[HN Gopher] FTX to file for U.S. bankruptcy, CEO resigns
___________________________________________________________________
FTX to file for U.S. bankruptcy, CEO resigns
Author : mfiguiere
Score : 461 points
Date : 2022-11-11 14:32 UTC (8 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| nunez wrote:
| i know next to nothing about crypto, but i guess we finally won't
| see umps with huge FTX logos on their polos next season, and
| that's really great.
| ftx_no_name wrote:
| I'm one of customers that have money on FTX international which I
| cannot withdraw. (yup i know. bad decisions etc, but i knew the
| risk).
|
| Do you guys know, what will happen with the funds? Will I as a
| customer get any of my money back? (do you know if I'm a secured
| creditor?)
| superjan wrote:
| I am surprised that this is hardly discussed here. FTX is
| supposedly a large exchange, so there should be lots of
| individual investors affected.
| AustinDev wrote:
| MTGOX blew up in Feb 28, 2014. I had ~100BTC there. I've yet to
| receive a dime. Just as a point of reference.
| benjaminwootton wrote:
| A cool $2 million, $6 million at peak. Maybe one day you will
| get the call....
| avrionov wrote:
| I'm sorry to hear that. You should look at Celsius as an
| example what happen next. They are further down on the
| bankruptcy.
|
| https://www.reddit.com/r/CelsiusNetwork/
| ftx_no_name wrote:
| Thank you!
| __derek__ wrote:
| You're an _unsecured_ creditor. It 's obviously an open
| question whether you'll be able to recover any funds.
| alldayeveryday wrote:
| adamsmith143 wrote:
| That thread is completely deranged and uses a lot of tweets to
| say nothing of substance. Barely above Qanon level here. Well
| connected kids with successful well connect parents make lots
| of money, news at 11...
| systemicdanna wrote:
| It's unusual that this trash is leaking to HN and is getting
| support.
| jjulius wrote:
| It's currently getting downvoted to the bottom of the
| comments, and follow up responses to it with more
| "corroborating information" are already getting downvoted
| to hell.
|
| Edit: Most comments in this chain, including the genesis,
| "Add some political contribution money laundering into the
| equation", are now grey.
|
| Edit 2: Aaaaand the genesis comment, as well as the follow
| up with "corroborating information", are now flagged.
| [deleted]
| orangepurple wrote:
| adamsmith143 wrote:
| You really think it was necessary to set up a totally
| fraudulent multi billion dollar crypto company in order to
| raise money for Biden? You realize they could have just gone
| to any of a few dozen left leaning billionaires and gotten
| the money far easier? Occam's Razor.
| streb-lo wrote:
| Do we really need to promote conspiracy theories?
|
| We know what happened. Smart rich kid uses his connections to
| get loaned $50M and gets wildly rich from arbitrage. I'm not
| sure why more and more people decided he was worth trusting
| with even more insane amounts of money, especially when it's
| just a gang of kids running the company.
| systemicdanna wrote:
| >really makes you think
|
| Ah yes, the pedophile cannibals are to blame. Look into it.
| monkeydust wrote:
| He should have just stuck to running an exchange and trying to
| innovate that game (note - earlier in the year lots of talk
| around their automated margin plan for wider industry beyond
| crypto). Theres a decent business there.
| digianarchist wrote:
| That's not profitable though. Look at Coinbase.
|
| That's why these companies have to mint their own shitcoins and
| come up with derivative Ponzi products to make money.
| herodoturtle wrote:
| > He should have just stuck to running an exchange
|
| I'm a bit of a Luddite when it comes to crypto, can you please
| help me undersatnd what did SBF actually do that has caused all
| this trouble?
|
| Aside from running an exchange I mean.
|
| I'm just trying to understand the context of all these
| headlines.
| boeingUH60 wrote:
| He used user deposits for risky trading and lost it all.
| bogomipz wrote:
| What was the "automated margin plan"?
| canoebuilder wrote:
| > _What was the "automated margin plan"?_
|
| And does/would it bring any value into the world, or is it
| just an effort to keep the plates spinning in the multi
| dimensional scam crypto has become?
|
| Genuine question btw, if there is a real business there, does
| it serve the interests of broader society in any way?
| fredgrott wrote:
| So the safe bet seems to be not the Tokens and not crypto
| specifically but the hardware house firms producing ASIC chips,
| namely:
|
| Anyone have an idea which firms produce these chips for Amazon,
| Apple, Google, Microsoft, etc. ?
| Animats wrote:
| "Voluntary Chapter 11" in Delaware. Figures.
|
| That gets them out from bankruptcy in the Bahamas, which is much
| tougher than US law. The Bahamas still has classic tough
| bankruptcy laws, where there's no debtor-in-possession
| reorganization. It's straight to liquidation, with a court-
| appointed receiver in charge.
|
| This should be, and may be, converted to a straight liquidation.
| Chapter 11 can be useful for restarting companies that actually
| _do_ something, like General Motors. There, much of the value is
| in the ongoing business. FTX, going forward, has no ongoing
| business. Lawyers for creditors will be making that argument.
|
| Note that Bankman-Fried is still employed by FTX, "assisting".
|
| Current banners at FTX.com: "FTX is currently unable to process
| withdrawals. We strongly advise against depositing. Deposits of
| TRX, BTT, JST, SUN, and HT are disabled. All onboarding of new
| clients has been suspended until further notice."
|
| "We have reached an agreement with Tron to establish a special
| facility to allow holders of TRX, BTT, JST, SUN, and HT to swap
| assets from FTX 1:1 to external wallets. This functionality will
| be enabled at 18:30 UTC, November 10, 2022."
| AustinDev wrote:
| >"We have reached an agreement with Tron to establish a special
| facility to allow holders of TRX, BTT, JST, SUN, and HT to swap
| assets from FTX 1:1 to external wallets. This functionality
| will be enabled at 18:30 UTC, November 10, 2022."
|
| These centralized coins are hilarious. How can you negotiate a
| special facility to swap to those assets when they're
| presumably gone? Also now that they've filed for Chapter 11
| won't all these 'activities' and withdrawals be frozen?
| qeternity wrote:
| Justin will conjure more out of thin air, and be probably
| views it as more profitable to encourage as many sheep into
| his ecosystem as possible, even if that means covering
| losses.
| rurp wrote:
| > We strongly advise against depositing
|
| Wait, withdrawls are completely frozen and the company is done
| for, but they are still accepting deposits?!
| a1369209993 wrote:
| I'm not familiar with any of the listed currencies, but in a
| properly-designed cryptocurrency a deposit to a given public
| key is just any transaction[0] that includes a output to that
| public key. There's no such thing as accepting or not
| accepting deposits, at most they could actively refund them,
| which bankruptcy presumably prevents them from doing.
|
| IOW, they're saying: "If you give us money, we will (/may) be
| forced to give it to our creditors rather than back to you,
| so don't do that.".
|
| 0: IE, a message published by Alice to the effect of
| "[Alice's public key] gives [Bob's public key] X [coin]s.
| [Alice's signature for this message]", published on the
| distributed ledger. Note that Alice can create and publish
| such a message without any input from Bob.
| Animats wrote:
| They've at least turned off signups.
|
| There are still people who _believe_. This is the top comment
| on FTX on Coinmarketcap, posted yesterday:
|
| _$FTT -- Take a screenshot of this post_
|
| _1. Someone is going to buy out FTX and this exchange is not
| shutting down. By someone I mean Elon Musk kind of people._
|
| _2. No. FTT isn 't going to wipeout if we talk about the
| fall, most of the cryptos have all fallen significantly. So a
| crypto going down from $24 to $3 doesn't mean the are going
| out for good._
|
| _3. $8 Billion Dollars as some here are fidgeting to
| understand isn 't a large number if you look at the entire
| market cap of the crypto sitting at $800 Billion and $3
| Trillion sometime back._
|
| There are people who truly believe. And there are those who
| exploit that belief.
| skinnymuch wrote:
| I don't think it's possible to stop someone from depositing
| something into a wallet/key. That's an issue with things like
| doxxing or spreading humiliating media of someone. You can
| push anything via the protocols to any address.
| chrisseaton wrote:
| How would they be able to stop people making deposits?
| sp332 wrote:
| Actually, the Bahamas already froze their stuff and that
| subsidiary is not part of the Chapter 11. Looks like Australia
| did the same. https://arstechnica.com/tech-policy/2022/11/sam-
| bankman-frie...
| null0pointer wrote:
| Wait, why does a Bahamas based company get to choose the
| jurisdiction where its bankruptcy proceedings are held? Surely
| if they are a Bahamas company they are beholden to Bahamas
| bankruptcy laws?
| Animats wrote:
| Background on multi-jurisdiction bankruptcies.[1] It's
| complicated. A lot depends on who makes the first legal move.
|
| [1] https://www.financierworldwide.com/forum-managing-cross-
| bord...
| imdsm wrote:
| Withdrawals halted yet one of the FTX hot wallets had hundreds
| of thousands of BUSD and USDC going out earlier today.
| ryanSrich wrote:
| If you're in the Bahamas you can withdraw. People on Twitter
| with millions in FTX have been paying Bahaman citizens to KYC
| their accounts so they can withdraw. This is obviously highly
| illegal.
| bipop5000 wrote:
| rinze wrote:
| Few understand.
| mkagenius wrote:
| Had it been going on behind the doors, the VCs would have pumped
| more money in to the scam. Since it became too public to hurt
| their brand they will no more fund it.
|
| It happens all the time. The VCs know how their portfolio
| companies operate and still keep supporting them.
| jddil wrote:
| Ding ding, winner winner chicken dinner.
|
| Quick reminder that we're on a VC board that has participated
| in this shell game; this fraud that has stolen money from naive
| people.
|
| And before I get downvoted to oblivion or moderated by @dang I
| hope a few people read this comment and realize how much was
| stolen from you so the sand hill gang can play monopoly ... it
| was a lot.
| thiscatis wrote:
| StableGains literally committed fraud and YC still invested
| in them. But talking about it here gets the YC apologists out
| en masse.
| MrMan wrote:
| yes its been my opinion for years that they are all crooks,
| the whole thing was made possible basically by quantitative
| easing. but I still find a lot of ridiculous foolishness
| posted here so I keep getting lured back.
| kodah wrote:
| There's no summon feature on this website so your @ is pretty
| futile.
| bitcharmer wrote:
| You must be new on HN. @ is very commonly used here to
| denote a user handle.
| kodah wrote:
| I'm not new and I've never seen people do this. I also
| have double your karma, which you could see in my
| profile. Strange comment.
| [deleted]
| matthewmcg wrote:
| Sam "Bank Run" Fried
| 1B05H1N wrote:
| The guy plays league of legends, what do you expect him to know
| about risk management?
| MangoCoffee wrote:
| i still can't get over the fact that FTX CEO took his customers
| money to fund his gambling firm.
| [deleted]
| onlyrealcuzzo wrote:
| Why can't you?
|
| This is exactly what you would expect absent regulation.
|
| If you win, you win.
|
| If you lose, your customers lose.
| zinekeller wrote:
| Just noting that the FT article has a statement from its interim
| CEO:
|
| "The immediate relief of Chapter 11 is appropriate to provide the
| FTX Group the opportunity to assess its situation and develop a
| process to maximize recoveries for stakeholders," _[John J]_ Ray
| _[III]_ said.
| NotYourLawyer wrote:
| Stakeholders == company insiders, right?
| cbsmith wrote:
| No, in this case, it'd be anyone that the company owes money
| to, with the shareholders being at the back of the queue.
| bilbo0s wrote:
| Well, secured creditors really. They may or may not be
| insiders.
|
| The people who are really hosed are the non secured
| creditors. Who, again, may or may not be insiders.
|
| That said, in either case, they are very likely to be
| extremely disappointed in what is recovered. I just have a
| sneaky suspicion that even the USD6 Billion that everyone
| hopes remains available, is not actually there.
|
| But time will tell.
| criddell wrote:
| Is this FTX US?
|
| Yesterday SBF said FTX US was not impacted by the shitshow:
|
| https://twitter.com/SBF_FTX/status/1590709195892195329
| sillysaurusx wrote:
| Sure is! https://news.ycombinator.com/item?id=33561290
| NotYourLawyer wrote:
| alwayshasbeen.jpg
| coffeebeqn wrote:
| Hahaha sure it won't be impacted
| denzquix wrote:
| SBF's announcement of Chapter 11 proceedings today explicitly
| includes FTX US:
|
| https://twitter.com/SBF_FTX/status/1591089317300293636
| kebman wrote:
| If only I had a FTX US account. I'd get one more day of
| GTFO...
| paxys wrote:
| SBF has Tweeted a lot of things in the last few weeks that were
| provably false, sometimes just hours after he sent them. I was
| surprised that everyone here just took him at his word about
| FTX US.
| criddell wrote:
| I gave it some credence because in the US he has the SEC to
| think about.
| [deleted]
| Kukumber wrote:
| I love how this stinky bomb backfired, they wanted to destroy
| Binance from the inside but greed blew up their plan
|
| How funny, US intelligence definitely is out of business
| orangepurple wrote:
| Is this the same FTX US that is the #3 donor to political
| parties?
|
| 2/3 (D) 1/3 (R)
|
| https://www.opensecrets.org/elections-overview/top-organizat...
| no_butterscotch wrote:
| $70,099,115
|
| 70 million in one year. Yikes. Seems like the company was full
| of bad decisions.
| asdajksah2123 wrote:
| Less bad decisions and more making sure they had political
| cover for their Ponzi and no one investigated them too hard.
| awinder wrote:
| These donations were pretty clearly part of a forward-play
| on having a prominent seat at the table for writing
| regulations, it's not really a secret that they were
| planning to try to starve out Binance through crypto
| regulation.
|
| Also while it's kind of a thing to buy influence to the
| legislative process, buying your way out of justice isn't
| really. There's way too much apparatus outside of electoral
| politics. FTX wasn't investigated because what were they
| going to be investigated for, it's an unregulated offshore
| financial outfit with no signs of distress until it went
| boom, like most "Ponzi schemes".
| bhouston wrote:
| Yup, money to politicians does tend to make them look away.
| [deleted]
| gjsman-1000 wrote:
| Yes. There are whole articles online (by both sides) about how
| he became a critical Democratic party supporter almost
| overnight.
|
| According to MarketWatch, he was the _second largest donor_ to
| the Democrat Party.
|
| Good for him I guess that Dems did well in the election.
| Though, I would love an independent probe to ensure there's no
| quid pro quo.
| vnchr wrote:
| Your hypothesis is the second largest donor to the Democrat
| Party gave without expectation of quid pro quo?
| gjsman-1000 wrote:
| I didn't try to suggest it because HN would probably
| downvote me to oblivion if I did. I personally, however,
| think that a quid pro quo is pretty likely - and
| Republicans would shout this from the rooftops if they had
| a little more sense in my opinion. Stealing a ton of money,
| giving a ton to Democrats, potentially helping win an
| election, and then not investigating or properly punishing
| the thief is a perfect crime... so, if I am the Dems, I
| would throw or at least try to get 150+ years in prison
| Madoff-style at a minimum.
| anon291 wrote:
| > Republicans would shout this from the rooftops if they
| had a little more sense in my opinion.
|
| The Republican party has been defunct since 2008. I say
| this as a republican. Yes, they have local machines in
| isolated areas, but the party itself is non-existent on a
| national level, except when they scrape by due people
| being disaffected by the democrats. The Republicans have
| not been a true majority party for decades.
|
| You will certainly see certain republicans shouting this,
| myself included. You will see smaller local groups shout
| this. But the national party does not really exist
| hotpotamus wrote:
| Why does anyone donate to a political party? They must
| expect some quo; isn't that your implication? Perhaps it's
| a systemic problem?
| xyst wrote:
| yes
| soco wrote:
| Why would an organization donate to BOTH competitors sizeable
| amounts like this? Okay, it's more to the dems, but quite a sum
| for the gop as well. Do they just want a soft landing
| regardless who wins? Wouldn't that be the same if not funding
| at all? Or maybe not, they can tell later any winner "look I
| paid ya"...
| polygamous_bat wrote:
| From a "trader" perspective, the best policy if you are
| bribing is bribing any current AND future candidates,
| discounted by some factor for probability of being in power
| at some point in the future, and discounted by the time value
| of money (so people currently in power gets more.) That's
| probably the type of amoral, risk reward based thinking that
| goes through someone like SBF's head.
|
| Source: was a quant at some hedge fund in a past life.
| [deleted]
| [deleted]
| rglover wrote:
| Yes, who's now ex-CEO's mother conveniently runs a Democrat-
| focused PAC out of Silicon Valley [1].
|
| The whole thing (FTX) appears to have been a front to funnel
| customer deposits to politicians--and if I had to guess based
| on the scale/amount of money, other corrupt individuals--and
| weaken the image of a legitimate cryptocurrency, Bitcoin, to
| bolster a push for regulation.
|
| How do I reason that? The mom coincidence combined with the
| sheer speed at which the government pounced on the opportunity
| to suggest regulations [2] as _rumors_ circulated about the FTX
| collapse the past few days. They jumped the gun and should have
| waited for this bankruptcy announcement.
|
| Echoing Snowden: just a den of "opportunistic serpents."
|
| [1] https://www.influencewatch.org/person/barbara-fried/
|
| [2] https://twitter.com/Snowden/status/1590787096863989760
| SV_BubbleTime wrote:
| I think it's really amazing that she started a PAC and 13
| days later her son became one of the largest political donors
| to the Democrats. What great timing for her.
| rglover wrote:
| https://www.reactiongifs.com/r/mgc.gif
| rapht wrote:
| I know little by way of the crypto world, but I have to say that
| calling platforms like FTX, Binance, and others " _exchanges_ "
| strikes me as very much misleading.
|
| In traditional finance, the "exchange", as in "the New York Stock
| Exchange", only facilitates the calculation of market prices for
| a range of assets and the matching between sellers and buyers.
| Exchanges don't even manipulate money - that's left to other,
| highly regulated, professions, such as brokers.
|
| Brokers hold your assets and sometimes lend you money, but are
| very restricted with what they can do with it unless they qualify
| as banks, which requires complying with an array of complex
| capital requirements.
|
| So really, I don't understand: how are those entities not
| offering "investment services" and so not under SEC supervision?
| fossuser wrote:
| The best write up for what's going on is Matt Levine's Money
| Stuff column in Bloomberg (imo).
|
| You can sign up to get the newsletter for free, but it's
| sometimes paywalled on the site (it's a great newsletter for
| finance anyway).
|
| The most recent:
| https://www.bloomberg.com/opinion/articles/2022-11-10/ftx-is...
| mherdeg wrote:
| I don't know if this bothers anyone else, but it always makes me
| a little grumpy when the press reports on a legal case and
| doesn't include a docket number so I can look up the records
| myself in PACER.
|
| In this case it looks like the court is the District of Delaware
| Bankruptcy Court and there are 29 docket numbers, representing 29
| different(?) chapter 11 bankruptcy filings by the same attorney
| on behalf of 29 differently named entities.
|
| The docket numbers are 22-11066-JTD (JTD because it's assigned to
| Judge John T Dorsey??), 22-11067, ... 22-11094.
|
| The entity names are respectively Alameda Research LLC; Alameda
| Research Ltd; FTX Trading Ltd.; Alameda Research Holdings Inc.;
| Clifton Bay Investments LLC; West Realm Shires Services Inc.;
| West Realm Shires Financial Services Inc.; Ledger Holdings Inc.;
| FTX Japan Holdings K.K.; FTX Europe AG; FTX Property Holdings
| Ltd; LT Baskets Ltd.; Alameda TR Ltd; Allston Way Ltd; Analisya
| Pte Ltd; Atlantis Technology Ltd.; Bancroft Way Ltd; Blue Ridge
| Ltd; Cardinal Ventures Ltd; Cedar Bay Ltd; Liquid Securities
| Singapore Pte Ltd; Maclaurin Investments Ltd.; Mangrove Cay Ltd;
| Paper Bird Inc; Pioneer Street Inc.; Quoine India Pte Ltd; Quoine
| Vietnam Co. Ltd; SNG INVESTMENTS YATIRIM VE DANISMANLIK ANONIM
| SIRK; Strategy Ark Collective Ltd.
|
| This seems awfully confusing. Are the press really supposed to
| follow all 29 of these docket entries for new filings, or what?
| spuz wrote:
| I'd also like to know why the press don't cite their sources or
| provide references numbers for readers to do further research.
| It feels like some lesson that must be taught in journalism
| school so as to ensure some kind of "oracle" status of the
| press with respect to its readers.
| [deleted]
| thiscatis wrote:
| Too bad Jonah Hill will be too old once the movie comes out about
| this whole saga. He would have aced it as SBF.
| aniforprez wrote:
| They made the Theranos series within a year of the trial and
| she still hasn't been sentenced yet. I think Jonah Hill could
| still get the part though for some reason I'm thinking Michael
| Cera?
| chrismarlow9 wrote:
| I'm leaning towards gaten matarazzo and Netflix series
| tptacek wrote:
| What about this story seems cinematic to you? This is a Ponzi
| scheme participant who didn't even deny being a Ponzi scheme
| participant in interviews.
| Imnimo wrote:
| It's like that scene in The Big Short: "I don't get it, why
| are they confessing?" "They're not confessing - they're
| bragging".
| tptacek wrote:
| Right. But (1) The Big Short was not a very good movie, and
| (2) it was about the collapse of the entire housing market.
| This is about the collapse of an abstract metaPonzi scheme.
| camjohnson26 wrote:
| The Big Short and Boiler room are incredible movies. The
| only real competition is Wolf of Wall Street, which goes
| too deep into the debauched party lifestyle at the
| expense of the more interesting financial story, and
| Margin Call which has the opposite problem since it's
| completely inaccessible to most people.
| amanaplanacanal wrote:
| I quite liked Margin Call.
| [deleted]
| bitcharmer wrote:
| It's an amazing movie and for a good reason. It explains
| the complexities involved in the 2008 market crash using
| simple and humorous analogies making the problem
| comprehensible.
| tptacek wrote:
| It's good on simple and humorous analogies and bad on
| explanation (and plotting).
| saurik wrote:
| I think the connections with the Effective Altruism community
| would make for a really amazing think-piece on conflicting
| ethics, circuitous reasoning, and moral rationalization.
| tptacek wrote:
| I don't understand it. I haven't ever done a deep dive on
| EA, but at first blush it seems like such a benign, banal
| idea: direct charity money effectively and pragmatically.
| Sure! How does it end up so weird and broken?
| thiscatis wrote:
| Sequoia already deleted the fluff piece they put out about
| SBF so they're clearly embarrassed / afraid of legal fall
| out. And sequoia being embarrassed doesn't seem interesting
| to you? And this is just one of the VCs putting crazy money
| into a scam. This plus the Bahamas coed dorm and the
| political ties is already enough for a 2 season Netflix
| series.
| tptacek wrote:
| No, in fact, I do not think Sequoia disavowing an
| investment is especially cinematic.
| aloner wrote:
| Boiler Room is a movie, you can make an interesting movie
| about anything
| tptacek wrote:
| Do you need to see it twice, and the second time without
| Vin Diesel? It wasn't that good of a movie to begin with.
| [deleted]
| esotericimpl wrote:
| rinze wrote:
| One more down, a few still to go.
| [deleted]
| synu wrote:
| Only resigns? You would think he was headed to jail.
| [deleted]
| shorthistory wrote:
| Where is Sam Bankman-Fried?
|
| Is any group tracking his location, or is he going to disappear
| like many that have come before him.
| [deleted]
| shp0ngle wrote:
| Larry David was right all along.
| [deleted]
| kevin_thibedeau wrote:
| They can just write it off?
| bhouston wrote:
| What of the rumour that Bahamians are allowed to access their
| funds for legal reasons while everyone else can not? Most of the
| FTX employees including SBF are based in Bahama? Isn't this just
| insiders cashing out before creditors/users?
|
| https://twitter.com/JasonYanowitz/status/1590800210200256513
|
| https://twitter.com/StackerSatoshi/status/159097223797656780...
|
| https://twitter.com/statelayer/status/1590939767205920769
|
| And then there are these NFT shenanigans:
|
| https://twitter.com/cobie/status/1590974648552148992
| Kukumber wrote:
| FTX is registered in the Bahamas, but the employees are not
| Bahamians, they are all from the US with a VISA for residence
| HDThoreaun wrote:
| FTX has plenty of non-american employees. I know a decent
| number of their developers are south american.
| [deleted]
| rippercushions wrote:
| There are 130 (!) companies in the FTX group, across a whole
| slew of jurisdictions:
|
| https://i.redd.it/078p4g7m6cz91.jpg
|
| The Chapter 11 filing is for the ones in the US, working out
| what this means for the rest is going to keep a whole lot of
| lawyers very busy for years.
| khuey wrote:
| The Chapter 11 filing is for pretty much the entire group
| including ex-US companies.
| adam_arthur wrote:
| FTX US is also part of the filing, per SBF's tweet
|
| 1) Hi all:
|
| Today, I filed FTX, FTX US, and Alameda for voluntary
| Chapter 11 proceedings in the US.
|
| https://twitter.com/SBF_FTX/status/1591089317300293636?s=20
| &...
| koolba wrote:
| The sheer number of affiliated companies is not unusual in
| regulated industries as each tends to be a special purpose
| vehicle to segregate the associated assets and liabilities.
| shapefrog wrote:
| Just 20 hours ago - it was all bad but still fine and plenty of
| money and lots of interested parties...
|
| Oh and it is all the fault of the Devs
|
| https://twitter.com/SBF_FTX/status/1590774827467812865
|
| If you stick your company name in your twitter handle - does that
| mean the company owns the twitter account too???
| [deleted]
| duxup wrote:
| >does that mean the company owns the twitter account too???
|
| At this point I think there are a lot of people who operate as
| if they and the company are fundamentally joined / the same
| thing.
| hef19898 wrote:
| Including the new owner of Twitter
| wand3r wrote:
| I am disappointed I cant go anywhere without seeing
| something positive or megative about Elon. This is the new
| TDS and its annoying. This has nothing to do with Twittter.
|
| What next?
|
| A bird watching website? Twitter logo is a bird. That
| reminds me, I hate Elon!
| mint2 wrote:
| If it's any better maybe people could start calling him
| Howard Hughes 2.O.
| gburdell3 wrote:
| It's almost as if he's doing things that have real
| consequences for the world we live in!
| anon291 wrote:
| Two years ago, when Twitter was banning right wing
| politicians (and left wing ones too), it was a private
| company that can do whatever it wants.
|
| Suddenly in the past two years, it has magically
| transformed into a national security risk with global
| consequences.
|
| Which is it? if the former, then they should be able to
| do what they want, including ban whom they want. If the
| latter, it needs to be regulated and certain rights ought
| to be enumerated for its users.
| misiti3780 wrote:
| HN seems to be full of Tesla driving Elon haters ....
| duxup wrote:
| I don't know that anyone likes how moderation is ever
| done. If you try I bet you struggle to find folks who
| have ever liked twitter / the ecosystem for very long ...
| ever.
|
| But the law here hasn't changed in any way...
| swarnie wrote:
| Heading over to r/CryptoCurrency/ to see if they sticky the
| suicide prevention hotline again.
|
| That's when you know shits getting real.
| [deleted]
| whyenot wrote:
| r/bitcoin did that in one of the early downturns, and with good
| reason: at least one person on r/bitcoinmarkets did take their
| own life, and several more in the cryoto subreddits talked
| about it.
| swarnie wrote:
| just looking for data points in a storm.
| viro wrote:
| I feel really bad about laughing at this.
| yourMaster_666 wrote:
| you cannot make up this shit
|
| https://www.reddit.com/r/wallstreetbets/comments/ys4lmo/she_...
|
| gold
| adamsmith143 wrote:
| "We don't really use math"
|
| Guess their entire trading strategy was hurr durr the coins go
| up. Completely unsurprising they lost their asses when _gasp_
| the coins stopped going up.
| notinfuriated wrote:
| She was referring to the type of math that she did to earn a
| math degree, which I suppose could be true. My math degree
| did not require any of the kind of math I assume they do at
| these kinds of exchanges, although I also assume that the
| whole branch of math that starts getting into modeling and
| analysis would be very useful in these sorts of companies.
| adamsmith143 wrote:
| Didn't she literally say they use elementary school math
| right after that?
| JamesianP wrote:
| I think it was specifically about her CEO job. There
| might be other people who worked there who did technical
| stuff.
|
| The comfort with risk part seems worse in hindsight.
| Obviously somewhat less comfort with risk would have been
| better.
| MrMan wrote:
| its actuarial science which is basically stats
| shp0ngle wrote:
| Eh this video doesn't really say too much
| feelandcoffee wrote:
| For a moment I tough was a parody of that meme of kids
| discussing "Is Fortnite Actually Overrated?"
| [deleted]
| queuebert wrote:
| Hollywood is dying because reality is so much more
| entertaining.
| lm28469 wrote:
| Even south park can't keep up with how dumb the system we built
| evolved to be
| AustinDev wrote:
| Wow... I thought this was satire. (when talking about trading)
| 'We don't tend to have stop losses, we don't see those as very
| good risk management tools' No wonder they're bankrupt...
|
| SBF loaned her company 10 billion to trade without basic risk
| management for trading.
| vgatherps wrote:
| She's not wrong, stop losses are pretty pointless if you're
| running a high volume market maker that is _in theory_
| constantly doing tons of volume and reacting to updates.
|
| They're also super dangerous if you have gigantic positions
|
| Anyways they wouldn't save you from collateralizing your
| loans with shitcoins, taking leveraged bets with money that
| isn't yours, having super high exposure to UST and/or Luna,
| exposed to hackable defi products. Harder things that "having
| a good sense for risk" usually entails thinking about.
|
| The real red flags are claiming she doesn't use math and that
| she's never lost a lot of money on a trade despite doing
| largely human informed trading for size...
| AustinDev wrote:
| Fair enough. I'm not familiar with that kind of trading I'm
| only familiar with basic day trading such as momentum and
| swing trading which stops have been very helpful for me
| personally. I imagine when you're making a market and are
| moving massive volume the rules are different and as you
| mentioned would require a lot of math like maybe trying to
| be delta neutral.
| vgatherps wrote:
| For a bit more color, as stop makes sense for you since
| you're not there 24/7 making decisions.
|
| But if you are, there's no reason to just auto trade a
| position away. The decision of "what to do when price
| hits X" is a function of many things instead of price,
| and you're better off dynamically deciding.
|
| Consider that you could already implement a stop as a
| 24/7 trading firm anyways
| SV_BubbleTime wrote:
| >The real red flags are claiming she doesn't use math and
| that she's never lost a lot of money on a trade despite
| doing largely human informed trading for size...
|
| For the peak crypto years it was almost impossible to lose
| money AS AN EXCHANGE. These clowns really thought they were
| on fire, and not just in position that random moves could
| be winning strategies.
| baobabKoodaa wrote:
| > For the peak crypto years it was almost impossible to
| lose money AS AN EXCHANGE.
|
| She wasn't running an exchange. You're confusing Alameda,
| the trading outfit, with FTX, the exchange. She was the
| CEO of Alameda. She was not the CEO of FTX.
| SV_BubbleTime wrote:
| My bad. But, just as bad.
|
| It was really tough to lose money, which we all knew was
| unsustainable.
| MrMan wrote:
| top comment thanks
| nullc wrote:
| Prices are not continuous. Stop loss orders are suicide
| pacts, especially in illiquid markets. They have little to no
| role in a coherent risk management strategy.
|
| They're primarily marketed to unsophisticated retail traders
| as providing protection that they can't provide-- something
| equivalent to a free put.
|
| In fact, some time back their firm was sued for IIRC
| essentially manipulating markets to trigger traders stop loss
| orders in order to swallow up trades at unreasonable prices.
|
| Tiny traders in the largest of markets can potentially get
| away with using stop losses and not get burned too badly too
| often, but none of the cryptocurrency markets really qualify
| as that.
| gjsman-1000 wrote:
| It's funny. Banks are widely perceived as corrupt; and lo and
| behold, the alternative systems to replace banking have been
| dragged by their heels through Banking 101.
|
| Edit: Also funny, was the unrelated Matt Damon TV ads about how
| "Fortune Favors the Brave." Obviously it comes from Caesar, but
| it was also used in Charles Dickens's _Little Dorrit_ by a
| character encouraging what later turned out a Ponzi scheme...
| MangoCoffee wrote:
| bank have FDIC to back their customers money and strict
| regulations.
|
| i still can't get over the fact that FTX CEO is taking his
| customers money to fund his gambling firm.
| zenkat wrote:
| Projection. It's always projection.
| throwawaysleep wrote:
| Too often banks are perceived as corrupt due to risk
| management practices, like not giving mortgages to poor
| people who go on about how their rent is more than their
| mortgage.
| bannedbybros wrote:
| ansible wrote:
| I don't think they've even completed the Banking 101 class
| yet.
| doorman2 wrote:
| FTX being corrupt doesn't automatically mean banks are not
| corrupt. Just 14 years ago, the actions of banks brought most
| of the world to the precipice of financial collapse. FTX and
| Alameda depositors will lose their money. During the GFC,
| almost everyone lost their money.
