[HN Gopher] We will not pursue the potential acquisition of FTX
___________________________________________________________________
We will not pursue the potential acquisition of FTX
Author : sbuccini
Score : 203 points
Date : 2022-11-09 21:06 UTC (1 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| fdgsdfogijq wrote:
| The funny thing is for six months I have been checking FTX for
| open developer positions. Thinking surely, the best place in
| crypto must be hiring good devs like me. And there have been no
| postings at all! And word on the street is their devs actually
| building the exchange made a middling salary with zero stock. I
| always found it odd, how could they not be hiring? even during
| the downturn? And now I know why, it was all a scam.
| ZephyrBlu wrote:
| They were hiring. I applied a few months ago and got an email
| from them, but never followed up.
| firekvz wrote:
| They just hire people from other places, cheaper labor, I know
| at least 4 southamericans who worked for them in the past, 100%
| remote, same talent as an US dev, and 1/4 of the cost
| skippyboxedhero wrote:
| It wasn't. They just ran with significantly less staff (iirc,
| less than 30). If they wanted you, they got in touch.
|
| FTX wasn't a scam either. Their business was a licence to print
| money but, as so often happens in finance, managed to spin shit
| from gold.
| fdgsdfogijq wrote:
| That's not what I have heard. Specifically know people who
| have gotten offers, mostly in the 150k range with zero stock.
| Alameda research is also just random devs that went to MIT
| with a few years experience. Impressive to go to that school,
| but clearly not experienced enough to run a real finance
| operation. Zero real finance people.
|
| If they were serious they would have hired portfolio managers
| with decades of experience.
|
| Its the same thing as three arrows capital, random people
| ending up with a bunch of capital, overestimating their
| intelligence due to a bull market run, and ending up with
| nothing
| mi_lk wrote:
| definitely know one guy hired by FTX intl in the past 6
| months
|
| so "If they wanted you, they got in touch." seems true to
| me
| [deleted]
| fdgsdfogijq wrote:
| "If they wanted you, they got in touch."
|
| you make it sound like a prestigious elite club. it was a
| scam, and it should be called out as such.
|
| also again i personally know two people that received
| stingy offers from them
| squidbeak wrote:
| Concealing from users they were gambling with their funds -
| and not a scam?
| throw827474737 wrote:
| Hey, in crypto not all is a scam. Some are a proper pyramid
| scheme, others outright betrayal, and few are just stupid
| or for fun (:
| pearjuice wrote:
| No surprise whatsoever. They killed a competitor, avoided being
| on the hook for ~$6B in missing funds and without paying anything
| they are basically inheriting all FTX customers still happy to
| trade crypto. FTX or whatever is left will be under massive legal
| scrutiny for years to come. The "institutional investors" they
| were attracting and lobbying for are the kind of folks you don't
| want legal battles with.
|
| Meanwhile, FTX is still operating (!), accepting new users and
| accepting customer deposits even though it is insolvent. If you
| haven't been following the crypto news much or aren't on Twitter,
| you will have received ZERO direct communication from FTX that
| they are insolvent (not even an email). This is coming from
| someone who went on the record[0] trying to lobby, blaming the
| financial industry for lack of transparency and taking on too
| much risk and publicly lying that FTX doesn't use customer funds
| to trade (tweets have since been deleted)[1]
|
| [0] https://twitter.com/HaloCrypto/status/1590417311839981569
|
| [1] https://cointelegraph.com/news/ftx-founder-sam-bankman-
| fried...
| 6d6b73 wrote:
| Ponzi doesnt want to buy failed Ponzi? How surprising.
| giantrobot wrote:
| Game recognizes game.
| seydor wrote:
| good for binance customers.
| Animatronio wrote:
| I don't think it very good for them either. They might feel
| secure for a couple more days, but the crash is surely coming
| for them as well.
| alexk307 wrote:
| Maybe people will finally get some sense and stop storing their
| wealth in digital currency that is backed by absolutely nothing.
| I think a lot of dominoes are about to fall in the crypto world
| scottiebarnes wrote:
| The Bitcoin protocol and network continues to operate exactly
| as expected. Here, people trusted a "bank" (an exchange acting
| like a bank), and got burned when the bank gambled and lost.
| sytelus wrote:
| Without exchanges like FTX or Coinbase, how should general
| public acquire crypto?
| rahen wrote:
| Bisq, of course.
|
| https://bisq.network
|
| With a bit more manpower, they could make the UI more
| usable to the general public. I wish there was an
| iOS/Android version too.
