force
| others to comply to the majority", but more a democratic
| in "you can try to convince enough people that the major
| chain becomes how you like it, while the others run a
| minority fork".
|
| People think "where the money goes, is where the miners
| go", but the blocksize wars showed that "where the users
| go, is where the miners go". Miners themselves don't
| decide on bitcoin rules, users do.
|
| So I personally think that bitcoin is not necessarily
| democratic, but still highly people/community vs money
| driven.
| jrumbut wrote:
| This is a terrifying definition of democracy, "you don't
| get a vote but there is an informal and non-binding
| channel to lodge complaints."
|
| That's not democratic at all!
| webXL wrote:
| > "you have a vote to force others to comply to the
| majority"
|
| is _less_ terrifying to you?
| cmeacham98 wrote:
| What you're arguing for is "you have a vote (well you
| don't, but people much richer than you do) to force
| others to comply to a very small minority", how is that
| better than majority rule?
| ballofrubber wrote:
| Well there are no votes, so you can't force anyone to run
| anything. You run what you like and hope others do as
| well. As I said miners follow users, not companies.
| nyolfen wrote:
| i urge you to compare this to any presently-existing
| monetary system or software project
| ballofrubber wrote:
| It might not be "democratic", to me personally it seems
| fair as you are not forced to run the rules that are
| imposed by others. It might not be the wise decision, but
| the market will decide on the "better" rules.
| andirk wrote:
| Democracy can be defined as a popularity contest;
| democracy does not = good. When I and others say
| "democratized money", it's not to say it is identical to
| the definition of democracy as it pertains to a populous
| voting 1 person 1 vote. More like "money that is not
| controlled by a single source but rather as large a group
| as cares to participate who also have access to and
| knowledge of the tech".
| ballofrubber wrote:
| Additionaly it's also different as in "the majority does
| not change my rules", they can be wrong in the long run
| and my rules become majority again.
| TeMPOraL wrote:
| > _" you can try to convince enough people that the major
| chain becomes how you like it, while the others run a
| minority fork"._
|
| FWIW, that is also true for fiat. You can become an
| economist, or a journalist, or a politician, or a pundit,
| and try to convince your country to do economics
| differently. It's a tall order, but it's been known to
| succeed. If this seems harder than the equivalent for
| blockchains, it's only because cryptocurrencies have
| _much fewer users_ , so your voice seems more powerful.
| ballofrubber wrote:
| Good point. I think the subtle difference is that the
| traditional political democracy coerces the minority to
| use the system how they like it (ofc. not everywhere,
| maybe more on the money/legal tender side of things),
| whereas with Bitcoin there is no coercion by the
| majority. The majority would accept one set of currency,
| while others might use another, however markets will
| probably always decide on a winner when it comes to
| currency, which could feel as if you are "forced".
| Definitely a nuanced topic.
| lern_too_spel wrote:
| > Crypto is an anarchist experiment
|
| And, like every anarchist experiment before it, it failed.
| It continues to draw in new suckers every day, and that is
| a problem for society.
|
| It doesn't matter if you didn't cause the problem. Because
| you live in that society, you still have to pay the cost to
| fix it or continue to take the losses from the problem
| existing.
|
| It's the same with slavery, not educating blacks, and then
| not employing blacks in America. I had nothing to do with
| it. My family had nothing to do with it. But because I live
| in America, I have to either pay the cost to fix the
| problem or pay the ongoing cost of crime that the problem
| produces. Taking on the cost of problems others created is
| the cost of living in society, just as benefiting from the
| value that others create is the benefit of living in
| society.
|
| The time to regulate crypto and cut our future losses was
| yesterday.
| codehalo wrote:
| >But because I live in America, I have to either pay the
| cost to fix the problem or pay the ongoing cost of crime
| that the problem produces.
|
| The "crime" the problem produces allow a lot of white men
| to put their kids through college, fooling themselves
| into thinking they are stopping "bad guys".
|
| If you dont keep them busy, they would create far more
| crime than you think black folk do. They might even start
| storming the White House.
| ohgodplsno wrote:
| To be fair to anarchists, it extremely often failed
| because of outside forces being violent towards them.
| Nothing in anarchy is inherently doomed to failure, and
| is a better demonstration of democracy than anything we
| have currently. (Because if there's anything an anarchist
| loves more than voting, it's one more voting round).
|
| Calling cryptocurrencies "anarchist" is walking on the
| corpse of actual anarchists and taking a big, steaming
| shit on them. Anarcho-capitalists have nothing to do with
| anarchy and are just kids whose bedtime reading was,
| regrettably, Ayn Rand.
| jrm4 wrote:
| Every anarchist experiment failed?
|
| The Internet's still around, buddy.
| svachalek wrote:
| The Internet was created by DARPA and while it got a
| little wild in the 90s, neither its origins or current
| form in any way resemble anarchy.
| Eduard wrote:
| Just because "The Internet"'s _mainstream_ may not
| resemble anarchy, this doesn't prohibit other parts to
| resemble anarchy. In fact there are a lot of examples
| active and thriving "on the Internet" fulfilling various
| definitions of anarchy.
| namaria wrote:
| The thing created by a US Government agency at the height
| of the Cold War is your example of anarchist success
| story?
| appleflaxen wrote:
| And over-leveraged, for a brokerage, is a major problem. A
| brokerage is not a bank, and account-holders are not earning
| interest. Therefore if you are taking their funds and doing
| something else with them (a pre-requisite for insolvency,
| unless you are hacked) is a major red flag for illegality.