| jjulius wrote:
| >FTX being corrupt doesn't automatically mean banks are not
| corrupt.
|
| That's not what OP said. OP highlighted the fact that _a
| lot_ of the crypto space lambasts the traditional banking
| system as being wholly corrupt, despite _a lot_ of the
| crypto space itself being equally corrupted in the same
| ways.
|
| Edit: "People who live in glass houses shouldn't throw
| stones", basically.
| woah wrote:
| FTX WAS a corrupt bank/betting parlor. Cryptocurrency is
| about self custody and full transparency. This is what
| blockchains allow. FTX was people depositing money in SBF's
| personal piggy bank. FTX has nothing to do with crypto, other
| than the fact that it allowed people to bet on crypto prices.
| systemicdanna wrote:
| A crypto exchange had nothing to do with crypto?
| xtian wrote:
| If they weren't corrupt then Glass-Steagall would have been
| no problem.
| throwaway0asd wrote:
| Where were the adults in any of this and why would people throw
| billions of dollars at unqualified children?
| memish wrote:
| Like Elizabeth Holmes, they are kids of the elite who are well
| connected and supported at high levels. Further, SBF is one of
| the biggest political donors and there may be corruption in the
| SEC. The general counsel of FTX US had served as lead counsel
| to Chairman Gensler at the CFTC.
|
| And then there's this from a congressman yesterday,
| "@GaryGensler runs to the media while reports to my office
| allege he was helping SBF and FTX work on legal loopholes to
| obtain a regulatory monopoly. We're looking into this."
| https://twitter.com/RepTomEmmer/status/1590717374801809409
| hotpotamus wrote:
| I'm skeptical that a Republican would support actual
| regulation on anything related to finance.
| rossdavidh wrote:
| Perhaps, but I think many (Dems and Reps) will recognize a
| sinking ship when they see one. Tighter regulation on
| cryptocurrencies (and related businesses) was starting to
| arrive, regardless. There is little incentive to try to
| slow this down, if the people being regulated don't have
| any money left to donate to your campaign.
| solardev wrote:
| He probably means "looking into how I can get in on it"
| anon291 wrote:
| Good point. That must mean democrats can do no wrong. /s
|
| This sort of non sequitur is dangerous to democracy.
| jker wrote:
| Indeed, the deregulation that led to the 2008 financial
| crisis was a thoroughly bipartisan effort, one that began
| in the Clinton Administration. This is why Brooksley Born
| is a hero for our times, and Larry Summers, a villain.
| https://en.wikipedia.org/wiki/Brooksley_Born
| hotpotamus wrote:
| You might notice that I didn't say that. But I am
| skeptical that the party that has branded itself as the
| anti-regulation party for my entire life is really going
| to embrace regulation all of a sudden in response to the
| malfeasance of someone they perceive as being a political
| enemy.
| anon291 wrote:
| > embrace regulation all of a sudden in response to the
| malfeasance of someone they perceive as being a political
| enemy.
|
| Given the GOP's willingness to strong-arm twitter and
| facebook (remember Trump tried to have it investigated by
| the DoJ), I feel like regulating companies due to being a
| political enemy is _exactly_ what I 'd expect the GOP to
| do. Perhaps it's the one time you can be sure they'll
| start regulating.
|
| From my perspective, the democratic party is constantly
| talking about how bad Citizens United is (and I am very
| sympathetic to that) while taking millions upon millions
| from large companies and wealthy individuals.
| hotpotamus wrote:
| That sounds like more of a weak-arm if they couldn't even
| muster an investigation, much less consequences. I
| remember thinking at the time when the Senate called
| Zuckerberg up to yell at him that if I were Zuck, I would
| have just said, "thanks for the tax cut, dudes".
|
| And criticizing the system you find yourself in as a
| result of Citizens United doesn't mean you are not still
| stuck in that system.
|
| So certainly I welcome politicians of any persuasion who
| would like to regulate these issues, but as I said, I'm
| skeptical of the actual intentions.
| SantalBlush wrote:
| >why would people throw billions of dollars at unqualified
| children?
|
| Because investors had too much cash and became increasingly
| desperate to earn a return on it. When they have an abundance
| of cash, they become wreckless and wasteful with their
| investing as they chase profits.
| nathanaldensr wrote:
| The people of the world have gone _that_ insane.
| twblalock wrote:
| The people of the world were always this way, and the same
| thing happened in normal banking until it was regulated.
| Machado117 wrote:
| Adults were throwing their life savings at it
| rinze wrote:
| It's unregulated and decentralized, and banks are not your
| friends. To be honest, they're not, but that doesn't make any
| of this Ponzi 2.0 economy great.
| bannedbybros wrote:
| fossuser wrote:
| He worked at Jane Street prior to starting his own company
| which was built on a successful arbitrage. Whatever his issues
| - qualification isn't one of them.
|
| I'm not defending this catastrophe (which seems like it was
| partly an execution by a rival), but this kind of comment is
| just bizarre on hacker news in the world of tech companies and
| startups. Age is not a good proxy for competence.
| boshalfoshal wrote:
| Don't know why you are getting downvoted. Yes, I believe that
| using customer funds to punt shitcoins at a supposed "quant
| market making firm" is really dumb, but people here really
| think the people in this operation are random idiots/got
| there via underhanded means. I think they just believed that
| the gravy train would last longer than they thought.
|
| Several Alameda employees worked at JS, which is by far one
| of the most successful quant firms out there and they only
| hire the best. He also exploited a very creative arbitrage to
| start the firm, which is also not a fluke.
|
| Then again, I would expect no less since the people on here
| constantly complain about leetcode interviews and "not
| wanting to interview for big tech for XYZ random reasons"
| when I know damn well they couldn't pass even if you gave
| them the answer.
| fossuser wrote:
| The median HN user isn't that bright and this topic in
| particular is one where the noise is such that the comments
| here are atypically bad.
|
| The outliers are great and make this site worth it, but on
| some topics (of which crypto is one) they're hard to find.
| throwaway0asd wrote:
| There are valid reasons why discussions of crypto turn
| out so very bad:
| https://news.ycombinator.com/item?id=33117833
| fossuser wrote:
| These aren't valid reasons - I don't want to get into a
| flame war though.
|
| - Blockchain's main innovation is solving the double
| spend problem in a decentralized way.
|
| - This means that self-custody is a new capability.
|
| - Self-custody without a centralized authority is a big
| deal and can empower users (especially those in hostile
| countries or places with bad currencies).
|
| - There's an extension of this with smart contracts and
| ethereum that allow for programmatic uses which can
| extend to completely transparent decentralized finance.
|
| - zk-SNARKs allow for privacy to exist within the above
| systems.
|
| That people don't self-custody because they don't
| understand how it works (and terrible UX) is a real
| problem and why most people should not be using
| cryptocurrency. They can still get screwed by regular
| collapses of fiat currency (and they do often), but they
| won't be helped by increasing their risk with something
| they don't understand.
|
| The centralized exchange failures are independent of this
| and arguably a symptom of how centralized finance can
| cause problems because people don't self-custody funds.
| Your reasons dismiss the new capabilities they provide
| (self-custody, protection from government debasement of
| value, global use) and are an example of the type of HN
| response I'm talking about.
| throwaway0asd wrote:
| That isn't really a solution. The confusion is the
| inability for most people to discern the words
| _decentralized_ and _distributed_ , which is the primary
| fraud of crypto. Centralized finance already has
| distribution in place just for security and continuity of
| business, so blockchain doesn't really provide anything
| new there.
|
| The only enticing quality of blockchain to finance is
| just elimination of transaction fees on a more open
| ledger.
|
| https://news.ycombinator.com/item?id=33153535
| _jal wrote:
| This is the result the "crypto community" asked for. They may
| not have wanted it, but they asked for it. A combination
| casino/money laundry/ponzi breeding ground also comes with
| intelligent crooks who are capable of running longer games.
|
| You want recourse? That means oversight, audits and regulation.
| PheonixPharts wrote:
| Because most of the adults know that there is a window when you
| can get rich off a known con and get out before it blows up
| with quite a lot of cash.
|
| The best part of these being unqualified children is that they
| don't even realize that part of the deal they've signed up for
| is to take the fall when shit finally hits the fan.
|
| There's plenty of people who have made money from SBF behind
| the scenes, but you'll never hear their names.
| tartoran wrote:
| This couldn't be further from the truth. SBF had enablers who
| knew what this was from the beginning but kept mum about it.
| They actually helped hype it up then exit with profits.
| digianarchist wrote:
| Really? I'm only reading about VCs [0] and big institutional
| investors [1] losing money.
|
| [0] - https://techcrunch.com/2022/11/10/daily-crunch-sequoia-
| capit...
|
| [1] - https://www.otpp.com/en-ca/about-us/news-and-
| insights/2022/o...
| paxys wrote:
| This (now removed) Sequoia profile on SBF and FTX is all that
| you need to know about why things went down the way they did -
| https://web.archive.org/web/20221027181005/https://www.sequo...
| glofish wrote:
| It feels like it was just yesterday when the CEO declared on
| Twitter that all the problems are localized at international
| FTX.com and that funds at FTX.us are 100% safe!
|
| Oh wait, it was yesterday.
| [deleted]
| jefftk wrote:
| More discussion in https://news.ycombinator.com/item?id=33561041
| shorthistory wrote:
| Can anyone speculate what Bankman-Fried's exit plan was?
|
| Was this a fraud that got out of control, or premeditated? If it
| was premeditated, what was the exit plan?
|
| Did he expect to be able to gamble with customer funds
| indefinitely?
|
| Were the Effective Altruism intimations genuine?
|
| Why, if Alameda was a market maker, and they therefore presumably
| have some form of insight into the markets, did they then decide
| to take a huge directional bet on Crypto [source?]? This is
| contrary to market making principles.
|
| What was the purpose of encouraging employees to invest? Was it
| to buy their silence/cooperation ('you have to stay employed and
| invested if you ever want your money back') if they found out
| about the fraud, or did Bankman-Fried genuinely believe it was to
| their benefit?
|
| Why were there so many puff pieces in the media, without any
| journalist questioning the narrative?
| Lonestar1440 wrote:
| They expected the gambles to pay off, and faster than customers
| started withdrawing en masse. Reminds me a lot of AIG's sketchy
| Securities Lending back before 2008.
| wombat-man wrote:
| I think he probably thought the value of the coins would keep
| rising. Hell everyone who bought in at sky high prices thought
| that.
| shorthistory wrote:
| But how, if you had spent time being a market maker, that is
| to say you understand market neutral strategies, would you
| convince yourself to take this bet? It seems contrary to his
| presumed understanding of the markets.
| vkou wrote:
| People who understand that betting on red over and over
| again isn't a long-term winning strategy usually don't make
| the news for fraudulently pissing away 8 billion dollars of
| customer funds.
|
| It's survivorship bias.
| polygamous_bat wrote:
| My personal hypothesis is that people keep attributing the
| successes of SBF to his intellect rather than a mix of
| intellect and luck, like the rest of us mere mortal. That
| list could as well include SBF himself. One can be lucky
| often but not forever, and sooner or later the "prodigies"
| see the fault in their impeccable algorithms.
| paxys wrote:
| Every serial gambler in the world thinks that they are just
| temporarily in the red and one big break away from winning big.
| They just need to invest a _little bit_ more.
| xisthesqrtof9 wrote:
| This is literally the plot of Uncut Gems.
| jdhzzz wrote:
| Gotta double up to catch up.
| dottrap wrote:
| The critics who follow this space rather closely seem to
| suspect that Alameda was especially exposed and damaged by the
| Luna collapse. This should have been Alameda's end, but because
| FTX can create FTT tokens out of thin air and it is so easy to
| manipulate the price, it can create the illusion of solvency
| ("flywheel").
|
| Presumably, SBF was hoping that the crypto winter would end
| soon, which would bring everything else massively profitable
| for them again, and then plug the holes he had.
| vishnugupta wrote:
| There's this incredulous passage from Sequoia article that's
| been taken down since. Make of it what you will
|
| At this point, mid-2019, SBF decided to double down again--and
| scratch his own itch. He would bet Alameda's multimillion-
| dollar trading profits on a new venture: a trading exchange
| called FTX. It would combine Coinbase's stolid, regulation-
| loving approach with the kinds of derivatives being offered by
| Binance and others. He only gave himself a 20 percent chance of
| success, but, in his mind, SBF needed extreme risk to maximize
| the expected value of his lifetime earnings--and, therefore,
| the good his earn-to-give strategy could do. The fact that he
| was, by his own lights, overwhelmingly likely to fail was
| beside the point.
|
| The point was this: When SBF multiplied out the billions of
| dollars a year a successful crypto-trading exchange could throw
| off by his self-assessed 20 percent chance of successfully
| building one, the number was still huge. That's the expected
| value. And if you live your life according to the same
| principles by which you'd trade an asset, there's only one way
| forward: You calculate the expected values, then aim for the
| largest one--because, in one (but just one) alternate future
| universe, everything works out fabulously. To maximize your
| expected value, you must aim for it and then march blindly
| forth, acting as if the fabulously lucky SBF of the future can
| reach into the other, parallel, universes and compensate the
| failson SBFs for their losses. It sounds crazy, or perhaps even
| selfish--but it's not. It's math. It follows from the principle
| of risk-neutrality.
| streb-lo wrote:
| I this is exactly it. When you let utilitarianism run your
| life, you try and maximize your ability to do good, even if
| you have to bend a few rules on the way.
|
| But outcomes aren't certain and high EV plays can still carry
| a substantial amount of risk, which is exactly why we have
| finance regulations.
| fwip wrote:
| Sounds like he forgot about the principle of diminishing
| returns.
|
| If you have $1B to your name, it's stupid to put it all on
| red, even if your expected return is positive.
| JohnPrine wrote:
| Diminishing returns don't apply for SBF - his life's goal
| is to fund effective altruist charities, so each billion is
| as valuable as the last as long as there are good projects
| to fund.
|
| I don't think people are comprehending how tragic this
| whole situation is (acknowledging that it's SBF's fault).
| This collapse put the brakes on a powerful force for good,
| and lives that would have been saved won't anymore.
| coffeebeqn wrote:
| It's only "good" if you believe the ends justify any
| means. What about FTX customers? People aren't pawns you
| can play with for your "greater cause"
| boeingUH60 wrote:
| No, Bankman-Fried is a scheming fraudster hiding under
| the cloak of so-called "effective altruism". He'd have
| done much better for the world if he didn't found a
| crypto exchange promoting scams and being reckless enough
| to trade with user deposits and losing it all.
| baobabKoodaa wrote:
| > Diminishing returns don't apply for SBF - his life's
| goal is to fund effective altruist charities, so each
| billion is as valuable as the last as long as there are
| good projects to fund.
|
| Let's be honest: we don't know what his life goals are.
| He _said_ that his goal is to fund charities, but that 's
| a pretty common thing for wealthy people in the U.S. to
| say because saying so gives you a lot of social status at
| no cost. Very few people actually proceed with any plans
| of significant charitable donations.
| joosters wrote:
| Well he failed miserably at that. If he had stuck with
| his original supposed $1 billion, he could have given
| almost all of it away and still lived a very comfortable
| life. As it stands now, his charitable foundation has
| pledged far less than $1 billion (at it remains to be
| seen just how much it pledged actually gets paid out).
|
| Perhaps if he had spent more time donating money (his
| stated aim) rather than inventing convoluted financial
| structures (FTX has over 100 related companies!), he
| would have achieved more, and cost people a lot less.
| hnews_account_1 wrote:
| The super stupidity of using math to dazzle people around you
| is my greatest lesson from this. In my highly technical
| field, I can use math without treating it like some precious
| scripture. But it's good to know it is so unfamiliar to a
| normal person in the VC world, I can use it to justify even a
| startup doing genocide as a platform or something.
| mrguyorama wrote:
| It's almost like people who don't actually know anything
| about math, statistics, or probability shouldn't be
| believed when they make poor arguments using the same.
|
| Maybe there's a reason it takes 4 years of extremely tough
| classes to understand the basics of "hard" math.
| hnews_account_1 wrote:
| It's not just that. But like if I made up bullshit like
| "the emerging market populations are growing hard and
| will strain earth's resources. Our startup needs to kill
| them to save the planet, here's a log Utility function to
| explain it", some VC out there is an idiot enough to give
| me money. Maybe if I'm playing league of legends while
| saying it, I'll get more cash than I even want to raise.
| mjburgess wrote:
| Four years?
|
| Most books, yt videos, jobs and academic press releases
| tell me all it takes is `import tensorflow` or `git clone
| github://lolcoin.git`
| beambot wrote:
| Quick detour: expected value alone does not optimally
| maximize your long term outcome. Bet sizing (a la Kelly
| Criterion) is just as critical.
|
| E.g. if you had a weighted coin that was 50-50 odds with
| 3-to-1 payout, you wouldn't bet your whole bankroll on just
| one flip.
| TacticalCoder wrote:
| > Can anyone speculate what Bankman-Fried's exit plan was?
|
| I can speculate based on recently revealed facts.
|
| SBF did grease politicians to the tune of 40 million USD in
| political donations. Several have described these donations as:
| "bribes" (I'll let you judge). (as a sidenote I wonder if these
| politicians are going to give these donations back to the
| people SBF scammed).
|
| A US congressman, as reported here several times, wrote: _"
| GaryGensler runs to the media while reports to my office allege
| he was helping SBF and FTX work on legal loopholes to obtain a
| regulatory monopoly. We're looking into this"_.
|
| It's "allegedly" but it's a _fact_ that a US congressman posted
| that.
|
| It's also established that a colleague of the SEC's Garry
| Gensler happens to be the father of... Drumroll... The 28 years
| old woman CEO of Alameda.
|
| So I'll speculate a TL;DR:
|
| SBF was working hand in hand with corrupt politicians and
| corrupt officials to kick Binance out of the US through
| regulatory capture in order to grab Binance's insane market
| share (easily 10x the size of FTX).
|
| SBF would then have continued the established FTX/Alameda scam
| through FTT. So he'd have then used FTX to pump the price of
| FTT (and, because why not, other manipulated shitcoins too) in
| order to keep pretending traders at Alameda were geniuses.
|
| Alameda would have been fully legit and would have take
| shitloads of money from various pension funds and investment
| funds (knowing he already got some: why not think he would have
| gone for more?).
|
| That's my speculation: why stop at 1/10th the size of Binance
| when you can donate tens of millions to politicians (which is
| pocket change when you're making billions) and work with the
| SEC to get a monopoly on crypto exchanges in the US, all the
| while pumping the value of your Alameda fund and all the while
| having covers of magazines and people everywhere (Bloomberg,
| Sequoia, JP Morgan, etc.) saying how big of a genius you are
| and how geniuses all people around you are.
|
| The guy is a megalomaniac: no longer than a few weeks ago he
| was saying that companies worth tens of billions were
| "potential acquisition targets".
|
| And I think that, had the overall markets not have been
| crashing hard, he may have succeeded at all that, creating a
| scam 10x or 100x bigger than the one he actually ran.
|
| But the market crashed and CZ took the opportunity to reveal
| the FTT scam to get rid of a very dangerous competitor. No
| matter if Binance is legit or not: SBF was after Binance but
| Binance was too big for SBF too chew. Binance may be going down
| too (no clue about that) but Binance was never going to go down
| alone while letting SBF free to run his SEC-endorsed scam.
| kranke155 wrote:
| This is all very interesting. I am also starting to wonder
| whether CZ had a good idea this would happen because maybe
| Binance is structured similarly.
|
| Basically - is Binance solvent? I don't know.
| MacsHeadroom wrote:
| Binance leads the industry in proof of 1:1 reserves of
| custom holdings.
|
| CZ knew about FTX's finances because he was the original
| investor in FTX. The reason he had FTT to dump in the first
| place is because of that initial investment in FTX.
| fullshark wrote:
| From his flirtations with politics and regulations: get too big
| to fail.
| bmitc wrote:
| My thoughts are that FTX was _maybe_ a legitimate business, but
| then Alameda was his trading baby that just happened to be run
| by kids, including himself, that have no idea what they 're
| doing and was losing money left and right. Then using FTX
| customer funds was viewed as just a "let's move these funds
| over to get our trading back on track and when we do, we'll
| move them back". That's my honest guess if I'm being generous
| as to their intentions and thought process. Not saying it isn't
| criminal though, because I think it is. It's also a complete
| guess as an outsider to all this.
| aqme28 wrote:
| My impression is that Alameda was also a legitimate business
| that also made a lot of money with a lot of leverage _for a
| while_ , but eventually the tide turned or it had one bad
| leveraged trade and poof.
| Hippocrates wrote:
| That's my guess too but the size of the hole (8bn+) makes it
| hard to imagine it could all be lost in trading, either in a
| big bang, or gradually for years.
| nu11ptr wrote:
| As I understand it, their primary "trade" was to buy and
| hold FTT. Suddenly FTT's value went "poof" and the rest is
| is history.
| brianbreslin wrote:
| I think that would only explain $4B or so, they said
| their hole was $10B. Or do we think the FTT leverage
| multiplied the exposure?
| wj wrote:
| I don't even understand why FTT existed?
|
| I also don't understand why there are competing
| cryptocurrencies? Without governments and borders,
| shouldn't one standard currency be enough? (Technical
| challenges aside)
| lazide wrote:
| Why are there multiple racecar teams? If there is a
| standard set of rules, why can't there be a standard car
| that hits the maximum ideal speed around a track, and a
| standard racer to do it? Or even just automate it?
| barnbuilder wrote:
| Some people think it's good to trade some of bitcoin's
| security for extra features, or at least, think that
| enough people will feel that way in the future to make
| these tokens good investments today.
|
| Those people look particularly silly on days like this.
| nemothekid wrote:
| >I also don't understand why there are competing
| cryptocurrencies?
|
| A lot of these "competing cryptocurrencies" are just
| financial instruments, kind of like you could have stock
| in a company, but you can also trade options and futures
| of the same underlying stock.
| baobabKoodaa wrote:
| > A lot of these "competing cryptocurrencies" are just
| financial instruments, kind of like you could have stock
| in a company, but you can also trade options and futures
| of the same underlying stock.
|
| No they weren't. This comparison has no relation to
| reality.
| lottin wrote:
| Crypto-currencies have no underlying. A crypto-currency
| is like a bunch of imaginary confetti. Why is every
| crypto organisation is issuing its own brand of confetti?
| It's a legitimate question. It's exactly the same
| confetti.
| tartoran wrote:
| It's not even real confetti, it's digital copies.
| timmytokyo wrote:
| Seeing these kids talk puts it even more into perspective.
| Just watch this video of Caroline Ellison, CEO of Alameda.
|
| https://www.youtube.com/watch?v=aW6SqLXw944
| bmitc wrote:
| I made a comment on that video elsewhere. It's pretty clear
| they were way out of their league in more ways than one.
|
| They're the type of people that are too smart for their own
| good where they can't even see how idiotic they're being.
| Or maybe they're just spoiled. Or maybe they just think
| they're smart. It's interesting to me that Jane Street
| prides themselves on their hiring process, but they
| apparently hire folks like this.
|
| Other than people losing money, I am super glad these
| reality checks are happening. But I wish they'd happen to
| more as well, e.g., Musk and Trump.
| shorthistory wrote:
| I agree, it reflects VERY poorly on Jane Street.
|
| They like to give the impression they hire Ultra Mega
| Geniuses who have done the IMO (who cares if you did the
| IMO at age 17...?)
| pigtailgirl wrote:
| -- having watched a series of in depth interviews with Do
| Kwon - the interview with Sam Bankman-Fried on Odd Lots -
| and now this - I wonder if these children had any mentors?
| - where were the adults? --
| georgeglue1 wrote:
| My understanding is that Alameda was a market maker, which
| should have less exposure to down / upswings.
|
| What kind of bets was Alameda making? Why would it need so
| much leverage?
|
| I understand why loaning money to Alameda could be
| rationalized a risky, but not sketchy move (if Alameda posted
| collateral, paid reasonable terms like anyone else would,
| etc.).
| AYBABTME wrote:
| I think they thought they were honest and doing things
| properly, and didn't realize that their holding of FTT was
| making them as bad as the other frauds before. I think these
| ouroboros are complex enough that even main players don't
| necessarily understand the position they've put themselves
| in.
| lazide wrote:
| If by 'they thought they were honest and doing things
| properly' you think the same for Madoff, then oof.
|
| Actions and results matter. Intentions can easily be
| bullshit and delusion.
|
| If someone is committing multi-billion dollar fraud, there
| is a line that was crossed a LONG time ago.
| adastra22 wrote:
| I read him as saying _they_ thought they were doing
| honest things.
| lazide wrote:
| I was referring to the same miscreants as the poster was.
|
| It's only plausible to a certain point that they were
| unknowingly bad actors. They'd have to willingly be
| deluding themselves.
|
| No one commits multi-billion dollar fraud _accidentally_.
|
| They'd have to turn a blind eye to something any
| reasonable person would consider a 'are we the baddies'
| moment. Or two. Or dozens.
|
| As to if it's documented? One can hope, but I'm not
| holding my breath. I'm sure there have been many shredder
| parties (or digital equivalents) happening in many places
| since the news broke.
| skinnymuch wrote:
| Yeah and the point is no one sane would seriously say
| Madoff thought he was being honest. They're making an
| analogy between Madoff and SBF being similar/the same.
| coffeebeqn wrote:
| Let's not treat senior management and owners of a company
| that has gambled away billions of dollars of customers (and
| investors) money as kids. They should get jail time from
| what I've read so far.
|
| They were either criminally stupid or did this on purpose.
| It really wasn't that complex. This isn't even close to
| 2008 complexity since this was all happening within one
| organization With the same owner SBF.
| SantalBlush wrote:
| "Never attribute to incompetence that which can be
| adequately explained by greed."
| HPMOR wrote:
| "Never assume malice by that which could be explained by
| incompetence."
|
| As a caveat, however, SBF did work at Jane Street and
| graduated Summa Cum Laude from MIT with a Physics degree,
| so maybe this quote does not apply.
| trollerator23 wrote:
| Nitpick: There is no such thing as Summa Cum Laude at
| MIT. Rankings and GPAs are not published, so he just
| graduated with a physics degree, period.
| SantalBlush wrote:
| Right, which is exactly why I took that quote--which is
| overused by HN crowd--and changed it to fit the context.
| But you went and added it anyway.
|
| I won't assume any malice on your part.
| ChrisMarshallNY wrote:
| That sounds like some of the thinking that went into these
| historic arbitrage disasters.
|
| Some young kid thought he knew better than his elders, and
| was doing arbitrage, which is moving around vast amounts of
| money, for very small gains (but safe ones).
|
| They had all this money at their disposal, and _just knew_
| that these stuffy old farts were "missing the boat," so they
| figured that they'd just use a bit, to make a small bet, and
| put it back...
|
| https://en.wikipedia.org/wiki/Nick_Leeson
| jasmer wrote:
| The part where he was lending out deposits to make big bets
| looks very problematic, and hopefully illegal.
|
| The CEO described how a feasible 'pyramid' could work with
| Levine on Bloomberg and it looks like he was doing just that.
|
| This is basically a smart kid breaking all the rules, doing
| mostly what he was allowed to do legally with all of the
| misrepresentation and hyper - plus a little bit of illegal
| stuff which is all you need along with the massive leverage
| that comes along with it.
|
| But I would say aside from his shenanigans - this is a crypto
| problem. At the base of the pyramid was an 'asset worth
| nothing' well ... of of crypto is essentially that.
| nullc wrote:
| > Were the Effective Altruism intimations genuine?
|
| SBF was just following the EA maxim: "take advantage of
| strategies other people are biased against using"
| johnp314 wrote:
| "Can anyone speculate what Bankman-Fried's exit plan was?"
|
| SBF contributed millions to democrat candidates in the recent
| elections. Perhaps his exit plan was legislation to bail him
| out.
| mrguyorama wrote:
| He didn't have an exit plan because, like every gambler, he
| was sure his "system" was better than anything that came
| before and couldn't possibly go tits up.
|
| Like every gambler, he was wrong of course, and eventually
| lost it all because gambling is stupid.
| tedunangst wrote:
| "Theranos just needed a little more time to get the tech
| working."
| [deleted]
| systemicdanna wrote:
| Regarding his exit plan: not sure if you will find a good
| answer right now. One way to get some insight into this type of
| mental game is to read about other major scammers who just
| couldn't help themselves and got too deep to pull out. Bernie
| Madoff comes to mind, and there are many books written about
| him and his business.
| [deleted]
| eddsh1994 wrote:
| Re: EA, you can see the general consensus of what's happened in
| a multitude of FTX posts here
| https://forum.effectivealtruism.org/
|
| My particular views are:
| https://forum.effectivealtruism.org/posts/EKN9Nn89ixriwSXpP/...
| shorthistory wrote:
| EA is a load of cabbage.
| glofish wrote:
| denial is a powerful drug,
|
| you are surrounded by people celebrating your genius,
| everything you touch turns to billions and billions
|
| it is easy to see how someone gets disconnected from reality
| and ends up living in the metaverse of their own genius
| jacooper wrote:
| And with Meta you can live your wildest illegal dreams
| without risks!
|
| See? The metaverse isn't useless after all.
| shorthistory wrote:
| That's an interesting take. Probably wouldn't happen
| though, the argument being that illegal dreams taking place
| in the metaverse would contagiously spread to the
| unmetaverse.
| nfw2 wrote:
| I think it likely started with a small mistake, not necessarily
| an innocent one but maybe one that was assumed to be low-risk.
| And like in the Fargo movie/show, Sam just kept digging the
| hole deeper trying to get out of it.
|
| This explanation seems pretty plausible from a game theory
| angle. The selfish cost of losing 1 billion dollars and losing
| 10 billion dollars for fraud is the same. Either way he is
| ruined and probably goes to prison, so he keeps gambling even
| if the odds aren't in his favor, and problem grows
| exponentially.
|
| Altruism is a lot easier when it's not your neck on the line.
| shaburn wrote:
| 10 Billion dollar question: Who were the counter parties to
| these trades where customer funds were "lost".
| basch wrote:
| They were the counterparty with themself?
|
| They accept FTT as collateral, give out a leveraged loan to
| the other company. The company spends that money on things
| like stadium rights and bailing out other failed crypto
| companies. Collateral falls to a value of 0, and the money is
| spent.
| oezi wrote:
| The thing is that there was never any funds stored in these
| accounts. If you store a bitcoin then there isn't any value
| to it until you sell it.
|
| The money that you spent to pay for the bitcoins exit the
| system during the purchase. Most likely paying the Ferrari of
| the seller.
| PebblesRox wrote:
| My understanding is that there were bitcoins (and other
| crypto tokens) stored in the accounts that are not getting
| returned, valuable or not.
| cellis wrote:
| It's called value destruction. The coins value dropped very
| quickly, the counter parties then where either 1) Most likely
| nobody, (as in nobody cashed out, as the myriad altcoins
| approached the limit of worthless) and 2) traders on FTX who
| cashed out other ,"more valuable" coins they were lent after
| depositing altcoins as collateral.
| fdgsdfogijq wrote:
| They were caught off guard by the risk asset sell off. They
| thought the bull run would go for longer
| jacooper wrote:
| I think he just though that he will never get caught, it was
| working for a long time, why would it fail?
|
| Also why are there no lawsuits yet? Since FTX clearly broke its
| own T&S?
| Animats wrote:
| U.S. Department of Justice lawyers are already closing in.[1]
|
| Using customer funds held in custody is theft. Period. People
| go to jail for this.
|
| This may be the biggest embezzlement of customer funds held
| in custody in history. Most scams involve misuse of funds
| invested, not just held in custody. The biggest outright
| theft of this type seems to have been Peregrine Financial.[2]
| That was $200 million, far smaller than this one.
|
| What happened to the CEO of Peregrine? Here he is, 10 years
| after conviction: Bureau of Prisons Inmate
| Locator RUSSELL R WASENDORF Register Number:
| 12191-029 Age: 74 Race: White Sex:
| Male Located at: Jesup FCI Release Date:
| 02/19/2054
|
| [1] https://fortune.com/crypto/2022/11/10/ftx-sam-bankman-
| fried-...
|
| [2] https://archives.fbi.gov/archives/omaha/press-
| releases/2013/...
| nullc wrote:
| > This may be the biggest embezzlement of customer funds
| held in custody in history.
|
| I wouldn't be surprised to learn that the amount of actual
| customer funds that went in were much smaller than claimed.
|
| Keep in mind FTX was mostly 'perpetuals' -- fake assets. It
| might be that a lot of the customer funds were just
| fictional gains, also may be that a lot of them were paper
| value owned by SBF entities.
|
| I've been trying to find anyone I personally know that had
| FTX exposure and so far I'm coming up dry.
| coffeebeqn wrote:
| How about everyone with assets stuck in FTX that can't
| withdraw them? When your accounting is fictional it might
| be hard to pinpoint who's money went where but everyone
| got screwed in the end
| Animats wrote:
| There's someone on Reddit who says they had their entire
| net worth in USDC on FTX.[1]
|
| At least they're at the head of the line in bankruptcy.