| scottiebarnes wrote:
| Use an exchange that publishes proof of reserves, and take
| custody of your crypto immediately.
| eddsh1994 wrote:
| There's a big peer to peer market, fwiw
| _jal wrote:
| > continues to operate exactly as expected
|
| Yep: as a set of primitives on which to build sorting
| mechanisms for fools and money.
| scottiebarnes wrote:
| Tell me more about the rock solidness of the housing
| market, or government bonds.
| sytelus wrote:
| At present no major currency is backed by anything material but
| trust. USD, for example, is only viable because, at the deepest
| level, trust in it is enforced by US army. There are three
| major class of people who need digital currency: (1) who are
| super rich and won't care about putting their 1% of wealth for
| "diversify and forget", (2) who need to transfer money eyes off
| from governments, (3) people who need alternative to be
| manipulated away from US fed. As long as there exist a group of
| people needing digital currency there is an intrinsic value
| assigned to that currency.
| polrjoy wrote:
| Chinese yuan is economically backed by state owned companies
| that routinely sell essential goods and services at below
| market prices when they otherwise would rise too fast.
| ummonk wrote:
| If the crypto-bros had a militia as powerful as the US army
| then perhaps crypto would be worth something.
| [deleted]
| pessimizer wrote:
| > USD, for example, is only viable because, at the deepest
| level, trust in it is enforced by US army.
|
| That's a very deep level. At the practical level, USD is
| viable because court judgements in the US can be settled in
| dollars (e.g. if somebody is held responsible for killing
| your goats, you can't demand to be paid back in goats), and
| US taxes are owed in dollars.
|
| At the deepest level, taxes and courts are maintained by the
| US government, which I suppose you can say is protected by
| the US military?
|
| Saying that the _high dollar_ is protected by the US military
| makes more sense. But the dollar itself is protected by the
| magnitude and reach of the entire US government, which is
| only partially maintained and extended by killing people.
| jonstewart wrote:
| > trust in it is enforced by the US army
|
| That's not exactly "absolutely nothing", to use the parent's
| phrase.
| sgt101 wrote:
| At it's deepest level the $ is viable because of the consent
| of the people of the USA. The US Army isn't either capable of
| enforcing law in the USA or exercising influence out of the
| USA without that consent.
| matai_kolila wrote:
| Yeah but like, the US is a lot more likely to be around in 20
| years, so this argument doesn't really make any sense.
|
| Honestly I'm sick of hearing it; yes we know, all money is
| made up, that's not an interesting point anymore. Society is
| okay with that, but it doesn't mean you can just make up
| another currency, that's not how it works.
| sytelus wrote:
| That's exactly how it works. When you issue IOU, you issue
| your own currency. When a company issues stock, they are in
| fact issuing their own currency. All contracts are in fact
| a currency that can be sold, bought, invested and
| transacted. World debt is far far larger than actually
| currency in circulation. How does that happen? Because we
| make up "currency" all the time.
| matai_kolila wrote:
| No, that's not the same thing at all. For every other
| example of currency besides the government's currency,
| there's a tangible thing backing that unit.
|
| Crypto still doesn't have that, and that matters. To what
| degree is up for debate, but it does matter. Only
| governments apparently can get away with the unbacked
| currency, because they otherwise back it with enforced
| societal rules (a.k.a. laws).
| keneda7 wrote:
| What other currencies are there in todays world other
| than fiat (government's currency back by nothing)? I was
| trying to think of something other than crypto and really
| came up blank.
|
| Sure some corporations have things like CompanyX dollars
| that they could give out to employees who then redeem
| them for something. But in these situations those dollars
| are back by nothing.
| CyanBird wrote:
| > No, that's not the same thing at all.
|
| Per Mark Blyth
|
| Money, to be useful is what Economists call three things;
| A Unit of Account A Unit of Exchange A Store of Value:
| A hedge against uncertainty Crypto is not money, so what
| is it? Is what the Chinese Central Bank characterized
| three years ago as Digital Gambling Asset
| NovemberWhiskey wrote:
| Other things we're fed up of: people making up their own
| weird and arbitrary definitions of "currency".
| kortilla wrote:
| No, contracts are not currencies. The whole point of
| distinguishing between currencies and other
| securities/debt is that a currency has the property of
| being a widely used medium of exchange.
|
| The contract I have with my plumber to plumb my toilet is
| not something you can use to buy lunch.
| addajones wrote:
| Exactly how it works... but you left out the US Army part
| this time? You kind of need that to give it value.
| Nothing else will. USD.
| cheeselip420 wrote:
| But what if you declare it? Like bankruptcy, but in
| reverse?