| jonas21 wrote:
| For those not up to date on crypto people, SBF is Sam
| Bankman-Fried [1] and CZ is Changpeng Zhao [2]. I don't know
| why they insist on being called by their initials like
| they're some sort of ticker symbol.
|
| [1] https://en.wikipedia.org/wiki/Sam_Bankman-Fried
|
| [2] https://en.wikipedia.org/wiki/Changpeng_Zhao
| Analemma_ wrote:
| Because they think the people they're most similar to are
| respected old-school hackers (rms, jwz, etc.) instead of
| carnival hucksters like P. T. Barnum.
| alliao wrote:
| i can just imagine jwz squirming at the idea of this and
| it is way too funny...
| [deleted]
| RC_ITR wrote:
| You see the same thing with Middle East Leaders - MBS, MBZ,
| etc.
|
| When the names are even semi-complex and the reach is
| global, people default to acronyms.
| [deleted]
| CamelCaseName wrote:
| They go by acronyms on social media, namely twitter, the
| main place people interact with them
|
| https://twitter.com/cz_binance
|
| https://twitter.com/SBF_FTX
| rvba wrote:
| CZ is Czechia though
| conductr wrote:
| DPR fans?
| SilasX wrote:
| Because Bankman-Fried is a mouthful/typeful to say every
| time, and Changpeng is a big, non-western name, and Zhao
| too common by itself.
|
| Source: me referring to one of them in conversation a lot
| with no incentive to kowtow to his preferred branding.
| sneak wrote:
| It's common in many internet circles to refer to prominent
| people by their initials. Hackerdom has a long tradition of
| this: rms gls esr jwz et al. It also tends to happen in US
| federal politics for some reason (jfk rfk gwb fdr et al)
| but not to everyone.
| [deleted]
| woodruffw wrote:
| There's a little bit of cargo-culting with the practice:
| I thought CZ was short for the Czech Republic. The only
| reason I know "SBF" is because the New Yorker obliged him
| in that William MacAskill piece.
| bombcar wrote:
| At least the political ones (some) came about for
| clarification (JFK and RFK are both Kennedies, GWB is to
| distinguish from "Bush"). Others come from their names
| being long or hard to remember/pronounce/spell (I suspect
| this is what happened with AOC).
| pitt1980 wrote:
| The Robert Caro books about Lyndon B Johnson detail his
| effort to force meme "LBJ" as a reference to him.
|
| (Mostly in terms of insisting various communications
| employees use it in press releases and what not).
|
| It seems he liked the iconography of it, especially in
| putting himself in similar company to FDR.
|
| Both his daughters have the LBJ initials, his wife is
| mostly known as Lady Bird Johnson (a nickname that
| predates their relationship, but is not her given name)
| cossatot wrote:
| OT: Are those books worth reading? I loved the Power
| Broker but the LBJ books are a whole lot to get through.
| pitt1980 wrote:
| Short answer, yes.
|
| Longer answer - from my prospective - I enjoyed the first
| book Path to Power the most, which revolves around LBJs
| early life up to becoming a US Representative. I thought
| it was very on par with the Power Broker. That an the
| Power Broker would probably be my first recommendation to
| an ambitious college kid who wants to know the real
| Politik of how the world works.
|
| The next book Means of Assent was my least favorite of
| Caro's books, but still highly enjoyable.
|
| Master of the Senate and Passage of Power are both great.
| But sort of specific to LBJs spot in life. Great, but I'm
| not sure they sparked my thinking quite the way the Power
| Broker and Path to Power did.
| Taek wrote:
| Can't forget pg and sama
| dpflan wrote:
| Maybe: Crypto is full of acronyms, token tickers are a
| great example and apropos here --> their names have been
| "tokenized"...?
| rich_sasha wrote:
| Ownership of personhood as documented by holding an NFT.
| dboreham wrote:
| You've been reading the DID spec.
| TeMPOraL wrote:
| Which is basically an energy-wasting form of the Blue
| Checkmark?
| ww520 wrote:
| Isn't FTT like FTX's own issuing tokens? It's like printing
| one's own money. But when the backing firm fails, the printed
| money is worthless, just like what LUNA issued by Terra had
| become.
| kuratkull wrote:
| Yeah. I can't be bothered to verify, but i remember that
| Binance has a huge double-digit percentage of all FTT tokens
| in circulation. Dumping all of them would crash the tokens
| value. And since this is FTX's own token, they would hurt a
| lot, maybe even terminally.
| miohtama wrote:
| It only matters if FTX was using FTT as a collateral for
| accounting purposes for a valuation that is not realistic
| considering the liquidity of a position size.
| potatototoo99 wrote:
| And of course they were, what else would they keep it
| pumped up for.
| [deleted]
| [deleted]
| ww520 wrote:
| Just went over the issues on the balance sheet of Alameda
| Research, which is SBF's trading company.
|
| Of the $14.6 billion assets Alameda manages, almost $6
| billion is FTT based. Alameda has heavy investment in Solana,
| Serum, and other alt-coins. It looks like the drop in their
| value has lowered Alameda's asset balance. Alameda borrowed
| FTT tokens from FTX to put them as assets in the balance
| sheet to shore it up. The size of the asset balance is
| probably used to obtain loans and liquidity.
|
| FTX issues FTT tokens (print money) => lends to Alameda to
| put under the asset balance => Alameda borrows money from
| outside against its assets or uses the asset/coins to invest
| in others => win with thin air!