| Custodial funds come ahead of debts.
|
| [1] https://www.reddit.com/r/wallstreetbets/comments/yq6y
| 5d/all_...
| sillysaurusx wrote:
| I just want to say, you have some of the most fantastic
| coverage of events like this.
|
| It feels like having an investigative journalist on
| payroll. The delay between an Animats comment and this
| showing up in the news is significant. Thank you!
|
| (I remember your comments about the CEO that forged pay
| stubs being similarly excellent. Someday it might be worth
| collating them. In the meantime, whenever Animats says CEO
| Foobar is going to prison, Foobar had better start mentally
| preparing themselves for the journey.)
| sillysaurusx wrote:
| By the way, that Wasendorf story (Animats' second link)
| is quite interesting. He skimmed $200M by forging bank
| statements and was eventually caught only when the world
| switched to electronic auditing. Previously he was able
| to fool everyone by intercepting the snail mail: https://
| www.forbes.com/sites/walterpavlo/2012/07/13/pfgbests...
| Animats wrote:
| It's just knowing some basic financial history. Crypto
| scams are not new kinds of scams. They're mostly scams
| from the 18th and 19th centuries, with a new paint job.
| "Extraordinary Popular Delusions and the Madness of
| Crowds" (1841), has the first time around for most of
| these bad ideas. Mass market scams first got going when
| newspapers appeared. At last, you could reach large
| numbers suckers at low cost. Before newspapers, scamming
| was a one-on-one in person thing.
|
| We still have both mass-market and one-on-one scams, but
| now they can both be done remotely. There's not much
| originality. It's mostly the same old scams of a few
| standard types, sometimes in new packaging.
| sillysaurusx wrote:
| I find all of it so fascinating. I wrote up Wasendorf's
| story just now, mostly out of curiosity:
| https://news.ycombinator.com/item?id=33565992
|
| Stories like that are really interesting to dig into.
| They all seem to get caught because the world changes
| (audits happening via internet in Wasendorf's case, the
| economy imploding and sinking Alameda's risky
| investments, etc) rather than from any particular
| mistake. The mistake always seems to be that they started
| cheating in the first place, and then it was just a
| matter of time.
|
| Of course, we only hear about the ones who were caught.
| It makes you wonder how many stories like this were swept
| under the rug -- if Alameda had made money instead of
| losing it, FTX would probably still be online, even
| though they'd still be committing the same large scale
| fraud.
|
| Anyway, thanks again for all this, and especially for all
| the detail you put in. (Your comment pointing out that
| SBF is firmly under the SEC's jurisdiction was
| wonderful.)
| shorthistory wrote:
| I may have missed it-but where is the source/evidence
| that some(all) this fraud is under SEC's jurisdiction?
| neomantra wrote:
| Any delay is related to the window size, MSS, and the
| amount of un-ACKed data ;)
| nemo44x wrote:
| Yeah I think it's why SBF immediately went on about not
| knowing everything that was going on, that he messed up by
| misunderstanding things, etc. He's trying to lay the
| groundwork for plausible deniability here.
|
| He will either go to prison or kill himself I would bet.
| shorthistory wrote:
| I guess the lawsuits are being prepared by affected parties
| as we speak.
| Edmond wrote:
| >Enron turnaround veteran John J. Ray III has been appointed as
| the new CEO.
|
| Sam is only 30 so obviously doesn't appreciate just how retro
| this is... Enron & Crypto...as I live and breathe.
| sn0w_crash wrote:
| We live in the best timeline
| Scoundreller wrote:
| That puts him around 9 or 10 at the time. And the unwinding
| took a few years.
|
| If he was high functioning and reading a daily newspaper, he'd
| have heard a lot about it.
| untouchable wrote:
| And John Ray III has SEC charges of insider trading
| [deleted]
| ForHackernews wrote:
| Be your own due diligence process!
| NelsonMinar wrote:
| Is Bankman-Fried a flight risk the way Do Kwon has proven to be?
| nfw2 wrote:
| It seems a bad idea to me to fly to a country with sparse
| protections after losing a bunch of sketchy people's money.
| Prison > Murder
| new2this wrote:
| His company is already based in the Bahamas, how much further
| could he fly?
| sgt101 wrote:
| Venezuela might be a good pick?
|
| Or just disappear in Europe?
| digianarchist wrote:
| They just handed back a bunch of oil executives so I doubt
| they'd be up for harbouring a fugitive.
| AustinDev wrote:
| He wouldn't be safe from US authorities in the Bahamas.
| They'd happily turn him over. The US Navy leases a lot of
| land on Andros for a Navy base that is a significant part of
| their GDP iirc.
| tluyben2 wrote:
| Of course he is. He will be hammered with lawsuits etc. If he
| didn't flee already.
| PaulWaldman wrote:
| Are there any potential repercussions for those with "perfect"
| timing who bought low and sold high?
| orangepurple wrote:
| ARCHIVE EVERYTHING BEFORE IT IS MEMORY HOLED
| nemo44x wrote:
| This whole thing is just the .com crash all over again. Super
| Bowl ad's the same year of the crash even.
|
| I happened to be at a hotel earlier this year that was hosting a
| crypto conference and the attendees looked like the kinds of
| people a multi-level marketing scheme attracts. Very different
| from a few years ago.
| friend_and_foe wrote:
| You must not have been following cryptocurrency for that long.
| This sort of thing happens every 2-3 years. This isn't a wild,
| unforseen crazy market calamity, this is your run of the mill
| downturn, this ones mild so far actually. You're only hearing
| more "bloodbath" talk because the news covers it nowadays, and
| the news loves to exaggerate bad things and make them sound
| worse because that's how they keep the lights on.
| Philip-J-Fry wrote:
| It seems like a fundamental flaw in their business model
| rather than a market downturn.
|
| This seems like a bigger deal to me because FTX is part of
| then new wave of crypto companies that were supposed to be
| legitimising crypto. And even they can't stay afloat. It's
| just a matter of time before the next crypto giant falls.
| friend_and_foe wrote:
| Every time there's a bull market a hundred new operations
| spring up. And some of them always present themselves
| legitimately, and most of them always fail when the
| downturn comes. This is a run of the mill downturn, it
| happens every single time. A ton of "crypto giants" don't
| survive the downturn, every single time.
| nemo44x wrote:
| I've held BTC since 2011 so I think I get it. My point is the
| industry around it collapsing. It's not just crypto crashing
| but the industry built around it collapsing at scale. This
| isn't Mt.Geox level - this is .com level.
| friend_and_foe wrote:
| But it's not collapsing at scale... not yet anyway. It's
| just one exchange, a big one but just one going under. It's
| scams and rug pulls predictably going under, same story as
| the last cycle. The only difference is that the news is
| covering it, it makes it seem like a bigger deal than it
| is.
|
| And you want them to go under. When the scams stop going
| under is when you have a real problem, because that means
| the entire industry is in fact a scam.
| halfmatthalfcat wrote:
| The path toward Binance and Tether's ultimate collapse is
| not hard to see, which would almost guarantee the
| collapse of the whole system.
| friend_and_foe wrote:
| Why would it collapse the whole system? These blockchains
| run themselves, the ones worth a shit anyway. They were
| here before these companies, there's nothing fundamental
| that prevents them from being around after.
|
| I am not really convinced of Tether having trouble
| anymore. I've been hearing it for years. They seem to
| have gotten lucky and cleaned up their act before
| collapsing, every time they do an audit or anything the
| last few years they show full collateral backing their
| assets in circulation. With regard to binance, I couldn't
| tell you one way or another, but they've survived more
| than one cycle so they probably know what they're doing.
| [deleted]
| halfmatthalfcat wrote:
| The previous dips though haven't been this leveraged though.
| Over the past couple years the amount of opaque and highly
| leveraged instruments against crypto has ballooned. There's a
| lot more on the line this time around imo.
| danans wrote:
| > I happened to be at a hotel earlier this year that was
| hosting a crypto conference and the attendees looked like the
| kinds of people a multi-level marketing scheme attracts.
|
| So people who are barely holding on to the bottom rungs of the
| (American) middle class, and who are the traditional targets of
| multi level marketing (and also religious) hucksters?
|
| That doesn't bode well for the argument that the crypto
| ecosystem isn't a set of scams, regardless of whatever the
| merits of the underlying technology has.
| alberth wrote:
| Dumb question: so if you stored digital assets in a FTX wallet,
| does that mean you just lost all of your $$$?
|
| If so, wow'zer.
| yieldcrv wrote:
| I'm not familiar with that and if they have a wallet thats
| different from their exchange app, but the litmus test is:
|
| If you don't have access to your keys then you never owned your
| digital assets
|
| and if you don't know how to run that test then blaming the
| victim is completely appropriate here
| sfusato wrote:
| That's how "Not your keys, not your coins" saying was coined.
| rvz wrote:
| Yes. They have the keys to the wallet and can freeze
| withdrawals.
|
| Not your keys, not your coins.
| pjc50 wrote:
| Based on previous exchange bankruptcies, you're now a creditor:
| so you'll get _something_ at _some time_ , but not a lot and
| not soon.
|
| (Did the mtgox payout happen yet?)
| AustinDev wrote:
| No idea, on MTGOX I don't even know if I'm still a creditor.
| I had ~100BTC on there I've already written it off.
| LZ_Khan wrote:
| How does FDIC insurance play into this?
| pavlov wrote:
| It doesn't apply. Crypto investors wanted to be free of pesky
| regulation, remember.
| pavlov wrote:
| Yes, that's generally what happens when an unregulated bank
| goes bankrupt. The list of creditors will be long, and some
| have priority claims so they get paid first.
|
| Everybody said this can happen. Coinbase was forced to include
| a warning to this effect in their filings as a public company.
| But nobody cares when the going is good and FOMO is strong.
| dehrmann wrote:
| Mutual funds and ETFs can have the same problem, but they
| generally structure it so the fund is a separate entity and a
| "customer" of the parent company. If the fund house goes
| bankrupt, the fund is safe because the fund house didn't
| actually own it.
|
| While I don't touch crypto for the same reason I don't touch
| Beanie Babies, it's made me think more about what is money,
| what's intrinsic value, and what protections are in place in
| case something goes wrong.
| once_inc wrote:
| It's official now; let's see if any other crypto companies will
| also fall. Looking at BlockFi and Nexo specifically.
| bmitc wrote:
| I saw that BlockFi is already blocking withdrawals and asking
| customers not to deposit.
| throwup wrote:
| Weed out the weak.
|
| https://finance.yahoo.com/news/blockfi-halts-withdrawals-cit...
| smt88 wrote:
| That's all of them, at this point (at least the big ones).
| wollsmoth wrote:
| coinbase is still out there.
| WFHRenaissance wrote:
| Nexo has zero exposure to FTX according to their CEO.
| bombcar wrote:
| Hopefully _this_ CEO will finally be the one who is totally
| honest and above-board.
| hn_throwaway_99 wrote:
| Nexo just proved that when there is a run on the bank, you
| want to be first in line:
| https://cointelegraph.com/news/nexo-dodges-219m-bullet-
| just-...
| rippercushions wrote:
| That's what BlockFi said yesterday, and here's what they're
| saying today:
|
| https://blockworks.co/news/blockfi-stops-withdrawals-
| hinting...
| aniforprez wrote:
| It's still possible they had no direct exposure because all
| of crypto is in chaos right now and people are fleeing
| jahewson wrote:
| That's good. Of course indirectly they're exposed to the
| macro environment that FTX just dropped on everybody.
| babyshake wrote:
| This where the investors including the big silicon valley
| investors that make billions of returns step in and make the
| little people whole. If BlockFi needs a line of credit to allow
| withdrawals, each of the investors needs to be in line to provide
| that credit at the expense of the partners and LPs. Officers eat
| last.
| prh8 wrote:
| Was this another CEO "taking all responsibility" without any
| actual responsiblity/penalties? Not counting resigning.
| triceratops wrote:
| Other than resigning, what more responsibility can someone take
| for a professional failure?
| systemicdanna wrote:
| In some circles resigning from a failed tech venture is not
| seen as a failure. WeWork CEO resigned and is now promoting a
| new fully funded company in the same space.
|
| FTX CEO has been openly lying about the impact for a long
| time now, and has mismanaged billions of dollars (of other
| people's money). Resigning doesn't seem like a reasonable
| punishment.
| skeeter2020 wrote:
| Not to get too far off-topic, but WeWork was commercial
| real estate, Flow is residential:
|
| Andreessen [of Andreessen Horowitz, investors of 350M in a
| company that's single asset is currently a landing page]
| positioned the new company as a long-awaited solution to
| the nation's "housing crisis." ... "community-driven,
| experience-centric service" -- to explain how the new
| startup would "create a system where renters receive the
| benefits of owners."
|
| This sounds completely different than WeWork, which had the
| simple goal of changing the world, one beer-Friday at a
| time.
|
| The sad part is the AZ money isn't the dumb money in this
| deal; that will flow in latter.
| systemicdanna wrote:
| I meant that he is back to working in real estate (both
| WeWork and Flow are in essence real estate businesses
| with some tech/VC sprinkles on top).
| bitcharmer wrote:
| I hope you're trolling because this is a very large scale
| theft. Most of us would agree resignation is not appropriate
| consequence for such conduct.
| triceratops wrote:
| I'm not trolling. So far this is just a business failure,
| not a crime.
|
| I don't know much about this whole thing. It sounds likely
| there will be investigations, and they may prove "large
| scale theft" at that time. But right now resigning is the
| only way for him to "take responsibility".
| shockeychap wrote:
| In this case, jail.
|
| He openly talked about how the whole thing was a Ponzi
| scheme.
|
| https://youtu.be/KZYqL79GDXU?t=1277
| triceratops wrote:
| Is he supposed to go the nearest federal prison and check
| himself in?
|
| It's the government's job to prove crimes.
| fossuser wrote:
| That's not what he's saying in that clip.
|
| From Levine's column yesterday:
|
| > "People on Twitter now are like "he admitted that FTX is
| a Ponzi!" but of course that's not true. He conceded a
| certain validity to my claim that some crypto businesses --
| not his -- are Ponzis. He is just in the business of
| trading their tokens.
|
| "In fact, I came away from that conversation bullish on FTX
| and Bankman-Fried. My view was, and is, that if you talk to
| a crypto exchange operator and he is like "crypto is
| changing the world, your old-fashioned economics are just
| FUD, HODL," then that's bad. A wild-eyed crypto true
| believer is not the person to operate an exchange. The
| person you want operating an exchange is a clear-eyed
| trader. You want someone whose basic attitude to financial
| assets is, like, "if someone wants to buy and someone wants
| to sell, I will put them together and collect a fee." You
| want someone whose perspective is driven by markets, not
| ideology, who cares about risk, not futurism. A certain
| cynicism about the products he is trading is probably
| healthy."
| shockeychap wrote:
| I'm not arguing on the basis of what Levine thought of
| the conversation.
|
| At the very least, it's apparent that SBF sees crypto as
| being heavily based on speculation that's disconnected
| from any actual value proposition, but he's choosing to
| exploit and profit from those systems. And it's now
| apparent that he also was engaging in speculation with
| user funds himself via Alameda.
|
| A wild-eyed crypto believer might lose anywhere from a
| few thousand to a few million of their own money in
| poorly placed speculation.
|
| A sophisticated market-maker will facilitate the loss of
| billions (about $10 billion in this case) from numerous
| people.
|
| Which is more dangerous? A HODL who loses their savings
| on some speculative crypto purchase, or the next Bernie
| Madoff?
| fossuser wrote:
| I don't really agree with this.
|
| A wild eyed Luna type can lose a lot of people's money
| and is probably more likely to do so than a skeptical
| trader making deals. The issue with this wasn't that
| general heuristic which is still true (imo), it was SBF's
| decisions despite that (which were bad and extremely high
| risk, but different than it being a ponzi).
|
| Pair that with an intelligent enemy looking for ways to
| destroy you and this is where it ends up.
| jimmydorry wrote:
| That is not the comparison at all, and while I have to
| assume you are commenting in good faith, it is really
| hard to do so here.
|
| The difference Levine is pointing out is between the type
| of person operating the exchange. It is not the
| comparison between janitor and CEO at a fortune 500
| company.
|
| A "true believer" will cause just as much (or per
| Levine's assertion: more) damage as a "sophesticated
| crypto cynicist", but one will at least understand
| financial fundamentals while the other brings none of the
| learnings from running any kind of investment or banking
| firm.
| shockeychap wrote:
| A "true believer" isn't able to carry out their work
| without a marketplace. Nobody lost money in crypto on the
| scale we're seeing 5 years ago.
|
| The largely unregulated, uninsured, and opaque
| marketplace of crypto, facilitated by people like SBF,
| has been the conduit for the true believers.
|
| If somebody says "I know you're a sucker and I'm going to
| take your money", (as SBF did in Levine interview) they
| just told you everything you need to know. You can rest
| assured that their other dealings are dirty, as is now
| coming to light for SBF.
|
| I'm not sure why "good faith" is being brought into
| question, and I certainly haven't challenged the good
| faith of those who disagree with me. So I'm not going to
| address that aspect of the conversation.
| easytiger wrote:
| But the exchange it seems was but only one constituent of
| a wider more complex (necessarily complicated?) web of
| cross funding that in no way represents the expected
| business practice of an exchange. Matt it seems failed to
| account for the bare faced lying of a deluded ideologue.
| Or at least someone who hid behind an ideology to excuse
| absurd business practices
|
| https://i.redd.it/078p4g7m6cz91.jpg
| bmitc wrote:
| His analogy of a "box" and "cool things" happening to that
| is almost comical.
| 1270018080 wrote:
| Stealing billions of dollars while working doesn't make it a
| professional failure, it's still stealing.
| triceratops wrote:
| Whether or not he stole is for the legal system to decide,
| not him. At best he can pledge to cooperate with
| investigations, if and when they start.
| nocoiner wrote:
| I will bet you cash money that this is one CEO you'll see in
| prison. This is like 10x as bad as anything Elizabeth Holmes
| did, and as far as I know, she wasn't tweeting real time as the
| walls were closing in on her.
| HDThoreaun wrote:
| I mean I doubt he's ever stepping foot in the US again. Dudes
| going into hiding and won't be seen.
| albntomat0 wrote:
| Is it as bad as Holmes? Theranos had patients with incorrect
| medical test results, which seems different in kind that a
| bunch of crypto investors losing a massive amount of money.
| shapefrog wrote:
| I take full responsibility for stealing $10 billion and am
| stepping down as CEO, it has been a long journey from me having
| nothing to this point. I am sorry to those that lost some or
| all of your money.
|
| I will no longer take part in the company and will quietly fly
| away on my private jet to my $50 million home where I will
| contemplate my next venture.
| bogomipz wrote:
| I'm not sure things will be that smooth for him. It sounds as
| though both DOJ and SEC are looking into this:
|
| https://ustoday.news/both-the-doj-and-sec-are-
| investigating-...
| tombakt wrote:
| Look at his connections, nothing of consequence will happen
| to him.
| Kiro wrote:
| The context here is other CEOs stepping down after a
| fiasco, getting a massive severance check, saying they
| take "full responsibility". Compared to that SBF is
| massively screwed.
| wombat-man wrote:
| he's bankrupt and deeply in debt. Why would his
| "connections" stick their necks out for him? I don't know
| if having a dad teaching at Stanford gives you a free
| pass everywhere.
| bogomipz wrote:
| I wasn't aware of this before reading your comment. It
| looks like both of his parents actually teach at
| Stanford. His mother is Professor of Law:
|
| https://en.wikipedia.org/wiki/Barbara_Fried
| bombcar wrote:
| Depending on how fast the case moves, she may end up
| getting to teach a course that uses her son as an example
| of "what not to do".
| wombat-man wrote:
| I'm not sure how much trouble having parents at stanford
| gets you out of. Maybe he can get a good lawyer but
| losing 10B of client funds is going to have a lot of
| wealthy people quite upset with him. I'd imagine anyway.
| bananapub wrote:
| > he's bankrupt and deeply in debt.
|
| is he? sounds like his various corporate frauds have
| destroyed a lot of companies and led to corporate
| bankruptcies, but what information is there about how
| much he scooped out before?
| qeternity wrote:
| Well his hedge fund blew up which took down his exchange.
| Presumably he was broke a long time ago which is why he
| dipped into clients funds.
|
| He stood to make a lot more from this working out than
| what the current situation permits.
| bananapub wrote:
| ?
|
| The allegation is he moved money between companies to
| support his terrible "hedge" fund. Where have you seen
| anything at all about him not having a lot of personal
| money?
| bogomipz wrote:
| Do you believe that Bernie Maddoff lacked connections?
| Kiro wrote:
| He already lost his whole net worth overnight ($16B) and will
| live in hiding with serious death threats for the rest of his
| life. This is no ordinary CEO switcheroo where the he walks
| away with a slap on the wrist and a golden handshake.
| digerata wrote:
| He was running a Ponzi scheme. Don't feel sorry for him.
| jnwatson wrote:
| It wasn't a Ponzi scheme, at least based on what's publicly
| known.
|
| This is just investing with client funds, which the US
| learned the hard way must be carefully restricted. The US
| has the Glass-Steagall Act, and deposit insurance to try to
| prevent bank runs like this.
| acdha wrote:
| The investing with client funds part is probably the
| easiest charge but his self-description sounds Ponzi-
| like:
|
| https://www.bloomberg.com/news/articles/2022-04-25/sam-
| bankm...
| tartoran wrote:
| This sounds like Napoleon Dynamite type of reasoning
| acdha wrote:
| Me, as a kid: "the emperor's new clothes is nonsense,
| nobody would go along with something that obviously
| wrong"
|
| Me, after watching people sell no-hope dotcoms, dubious
| real estate, and cryptocurrency: "... unless they thought
| they could cash out before the other fools wised up"
| roywiggins wrote:
| They were talking about stuff like Celsius. I don't think
| FTX was itself offering yield-farming products, just
| letting people trade those tokens. "Yeah, the stuff
| people trade on my platform are probably Ponzis" is
| definitely not great publicity, but it's not obviously
| admitting to your own crimes.
| jjulius wrote:
| >It wasn't a Ponzi scheme, at least based on what's
| publicly known.
|
| >This is just investing with client funds...
|
| This is just plain not true.
| Kiro wrote:
| I'm not. Just saying that he won't get away with it like
| other CEOs have done in the past while "taking
| responsibility". His punishment has already begun.
| stingraycharles wrote:
| Which is what, exactly? Living in hiding?
| Kiro wrote:
| Yes, losing his money, reputation and freedom (whether
| that's in hiding or in jail). He's obviously royally
| screwed, regardless if he goes to jail or not, and yet
| people are saying he walks away from this unscathed.
| stingraycharles wrote:
| To be fair to the guy, he wasn't afraid to admit it in some
| very public interviews. But yeah, don't feel sorry.
| skeeter2020 wrote:
| > To be fair to the guy, he wasn't afraid to admit it in
| some very public interviews.
|
| I don't think brazen criminals should get a different
| perspective than sneaky ones; perhaps a worse
| characterization because they either don't recognize what
| they're doing is wrong, or they simply hold society in
| contempt.
| skeeter2020 wrote:
| When you have a net worth of 16B it's probably pretty easy to
| make 10's or 100's of millions disappear.
| hristov wrote:
| I am still not convinced that he did not steal the missing
| FTX client funds. So at this point it is not clear to me how
| much he lost or gained from this. I do hope the DOJ conduct a
| full investigation and trace where all the money went.
| benmmurphy wrote:
| I assume all those political donations bought something :)
| mywittyname wrote:
| Let's hope some congresspeople were stupid enough to put
| their money into FTX.
| Freebytes wrote:
| If so, then he will be facing jail time. If not, then he
| is fine.
| wombat-man wrote:
| well, they're not giving the donations back, and it
| doesn't look like he'll have much to give in the future.
| Where's their motivation?
| [deleted]
| snapcaster wrote:
| Where there is fraud there is embezzlement
| ww520 wrote:
| Does he still hold on to the billion dollar worth Robinhood
| shares?
| rinze wrote:
| He had $16b in Magic Dollars(TM) and he can have the same
| amount in the same token tomorrow if he wants, though.
| mayankkaizen wrote:
| I am 100% sure he must have siphoned off some sizable part of
| his net worth in cash or other non-crypto assets.
| onlyrealcuzzo wrote:
| Several million dollars is a lot of money - but not sizable
| compared to $16B.
|
| If he siphoned off even 1% ($160M+)- you can bet he's going
| to lose it in bankruptcy proceedings.
| systemicdanna wrote:
| 10-20% is not $160M+, it's $1.6B+.
| meetingthrower wrote:
| 10% is $1.6B. Only needs 1% for $160M. .1% for $16M.
| Which is still generationally rich. Yeah, I think he
| would have taken that out right?
| AndreLock wrote:
| SBF personally owns a 7.6% stake in Robinhood worth ~$700m
| at the current price.
| sgt101 wrote:
| He will have worked with some accountants and lawyers to
| move money into untouchable places. There will be someone
| employed to hold it for him, and dole it out in the future.
| Sure he will have to keep a low profile, but there will be
| resources.
|
| He will probably have dispersed quite some sums to friends
| and family, some of that will come back to him in one way
| or another.
|
| Finally, he will be able to go on the celebrity speaking
| circuit for quite a while...
| tartoran wrote:
| > Finally, he will be able to go on the celebrity
| speaking circuit for quite a while...
|
| Yeah, talking about the power of failure what he learned
| from it.
| sgt101 wrote:
| Maybe this is good - maybe it will keep the lesson of
| crypto alive in the public mind...
| adam_arthur wrote:
| Pretty likely that he has money on the side or some sort of
| assets that are worth a fair amount. Likely not Billions, but
| certainly in the Millions.
|
| Hopefully the US Gov goes after him and forces him to pay it
| back to creditors/customers, similar to Trevor Milton/Nikola
| yawnr wrote:
| Lol give me a break. He will be fine and rich forever, just
| maybe not a billionaire. There are no real consequences when
| you are that wealthy.
| tasuki wrote:
| No death threats because he had money? Have you perhaps
| seen the extensive list of Russian billionaires who
| "committed suicide" during like the past five years?
| flerchin wrote:
| From one of the other HN threads, it seemed that FTX.us was
| firewalled from FTX.intl. Is that now revealed to be false?
| hello639 wrote:
| > it seemed that FTX.us was firewalled from FTX.intl. Is that
| now revealed to be false?
|
| No shit
| cbtacy wrote:
| "...it was CLAIMED that FTX.us was firewalled..."
| Julesman wrote:
| I'm not a luddite (on hacker news lol) and I can clearly see the
| revolutionary potential of blockchain. But, for the love of God,
| can we STOP the blind short-term speculation on the promise of
| extreme wealth. Moderate investment can support development
| without the kind of hype that ruins lives and sullies public
| perception of the technology.
| louwrentius wrote:
| Guess I'm a Luddite as I only see blockchain tech as a solution
| in search of a problem. I think it's worse than useless and
| crime isn't a valid use case.
| nu11ptr wrote:
| Separation of money and state is definitely a worthwhile goal
| in my opinion. Everything else is more questionable.
| louwrentius wrote:
| You mean tax evasion. I said legal use cases. Please pay
| your dues to society.
| squokko wrote:
| Then you have no state power to deal with misuse of money.
| nwah1 wrote:
| The state has a monopoly on the use of force. It can tax,
| expropriate, conscript, regulate, and otherwise redirect
| resources however it wants, and it can demand payments in
| any currency it chooses. The wishful thinking involved in
| trying to "separate" money and states is absurd. Even under
| a gold standard, the government can acquire resources from
| the public at will. The entire goal is nonsense. The root
| desire there is the urge to not have a government, which is
| just yet more wishful thinking.
| deebosong wrote:
| Not the person you're responding to. But I concur. How
| will one separate money from state and then protect one's
| state-separated money without themselves becoming a
| "state" of sorts, that then is fused to their money? And
| then everyone becomes their own little island/state, that
| is fused to their money, and then you forge alliances and
| become allied island-states, and so on and so forth,
| until you become a nation of sorts?
|
| Like cmon now. Isn't that the inevitable progression? And
| if so, doesn't that mean these folks who insist upon
| separating state from money just want to become the
| ruling class?
|
| I dunno. That's just how it always comes across to me.
| three_seagrass wrote:
| Yep, power vacuums always have a way of being filled.
|
| The question is, do you want it to be controlled by
| rational actors seeking to exploit everyone else, or an
| organization that has potential for other (maybe even
| altruistic) motives?
| cellis wrote:
| Centralization is inevitable.
|
| - https://subconscious.substack.com/p/centralization-is-
| inevit...
| pxmpxm wrote:
| People pitching the state vs money argument are the same
| crypto nerds as per xkcd:
|
| https://xkcd.com/538/
| louwrentius wrote:
| Indeed, thank you.
| thwayunion wrote:
| Back in the beginning, bitcoin was intensely attractive
| to people who were in the intersection of extreme
| libertarian ethics and cosmopolitan financial capitalism
| ethos.
|
| It's a fundamentally contradictory world view, of course.
| You cannot have cosmopolitan financial capitalism without
| very strong states propping up an extremely unnatural
| global order. But you can understand how middle-wealthy
| tech people ended up there. They were self-made, annoyed
| with taxes, and primarily held wealth that was generated
| without geographic ties. This is opposed to traditional
| middle-wealthy folks, whose revenue streams were
| historically closely tied to place and/or community.
|
| Now that the End Of History is over, the contradiction is
| laid bare, and the reaction has been a sort of
| ideological immune response triggering fever dreams that
| are increasingly absurd and desperate (metaverse, web3,
| NFTs).
| birdyrooster wrote:
| These are the same people that want free software to
| workaround abusive corporate policy instead of first
| regulating corporations. We might actually even be served
| by a free software movement if employees and people were
| actually free and unconstrained by corporations that that
| keep them from ever participating. People like Stallman
| think a license.txt is going to solve this?
| killerstorm wrote:
| People can move from one country to another.
|
| The majority of people on Earth live in countries which
| are considered corrupt & incompetent and have regular
| bank crashes. It would be a good thing if we remove
| control of money from corrupt governments.
| louwrentius wrote:
| As if that's really working. Food is still paid in local
| currency and exchanges can be controlled by the
| government.
|
| It's not worth boiling the oceans for.
|
| But even so, crypto was never really about the poor and
| unfortunate.
|
| Crypto is about pure greed. Money. Tax evasion. Don't
| tell waffle stories about people in other countries
| please. It was never about them. Be at least honest.
| JamesianP wrote:
| I would have assumed separating money and state simply
| means the state can no longer control money creation. So
| yes it would be similar to using gold as a currency. Just
| high tech. Though with all the hype I'm sure there was a
| lot of craziness imagining more beyond that.
| yifanl wrote:
| That seems like a non-feasible end-goal. If we assume
| there's any meaningful input involved with the creation
| of money (mining equipment or graphics cards), then
| centralization will happen around having the most of the
| input and securing that, which naturally implies a
| monopoly on force, which implies a state.
|
| If you allow for fiat money, then almost definitionally,
| there's a state that everybody agrees is empowered to
| create the money or else, why would they continue to
| ensure the value of money?
| JamesianP wrote:
| Gold mining purportedly does cause inflation in gold-
| backed currency. I guess bitcoin mining is the same, not
| familiar with that other than the annoying effect on
| hardware prices. Perhaps the argument is that this gets
| increasingly harder, as opposed to fiat money creation,
| which appears to be exponential growth. Plus manipulation
| of the currency has never been all that consistent, they
| are constantly trying new things and pushing boundaries.
| so any claims of future stability comes down solely to
| predicting how far some president or fed chairman might
| choose to go next along with how other countries react to
| that.
| nwah1 wrote:
| Calling out useless "tech" for being useless doesn't make you
| a luddite. If you call out a "free energy" machine for not
| actually making free energy, that just makes you honest and
| reasonable.
| twblalock wrote:
| > But, for the love of God, can we STOP the blind short-term
| speculation on the promise of extreme wealth.
|
| Not without changing human nature. If there is a get-rich-quick
| scheme available, there will always be takers.
| thwayunion wrote:
| _> can we STOP the blind short-term speculation on the promise
| of extreme wealth_
|
| I first played around with blockchain in 2011 or so and I still
| don't know what actual utility this technology is supposed to
| have. I have never -- _never_ -- encountered a value-producing
| use case for cryptocurrency that can 't be solved by either
| signed git commits or a SQL database.
|
| Around 2015 a lot of people I thought were smart enough were
| exploring use cases for blockchain. AFAICT everyone in that
| space either left the space altogether, is still rambling about
| solving supply chain fraud (...), or pivoted to shovel
| salesmanship to support speculators (or speculate themselves).
| JSavageOne wrote:
| Cryptocurrency has many advantages to centralized fiat money.
| If you can't list a single one, you should educate yourself
| on cryptocurrency before commenting on it as if you have any
| idea what you're talking about.
