[HN Gopher] We're discontinuing the Stablegains service. Please ... ___________________________________________________________________ We're discontinuing the Stablegains service. Please withdraw remaining funds Author : mkeeter Score : 179 points Date : 2022-05-21 20:48 UTC (2 hours ago) (HTM) web link (blog.stablegains.com) (TXT) w3m dump (blog.stablegains.com) | axiosgunnar wrote: | This is huge news, isnt it? A YC startup going bankrupt because | of the Terra collapse? | lupire wrote: | A fraudulent company going bankrupt because the fraud | collapsed. | xvector wrote: | Source on the company being fraudulent? | | Source on Terra being a fraud? | | Please provide sources for your ad-hominems. | JumpCrisscross wrote: | > _Source on the company being fraudulent?_ | | See [1]. If you sell a deposit-like product by saying "you | will not lose your funds," and then lose the funds, you go | to jail. (First you lose your money.) | | [1] https://news.ycombinator.com/item?id=31462617 | npc12345 wrote: | (I upvoted you btw, I don't like to censor). | | I'm a maximalist and even I am not that disingenous. | braingenious wrote: | I'd probably assume somebody looked at "15% interest" as a | sales pitch and "losing all of your money" as the actual | thing that happened and concluded that it was fraud. | | What exactly is fraud by your estimation? | xvector wrote: | There is intent behind fraud. | kadoban wrote: | So if you intend for the con to survive longer than it | did you're in the clear? Interesting. | nrmitchi wrote: | The "intent" that is necessary is the intent to benefit | from the known misrepresentation, which in this case | Stablegains did by obtaining investment from these | customers. | | It would be ludicrous to suggest that Stabelgains needed | to "intend" the end result (ie, "catastrophically fail | and lose all of their customers funds") for it to be | fraud. | lupire wrote: | Source: https://en.m.wikipedia.org/wiki/Do_Kwon | nrmitchi wrote: | > Inspired by the possibilities across DeFi, our aim was to | go beyond Anchor and to integrate with multiple protocols | so that users could have easy access to multiple tools and | allocate their assets across all of them based on their | judgment of the benefits, costs, and risks of each option. | Unfortunately, we didn't get there in time. | | Their previous marketting said (or at least implied) that | they were spread across different defi products to protect | against this exact risk. | | That is not the same thing as "we planned to get there | eventually, but didn't in time". This is borderling to an | institution saying "We're FDIC insured!" but actually | meaning "We hope to be FDIC insured at some point in the | future". | | Lying to customers about what you're doing with their | investment funds is 100% illegal and literally what Martin | Shkreli was in prison for (and that case didn't even end | with him losing all of his investors money) | xvector wrote: | Do you have a source for the misleading marketing? | | Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using | Anchor Protocol, a decentralized lending market." | | This is in a giant blue block right above a "get started" | link. There is no mention of anything other than Anchor | being used to store investor funds. | | It seems to me that you are trying to twist the post- | crash retrospective into a marketing statement that | didn't simply exist before the crash. Where, exactly, is | the lie? | | [1]: http://web.archive.org/web/20220203225905/https://st | ablegain... | Tao332 wrote: | That's not an ad hominem. | | The circular relationship between Terra and Luna is really | fishy. It's probably not really a scam today, but similarly | structured schemes should probably be classified as such | and criminalized in the future. | somewhereoutth wrote: | The best explaination Ive seen (from HN I think) was that | the Terra/Luna thing was an attempt to tranche the | 'asset'. So Luna (junior tranche) has the risk and | potential returns, whereas Terra is supposed to be less | risky, less returns (Senior tranche). See MBS, CDO, | CDO^2, etc. | Jasper_ wrote: | Anybody promising low-risk, high-return investment is a | fraud. After all, why would they have to convince you to | invest money if they could just do it themselves? | xvector wrote: | > After all, why would they have to convince you to | invest money if they could just do it themselves? | | Capital. Taking a 5% cut of billions of dollars is going | to be worth a lot more than 20% of whatever tiny amount | of capital you are able to muster yourself. | Jasper_ wrote: | If you're so sure of your low-risk, high-reward strategy, | get a bank loan. And then once you make more money, get | an even bigger bank loan. | | There are ways of getting capital that don't involve the | public's money. | nrmitchi wrote: | This works _sometimes_ , but banks don't want to be | overexposed (even if something is very low risk). | | There's the old saying "If you own the bank $1m, that's | your problem, but if you owe the bank $100M, that's the | bank's problem". | | This kind of stuff happens in other industries (like real | estate) all the time. Even with bank financing, you'll | need another source of funds (typically LPs) to meet loan | requirements. | peter422 wrote: | Fwiw a lot of YC companies have had large collapses. For | example Homejoy which is a lot bigger than this company. It | happens. Startups are risky. Not huge news. | formerkrogemp wrote: | Meh YC backs a lot of scams masquerading as businesses. This | period of easy money and wealth concentration has fostered much | in the way of misallocation of capital. Y-Combinator exists to | make its owners money. Their primary concern is bloody | Benjamins, not morality and the public interest. | gsibble wrote: | As I've said elsewhere, having dealt with them and seen who | they invest in, morality does not seem to be an important | aspect of YC investments. | tyrfing wrote: | Interestingly, they removed their prominent YC branding very | recently after the collapse. Compare: | | https://twitter.com/stablegains/status/1523874916206059525 | | https://web.archive.org/web/20220510035811/https://twitter.c... | 1270018080 wrote: | Least corrupt crypto company. | | Return is directly correlated to