|
| The crashing of the FTT token not only tanked FTX, it's going
| to tank Alameda Research as well since its asset balance
| suddenly shrunk and might have liquidity problem.
|
| The tanking of Alameda is going to another Three Arrow
| Capital event since Alameda invests in lots of other cryptos.
| It might be forced to liquidated those investments. Expect
| another bloodbath in the crypto space.
| johnvanommen wrote:
| > FTX issues FTT tokens (print money) => lends to Alameda
| to put under the asset balance => Alameda borrows money
| from outside against its assets or uses the asset/coins to
| invest in others => win with thin air!
|
| The Federal Reserve issues US dollars (print money) => US
| Treasury borrows money from The Federal Reserve, Japan,
| China and the UK against its assets or uses the asset/coins
| to invest in others => win with thin air!
| SilasX wrote:
| > The size of the asset balance is probably used to obtain
| loans and liquidity.
|
| 1) Lenders don't care about the liability side?
|
| 2) How does "liquidity" differ from "loans" here? That is,
| when would they do this to achieve one but not the other?
| ww520 wrote:
| 1. We don't know what the lending basis for FTT from FTX
| vs the claimed value of FTT on Alameda's book. FTX lent
| FTT at $10 to Alameda and then FTT inflated to $50 would
| mean Alameda has $50 asset vs $10 liability.
|
| It's reported that Alameda Research has $14.6 billion in
| assets and $8 billion in liabilities. Some claim that
| Alameda's assets are "entirely illiquid." Nobody knows
| how bad things are. The only thing is that FTX has
| stopped the withdraws.
|
| 2. Loans for long term and liquidity for short term? Like
| overnight lending.
|
| Edit: add more info.
| SilasX wrote:
| 1) What is that replying to? I was asking why the
| borrowed FTT would make them more capable of getting
| loans if it came with a corresponding liability. That
| would only make sense if lenders didn't care about the
| liability balance sheet, which is ... non standard.
|
| Edit: That is, you said the "size of the asset balance"
| is used to obtain loans. That makes it sound like merely
| increasing assets -- even if they come with liabilities,
| makes them more capable of getting loans.
| [deleted]
| jimcavel888 wrote:
| purple_ferret wrote:
| Binance continues to amaze.
|
| Does anyone even know where it operates out of these days?
| danrocks wrote:
| They have a lot of positions open at their Singapore and Hong
| Kong... offices?
| FormerBandmate wrote:
| They said they'd announce it shortly in July
| (https://decrypt.co/105376/where-is-binance-hq-ceo-cz-says-
| co...). Since then, nothing
|
| They got regulatory approval to operate in Dubai and have
| offices there, so maybe there
| (https://www.coindesk.com/policy/2022/09/20/binance-
| secures-l...)
| tommek4077 wrote:
| The fabric of the internet.
| yieldcrv wrote:
| There is a pool of capital that pays people working for them
| onchain. They can also do fiat via local subsidiaries, and
| local contracts for compliance and litigation.
|
| It's almost like it doesn't matter.
|
| For accountability, it barely matters. For financial products
| they offer, it also barely matters. Most jurisdictions are
| too small to say anything and all their customers can
| circumvent any geo-restriction. They have distinct
| subsidiaries in major markets like USA.
| ForHackernews wrote:
| > smells like Binance played 4D chess all along
|
| It's not really "4D chess" to screw over your competitor to
| corner the market.
|
| That's like, business 101.
| rchaud wrote:
| Business 101 is buy low, sell high.
|
| Winning an evenly matched game of prisoner's dilemma with
| billions at stake is about as close to 4D chess there is.
| wesapien wrote:
| I'm not too familiar but can you elaborate on how the
| screwing happened.
| gpderetta wrote:
| Market manipulation is not exactly business 101.
| astrange wrote:
| Typically you don't expect Bank of America and Chase to do
| this to each other.
| acchow wrote:
| This doesn't sound like very complicated chess. Sounds like
| those Hong Kong TV shows I watched when I was 13
| danrocks wrote:
| Having lived in Hong Kong and watched some of these old
| shows, I concur.
| ucha wrote:
| SBF said "We don't invest client assets (even in treasuries)".
| [0]
|
| He then says the purpose of the transaction with Binance is to
| "clear out the liquidity crunches". [1]
|
| How could there be a liquidity crunch if assets are not invested?
| You can't do a bank run on an entity that doesn't function as a
| bank and doesn't invest clients assets... Something is shifty.
|
| [0] https://twitter.com/sbf_ftx/status/1589598285798707202
|
| [1] https://twitter.com/sbf_ftx/status/1590012126701441025
| dbreunig wrote:
| You mean the guy who said he named his other co "Alameda
| Research" so it wouldn't sound like a bank, even though it
| basically is, might be shifty?
| carnitine wrote:
| How is a prop crypto firm a bank? Laughable
| ramish94 wrote:
| Welcome to the world of unregulated finance.
|
| There's a reason the FDIC exists and all banks must be insured.
| miohtama wrote:
| Note that FTX.us is regulated under some US licenses and is
| unaffected. What was blown up was FTX.com operation that is
| licensed and regulated in Bahamas.
|
| [insert coconut meme.gif here]
| hi5eyes wrote:
| good comment to ignore, like most of the comments itt. almost
| no one in here has any idea what theyre saying much less
| doing/knowing about anything on-chain
| w1nst0nsm1th wrote:
| I did not comment but I have some insight on regular
| finance and took a Udemy course on building your own
| crypto...