| three_seagrass wrote:
| Perhaps you can share some of the many advantages?
| JSavageOne wrote:
| Being able to self-custody and send money anonymously and
| internationally in seconds without an intermediary.
| Decentralization, composibility, programmable money. Come
| on this is literally crypto 101
|
| I don't understand how anyone can be on HN talking about
| crypto without knowing any of crypto's use cases. I mean
| you don't see people here in Rust threads commenting "I
| can't think of a single use case of Rust".
| thwayunion wrote:
| _> send money anonymously and internationally in seconds_
|
| I can easily do this without crypto. (It many cases it's
| illegal, ofc, but it's trivial to do without crypto if
| you don't mind breaking the law, and using crypto doesn't
| suddenly make illegal things legal.)
|
| _> Decentralization, composibility, programmable_
|
| Glad to see that the dot com era OOP consultants found
| new employment opportunities that don't involve agile or
| scrum consulting.
| mrguyorama wrote:
| >send money anonymously and internationally in seconds
| without an intermediary.
|
| Something that the vast majority of people have no need
| for. Remember, most americans never even leave the
| country.
|
| >Decentralization
|
| Prove this is good without just claiming so.
|
| >composibility
|
| What?
|
| >programmable money
|
| Ah yes, because the main feature missing from my bank
| account and debit card is a half assed, poorly programmed
| system that sends all my money to a random account that
| nobody controls.
|
| >Rust threads commenting Because "impossible to corrupt
| memory" is a feature programmers have been asking for,
| developing, and considering since the 40s. Who the fuck
| has been asking for "you don't control your money unless
| you take 100% personal custody of it and take on all the
| risks that entails and the money changes value pretty
| much every day and any transaction takes at least a
| minute to have any confidence it actually went through"
| generalpf wrote:
| Rust has use cases.
| nunez wrote:
| i thought it takes 15 minutes for txn's on bitcoin to
| clear?
| three_seagrass wrote:
| 20 minutes minimum for bitcoin transactions, which is a
| long time to hold up the line at the grocery store.
| Occasionally this has been weeks or never.
|
| For comparison, credit cards can verify in less than a
| second.
| nunez wrote:
| i thought that physical places that take bitcoin use
| (centralized, LOL) intermediaries to provide float for
| points off the top to cover for the extra long txn
| completion times
| tsimionescu wrote:
| > Being able to self-custody
|
| Also possible with cash, but extremely risky for most
| people. Not an advantage of crypto, not an advantage in
| general.
|
| > send money anonymously
|
| Only relevant for crime. Disadvantage or irrelevant for
| most legitimate businesses (you anyway need to provide
| address for shipment).
|
| > send money [] internationally in seconds without an
| intermediary
|
| Also possible with many banks, VISA, Western Union. The
| fact that you're using an intermediary is irrelevant -
| since either way you're paying transaction fees, and
| trying to avoid sanctions is too dangerous for most
| people.
|
| > Decentralization
|
| In practice, it's far more centralized (far fewer
| exchanges in the world than banks, and the majority of
| people using crypto hold it with an exchange)
|
| > composibility, programmable money
|
| Doesn't really mean anything. Money is money, it can only
| change hands with a legal contract, and "smart contracts"
| are not legal contracts.
| everfree wrote:
| > Only relevant for crime.
|
| Sending money anonymously is speech. Just as there's no
| reason the government needs access to my Signal text
| history, they don't need access to my sex toy purchase
| history either.
|
| Are you in favor of strong encryption for messaging, but
| not payments? If so, I am curious to hear more of your
| reasoning on that.
|
| > Money is money, it can only change hands with a legal
| contract, and "smart contracts" are not legal contracts.
|
| Possession is 9/10 of the law, and low-value transactions
| are not worth litigating. Smart contracts let a piece of
| software be the judge and jury on a $5 transaction, and I
| think there's some value in that. It could also be useful
| for transacting with people who live in countries with
| broken legal systems.
| lottin wrote:
| Sending money is not speech.
| mrep wrote:
| > Are you in favor of strong encryption for messaging,
| but not payments? If so, I am curious to hear more of
| your reasoning on that.
|
| Not OP but yes. The government needs taxes to fund itself
| which means it needs to track some financial transactions
| in order to levy taxes.
| jefb wrote:
| _Cryptocurrency has many advantages to centralized fiat
| money._
|
| Narrator: It doesn't.
| nazgulnarsil wrote:
| >I have never -- never -- encountered a value-producing use
| case for cryptocurrency that can't be solved by either signed
| git commits or a SQL database.
|
| You have always --always-- lived in a high trust society with
| trustworthy institutions
| thwayunion wrote:
| I live in the USA.
|
| I will concede your point if it means you'll agree that at
| the very least cryptocurrency is useless to people in the
| USA.
|
| (Even as a hedge. My resiliency to societal collapse comes
| from the social relationships I maintain in my local
| community and the collection of skills and knowledge we
| collectively have, not my ability to flee to New Zealand
| and hope my digital tokens still have perceived value.)
| RetpolineDrama wrote:
| >I have never -- never -- encountered a value-producing use
| case for cryptocurrency that can't be solved by either signed
| git commits or a SQL database.
|
| I've heard a lot of people used it to buy drugs on the
| internet.
| nunez wrote:
| also pizza, for a short time
| tsimionescu wrote:
| That works for a while - when it's an obscure new thing
| that the government doesn't know to look for. Afterwards,
| it becomes a public unchangeable ledger of the entire
| network of illegal trading.
| everfree wrote:
| The IRS currently has a $600k bounty on the ability to
| de-anonymize Monero transactions, which has so far gone
| unclaimed. Most crypto drug sales are transacted in
| Monero nowadays. Not every crypto has public and
| traceable transactions.
| medvezhenok wrote:
| 600k is peanuts compared to how much that ability would
| be worth.
|
| A real bounty would be close to 100x that number.
| mrguyorama wrote:
| You're forgetting that the IRS is basically perpetually
| handicapped by people who are protecting their friends
| who do sketchy tax based things to make more money that
| they then feed back to the people that kneecap the IRS
| tsimionescu wrote:
| You're still betting your future on this privacy holding.
| If they do find a way to attack it, they will likely
| still be able to reconstruct the whole history, unlike
| with cash.
|
| Also, the bounty was awarded to a company who is
| theoretically developing a solution. I'm not holding my
| breath, and anyway I hope for the sake of everyone guilty
| of harmless "crimes" (buying recreational drugs) that the
| anonymity holds.
| everfree wrote:
| I actually don't believe it's possible to retroactively
| reconstruct Monero history, in an information-theoretic
| sense. The data just isn't there, because it gets thrown
| out along the way after each ring-signature is completed.
| It's on a similar playing field as cash in that regard.
|
| To track cash, you need to surveil each point at which
| the cash changes hands, otherwise that information is
| lost forever. To track XMR, you likewise need to surveil
| each point at which XMR changes hands. In some ways, the
| process is similar to reconstructing TOR traffic - you
| can't passively observe and deanonymize the entire
| network, you have to actively target a specific actor. I
| believe that's what the IRS is talking about when they
| offer their bounty.
| jonny_eh wrote:
| It's been 10+ years of a costly solution desperately looking
| for a problem.
| robocat wrote:
| Definitely useful in Argentina:
| https://www.freethink.com/technology/crypto-argentina-
| black-... - fabulous article
| three_seagrass wrote:
| Bitcoin was always this fun nerdy hobby money, right up
| until the speculators came in and exploited it.
|
| Now it's "investing" in the confidence of the future of a
| computing network that can only handle 7 transactions a
| second, but that still hasn't stopped it becoming the
| essential oils for tech bros either.
| piyh wrote:
| You're under selling the revolution that was buying LSD
| on the internet
| three_seagrass wrote:
| Yeah, I almost mentioned Silk Road, but BTC has since
| been used to back trace and arrest online drug dealers so
| I feel like it was never really that good at it to begin
| with.
| w1nst0nsm1th wrote:
| I suspect BTC has always been an US government honey
| pot...
|
| Google dorian satoshi nakamoto newsweeks. The guy is
| probably behind btc. He worked previously as army
| contractor and in the finance sector...
|
| Just like TOR network was the work of 2 previously army
| contractors (I remember that quite well, even if
| wikipedia doesn't seem to remember as well).
|
| Beside, Belgian and other CB (not even ECB) never had a
| thing to say about crypto with public blockchain of any
| sort. But monero, which has a private blockchain, has
| been prohibited in nearly all EU juridiction soon after
| its launch.
| ssnistfajen wrote:
| The promise was a trustless system that can operate on its
| own without central authorities. The problem is this proposed
| solution has yet to justify itself in terms of both
| efficiency and cost over existing alternatives which is
| relying on self-declared central authorities whose trust has
| been earned via either regulatory guarantees or well-
| established reputation.
| nannal wrote:
| I don't trust you, you don't trust me, neither of us trust
| the guy who owns the git server but I need to give you
| something without anyone being able to stop us.
| fuckstick wrote:
| > give you something
|
| Eh? You can't like give me anything - you can give me a
| token - which can also effectively be money. The latter
| usually occurs due to some other trust relationship needing
| to be established - we are back at square one.
| nannal wrote:
| Luckily there's a fairly liquid market for the things
| we're handing around (usually)
| fuckstick wrote:
| I acknowledged "something you can exchange for money" -
| that was not the objection.
|
| It doesn't solve the underlying difficulty of exchanging
| physical goods and services that are not tokens - you,
| know, the actual hard part. It also doesn't solve the
| laundering aspect once you try to get those tokens
| liquidated to something not volatile as fuck.
| tsimionescu wrote:
| Simple: there's no way to do this transaction - at least
| not scalably. Are you implying that BTC can somehow solve
| this?
| krrrh wrote:
| You really shouldn't be doing a significant amount of your
| business with people who don't trust you and who you don't
| trust. Blockchain advocates really underestimate how much
| of functioning economies simply work because of trust (with
| lawyers and courts as a backup), and how small the
| potential "I don't trust you" market is.
| everfree wrote:
| Courts and lawyers are the opposite of trusting who
| you're doing business with. If you actually trusted them,
| there would be no need for courts.
|
| The "I don't trust you" market consists of everyone who
| does business using written contracts. So, nearly
| everyone.
| thwayunion wrote:
| _> Courts and lawyers are the opposite of trusting who
| you 're doing business with._
|
| Courts are extremely expensive and time-consuming.
| Contracts are definitely not the opposite of trusting who
| you're doing business with. If you do not trust someone
| to fulfill their side of a contract, you probably don't
| bother writing up the contract. The contract is there to
| punish breach of trust, not to establish trust.
|
| _Security_ is the opposite of trusting who you 're doing
| business with. There's a reason super markets -- the most
| common type of business operating without high trust --
| employ loss prevention professionals.
|
| Notice that the blockchain offers no substantive defense
| to a five finger discount...
| everfree wrote:
| > The contract is there to punish breach of trust, not to
| establish trust.
|
| If someone can only be trusted under threat of
| punishment, that means that they aren't actually
| trustworthy in the first place. I think we might have
| different definitions of trust. If I fully trust someone,
| to me that means that I know there's no need for the
| threat of court at all, because I can be sure that they
| will uphold their word even if it's in their better
| financial interest to break it.
| short_sells_poo wrote:
| I'm sorry but this is a take I completely disagree with.
| Fundamentally, I do business with people I trust. If I
| don't trust someone, I'll simply never do business with
| them. No amount of bullet proof mathematical constructs
| will change this.
|
| Now, I may trust someone now, but circumstances change.
| People change. I don't trust the universe to be constant.
| I thus want to enshrine agreements in contracts and and I
| want there to be institutions that can offer objective
| (within reason) arbitration in case my counterparty and I
| come to disagree in the future.
|
| I don't know what sort of business you operate in, but in
| my industry, trust is paramount and is practically
| equivalent to capital. You'll simply not even be employed
| unless you are trusted. It takes a long time to build a
| track record and you can lose it in the matter of seconds
| if you make poor decisions.
|
| So yes, IMO the world operates fundamentally on the basis
| of trust. I don't believe for a moment that long term
| successful business can be conducted in an environment
| without fundamental trust between counterparties. Again,
| trust does not equal blindly taking people at their word
| or neglecting due diligence. "Trust, but verify" is the
| saying.
| everfree wrote:
| > Now, I may trust someone now, but circumstances change.
| People change.
|
| Trust is inherently a forwards-looking thing. If you
| don't trust someone not to change in a way that breaks
| the promises they've made to you, that's not trust at
| all.
|
| > Fundamentally, I do business with people I trust.
|
| > I don't know what sort of business you operate in
|
| Software industry. When employers have tried to screw me
| out of things they promised me, I've pointed to sections
| of written contracts (with the unspoken understanding of
| a lawsuit if their side of the contract is not upheld)
| and it's saved me multiple times. These companies just
| don't care about what they promised you, you can't trust
| them, they only respond to the looming threat of legal
| action. On the flip side, I've been screwed before at
| those times where I didn't keep a meticulous paper trail.
| The last one was particularly tough because I thought I
| had made close friends with the person I was doing
| business with, and I genuinely thought they could be
| trusted, but they ended up stiffing me out of payment in
| the end.
|
| In the software industry and in particular working at
| start-ups, promises are worth jack shit unless they're in
| a written contract. Nobody trusts anyone to uphold
| promises. I would love to work in an industry where
| people could trust each other to uphold their word. What
| industry are you in?
| lottin wrote:
| We place trust in the courts of justice so we don't have
| trust every single party that we interact with. If the
| courts of justice or the government at large cannot be
| trusted, then society cannot function, and no amount of
| cryptography or technology of any kind can fix that.
| ArchD wrote:
| Do you trust the bank, credit bureaus or some other
| establishment that you deal with to not leak your
| sensitive info? Maybe you do. But in case you don't,
| which is a rational response to the past performance of
| some establishments (e.g. Equifax), your life still has
| to go on.
|
| Did you trust the POTUS when he said that Iraq had WMD
| before starting a war? I suppose he's a painter now so
| everything's peachy.
|
| A lot of people have been giving reminders of the general
| untrustworthiness of establishments, including Snowden &
| Assange. Establishments that many people are forced to
| deal with.
|
| It would be nice if everybody could be safely trusted.
| For those who readily trust, there is no problem to
| solve.
|
| However, some other people see untrustworthiness
| everywhere, so they take opportunities to try to opt out
| of the system by engaging in a trustless system that does
| not require privileged middlemen. It's been baby steps so
| far.
| MrMan wrote:
| you cannot opt out, there is no escape, its a closed
| system. misanthropy is harmful. decentralization is a
| fantasy
| thwayunion wrote:
| It is okay to do business with people you don't trust,
| but the crux is that pow/pos doesn't actually solve most
| of the substantive trust problems.
|
| Eg: all of the weird supply chain nonsense around
| blockchain. You can keep a ledger and so on, but if
| there's corruption/theft in the physical warehouse then
| the ledger is worth only and exactly the disk space to
| which it's written. No amount of distributed consensus
| will change anything about the fact that Joe's cousin's
| friend heard about the shipment and stole 10% of the bulk
| good and replaced it with dirt to make the weights match.
|
| The problem of doing business with people who you don't
| completely trust is very real. However, blockchain offers
| no solution (except and unless the thing you are trading
| is something that literally be placed on a blockchain, ie
| nothing physical and nothing that depends on a legal
| system to enforce).
| pama wrote:
| Signed git commits, as per the parent.
| nannal wrote:
| Git guy took the server offline. You want to refer to the
| commit to give someone else the token but now you can't.
|
| You can't trust the git guy.
| mrguyorama wrote:
| It's funny how after over a decade the best bitcoin can
| do is an almost half solution to a problem more contrived
| than the plot of a daytime soap opera. Who the fuck
| actually has this problem?
| thwayunion wrote:
| This isn't a coherent problem statement, and to the
| extent that it is, it's solved by TCP/IP (this isn't the
| early 1980s; why are you using some random third party's
| server if you explicitly don't trust them to keep the
| server running? Run it from your own box. This has been
| solved since the early 90s.)
| kasey_junk wrote:
| A "universal" api for moving money between financial
| institutions that don't have existing relationships would be
| extremely valuable and could unlock innovation in everything
| from payments to mortgages.
|
| But the blockchain space has an extreme bias against the
| existing finance world. Frequently products in the space want
| to tear it down as they view it as predatory.
|
| This leaves us with the current situation, the crypto
| industry speed running the history of finance and a
| technology in search of a problem.
| thwayunion wrote:
| _> A "universal" api for moving money between financial
| institutions that don't have existing relationships_
|
| KYC is a feature, not a bug, so there has to be at least
| some sort of relationship even if it's via mutual
| registration with a third party.
|
| Also, modernization of banking systems, including inter-
| bank transfer, has been slowing happening in the background
| for the last decade. AFAIK no one is using pow, pos, or
| blockchains (except, maybe, just in the sense that
| traditional databases have many of the same desirable
| attributes as a blockchain).
|
| _> could unlock innovation in everything from payments to
| mortgages._
|
| Innovation in mortgages didn't work out so well last time,
| and honestly the actual origination of a mortgage is one of
| the least painful and inefficient parts of real estate.
|
| When bitcoin launched we really did need innovation in
| payments. Apple Pay and Google Pay solved a lot of the
| problem, and the recent rise of "bank/lender as an api"
| startups popping up now solve a significant part of the
| rest of the problem.
| JSavageOne wrote:
| The inadequacies of the traditional finance industry are
| not the "blockchain space"'s fault.
| caycep wrote:
| How is it currently run? From my layperson experience,
| every time I do a wire transfer, I feel like I'm inputting
| data into a mainframe or something...
| bombcar wrote:
| You basically are.
|
| https://www.fiscal.treasury.gov/ach/ and
| https://www.swift.com handle much of the US, and it's a
| system developed in the 70s (or earlier) and it works.
|
| It could be _modernized_ and things like
| https://explore.fednow.org are trying to do that.
|
| But the problems involved are not things a blockchain
| would secure _because there 's a trusted intermediary_
| which can just run a database.
| belter wrote:
| Well technically...
|
| [1] - "How Mainframes Keep The Financial Industry Up And
| Running"
|
| "...92 of the top 100 banks use the mainframe to provide
| banking services to customers, and other types of
| financial services companies depend on the mainframe, as
| well. Visa, for example, uses the mainframe to process
| billions of credit and debit card payments every year.
| According to some estimates, up to $3 trillion in daily
| commerce flows through mainframes..."
|
| [1] https://blog.share.org/Article/mainframe-matters-how-
| mainfra...
| hinkley wrote:
| Technically technically, you're feeding data into a
| system whose purpose is the care and feeding of a
| mainframe. That veneer is pretty thin in places and so it
| tends to feel like you're talking to a mainframe even
| when you're talking to an arbitrator for the mainframe.
| bananapub wrote:
| I swear to god, half of the problem with cryptocurrency is
| Americans not understanding what a functional personal
| banking system looks like. The big American banks just
| never bothered to move beyond the 1970s, and so otherwise
| fairly well-informed Americans in tech assume you need some
| sort of completely mad system like "consume the power of
| Spain making a distributed merkel tree full of partial hash
| collisions" to make bank transfers work.
|
| in every other rich country, you just log in to your bank's
| web ui thing, click "SEND MONEY TO MY MUM", and then it
| sends it, for free, to your mum, with no risk of your mum
| being able to take more money, no random intermediary, no
| worry about if it actually gets there, no third party
| holding it in a non-bank cash account, no pre-
| authorisation, etc. you enter a bank identification number
| and an account number (and a name, usually, to avoid
| mistakes) and it just happens and it just works. in most
| countries this is quick, even, e.g. in the UK it's almost
| always < 5 seconds.
|
| FOR FREE.
|
| no blockchains, no multi-billion ponzi schemes, just a
| boring and simple service offered by every bank in the
| country.
|
| making the Fed make banks just introduce free, instant bank
| transfers could have saved the world tens of billions of
| dollars and apparently tens of billions of tons of
| greenhouse gases.
| hinkley wrote:
| Snake oil comes around every couple of generations once
| the people who lived it are too feeble or too few to get
| the message out to the latest crop of people with enough
| income to grab the attention of con artists.
|
| These are in theory lessons that are meant to be passed
| along by the Public Education system but ours is pretty
| broken.
| mjr00 wrote:
| Exactly this, I'm in Canada and can transfer money to
| anyone in Canada (and maybe worldwide, never tried it
| though) for free, instantly. That's how most people pay
| rent up here.
|
| Most of the problems people perceive with the banking
| system are completely societal, 0% technical. If your
| bank doesn't let you send money instantly to your friend
| for free, that isn't because your bank needs a
| blockchain.
| bananapub wrote:
| > Most of the problems people perceive with the banking
| system are completely societal, 0% technical. If your
| bank doesn't let you send money instantly to your friend
| for free, that isn't because your bank needs a
| blockchain.
|
| that's excellent, thank you for putting it better than I
| did.
| ZeroGravitas wrote:
| See also Uber vs countries that can and did simply
| regulate taxis well for decades, without burning billions
| of VC dollars.
| JamesianP wrote:
| I've never been impressed by tech startups "disrupting"
| boring traditional industries. Except that perhaps some
| of their technology problems may be interesting. But
| overall, you're now working/investing in a boring
| industry.
| JSavageOne wrote:
| > In every other rich country
|
| Let's not ignore the non-"rich" countries
| bananapub wrote:
| yes, sorry, good point.
| mrguyorama wrote:
| Most of Africa has more robust money transferring systems
| than the US. You can literally text someone currency, and
| this has been around longer than bitcoin.
| JamesianP wrote:
| If you're referring to M-pesa, it's an app like Venmo.
| The US has apps too (for example Venmo).
| JamesianP wrote:
| Well I mean the US is the biggest and richest rich
| country by a large margin. And has maintained a
| continuously functioning financial system for centuries
| now (though I do wish they would let it crash and be
| replaced sometimes when it so-richly deserved to). So it
| is kinda hardest to implement here, especially with every
| state having their own banking rules.
|
| The banks are adding some instant money transfer services
| in the last few years though.
| bananapub wrote:
| > Well I mean the US is the biggest and richest rich
| country by a large margin. And has maintained a
| continuously functioning financial system for centuries
| now (though I do wish they would let it crash and be
| replaced sometimes when it so-richly deserved to). So it
| is kinda hardest to implement here, especially with every
| state having their own banking rules.
|
| the EU did this, SPANNING TWENTY EIGHT COUNTRIES. they
| don't even all use the same CURRENCY.
|
| edit: sorry, it's 36 - EU27 + EFTA + UK + microstates
|
| > The banks are adding some instant money transfer
| services in the last few years though.
|
| it appears to me, judging from talking to Americans, and
| my own use of the US banking system, that customers do
| not even generally have ability to login to their bank's
| website and transfer money, AT ALL, forget "instant".
|
| overall, this is such a bizarre reply, but emblematic of
| many of the problems the US faces - "it's too hard to fix
| $problem_with_well_known_solution because of entrenched
| interests, so let's create this absolutely awful parallel
| system that creates a whole new world of entrenched
| interests who will in turn block any innovation".
|
| why do you think it would be hard? ACH exists, and lets
| banks transfer money. why can't banks make it better like
| Australia did? or have the same structure create a
| parallel, better transfer system banks can opt in to,
| like the UK did with FPS?
|
| I would have said that letting venmo/paypal/etc do it was
| the worst possible solution, but then I could not have
| imagined that another solution people would seriously
| propose was "cryptocurrency".
| afarrell wrote:
| > emblematic of many of the problems the US faces - "it's
| too hard to fix $problem_with_well_known_solution because
| of entrenched interests, so let's create this absolutely
| awful parallel system that creates a whole new world of
| entrenched interests who will in turn block any
| innovation".
|
| This is what happens when you build a country with a
| disproportionate number of the sort of people who are
| willing to say "Fuck it. Building a decent living in my
| home country is too hard. I'm going to cross an ocean in
| a steam ship and start a new life on a new continent
| where I am a complete stranger."
|
| I say this as an American who has made similar choices of
| questionable wisdom.
| mrguyorama wrote:
| No this is what happens when you develop your culture's
| ideology to be "Helping other people is communism, and
| they deserve to suffer"
| JamesianP wrote:
| Yes of course we can do transfers online. I've been doing
| business this way for decades. Even in the very very
| early days of the internet they started "online bill
| payment" services, which would transfer electronically or
| else outright send a check as needed. It's how I paid
| rent in college. Also credit cards have been in
| widespread use for longer than that, so the need for an
| alternative was always only in narrow niches.
|
| The new services (and the tech companies) only selling
| point is they can be instant and cheaper or free (though
| not all older approaches have fees). And serve groups
| like younger people with no credit.
|
| And what is your post emblematic of with it's abuse of
| caps and stereotyping? I'm just talking about why they
| haven't replaced an older solution that "isn't broke"
| since it gets 99.9 percent of the job done already. No
| need to lose your mind.
| bananapub wrote:
| Another great example (https://twitter.com/felixsalmon/st
| atus/1591193835886891009) from one of the worst VC funds:
|
| > Problem: US healthcare is broken.
|
| > Solution: Build a for-profit company that will generate
| trillions of dollars in value for its shareholders, all
| of which will come from payment for healthcare
| oezi wrote:
| It is not quite true that this is the way in every other
| country. It took Europe quite some time to adopt the
| IBAN. Money transfer between banks is still mostly
| cleared only daily (even if the transfer is shown as
| instantaneous).
|
| Also the name given during the transfer aside the IBAN
| won't make the transfer fail as far as I know if
| incorrect.
| kasey_junk wrote:
| Now do a transfer between an EU bank and one in Canada.
|
| Or send money to a wallet in China.
|
| I assure you I understand the rails going on in
| international money transfers, and the amount of
| different systems, protocols and hops to make it happen
| is staggering.
|
| It can take sophisticated modern treasury operations
| years to get up and running in new jurisdictions
| independent of the regulatory challenges.
|
| If we could isolate it to the compliance and risk
| management portions of the challenge it would increase
| innovation dramatically.
| deepspace wrote:
| ... or they are off promoting "web 3", the definition of
| which changes as the weather does.
|
| For me, enthusiasm for "the blockchain" is a quick way to
| identify a) people who promote technologies without bothering
| to research the fundamentals and b) crooks/charlatans.
| miracle2k wrote:
| > I have never -- never -- encountered a value-producing use
| case for cryptocurrency that can't be solved by either signed
| git commits or a SQL database.
|
| The value is in a permissionless and censorship resistant
| financial network. You may not find that valuable, but that's
| ok.
| mumbisChungo wrote:
| I think you have to want or need decentralization in order to
| buy into most of the use-cases of the technology, either
| because you don't trust institutions or because you're in a
| part of the world where either the institutions aren't safe
| or the currency isn't.
|
| Assuming you do believe that decentralization is nice to
| have, applications like decentralized banking (ie. lending,
| borrowing, exchange of assets) become valuable.
|
| There are also emergent culture sources of "value" in the
| industry, such as medium native artforms in on-chain
| generative artworks, distributed multiplayer "runtime"
| systems artworks, on-chain gaming and metagaming, etc.
|
| I understand that for many people, even if you grant that
| _some_ people might find the above legitimately valuable or
| useful you may still believe that it doesn't justify the
| energy costs. To that my response would be that all of the
| above are serviced by networks like ethereum and its various
| layer two solutions, none of which utilize proof of work, and
| the sum of which have a fairly modest carbon footprint, as
| with other computationally inexpensive digital technologies.
|
| If you take issue with Bitcoin specifically I can't really
| offer an argument with conviction. BTC is what got me into
| the industry, and I think the BTC whitepaper is a brilliant
| example of human ingenuity, but more recent advancements in
| the technology leave me skeptical about the societal ROI on
| large scale PoW operations.
| thwayunion wrote:
| I do not see any need in my life for the combination of
| high finance and decentralization. Centralized and highly
| regulated high finance is bad enough, and already something
| I try to avoid except when absolutely necessary. My
| economic life is highly decentralized, but with extremely
| high trust and very little financialization, so no need for
| what crypto people mean when _they_ say
| "decentralization". DeFi, in my life, means the neighbor
| down the street leaves a you-owe-me note when she drops off
| eggs, a debt instrument that I can settle using any number
| of currencies recognized by the local economy; I most often
| opt to pay in HomeBrewCoin.
|
| _> I think the BTC whitepaper is a brilliant example of
| human ingenuity_
|
| I largely have the same problem as hinkley (sibling
| comment): I had seen most or all of these ideas prior to
| the emergence of BTC. I first countered Merkle trees...
| gosh, forever ago. Got really into cryptography in the 90s.
| Etc. The idea of creating a currency backed by PoW didn't
| seem ingenious; it seemed like a particularly silly
| application of otherwise quite useful technologies. AFAICT
| it still is mostly useless, except that it made some people
| very wealthy.
|
| Anyways, I'll go back to yelling at kids to stop picking my
| tulips.
| afarrell wrote:
| I have found one: Sending the Jamaican Bobsled team to the
| olympics. I highly doubt that this could have been done based
| on Postgres. Postgres is too boring and stable to attract the
| necessary attention.
|
| https://www.npr.org/sections/thetwo-
| way/2014/01/22/265060754...
| thunky wrote:
| Yes because we all know the only way to raise money is via
| shitcoins.
|
| I learned that by watching Cool Runnings.
| afarrell wrote:
| As noted elsewhere, most of the money wasn't transferred
| via dogecoin. But reasonable financial transaction
| systems don't attract the advertising attention that this
| was able to.
|
| Does that make it a good financial system? To the degree
| that a clown car is a good public transport system.
| qeternity wrote:
| TFA: Dogecoin was sent for 30k of the 184k raised
|
| So no this effort was not enabled by crypto
| hinkley wrote:
| I worked on code that used a Merkle Tree before any of us had
| heard of a Merkle tree or this blockchain bullshit came
| around, so I never got starry eyed about any of this stuff.
|
| That project was in an environment where chain of custody is
| an established mechanism for ensuring public safety. Layering
| a web of trust over the top of that was something the users
| could mostly digest. Consumers can only use software signed
| by a particular department or person, only approved software
| is signed, and approval requires a chain of approvals before
| it going back to an original signature that says "these are
| the bits we gave you".
|
| That's a useful application of the Merkle Trees. But you'll
| note there's no distributed consensus, and there's no Proof
| of Work. Or rather, the proof inferred, backed by process and
| in this case legistlation.
|
| Block _chain_ admits it 's only barely a Merkle Tree right in
| the name. Our graph looked a lot more like trunk in a git
| repo. Slightly more tree-like but people only care about the
| last node.
| killerstorm wrote:
| A Block header includes a root hash of a Merkle tree of
| transactions. So yes, it is a tree, if you also consider
| the useful payload, not just block headers.
|
| Then e.g. in Ethereum there's also a Merkle tree of the
| entire state as well.
|
| > there's no distributed consensus
|
| Distributed consensus is necessary if you want high
| availability and replication for your Merkle tree.
|
| If data in your tree is important, you want to replicate
| it, right? You want to be sure it's stored on multiple
| nodes.
|
| So this distributed consensus thing, Byzantine Fault
| Tolerance, it basically gives you a receipt that at least N
| nodes have this data stored.
|
| You didn't implement it because it takes considerable
| effort. But if you implemented Merkle tree with high
| availability, you'd get something very similar to
| blockchain.
| thwayunion wrote:
| _> If data in your tree is important, you want to
| replicate it, right?_
|
| Yes!
|
| _> You didn 't implement it because it takes
| considerable effort._
|
| I'd wager it's because he was smart enough to read the
| man page for rsync and didn't over-engineer a non-
| solution to a non-problem in his particular use-case.
| monkmartinez wrote:
| what do you see as the "revolutionary potential" in blockchain?
| Genuinely curious.
| mkoryak wrote:
| separating people from their money
| codegeek wrote:
| "> can we STOP the blind short-term speculation on the promise
| of extreme wealth"
|
| Then there is nothing left to do.
|
| "I can clearly see the revolutionary potential of blockchain."
|
| Started in 2009. 13 years now. How much longer do we need to
| see the revolutionary potential ? Isn't it obvious that there
| is no real practical usage ?
| sdiacom wrote:
| As someone with a similar-ish position to yours, I think by the
| time someone figures out how to build something useful with
| this technology, the terminology of cryptocurrencies
| (blockchain, "defi", NFTs and whatever a "web3" is) will be so
| tightly associated with scams, that this new useful thing will
| use completely different terms to describe itself.
| nkozyra wrote:
| While true, there's an endless supply of new buzzwords to use
| to capture another round of rubes.
| zeroclip wrote:
| These things already exist. Uniswap, Aave. Both pretty easy
| to use and can not just go insolvent on you.
| sdiacom wrote:
| The only currently existing purpose of those things is to
| trade scam tokens for other scam tokens, which makes them
| effectively meta-scams. What I mean is that, like Ethereum,
| they're not scams in itself, but their only real-world use-
| case is to provide a decentralised platform on which to run
| scams.
| JeremyNT wrote:
| > I can clearly see the revolutionary potential of blockchain.
|
| What do you feel is the "revolutionary potential" here? Bitcoin
| has been around for a while, and I surely haven't seen it.