risk, so when a black box | corporation is promising 15% returns and marketing itself as a | "simple and safe" way for its users to benefit from "advances in | financial technology." It's probably not safe, but it is very | simple. | nootropicat wrote: | >Return is directly correlated to risk | | This is at least a weak EMH assumption. It's not a law. In | crypto sometimes the opposite is true for short to medium | periods of time because uninformed people are afraid of 'too | high' returns. Best money is made on market inefficiencies like | that. | j-pb wrote: | Any crypto or web3 startup contains an ad hoc, informally- | specified, bug-ridden, slow implementation of "receive_funds.sh | > /dev/null". | somewhereoutth wrote: | Thought you were about to say 'a Ponzi scheme'. | Edmond wrote: | >Return is directly correlated to risk | | This is really what should be required as the boldface | disclaimer on every investment product. | | "10-15 % guaranteed return" has another name...fraud....even in | the case of old-school imperial plunder, there is always the | risk your target might fight back. | Imnimo wrote: | I guess they didn't get the memo about going default alive. | unicornmama wrote: | Hey these days we're going default ponzi :) | [deleted] | braingenious wrote: | Seriously! | | I know this may be an unpopular opinion on this site in | particular, but after seeing this I would never even consider | raising money from YC. I would not be comfortable having the | fate of my business in any way tied to a group of people that | are so fucking dumb that they invested in the money version | of a perpetual motion machine. | | Seriously, this is the fucking stupidest thing I've seen in | _YEARS_ | Nextgrid wrote: | On the other hand, this is your opportunity to make your | own money-version of a perpetual motion machine and get | lots of _real_ money as investment. | pid-1 wrote: | > Seriously, this is the fucking stupidest thing I've seen | in _YEARS_ | | C'mon, let's not forget about NFTs. | braingenious wrote: | Touche | docmechanic wrote: | Quiet! The kool-aid tray is coming round again. | paulryanrogers wrote: | Isn't the point that it can only go around once? | Animats wrote: | TerraUSD Price (UST) $0.05468 | | So, 95% of the value is gone. | | Can anyone explain how the fork, airdrop, and other gyrations the | Terra/USD promoter is proposing will work, and where any actual | money comes from? | lupire wrote: | Terraform has $3B (ish, stores as Bitcoin) that they could use | to try to buy back faith in their coin. | | Problem is, best they can do is reboot with a Bitcoin- | collateralized coin. The whole Terra/Luna/Anchor "algorithmic | stablecoin" had been exposed as a fraud or a fantasy, so such | smaller fraction of suckers and scammers will buy in to that | again, and everyone else _might_ buy in to a Bitcoin backed | stablecoin, but there 's not much profit in that for Terraform, | and the users have no reason to choose it over a more reliably | backed coin like Tether or USDC or DAI. | josu wrote: | >Terraform has $3B (ish, stores as Bitcoin) that they could | use to try to buy back faith in their coin. | | This is not correct. They used those bitcoins to try to | defend the peg. Here you can see the actual treasury: https:/ | /datastudio.google.com/u/0/reporting/b31cc9e5-c54c-44... | khuey wrote: | > This is not correct. They used those bitcoins to try to | defend the peg. | | My understanding is that its more likely that they were | allowing connected insiders to cash out at face value | rather than "trying to defend the peg" at the prevailing | market rates. | josu wrote: | No public evidence of that as of now, but it could | definitely be true. The interesting thing is that it | doesn't really matter, those "insiders" would have dumped | the coins in the open market breaking the peg even | further. So yeah, maybe LFG could have sold the bitcoins | a bit better in the open market, but I don't think that | it would have made a difference. | UncleEntity wrote: | You're actually defending (alleged) collusion, (alleged) | fraud and (alleged) insider trading on the basis that the | ship was going to sink anyway? | josu wrote: | I'm not defending anything, just pointing out the | obvious. | | But yeah, I'll be surprised if Do Kwon doesn't end up | sitting in front of a judge | fxtentacle wrote: | That seems to be the spirit of most crypto advocates... | prepend wrote: | There's no public evidence that they were defending the | peg. Statements from these charlatans aren't evidence and | shouldn't be believed without clear evidence of | transactions. And I don't there is any evidence of the | transactions using the missing $3B. | Tao332 wrote: | > Terraform has $3B (ish, stores as Bitcoin) that they could | use to try to buy back faith in their coin. | | _Had_. It 's gone. | gruez wrote: | What happened? Last I heard they transferred it to gemini | but people weren't sure whether they actually sold it or | not. | sbierwagen wrote: | LFG only said "a counterparty". https://twitter.com/LFG_o | rg/status/1526126703046582272?ref_s... They transfered | 52,189 BTC between May 7th and the 10th, and another | 33,206 when UST hit $0.75. After the insiders were paid | off, Terra was free to go to zero. | | Presumably we'll only find out what actually happened | when Do Kwon is in jail and people start testifying | against each other in return for lighter sentences. | loopdoend wrote: | What a great system they devised for using these funds in | an emergency. /s | ueco-jb wrote: | It won't work. What they are trying to sell, is - community was | stronger then only relying on UST. In one in a million chance, | there could be a inflow of money and while users from snapshot | wouldn't sell their tokens in an instant. So, basically, an | utopia. | | Hype is lost, wave is over. | swarnie wrote: | Much the same way as this scam. | ryanSrich wrote: | The money comes from incredibly low IQ and poor people thinking | they'll win the lottery. It's the same thing over and over. | Luna2 is just a scam. Do Kwon is a sociopath. | civilized wrote: | Why did YC fund this fairly obvious fraud? | [deleted] | spyder wrote: | A great related article from last year about the "Inherent | fragility of algorithmic stablecoins" it