|
| And I came to the conclusion that SBF is a crook and the
| whole crypto space is build on thin air.
| [deleted]
| hanniabu wrote:
| This has nothing to do with defi. This is purely centralized
| entity shenanigans.
| ChainNet wrote:
| There's nothing decentralized about FTX or Binance. They
| operate in an opaque manner like any traditional business,
| transparency comes from forced audits & regulation.
|
| Decentralized finance is built on chain where all assets are
| publicly auditable at all times.
|
| EDIT: parent comment talked about decentralized finance, then
| edited to remove mentions of defi
| three_seagrass wrote:
| Even without the edit, your response feels like a no-true-
| scotsman
|
| i.e. an attempt to remove bad actors who deal in
| decentralized cryptocurrencies from the purity that is
| defi.
|
| What are some large, successful defi organizations today?
| null0pointer wrote:
| I don't see at all how you can say calling out literally
| centralized companies as "not-decentralized" is no-true-
| scotsman. It's just an obvious fact.
|
| > What are some large, successful defi organizations
| today?
|
| In my opinion, if there is an organization behind it then
| it is, by definition, not decentralized. Yes, even the
| ones that operate fully on-chain.
| three_seagrass wrote:
| >literally centralized companies as "not-decentralized"
|
| So defi is 100% decentralized _everything_ , even if the
| financial tools are decentralized cryptocurrencies?
| potatototoo99 wrote:
| Tornado Cash is pretty successful.
| colinmhayes wrote:
| not sure about this one.
| sperm wrote:
| Uniswap. Large in terms of volume, not org size.
| ChainNet wrote:
| Uniswap, Curve DAO, AAVE, Compound, Lido, MakerDAO...
| kolbe wrote:
| The FDIC is just a ruse to let "useful idiots" think that
| everything is okay. In reality, the FDIC charges banks 90%
| less than the actuarial value of the risk they take on, and
| banks make wildly risky loans/bets all the time, knowing it's
| "heads I win, tails the taxpayer loses."
|
| Insofar as you can call US Finance any better than crypto,
| it's because of socialized losses. IMO, bank failures are a
| much more appropriate solution.
| lottin wrote:
| What is the 'actuarial value' of the risk a bank takes on?
| shapefrog wrote:
| 12:38 PM * Nov 7, 2022 2) FTX has enough to cover all client
| holdings. [0]
|
| 4:03 PM * Nov 8, 2022 2) Our teams are working on clearing out
| the withdrawal backlog as is. This will clear out liquidity
| crunches; all assets will be covered 1:1. This is one of the
| main reasons we've asked Binance to come in. [1]
|
| has enough to cover all client holdings ---> not enough to
| cover all client holding in 24 hours. Either they _lost_ a
| billion or so dollars of client segregated funds in a day down
| the back of the sofa or it was a lie the whole time.
| eftychis wrote:
| As other people said, usually a lot of assets are illiquid in
| 24 hours. You can say I have money to buy this house, but if
| I ask you for the money the next 24 hours, most people will
| say they need more time to liquidate.
|
| It is actually irresponsible to the users (risk management
| wise) to be keeping all that cash in hand 24/7. The easiest
| bad case example: are you keeping all your savings under your
| mattress?
|
| Edit/to commenters below: I understand there are emotions,
| but that's simply how things work. As other fellow commenters
| noted, banks do not keep or even promise they do keep your
| money($) under their "mattress."
|
| Say you deposited in EUR. The exchange and everyone borrows
| in USD, so your EUR become USD -- no way out of it. EUR goes
| down, and then there is a bank run. Even if as the bank were
| irresponsible and kept 100% liquid, they can not serve
| everyone 1:1 in 24h. Nobody can give you that guarantee,
| besides your local grocery store. We are thinking these
| things at the wrong scale.
|
| We are not trying to shift blame away from FTX -- already the
| whole relationship was sketchy. But claims about keeping 100%
| USD with a 24h cashout in a worldwide scale is not something
| on the table right now. I get worried when people feel
| comfortable believing those statements.
| shapefrog wrote:
| > risk management wise
|
| Short dated government bonds would be the safest. But tweet
| 0 he litterally says they dont do that, they keep the cash
| under the mattress and you can have it if you stop by.
| People stopped by and there was no cash under the
| mattress...
| eftychis wrote:
| I agree. And it is sketchy when people give a guarantee
| we know they can't keep.
| Bubble_Pop_22 wrote:
| > It is actually irresponsible to the users (risk
| management wise) to be keeping all that cash in hand 24/7.
| The easiest bad case example: are you keeping all your
| savings under your mattress?
|
| "We never block withdrawls" is the new "We don't crash
| ever" as seen in the Facebook movie.
|
| If you are in the crypto exchange business you gotta do
| both actually. Don't crash the website and don't suspend
| withdrawls ever.
| rhaway84773 wrote:
| If you take other people's money by promising you will be
| keeping their money under your mattress, yes, you should
| keep all that money under the mattress or you'll be behind
| bars for fraud.
| candiddevmike wrote:
| I'm not a business masquerading as a bank, lol.
| beambot wrote:
| Banks don't have cash on hand equal to assets either...
| oldgradstudent wrote:
| Real banks have access to a lender of last resort.
|
| Shadow banks don't.