| buitreVirtual wrote:
| Storing wealth means that you can get your wealth out later. In
| this case, people are just giving it away.
| sicp-enjoyer wrote:
| An exchange explodes almost every year. I doubt anything
| substantial has changed. In fact, binance looks better than
| ever.
| sgt101 wrote:
| Well, absent the implosion of general confidence in crypto
| and the likely hawkish reaction of regulators - I agree.
| Mistletoe wrote:
| What backs this?
|
| https://fred.stlouisfed.org/series/M2SL
|
| Might of USA and all that? Yes I've heard all that before.
| Rome, France, England...
|
| https://en.wikipedia.org/wiki/Debasement
|
| https://en.wikipedia.org/wiki/Assignat
|
| https://en.wikipedia.org/wiki/The_Great_Debasement
|
| History is more on the side of it happening than not.
|
| "The root problem with conventional currency is all the trust
| that's required to make it work. The central bank must be
| trusted not to debase the currency, but the history of fiat
| currencies is full of breaches of that trust." -Satoshi
| Nakamoto
| thr0wawayf00 wrote:
| > History is more on the side of it happening than not.
|
| Is this true? Of all the years that various countries have
| used traditional fiat currency, has debasement happened more
| years than it hasn't? I don't think so but I'm not certain.
|
| Obviously, nobody can predict the future here, and history
| tells us that all empires come to an end at some point. But
| we're watching crypto speed-run through all of the issues
| that the American banking system had in the Free Banking era
| leading up to the creation of the Fed. Operating in this
| trustless crypto system still makes it possible for people in
| control to do stupid things which threaten the viability of
| the entire system.
|
| Personally, I think cases like this prove that wealth
| concentration in the hands of the few leads to these
| situations. It's a not a government problem, it's a
| concentration of wealth and power problem. Individuals
| shouldn't have this much money or power to act so recklessly,
| but we accept the outcome as a consequence of our winner-
| take-all culture.
| jdasdf wrote:
| >Is this true? Of all the years that various countries have
| used traditional fiat currency, has debasement happened
| more years than it hasn't? I don't think so but I'm not
| certain.
|
| Do you know of any currency over the past 200 years that
| has suffered deflation throughout that period?
|
| I don't mean "occasionally has one year with deflation", I
| mean, the real value of 1 unit of that currency 200 years
| ago was less than what it is today.
| thr0wawayf00 wrote:
| Certainly major currencies have experienced periods of
| deflation (i.e. the Great Depression, the Great
| Recession, etc.). But deflation is a sign of weakening
| economy as well. There's an obsession with inflation, but
| the reality is that some inflation is inevitable in a
| growing economy as demand outpaces supply. Economists
| agree pretty consistently on that.
| nightski wrote:
| Do you typically invest all of your wealth in one thing?
| Because for most of us I imagine that is not the case.
| shmatt wrote:
| CZ knew about the bad leverage to begin with, which is why he
| tweeted about selling all of the FTT
|
| What are the chances he never intended to buy FTX, just to
| destroy it after their public back and forth? It's almost like a
| reverse Musk - he sent a purchase offer with an option to back
| out no matter what
|
| CZ knew from day 1 all he needed to do was crash FTT just enough,
| and the rest would happen organically
| rr808 wrote:
| CZ seems like a genius, but I'm sure he's panicking now, he
| doesn't benefit from killing the whole alt-coin world - which
| increasingly looks like happening.
| eddsh1994 wrote:
| I called it and saw many others call it too. Cause a run on
| FTX, get due diligence and say it's F**ed, and get their user-
| base for free.
|
| My concern is how much funding FTX and SBF in particular were
| giving to EA/AGI Safety research labs and charities. There's
| going to be some significant knock on effects there when the
| money is no longer available.
| Animatronio wrote:
| What user base? FTX is unable to process withdrawals right
| now (and who knows if they ever will be), so the money's gone
| meaning users won't simply migrate to Binance.
| eddsh1994 wrote:
| Basically any r/cc user who was in FTX and wants to invest
| part of their next paycheck?
| Animatronio wrote:
| As the saying goes "Fool me once ..."
| eddsh1994 wrote:
| Regardless of opinions it's a sizable user base! And,
| assuming there's another bull run at some point, it'll
| grow again.
| headsoup wrote:
| That's a big assumption at this point.
| kuratkull wrote:
| Seems pretty likely. The moment FTX publicly accepted the
| buyout idea they were doomed as a company, it wouldn't have
| mattered if Binance actually bought them after that.