also mentions Terra: | http://www.wakeforestlawreview.com/2021/10/built-to-fail-the... | wutangisforever wrote: | not that stable... | echlebek wrote: | lol. Even beanie babies were a longer-term investment vehicle | than this. I just hope these recent very public and very | embarrassing failures are enough to discourage the average person | from wasting their money on these scams. I also hope the people | behind this get investigated for fraud. | loopdoend wrote: | If Ty had come out with a Beanie Baby NFT project this whole | thing would've come full circle. Do you think they'd have taken | off or tanked at the height of the NFT Bubble? | eternalban wrote: | That was funny! | | > the average person | | So I'm riding the subway in NYC and there are these adds for | yet another one of these crypto related "businesses" and copy | iirc goes something like 'stop boring us at parties trying to | explain crypto. just invest with us blah blah'. Pretty sure the | irony is lost on the target demographic. | cheaprentalyeti wrote: | I thought there was already a big announcement back towards the | middle of the week. (Checks mail spool) OK, Thursday. | josu wrote: | Previous discussion: YC W22 Stablegains is being sued for losing | $42m in funds from 4878 customers | https://news.ycombinator.com/item?id=31431224 | fakename wrote: | So the options are to withdraw to USD at 5% value, or transfer | the ust to another wallet to qualify for a "potential airdrop" | but probably lose the 5% as ust goes to 0? | Nextgrid wrote: | True, however at this point it's not really up to StableGains - | they are doing the right thing here (regardless of their | initial - potentially false - advertising) of allowing you to | withdraw your holdings and then be at the mercy of the market | directly. | [deleted] | williamtwild wrote: | Stablehains sounds like something from a 2am infomercial. I have | no idea why people would fall for this garbage. | Justsignedup wrote: | people who bet early, made big money. people who came in on the | hype lost everything. the definition of pyramid schemes. | | Oh well. We'll see, it might bounce back as these things do. | capableweb wrote: | Oh, by that definition, even AAPL is a pyramid schema. | | How about we leave the definition for pyramid scheme where it's | already at? | | > Pyramid scheme: making money based on recruiting an ever- | increasing number of "investors." | | > Oh well. We'll see, it might bounce back as these things do. | | No, it won't. It won't regain the trust of the community and | the project is dead in the water now, no way it'll recover from | this. | paulryanrogers wrote: | AAPL has physical and IP assets which could be sold to make | investors whole. While I have big issues with them, they're | not in the same ballpark as this 'stable' coin company or | pyramid schemes. | gruez wrote: | >AAPL has physical and IP assets which could be sold to | make investors whole | | While they might have _some_ "physical and IP assets", | there isn't nearly enough to "make investors whole" (ie. | pay them back). If you invested $100 in apple earlier this | year and AAPL somehow needed to be liquidated, you're only | getting a fraction of $100 back. | JumpCrisscross wrote: | > _Pyramid scheme: making money based on recruiting an ever- | increasing number of "investors."_ | | This is correct. While looking into this for a friend I came | across: "for a full year, you'll earn 0.5% APY on what each | person you refer deposits" [1]. Still not a pyramid scheme, | since 0.5% is a small fraction of the total yield paid out, | but pyramidesque. | | [1] https://stablegains.zendesk.com/hc/en- | us/articles/4409440197... | Liron wrote: | Written as if no mistakes were made on their end. Paraphrasing: | | "We all thought UST and Anchor were a source of stable >10%/yr | gains that you could trust for your corporate treasury. That the | yield instead turned out to be -99% is quite disappointing, and | makes this a natural time for us to bring our service to an end. | It's been a pleasure to serve you." | hinkley wrote: | >-99% | | You know the scene in Office Space when Peter says, "I have | eight bosses, Bob." And then Tall Bob (Dr Cox) leans forward | with a surprised look on his face? | | I don't think I've ever empathized with Bob in that scene. | Until just now. | Liron wrote: | May I suggest another Office Space clip for this situation: | https://twitter.com/liron/status/1527376821045473304 | puranjay wrote: | Even serious crypto people knew that UST was highly unstable | lol | | How did these guys raise funding? They literally just built a | fiat onramp | ushakov wrote: | > How did these guys raise funding? | | either the investors didn't do enough research or they were | on it | | https://davidgerard.co.uk/blockchain/2022/04/11/web3-a-vc- | fu... | gabereiser wrote: | This article is spot on to what I saw in the VC space (I | won't name where). Tons of little copycat crypto | "companies" taking VC money for tokens which were | collateralized with BTC. I know this article is going after | a16z but it's not just them, it was pretty much everyone. | TS, YC, a16z, and more. | tootie wrote: | Anybody who believes that kind of logic deserves to lose their | stake. Crypto has spent most of it's formative years riding an | historic bull market and claiming it's immune to market forces. | Now we have pretty clear evidence that crypto is just a | multiple of the Nasdaq. | trixie_ wrote: | UST, a stable coin not even pretending to be backed by the very | thing it was pegged to fails. Unlike USDT, USDC or GUSD, there | was a documented plan of attack to take UST down 6 months ago, | someone just raised enough capitol to execute it. | phire wrote: | While there was a proposed attack, there is no evidence it (or | any other attack) was executed. | | Which would be weird. Attacks on blockchains usually have | detailed analysis within days, the blockchains are public and | any evidence would be right there for people to examine. | | All evidence is that UST simply collapsed on under it's own | weight because it's algorithmic nature was never stable. As | soon as the price of LUNA started falling, it created a | feedback loop which drove the price of LUNA to zero, destroying | the very thing backing