| shapefrog wrote:
| The CEO of a band has never say they have everyones money
| sitting in the safe waiting for them to pick it up
| whenever they wanted it.
|
| FTX CEO litterally said that in his tweet.
| beambot wrote:
| My read of the situation: SBF's comments were about
| assets (balance sheet) rather than FTX's liquidity. I
| believe SBF was saying (paraphrasing) "Our balance sheet
| is fine; FTX doesn't invest customer assets; we're
| processing withdrawals as fast as possible." That's
| different than saying "we have 100% liquidity."
|
| Banks make similar statements all the time -- they
| require regular audits of assets (stress tests) and
| maintain some minimum levels of liquidity.
| treis wrote:
| Banks say that they don't invest deposits?
| beambot wrote:
| In the Glass-Steagall sense, they probably shouldn't.
| Mixing commercial banking and investment banking was
| illegal from 1933-1999, and it is (arguably) one of the
| underlying factors in the 2008 financial crisis.
|
| Note: There's a difference between being a custodian of
| customers' investments (brokerage / commercial banking)
| versus proactively investing customer deposits
| (investment banking).
| cmeacham98 wrote:
| Going to need a _huge_ source on that claim. Investing
| customer funds is the primary way banks make their money,
| and has been that way essentially since the invention of
| banking.
|
| From https://en.wikipedia.org/wiki/Fractional-
| reserve_banking:
|
| "Fractional-reserve banking predates the existence of
| governmental monetary authorities"
| oldgradstudent wrote:
| Banks lend deposits. That's how they make their money.
| They have to keep some part of the deposits as a reserve.
|
| Real regulated banks have access to the Fed to borrow in
| a case of a bank run.
| yucky wrote:
| If everybody walked into their bank right now to withdrawal,
| they couldn't cover either.
|
| Right?
| lmm wrote:
| They'd cover it. They might need to call up the fed, but
| they'd cover it.
| pcai wrote:
| But their point was: FTX doesn't purport to be a bank
| kikokikokiko wrote:
| It doesn't purport to be a HUGE PONZI either, but... Just
| another normal day in crypto land.
| astrange wrote:
| I mean, the CEO does literally tell people he's running a
| Ponzi.
|
| https://www.bloomberg.com/news/articles/2022-04-25/sam-
| bankm...
| kasey_junk wrote:
| https://www.fdic.gov/news/press-releases/2022/ftx-
| harrison-l...
|
| Well...
| rhaway84773 wrote:
| And that's why banks are heavily regulated and get
| protections.
|
| If FTX wanted protections against a bank run they could
| also choose to be regulated as a bank.
|
| Cryptocons want us to both treat crypto scams as banks and
| not banks depending on what suits them in the moment, just
| like they want us to treat cryptocurrencies as assets or
| currencies based on what suits their argument in the
| moment.
|
| All to hide the fact that it's a mediocre technology which
| has been surpassed by many other technologies for most of
| its possible uses and is nothing more than a Ponzi scheme
| designed to enrich its original backers.
| rchaud wrote:
| You may as well say "if everybody jumped off a bridge at
| the same time...."
|
| How many bank runs have there been in 2022 in the developed
| world?
|
| The reason people don't try to pull their money out all at
| once is because their deposits are insured, because their
| bank pays into an insurance pool.
| yucky wrote:
| The reason people don't try to pull their money out all
| at once is because their deposits are insured, because
| their bank pays into an insurance pool.
|
| Only up to $250k.
| smcl wrote:
| https://fortune.com/2022/05/23/record-number-american-
| househ...
|
| That wouldn't be a problem for the majority of Americans
| astrange wrote:
| If you go over $250k, you can just open accounts at other
| banks to keep being insured. Or get your own insurance I
| suppose.
| smcl wrote:
| My point was that if many would struggle to put together
| $400 in cash, they're likely unaffected by a $250k upper
| limit on insured deposits
| ramish94 wrote:
| He mentions that they have everyone's money, and then the
| very next tweet says "we'll clear out liquidity crunches".
|
| Literally a contradiction.
| crystaln wrote:
| It's not a contradiction. It's easy to have illiquid funds.
| For example cold storage or locked funds.
| drexlspivey wrote:
| There is a time delta between the statements, assets worth
| $10B on one day could be worth $5b the next
| shapefrog wrote:
| "we'll clear out liquidity crunches" - they have everyone's
| money if they get more money from someone else.
| mistercheph wrote:
| Giving them the benefit of doubt, this is not a
| contradiction. The statement means that they have enough
| illiquid assets to cover the withdrawal that they are
| working on converting into liquidity.
| lottin wrote:
| What do you mean illiquid? Worthless?
| piva00 wrote:
| Illiquid just means that you can't cash it in quickly.
|
| Cash is 100% liquid while a house is illiquid you might
| have millions US$ parked there but only if you manage to
| sell it, then you convert it into liquid cash.
|
| Liquidity is a measure of how easy it'd be to trade a
| thing for another thing you want.
| appleflaxen wrote:
| IMO this would contradict what the GP comment asserts:
| that SBF said "We don't invest client assets (even in
| treasuries)".
| sroussey wrote:
| I thought FTX Alemeda (the trading side) invested into
| their own token, which is tanking thus causing problems.
|
| Alemeda has like $14b assets and $8b in liabilities. But
| of that $14b, $5b are in their own token (FTT) which is
| kinda?? worth nothing at this very moment. So now the
| assets and liabilities are more equally matched, but less
| margin for shifting values of tokens.
