[HN Gopher] Binance to acquire FTX ___________________________________________________________________ Binance to acquire FTX Author : jmsflknr Score : 355 points Date : 2022-11-08 16:13 UTC (6 hours ago) (HTM) web link (www.bloomberg.com) (TXT) w3m dump (www.bloomberg.com) | ramish94 wrote: | I'm a little ignorant to the whole crypto ecosystem, so can | someone give me a quick rundown on the chain of events that led | to this? Seems a little out of left field. | | BTX, from the outside looking in, looked to be one of the more | well run, stable crypto exchanges. $1.02 billion in revenue with | $388M in net income in 2021. They didn't go on any crazy hiring | spree when they didn't have to. Liquidity crisis implies that | people are withdrawing cash they do not have, but if so, where | did it go? | JumpCrisscross wrote: | FTX bet customer funds through the CEO's hedge fund on an FTX | token [1]. The token price fell when this was revealed [2]. | | The hedge fund, and thus FTX, had less money than they owed | lenders and customers. FTX found a bail-out in Binance; | otherwise everyone would have lost their money. | | [1] https://www.coindesk.com/business/2022/11/02/divisions-in- | sa... | | [2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets- | as-... | gitfan86 wrote: | It isn't officially a bailout. They just said they intend to | acquire FTX. But, once they look at the books they may | backout out the deal, especially if most customers want to | take their money out. What is the point of buying an exchange | that has no customers? | rhaway84773 wrote: | The point is the same reason why FTX bought all the smaller | crypto firms that were about to collapse. | | Preventing exposing the entire crypto currency ecosystem as | fraud. | JumpCrisscross wrote: | > _isn 't officially a bailout. They just said they intend | to acquire FTX_ | | That's a bailout. | | > _once they look at the books they may backout_ | | It's not a done deal. But the proposal is a bailout, | through and through. | anonu wrote: | I can't help you but all I can say is empires rise and fall | faster than a house of cards in this space. | colinmhayes wrote: | FTX's ceo also runs a prop trading firm which is the real | source of his wealth. FTX loaned the trading firm billions of | its own token FTT. FTX also gave binance billions of dollars of | FTT because binance invested in them. Over the weekend FTX's | ceo and Binance's ceo got in a fight on twitter and binance | sold all of their FTT which collapsed the price. FTX's assets | are tied up in the loans to their trading firm which are | denominated in the now essentially worthless FTT and so they | can't convert the FTT to cash which means can't process | withdrawals. | shawabawa3 wrote: | > so they can't convert the FTT to cash which means can't | process withdrawals. | | That implies they embezzled customer funds (customer deposits | should never be invested or loaned or intermingled with | company funds) | hanniabu wrote: | https://techcrunch.com/2022/11/07/heres-the-rundown-on-the-b... | [deleted] | max_ wrote: | Its funny how a few days back some people on HN were saying FTX | is unlikely to be illiquid because SBF is a genius from | JaneStreet. | asdajksah2123 wrote: | And people who knew what they were actually talking about were | pointing out that it's unlikely anyone would have voluntarily | left Jane Street as early as he did. But they were largely | ignored. | eddsh1994 wrote: | Leaving Jane Street to become a Billionaire seems like a | weird criticism | Bootvis wrote: | It seems likely that the Kimchi arbitrage (arbitraging | between exchanges in Korea an the rest of the world) was | indeed massively profitable. He took a wrong turn later. | nullc wrote: | When I saw that he was using that as the claimed origin of | his wealth I wrote him off as an almost certain fraud. | Bootvis wrote: | Why? He must have had some money of his own and some rich | friends to set it up. So he had the means. Also, the | difference was there and it was persistent so he had the | opportunity as well. | nullc wrote: | There was _very_ little volume available on those pricing | discrepancies, making thousands per day without erasing | the arb would have been a challenge but perhaps not | impossible. The public is expected to believe he made | over $10 million dollars per day on average on that | trade. It 's not credible. | astrange wrote: | Maybe he likes Haskell better than OCaml. | type-r wrote: | I read he was there for over 4 years, is that abnormally | short? Seems like a pretty normal period of time to me. | whymauri wrote: | Seems like a weird critique to me. Some people join out of | college and realize that, for a variety of reasons, that | sector isn't for them (yes, even at Jane Street). Maybe | they get overly enamored by an internship; maybe they don't | want to live in NYC. My impression is they are pretty 'open | door' about rehiring if you leave on good terms or decline | an offer anyway. | wmf wrote: | He sacrificed FTX but kept his real baby Alameda. | [deleted] | acgt23 wrote: | Alameda won't be worth nearly as much without FTX - it was so | successful because FTX fed it as much market data as it | wanted and gave it priority market making etc. Also seemed to | be sending it its own printed FTT tokens to secure loans for | trading which was the cause of the insolvency rumors. | | Neither of those things benefit the owner of FTX unless they | are also the owner of