UST. | djbusby wrote: | Can you point to the docs? That seems an interesting read. | syncsynchalt wrote: | Might be referring to https://twitter.com/freddieraynolds/sta | tus/14639606234029137... | SemanticStrengh wrote: | What's interesting is that Do Kwon(the founder) blatantly | insulted the researcher at the time.. don't have the link but | google it, it's on twitter | [deleted] | gloryless wrote: | It's pathetic that regulators haven't stopped this nonsense. | These scams don't even last 6 months anymore, it's a joke | unyttigfjelltol wrote: | It's pathetic that the U.S. Federal Reserve and Treasury | allowed _anyone but the U.S. Government_ to _mint_ a _coin_ | 'tethered' to USD, and named anything remotely similar. It's | bizarre and a complete reversal from prior practice. | DelaneyM wrote: | Plenty of countries have currencies which have a fixed | exchange with USD, including my own (1 KYD = 1.2 USD). | | It just takes a shit-tonne of capital, and it helps to have a | functioning internal economy and flexibility to be able to | defend against malicious agents. | | I suspect there are other legal issues with creating an | alternative currency in the us though, which is why these | aren't currencies but securities. Which is still fine! A | tethered coin is conceptually _similar_ to a 0-yield bond. | | Presenting it as being "safe" without it actually being so is | the problem here. | pid-1 wrote: | IMO letting crypto die by itself is the best way to prove it | sucks. | | If any blockchain was forbidden, there would be a huge PR | stress and infinite arguments about their viabilities. | | Just let morons fail. | IdEntities wrote: | Yep. Too many regulators have been on the trail of Tether | and its ilk for too long for any of what's about to come to | take them by surprise. Crypto being strangled in the crib | by regulators makes them look like exactly the villains all | the crypto advocates portray them as. Crypto being | detonated by a huge number of blatant Ponzi schemes, on the | other hand, is nothing but upside for the regulators. | | Tether may also have been allowed to proceed as a sort of | test bed for the CBDCs which seem to be on the agenda. Now | the narrative can be "the public has already demonstrated | strong demand for USD-type cryptocurrencies, we just need | to supply an official version." | xvector wrote: | As long as someone pays for cryptocurrency somewhere in the | world, you will be able to algorithmically mint a coin | tethered to USD or any other asset, and there is absolutely | nothing the US Government or anyone else can do to stop it. | The Pandora's Box is open. | [deleted] | chx wrote: | _All_ crypto is a scam and it 's _so_ simple to see, it 's | astonishing anyone fell for this. | | Look. | | Imagine an otherwise empty room with a table and a few chairs. | A couple people come in with some money in their pockets and | cards. They play a few round of a card game, some lose, some | win. When they leave, the room as it was before so it is | crystal clear the _sum_ of their money couldn 't change. Some | won, some lost but overall the change is zero. This still | doesn't change if, for convenience, during the game, they use | plastic chips to count wins and losses and at the end they | exchange it for money. | | But if someone takes a small cut every time the plastic chips | move then that person is _guaranteed_ to win and everyone else | _together_ is guaranteed to lose. Now, a game where, without | knowing anything about the game you can tell ahead of the time | which group wins and which one loses is not a game, it 's a | scam. | | Indeed, one of the best moves for players is not to play the | game but to sell their chips -- and praise the game to increase | the chance of a greater fool buying in. Those will sit on a | greater loss than you did which might not materialize yet but | it's certainly in the system. | | So, any crypto"currency" with transaction fees is a scam. Those | who collect transaction fees are guaranteed to win and the rest | are guaranteed to lose. | | And no, stocks aren't like this because they produce dividend. | And no, gold is not like this either because there are uses of | gold which transform your gold into higher value products than | raw gold (integrated circuits, jewelry) which sell for real | money. Neither _can_ happen with crypto "currencies", there the | only interfacing with real money is exchange. | risyachka wrote: | Crypto is a tool. | | Is it often used for scam? Yes. But so is email. | | Just like stocks can fall 99% in a day. It stock s cam? No. | | The problem is that users dive into it without understanding | the risks. Also, there should be (and will be) more | regulations around it. | | But it is as far from the scam as it gets. | gabereiser wrote: | If I buy a share of a company, I own it. Buy enough of it, | I can control it. Same can not be said for crypto. If I buy | a token of BTC it guarantees me no voting rights, no | shareholder rights, no FDIC insurance, no insurance | whatsoever. When comparing investment instruments, crypto | is the worst of all of them, including timeshares. | toqy wrote: | You're right, it's not always a scam. Sometimes it's just | useless. | planetsprite wrote: | But what about crypto completely revolutionizing | transactions, decentralizing the economy and providing a | stable universally accessible data exchange medium? What | about tracking the food you buy on the blockchain? What about | web3? What about muh NFT monkeys? | jdasdf wrote: | > All crypto is a scam and it's so simple to see, it's | astonishing anyone fell for this. | | No, it is not. | | Please try to set aside your hatred for all things crypto and | understand that there is actual legitimate value in many of | the crypto projects, and that the core proposition, that of | decentralized peer to peer value transfer, is a legitimate | and useful use case. | chx wrote: | > decentralized peer to peer value transfer, is a | legitimate and useful use case. | | I would contest even this. People don't want to transfer | "value" they want to transfer _money_ , now to use, say, | Bitcoin to transfer money you need to do the following | steps: | | 1. Buy Bitcoin. Let's presume you are already set up with | an exchange for this so all