| shapefrog wrote:
| The Wall Street Journal in its report quoted Binance as saying:
| "Our hope was to be able to support FTX's customers to provide
| liquidity, but the issues are beyond our control or ability to
| help."
|
| Big if true
| redox99 wrote:
| That quote comes literally from the tweet linked in this post
| pavlov wrote:
| Why does anyone trust Binance either? They're notoriously shady
| about where they operate and what assets they actually hold, to
| the point that they're officially not headquartered anywhere.
|
| If you have $100k at Binance, is there any reason to believe you
| could withdraw it tomorrow? Any contract you may have with
| Binance is made with a local shell company that could just as
| well be a hot dog stand. Any money you've sent them is
| effectively nowhere.
|
| FTX was supposed to be above the board and they collapsed in a
| day. A few months ago FTX was the white knight buying out
| distressed crypto companies. Why would Binance do any better?
| nfw2 wrote:
| Potentially dumb question here; I am no expert on crypto or
| finance.
|
| Isn't the collapse of FTX in some ways evidence in favor of
| decentralized currency rather than against it? As evidenced by
| 2008, firms gambling with other people's money doesn't seem to be
| specific to DeFi.
|
| If coin exchanges had some legal obligation to just be wallet and
| marketplace services instead of investment engines, could that
| help prevent this sort of fiasco (and the 2008 one) happening in
| the future? On the other hand, perhaps this solution could be
| equally applicable to traditional banks.
| ricardou wrote:
| This whole thing is such a mess. Binance's statement is quite
| scathing. It is a shame that crypto institutions continue to fold
| after mismanagement. The free money era will sure take a couple
| more entities with it.
| maxerickson wrote:
| Maybe organizations is a better word there.
| grey-area wrote:
| It would be amusing if this deliberate attack by Binance also
| caused other frauds like Tether and eventually Binance to
| collapse too.
|
| People will simply lose faith in crypto entirely and avoid the
| whole market.
| chasd00 wrote:
| I certainly have no faith in crypto. The returns look nice but
| I know i'm not informed enough to get out while the getting's
| good so I'll have to pass.
| Kukumber wrote:
| Why would they buy a government sponsored ponzi scheme
|
| Congrats on Binance for dodging the bullet
| nrmitchi wrote:
| Real answer? If the value of maintaining trust in the over-all
| ponzi environment is worth more to you than the lost value of
| the failed ponzi scheme, it might be worth buying the other
| ponzi scheme.
| foobiekr wrote:
| That is almost certainly the only reason they were even
| considering this.
| secretsatan wrote:
| Independent ponzi schemes FTW!
| churchill wrote:
| From reports I've heard floating around, Alameda was making >$1M
| per day doing their good ol' prop trading. If that's true (and
| that's a big if) then all SBF had to do was simply stick to the
| playbook. Do you prop trading on the side, help customers
| transact crypto via FTX.
|
| How do you even mess it up this badly?
| zomglings wrote:
| By getting greedy and treating FTX user funds as capital to
| deploy in the prop trading firm.
| JumpCrisscross wrote:
| In the thick of it, illiquidity and insolvency blur. But not
| after the fact.
|
| As usual, Levine put it best: "the problem is not a timing
| mismatch, in which FTX's customers asked for their cash back but
| FTX did not have enough ready cash because it had long-term but
| money-good loans out. The problem is that FTX took its customers'
| money and traded it for a pile of magic beans, and now the beans
| are worthless and there's a huge hole in the balance sheet" [1].
|
| Before one is insolvent, illiquidity and insolvency are circular
| questions of asset value. After the fact, it shouldn't take
| someone more than a few minutes to come to a conclusion. (There
| is a deeper discussion on the folly of accepting as collateral
| assets correlated with confidence in oneself. I recommend reading
| the article.)
|
| [1]
| https://www.bloomberg.com/opinion/articles/2022-11-09/bankma...
| warinukraine wrote:
| Hah I called them magic beans yesterday!
|
| https://news.ycombinator.com/item?id=33524912
| sgt101 wrote:
| We've been here a long time ago :
| https://en.wikipedia.org/wiki/Beenz.com
| simonjgreen wrote:
| Wow I had forgotten all about that.
|
| I remember a lot of hype in the dot-com era around that
| ArtWomb wrote:
| The NFTs of 1997: "etoy shares compel people to think
| about the elusive and amorphous nature of Internet art.