Alameda | ww520 wrote: | Not sure how safe Alameda is. $6 billion out of $14 billion | of Alameda assets is FTT based. With FTT tanking, its asset | balance shrunk greatly. It might well has its own liquidity | problem. | | Also with Biannce buying FTX, it can call back the loaned FTT | from Alameda. | perlgeek wrote: | Wasn't there a post hitting the HN front page just yesterday or | two days ago about how FTX was close to being illiquid, and most | of the top comments were about how wrong that analysis was? | | Or was that another crypto trader? | | If anybody could help my sieve-like brain, that would be very | appreciated :-) | teuobk wrote: | Yup, here's the HN thread: | https://news.ycombinator.com/item?id=33464494 | jaywalk wrote: | Yep, it was FTX. | jo6gwb wrote: | https://dirtybubblemedia.substack.com/p/is-alameda-research-... | wmf wrote: | Yes, concerns about Alameda's insolvency infected FTX. In | retrospect these "concerns" may have been disinfo designed to | destroy FTX. | throwaway4good wrote: | So wouldn't this trigger and potentially be blocked by CFIUS? | Given Binance's Chinese roots and the general anti-China | sentiment in US politics. | | Here is an article about the twitter acquisition also with | Binance/CZ onboard - this would similar or worse, no?: | | https://www.brookings.edu/research/the-national-security-gro... | | The national security grounds for investigating Musk's Twitter | acquisition | ajaimk wrote: | "Note that http://FTX.us and http://Binance.us - two separate | companies-are not currently impacted by this." | redox99 wrote: | Isn't ftx.com[1] from the bahamas, and binance from the cayman | islands? | | [1] Not ftx.us, which is not getting bought | throwaway4good wrote: | This is article says it is only the non-US part of FTX that is | in play: | | https://www.cnbc.com/2022/11/08/binance-offers-to-buy-ftxs-n... | | Binance offers to buy FTX's non-U.S. operations to fix | 'liquidity crunch' | | The acquisition impacts only the non-US businesses, FTX.com. | FTX.us will remain independent of Binance. The deal, according | to Tweets from both Zhao and Bankman-Fried, rests on a non- | binding letter of intent, pending full due diligence. | JumpCrisscross wrote: | > _it is only the non-US part of FTX that is in play_ | | The U.S. subsidiary had to follow rules that made FTX's | shenanigans more difficult. | drak0n1c wrote: | CZ has shut down the China branch, and was essentially banned | since their crypto crackdown. He has been publicly critical of | the CCP government too. The gov may not have much leverage over | him. | thepasswordis wrote: | I am _extremely_ bullish on crypto, and have been for the last | decade. | | That said: the sooner we can get rid of these weird centralized | exchanges and weird messiah figures the better. | | The next thing I thing will explode is Cardano, which appears to | function approximately like a cult, with no actual product (as | far as I can tell). | | Ethereum, LINK, and Bitcoin. Everything else is a distraction. | rapsey wrote: | Crypto would be perfect. If only humans were robots. | boc wrote: | Not really, quite the opposite in fact. If humans were robots | they'd trust each other completely, meaning all financial | transactions could be done instantly with a simple database. | | Humans are messy, so the solution we've arrived at is a | database _enforced by_ a complicated legal system + state | power /violence (and arguably private power/violence via the | mob). This works pretty well and powers trillions of dollars | around the world. | | Crypto is a fundamental misunderstanding of what makes modern | finance hard. It's not about trust, it's about enforcement. I | don't need to trust my bank, but I need to trust that | somebody will make things right if my bank takes my money. | That allows me to trust my bank with my life savings, even | though I've never met my banker or even know a single | employee at the bank. | | Crypto is missing this point and it's why, despite following | it since the beginning, I've never thought it has a future. | It's fundamentally solving the wrong problem. | short_sells_poo wrote: | That's a very eloquent way of putting it, thank you. It's | possibly even worse than just a misunderstanding though. | I'm sure there are people in the Crypto industry who see | core issue of enforcement, because the second wave (after | Bitcoin first became mainstream) was all about smart | contracts. E.g. there was an effort to move the subject of | enforcement into the framework. After all, if the contracts | that need enforcement are part of the crypto system, then | enforcement can also happen in the same system. Right? | | Of course, this still falls short because no amount of | mathematics will bridge that gap. At some point, the | financial system (whether classical or based on | blockchains) has to interact with the mind boggling mess of | the real world. In the real world, 2+2 is not certain or | deterministic at all. It can be debated, social | implications weighed and the judge might say it's 4 and a | bit, or slightly more than a pie. | | In some sense it feels like crypto would work perfectly in | a world that is completely deterministic, measurable and is | populated wholly by algorithms interacting with each other. | The second order question then is: would such a world even | need crypto? | paulpauper wrote: | The time to have been bullish was a decade ago. Now it looks | like the bubble finally