you need to do is transfer your | money some way to the exchange. | | 2. Transfer Bitcoin and pay the transaction fee (note this | an unknowable amount). | | 3. The receiver wants money. So let's again presume -- | despite this is a much shakier presumption -- they are | already set up with an exchange then they need to exchange | Bitcoin to real money and transfer their money from the | exchange to their bank account. I am not mentioning here if | they tarry then the exchange rate in #1 and #3 differs -- | that could be automated although as far as I am aware | there's no service which currently does it. | | Turns out the challenge is not #2 but #1 and #3: | integrating with every national banking system in the | world. Wise (nee Transferwise) shows this can be done and | #2 completely cut from the process, creating transparency | and predictable fees. | andreilys wrote: | Sounds like you're describing the Visa/Mastercard duopoly | that charges high interchange fees to merchants so they can | bankroll their own rewards programs. | cmeacham98 wrote: | > Imagine an otherwise empty room with a table and a few | chairs. A couple people come in with some money in their | pockets and cards. They play a few round of a card game, some | lose, some win. When they leave, the room as it was before so | it is crystal clear the sum of their money couldn't change. | Some won, some lost but overall the change is zero. This | still doesn't change if, for convenience, during the game, | they use plastic chips to count wins and losses and at the | end they exchange it for money. | | Does this not describe CC fees/taxes/online marketplaces/etc? | Or is your argument all those are scams as well? | | I agree crypto projects are generally a scam but I fully | disagree the reason for that is transaction fees (which I | assume is what you're alluding to here as the "small cut"). | nemothekid wrote: | > _Does this not describe CC fees /taxes/online | marketplaces/etc? _ | | No, because CCs exchange dollars and the dollars themselves | are not worthless (or, rather are given worth via a nuclear | arsenal). | | The coins themselves are worthless, but accrue "fees" in | fiat (ex. when you exchange USD for UST). | rvz wrote: | > It's pathetic that regulators haven't stopped this nonsense. | | As a result of the ICO scams in 2017 for example the infamous | Ethereum DAO hack, perhaps that is why at least in the US, the | SEC banned unregistered ICOs [0]; more countries to follow. | | They have done 'something' about it, but it is not going to _' | completely'_ stop otherwise they would have 'totally' banned | all of them, including even registering an ICO with the SEC. | | I won't be surprised to see stable-coin regulations this year | with only a few of them still surviving. | | [0] https://www.whitecase.com/publications/alert/regulation- | init... | ushakov wrote: | nowadays they don't even do ICOs | | find a VC who'd buy coins at low prices and then dump into | public by placing on Coinbase/Binance | | spend that VC cash on marketing | badkitty wrote: | Let's be clear: YC needs to quit financing ponzi scams. Or | better yet, be punished for it. | dvt wrote: | Yawn, brand new account, take this virtue signaling back to | reddit and give me a break: YC can invest in whatever they | want to, it's their money. Stablecoin farming may not be | sustainable, but it's not a Ponzi scheme, unless you have no | idea how a Ponzi actually works. | ushakov wrote: | farming is literally a ponzi | | https://m.youtube.com/watch?v=C6nAxiym9oc | Jasper_ wrote: | The thing is that a Stablecoin is either stable, and | provides no returns, or it's volatile, and provides 15% | returns. You can't have a stablegain that continually goes | up in price, that's not stable then! | | Stablegains, by their own admission, _only invested in | stablecoins_ : https://stablegains.zendesk.com/hc/en- | us/articles/4402687671... | | > We do not engage in speculation on the prices of volatile | cryptocurrencies like Bitcoin or Ether. We only offer | deposits in stablecoins whose value is pegged to one | dollar. | | > Regardless if crypto markets are soaring or crashing, the | value of assets under our management remains stable. | | This is hypocritical _on its face_. You can 't have any | returns if the assets are stable! | | Sure, YC can do whatever they want with its money, but we | can all be very disappointed and sad that VC funds are | engaging with any of this. YC has been slowly been losing | their image for years now, along with the other VC firms, | and this just cements it for me. | dvt wrote: | I completely agree with all of this. Stablecoin farming | often uses a "secondary" coin which happens to be | volatile (or some form of lending/leverage). The risk is | obfuscated, but it's still there. My point was only that | calling it a Ponzi is just lazy and wrong. | eatonphil wrote: | The shorter the term the harder I would imagine it to be for | regulators to act. | | Governments tend to do things at their own pace. | ryanSrich wrote: | IMO, every single exchange is at least partially responsible for | misleading users. Binance.US and OKCoin specifically marketed UST | as a stablecoin that you could earn 20%. Marketing it as a | stablecoin is a very clear signal that it has less risk. | | Yes, users should inform themselves, but exchanges (as well as | companies like Stablegains) need to be held accountable. | bmm6o wrote: | Obviously I'm a little out of the loop, but what is the "attack" | they talk about in the new plan? I thought the coin just death | spiraled. | deutz_allis wrote: | http://podcast.banklesshq.com/ust-luna-the-biggest-collapse-... | | These guys discuss some details (that were known as of this | publish date). It closely resembles the 'attack' on GBP in the | 90's by a billionaire. | celticninja wrote: | The thoughts are that someone borrowed lots of BTC and UST, | started selling UST to depeg, then started selling BTC as they | tried to regain the peg, the joint selling of BTC lowered the | price making it harder, actually impossible,to regain the peg. | dwighttk wrote: | But wouldn't that just be mr market, not a particular | someone? | rspeele wrote: | Terra: you can always exchange 1 UST for $1 worth of Luna via | this smart contract if