|
| I don't know, but the derivative of their assets looks
| scary the last 24hr.
|
| Disclaimer: not a crypto person
| viscanti wrote:
| But they're meant to store the customer assets in a cold
| wallet. They're not meant to invest them in illiquid
| assets that would need to be liquidated to give people
| their money. If it's not a contradiction, it's an
| intentionally misleading statement to avoid admitting
| they let Alameda Research invest the money when the
| entities are supposed to be completely separated.
| shawabawa3 wrote:
| The extremely charitable read is that
|
| 1. They have all the funds
|
| 2. Many are in cold storage or otherwise inaccessible in
| short term
|
| 3. Their cold storage restore process is so slow they
| need emergency help to provide liquidity in the meantime
|
| Seems more like that they've either embezzled client
| funds or been hacked/lost some cold storage keys
| astrange wrote:
| The normal way to handle this would be insurance or a
| line of credit, not selling your company to your
| competitor overnight.
| viscanti wrote:
| In that scenario they could point to some of the wallets
| to help calm the fears the money isn't available. Or they
| could approach a number of different lenders who would be
| comfortable lending at high interest rates if the money
| is there but slow to access. They only sell if we're in
| the non-charitable case.
| wmf wrote:
| They're _totally_ solvent but no one is willing to lend
| them money?
| lokar wrote:
| "Every banker knows that if he has to prove that he is
| worthy of credit, however good may be his arguments, in
| fact his credit is gone."
| miohtama wrote:
| FTX/Alameda holds tons of illiquid FTT tokens that they
| cannot sell and which Binance was dumping. Thus, they
| might have not technically lied. But they were still
| wrong from the accounting perspective - they surely
| understood that FTT token cannot be used to cover gaps in
| large scale.
|
| It was the question that matters "how fast you can
| process user withdrawals and with what risk"
|
| Sam owns 8% of Robin Hood that is worth around ~$1B - he
| could sell that and cover some of the gap. But what we do
| not know yet is the size of the gap in time and space.
| FTX had $6B withdrawals pending on Tuesday.
| lancesells wrote:
| > Sam owns 8% of Robin Hood that is worth around ~$1B -
| he could sell that and cover some of the gap.
|
| Not knowing too much about this space have you ever seen
| anything like this happen? A CEO using their personal
| wealth to cover their customers funds seems unlikely.
| tanseydavid wrote:
| Free Jon Corzine!
| dmitrygr wrote:
| > have you ever seen anything like this happen? A CEO
| using their personal wealth to cover their customers
| funds
|
| No, but I would love to see it happen, enforced by a
| court, and backed by a promise of jail time if the CEO
| fails to comply in a timely fashion.
| fantasyman1 wrote:
| spuz wrote:
| Remember that blockchain transactions are slow and FTX has
| over 1m users. Even in the most positive of scenarios, I
| would not be surprised if it took days to clear the backlog
| of withdrawal requests.
| rhaway84773 wrote:
| "How to destroy the entire basis for blockchain technology
| in 1 sentence".
| zoklet-enjoyer wrote:
| Slow blockchain transactions and it would be shocking if
| they didn't stake user assets. Most (all?) proof of stake
| chains have lock up periods. Atom and other Cosmos chains
| are usually 21 days.
| EVa5I7bHFq9mnYK wrote:
| Indeed, all Bitcoin blocks today are full. There is no
| physical possibility to withdraw all those funds. That's
| why Binance must implement Lightning deposits/withdrawals,
| like Kraken did.
| smoldesu wrote:
| Adding L2 chains to this equation dumps the frying pan
| into the fire. We don't need more points-of-failure, it's
| bad enough as-is.
| EVa5I7bHFq9mnYK wrote:
| Inability to process more than 5 tx a second for entire
| world is a major point-of-failure that L2 chain cures.
| jdprgm wrote:
| Not sure what people are talking about here, bitcoin
| mempool doesn't even have a notably large backlog at the
| moment and fees are currently low/normal:
| https://mempool.space/
|
| Exchange withdrawals are one to many for btc helping keep
| size down and most other chains shouldn't have any issues.
| Don't see how FTX or really any exchange should be
| bottlenecked by blockchains here.
| aaronharnly wrote:
| It seems to my layperson's eye that that would be a reason
| to get a loan for a week or a month, not to sell the
| company.
| somuchfordonor wrote:
| You forgot 8 hours ago: Hacker News commenters are in total
| denial:
|
| https://news.ycombinator.com/item?id=33518961
| chx wrote:
| > it was a lie the whole time.
|
| how many of these y'all need before you learn: _all crypto is
| a scam_. It never was anything else, it never will be
| anything else because it _can not be_ anything else.
|
| There's an awful lot of fancy piled on the simple fact that
| all crypto"currencies" are _negative sum games_. The only
| disagreement is whether this is an entirely new type of scam
| , a "Nakamoto Scheme" or the difference between these and
| the classic Ponzi are irrelevant like the difference between
| a CRT and a HDTV and then we are looking at a Ponzi.
| jiveturkey wrote:
| Could be technically true?
|
| They don't "invest" client assets, not even in treasuries, ie
| actual investments.
|
| They "speculate" client assets, in tokens.
| PaywallBuster wrote:
| https://www.investopedia.com/terms/c/cashandcashequivalents....
|
| > Cash and cash equivalents refers to the line item on the
| balance sheet that reports the value of a company's assets that
| are cash or can be converted into cash immediately.