|
| I see this stuff only used for scams, speculation, and illicit
| transactions. None of this is "revolutionary" - scams,
| speculation, and illicit transactions have been around as long
| as money.
| wustangdan wrote:
| The reason is because your government is reasonably well
| behaved. You can think of crypto as a hedge against bad
| government behavior. So in your case, you aren't a target
| customer.
|
| Try thinking about people in Turkey or Venezuala, where the
| yearly inflation is 100% - 5,000%. Bitcoin looks like a
| relatively stable safe heaven in comparison.
|
| https://www.coindesk.com/layer2/2022/10/25/turkey-
| cryptocurr...
|
| In the US it was illegal to send dollars to Wikileaks. Is it
| really your money if you aren't allowed to send it to whoever
| you want?
|
| Imagine instead of Wikileaks it was a political cause you
| truly believed in and wanted to support but your government
| didn't like. Surely you can see how they could label any
| money flowing to this cause as an "illicit transaction". Dn't
| you think that you should have the power to support whatever
| cause you believe is right? Or do you think that only your
| government should decide what are the approved political
| causes you are allowed to support?
| GrinningFool wrote:
| You haven't answered the OP's question though.
|
| From the article you posted, it seems like its primary
| value there has been as a proxy for other [more stable]
| currencies.
|
| USD did that something like that for a while when it was
| gold-backed. How is it now revolutionary when crypto does
| the same thing backed by fiat currencies instead of gold?
| [deleted]
| chx wrote:
| > and I can clearly see the revolutionary potential of
| blockchain.
|
| I can not.
|
| It's been 13 years and there's still nothing.
|
| It was never anything else but a scam and can not be anything
| else but a scam for all crypto"currencies" with a transaction
| fee are _negative sum games_.
| luckylion wrote:
| Fast, cheap money transfer (theoretically) not requiring
| trust in any middle man, cutting out bank's control, i.e.
| "digital cash". I don't know if it's revolutionary, but it
| has a lot of potential and is great when it works.
| short_sells_poo wrote:
| I can transfer money for free and it gets instantaneously
| deposited in the other bank account. You list many things
| (middle man, bank's control) but don't list any reasons why
| these are bad. You also say it has potential, but don't
| provide any example such potential.
|
| IMO there is one saving grace of cryptocurrencies, but
| ultimately this is also the reason why they simply won't be
| accepted: they are temporarily out of government control.
| This allows one to funnel funds in and out of hostile
| jurisdictions. This is a genuinely beneficial use case for
| people trapped in these jurisdictions. However, I'd argue
| this is such a vanishingly small portion of the mindshare
| and "business" conducted with and on behalf of the crypto
| industry, that it doesn't offer even a shred of redemption.
| The one altruistic use case is practically drowned out in
| the insane amount of buzzword laden echo chambers coming up
| with ever more hare brained structures and concepts to sell
| to each other. I wonder if these people even recognize how
| much of a caricature they have become.
|
| I really connected the dots when I read some banker's
| messages to Elon Musk about how SBF was pitching some
| blockchain silliness for Twitter (as he would), and even
| Elon Musk, the master memer and troll, recognized how silly
| the idea was.
| chx wrote:
| Here are the steps you need to take to move money with
| crypto"currency":
|
| 1. Establish a presence at an exchange (you need to do this
| only once)
|
| 2. The receiver needs to establish presence at their
| exchange (every receiver of yours need to do this)
|
| 3. Transfer money to the exchange
|
| 4. Buy coins and move them and the receiver exchanges back
| them to money
|
| 5. The receiver needs to move money from the exchange to
| their back account
|
| Reminder: you want to transfer money and crypto"currency"
| is merely a vehicle to do this. And so turns out the hard
| part is #3 and #5 -- integrating into existing banking
| systems and #4 is _completely superflous_. For example,
| wise.com (nee transferwise) solves the same problem except
| without the receiver needing to do this nightmarish
| rigmarole.
|
| Not trusting the middle man would require the entire world
| to switch to some crypto"currency" and this is completely
| unfeasible with the current ones.
| luckylion wrote:
| That includes steps that you shouldn't. I.e. to transfer
| money via bank, I wouldn't include "get a job to earn
| some money".
|
| You don't want to transfer money, you want to transfer
| value. If the recipient can use the crypto currency to
| buy something else, they don't need an exchange.
|
| Here's my very simple setup: have a bunch of mbtc sit in
| a wallet. Open the wallet. Insert the password. Insert
| address and amount. Insert the password again. Done.
|
| I can do the same with a bank, but it takes much longer
| (i.e. days instead of seconds or minutes) unless the
| recipient is at the same bank, or I pay extra and they're
| in the same network, and I need to rely on the bank to
| allow my payment. Want to buy porn, drugs, or want to
| gamble your hard earned money away? Good luck using your
| VISA or PayPal for that.
|
| There's plenty of potential in crypto, it doesn't need to
| replace any and all usecases of banking to be useful.
| chx wrote:
| No, this is a crypto"currency" fanboi's version, sorry.
|
| Everyone wants to transfer money except a vanishingly
| small percentage of the population who wants to use these
| things. Aside from a rounding error, no one even
| understands what they are or how to use them. I get
| invoiced for services in money, I pay my taxes in money.
| There's nothing else.
|
| This has been the favorite poster child of bitcoin shills
| but it's been, again, _thirteen years_ and it still doesn
| 't work so much that there has not even been a credible
| attempt making it work.
| luckylion wrote:
| "It doesn't work"? I've bought stuff and paid with
| bitcoin just yesterday. It worked fine. That you and a
| majority of the population have no use for it doesn't
| mean that it doesn't work. It works for the people who
| use it, and it solves problems for them.
|
| You're not one of them. That's fine, not everything has
| to include you to be useful.
| gilrain wrote:
| Let's keep irreversibly destroying our ecology and
| economy because dozens of people manage to buy wool socks
| and pizza with Bitcoin.
| mrguyorama wrote:
| The grocery store won't accept my bitcoin. Steam won't
| accept my bitcoin. My landlord won't accept bitcoin. The
| coffee shop won't accept bitcoin.
|
| Who does? People who sell bitcoin hardware and one small
| tourist shop in colorado that sells christmas ornaments.
|
| Wow, what utility!
| luckylion wrote:
| My landlord won't accept bitcoin either, but I'm
| perfectly fine with just using my bank account to let
| them take the money out of my account. It's easy,
| convenient and just works, they even have an account at
| the same bank I have mine.
|
| I also occasionally spend money at international
| businesses on things PayPal, VISA and MC aren't fond of,
| so short of putting bills into an envelope and sending
| them it's difficult to do. Crypto solves that for me.
| It's quick and I don't need anyone's approval of the
| industry I'm spending money on. It's like cash for local
| shopping, minus the large acceptance. I'd love to see
| more businesses use crypto, and for it to be less roller-
| coaster-y, and to have less energy waste etc, but it is
| what it is, and it still works for me.
| nunez wrote:
| i thought your counterparty doesn't need to be on the
| exchange since you're just sending funds to a hex
| address? i thought that it's trivial to lose funds b/c of
| this?
| codegeek wrote:
| "not requiring trust in any middle man"
|
| And yet, we have these middlemen like Coinbase and what
| not. IN theory, decentralized currency is awesome. In
| practice, almost impossible. Novel idea for sure but it is
| time we admit that it cannot be implemented without
| middlemen.
| luckylion wrote:
| You don't necessarily need Coinbase etc, but yes, they do
| make everything easier. I meant that you still need to
| trust the miners who have centralized and aren't
| guaranteed to be trustworthy.
| Barrin92 wrote:
| You don't need to preemptively apologize for criticizing or
| questioning a particular data structure. That certainly does
| not make anybody a luddite. Also luddites had some decent
| reasons for their activism given the mass unemployment as a
| result of factory work, which I don't think we're facing with
| the 'blockchain revolution' any time soon, unless you operate a
| casino maybe.
| vkou wrote:
| We already tried that, that was the wave 2 of Crypto, when
| people were trying to build tokens with utility. Things like
| Filecoin.
|
| Eventually everyone realized that the value-add of the utility
| those tokens bring is roughly ~$0, and the only reason tokens
| in general, and those tokens in particular have any value at
| all is because people buy them so they could sell them to a
| bigger fool.
|
| Token producers thus took the next logical step[1] - dispense
| with any promises of token utility, and go straight to minting
| NFTs and fartcoins. Why bother actually developing a product
| and ecosystem when the only thing people buying from you care
| about is the pump and dump?
|
| [1] I'm omitting the various ponzicoins, here, those are
| straight up, unabashed fraud, without even a fig leaf to cover
| themselves with. :)
| odiroot wrote:
| "There's a sucker born every minute". And so there's always an
| opportunity to sell new revolutionary investments.
| fiat_fandango wrote:
| Curiously I was able to pull out all of my Eth / Eth tokens from
| FTX.US but not chainlink?
|
| Withdrawals were requested at the same time two days ago, glad I
| remembered I had some coins sitting around in those accts.
| yourMaster__666 wrote:
| 1-6 wrote:
| Where's the oversight from the SEC?
| [deleted]
| orangepurple wrote:
| This is the oversight from the SEC
|
| https://news.ycombinator.com/item?id=33561610
| HDThoreaun wrote:
| FTX is a bahamian company. SEC doesn't have jurisdiction.
| twblalock wrote:
| This has been a wonderful social experiment, enabling people who
| didn't live in the 19th century to see what happens when banking
| and investing is treated like the wild west.
|
| Maybe something could have been different this time? In the end
| it wasn't, and it proves the necessity of regulation and
| institutions.
|
| There aren't very many other aspects of our society where we get
| to have that kind of experiment and find out whether our
| approaches to past problems were really correct. Letting us do
| that may turn out to be the true value of crypto, after the coins
| go to zero and we start mentioning it in our history books
| alongside tulip mania and the South Sea bubble.
| reaperducer wrote:
| _This has been a wonderful social experiment, enabling people
| who didn't live in the 19th century to see what happens when
| banking and investing is treated like the wild west_
|
| For those who can read long books, see Anthony Trollope's _The
| Way We Live Now_.
| https://en.wikipedia.org/wiki/The_Way_We_Live_Now
|
| The 2001 television version was also excellent:
| https://en.wikipedia.org/wiki/The_Way_We_Live_Now_(2001_TV_s...
| , and only four episodes, instead of 100 chapters.
| ahallock wrote:
| Defi can help. There are still issues with contract
| vulnerabilities, but I don't think you can get away with the
| same level of fraud as you can on a CEX, where there's far less
| transparency.
| qudat wrote:
| Hmm, I'm not sure about your conclusion.
|
| I would rather see people be more scrutinizing when giving
| their money to others. It doesn't matter if there are rules and
| regulations, people are always going to be duped. When I read
| about FTX I just think that people need to be better educated.
|
| Maybe one could argue that the rules and regulations are
| specific to providing consumers with tools to make educated
| decisions about financial investments.
| piva00 wrote:
| > I would rather see people be more scrutinizing when giving
| their money to others.
|
| "I just wish everyone is better" is _never_ a solution for
| anything that has mass appeal /is used by the general public.
| You can't ever depend that individual actions will solve a
| systemic issue, it's not realistic.
| qudat wrote:
| The same argument can be made for government intervention.
|
| I don't buy it, there are a ton of examples where not only
| does the gov get it wrong but also have the opposite effect
| of what they were trying to achieve. Good intentions is not
| realistic.
|
| The systemic issue is education.
| piva00 wrote:
| Tell me what systemic issues were solved by individual
| action. I'd really like to hear examples, I've never
| found them.
| randiantech wrote:
| 19th century, or 2008. It'd be same.
| rfrey wrote:
| In 2008 depositors got their money back. In the 19th century
| they lost it.
| thinkcontext wrote:
| 2008 had a lot of things the 1800s didn't, like the Fed and
| FDIC, both of which were very busy.
| supdup wrote:
| Protectionist government is the only reason why societies would
| need to go through cycles of repeating the experiment. When
| they are protected, they forget how to protect themselves...
| from their own decisions.
| twawaaay wrote:
| I red a bunch of financial books including some history of
| financial systems to learn to invest but also because I am just
| curious about how we got where we are.
|
| It is interesting that the waves that we are experiencing are
| nothing new, everything has been repeating every 20-40 years
| for the past three centuries or more.
|
| Yeah, bitcoin is nothing new. It is the roughly similar thing
| happening all over again -- people buying something they
| absolutely do not understand just because they see the value is
| going up. Investing is hard and here is this golden opportunity
| -- just put your money in and see it multiply. And for a long
| time this works because more people are putting their money in
| and expecting returns. Then suddenly for whatever reason the
| positive returns dry up (at the very least you have to run out
| of new capital at some point) and those same people who were
| only in to speculate now want to get their money back. But as
| the first are able to do it, the price starts to fall.
|
| Then you get companies or individuals swarming nearby the
| stream of money because, hey, for every greedy person with
| capital you will find a greedy person without it. And lots of
| these people also want to get rich quick.
|
| It really is just another pyramid scheme that lures in people
| who do not understand finances but want to get rich quick (and
| some who do understand but are just too greedy to pass on the
| opportunity or play with somebody elses capital), the
| difference being it looks way more legit and legal because of
| the number of investors and amount of capital.
|
| The cycle length has something to do with how long people
| remember the previous painful lesson before they forget and do
| it all over again. Remarkably stable over centuries...
| tasubotadas wrote:
| Why does this need to be regulated? We already have banks for
| that. And it's not like regulation saved them from being able
| to become insolvent.
| thinkcontext wrote:
| The US generally protects retail investors from risk like
| this in other financial instruments and markets. This isn't
| really different, its just new enough that regulators haven't
| caught up. This kind of event could speed that up.
| jfghi wrote:
| Because financial fraud isn't a victimless crime.
| nradov wrote:
| In this particular instance of fraud it's impossible to
| feel any sort of sympathy for the "victims". They
| absolutely deserve their losses.
| [deleted]
| aaronbrethorst wrote:
| I get whiplash wearing a seatbelt when my car gets into a
| crash. Why should I bother wearing that seatbelt? It didn't
| save me from the whiplash!
| twblalock wrote:
| Even in 2008, no depositors in FDIC-insured banks lost their
| money. Some banks died (Washington Mutual comes to mind), but
| it's not like FTX where the depositors are left with nothing.
| aaronbrethorst wrote:
| I banked with WaMu in 2008. They died. Chase absorbed them.
| My account balances moved to Chase and were left 100%
| intact.
| everfree wrote:
| > it's not like regulation saved them from being able to
| become insolvent.
|
| It may have, in a way.
|
| It's too early to tell, but it's possible that FTX's USA-
| based corporation ("FTX US") is still solvent. I believe it's
| the Bahamas-based entity that's in bankruptcy - the one
| that's in an offshore haven not subject to US regulations.
|
| Edit: Looks like FTX US is bankrupt too, but still it may or
| may not be solvent.
| kgwgk wrote:
| FTX US is included in the bankruptcy proceedings.
| everfree wrote:
| Thanks, I just read that elsewhere in this thread.
| hnews_account_1 wrote:
| Regulation saved the economy from the worst of it. But this
| is the kind of uninformed ignorance that is common in these
| parts. It has been consistently proven that regulation and
| central banking have prevented the worst of excesses. But
| live in your own world without reading anything. No one is
| stopping you.
| yieldcrv wrote:
| an opaque shadow bank in the Bahamas crashing has nothing to do
| with its niche of crypto.
|
| try not to conflate the two.
| seydor wrote:
| Or maybe it is the opposite? Why did (institutional) investors
| trusted and funded this ... thing so much? Maybe the fact that
| the Founder was literally born inside academic elites has
| something to do with it?
|
| The guy who is supposed to have "won" this , is running an
| exchange apparently banned by china, largely disliked by
| regulators and disinvited by governments, and not funded by any
| government or large investors, right?
| derangedHorse wrote:
| It seems like you're conflating the value of crypto with the
| recent blunders of crypto-focused businesses. The fundamental
| value of cryptocurrency is being able to self-custody tokens of
| value without relying on any other mechanism besides the proper
| functioning of the blockchain and its respective rules. What
| we're seeing here is a lack of clarity/regulation amongst world
| governments on how crypto and the businesses that manage them
| should be treated.
|
| The promise of DeFi has a higher barrier of entry for those
| unfamiliar with the technicalities of interacting with
| decentralized systems, but they generally have more
| transparency in management of funds than crypto-centric
| businesses. All code running on the blockchain can be audited
| and so can the funds held within smart contracts. There are
| plenty of valid criticisms that can be made of various
| cryptocurrencies with those models of on-chain finance (and
| even with the value of cryptocurrencies themselves), but
| criticism of cryptocurrencies deriving from bad businesses that
| manage them shouldn't be one of them in my opinion.
| jfk13 wrote:
| > The fundamental value of cryptocurrency is being able to
| self-custody tokens of value
|
| Like dollars under my mattress? Sure, self-custody can be
| useful sometimes. But (almost) anyone with substantial
| quantities of "tokens of value" generally appreciates that
| delegating custody of them to a (regulated and insured)
| institution provides a lot of both convenience _and_
| protection that 's difficult to replicate with "self-
| custody".
| pclmulqdq wrote:
| This is the downright civilized version of what happens in the
| financial wild west. SBF will likely keep possession of his
| entrails and his head.
| [deleted]
| [deleted]
| everfree wrote:
| I don't see why crypto is incompatible with regulation and
| institutions. Crypto is a unit of account, not some magical
| lawless thing that's doomed to never have a regulation written
| about it. In fact, places like New York already have pretty
| strict regulations requiring specific licenses for crypto-
| related businesses.
|
| Crypto crises like these are in general due to regulation not
| having caught up yet, not because companies that involve crypto
| are inherently un-regulatable. Crypto is speed-running banking
| regulation over again. It's an ugly process, but the end result
| will be crypto institutions that are strictly regulated like
| banks (and/or existing banks will start to handle crypto just
| like they do any other foreign currency balance).
|
| As for the current state of things, FTX is (was) a Bahamas
| company not subject to the financial oversight of the general
| western world. The public would generally hesitate to wire
| large amounts of money off to some company in the Bahamas, but
| when it's crypto, people don't think twice about it for some
| reason. After the FTX blow-up, perhaps more people will. It's
| hard to prevent people from wiring money off to a company in
| some other country that has much looser financial regulations,
| but that's not a crypto problem, it's a financial education
| problem.
| hotcoffeebear wrote:
| What you regulate; cryptocurrency exchanges, cryptocurrencies
| or decentralized exchanges?
| everfree wrote:
| Companies, of course.
|
| Edit: Businesses, more specifically.
| ohgodplsno wrote:
| So I could become a trusted individual and handle
| hundreds of millions of dollars in transactions through
| my homegrown exchange (read: I cloned a git repository)
| and I will not be regulated because I'm not a company?
|
| Sounds like a solid plan.
| everfree wrote:
| Buying and selling property is a tricky thing, legally.
|
| To buy and sell cars in a personal capacity, you don't
| need a license. But if you run a business with the intent
| of making a profit by buying and selling cars to other
| individuals, that's illegal to do without a licensed
| corporation.
|
| To buy and sell gold in a personal capacity, you don't
| need a license. But if you run a business with the intent
| of making a profit by buying and selling gold to other
| individuals, that's illegal to do without a licensed
| corporation.
|
| It all comes down to whether the government deems
| something to be a personal activity or a business
| activity. Handling hundreds of millions of dollars worth
| of trades may well be considered a personal activity, if
| you're rich and making a series of OTC trades with a
| friend. But if you're attracting a diverse customer base
| and making a business out of it, that's when regulations
| apply.
|
| A great example of the murkiness of this distinction was
| the crackdown on localbitcoins. It wasn't the people
| doing one-off personal trades who got in trouble, it was
| the people profiting off of volume, doing many trades and
| capturing the spread. The people who traded with several
| counterparties, but maybe not enough to be considered a
| business - well, that's where the gray area lies and
| personally, I am not a big fan of that gray area.
| landemva wrote:
| > if you run a business with the intent of making a
| profit by buying and selling gold to other individuals,
| that's illegal to do without a licensed corporation.
|
| Do you have a USA reference for this belief? From my
| experience and knowledge that claim is not true.
| [deleted]
| lupire wrote:
| Crypto is naturally globally networked. What jurisdiction
| could it be in?
| martin8412 wrote:
| Banking is largely globally networked as well, at least in
| the West.
| everfree wrote:
| The internet is also naturally globally networked, and it's
| regulated in _every_ jurisdiction.
|
| When a packet hops from one country to another, it's bound
| by a different set of laws. Same thing with an
| international financial transaction, crypto or otherwise.
| UncleEntity wrote:
| > As for the current state of things, FTX is (was) a Bahamas
| company not subject to the financial oversight of the general
| western world.
|
| The headline says filing for US bankruptcy so I'm assuming
| they have some US based entity -- which as of yesterday was
| perfectly solvent because the accounts weren't commingled.
|
| So one would presume (without actually reading TFA) that they
| are indeed subject to US financial oversight and have some
| explaining to do to the people in charge of those sorts of
| things.
| bwestergard wrote:
| Why bother with proof of work or proof of stake mechanisms if
| you want political regulation? In that case, you might as
| well empower a state's central bank to develop a payment
| mechanism, and task them with ensuring fairness and enforcing
| laws around taxes, illegal activity, etc.
| everfree wrote:
| You're right in that if all we wanted was a domestic
| payment network, blockchain consensus mechanisms would be
| overkill and introduce unneeded overhead. Personally, I'm
| excited about the FedNow payment service coming online in
| the USA next year. Perhaps I'll finally be able to easily
| send money from bank to bank without involving third party
| fintechs like PayPal and Venmo, and without waiting a day
| or two for ACH.
|
| However, crypto is useful because it standardizes behavior
| across regulatory boundaries, and because it creates a
| stateless unit of account.
|
| Standardizing behavior across regulatory boundaries means
| that crypto "just works" to send value from one country to
| another, without needing cross-border intermediary
| companies that support your specific country pair to
| convert things between currencies/systems.
|
| The stateless unit of account part is perhaps more
| interesting to me, though. Before crypto, there were no
| digital representations of value independent from state. No
| country has the power to hyperinflate crypto, and there
| doesn't seem to be a clear path to be able to accomplish a
| unit of account like that through traditional political
| means. The closest thing we have to that is the Euro, but
| it doesn't tick all the boxes.
|
| Is a stateless unit of account good, or better than
| traditional government currencies? I'm honestly not sure.
| It does have some drawbacks in terms of the ability to use
| monetary policy to loosen and tighten markets. But it's an
| interesting enough concept that I would say it's worth it
| to "bother" with blockchain consensus technology.
| bwestergard wrote:
| We can have an international unit of account through,
| e.g. Special Drawing Rights. This makes plain the
| political bargains struck to ensure international
| economic stability. Crypto alternatives would have the
| same political valence as a return to the gold standard,
| which was abandoned to avoid the crisis potentials
| peculiar to it.
|
| The most influential statement of your proposal is
| Hayek's article "Choice in Currency: A Way To Stop
| Inflation"[1] which he later expanded on in
| "Denationalisation of Money".
|
| Hayek's views have an admirable internal consistency, but
| his political premises are contrary to the core values of
| almost every pre-industrial society, and of the social
| democratic tradition in Europe which has been
| internationally influential.
|
| Very few people understand the full scope of Hayek's
| political vision, which is premised on a thoroughgoing
| skepticism toward the very possibility of rational
| democratic deliberation. If they fully understood his
| proposal's implications, I doubt they'd support them; but
| certainly there are some who are willing to fully own
| their anti-democratic implications.
|
| 1: https://iea.org.uk/publications/research/choice-in-
| currency-...
| danaris wrote:
| Well, I mean...that's the thing. There really _isn 't_ much
| point to crypto once it's regulated the same way as
| traditional finance...and there's no world where that
| wasn't eventually going to be the case.
| santoshalper wrote:
| Wouldn't that be crazy!?
| lazide wrote:
| Crypto is incompatible with regulation and institutions
| because it was designed to be, and is consistently a part of
| the ethos espoused by pretty much all crypto players?
|
| Literally, the first sentence in the Bitcoin whitepaper
| (which arguably kicked off 'crypto' as a thing) is "A purely
| peer-to-peer version of electronic cash would allow online
| payments to be sent directly from one party to another
| without going through a financial institution".
|
| [https://bitcoin.org/bitcoin.pdf]
|
| I mean, seriously?
| thewataccount wrote:
| The network was designed not to be regulatable. Businesses
| however are regulatable.
|
| The US has shown they can effectively enforce AML/KYC
| requirements across the vast majority of exchanges and
| businesses. Any exchange the average person tries to use to
| buy crypto will request your ID to do any meaningful
| transaction.
|
| Granted, there are exchanges you can use a VPN and access
| without KYC, and while it is difficult to manage billions
| of dollars in the dark, it's certainly possible. But they
| can regulate the vast majority that any regular user will
| find, and have shown they're willing to OFAC others.
|
| It is not going to be long before regulations are
| increased, and some exchanges/services will be known to be
| subject to them - and will likely lean on that as a selling
| point. The others will only be accessible to those going
| out of their way to use them.
| lazide wrote:
| Sure, but that's building a giant industry around the
| tech to make it explicitly NOT what it was designed to
| be, or what the ethos has been - secure, point to point
| electronic cash with no one telling you who you can
| transact with or what you can spend it on. Aka electronic
| cash.
|
| No one needs a pile of paperwork to prove to the gov't
| who they are to spend or get paid cash.
|
| No one needs to be on a list, and have their every
| transaction double checked to make sure it's with a
| validated counterparty to pay in or get paid cash.
|
| Etc.
|
| At that point, it's literally cheaper, easier, and safer
| to just use a normal bank.
|
| Which is I guess the point.
| thewataccount wrote:
| > Sure, but that's building a giant industry around the
| tech to make it explicitly NOT what it was designed to
| be, > No one needs a pile of paperwork to prove to the
| gov't who they are to spend or get paid cash.
|
| To be clear there's different types of regulations, some
| we/I personally agree with more than others.
|
| Personally, I agree with you that kyc/aml laws are over
| the top. I think privacy and money laundering are two
| things people often conflate, and that privacy is
| something we should want. (Side tangent - the majority of
| crypto was not really designed for anonymity or privacy,
| although that's a whole different topic). People claiming
| "crypto is just for money laundering" as a reason it's
| bad should be applying the same logic to physical cash.
|
| What I'm particularly interested in is regulations around
| the big exchanges to prevent them from putting all of
| their clients money somewhere stupid, losing it all, and
| go illiquid.
|
| > At that point, it's literally cheaper, easier, and
| safer to just use a normal bank.
|
| I mean yes, an FDIC insured bank is absolutely safer than
| an unregulated crypto exchange. This is the exact reason
| why the phrase "not your keys, not your coins" exists,
| and why everyone says you shouldn't keep your keys on an
| exchange. Done properly, a crypto wallet should be safer
| than a bank provided you can assure physical safety and
| redundancy of your keys.
|
| Part of the problem IMO is that crypto became this "get
| rich quick" thing - with "exchanges" advertising double
| digit returns, people using NFTs for art for some reason,
| etc. I think the technology has uses, but this "get rich
| quick" bs has been a massive hinderance. I really think
| this "the point of crypto is to make money" mentality is
| missing the actual use of it.
|
| tl;dr - a properly used crypto wallet should be safer
| then a FDIC bank, an FDIC bank is faaar safer then a
| crypto exchange, there could be more regulation on just
| the exchanges, and aml/kyc laws are a seperate type of
| regulation - I was just using these as an example of the
| US government successfully regulating exchanges.
| lazide wrote:
| Well, one issue is it's pretty hard to make money being a
| responsible custodian of cash, electronic or otherwise.
| It fundamentally doesn't earn interest just sitting
| there, it's a tempting target for thieves so you have to
| go through a lot of effort to protect it, etc. that's
| true even if you're just an exchange, and you only hold
| it for a day.
|
| It's a lot easier to make a lot of money if you steal it,
| or play games. Most of those are already illegal, no
| regulators required.
|
| Regulation can help of course, if someone actually comes
| by and _checks_ that nothing illegal going on. but the
| type of regulation that comes along with 'have a reliable
| audit of what you've got every night, or else' also tends
| to include 'and make sure you don't do business with drug
| lords and human traffickers', at least in the West.
|
| God help you if you try to fight that last one too.
| szulcseban wrote:
| Well, you can't mix identity regulations (that only add
| friction at this point indeed) with securities
| regulations that organisations should succumb to when
| dealing with clients' assets.
| startupsfail wrote:
| Right regulation right now would be to straight ban BTC
| in Europe because of the energy usage and CO2 emissions .
| And hopefully California could pass a right act during
| next elections and join the ban.
| lazide wrote:
| KYC/AML regs are required everywhere that handles my
| money, at least in the US, near as I can tell.
| PKop wrote:
| That just means there are powerful forces that can act
| against "what it was designed to be" for their own
| interests, whether it's the financial industry,
| government or both acting together.
|
| It's not about pleading to these entities that they are
| "doing it wrong". They know this, because this is their
| way to control it / oppose "doing it right".
| stripedfish7 wrote:
| I don't understand your point. My grandfather tries to use
| only cash which allow 'payments to be sent directly from
| one party to another without going through a financial
| institution'.
| ohgodplsno wrote:
| Cash has serial numbers for traceability, and is emitted
| by a central bank. That's a big chunk of a financial
| institution right there. Additionally, if you pay for
| $50, the state won't give a damn, because it's $50. Pay a
| company $10k in cash and every alarm will go off and the
| transaction will have to be notified to a financial
| institution. Tracfin in Europe for example, etc.
|
| So, no, cash isn't entirely separated from financial
| institutions.
| biztos wrote:
| > Pay a company $10k in cash
|
| Do you mean _bank transfer?_
|
| Let's say I buy a legal widget for $10K and I pay cash
| and I don't plan to treat it as a business expense. On my
| side, I'm done, and any alarm that might be invoked is
| the problem of the seller, and probably dependent on
| their compliance with weakly enforced regulations.
|
| For some classes of widget I might want a receipt, but
| definitely not for all. You can easily spend that much on
| a birthday dinner with your friends, if that's your
| thing.
|
| I don't think anybody is arguing that cash is "entirely
| separated from financial institutions" but -- even above
| $10K -- it allows for the possibility (not the guarantee)
| of transaction privacy.
| adolph wrote:
| That reminds me of the excellent Econtalk episode: _Devon
| Zuegel on Inflation, Argentina, and Crypto_
|
| _Devon Zuegel talks with EconTalk host Russ Roberts
| about the crazy world of money and finance in Argentina.
| When inflation is often high and unpredictable, people
| look for unusual ways to hold their savings. And when
| banks are unreliable because of public policy, people
| look for unusual ways to keep their savings safe and to
| make financial transactions. Welcome to Argentina, where
| Zuegel finds surprising applications of cryptocurrency
| for solving problems._
|
| https://www.econtalk.org/devon-zuegel-on-inflation-
| argentina...
| lazide wrote:
| I didn't say cash didn't require institutions somewhere.
| Cash creation (physical), and cash into and out of the
| system requires institutions.
|
| Cash transactions do not, so _spending_ , _receiving_ ,
| and if one is crazy _storage_ can be done without
| institutions.
|
| That hypothetical $10k transaction for instance only sets
| alarm bells off if it's an abnormal transaction for an
| individual account.
|
| Someone doing a cash business is going to do stuff like
| that so much, it's a drop in the bucket and no one cares.
| Coin shops, check cashing places, certain types of
| convenience stores and restaurants, etc.
|
| If they manage the cash themselves instead of a cash
| drop, such as if they are a dispensary and are unbanked,
| a given dollar bill can circulate a very long time before
| touching a bank, depending on which parts of the economy
| it touches.
|
| The reality is it isn't super hard to launder funds
| apparently, so it ends up back in a bank somewhere soon,
| but with the intermediary transactions hidden.
| WontGetFooled wrote:
| adastra22 wrote:
| And that is arguably the simplest explanation of what
| bitcoin is: digital cash.
| brk wrote:
| Which by definition is fundamentally impossible to do
| transfers without a middle man of some kind.
| adastra22 wrote:
| Bitcoin has no middleman.
| brk wrote:
| How you can transfer bitcoin between exactly two people
| with zero outside involvement from other entities? I
| suppose you might be able to have a bunch of pre-filled
| wallets of various amounts that you can transfer via
| thumb drive, but in a practical sense your transaction is
| going over various networks and through other machines.
| salawat wrote:
| Cash doesn't announce your balance to the world...
| codehalo wrote:
| Transaction broadcast is not the problem. Censorship is.
| However, if you want privacy, use Monero.
| lazide wrote:
| It's a problem if you don't want to have to worry about
| some third party deciding post-facto to come after you
| for the transaction!
|
| And since it's global, that third party could even be
| some foreign gov't or entrepreneurial individual.
| stripedfish7 wrote:
| Can you elaborate? When I give a cash payment to the
| babysitter, who is the middleman?
| brk wrote:
| Sorry I meant that comment in the sense of bitcoin not
| cash.