you'd like to cash out. | | Users: OK, don't mind if I do. | | Terra: help we're under attack. | dataflow wrote: | > Stablegains is not accepting any new users or any new deposits | on our platform. At this time, please DO NOT use your deposit | addresses as any funds sent might not be recoverable. | | It boggles my mind that people don't see that the inability to | block/reject payments is a fundamental flaw of cryptocurrency. | devit wrote: | You can do that with a smart contract if you plan ahead for the | possibility that you want to do so. | codehalo wrote: | Are you saying that someone can't deposit money into random | bank account? | dataflow wrote: | I'm saying people can close their bank accounts. | dwighttk wrote: | Unless Wells Fargo opens them back up | wcoenen wrote: | Why would there be a "fundamental" reason for an inability to | block/reject payments in cryptocurrencies? Ethereum smart | contract can already do that. Just exit with an error while | processing an incoming payment. | nrmitchi wrote: | > While we have informed users that there are no absolute | guarantees against risks | | I'm... uh.... fairly certain this was not the crux of their | marketing which severly downplayed the underlying risk. There is | also a huge spectrum between "we cannot guarantee that there is 0 | risk" (which seems to be what the above sentence is saying), and | "there exists a risk that all of your funds disappears in 24 | hours". | | It seems like there is some _serious_ rewriting of history going | on here. | | Question though, do the founders here have any potential criminal | liability from this whole situation (including _apparently_ lying | about what they were doing with their customers funds)? | gruez wrote: | >Question though, do the founders here have any potential | criminal liability from this whole situation (including | apparently lying about what they were doing with their | customers funds)? | | While they're not exactly forthcoming with the risks, their | marketing pages[1] were also careful to not make any explicit | claims of safety (eg. "your principal is protected", or "you | won't lose money"). The most that they claimed were "stable" | returns. For good measure there's also a disclaimer mentioning | the risks. | | >There is a range of safeguards in place to help secure your | deposits, however holding and depositing stablecoins with | Stablegains and third party lending platforms still carries | significant risk. Please carefully read our Terms of Use and | Risk disclosures in our Learning Center before making a | deposit. Any deposit with Stablegains and third party lending | platforms is entirely your responsibility. You understand that | your principal is at risk. | | [1] | https://web.archive.org/web/20220108232821/https://www.stabl... | nrmitchi wrote: | > careful to not make any explicit claims of safety (eg. | "your principal is protected", or "you won't lose money"). | | These are both explicit examples of explicit claims of safety | that are still up on their documentation (at least as of 5 | minutes ago) | | - "You will not lose your funds because all loans are 100% | asset-backed." (https://stablegains.zendesk.com/hc/en- | us/articles/4402680425...) | | - "Regardless if crypto markets are soaring or crashing, the | value of assets under our management remains stable." | (https://stablegains.zendesk.com/hc/en- | us/articles/4402687671...) | | Edit: Updating link to fix truncated urls | gruez wrote: | Thanks for unearthing this. In light of this, I'll admit it | looks pretty bad for them. | jdasdf wrote: | And now those are gone. | | These people need to be in jail. Deleting evidence isn't | going to look good in front of the judge. | nrmitchi wrote: | oh. my. god. | | Everyone pour one out for u/ushakov, hero of the hour: | https://news.ycombinator.com/item?id=31462674 | gruez wrote: | In this case it's just sloppy copy pasting (copying the | truncated link?) breaking the link. The original links | from his other comment still works: | | https://stablegains.zendesk.com/hc/en- | us/articles/4402680425... | | https://stablegains.zendesk.com/hc/en- | us/articles/4402687671... | nrmitchi wrote: | Yupp that was it. I guess that's the better result here. | | I updated the the parent comment with the correct urls | menzoic wrote: | The pages are gone... That was too fast. | gruez wrote: | See my other comment, the links were just improperly | pasted, not taken down. | | https://news.ycombinator.com/item?id=31462851 | nrmitchi wrote: | Further little notes from their documentation that, lets just | say, "downplay the risk": | | - "You will not lose your funds because all loans are 100% | asset-backed." (https://stablegains.zendesk.com/hc/en- | us/articles/4402680425...) | | - "Regardless if crypto markets are soaring or crashing, the | value of assets under our management remains stable." | (https://stablegains.zendesk.com/hc/en- | us/articles/4402687671...) | | It's kind of shocking really that these statements are still up | give how many of their other docs have been editted in the last | 10 days. | | --- | | Edit: u/ushakov is the hero of the hour for archiving those | pages (https://archive.ph/O2lZV, https://archive.ph/ItERp) | ushakov wrote: | archived for future reference | | https://archive.ph/O2lZV | | https://archive.ph/ItERp | Hamuko wrote: | > _How long do you expect users can earn such high yields?_ | | > _The basis for Stablegains ' rate is Anchor Protocol's | yield. At the time of writing, Anchor yield is set at 18% - | 20% APY and expected to remain so for a long time._ | | > _We expect the rates of open finance protocols to beat | those of traditional finance for a very long time._ | | https://stablegains.zendesk.com/hc/en- | us/articles/4402680471... | nrmitchi wrote: | Both of those were good to, but I didn't include them | because both are either "expectations", or a reference to | someone else's expectation/statement, and are not | definitive statements. | perihelions wrote: | Their more recent marketing ups the minimum collateral to | 125%. (Your link is dated July 2021; this one is March 2022). | | - _" The key to all the DeFi lending enabled via Stablegains | is that all loans are over-collateralized. In fact, all loans | are collateralised by a minimum of 125%."