| One of the many controversies about Net art is that there
| is no original copy; an artist can't exactly "sell" a
| home page to a collector. The "shares" play with the idea
| of ownership and the Net, as well as spoof absurdly
| overvalued Net stock" ;)
|
| https://www.villagevoice.com/1999/11/30/e-toy-story/
| pseudosavant wrote:
| FTX going under due to magic beans reminds me so much of Lehman
| Brothers going under in 2008. That time the magic beans were
| "mortgage backed securities" that somehow took low-quality
| debt, mixed it up with some magic, and out came high-quality
| debt, only it didn't.
| kristjansson wrote:
| The problem with MBS was always the zero-sum nature of the
| alchemy. They took 100 low-quality loans in, and returned 10
| high-quality loans, 30 ok-ish loans, and 60 dog-shit loans.
| No harm no foul, until the dog-shit tranches were marketed as
| ok-ish, and alchemists believed they we're really creating
| gold.
| dragontamer wrote:
| CDOs weren't the problem. You see, mixing together dog-shit
| __ONCE__ isn't that big of a deal.
|
| CDO-squared (CDOs of CDOs) were a problem. If you took
| those 60 dog-shit loans, mixed them together, and created
| 10 high quality loans out of them, problems began to occur.
|
| Even then, it wasn't the CDO-squared that collapsed the
| whole thing. It was the CDS: the "insurance" (so to speak)
| on the CDO-squared that made things go haywire.
| ethbr0 wrote:
| The central MBS problem seemed to be ratings-based-
| regulation + free-market-unregulated-ratings-agencies.
|
| In hindsight, it should have been structured like
| government insurance servicers: subject to random and
| _regular_ audits, with $$$ fines if they turn up anything
| fishy.
|
| If you don't want corruption, engineer a system where not
| being corrupt is more profitable...
| btown wrote:
| Archive link to the Levine column linked above:
| https://archive.ph/CxJqM
| SilasX wrote:
| That's why I hate when people in these discussions refer to
| needing/providing "liquidity". It feels like such a weasel
| word. Unless you _know_ enough to conclude it's really a cash
| flow mismatch, then don't mince words or overcomplicate it.
|
| Money. They need some g/d m/fing money. Maybe they need it as
| arms-length loans on legitimately illiquid capital. Maybe they
| need underpriced loans for the risk of the business. Maybe they
| just need a giant dump of free cash.
|
| But it's money they need. To weasel it away as "liquidity" is
| to assume something you probably have no way of knowing until
| later.
|
| It was _particularly_ dubious in the case of FTX, whose assets
| were in popular cryptocurrencies, which are traded every
| millisecond. You can absolutely find a buyer instantly! At
| about the same price it traded for five minutes ago! Just not
| at the price you _need it to be_.
|
| "No, no, the _fair market price_ is actually much higher, it's
| just that there's only one guy who would actually buy it all
| right now!" No. Stop. We already have a word for an asset that
| exactly one person wants to pay a positive price for: worthless
| (because they only have to outbid everyone else).
|
| Sorry, /rant
| Marazan wrote:
| Lol
| smcl wrote:
| Quite. And may I add: lmao
| scrlk wrote:
| Just a PSA for any FTX users out there: please make sure you get
| details of your balances, deposits, withdrawals and trade history
| whilst the site is still up.
|
| You can download it as a CSV - I'd also take screenshots to be on
| the safe side.
|
| Save yourself a potential headache when you come to do your taxes
| down the line.
| [deleted]
| WJW wrote:
| Extremely interesting to see how this will end. IIRC, Alameda
| research had a huge position in FTT which will presumably go
| under now.
| mdolon wrote:
| Their website has been taken down (marked private):
| https://www.alameda-research.com/
| wellthatsawrap1 wrote:
| Hopefully with jail time
| skippyboxedhero wrote:
| SBF was one of the biggest political donors to the party in
| govt. He seems to have done all the shady stuff with Alameda
| (and said it was arms-length). And whilst Alameda's CEO said
| multiple things that would have got you in trouble with
| regulated products (saying they had $10bn in secret assets,
| making a public offer to buy FTT to manipulate the
| price)...this is crypto.
|
| I will make an exception to this: if they do not manage to
| make everyone whole or if there is public outrage that
| overwhelms his purchased politicians then it is over and
| multiple people will do time.
| ignoramous wrote:
| If and after cryptocurrency becomes deeply intertwined with
| the economy (like Banks), I wonder bailouts would be the norm
| besides relatively inconsequential jail times?
|
| I wonder what's going on / will happen in countries where
| governments (or citizens en masse) have endorsed / adopted
| cryptocurrencies?