| codehalo wrote:
| Who is the middleman in a bitcoin to bitcoin transaction?
| wardedVibe wrote:
| That's monero. Because it's deflationary and has a
| completely open record of transactions, Bitcoin is
| digital gold.
| sgt101 wrote:
| Hang on, when did gold come with a transaction record?
| adastra22 wrote:
| I was talking about bitcoin as a reference class for
| digital currencies, as opposed to Apple Cash balances or
| whatever.
| lazide wrote:
| Which every financial institution and western government
| keeps trying to get rid of because it is essentially
| impossible to regulate or police?
|
| And which cops have a nasty tendency to seize on sight in
| the US if seen in any significant quantity (outside of an
| armored car) because 'proceeds of crime'?
|
| And pretty much every drug transaction, illegal sexual
| transaction, whatever is done in cash? To the point most
| major crime shows and drama shows have scenes involving
| some massive pile or duffel bags or whatever of cash as a
| plot point?
|
| Cash on the barrel head is the textbook definition of
| 'difficult to regulate'.
|
| Also, most people buying person to person used cars and
| doing yard sale transactions use it too, of course.
|
| It's not a requirement that Cash transactions involve a
| crime at all. Same with crypto.
|
| If your transaction is illegal though, using Venmo seems
| pretty dumb.
| biztos wrote:
| > ...and western government keeps trying to get rid of...
|
| But then there's China, right?[0] And arguably India?[1]
|
| I agree with your larger point, but I don't think it's
| "western" per se to dream of the surveillance state
| knowing our every spend.
|
| [0]:
| https://www.nytimes.com/2020/10/27/technology/alipay-
| china.h...
|
| [1]: https://en.wikipedia.org/wiki/2016_Indian_banknote_d
| emonetis...
| lazide wrote:
| For sure, but I wasn't familiar enough with their efforts
| to say how vigorously or effectively they have been
| pursuing it.
|
| Thanks for the links!
| iskander wrote:
| That's the underlying payment network, but a whole
| "industry" of institutions have grown on top of it. Those
| can be regulated.
| lazide wrote:
| Sure. The problem I've seen is there is zero value add
| (and significant costs and value loss) when that happens
| over a normal bank.
| ManuelKiessling wrote:
| I can pay you in cash without going through a financial
| institution. That doesn't make the Euro unregulated.
| lazide wrote:
| It makes spending Euros defacto unregulated, no?
|
| Or do you have to fill out a slip and get audited for
| every transaction?
| potatototoo99 wrote:
| Modern crypto has little to do with bitcoin.
|
| Bitcoin was about digital money, out of the reach of
| central banks as a response to the 2008's financial crisis.
|
| Modern crypto is about trying to convince others your
| altcoin has some intrinsic value by selling rumours,
| partnerships, governance or some other vaporous dream, so
| it can be used for gambling.
|
| The problem are central exchanges creating monstrous
| speculation instruments and of course gambling with user
| funds on top of it by lack of regulation.
| lazide wrote:
| They all use it as support in their value prop, and try
| to claim some association, near as I can tell.
|
| But yeah, it's mostly semi-transparent grifts, and has
| been for awhile.
| Lonestar1440 wrote:
| Once you accept the necessity of middlemen, known
| counterparties, and regulators; what's the point of Crypto?
| adastra22 wrote:
| Businesses operating as custodians should be subject to all
| the usual banking regulations. They are holding other
| people's money.
|
| But that's not crypto, that's just a crypto-related
| service.
| dlubarov wrote:
| Regulated exchanges are just onramps; once the user takes
| custody of their funds they become free to transact without
| middlemen.
| SevenNation wrote:
| This post conveniently ignores the long line of 20th and 21st
| century banking and finance disasters, which occurred under the
| watchful eye of Congressionally appointed regulators.
|
| One could also argue that the presence of regulators and
| regulation _creates_ the very problem it tries to solve through
| moral hazard.
|
| As long as there are schmucks with dollar signs in their eyes
| and little patience to read history, these disasters will
| continue - with or without regulation.
| RobRivera wrote:
| maybe the real true value of crypto was the frens we made along
| the way
| socrates1024 wrote:
| Why would this prove the necessity of regulations? This
| occurred within the realm of regulations, not in the wild west.
| FTX.US is a regulated entity in the US, and FTX Intl wasn't
| available to US customers. Doesn't this prove that calamity
| happens even despite the regulations
| Animats wrote:
| So what happens to crypto now?
|
| A reasonably likely possibility is that the SEC starts sending
| letters to every issuer and exchange that sells to US persons.
| If you're an issuer, you have to register as a security or get
| a no-action letter that says yours is a utility token. If
| you're an exchange or a broker, you have to register as an
| exchange or a broker. Sign up for FINRA regulation and pay SIPC
| premiums. They did that to ICO issuers back in 2017, which is
| why you don't see many ICOs any more. NFTs were a workaround
| for that, but the SEC has been saying that bulk NFT issues and
| fractional NFTs are probably securities.
|
| The SEC has been reluctant to do this, partly because they were
| still litigating over whether crypto issues are securities, and
| partly due to political pressure. Last week, the SEC won _SEC
| vs. LBRY_ with a decision that crypto is almost always a
| security. Much of the political pressure came from FTX, which
| is now a political liability. FTX donated to both Republicans
| and Democrats. Now, on Capitol Hill, key committee leaders from
| both parties are against them.[1] The SEC is now ready to
| act.[2]
|
| The crypto industry sees regulation coming and is freaking out.
| It's not that filing an S-1 is that hard. It's that you have to
| give all the info crypto issuers like to hide, such as where
| the money is going, the business plan, and who's running the
| thing. Under penalty of perjury.
|
| (I want to see an S-1 for Yuga Labs (Bored Ape Yacht Club /
| Otherside). They raised $400 million, printed some pictures,
| and threw some raves. That could be the most fun S-1 to read
| since BOYSTOYS.COM did an IPO for a strip club.)
|
| There are fewer offshore havens available. China pulled the
| plug on crypto mining. (Literally. Power was cut to crypto
| mines.) Cyprus cracked down. Japan, post Mt. Gox, licenses and
| regulates crypto exchanges. Bahaman regulators were about to
| take FTX into liquidation. Cyprus cracked down after the binary
| option debacle. There's still Bulgaria.
|
| What will be left after all the sketchy operators are shut
| down?
|
| [1] https://www.cnbc.com/2022/11/11/crypto-meltdown-
| washington-t...
|
| [2] https://finance.yahoo.com/news/sec-chair-gensler-slams-
| non-1...
| twblalock wrote:
| Crypto seems like the kind of risky/novel investment the
| accredited investor program was designed for.
|
| Of course that would kill crypto.
|
| In general I'm glad the government let the experiment be run.
| I was not one of the people saying crypto should be banned,
| and I'm still not. But at this point I think it should be
| regulated, for the same reason most other investments are.
| olalonde wrote:
| > It's not that filing an S-1 is that hard.
|
| Doesn't it cost 200K$+ in attorney fees?
| Animats wrote:
| The actual filing fee is $110.20 per $1,000,000 raised.
|
| How much it costs to draft depends on how convoluted your
| financial structure is.
| sangnoir wrote:
| > This has been a wonderful social experiment, enabling people
| who didn't live in the 19th century to see what happens when
| banking and investing is treated like the wild west.
|
| The only difference is that the bank-analogs do not get to face
| era-appropriate "frontier justice", but instead get to hide
| under the skirts of 20th century bankruptcy laws.
| dsco wrote:
| Institutions funded FTX - what are you on about with your very
| wordy but empty post?
| xxEightyxx wrote:
| dang wrote:
| > What a wonderfully ignorant statement to make.
|
| Can you please make your substantive points without personal
| attacks or name-calling? Your comment would be fine without
| this bit.
|
| https://news.ycombinator.com/newsguidelines.html
| 127 wrote:
| Bitcoin is neither banking or investing. It's a decentralized
| ledger.
|
| I for one am not very excited to continue using the legacy
| systems with countless of middle men and entrenched rent
| seekers to extract the maximum they can out of the completely
| legal trades I do with other consenting individuals.
| Mortiffer wrote:
| FTX was a centralized exchange. Those who believe in trying to
| build an alternative financial system did not use centralized
| exchanges except perhaps for on-ramp off-ramp. Uniswap among
| others has been stable with very audited open code that
| prevents anyone from doing what FTX did.
|
| Just want to remind ppl to not put them in the same bucket.
| HDThoreaun wrote:
| You're always going to need a centralized ramp to convert
| crypto to fiat though. If everyone thinks they're scams
| crypto has a big problem.
| dist1ll wrote:
| Yeah, but the conversion happens very quickly. Deposit,
| trade, withdraw.
|
| Unfortunately, people leave tons of money on exchanges, for
| long periods of time. That's the problem. That's what the
| majority of exchange users are doing.
| ahallock wrote:
| I believe BlockFi had all their assets on FTX
| thwayunion wrote:
| Without greater fools in sufficient quantity,
| cryptocurrency loses its speculative use-case. You won't
| get greater fools in sufficient quantity without
| centralized exchanges where people hold their funds.
| dist1ll wrote:
| Great, we don't need speculation in crypto. We need
| people taking a chance on the technology, and empower
| democratization of finance.
| stouset wrote:
| People leave money on exchanges because the alternatives
| are _worse_. They 're almost as dangerous (if not more
| so): how many people have lost millions or billions due
| to malware, forgotten passwords, failed hard drives,
| death of the owner and inability to transfer that wealth
| to their heirs, etc.?
|
| All of these problems are solvable with ludicrous levels
| of complication and confusion, and the average person
| doesn't even realize they need to take these sorts of
| measures until they've irrecoverably lost everything.
| dist1ll wrote:
| Do you think it's a good thing that we as a society are
| collectively extremely ignorant about how money works?
|
| Don't you think that maybe people should start becoming
| more educated about how our economy runs? Or what
| protects their assets?
|
| Don't you think someone with millions of dollars to lose
| should take some responsibility and become informed about
| how to protect them?
| HDThoreaun wrote:
| > Don't you think someone with millions of dollars to
| lose should take some responsibility and become informed
| about how to protect them?
|
| I really just think that if someone thinks an institution
| might disappear with their money they won't use the
| institution. If the alternative is too much of a hassle,
| or also seems like it could lead to loses then people
| will just not use crypto.
| kyleplum wrote:
| You could replace "money" with any specific area of human
| expertise. I don't need to fully understand how my body
| works because my doctor does. I don't need to fully
| understand how my car works because my mechanic does. I
| don't need to know how to build my home because my
| contractors know.
|
| The information is available to those who are interested
| or want to further that area of human expertise, but the
| collective knowledge of humanity is too great for all of
| us to know everything. That's why we pay (mostly)
| regulated experts to handle these things for us.
| dist1ll wrote:
| (1) Knowing how to use crypto safely is hardly
| "expertise". It's something that can be learned quite
| quickly from experts.
|
| (2) Having a general idea of many areas in life is
| important for a functioning society and becoming a
| healthy human being.
|
| I really dislike this narrative that we must not think
| for ourselves. Always delegate. Always leave it to the
| experts. I see the same anti-intellectual sentiment in
| programming communities.
|
| - Don't write assembly, compilers are smarter than you.
|
| - Don't think about building your own networking stack.
| It's too complicated.
|
| - Don't write your own OS. Do you think you can
| outperform Linux? Lol
| WontGetFooled wrote:
| null0pointer wrote:
| This is pretty clearly not a failure of cryptocurrency. Bitcoin
| et al. are still chugging along just fine. This is, once again,
| a failure of a centralized business in which people placed way
| too much trust. I hope SBF, and other "crypto" company execs,
| are held accountable for misleading customers about their
| offerings. Specifically calling it crypto when it's not.
| dist1ll wrote:
| That's what people don't get. FTX' spectacular failure is
| literally an advertisement for decentralization.
| mlinhares wrote:
| The "no true Scotsman" is such an old and failed defense
| for crypto. Not even the believers believe in it anymore.
| zeroclip wrote:
| What? FTX is a centralized custodian. It is in
| competition with DeFi protocols.
| VHRanger wrote:
| Bitcoin failed, though?
|
| All the proposed usecases except speculation and censorship
| resistant wealth transfers (eg. getting money out of Russia)
| have been abandoned.
| [deleted]
| bogota wrote:
| I used bitcoin to remit money to another country just
| yesterday.
| martin8412 wrote:
| I sent EUR from one bank account in country X to another
| bank account in country Y the other day. It arrived in
| five seconds and it cost me less than 1 EUR to transfer
| 2k EUR.
| bogota wrote:
| I have also done that. Congrats. Some places it's easier
| to move money with bitcoin as even though i can send
| money directly they have tons of limitations in place
| around amount that you can send that is very low.
|
| Just because you haven't found crypto helpful doesn't
| mean it doesn't have use cases.
| martin8412 wrote:
| Well yea, the main use case is crime. You've just
| admitted to committing a crime.
| dlubarov wrote:
| Surely we can think of other reasons they might want to
| avoid TradFi?
|
| Maybe the payment is related to, say, Cannabis, so
| companies like Wise would refuse to facilitate it [1],
| legal or not.
|
| Or perhaps they've heard the stories of PayPal seizing
| funds with no explanation or recourse (e.g. [2]), and
| don't want to roll the dice on that.
|
| Maybe they want to exchange currency at the actual market
| rate, rather than PayPal's 3-4% spread.
|
| Or they might not want to wait forever for a two-sided
| ACH transfer (usually the cheapest option with e.g.
| Wise), or pay wire fees and _still_ have to wait until
| Monday morning before a US bank will consider processing
| the transfer.
|
| [1] https://wise.com/acceptable-use-policy
|
| [2] https://arstechnica.com/tech-policy/2022/01/paypal-
| stole-use...
| ZephyrBlu wrote:
| I'm assuming this was in the EU and you weren't
| exchanging currencies?
| martin8412 wrote:
| Correct.
| deltree7 wrote:
| While losing a ton of money during this process
| bogota wrote:
| airstrike wrote:
| I used PayPal to remit money to another country just
| yesterday
| bogota wrote:
| UncleEntity wrote:
| I used the app my internet only bank made to send money
| to buy a house for cash a few months back, pretty sure
| bitcoin wasn't an option.
| bogota wrote:
| You can buy houses for bitcoin in some places but im
| really not arguing that bitcoin is the best money to use
| for every day. I responded to a person who said it had no
| use case. I use bitcoin multiple times a year for
| transactions where it works better. And i happened to do
| that yesterday.
|
| It's crazy how stupid HN becomes at the word crypto.
|
| "A non binary view about crypto omgzzz can't compute!!!"
| notyourday wrote:
| No, you are not buying houses for bitcoins. You are using
| bitcoins that are converted to the currency the house is
| quoted at and if the amount is greater than the contract
| price you get the house.
|
| It is no different from saying "In some places I can buy
| houses with cocaine". Sure, if the buyer thinks they can
| immediately offload cocaine for cash, the buyer might
| take it. That does not mean that the house is sold for
| cocaine.
| clemensley wrote:
| I pay all salaries in Bitcoin. Way faster, cheaper, easier
| than fiat.
| scoofy wrote:
| This is good for Bitcoin.
| hn_throwaway_99 wrote:
| 1. BTC has cratered 20% in the past couple days. I know, par
| for the course for crypto, but also a good example of why it
| doesn't share standard features of real currencies.
|
| 2. All the "not your keys, not your coins" mindless chanting
| misses the point. While true, a modern financial system
| depends on being able to have trust in financial institutions
| if you actually need to move money quickly. Years ago I
| _went_ the "move everything to cold storage" route, and it
| was a major pain in the ass, not to mention slow and
| expensive every time you needed to move to an exchange to
| trade or convert to fiat. It's the equivalent of stuffing
| your money under your mattress - valid for emergency
| situations, but not for a currency you actually want to
| transact in.
|
| Oh, and the reason hardly anyone actually stuffs money under
| their mattress any more is that we've built up institutions
| (e.g. FDIC insurance, SIPC insurance, and the associated
| regulations to provide this insurance) to reliably protect
| depositors.
| naasking wrote:
| > 1. BTC has cratered 20% in the past couple days. I know,
| par for the course for crypto, but also a good example of
| why it doesn't share standard features of real currencies.
|
| Currencies tanking is not uncommon either. I'm not sure
| what you think this proves exactly.
| hn_throwaway_99 wrote:
| Major fiat currencies tanking 20% in a matter of hours
| _is_ extremely uncommon, that 's my whole point. In the
| forex world moving a percent or two in a single day is
| considered a major, major move. In the land of crypto
| that's standard lunchtime volatility.
| wmf wrote:
| Cold storage is kind of an old concept. Now there are
| multisig variants and tools like Fireblocks to allow active
| trading without being immediately hacked.
| wmf wrote:
| Cryptocurrency failed to be fast enough to support
| sophisticated DEXes. This failure created the need for FTX.
| mzs wrote:
| Bitcoins is not fine. It is down roughly 75% over this year.
| lokar wrote:
| I think you missed the point. It's about saying "this is
| different, the rules don't apply and we can do whatever we
| like"
|
| The actual tech is sort of irrelevant, it's the hubris and
| exceptionalism
| themihai wrote:
| 2008 was not 19th century though.
| barkingcat wrote:
| even the idea of "declaring bankruptcy" is a modern regulated
| construct.
|
| In medieval times, if you "declare bankruptcy" your family and
| dependents get sold into slavery and your wife is sold off to
| the highest bidder who will buy your debt.
|
| In many previous times, if you couldn't pay debts you'd just be
| killed.
| lazide wrote:
| Well, those 'previous times' where you just got killed ran
| concurrent too those slavery times. And if you borrow money
| from the wrong people today, it can still happen.
| spaceman_2020 wrote:
| They literally had debtor's prisons when Charles Dickins was
| still writing!
| jrumbut wrote:
| This idea of auctioning off someone's wife seemed (seems)
| unlikely to me in a medieval European context (since divorce
| was hard to come by).
|
| What I found was actually weirder:
|
| > In medieval Italy and southern France, it was common for
| the cedens to stand nude but for his shirt and strike a stone
| with his posterior ('vituperii lapis') while declaring 'cedo
| bonis'." The patent purpose of this ceremony was as much to
| satisfy the anger and frustration of creditors as to
| publicize the debtor's bankruptcy.
|
| http://www.mgh-bibliothek.de/dokumente/b/b071148.pdf
| santoshalper wrote:
| The medieval version of "I Declare Bankruptcy!!!"
| wly_cdgr wrote:
| The filing speaks for itself
| wly_cdgr wrote:
| (FTX sponsored the chess tournament where Hans Niemann said
| "the chess speaks for itself" after winning the first game of
| his match against Magnus - and before promptly losing the
| remaining three)
| indigodaddy wrote:
| Dumb question, but what happens to stuff like Miami Heat's FTX
| Arena etc in situations like this? Should we expect a name change
| for the arena at some point soon?
| theideaofcoffee wrote:
| I also think this is an interesting question. Coming from a lay
| person I'd imagine it would remain with that name until the
| contract is up for renewal. Depending on how the naming deal
| was structured, the money to do the deal would probably have
| come from FTX' marketing budget in a lump sum up front
| (presumably) for a fixed number of years. When that's done, the
| arena will find another source of funds and give the rights
| anew.
|
| Edit: here's [0][1] some sources that says FTX ponied up $135M
| for the name to remain through 2040. Your question still
| stands, will that name stay even if the organization that has
| the name doesn't exist or is circling the drain? All depends on
| the terms of the contract, I guess.
|
| [0] https://www.local10.com/news/local/2021/03/27/nba-still-
| need...
|
| [1] https://www.cbsnews.com/miami/news/its-official-miami-
| heat-h...
| function_seven wrote:
| If there's time left on the deal, but the arena would rather
| not keep the stinky association, can't they sell a new naming
| rights deal today, and send a portion of the new proceeds
| from that to FTX?
|
| In a way it would be another asset for the bankruptcy
| liquidator to disperse.
| enkid wrote:
| Alternatively, can FTX sell the naming rights (with the
| approval of the arena)
| function_seven wrote:
| Yeah that makes more sense. They have the asset (rights
| through 2040). Would be pretty funny if it turns out that
| these naming rights are the single most valuable asset
| they own today.
|
| I just looked up a similar situation from 20 years
| ago[0,1].
|
| [0] https://www.nytimes.com/2002/02/28/sports/baseball-
| astros-ba...
|
| [1] https://www.wsj.com/articles/SB1014832920627596080
| indigodaddy wrote:
| Good info thanks! I had lazily not researched my question yet
| at all :)
| Brendinooo wrote:
| A few years ago Consol Energy broke a naming rights deal
| early; the original deal was $105 million over 21 years, but
| they were only about 8 years in. The Pittsburgh Penguins
| found a new partner in PPG Paints pretty quickly. And Consol
| didn't even go bankrupt!
|
| The Heat will find another partner, and they may or may not
| try to get money out of the FTX bankruptcy proceedings, but
| I'm guessing the odds of that aren't super high. Probably
| more efficient to cut bait and move on.
| pbreit wrote:
| Unlikely is was paid up front. The news articles say things
| like "$90m over 19 years". There is also almost certainly
| terms in the contract relating to the reputation of the
| advertiser (FTX in this case).
|
| All of this is handled much differently if a party is in
| bankruptcy (which is the point of bankruptcy).
| sgt101 wrote:
| The administrators / bankruptcy courts will try and do a deal
| with the stadium. Something like "we can auction the rights
| again and we will keep 90% of what we get for them, you can
| have 10%, so you are 10% up, for nothing"
| pbreit wrote:
| Very unlikely the bankruptcy court will get to do much
| beyond terminating the deal.
| rhino369 wrote:
| >Coming from a lay person I'd imagine it would remain with
| that name until the contract is up for renewal.
|
| As a lawyer, not a transactional lawyer so this is pretty far
| outside my expertise, I'd imagine they'd include some
| provisions for this type of scenario in the agreement. Even
| if it didn't, the stadiums owners would probably offer FTX
| some sort of partial refund to give up the naming rights,
| which they would have to to pay back their creditors. They
| could even just breach the agreement and offer a settlement.
|
| Eron field got renamed pretty fast. So will this stadium.
| theideaofcoffee wrote:
| Thank you for those points!
| [deleted]
| dub wrote:
| It's been half a year since terra/luna crashed but the name
| lives on at Nationals Park:
| https://www.mlb.com/nationals/tickets/premium/nightly/terra-...
| AndreLock wrote:
| The Sacramento Kings' old arena was called the Power Balance
| Arena in 2011-12. Power Balance went bankrupt in 2011, and the
| arena naming rights went to Sleep Train the following year.
| __derek__ wrote:
| Presumably the naming contract isn't pre-paid. It will be
| renamed.
| georgemcbay wrote:
| The company probably has the yearly naming rights fee cut into
| payments. When they miss their next payment, their name will be
| removed from the arena.
|
| This happened to Adelphia with the Tennessee Titan's arena in
| 2002. In that situation the stadium was renamed to a generic
| "The Colosseum" for a few years because they had trouble
| finding a new naming partner. I suspect they'll have an easier
| time finding a replacement in this case, but who knows.
| mateo411 wrote:
| I don't think this is a dumb question. I was also wondering.
| They had a 19 year deal 135 million naming rights with the
| Miami Heat, but I'm fairly certain they didn't pay everything
| up front. Apparently the county owns the arena, so they will be
| involved.
|
| At least Larry David got paid.
| misiti3780 wrote:
| how much did they pay him?
| rokhayakebe wrote:
| Suggestion to remove the first one from your question. It is a
| good one.
| paxys wrote:
| Two possible outcomes:
|
| - They miss their next payment and the contract is terminated.
| The arena owners find a new sponsor.
|
| - The naming rights are considered an asset of FTX and are sold
| off during bankruptcy proceedings to recover cash. The buyer
| puts their own name on the arena for the rest of the contract
| term.
|
| Considering naming rights are sold for such lengthy terms (20
| years in FTX's case) it is incredibly common for companies to
| go under or get bought out in the middle of it.
| pbreit wrote:
| Both of those are unlikely. The whole point of bankruptcy is
| to mitigate things like contract terminations. Further, the
| bankruptcy court will have little, if any involvement in the
| eventual sale of the naming rights to a new sponsor.
| paxys wrote:
| > The whole point of bankruptcy is to mitigate things like
| contract terminations
|
| Except in this case both parties involved will want the
| contract to be terminated.
| itslennysfault wrote:
| Does anyone understand how SBF was able to raise almost $2bn
| without EVER GIVING UP A BOARD SEAT?!?!
| jmyeet wrote:
| So for "normal" financial institutions (eg banks, mutual funds,
| brokerages) you are legally required to shield custodian assets.
| They rea typically held in trust. Due to various scandals there's
| a lot of regulation. There's even government protection (to a
| point) for individual customers (eg FDIC insurance for bank
| depositors).
|
| All of this is necessary to stop situations like FTX/Alameda. A
| bank can't take your money and bet it on blackjack but there
| seems to be no such protection for these crypto exchanges. All of
| this is necessary to maintain confidence in the financial system
| (yet another reason to roll one's eyes at libertarians).
|
| I mention this because it's just another case of crypto lacking
| protections the non-crypto financial system has and ignoring
| lessons learned over the last 5000 years of finance.
|
| I saw a comment on HN yesterday where someone in the Navy said
| that when they get a new CO it'll be one of two types: the first
| will work out how things work and then incrementally improve
| things. The second will immediately reshape everything in their
| image without figuring out why things are the way they are.
|
| I see that trend in management too. But it seems to be a problem
| with the entire crypto space. Otherwise smart people completely
| ignorance of the financial systeem just reshaping crypto with no
| regard for history.
|
| As for SBF, this is a fraud on a massive scale, like Madoff
| scale. I really wonder what will happen here because what should
| probably happen is he'd spend the rest of his life in prison.
| krupan wrote:
| Everything you say is true.
|
| I would like to clarify that the regulations on "the financial
| system" have probably enabled just as much fraud as they have
| prevented over the long run. The financial system you speak of
| is a huge collection of bets and leverage and interesting
| interpretations of the truth ("why yes, your money is 'safe'
| with us!"). The regulations make it work just barely well
| enough that it only comes crashing down, what, every 10 or 20
| years now? If instead of adding regulations and saying, "there,
| now it's totally going to work, put your money back in," I
| wonder what things would look like if we had instead said,
| "yup, loaning your money to
| banks/corporations/governments/individuals is super risky,
| learn from past mistakes!" ? Maybe people would only risk what
| they can actually afford to lose and we wouldn't get into these
| cycles where people get over leveraged, things crash,
| bankruptcy gets declared, and the poor and middle class foot
| all the bills. Over and over and over. A libertarian can
| dream...
| pjc50 wrote:
| > loaning your money to
| banks/corporations/governments/individuals is super risky
|
| This is called a "low trust society". The flip side is of
| course that nobody will _lend_ you money. Mortgages and
| consumer credit are scarce. Business credit is difficult.
| Large amounts of capital need to be tied up in buffers. The
| overhead of keeping an eye on everyone is considerable. You
| don 't get "First World" levels of development with a low
| trust society.
| krupan wrote:
| I actually really like the idea of not needing to rely on
| trust so much. Needing to rely on trust is a big problem
| that Bitcoin solves. There's no single Bitcoin Chair than
| can tweak the policy or supply of Bitcoin that you have to
| trust. No congress or president that can change the rules
| of the Bitcoin game that you have to trust. Bitcoin is
| impossible to forge, no trust that someone is handing you
| real money needed. There are no charge backs, payments are
| fully settled in minutes not days, you don't have to trust
| that you'll get paid and stay paid. No couriers, no middle
| men that you you have to trust to not steal your money in
| transit. If you want to prove to someone that you have the
| funds for something (like maybe FTX proving to customers
| they have the funds they said they did), you can sign a
| message with the private key of your wallet and everyone
| can verify that you have the funds in that wallet.
|
| Many of the crypto scams that are out there are claiming
| their coin has these same properties when it doesn't and
| that's where people at getting burned by "crypto." Yes,
| regulations could reduce the risk of these frauds
| happening, but they won't eliminate it. Bitcoin eliminates
| the risk.
| ransom1538 wrote:
| Anyone here able to do a tl;dr; for us? The FTX story is super
| confusing. Why are they screwed? What happened?
| purple_ferret wrote:
| here's the way I understand it:
|
| -SBF's other pet project Alameda Research suffered huge loses
| after Luna blew up.
|
| -Alameda Research, a 'backer' of FTX was given billions of FTT
| tokens that they 'owned' by FTX because they participated in
| its 'ICO', transferred it FTX, and then used it as collateral
| to 'borrow' FTX user assets, hoping they could gamble with it
| and make back their money.
|
| CZ, of Binance, got wind of this somehow, and holding billions
| of FTT on Binance, decided to tank the price by saying it will
| all be sold immediately
|
| -SBF gets caught with his pants down
| bogomipz wrote:
| I'm curious what was the intended utility of their FTT token
| and ICO? Was the token meant to be a type of equity in the
| FTX exchange then?
| benjaminwootton wrote:
| FTX the exchange appear to have lent client funds to Alameda
| research.
|
| The loans had very poor collateral behind them, meaning that
| FTX were exposed.
|
| It is not currently clear if or how Alameda lost the $billions
| of client assets, or if they are just illiquid.
|
| There is noise that the client assets were spent on things like
| the summer bailouts of defunct crypto firms, but I think we are
| just speculating at that point.
| gvb wrote:
| "The FTX-Alameda nexus"
| https://www.coppolacomment.com/2022/11/the-ftx-alameda-nexus...
|
| Excellent explanation.
|
| Appears to be confirmed by the WSG "FTX Tapped Into Customer
| Accounts to Fund Risky Bets, Setting Up Its Downfall"
|
| https://archive.ph/nZNmw
|
| Original: https://www.wsj.com/amp/articles/ftx-tapped-into-
| customer-ac...
| camjohnson26 wrote:
| From the marketwatch article it sounds like this was
| essentially a hostile attack from Binance, first dumping the
| token to collapse the price, then pretending to be interested
| in an acquisition to keep FTX from looking at other emergency
| measures, then pulling out at the last minute.
|
| Compare this to traditional finance with events like the
| collapse of Lehman, then Bear Stearns, with Morgan Stanley
| next in line to fall. Their competitors stepped in, with a
| major push from the Fed, to prevent the collapse because they
| knew it would trigger a domino effect that would crash prices
| and bring them all down. Binance seems to be doing the exact
| opposite.
| gvb wrote:
| Binance triggered the collapse, but the stage was set by
| FTX/Alameda by "creating its own token" (per "The FTX-
| Alameda nexus") and "loaning" $10bn to Alameda using their
| "own created token" as the backing collateral.
|
| _Of course, there 's a risk that the hedge fund could lose
| some or all of the customers' funds. And the exchange
| promises that customers can have their assets back on
| demand, which could be a trifle problematic if they are
| locked up in leveraged positions held by the hedge fund.
| But this is crypto. There's an easy solution._ The exchange
| can issue its own token to replace the customer assets
| transferred to the hedge fund. _The exchange will report
| customer balances in terms of the assets they have
| deposited,_ but what it will actually hold will be its own
| token. _If customers request to withdraw their balances,
| the exchange will sell its own tokens to obtain the
| necessary assets - after all, crypto assets, like dollars,
| are fungible._ [ "The FTX-Alameda nexus" - emphasis mine]
| element77 wrote:
| This is a good read on the story:
| https://www.marketwatch.com/story/the-26-billion-rise-and-fa...
| sillysaurusx wrote:
| Does this bankruptcy include FTX US? A bunch of people in
| yesterday's thread were saying that FTX US is safe, which seemed
| strange.
| tedunangst wrote:
| If withdrawals are open, then it seems FTX.us still has all its
| customers assets and can return them, but will not be able to
| pay its own bills for hosting, staffing, etc. in the very near
| term. So yesterdays statement that it wasn't affected by the
| loss of funds implosion would be accurate, but if the business
| was reliant on funding from other operations to survive, it can
| still go bankrupt.
|
| People get all antsy in their pantsy and can't read nuance.
| babyshake wrote:
| I think people are jumping to conclusions by saying that
| because FTX.us is included in the filing, all user funds are
| completely gone. Not to say I blame them for thinking the
| worst, but we'll probably know more once the dust settles.
| gmays wrote:
| Yes, it explicitly mentions that FTX US is included:
|
| > FTX Trading Ltd. (d.b.a. FTX.com), announced today that it,
| West Realm Shires Services Inc. (d.b.a. FTX US), Alameda
| Research Ltd. and approximately 130 additional affiliated
| companies (together, the "FTX Group"'), have commenced
| voluntary proceedings under Chapter 11 of the United States
| Bankruptcy Code in the District of Delaware in order to begin
| an orderly process to review and monetize assets for the
| benefit of all global stakeholders.
|
| Excluded are:
|
| > The following subsidiaries are not included in the Chapter 11
| proceedings: LedgerX LIC, FTX Digital Markets Ltd., FTX
| Australia Pty Ltd. and FTX Express Pay Ltd.