_ | | https://blog.stablegains.com/stablegains-for-business- | earn-1... | perihelions wrote: | This was their old marketing: | | https://news.ycombinator.com/item?id=31431915 | | - _" 15% interest. No surprises."_ | TheDudeMan wrote: | To be fair, the collapse of an algorithmic stablecoin is no | surprise ;) | lmohseni wrote: | 15% interest? No, surprises! | puranjay wrote: | I can tell you right now that there is absolutely no safe | yield in crypto currently that goes beyond 4% on a "safe" | stablecoin like USDC. For truly safe (as in, huge value | locked, never been hacked), the yield is more like 1.5-2% | | All the high yield is in algoponzis or new protocols that | carry massive protocol risk | elliekelly wrote: | There is absolutely no safe crypto. Full stop. | UncleEntity wrote: | > "15% interest. No surprises." | | I'm honestly not surprised about how things turned out. | gus_massa wrote: | Was it 15% monthly or 15% annual? | nrmitchi wrote: | Well 15% monthly woud be ~535% annual and at that point | you're well past "highly unlikely" and into "I'm printing | money in my 20k sqft basement" territory. | perihelions wrote: | Annual. | | - _" Earn 15% APY. Interest paid daily."_ | | https://blog.stablegains.com/stablegains-for-business- | earn-1... | | That link also has some very topical marketing claims: | | - _" The main risk when lending out money for a yield is | the risk of default. The risk that the borrower does not | repay. The key to all the DeFi lending enabled via | Stablegains is that all loans are over-collateralized. In | fact, all loans are collateralised by a minimum of 125%. If | the borrower does not repay, the protocol sells the | collateral and repays the loan in full. This makes the | default risk extremely low. We describe related risks and | what we do to mitigate them here."_ | Terry_Roll wrote: | Dont rely on any websites & webpages existing like this link. | | I can show you links where even the Wayback machine has | removed content, most people will know how Google Cache has | removed content, so print all copies and have hard copies | safely stored away where they cant be destroyed. Houses will | be broken into in order to destroy evidence, I know I've had | it done to me! | | This may be your only chance to out the criminals that run | the world! | gruez wrote: | >Houses will be broken into in order to destroy evidence, I | know I've had it done to me! | | >This may be your only chance to out the criminals that run | the world! | | Given that the screenshot is an (instagram?) ad, there's | probably such a huge papertrail that can be subpoenaed that | you don't have to worry about the founder breaking into | your house to destroy the only copy of the marketing | materials. | Terry_Roll wrote: | midasuni wrote: | Maybe you could store it on the blcokchain... | fartcannon wrote: | That would quite legitimately work. | Terry_Roll wrote: | I love the hubris people have in technology. | [deleted] | nrmitchi wrote: | Thank you! I was looking for that image (which I'd seen | before) but couldn't find it. | | Will be interesting to hear the argument "Well technically | there were no surprises here, because customers should not be | surprised when they lose all their money investing in risky | assets. Therefore, technically, we did not lie." | sedatk wrote: | I recommend skimming over the list of blog posts shared over the | course of a year about the rise and decline of a crypto startup. | It's a great post-mortem: https://medium.com/@kamil.ryszkowski | jmyeet wrote: | What's funny about this is that I can recall discussions here and | elsewhere from only a few months ago questioning the "guaranteed" | super-high returns. I forget who said this but someone awhile ago | said in finance said that if someone is promising you consistent | above-market returns it's either a scam or there is unknown or | undisclosed risk. | | And the Crypto Andys were all like "you just don't understand | DeFi!" to which the retort is "No, _you_ just don 't understand | finance". | | Finance is the way it is for many reasons. There are thousands of | years of lessons that have made the system the way it is. I get | the innovator mentality of sweeping away the old but there seems | to be a fine line between innovation and ignorance. | | I'm just sitting on the sidelines watching people relearn all the | lessons of finance the hard way, some because they think they | understand finance because because they understand merkle trees | and consensus protocols but really most just want to get rich | quick. | vmception wrote: | Usually there is an answer, I'm not familiar with the | stablegains service but usually there is enough information for | you to tell objectively why to use or avoid a service according | to your risk profile. | | There was enough in the terra ecosystem to come to a conclusion | of avoiding completely | samhw wrote: | Consider what we see if there _isn 't_ enough information: | https://en.wikipedia.org/wiki/The_Market_for_Lemons And on a | totally separate note, consider what we see in DeFi. | JumpCrisscross wrote: | > _There was enough in the terra ecosystem to come to a | conclusion of avoiding completely_ | | There is enough information in a ten or 20% yield to come to | a conclusion. That doesn't stop unsophisticated investors | from getting screwed. When they do so because they bought | magic beans, I have no sympathy. When are lied to and sold | deposit-like products, it's infuriating. | koheripbal wrote: | What most people don't understand about finance is that there | are fundamental rules that you really cannot break without | consequences. | | Anyone who has studied quantitative finance knows that it is a | HARD science. I worked with a Nobel prize winner in economics, | and the math dominated. There was no politics, no opinions, no | ethics involved. It really is a science. | | Most social media characterize finance as some ethical vice or | organized political power structure - and those people simply | don't understand finance. | | Talking to people who are looking to just tear down modern | finance are no different than climate change deniers, antivax, | or flat earthers... and yes, they even exist in crypto (and on | HN). | throwk8s wrote: | Is the math meaningful though? | JumpCrisscross wrote: | > _Is the math meaningful though?