| dang wrote:
| Previous related thread, now pushed down the stack:
|
| _FTX's financial black hole leaves Binance balking at rescue
| plan_ - https://news.ycombinator.com/item?id=33535161 - Nov 2022
| (353 comments)
| googlryas wrote:
| Can someone who has a clue tell me which happened?
|
| Did SBF/FTX break the law and will see jail time?
|
| Or did they break regulations and will receive a fine?
|
| Or is it just a tough cookies situation?
| ALittleLight wrote:
| I hope so. Crypto scams hurt real people who put real money
| into this thing. Whatever "financial engineering" happened to
| vaporize X billion surely did more harm, and to many more
| people, than the average felony theft.
|
| There are so many laws, so many jurisdictions involved, and so
| much complexity and ambiguity that it seems basically certain
| laws were broken. So, we have broken laws and injured parties -
| seems correct to pursue criminal charges.
| kra34 wrote:
| https://www.bloomberg.com/news/articles/2022-11-09/binance-s...
|
| Estimated 6 Billion USD of a hole on the FTX side.
| adrr wrote:
| Does this number match the debt on Alameda's balance sheet?
| paulpauper wrote:
| If I had a $1 for everyone who "called it" or "knew it"...
| RadixDLT wrote:
| "Every time a major player in an industry fails, retail consumers
| will suffer. We have seen over the last several years that the
| crypto ecosystem is becoming more resilient and we believe in
| time that outliers that misuse user funds will be weeded out by
| the free market."
| misiti3780 wrote:
| Does anyone here think SBF will be prosecuted?
| idoh wrote:
| What crime was committed? I'm asking in a neutral way. Simply
| losing billions of dollars of other people's money isn't
| necessarily illegal.
| misiti3780 wrote:
| im not sure either, but it sounds like the same situation as
| three arrows capital and those founders disappeared
| cbtacy wrote:
| Among other things, he perjured himself in front of Congress.
| wollsmoth wrote:
| yeah crypto deposits don't have the same protections as
| securities which is why you don't want to leave them in an
| exchange wallet. I'm going to guess somewhere in here there's
| enough for a fraud charge though. I don't know enough to
| explain why, but my hunch is he didn't lose all this money by
| going around and making honest mistakes.
| redox99 wrote:
| He claimed literally days ago that funds were backed. That
| seems like fraud.
|
| https://twitter.com/augginator/status/1590117110818443265
| TheAlchemist wrote:
| What's even more funny is that Binance make it look like they are
| a stable financial institution, and it's thanks to their high
| standards that they won't acquire FTX. Binance is most probably
| much more of a fraud than FTX.
|
| Binance doesn't even have physical headquarters in any country in
| this world - and the reason is that they are being actively
| investigated or banned almost everywhere.
| bamazizi wrote:
| ^this ... The whole space seems like a mirage
| lizknope wrote:
| It seems like it because it is.
|
| No regulations, no protections, only idiots "invest" in this
| garbage.
|
| It's just one scam after another
| jjtheblunt wrote:
| We could ask how long till Binance implodes.
| mrtksn wrote:
| I don't know about it, Binance has become a gold standard in
| crypto exchange business. Here on HN it was always about
| Coinbase likely because its an American company but for the
| rest of the world, it's all about Binance and the rest of the
| world is huge. How huge? About an order of magnitude to
| Coinbase.
|
| If Binance goes, crypto isn't coming back.
| naveen99 wrote:
| mtgox was bigger too. There are other reasons for a crypto
| winter like high interest rates and a newly credible us
| central bank. Rest of the world is not bigger when it comes
| to non residential real estate: private equity, venture,
| tech, finance.
| JumpCrisscross wrote:
| > _Binance has become a gold standard in crypto exchange
| business_
|
| This was FTX and Alameda like a week ago.
| potatototoo99 wrote:
| Not really, FTX was barely in the top 10 for spot, though
| better in futures. Plus there are DEX and AMM.
| dogman144 wrote:
| Correct until the last I think. Every exchange is looking
| international because they know what you're saying too. If
| Binance goes, there's a mix of enough international toeholds
| from regulated exchanges and enough defi to keep the markets
| live.
| rahen wrote:
| "Not your keys not your coins". I wonder how people can trust
| those CEX to store their funds. Private keys should be hosted
| on a cold wallet, period.
| thepasswordis wrote:
| I hope this kills the "disheveled awkward guy must actually be a
| genuis!" meme forever.