| chinathrow wrote:
| 130 companies? What did they for a living? Collect companies
| each time a new month began?
| hestefisk wrote:
| Heard of invoice carousels? It's a thing :)
| dclusin wrote:
| If a hedge fund trades on an exchange in Singapore they
| will probably want a corporate structure there for trading
| and tax purposes. Larger trading operations aren't just
| clicking sign up on random exchange websites and allowed to
| start trading billions of dollars. Legal agreements need to
| be inked, collateral deposited, etc.
| quadcore wrote:
| Laundering money takes some logistic.
| pavlov wrote:
| These days owning a crypto exchange is a shell game where
| you try to hide the funds and liabilities into a chain of
| companies located in offshore jurisdictions.
|
| Binance does the same but even more extreme -- they don't
| even tell where their HQ is actually located.
|
| Money launderers and tax evaders have long used these
| tricks. Those people don't normally get VC capital at $34
| billion valuations though. The crypto implosion ought to be
| a massive lesson to the industry.
| CraigRood wrote:
| I'm really skeptical of Binance, whilst I would never
| accuse them of anything specific, I have no proof. Their
| structure, governance and business model combined with
| their refusal to meet basic regulatory requirements makes
| me feel uneasy.
| pavlov wrote:
| Binance is effectively saying "I'm not going to tell you
| where I am but you should let me manage your money." It
| takes a special kind of gullibility to accept that, but
| in the crypto world left has been right and black white
| for a very long time.
|
| Binance's US subsidiary is just as safe as FTX.US was,
| despite their claims otherwise. It will fall along with
| the other dominos.
| tppiotrowski wrote:
| All day I've been seeing reserve audit posts from all the
| crypto companies. To me this also screams "Please don't
| make a run on us or we're screwed"
| Scoundreller wrote:
| Proof of assets is only one half of the solvency equation
| though.
|
| What are the liabilities and who are they to?
| mikeyouse wrote:
| Even the assets are questionable -- as Tether's
| attestation language change shows. They value their
| assets at what they're worth "in normal market
| conditions" which is a flashing red light for bank run
| vulnerability.
| EVa5I7bHFq9mnYK wrote:
| Exchange is pretty simple business. Customers deposit
| coins and fiat, trade between them and pay you
| commissions. If you don't send any of those coins out,
| there is no risk, no liquidity crunches, no liabilities
| whatsoever. This guy took customer coins to gamble, and
| lost. Story as old as Romeo and Julia.
| vkou wrote:
| > If you don't send any of those coins out, there is no
| risk, no liquidity crunches, no liabilities whatsoever.
|
| If you don't send any of those coins out, there are no
| profits for the exchange operator, either. Look at how
| Coinbase does everything more-or-less by the book, and
| barely makes money. Trading fees just don't cut it.
|
| Yet, some fly-by-night exchange incorporated in the
| Bahamas is offering wild signup bonuses and lower fees
| and yield that would make Scrooge McDuck blush.
| EVa5I7bHFq9mnYK wrote:
| Yeah, those trading fees won't support billion dollar
| IPOs .. investors need to see clear world dominance path.
| bananapub wrote:
| where are you seeing any _actual_ audits?
|
| it looks like the usual nonsense of "here's some bank
| account balances", with no explanation of what
| liabilities they hold, or how much related party loan
| crime they have on their books.
| rippercushions wrote:
| Gaze on the beauty of this chart and despair:
|
| https://i.redd.it/078p4g7m6cz91.jpg
| bmitc wrote:
| Who sets all this up? This just clarifies my perspective
| that lawyers live in their own little world, totally
| disconnected from reality.
| MichaelZuo wrote:
| No wonder their accounting is so messed up.
| dylan604 wrote:
| It's almost like they asked GPT3 or Dall-e to create "a
| corporate structure that is so confusing it will be a
| liability shield to keep my ass out of jail", and then
| used whatever came out
| B4CKlash wrote:
| To be fair, any billion-dollar multinational will have an
| organizational chart that looks very similar to this.
| Companies like EY exist, almost purely, to create 'tax
| effective' structures with hybrid debt instruments and
| service agreements.
| browningstreet wrote:
| To balance this: I work for a US-based, US-only top N
| financial institution that's all of <10 corporate
| entities.
| anomaly_ wrote:
| Being US only limits your structure options. Start
| generating some international revenue and you'll see how
| your entity/structure requirements increase.
| three_seagrass wrote:
| Same, but it's like 20+ entities.
|
| Anyone working in the CPG space would be 50+.
| LeifCarrotson wrote:
| I'm impressed that there actually _is_ a chart.
| kodah wrote:
| My god, it's like the blueprint to a Ponzi scheme
| mensetmanusman wrote:
| Someone needs to replace calling cards with crypto-
| currency in this Office skit:
|
| https://youtu.be/lC5lsemxaJo
|
| It fits perfectly
| madamelic wrote:
| From the Sequoia article on SBF / FTX, it's very likely
| to be able to trade internationally because each country
| requires you to have a bank account in that country to be
| able to access their markets.
|
| In the Sequoia article, SBF gained his initial funding
| for FTX from executing trades from the US to Japan, where
| BTC was overpriced because no one bothered to arbitrage
| it because of the setup difficulty. The way he did this
| was by contacting a friend to open a bank account in
| Japan and manage the funding over there while he managed
| the account US side.
|
| I am sure some of it is normal corporate shell game but
| I'd imagine at least 50% of this setup was for regulatory
| purposes. Even small fintechs will have "shell game like"
| company structure to please regulatory forces that
| require having certain things be independent from the
| consumer platform even if the two companies are working
| towards the same goal.
| cavisne wrote:
| This guy has major Epstein vibes (minus the girls). comes
| out of nowhere super politically connected, investing in
| research, with a pretty dubious origin story of how he
| got rich.
| whimsicalism wrote:
| That's a major reach.
| skeeter2020 wrote:
| That sounds to me a lot like a cover story to try and
| convince people there was actually a value-add. I'm
| skeptical that the barriers were so high they discouraged
| anyone from seizing essentially free money, but he solved
| this with a Japanese friend's bank account.
| cma wrote:
| No one did it for Japan first probably because they have
| pretty strong criminal liability stuff for securities
| violations and other financial crimes and don't play the
| "no fault settlement" game.
| madamelic wrote:
| It's not illegal to arbitrage but yeah I think what you
| are pointing at is you have to be regulatory-ily buttoned
| up for Japan markets vs a more loose market where you
| don't have to be super careful & can learn as you go.
|
| So SBF having been in finance before (Jane Street), he
| knew where the footsteps were and how to do it vs a fly-
| by night crypto investor with no finance background.
| paganel wrote:
| Supposedly the Japan "subsidiary" (if you can call it
| that) was set up by a Japanese person and a resident of
| Japan, who was a contact of SBF through the Effective
| Altruism thing. I think they knew something was shady,
| because the account they had opened in Japan was with a
| small rural Japanese bank.
|
| When that "arbitrage" turned out to be really lucrative
| one of the founders of Skype (Talinn something) gave SBF
| a $50 million loan. SBF and that Talinn guy knew each
| other also from that Effective Altruism sect-like thing.
|
| All this info was part of a Sequoia congratulatory piece
| on SBF, they of course had also given him money. The
| article has since been taken down, it's still reachable
| through Web Archive.
| vkou wrote:
| > The article has since been taken down, it's still
| reachable through Web Archive.
|
| I've skimmed through it, and by god, I was surprised
| Sequoia wasn't crediting the sun rising each morning to
| SBF.
| tptacek wrote:
| What do you even need a blueprint for? The guy did an
| interview with Matt Levine and laid the Ponzi scheme
| straight out: scammers make boxes that pay fake coins
| when you store your money in them, they put so much money
| into the boxes that the fake coins seem valuable, then
| they rug pull everyone and move on to the next one.
| That's how he described his own business.
| SilasX wrote:
| I hate to be the That Guy this time, but pump-and-dump is
| a different kind of fraud from a Ponzi. Not that anyone
| cares to make the distinction anymore.
| tptacek wrote:
| Hey, that guy, tell it to Matt Levine and SBF, who
| _literally used the term in the interview_.
|
| :)
|
| I'm just reacting to the idea that you'd need to see the
| SBF corporations laid out on a diagram to reach the
| conclusion. When Carrell's character says "they aren't
| confessing, they're bragging", he's talking about an
| allusion. _The Ponzi schemes here are not allusive_. SBF
| _literally bragged about them_.
| SilasX wrote:
| That still doesn't mean they're using the term properly,
| at least in regards to kind of scam you were describing
| in your comment, or what that comment's parent was
| referring to.
|
| "SBF/Matt Levine said it" does not automatically make it
| true.
| piva00 wrote:
| To be honest, you don't explain how they are wrong and
| then tell us that "SBF/Matt Levine" saying it doesn't
| make it true but both have a public recognisable
| background in finance, we have absolutely no idea who you
| are to even judge if you could be right or not.
|
| Instead of debating semantics, enlighten us with how/why
| they are using it incorrectly and what you mean by this
| being a pump and dump and not a Ponzi. To me it
| definitely looks like a Ponzi: money from new entrants in
| the system go to pay off earlier entrants, a pump and
| dump from what I know would require SBF/FTX pumping up
| FTT to then dump it all leaving bag holders in the wake
| of the crash.
| SilasX wrote:
| That's fair -- I thought that by highlighting the correct
| term, against the parent's description with its
| mislabeling, that would be enough to make the point,
| especially since a) the issue of "Ponzi" misuse comes up
| so much, and b) one could just look up the terms and
| compare. But, to make it explicit:
|
| Ponzi scheme: Taking later entrants' investments to pay
| earlier investors on the false pretense that the
| venture's activity generated the returns.
|
| pump-and-dump: Duping others into thinking an asset has
| value so that it can be resold above its legit worth.
|
| The original description given clearly fits pump-and-dump
| better[1], since it's based on making an asset seem
| valuable:
|
| >>laid the Ponzi scheme straight out: scammers make boxes
| that pay fake coins when you store your money in them,
| they put so much money into the boxes that the fake coins
| seem valuable, then they rug pull everyone and move on to
| the next one.
|
| For tptacek's part, he could have defended his claim by
| presenting a substantive understanding of the distinction
| and justified the label in his own words. Or, somehow
| indicated this was a point of contention at all. Or done
| _anything whatsoever_ beyond arguing, in effect, "the
| perp used the label, therefore it must be accurate". That
| does not advance the discussion, or indicate a prompt for
| the kind of contribution in the first half of this
| comment.
|
| [1] https://news.ycombinator.com/item?id=33562224
| perihelions wrote:
| (Here's the link to that Matt Levine interview:
|
| https://www.bloomberg.com/news/articles/2022-04-25/sam-
| bankm...
|
| )
| piva00 wrote:
| I remember listening to that interview and this part
| always got me:
|
| > Matt: (27:13)
|
| > I think of myself as like a fairly cynical person. And
| that was so much more cynical than how I would've
| described farming. You're just like, well, I'm in the
| Ponzi business and it's pretty good.
|
| I seriously cannot understand how after this interview
| Sam still had any kind of support from VCs and so on.
|
| I hope the late 2010s-early 2020s will be remembered as
| the dot-com era of extremely dumb money...
| lotsofpulp wrote:
| > I seriously cannot understand how after this interview
| Sam still had any kind of support from VCs and so on.
|
| Because they thought they could make money by finding a
| bigger fool, or by finding someone who thought they could
| find an even bigger fool.
| bananapub wrote:
| > I seriously cannot understand how after this interview
| Sam still had any kind of support from VCs and so on.
|
| yes you do - because they're at best amoral and know
| their position and connections means they can make money
| out of shit like this by ensuring there's a series of
| bigger fools waiting to buy them out.
| AlexandrB wrote:
| Forget VCs. This interview snippet went semi-viral, I
| don't understand how FTX's customers didn't try to pull
| all their money out right then and there.
| tonetheman wrote:
| It is not "like" a blueprint. It IS a blueprint.
| taliesinb wrote:
| Amazing! Even includes anagrams: a person called Charis
| Law who owns a company called Whirl Casa.
| a-ve wrote:
| Finally a worthy opponent to the IKEA corporate
| structure:
|
| https://en.wikipedia.org/wiki/IKEA#Corporate_structure
| WXLCKNO wrote:
| To be fair ikea corporate structure looks like the mini
| boss before the real boss compared to this lol.
| rrrrrrrrrrrryan wrote:
| It actually gives Enron a run for its money:
| https://www.researchgate.net/profile/Hamid-
| Ekbia-2/publicati...
| nocoiner wrote:
| That's actually just a tiny, tiny subset of the overall
| Enron corporate structure. The chart you linked just
| shows the capitalization and ownership of one of the off-
| balance sheet structures that Enron used to conceal debt.
| This structure was capitalized with Enron stock, which
| worked great as long as the price kept going up, but once
| the value of that stock fell beneath a certain value, the
| single-purpose entity used here became insolvent and
| accounting rules (finally) required that that debt be
| consolidated back onto Enron parent's balance sheet.
|
| It's a situation with many interesting parallels in the
| crypto industry. Not only does history rhyme, but
| sometimes it really does repeat.
| kmac_ wrote:
| It's quite common to spin off daughter companies per
| project, it isn't unusual or illegal in any way. Without
| at least type and ownership information it's hard to tell
| if it's iffy.
| capableweb wrote:
| You should see the structure of companies like IKEA or
| others who really have a complicated corporate structure.
| pjc50 wrote:
| Do you have a chart for our entertainment?
|
| (Does the IKEA org chart have the little figures from the
| assembly instructions, and an Allen key?)
| nunez wrote:
| FTX is worse: https://www.researchgate.net/figure/IKEAs-
| ownership-structur...
| wodenokoto wrote:
| IKEA is notorious for having one of the most opaque
| company structures in the world.
|
| Word on the street is that ikea is technically a charity.
| bananapub wrote:
| it's not a charity, it's a ultimately held by a pair of
| Liechtenstein and Dutch foundations, with an elaborate
| sea of holding companies underneath:
| https://en.wikipedia.org/wiki/IKEA#Corporate_structure
| baby-yoda wrote:
| This is a huge oversimplification but my recollection is,
| there is a design arm of the IKEA structure which is a
| non-profit. They create and own all of the designs and IP
| related to products, which a different IKEA subsidiary
| then licenses and pays royalties on, essentially negating
| much/all of the margin of the finished good.
| WXLCKNO wrote:
| Is this just the natural outcome of running a multi
| billion dollar crypto business? Do you hire so many
| experts and lawyers that they set this up for you as an
| ideal structure?
|
| Seeing how stupid/greedy SBF was, it makes me wonder if
| people like him are smart enough to truly understand the
| need for such structure without having experts in place.
| rchaud wrote:
| SBF would be a nobody without Sequoia and others throwing
| money at him. I'm more concerned about the judgment of
| monied people who are so desperate to find their own Adam
| Neumann, that they forgo common sense and invest based on
| 'feel'.
| chewz wrote:
| You need that many companies trading with each other to
| create value and muddle the waters... Intangible assests
| and future flows passed from one entity to the other and
| priced at some unrealistic assumptions create/raise paper
| value.
|
| This is how you blow the ballon...
| skeeter2020 wrote:
| if you're a creditor, good luck getting any part of
| what's left over after they pay the accounting firms to
| unwind this. On second thought, if you're an accounting
| firm, good luck getting paid if you do any work for them.
| [deleted]
| fdsafdasfdsa wrote:
| FTX US is included in the Chapter 11 bankruptcy filing.
| randomsearch wrote:
| Just bumping this up from comment below:
|
| >> This was about FTX International. FTX US, the US based
| exchange that accepts Americans, was not financially impacted
| by this shitshow.
| >https://twitter.com/SBF_FTX/status/1590709195892195329
|
| So, SBF seems likely to have flat-out lied, right up to the
| last moment. At this point, why would you choose to trust any
| crypto company that wasn't perfectly transparent in how it
| holds assets, backs coins, what it's borrowing on, etc?
|
| Do we blame individuals or the technology that enabled them? I
| don't know. I do think we need to get back to building useful
| tools that people need.
| pvg wrote:
| [deleted]
| [deleted]
| steveBK123 wrote:
| Was obviously cope at the time.
|
| If the guy is dipping into supposedly segregated client
| accounts to run his prop trading, and lying about it.. why
| would he not do the same with FTX US money.
| halfmatthalfcat wrote:
| It looks like it? At least from a cursory reading of the press
| release...which goes against everything that has been said up
| to this point. The hilarity continues.
| leereeves wrote:
| Yeah, just yesterday SBF tweeted:
|
| > This was about FTX International. FTX US, the US based
| exchange that accepts Americans, was not financially impacted
| by this shitshow.
|
| https://twitter.com/SBF_FTX/status/1590709195892195329
| durpkingOP wrote:
| Wrong. FTX US is the US based exchange that accepts
| Americans. You gotta always read the latest SBF tweets
| because he consistently says 1 thing then the next day does
| the opposite.
| boeingUH60 wrote:
| This guy is such a serial liar...I wonder why he doesn't
| have a lawyer advising him to avoid making statements on a
| public platform at this point.
| moogly wrote:
| Because no one can tell who are real accounts and parody
| accounts on Twitter right now.
| tshadley wrote:
| https://twitter.com/Popehat/status/1591091209157898241
| selimthegrim wrote:
| His parents are probably going to invoice him for legal
| advice at this point.
| jjulius wrote:
| It absolutely blows my mind; if this[1] failure of an
| attempt at a "get out of jail free" disclaimer is
| something you feel the need to write out so poorly, and
| in all caps, _after_ your diatribe, maybe - MAYBE - you
| shouldn 't have said a goddamn word.
|
| [1]https://twitter.com/SBF_FTX/status/1590709199067295749
| sillysaurusx wrote:
| Yeah! That was the tweet that made me suspect an anxiety
| attack / some other health condition.
|
| The weirdest part is that all 23 tweets were posted
| simultaneously at 8:13am. So he had the opportunity to
| say nothing; he could've clicked "save draft" instead of
| "tweet all".
| chasd00 wrote:
| heh how close together are the "save draft" and "tweet
| all" buttons?
| boeingUH60 wrote:
| "Your honor, whatever I've said should not be used
| against me in the court of law"...I can't make up this
| parody if I was a scriptwriter.
|
| Here's another...SBF has stepped down, and his
| replacement is John J. Ray III, a famous bankruptcy
| lawyer who helped clean up Enron...yes, that Enron.
| Scoundreller wrote:
| I bet is motto is the same as the one that gets these
| companies in trouble: "pay yourself first".
| lotsofpulp wrote:
| Must be tough being a fiction writer these days.
| dylan604 wrote:
| I'm waiting for the Law&Order ripped from the headlines
| episode. Who will be the murder victim in the opening
| scene though? DUN DUN!!!
| perihelions wrote:
| Twitter should add Miranda warnings to the before-you-
| tweet prompts. It would be a reasonable use-case for ML
| classification.
| dylan604 wrote:
| This guy is just taking a play from the same book Trump,
| Musk, Kanye, etc use. Only, he's turned it up to an 11.
| It'd be a funny skit to see a Trump character reading
| this guy's tweets/interviews and saying "whoa"
| UncleMeat wrote:
| Especially on twitter, where by default you only see the
| first few tweets of a chain.
|
| "Here is a bunch of information about the ongoing
| potentially criminal collapse of my company - oh by the
| way I'm a bad dev so some of what I said above might be
| wrong, don't act on this information."
| bmitc wrote:
| His parents are law professors at Stanford. It's crazy.
| You think they'd make a call and tell him to just stop.
| bombcar wrote:
| I'm sure they have; does this look like someone who would
| listen to his parents?
| nullc wrote:
| His father was involved in the business...
| https://www.youtube.com/watch?v=MmmXUtRt6xo
| [deleted]
| sillysaurusx wrote:
| That's the one. Thanks for linking it.
|
| Was he in denial? Lying? Clueless? I have no idea at this
| point.
|
| He seemed earnest and genuine, but everything he's saying
| is the exact opposite of reality.
|
| Maybe he was having an anxiety attack. I had one once, and
| it completely sucks. It ruins your ability to form logical
| thoughts.
|
| (It's rare to see someone so powerful be so confidently
| mistaken. The confidence is the part I'm struggling to
| figure out. There doesn't seem to be much benefit for him
| to knowingly lie about FTX US not being impacted, so it
| seemed like something else was going on.)
| dottrap wrote:
| Rumors were that he was still trying to raise some kind
| of last minute savior financing after Binance backed out.
| If so, his best cards are to show that not everything he
| has is a shitshow and there may still be some real value
| financiers might be able to buy for pennies on the dollar
| if they save him from complete collapse.
| ahelwer wrote:
| If he comes out the other side massively wealthy, then
| what was there to be "mistaken" about? You're extending
| an incredibly generous quantity of sympathy to someone
| that has absolutely not earned even a little of it.
| Speculating that he had an anxiety attack! I mean,
| really.
| sillysaurusx wrote:
| It's not really sympathy though. From a game theory
| perspective, what benefit did he get from saying FTX US
| wouldn't be impacted?
|
| It seems like there was negative benefit: not only did it
| accomplish nothing in practice, but it couldn't have
| helped even theoretically.
|
| So when someone does something like that, I can't help
| but speculate.
| ethanbond wrote:
| More time to get his and his friends' money out?
| sillysaurusx wrote:
| Oh, good point. Thanks!
| yunohn wrote:
| Ah yes, yet another "game theory" perspective. Seriously,
| what is it with crypto enthusiasts and making everything
| about game theory? What does it even mean in reality?
| mrguyorama wrote:
| Stop assuming rich people are rational
| ahelwer wrote:
| It kept some number of people from withdrawing their
| funds from FTX US yesterday, leaving more money in the
| pot to return to other stakeholders. This has nothing to
| do with game theory, what would that even mean!?
| skeeter2020 wrote:
| AlexandrB wrote:
| > It's rare to see someone so powerful be so confidently
| mistaken.
|
| I struggle to see how this could be true after 4 years of
| President Trump and Elon Musk's various undelivered
| promises. It's not rare, it seems to be extremely
| commonplace.
| TedShiller wrote:
| Remember when Biden said the Hunter Biden laptop was
| fake?
|
| It is very common
| peppermint_gum wrote:
| >Remember when Biden said the Hunter Biden laptop was
| fake?
|
| I don't think Joe Biden has ever said that.
| TedShiller wrote:
| FBI was told not to investigate
|
| https://www.nationalreview.com/news/fbi-officials-told-
| agent...
| gilrain wrote:
| > He seemed earnest and genuine, but everything he's
| saying is the exact opposite of reality.
|
| Con man is short for "confidence" man for a reason. What
| they're good at is gaining the unmerited confidence of
| others. You got played by his charisma. Remember this for
| next time.
| europeanguy wrote:
| I think these people have shown they have no problem lying
| about everything, so I wouldn't take what they say as a data
| point.
| Saig6 wrote:
| All of FTX Group, including FTX US and 130 additonal companies
| are covered by the statement. https://ftx.us/ doesn't mention
| anything though.
| jfk13 wrote:
| https://ftx.us/home currently shows a message:
|
| > Announcement 2022-11-10: trading may be halted on FTX US in
| a few days. Please close down any positions you want to close
| down. Withdrawals are and will remain open. We will give
| updates as we have them.
| memish wrote:
| The CEO of Alameda said "we tend not to have stop losses... I'm
| trying to think of a good example of a trade where I've lost a
| ton of money... I probably don't want to go into specifics with
| that"
|
| https://twitter.com/ApeDurden/status/1590912098871435265
|
| Now how did this place end up managing billions of dollars and
| SBF the darling of politicians?
|
| The picture is starting to come into focus. SBF used customer
| funds to become one of the top political donors. He donated $40M
| and was planning up to $1B. His parents are Stanford Professors
| who are well connected in the political world.
|
| Caroline, Alameda's CEO, also said "My advice for college is that
| classes don't matter that much and friends and networking are
| really important. Probably the most valuable thing you can do in
| college is find the coolest people you can and spend lots of time
| hanging out with them". Apparently so.
|
| Her dad is the Department Head of Economics at MIT. Prior to
| getting appointed to the SEC, Gary Gensler was a Professor for
| the Practice of Global Economics & Management at MIT.
|
| The CEO of GoldmanSachs met with SBF to help FTX get regulatory
| approval.
|
| From a congressman yesterday, "Gary Gensler runs to the media
| while reports to my office allege he was helping SBF and FTX work
| on legal loopholes to obtain a regulatory monopoly. We're looking
| into this."
| https://twitter.com/RepTomEmmer/status/1590717374801809409
|
| Senators are still going forward with an SBF-backed bill
| https://www.theblock.co/post/185746/senators-moving-forward-...
|
| It looks like Enron or Theranos 2.0. The kids of the elite were
| being elevated into positions way outside their ability and
| supported at high levels with no scrutiny. The fallout from this
| is going to be astronomical.
| europeanguy wrote:
| I guess the way it works is before they blow up people go
| "clearly they're doing great, they know something we don't. You
| think they need stop losses, but that's because you just don't
| get it. Stop asking questions".
|
| That's how.
| lancesells wrote:
| The more I read and learn about all this it feels like the work
| of a criminal mind more than just plain greed or hubris.
| tartoran wrote:
| https://en.m.wikipedia.org/wiki/Hanlon%27s_razor
| salawat wrote:
| How many times are we going to allow someone to slice us
| with weaponized stupidity before we realize that willful
| ignorance is actually a powerful tool in the malicious
| actor's/white collar toolkit?
|
| On the street, the cops/court'll beat you with "ignorance
| of the law is not an excuse".
|
| In the board room, the corporation can do no wrong, here's
| your settlement, chapter 11 plox.
| lancesells wrote:
| My point is this doesn't feel like stupidity or some
| confluence of mistakes. It feels more like someone
| realizing they can get people to invest in their house of
| cards while knowing it's a house of cards.
| bmitc wrote:
| This stuff just worries me so much. These people are looked up
| to as some gods of business, insight, or whatever. Even I have
| been guilty of getting caught up and being jealous of these
| younger people with so much apparent success. But then you find
| out, in gory detail, about just how much bullshit it all is,
| and that these people are just from elite circles who got
| handed keys to the Lamborghini after just playing with a Tonka
| truck. I mean, just hearing these people speak is cringe. They
| don't understand how anything actual works. I can't believe
| that something that literally stops your losses is not an
| effective risk management tool.
|
| This is what you find with kids from the elite class. They can
| take on mind blowing risk because they can fall back on their
| parents when it fails. People from lower socioeconomic levels
| cannot do that. Our government sets back and let criminal
| actions go unpunished, letting people truly treat life as a
| Monopoly game.
| kgwgk wrote:
| I'm sure they have many things on their plates now but they
| really should think about deleting their twitter profiles.
|
| "nothing like regular amphetamine use to make you appreciate
| how dumb a lot of normal, non-medicated human experience is"
| https://twitter.com/carolinecapital/status/13790363463003054...
|
| SBF should delete twitter mostly to stop publishing
| increasingly ridiculous "I'm really sorry, again" messages:
| "Hopefully things can find a way to recover. Hopefully this can
| bring some amount of transparency, trust, and governance to
| them. Ultimately hopefully it can be better for customers."
| whimsicalism wrote:
| This is a silly post. It's easy to draw a 3rd degree connection
| from anyone who went to an elite school and important
| politicians.
|
| You're saying: SBF's coworker's dad's former coworker is now
| the SEC head and that is the trick?
|
| Getting hired by a firm like Jane St is a pretty strong signal
| that you are likely capable.
| tremarley wrote:
| This makes a lot of sense. Stop Losses suck
| mywaifuismeta wrote:
| Time to start a hedge fund with this trick. Let's see if
| Sequoia wants in.
| dlubarov wrote:
| Yeah, it's funny to see Alameda called out for this, when
| most hedge funds don't use stop losses. It's pretty
| reasonable not to want their assets liquidated at a bad price
| in their sleep, in response to a price movement which might
| have been an artificial blip.
| frontman1988 wrote:
| [deleted]
| drumhead wrote:
| Is this how it always is and has been in Silicon Valley or Tech
| in the US. Startups started by well connected or well off kids,
| with backgrounds at elite Universities. Background and
| connections count for so much in that industry, it makes you
| wonder how much has been lost or how much potential was lost
| because people didnt go to the right schools.
| mistrial9 wrote:
| no, this is not true. The reality of Silicon Valley since the
| mid-1970s is an explosive and unpredictable mix of
| institutional money, their cohorts and practices; defense
| industry, their cohorts and money (these fit your hypothesis
| somewhat); dramatic and overlapping physical inventions using
| silicon parts, the people that build and promote those, their
| investor and insiders; marketing success more like Hollywood
| of old, their cohorts and practices; non-USA money and
| investment systems, their cohorts and practices;
| international Fortune 500, their cohorts and practices.. and
| more I am leaving out..
| willio58 wrote:
| Seems like the bill's aim is to have more oversight in crypto
| companies.
| altacc wrote:
| The same way fiat finance builds up and then collapses: most
| people have no idea what's going on or what any of it means.
| There's a lot of accounting smoke & mirrors to make everything
| look successful, until it's put to the test. At least with
| traditional finance there is occasional some effort to reign
| things in, or at least cover consumer checking accounts. But
| even there the finance companies employ more lawyers,
| accountants and experts than the regulators can and so the
| regulators are usually playing catch up after the collapse. In
| crypto there's no regulators, just other companies hoping they
| don't get found out.
| SilverBirch wrote:
| To be fair I heard from a few places that you really don't want
| to do stop losses on crypto exactly because of companies like
| FTX - since the traders and the exchange are really the same
| people, it's possible that there isn't a good enough chinese
| wall between them - when that happens the traders can see your
| stop losses which is like holding a massive sign saying "Here,
| take my crypto for cheap".
| jddil wrote:
| I hope people read this and really understand what it says.
| It Crypto had any intrinsic value this paragraph would be
| ridiculous ... but it's not. At least tulips were pretty to
| look at.
| madamelic wrote:
| The only reason big banks doesn't do this openly is because
| they actually have regulators breathing down their neck so
| they have to either hide it well or find ways around.
|
| The problem isn't crypto, it's the lack of accountability.
| super256 wrote:
| > The only reason big banks doesn't do this openly is
| because they actually have regulators breathing down
| their neck so they have to either hide it well or find
| ways around.
|
| I thought that's what the whole PFOF debate in the US was
| about? That e.g. Citadel is allegedly using SL and order
| book information to hunt stops on thin volumes.
|
| Not from the US and I didn't follow it too closely, maybe
| I got it wrong.
| ldjkfkdsjnv wrote:
| This is actually generally how finance works though. The whole
| industry is built on the illusion of superior competence.
|
| "Prestige" is a determining factor in someones ability get a
| job running a hedge fund/financial asset management. Generally
| they need to have gone to the right school, worked at the right
| bank, then at the right hedge fund. Each should show a good
| amount of tenure ( > 3-5 years ).
|
| A major asset manager that I won't mention hires PhDs from
| Harvard as a way to get people to invest in their fund. Behind
| the scenes, away from all the quant marketing nonsense, is some
| guy you've never heard of making gut based trades on the
| market.
| pmoriarty wrote:
| _" This is actually generally how finance works though. The
| whole industry is built on the illusion of superior
| competence. "Prestige" is a determining factor in someones
| ability get a job running a hedge fund/financial asset
| management"_
|
| It's not just finance, people everywhere are impressed by a
| prestigious background, and assume if you can drop certain
| names on your resume you must be great.
|
| Such names will open all sorts of doors for you that are
| firmly shut against the riffraff.
|
| Of course, conmen have used such patinas of prestige to their
| advantage since the dawn of time.
| jasonwatkinspdx wrote:
| There's also the irony of the fancy office. If you're a
| customer of a professional and walk into a very luxurious
| office, you know ultimately you're the one paying for that.
| If it were a separate surcharge to meet in the fancy office
| vs something basic would you chose to pay it? Yet
| psychologically we all feel more confident in the fancy
| office.
| whimsicalism wrote:
| It's bigger in fields where you need to get rich people to
| hire you: ie. consulting & finance.
|
| Fields like tech are nominally more meritocratic.
| whimsicalism wrote:
| I do feel like SBF path was obviously distinct from this
| hedge fund/IB pathway you are describing.
|
| For one, he got hired for a prop trading firms - in which
| these effects are not very large because they have little-to-
| no interest in clients and managing assets.
| ljlolel wrote:
| I saw this at Bridgewater. Hired only ivy league, smart
| people actually. But their total discretionary control was a
| tiny % of fund. Hedge funds are mostly marketing. When 2008
| financial crisis happened, Dalio was making the big trades in
| the control room himself on gut feel.
| dig1 wrote:
| > Hedge funds are mostly marketing
|
| This. Someone from Bridgewater mentioned that Dalio's
| "radical transparency" and all that we-record-everything
| nonsense is just a marketing bluff. Actual decisions are
| made behind closed doors by a few people.
| nunez wrote:
| I've heard the opposite. Recruiters working with them
| told me that they drink their own kool-aid harder than
| Amazon does!