_ | | "Meaningful" is squishy. Is it strongly predictive, and in | some cases, definitive? Yes. | reflexco wrote: | The 20% APY provided by Anchor was way above the average yields | for safe DeFi lending. Which indicated that even among crypto | users, this was considered a _degen_ play! | | The whole Terra saga was a typical example of speculative | bubble. Everyone knew it was risky, but its sheer size and the | caliber of people endorsing it | (https://twitter.com/novogratz/status/1478535972560195585) was | providing an aura of safety. Too big to fail. | | It's also similar to the stock market as a whole before it | started correcting. Everyone knew valuations were detached from | every fundamental except liquidity, yet everyone went along | thinking the music just had to keep going. | JumpCrisscross wrote: | If you are in the U.S. and lost money, please write to your | state's Attorney General [1]. | | The company is Stablegains, Inc. and the people to name are Kamil | Ryszkowski and Emil Rasmessen, co-founders and, I think, Board | members. Copy Ken Paxton, Office of the Attorney General, P. O. | Box 12548, Austin, Texas as well as his challenger George P. Bush | at P. O. Box 26677, also in Austin. (Stablegains and its founders | are in Texas. They are spearheading the criminal complaint.) | | [1] https://www.usa.gov/state-attorney-general | truthwhisperer wrote: | SnowHill9902 wrote: | What should you write exactly? | perihelions wrote: | Hopefully the A.G. will recuse himself. He's under indictment | for the same crime. | | https://en.wikipedia.org/wiki/Ken_Paxton#State_securities_fr... | hprotagonist wrote: | yeah, Ken Paxton is ... let's go with "not clear and free of | scandal". | chmod775 wrote: | Creating a public permanent record of having fallen for the | latest crypto shitcoin will likely be too embarrassing for | some. But then again I'm having trouble relating. | | Successful "crypto startups" hardly exist, and most of those | are selling shovels to suckers. What was the expectation here? | gruez wrote: | Isn't it already "a public permanent record" because it's | already in the news? | nvr219 wrote: | It's in the news about this company, but it's not in the | news that I fell for the scam for example. | t-3 wrote: | A blockchain is already a public permanent record in the | first place. | lumost wrote: | It won't be once it shuts down. Blockchains are as | permanent as the miners that power them. | adventured wrote: | There's no such thing as a blockchain permanent public | record. Some entity has to keep that up forever, | maintained, public & accessible, for it to be such - | that's not going to happen. Nearly all of them will fail | and be wiped by time. | | And certainly all of them can go away, they're mere | digital storage systems. There's nothing permanent about | any of it, not by any stretch of the imagination. | | They're particularly, almost pathetically, temporary | records. Most of these garbage coins will have no | comprehensive financial records remaining several decades | from now. By contrast, I know a lot of small businesses | that have elaborate financial records going back 30-40 | years, and the country is surely filled with similar (and | most large corporations will have such). | giantg2 wrote: | For what it's worth, they are also a YC backed company. | JumpCrisscross wrote: | > _For what it 's worth, they are also a YC backed company_ | | Severely disappointing. I respect PG too much to believe he | would knowingly condone this. The partner who did this didn't | understand what they were investing in or should be decoupled | with haste. | | At the very least, the Alaska RMB, U of M Endowment, | Bloomberg's family office and SMC should be asking why their | capital is backing what should have been clear as day _ex | ante_ a fraud. Anyone living in Alaska, going to or an alumni | of U of M or Stanford, or working for Bloomberg should be | asking the same question. | sergiomattei wrote: | Let's not even get started with Sama pushing Worldcoin, a | pretty exploitative attempt at getting everyone's irises | with a pre-mined currency supposed to revolutionize world | finance. | majormajor wrote: | The VC drive to jump into the crypto world was startling | to me. People hold varying opinions on various crypto | products, but so many of the ones getting investment are | making claims that should gather _extreme_ scrutiny from | a crowd that should be familiar with finance and returns. | "We expect 10%+ returns for a long time"? Folks investing | in companies instead of banks should know firsthand that | guaranteed market-beating returns are almost | definitionally suspect! | | Even if you think it's not fraudulent on the part of the | founders, the industry is frothy and unproven and fraud- | adjacent enough that investing in many companies in the | space should appear to be a huge potential reputational | risk beyond just losing some invested money. The people | putting up the cash should be looking long and hard at | this whole story. | | And then once you get into the details, the moment you | hear about one of the main use cases for defi lending | leading to these high interest rates being "put up crypto | collateral to borrow to buy even more crypto since it's | appreciating rapidly"... run! | davidgerard wrote: | VCs promoting this sort of blatant and obvious Ponzi - and | there are _many_ VCs getting into ponzinomic crypto | enterprises - is a good reason to start making some of the | investors more liable. | sillysaurusx wrote: | Take it from someone who lost his father's money (all $11,000 | of it) in 2014: it's easier to just get over it as quickly as | possible. | | None of this will amount to anything, and you'll feel awful | until you give up. Then the healing can begin. | | On the other hand, I'm not sure if I was mentally capable of | hearing this advice back then, so... | | But it's true. It's 2022 now. That's almost a decade ago. In | fact I forget when exactly Gox collapsed, which is how little | it matters to me now. But back then, it felt like the end of | the world. ___________________________________________________________________ (page generated 2022-05-21 23:00 UTC)