| landoftheice wrote:
| Bankman
|
| Fried
|
| Dimon
|
| Powell
|
| Yellen
|
| Stein
|
| Wicz
|
| Blum
|
| Gold
|
| Silver
|
| Epstein
|
| Weinstein
|
| Cohen
| paulpauper wrote:
| MSTR down 50% in 2 days. That will also be going to zero, too
| given how much debt it carries. Leverage on an such a volatile
| but likely worthless asset is financial suicide. What were these
| people thinking. Leverage on index funds is pretty risky, but on
| bitcoin? Makes no sense.
| pedalpete wrote:
| Are you referring to Microstrategy? Or some other MSTR?
|
| Google is showing down 30% over the last 4 days.
| https://www.google.com/search?q=MSTR&sourceid=chrome&ie=UTF-...
|
| At the same time, if you are talking MSTR, Saylor must be
| concerned.
| paulpauper wrote:
| MicroStrategy
| snowypine wrote:
| Wow, after only one day of due diligence.
| baq wrote:
| 'show me what you have and how much you owe' 'it's $10B and
| $16B' 'no thanks'
| cannaceo wrote:
| My personal belief is that binance agreed with no intention to
| carry out the deal. CZ tapdanced on FTX's grave on twitter with
| critical comments yesterday. It is now unlikely that anyone
| else will want to step up to look at the deal.
| ignoramous wrote:
| I'd say Stripe but unlikely given their missed IPO window.
| Perhaps, Amazon, if they are feeling lucky?
| [deleted]
| pearjuice wrote:
| My prediction: nobody will touch FTX and whatever is left
| of it will be in legal battles for years to come. Most will
| get auctioned to recoup the big fish making the most noise
| and maybe pennies after that for individual users which had
| funds on FTX. There is near zero value in an exchange-brand
| which took a reputational hit as big as this.
| masklinn wrote:
| Why would they want to take on what is reported to be net
| 6bn in liabilities?
| mumbisChungo wrote:
| The silly thing is that FTX was a money printing machine. There
| was no reason to start gambling with user funds, aside from
| greed, hubris, and stupidity.
|
| Similarly, Sam's fund Alameda was delta-neutral until some time
| in 2021, which is something that also could have profitably
| continued in perpetuity, but they got greedy and started making
| directional bets with leverage.
| jti107 wrote:
| reminds me of LTCM...they were making bank until the Asian bank
| crisis and Russia defaulting on their debt
|
| https://www.dailymotion.com/video/x225si7
| oldgradstudent wrote:
| Very different. LTCM was making massive, very risky bets
| while pretending they were safe.
|
| They were making insanely leveraged bets on real assets.
|
| FTX seems to me to much closer to Madoff.
|
| They were printing their own Monopoly money and pretending it
| was worth billions.
| pclmulqdq wrote:
| FTX was the next iteration of beanie babies.
|
| They held a huge supply of an illiquid asset that they made
| the market on. No surprise that they would offer a high
| price and then say "these are worth a lot." This happened
| with beanie baby sellers: they would corner the market on
| one model and the jack the price. The problem is that
| nobody else thought they were worth that much.
|
| Then, FTX made it worse by allowing people to borrow
| against them at the valuation of "a lot," and borrowing
| against them at the same valuation.
| jeffreyrogers wrote:
| LTCM actually was doing a lot of the risk management people
| later said they should do. Their problem was the trades
| they were doing were more crowded than the realized and
| they couldn't unwind them cheaply because everyone else was
| doing the same thing. Plus once people realized they were
| struggling other market participants started betting
| against them. There have been other similar situations
| since then. In August 2007 most of the big quant funds lost
| double digit percentages in a few days when someone had to
| unwind a portfolio and statarb strategies stopped working.
| mumbisChungo wrote:
| The core of the issue here was not ponzinomics, it was the
| exchange gambling directly with user funds, by way of
| unsecured loans to a hedge fund controlled by the founders.
|
| Fraud? Yes. But users weren't buying into a ponzi, they
| were using a centralized exchange product with the
| understanding that reserves were whole, when in reality
| they were secretly fractional reserves.
| lizknope wrote:
| SBF literally describes a magic ponzi box
|
| https://www.youtube.com/watch?v=C6nAxiym9oc
| nullc wrote:
| Why do you think a single thing they told the public was ever
| truthful?
|
| It seems naive to me.
| mumbisChungo wrote:
| I'm not sure what you mean by this exactly. Many of the
| things they said to the public are not true, but these
| currencies use permanent, public ledgers, so you can see
| where the money goes if you look carefully.
| TedDoesntTalk wrote:
| Does the ledger capture loans of user funds held by FTX?
| mumbisChungo wrote:
| Yes
| PaulWaldman wrote:
| >The silly thing is that FTX was a money printing machine.