|
| > Cash equivalents include bank accounts and marketable
| securities such as commercial paper and short-term government
| bonds.
|
| > Cash equivalents should have maturities of three months or
| less.
|
| Don't know specifics on FTX/Alameda but this is probably normal
| to a degree for banks/brokers or just any regular business?
| max_ wrote:
| Now it is clear that he was lying.
|
| They stopped processing withdrawals according to on chain
| data.[0]
|
| [0]: https://www.theblock.co/post/184176/ftx-appears-to-have-
| stop...
| skippyboxedhero wrote:
| They have one BTC. Form an orderly queue to receive your
| portion.
|
| https://www.coindesk.com/business/2022/11/08/ftxs-bitcoin-
| ba...
| jefftk wrote:
| _> They stopped processing withdrawals_
|
| If you look at the comments on
| https://news.ycombinator.com/item?id=33518961 that article
| missed that FTX uses multiple addresses for withdrawals.
| max_ wrote:
| He admits they were illiquid and needed Binance to cover
| withdrawals 1:1.
|
| >Our teams are working on clearing out the withdrawal
| backlog as is. This will clear out liquidity crunches; all
| assets will be covered 1:1. This is one of the main reasons
| we've asked Binance to come in. It may take a bit to settle
| etc.
|
| [0]: https://twitter.com/SBF_FTX/status/1590012124864348160
| jefftk wrote:
| Sorry, edited my comment to quote the section of yours I
| was trying to reply to
| chaosbolt wrote:
| Are you seriously asking? He lied like every other exchange
| does. The man's middle name is Bankman for god's sake.
| Aaronstotle wrote:
| I don't understand how his middle name relates to anything
| about this situation.
| prottog wrote:
| Perhaps a quip on the untrustworthy nature of bankers.
| kgwgk wrote:
| And he's Fried now.
| shapefrog wrote:
| This a.m. before securing an emergency lifeline from rival
| Binance, FTX was canvassing deep pockets in Silicon Valley and
| Wall St -- think billionaires, not institutions -- ppl familiar
| told me & @lmatsakis @SaacksAttack. Two of the ppl he was
| seeking more than $1bn.
|
| https://twitter.com/lizrhoffman/status/1590021299295768578
|
| He / his people didnt call me, but I would have passed anyway
| toomuchtodo wrote:
| > One person briefed on the fundraising blitz said what
| started as a $1bn ask was looking more like $5bn-$6bn by
| midday.
| matheusmoreira wrote:
| They lied to everyone of course. Never trust these
| corporations. They're sitting on huge piles of consumer
| deposits, of course they're gonna leverage that money. They
| cannot resist the temptation.
| ForHackernews wrote:
| It's all lies. Just like everything else involving
| cryptocurrency.
| purpleblue wrote:
| Well, if the customers are holding FTT and they're trying to
| get rid of their FTT, that could cause the liquidity crisis.
| The crisis isn't with the customer assets, it's with their FTT
| side of the business.
| cguess wrote:
| Can't have a run if you can't withdrawl!
| JumpCrisscross wrote:
| > _SBF said "We don't invest client assets (even in
| treasuries)"_
|
| We know that was false when it was said, given the Alameda
| balance sheet. (FTX invested in Alameda which made risky loans
| to crypto folks and bought FTT, which FTX minted [1].)
|
| [1] https://www.coindesk.com/business/2022/11/02/divisions-in-
| sa...
| ucha wrote:
| Nowhere does it say that FTX invested in Alameda.
|
| Alameda invested in FTT which is minted by FTX which is not
| the same thing.
| JumpCrisscross wrote:
| > _Alameda invested in FTT which is minted by FTX_
|
| FTX issued FTT to Alameda. We have no idea what Alameda
| gave them as collateral, but it's clear it wasn't cash.
| Lending is a form of investing. (I don't get what unlocked
| versus collateral FTX on Alameda's balance sheet means.)
| ucha wrote:
| How can you say it's clear it wasn't cash? What's the
| source?
|
| Also, FTX minted FTT out of nothing - effective cost zero
| - so no matter what they received in exchange, even if
| they had received _nothing_ that is not an investment
| unless they received Alameda equity. I agree that lending
| is a form of investment but nothing says that they
| received a loan in exchange.
|
| You could still be right, but it's all speculation :)
| JumpCrisscross wrote:
| > _How can you say it 's clear it wasn't cash?_
|
| FTT spiraled and FTX went insolvent.
| lmm wrote:
| Doesn't mean they never received any cash. Maybe the CEO
| spent it all on crack and hookers.
| tootie wrote:
| I know the SEC is struggling to stay on top of the crypto
| market, but it certainly seems like SBF should be in an
| absolutely huge amount of legal jeopardy right now. And if he
| isn't, then the crypto market is beyond saving and deserves
| to die.
| JumpCrisscross wrote:
| > _SEC...it certainly seems like SBF should be in an
| absolutely huge amount of legal jeopardy right now_
|
| FTX U.S. is fine. To the degree Americans are hurt, it's
| investors in the international entity. If anyone deserves
| regulatory scrutiny, it's the institutional investors
| betting fiduciary assets on crypto.
| [deleted]
| Bluecobra wrote:
| Remember this is a NON-BINDING letter of intent. I wouldn't be
| surprised at all if this doesn't actually happen and just a bunch
| of ballyhoo. Unlike Twitter, FTX won't be able to drag CZ down to
| Delaware's Chancery Court to force him to acquire it.