| whimsicalism wrote:
| Bridgewater is an even worse example of this than normal.
| Very cult-ish
| PheonixPharts wrote:
| To see this all you have to do is interview at a few
| "prestigious" financial companies.
|
| A while back I interviewed with one of the top trading firms.
| It was for a lower level position that I normally wouldn't
| take but I was excited about the prospect of working with
| some truly brilliant quants.
|
| Wow was I disappointed. The discussion with the quants
| quickly relieved that they had absolutely zero interest in
| their field, and not a particularly deep understanding of the
| fundamentals of the mathematics they were using. It became
| clear that their entire course of study was focused on
| getting in to high paying financial company, and all the
| things they had to learn on the way there were just boring
| prereqs.
|
| I've met a lot of really talented and smart applied math
| people over my career, and this quant team was not in that
| groups of people.
|
| That said all the engineers I chatted with were great. My
| takeaway was that these companies do need talented engineers
| to run these systems but the "brilliant quants" is more or
| less just, as you say, the illusion of superior competence.
| whimsicalism wrote:
| I think it really depends to be honest. I don't think what
| you are saying is generally true of people at prop trading
| firms, the ones that I know were generally very into
| math/physics and got lured by the high pay.
|
| With prop firms, there is little need to schmooze the rich
| with fancy degrees
| ldjkfkdsjnv wrote:
| This point is invalidated by looking at the schools their
| employees went to.
| whimsicalism wrote:
| In what way is that true? Short pithy comments are
| unconvincing.
|
| The presence of people with fancy degrees might be
| expected for the more mundane reason that those people do
| tend to be more competent on average.
| gringoDan wrote:
| > _Caroline, Alameda 's CEO, also said "My advice for college
| is that class don't matter that much and friends and networking
| are really important. Probably the most valuable thing you can
| do in college is find the coolest people you can and spend lots
| of time hanging out with them"._
|
| This is mainstream advice if you're at an Ivy, Stanford, etc.
| You're learning the same material as the people who go to a
| state university. The advantage is the proximity to power, the
| people you rub elbows with who can help your career down the
| line.
|
| This is the entire premise of elite business schools - nobody
| is dropping $100k/year for the content that you can get on
| YouTube for free.
| [deleted]
| endtime wrote:
| > You're learning the same material as the people who go to a
| state university. The advantage is the proximity to power,
| the people you rub elbows with who can help your career down
| the line.
|
| I got my MS CS from Stanford and this is completely false. I
| did my BS CS at Georgetown, and even between the two there
| was a huge difference being at Stanford. The course material
| pushed me way harder, there were more resources (e.g.
| robots), a much wider selection of electives, and more
| consistently brilliant peers. I never felt behind at
| Georgetown; I certainly had those moments at Stanford, even
| though I did very well there in the end.
| gringoDan wrote:
| The original comment applies more to humanities and
| business school than to hard sciences. But it's still
| relevant in STEM.
|
| > _I got my MS CS from Stanford and this is completely
| false. I did my BS CS at Georgetown, and even between the
| two there was a huge difference being at Stanford._
|
| Stanford is probably the best-known school in the world for
| Computer Science. Georgetown (while a great school) is
| known for its international relations. So I'm not surprised
| that Stanford had more CS electives, resources, etc.
|
| But the fair comparison here is a school like UC Berkeley,
| University of Illinois, or [insert flagship state
| university here]. Is the quality of education really that
| different vs. Stanford? Or is the Stanford name brand on
| the resume the differentiator?
|
| Also, a masters program should be harder and more
| competitive than an undergrad program!
|
| > _and more consistently brilliant peers_
|
| Exactly. At Stanford, your "consistently more brilliant
| peers" will be in positions of power down the road. They'll
| be hiring managers at Google and Apple in <5 years.
| throwaway4good wrote:
| It is not Theranos 2.0; it is straight up theft to use client
| funds sitting in an exchange to cover losses in a hedge fund.
| ethanbond wrote:
| Theranos was straight up fraudulent lab reports _and_ a tale
| of numerous people who should 've known better getting duped
| throwaway4good wrote:
| I think stealing beats a fudged lab report.
| [deleted]
| hn_throwaway_99 wrote:
| > Now how did this place end up managing billions of dollars
| and SBF the darling of politicians?
|
| It's not that hard to be the darling of politicians in this day
| of extreme polarization - you just tell them what they want to
| hear.
|
| SBF made a good safe bet that coming off as "pro-regulation"
| would be a winning strategy in the current climate. Heck, it
| was probably a good bet regardless of whether Democrats or
| Republicans are in power, because even though Republicans are
| nominally anti-regulation, being against "Silicon Valley
| billionaires" is basically the one thing that gets bipartisan
| support these days, so flattering politicians with "we need you
| to regulate us" was probably a good strategy.
| shapefrog wrote:
| It's not that hard to be the darling of politicians - give
| them money.
| adamsmith143 wrote:
| It's completely unsurprising that "successful" kids have well
| connected and successful families.
| throwup wrote:
| "Risk management? You mean that's a thing people actually do?"
| shapefrog wrote:
| Just 20 hours ago - it was all bad but still fine and plenty of
| money and lots of interested parties...
|
| Oh and it is all the fault of the Devs
|
| https://twitter.com/SBF_FTX/status/1590774827467812865
|
| If you stick your company name in your twitter handle - does that
| mean the company owns the twitter account too???
| [deleted]
| tppiotrowski wrote:
| I still can't reconcile how fast this happened. Back in April SBF
| was willing to give billions to buy Twitter. It seemed like there
| was plenty of surplus or was the money he planned to invest just
| FTX customer holdings?
|
| "Musk responded to the text by asking if Bankman-Fried had "huge
| amounts of money?" MacAskill said SBF was worth about US$24
| billion at the time and could be willing to provide as much as
| US$8 billion to US$15 billion in financing." [1]
|
| [1] https://forkast.news/sbf-wanted-to-join-elon-musk-twitter-
| de...
| strikelaserclaw wrote:
| most of crypto/segments of wallstreet are a giant scam using
| mathematics to make money, any pr is good for them. It is like
| that wall street movie quote "You got ninety percent of the
| American public out there with little or no net worth. I create
| nothing. I own. We make the rules, pal."
| Scoundreller wrote:
| > "You got ninety percent of the American public out there
| with little or no net worth. I create nothing. I own. We make
| the rules, pal.
|
| Might make sense to tax the people doing the work less and
| the people owning stuff more. Should be a homerun policy in
| any democracy.
| 2devnull wrote:
| Which is why we have a progressive tax schedule. It didn't
| work, or you wouldn't be here complaining.
| throwup wrote:
| Surely he's saying the capital gains tax rate should be
| higher than the W-2 tax rate. That's definitely not the
| case in the US.
| rchaud wrote:
| Nothing mathematical about it.
|
| It's Enron accounting all the way down. Except in Enron's
| case the accounting was actually creatively done to dodge
| regulators. These guys didn't even have that to worry about.
| memish wrote:
| Here's another guy that was vouching for SBF to get in on the
| Twitter deal for $5b.
|
| Michael Grimes [IBanker at Morgan Stanley]: Do you have 5
| minutes to connect on possible meeting tomorrow I believe you
| will want to take?
|
| Elon: Will call in about half an hour
|
| Michael: Sam Bankman Fried is why I'm calling
| https://twitter.com/sbf_ftx/status/1514588820641128452
| https://www.vox.com/platform/amp/recode/2021/3/20/22335209/s...
| https://ftx.us
|
| Elon: ??
|
| Elon: I'm backlogged with a mountain of critical work matters.
| ls this urgent?
|
| Michael: Wants 1-Sb. Serious about partner w/you. Same security
| you own
|
| Michael: Not urgent unless you want him to fly tomorrow. He has
| a window tomorrow then he's wed-Friday booked
|
| Michael: Could do $5bn if everything vision lock. Would do the
| engineering for social media blockchain integration. Founded
| FTX crypto exchange. Believes in your mission. Major Democratic
| donor. So thought it was potentially worth an hour tomorrow a
| la the Orlando meeting and he said he could shake hands on 5 if
| you like him and I think you will. Can talk when you have more
| time not urgent but if tomorrow works it could get us $5bn
| equity in an hour
|
| Elon: Blockchain twitter isn't possible, as the bandwidth and
| latency requirements cannot be supported by a peer to peer
| network, unless those "peers" are absolutely gigantic, thus
| defeating the purpose of a decentralized network.
|
| Elon: ["disliked" "Could do $5bn ..."]
|
| Elon: So long as I don't have to have a laborious blockchain
| debate
|
| Elon: Strange that Orlando declined
|
| Elon: Please let him know that I would like to talk and
| understand why he declined
|
| Elon: Does Sam actually have $3B liquid?
|
| Michael: I think Sam has it yes. He actually said up to 10 at
| one point but in writing he said up to 5. He's into you. And he
| specifically said the blockchain piece is only if you liked it
| and not gonna push it. Orlando referred Sams interest to us and
| will be texting you to speak to say why he (Orlando) declined.
| We agree orlando needs to call you and explain given everything
| he said to us and you. Will make that happen We can push Sam to
| next week but I do believe you will like him. Ultra Genius and
| doer builder like your formula. Built FTX from scratch after
| MIT physics. Second to Bloomberg in donations to Biden
| campaign.
|
| https://danluu.com/elon-twitter-texts/#62
| [deleted]
| [deleted]
| EVa5I7bHFq9mnYK wrote:
| Interesting, the banker thinks "Major Democratic donor" is a
| positive selling point for Musk. I thought he is red.
| paganel wrote:
| And finished it off with with "second to Bloomberg when
| donating to Biden".
|
| If any of this had happened in a non-rules based world or
| even at the periphery of our "civilized" world, a whole
| bunch of US-financed NGOs and "civil society" thingies
| would have been up all in arms about it, with cries of
| corruption and the like. But the moment when it turns out
| that the second largest financial donor to the US President
| is basically a crook and a fraudster all those voices are
| suddenly silent.
| josefresco wrote:
| I found that odd too, but I would guess it was meant to
| show that he was a "major player" and thus had political
| connections that might be useful to Musk/Twitter.
| corndoge wrote:
| Many people can't be quantified with one of two colors
| rchaud wrote:
| That's certainly who he started pandering to once the deal
| looked likely. "Democrats are the party of division and
| hate" in May 2022 [0]. BTW, searching for this tweet on
| Google is fruitless, whereas DuckDuckGo brought it up
| straight away (from my US-based IP).
|
| If that was to set the stage for reinstating Trump, it
| seems to have backfired massively, as Trump (of all
| people), called him out as a BS artist and RINO.
|
| Still, on what should have been of the busiest weeks in
| Twitter's history, he found time to use his Twitter
| bullhorn to advocate voting Republican in every race.
|
| [0]https://twitter.com/elonmusk/status/1526997132858822658
| n0tth3dro1ds wrote:
| The entire offer is embarrassing.
|
| "Let me add useless, wasteful, and costly blockchain "tech"
| to your money-losing CRUD app. By the way, did you know
| we're massive Democrat donors?"
|
| Like offering poop flavored ice cream with vomit sprinkles.
| nu11ptr wrote:
| Elon isn't red or blue. He has leaned to voting dem in the
| past and now leans to voting gop for various reasons. It
| could change tomorrow. In the end, he thinks what he thinks
| and doesn't care how it aligns to a "party".
| stefan_ wrote:
| The guy doesn't even vote, he's an opportunist that would
| pretend to be orange if it curried favor with small minded
| people.
| boc wrote:
| I'm cackling at idea that even Elon is tired of hearing about
| the blockchain from crypto nerds... even the ones offering
| him billions.
| tonetheman wrote:
| everyone is
| Animats wrote:
| _" I still can't reconcile how fast this happened."_
|
| That's normal for trading firms. Lehman Brothers went down
| about this fast.
|
| The larger finance and regulatory systems are no longer willing
| to tolerate long "pauses" in withdrawals from crypto companies.
| Now, you "pause" withdrawals for a day and you're dead. Back in
| the Mt. Gox days, crypto exchanges went into limbo for months
| before the hammer of bankruptcy came down. That's over.
| saddlerustle wrote:
| FTX was making a killing, so its token that paid out trading
| fees was worth a lot. To bail out trading losses in Alameda,
| FTX sent it cash in exchange for a bunch of its own token. This
| might have worked out fine, except now the moment everyone
| expects FTX to go bankrupt, it's bankrupt.
| hazyc wrote:
| Haseeb Qureshi said recently on his Chopping Block podcast
| that it was a not-so-secret secret that FTX was the least
| profitable exchange of any of the major exchanges, so even if
| they were generating a lot of revenue they weren't making
| much profit on it.
| ahMath8 wrote:
| kebman wrote:
| Ah, the magic of loaned funds with little or no demands tied to
| it. And you wonder why real estate prices are so high? It's
| largely the same principle, except the regulation is way, wayyy
| tighter. But in sum, the effect it has on markets is
| unquestionable.
| mi_lk wrote:
| > loaned funds with little or no demands tied to it
|
| What does it mean for funds tying to demands?
| kebman wrote:
| It means that the contract you enter when you loan money
| has limitations to what you can use said funds for, and how
| or what it's secured with (including interest). It would
| seem that the creditors of Bankman-Fried gave him quite
| liberal limits, if it wasn't simply the byzantine structure
| of his many, many straw companies that made it extremely
| hard to understand what the money was ever used for, so
| much so that he may or may not have lost track himself.
| bananapub wrote:
| is this finally the straw that will expose the massive
| Tether/USDT fraud?
| faefox wrote:
| I've seen some comments saying that this is all delayed fallout
| from the Luna/Terra collapse last spring, it's just that FTX had
| the means (its own token that it could pump and move around its
| own entities) to paper over the hole in its balance sheet until
| now. Can anyone more familiar with the situation elaborate? How
| much further will the contagion spread?
| OptoContrarian wrote:
| Scoopy in the Alchemix discord had this to say: "If you are on
| any CEX or CeFi app or earn product, get out RIGHT NOW. Rumors
| are swirling and it is possible that none of them are solvent.
|
| I am not kidding, really, get out now. I care too much for our
| community to not have said anything to warn you."
|
| Not sure what that all entails.
| ignoramous wrote:
| > _Not sure what that all entails._
|
| Those same network effects that propelled web3 into
| stratosphere are going to bring it down back to earth. Not
| necessarily vanquish it, but put web3 in its place, so to
| speak. A scenario I'd imagine where DEXes / DeFi will endure
| and possibly thrive, but DEXes / DeFis don't have the kind of
| moats to justify astronomical valuations... which is both a
| good and a bad thing, depending on which side of the coin you
| are on.
|
| Tech VCs have already circled _back_ to AI, so doubt private
| companies in need of more money can stay afloat for longer,
| if they weren 't being careful with volatile crypto assets.
| drexlspivey wrote:
| Always take financial decisions based on anons in random
| discords.
| misnome wrote:
| To be fair, a lot of people probably got into this
| situation on an equivalent recommendation.
| sz4kerto wrote:
| Even Coinbase?
| AuryGlenz wrote:
| I feel perfectly fine having my crypto stored on Coinbase's
| end. As far as I know their business model makes perfect
| sense and they don't take the weirdly big risks all of
| these falling dominoes have.
|
| Also, if Coinbase goes bankrupt and takes everyone's crypto
| with them I feel everything will crash to essentially 0.
| HDThoreaun wrote:
| > their business model makes perfect sense
|
| Well they can't make money because all the other
| exchanges offer better fees/lower spreads since they're
| loaning customer money out. They'll never be big enough
| to actually makea. profit while there are shady exchanges
| offering a better product(until it collapses).
| saurik wrote:
| There aren't many compliant exchanges operating in the
| US, though; Coinbase seriously even _raised_ their fees a
| couple years ago because they thought they could do so,
| even while other exchanges are trying to lower them: they
| aren 't merely competing on fees.
| etc-hosts wrote:
| Coinbase appears now to be relatively boring, highly
| regulated, and compliant with US laws.
|
| I think they'll be fine.
| peyton wrote:
| So was FTX US.
| digianarchist wrote:
| Right but Coinbase doesn't have a renegade holding
| company based in the Caribbean.
| polygamous_bat wrote:
| They will be fine _modulo people's interest in crypto_.
| The way I think about it is that their business model is
| taking fees off of every transactions, so as the interest
| tapers off so will their earnings and valuation.
| jjfoooo4 wrote:
| On the path to bankruptcy the boring way, not being able
| to turn a profit
| polygamous_bat wrote:
| Perhaps Coinbase will set a record by being the first
| crypto exchange that folded the proper, legal way! /s
| saurik wrote:
| You seem to be confusing "is a good business to invest
| in" into the discussion of "is reasonably safe to use".
| crypt1d wrote:
| Its hard to tell, but looks like the fall out is far from over.
| There are a lot of rumours running around so unsure what is
| true and what is not, but we've gotten confirmations from a lot
| of crypto companies to be affected one way or another. Genesis
| (a big OTC trading company) lost about 160M but their parent
| company wrote them a check. BlockFi seems to be in the hole and
| has closed withdrawals. Blockfolio (an FTX owned company)
| paused withdrawals. Anything SOL/SRM related is likely
| affected. Any market maker worth its salt had money on it as
| well... think we will see a lot of blood in the coming
| days/weeks.
| acover wrote:
| For those curious I think srm is serum and sol is solana.
|
| https://www.kraken.com/learn/what-is-serum-srm
|
| > Serum is a decentralized exchange software built on Solana
| where cryptocurrencies can be bought and sold by traders
| crypt1d wrote:
| Correct. I've been in this world so long I forget 'normal
| people' don't really know all the acronyms :)
|
| more rumours are surfacing, including Yuga Labs (biggest
| name in the NFT space), Jump Crypto, Paradigm... this is
| basically our Lehman Brothers moment
|
| edit: looks like Yuga might be ok after all. luckily,
| sometimes rumour is just a rumour.
| coffeebeqn wrote:
| FTX also bailed out a ton of crypto companies. Now I don't
| know what those deals were like but it's likely some of these
| will fold soon
| bmitc wrote:
| Does anyone know the effect on Nova Labs and the Helium
| Network? It was my understanding that they recently switched
| the network from the Helium Network token (HNT) to Solana
| (SOL).
| Alupis wrote:
| For someone that only dabbles in crypto - what are the reasons
| people choose to use high-risk exchanges like FTX, and buy even
| higher risk "sh*t coins" on them? Especially the exchange-
| created-and-owned coins - of which I have yet to see one
| actually do what it promised.
|
| Is Coinbase just not cool anymore, or is there some advantage
| to using exchanges like FTX until they go belly-up?
| edwnj wrote:
| The main attraction was access to pretty much any shitcoin
| and advanced leverage+trading features:
|
| - multiple sub accounts - 20x leverage with tiered
| liquidations - you could use your portfolio as collateral -
| advanced trading tools
|
| This is why it was so shocking to see them collapse for doing
| such a stupidly bad thing, the guy seemed super smart (albeit
| vegan+commie).
| skinnymuch wrote:
| Where is he a commie? EA has insanely famous liberals like
| Steven Pinker on their side. If that's what you're trying
| to get at. Otherwise I'm puzzled since his main focus is
| EA.
| dottrap wrote:
| - FTX had much bigger trading volume (which might get people
| better fills)
|
| - FTX had lower fees than Coinbase
|
| - FTX offered a lot more coins to trade than Coinbase
|
| - FTX (like many others, but not so much Coinbase) were
| giving large sign up bonuses, and advertising like crazy.
| (Finance YouTubers like Graham Stephan, Meet Kevin, Jeremy
| Financial Education, Minority Mindset, etc. are taking some
| heat for their paid promotions they did for FTX.)
|
| - FTX offered options on some cryptos, like Bitcoin. This
| seems to be kind of rare.
|
| - FTX offered leverage (like most of the other big exchanges,
| but not Coinbase)
|
| - Since FTX also set up a separate FTX.US entity, it gave the
| perception that it had all the same US regulation protections
| as Coinbase. And since FTX was much bigger than Coinbase, it
| gave the perception that FTX was more likely to be more
| solvent than Coinbase. A month ago, I suspect if you asked
| most crypto people which exchange was more likely to go under
| first, they would have all said Coinbase.
|
| This whole industry looks very unhealthy. The large exchanges
| that most people use like Binance and FTX have books and
| operations shrouded in mystery, so nobody really knows how
| solvent any of these things were. FTX said they were not
| lending out coins (and by law, as an exchange, they are
| supposed to have all assets), but only after a leak revealed
| by Coindesk, did the public find out something was really
| wrong. Without that leak, FTX would still be doing business
| as usual.
|
| Meanwhile, Coinbase which is a publicly traded company in the
| US which is many magnitudes more transparent with their books
| (because they are required to be), can't seem to make a
| profit.
|
| The overall implication is that regular exchanges that just
| make money from fees are in an unsustainable business model.
| And all the other exchanges that are making a profit, might
| be doing all the shady things that FTX was caught doing.
| nu11ptr wrote:
| FTX's UI was way faster and better. I will miss that.
| Coinbase UI is very laggy, slow, and even more of a memory
| hog.
| MuffinFlavored wrote:
| > high-risk exchanges like FTX
|
| Larry David + Steph Curry "endorsed" television commercials?
| mateuszf wrote:
| Technically speaking Larry David was discouraging people
| from using FTX.
| kyleplum wrote:
| I am convinced that him not believing in it, getting paid
| a boatload to do a commercial stating he doesn't believe
| in it, then it failing is definitely the plot for a Curb
| Your Enthusiasm episode.
| djinnandtonic wrote:
| For someone that only dabbles in investing, what are the
| reasons people choose ultra-high-risk investments like
| crypto?
| AuryGlenz wrote:
| High risk, high returns.
|
| I bought some (emphasis on the some, sadly) Bitcoin when it
| was $80. I'll never get a return like that in my life.
| Other people are chasing that dragon. Unfortunately it
| leads them to burgeoning "shitcoins."
|
| It's all fine if you view it like the lottery and put "fun
| money" into it. It's not fine if it's your primary
| investment vehicle. For what it's worth I still think
| Bitcoin and Ethereum will be fine and bounce back up,
| eventually.
| jmathai wrote:
| You would be surprised how easy it is for people to get
| sucked into a crypto bubble vortex that makes you feel like
| you're missing out big time by not being invested in
| crypto.
|
| I was pretty heavily involved in the personal finance
| community on Twitter and there's two camps.
|
| 1) VTSAX and chill (basically dump money into an ETF and
| forget about it) 2) Moar passive income by side hustles and
| crypto
|
| The latter became more and more common and ultimately
| drowned out the former. I believe it's because the market
| was doing so well that folks' risk meter just wasn't
| registering.
|
| Probably the same reason why people choose to get into
| MLMs.
| Alupis wrote:
| That one is easy... FOMO - Fear Of Missing Out. People see
| the 10,000%+ returns extreme early adopters obtained and
| think they need to get in before the good-getting is done.
| Most of the time they're wrong and just throwing money into
| dark pits...
|
| "Gamified" trading apps like Robin Hood have made it all
| too easy to feel much lower risk that it is in reality
| though.
|
| For the rest, crypto can be part of a diversified
| investment strategy. Not all crypto is outright scams...
| but you do need to be able to handle the volatility.
| beefield wrote:
| Broadly speaking, either they are financially illiterate,
| or they like gambling. Or both.
| HDThoreaun wrote:
| Coinbase doesn't offer the leverage that offshore exchanges
| do. FTX was popular originally because they offered 100x
| leverage, later reduced to a maximum of 20x. They also had
| better spreads, probably because they were making their own
| market and had inside info. I think that people generally
| didn't expect FTX to be high risk. It's got a profitable
| business, all they had to do was not embezzle customer funds.
| Alupis wrote:
| > Coinbase doesn't offer the leverage that offshore
| exchanges do. FTX was popular originally because they
| offered 100x leverage
|
| Sounds like a red alarm for me. There's probably a good
| reason domestic exchanges don't let you extend out that
| far... particularly on extremely volatile securities.
| HDThoreaun wrote:
| Definitely alarming, but mostly for counterparty risk. If
| the exchange is just a middle man then they can't lose as
| long as they're able to liquidate toxic positions before
| they're negative. Turns out FTX was also the market maker
| through alameda and because of that was hesitant to
| liquidate toxic positions, leading to the embezzlement to
| try to save alameda and the current crisis.
| MrMan wrote:
| market making in a volatile instrument is not easy. when
| all instruments are .96 correlated it makes it harder to
| balance your book. the good thing is that its retail flow
| but just because its retail doesnt mean you won't lose
| money when the market jumps in one direction or another.
| blep_ wrote:
| That kind of gets into philosophy of what governments are
| for: should they protect people who make bad decisions
| from themselves? Does the answer change if people are
| actively marketing the bad decision? Does the attempt at
| doing so suggest they're actively trying to keep poor
| people from getting rich?
|
| (This comment is an explanation of a viewpoint, and not
| an endorsement.)
| Alupis wrote:
| I see it as the government should get out of the way of
| those who _know_ what they are doing and the risks.
|
| The problem is, these exchanges do not make you go
| through the same "vetting" processes traditional
| securities brokers/exchanges do before you can leverage
| up to your eye balls and lose everything.
|
| They also go out of their way to make it "fun" to trade
| crypto - gamification at it's best - which
| reduces/removes the traditional apprehension of getting
| in way above your abilities.
|
| We can liken a lot of these exchanges to gambling more
| than investing.
|
| That is to say, an 18 year old with $500 in total assets
| shouldn't be eligible to leverage 20x or more. That's
| just a life-changing problem waiting to happen.
| jasonwatkinspdx wrote:
| All of these places were offering insane APRs as well as
| other perks for staking your coins. So speculators park real
| money, expecting that they'll be smart enough to see the
| crash coming and slurping up that sweet return in the
| meantime.
|
| And it's glaringly obvious everyone offering these outsized
| returns is literally just pulling a ponzi.
| jfdbcv wrote:
| [RUMOR - UNCONFIRMED]
|
| People are saying that Alameda Research lost a lot of money due
| to Luna / Terra and were bailed out by FTX user funds, a loan
| with FTT as collateral.
| Emma_Goldman wrote:
| This is my sense of what happened.
|
| Alameda's bets went bad in the crypto crash earlier in the
| year. FTX loaned it up to $10bn in customer deposits against
| trumped-up collateral (its own token). Somehow, Alameda must
| have lost most of that money, either by using it to cover its
| liabilities from the crash, or making more bad bets. When it
| was leaked to Coin Desk that Alameda's balance sheet was
| padded with FTX tokens, confidence in the token rapidly
| collapsed. That obliterated the collateral protecting FTX's
| loans, ripping open a ~$10bn hole in its finances.
| haasted wrote:
| Saw a theory that their liquidation engine may have failed them
| during the LUNA meltdown.
|
| https://twitter.com/westiecapital/status/1591089073468280832...
| ryanSrich wrote:
| I don't think people realize how big of a collapse UST was. $18
| billion market cap that vanished in a week. The fact that Do
| Kwon is not in jail yet is astonishing to me. FTX by comparison
| is on the hook for $10 billion, about half of the UST collapse.
| Everything we're seeing is a result of Do Kwon's scamming.
| [deleted]
| btilly wrote:
| How much further?
|
| By their own figures, Tether is now undercapitalized and just
| had billions withdrawn. They made those payments. But, as
| Hemmingway said, bankruptcy tends to happen gradually and then
| all at once. Tether is in a hole. Nobody knows how close they
| are to not making payments. But when they implode, it will be
| sudden and the blast radius will be large.
|
| Does Tether weather this squall? Based on history, probably.
| Based on economic fundamentals, they will sink at some point.
| [deleted]
| saurik wrote:
| > _By their own figures_ , Tether is now undercapitalized...
|
| Where has Tether stated this? Last I heard--today--Tether has
| continued to claim the opposite.
|
| (edit to add, 45 minutes later:) I see patio11 makes the same
| claim, but I've now read both his recent articles on this and
| he is making a LOT of extremely stretched assumptions to pull
| off this reasoning, and even then the best he has is that it
| must have momentarily become insolvent in the past :/. And so
| like, maybe they are undercapitalized... but if they are it
| is because they are _lying_ , not because their own figures
| somehow demonstrate such.
| toomuchtodo wrote:
| Tether might be able to plug the hole depending on how big it
| is if treasury rates rise fast enough for returns to paper
| over their previous asset allocation or mismanagement
| mistakes, and redemptions don't exceed assets on hand.
| btilly wrote:
| Well patio11 just came out with a whole article of BAM
| about leverage:
| https://bam.kalzumeus.com/archive/demystifying-financial-
| lev...
|
| The point of this article was to make the consequences of
| the following statement clear:
|
| _And now you know enough to understand what I 'm saying
| with an otherwise opaque statement like "Tether is 35:1
| levered on risky assets during market contagion."_
|
| Yes, if everything goes Tether's way, they can weather
| anything, forever. But eventually it won't, and they won't.
| toomuchtodo wrote:
| Ahh, they're fucked. Thanks for the link.
| cenal wrote:
| Until the tether fraud collapses the market hasn't corrected.
| guelo wrote:
| Why are they filing in the US? I thought they were Bahamas or
| Hong Kong besides ftx.us
| jasonwatkinspdx wrote:
| The US company may be the only part of SBF's portfolio that's
| worth anything at this point. I assume it's inevitable it gets
| pulled in.
| phire wrote:
| I can guess:
|
| The US has Chapter 11 bankruptcy, while Antigua and Barbuda
| might only have something more closer to the US's Chapter 7.
| rippercushions wrote:
| You can't really pick and choose where to have your
| bankruptcy. This filing is for FTX's US entities, those in
| Antigua will be wound up with Antigua's rules.
| phire wrote:
| Yes, that's what's weird.
|
| FTX Trading Ltd is "is incorporated in Antigua and Barbuda,
| and headquartered in The Bahamas", yet the linked statement
| clearly says FTX Trading Ltd (plus the FTX US entity, and
| Alameda, and others) are filing for Chapter 11 under US law
| in Delaware.
|
| Is there a parent company of FTX Trading Ltd that's based
| in the US?
|
| Edit: Apparently "Paper Bird Inc" is registered in
| Delaware, is 100% owned by SBF, and has ~89% ownership of
| FTX Trading Ltd.
| donedeals wrote:
| It's probably because the parentco is filing. Need to see
| the BK filing to understand.
| kgwgk wrote:
| According to the filing Paper Bird Inc. owns
| approximately 75% of FTX Trading Ltd. - the rest is owned
| by third party investors.
|
| https://qz.com/full-text-ftx-bankruptcy-filing-1849772656
| ucha wrote:
| None of the answers you received so far are correct.
|
| The holding company of the foreign entity is in the US and can
| thus file for ch11. See who owns FTX Trading Ltd (Antigua) for
| example:
| https://d1e00ek4ebabms.cloudfront.net/production/8566b562-d5...
| hestefisk wrote:
| Group holdings yes, but the US exchange and some of their other
| acquisitions are in US. It seems to be quite an elaborate
| cluster of firms that have filed for bankruptcy, which makes me
| think maybe someone was doing funny stuff with money.
| lost_tourist wrote:
| Or hoping they could limit damage to one corp, but in this
| case the big daddy corp is sinking screwing all its assets
| brindlejim wrote:
| As a sidenote, many of the commitments that SBF made to the FTX
| Future Fund were either in FTT or paid in installments, which
| means that they will never be paid at all. Huge impact on the EA
| movement and their grantees.
| lm28469 wrote:
| This is good for bitcoin
| hestefisk wrote:
| Why?
| 323 wrote:
| It's a joke.
|
| When something bad happens, bitcoiners say "this is good for
| bitcoin".
| [deleted]
| firstSpeaker wrote:
| Who is next?
| hn_throwaway_99 wrote:
| I think this tweet reply to the bankruptcy announcement is pretty
| brilliant,
| https://mobile.twitter.com/Abrahamweb3eth/status/15910726841....
|
| I made the argument a couple days ago that CZ thought he was
| playing "4D chess" as the kids like to say these days by publicly
| and loudly dumping FTT, and he ended up burning the whole thing
| down.
| phphphphp wrote:
| intentional or unintentional, he didn't really have a choice:
| if he had dumped FTT quietly, people would have noticed and it
| would have had the same outcome. If he didn't dump it, he'd
| have been left with a worthless token. As soon as the Alameda
| balance sheet was leaked, the fate of SBFs empire was sealed,
| because it was the SBF mythology that supported FTX -- hence
| the "credible" industry players using and recommending FTX. For
| cz to have been responsible for this, you have to argue that
| Alameda could have remained credible within the industry after
| it was revealed to be leveraged to the gills -- doesn't really
| seem plausible, it was only a matter of time before it was
| discovered that he was stealing customer deposits. The only
| variable in the collapse of FTX was the amount of time it took
| people to realise that SBF had been stealing deposits, whether
| it happened because of a bank run or something else, it would
| have happened.
| [deleted]
| spaceman_2020 wrote:
| I've defended crypto countless times here and I still believe in
| the ideology and the decentralized mission
|
| But man...what a clownshow.
| ram4jesus wrote:
| Life is fleeting. But crypto even more so.
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