| There was no reason to start gambling with user funds, aside
| from greed, hubris, and stupidity.
|
| Where were their profits derived? Was it from taking their
| slice of every transaction? Or selling their freshly minted
| coins? If it was the latter, that only works for so long, just
| ask the Fed.
| oldgradstudent wrote:
| > Where were their profits derived?
|
| Is there any reason to believe there were any profits ever?
| mumbisChungo wrote:
| Of course. They were one of the highest volume exchanges,
| taking a % of every transaction.
|
| Unfortunately, they got greedy and started lending money
| (to themselves in Alameda, where it was gambled away)
| mumbisChungo wrote:
| Trading fees on billions of dollars of volume.
| nfw2 wrote:
| In this case, where do the liabilities come from?
|
| Edit: nvm I guess this thread is about FTX's original
| business model
| cellis wrote:
| There's a Bloomberg article that goes over why this is a bit
| more nuanced than "gambling with customers funds". In short,
| it's either one or both of poor risk management ( margin
| traders can't post collateral and the collateral they had was
| FTT which went to zero ) and black swan bank runs ( Binance CEO
| tweets about risky FTT causing bank run causing further drops
| ). In fact "gambling with customer funds" was _by design_.
| Coinbase, to their credit, lost business to the cexes and FTXs
| for not allowing derivative and defi lending / margin trading.
| So the customers should have known the fatalistic game they
| played.
|
| If you have a subscription I recommend it. -
| https://www.bloomberg.com/opinion/articles/2022-11-09/bankma...
| brobinson wrote:
| https://archive.ph/CxJqM
| wfleming wrote:
| FWIW you can subscribe to Matt Levine's column as email
| newsletter without being a Bloomberg subscriber. (That
| doesn't help for reading already-published columns, but of
| course there are other ways around paywalls.)
| mumbisChungo wrote:
| >In fact "gambling with customer funds" was by design.
|
| This is not accurate. The ToS for FTX explicitly said that
| customer funds would not be used for investment purposes.
| While it didn't explicitly say it wouldn't be used for
| lending, it was a broad assumption in the industry that the
| exchange was solvent and could back user assets on a 1:1
| basis.
|
| It is widely believed now that Alameda went deep underwater
| during the collapse of the Luna ponzi (this one was quite
| literally structured like a ponzi) and borrowed a large
| amount from FTX to bail themselves out of it. In the wake of
| this, FTX had a shortage of hard assets and a fat bag of FTT
| that the loan was issued against, which is what exposed them
| acutely to a bank run and/or price decrease in FTT.
| potatototoo99 wrote:
| The issue wasn't the bank run. FTX could just have halted
| withdrawals, CEX do it all the time. The issue was FTT
| collaterized loans or equivalent, because they gambled too
| hard. And I doubt their users were aware of the risks, sBF
| himself guaranteed on Twitter the day before.
| r00fus wrote:
| If something doesn't make sense after a detailed review - my
| instinct is that there is hidden knowledge that I don't have.
| bowsamic wrote:
| That instinct will mislead you. It denies stupidity and
| irrational choices and leads to conspiracy theories
| oldgradstudent wrote:
| > FTX was a money printing machine
|
| Turns out, they were a Monopoly money printing machine.
| woeirua wrote:
| Honestly, I think this is a really dumb move by Binance. They
| have taken a look under the hood, determined that FTX is bankrupt
| and then told everyone that is the case. Now there's going to be
| a widespread crypto panic that is going to cause other exchanges
| to collapse, and ultimately I expect Binance too will go down.
| infotogivenm wrote:
| Dumb? It would be shockingly out-of-character if Binance isn't
| utilizing strategies to make fat, fat stacks here.
| YeBanKo wrote:
| Ok, so here is FTX's CEO Sam Bankman Fried explains how the Ponzi
| scheme works using crypto farming as an example:
| https://www.youtube.com/watch?v=KZYqL79GDXU&t=1276s
| tommica wrote:
| Why waste money on something that is burning out anyways? Also
| conveniently mentioning "potential", they really want to make
| sure people understand that there never was anything binding
| going on.
| jefftk wrote:
| If FTX was at least close to solvent it could have been worth
| acquiring for the customer relationships.
| firefoxkekw wrote:
| FTX in need of 8 billions according to the wsj.
|
| https://archive.ph/lXRAd
| [deleted]
| bmitc wrote:
| What happens to all the companies that FTX gobbled up? Was that
| just a ploy to try to stabilize the crypto space? Are those
| companies that were going defunct now going to go defunct again?
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