| matheusmoreira wrote:
| Indeed. Didn't stop the market from melting down though and it
| looks like FTT is going to zero. Wonder what happens if they
| decide not to buy it after all.
| popcalc wrote:
| I think that's what the OP meant...
| orsenthil wrote:
| What is CZ?
| [deleted]
| aaur0 wrote:
| CEO of Binance - https://twitter.com/cz_binance
| spaceman_2020 wrote:
| All of SBF coins are going to crash like anything. All those
| tokens will be liquidated to pay lenders.
| boeingUH60 wrote:
| "We're going to look back at a generation of successful founders
| and VCs with the realization that all of their talent was in
| creating a company during the bull market." - random tweet I came
| across that's very relevant here.
| billjings wrote:
| Dare Obasanjo:
| https://twitter.com/Carnage4Life/status/1589867071693017088
| 3001 wrote:
| Total unrelated but son of
| https://en.wikipedia.org/wiki/Olusegun_Obasanjo. Numero uno
| looter of Africa
| MaxHoppersGhost wrote:
| Wow. I like how his son's Twitter profile talks about
| inclusivity. Very brave.
| melvinmelih wrote:
| He very cleverly took his name out of his dad's wikipedia
| entry. It's still there in older versions: https://en.wikip
| edia.org/w/index.php?title=Olusegun_Obasanjo...
| niyikiza wrote:
| Wow! That's next level Ad Hominem & Genetic fallacies
| bolasanibk wrote:
| Not to be confused with the talented soccer player Sam
| Obisanya. https://ted-
| lasso.fandom.com/wiki/Sam_Obisanya#Dubai_Air_and...
| googlryas wrote:
| Why even reference it then? We have understood that sins of
| the father are not the sins of the child since at least the
| book of exodus(~500BC).
|
| If that tweeter has done something wrong in his life, then
| talk about it. But he didn't really have a choice on who
| birthed him.
|
| From the wiki page:
|
| > Some of his children were resentful that he gave them no
| special privileges and treated their mothers poorly.
| [deleted]
| billjings wrote:
| I went to Georgia Tech with Dare. It's a great school,
| but it's not exactly the kind of place you send your
| scions of privilege.
| 3001 wrote:
| Thats funny, sure going to Gtech for an American as an
| undergrad doesn't scream privilege but seeing that today
| the total cost of going to such school will run you
| around 400k as an international student, while millions
| of people graduate high school in Nigeria and have to go
| through the hunger games of Jamb for extremely limited
| spots due to the lack of investment in education lead by
| his dad and cohorts tells a different tale.
|
| Someone like him not born to such father in Nigeria, will
| likely be an high school teacher getting paid $100 every
| 4 months.
| googlryas wrote:
| Are you just assuming his dad paid for his school? Do you
| know if he received any scholarships? Do you know the
| finances of his mother/mother's side of the family?
| httpz wrote:
| Majority of early startups still don't make it past the valley
| of death even during a bull market.
|
| This is like saying every great sailor happened to sail when
| the wind was blowing in the right direction.
| chubot wrote:
| There was an entire book about this that became famous during
| the 2008 financial crisis:
|
| _Fooled by Randomness_ by Nassim Taleb
|
| https://www.amazon.com/Fooled-Randomness-Hidden-Markets-Ince...
|
| It's literally about how options traders and the like can be
| lucky for 10 or 20 years, but they are actually idiots who
| destroy the economy.
|
| They think they are skilled, and others think they are skilled,
| but it's luck. You can also call it "anti-luck" because their
| short-term actions can cause the long-term crisis.
|
| This book was a #1 best seller, as were most of Taleb's books,
| but for some reason whenever I mention it to anybody, I get
| blank stares.
|
| I think it's just really hard for people to understand
| phenomena that occur at time scales of say more than a decade.
|
| (BTW Another good book about recurring economic cycles is
| Dalio's 2022 _The Changing World Order_. All of this stuff has
| happened before. This is separate from crypto, and relates to
| the global economic environment.)
| lordnacho wrote:
| > whenever I mention it to anybody, I get blank stares.
|
| Maybe it's the circles you move in. In finance nobody hasn't
| heard of it.
|
| Well deserved reputation too, it really changed how I saw
| things. It's weird because even as someone who studied
| probability and stats, I hadn't thought it would change my
| entire worldview.
| tanseydavid wrote:
| This book was my introduction to Taleb and I loved it. I
| recommend it frequently.
| niyikiza wrote:
| Great book. It was my introduction to Taleb as well It
| profoundly shaped how I interpret markets and approach my own
| investments.
| Patrol8394 wrote:
| > and said FTX was totally fine
|
| I want to think that by now people have learned that "totally
| fine" in crypto means that they are not.
|
| Also, wasn't FTX gonna buy Voyager?
| Aaronstotle wrote:
| Every exchange needs to show proof of reserves, I don't have much
| faith that Binance is in much better shape than FTX.
| Bubble_Pop_22 wrote:
| Exchanges big wallet are public info on the blockchain IIRC.
| The huge problem is that you'll never know if they add up
| because you'd need confirmation from every user of the exchange
| who'd have to self-declare their crypto-wealth in some sort of
| Slack or Telegram group so that you then can compare the 2
| totals and see if x=y.
|
| Will never happen. They are black boxes. Only them know if 1:1
| ploppyploppy wrote:
| Kraken do: https://www.kraken.com/en-gb/proof-of-reserves
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