burst. No bottom in sight. No adoption | either. The government has made crypto obsolete or unusable. | Everything is traced and tracked. | m00dy wrote: | reducesuffering wrote: | SBF tweets for more clarification: | https://twitter.com/SBF_FTX/status/1590012124864348160 | | Apparently this is for the international exchange business, | FTX.com, but not FTX.us or Alameda quant trading firm. | gringoDan wrote: | Some level-headed commentary on the developing situation via Cas | Piancey and Bennett Tomlin: | https://www.youtube.com/watch?v=B2UFswUMQqI | paulpauper wrote: | And total market meltdown continues. Not good enough. | adam_arthur wrote: | The ultimate shell game... | thedangler wrote: | I don't know if this is posed yet but FTX.com is different than | FTX.us which GameStop Partnered with. I've seen lots of confusion | and FUD arround this. | zaps wrote: | The umps get new jackets! | bob234 wrote: | blueblisters wrote: | This is probably going to have ripple effects in unrelated | industries - FTX Foundation, presumably funded by | FTX/Alameda/SBF's personal wealth, has been been the biggest | funder of AGI projects and labs this year. They were the biggest | funder (in a $500M fundraise) for Anthropic, which is (atm) a | non-profit AI alignment lab. They also funded a bunch of esoteric | EA projects which likely rely on them for continued funding - | https://ftxfuturefund.org/our-grants/ | dabeeeenster wrote: | It's a pyramid all the way down. So surely when there's only 1 | exchange left standing, who is going to catch it when it falls? | 2OEH8eoCRo0 wrote: | Don't catch a falling knife. | kevmo314 wrote: | Build new exchanges faster than they fall. It's the only way to | keep the ponzi going. | Analemma_ wrote: | Easy to do in a world of 0% interest rates, not so much now. | I think the entire crypto ecosystem is about to crash and | burn hard as the Fed just keeps the rate hikes coming. | three_seagrass wrote: | Yeah the music stops when the naive outsiders stop having | the extra cash into the system. | Scoundreller wrote: | Pretty sure the last remaining counterparty will be the | mysterious and shadowy # # # #, # # of Elbonia. | boppo1 wrote: | Gemini is doing fine last I checked. | ushakov wrote: | How much? | [deleted] | b0sk wrote: | [deleted] | [deleted] | whatifs wrote: | smells like a crypto pump and dump to me, we shall see | Sysctl232 wrote: | More like a dump and pump | LatteLazy wrote: | Might be the first hostile takeover via crypto... | polygamous_bat wrote: | On an unrelated note, I really hope to never see this clown's | (SBF) face or name in any of the Effective Altruism | docs/post/communications. Really irks me to see some new age | robber baron to be the face of twenty-first century altruism, | notwithstanding my other issues with EA. | mjr00 wrote: | So after SBF came out yesterday and said FTX was totally fine.. | it turns out they _were_ insolvent and needed to get bailed out | to cover withdrawals? | | Never a dull moment in the world of crypto. | pranshum wrote: | "Every banker knows that if he has to prove he is worthy of | credit, in fact his credit is gone." - Bagehot | oldgradstudent wrote: | They claim to be an exchange, not a bank, not investing user | assets. | | https://twitter.com/SBF_FTX/status/1589598285798707202 | | The Bagehot quote is not SUPPOSED to apply. | matheusmoreira wrote: | > They claim to be an exchange, not a bank | | They're liars. They are literally banks with all of the | drawbacks and none of the benefits. They do fractional | reserve banking with user deposits. | oldgradstudent wrote: | I'm not sure why you are ruling out a Ponzi scheme so | quickly. | matheusmoreira wrote: | I don't think a Ponzi scheme adequately explains the | problems with centralized cryptocurrency exchanges. | They're just banks. There are plenty of scammers in this | space, I just don't think Binance is one of them. | | The problem is they leverage user deposits as gambling | money. These corporations can't bear to watch a pile of | money sitting around doing nothing while in their | custody. They just need to loan it out. | colinmhayes wrote: | Did anyone actually believe they weren't loaning out user | funds? How were they funding their massive leverage | programs? How were they loaning all that money to SBF's | trading firm? | matheusmoreira wrote: | Crypto? This is nothing but a good old bank run. | JumpCrisscross wrote: | > _nothing but a good old bank run_ | | Exchanges aren't subject to bank runs. If an exchange (or | even broker) cries run, they were taking novel risks. | matheusmoreira wrote: | They aren't brokerages, they're banks pretending to be | exchanges. They do fractional reserve banking with user | deposits. | arcticbull wrote: | Fractional reserve in the context of banking is | completely different because the FDIC backstops runs and | the Fed backstops the FDIC. | | Nobody backstops FTX or any other crypto exchange so its | better described here as 'the yolo lifestyle'. | | A modern day bank run in traditional finance is | functionally impossible* (up to the FDIC insurance | limits, and often higher in practice - there were no | imposed limits at WaMu for instance). | matheusmoreira wrote: | > modern day bank run in traditional finance is | functionally impossible | | Not at all. Bank runs still happen, the backstops just | soften the blow with liquidity injections. Every time you | see a withdrawal limit, there is no doubt a bank run is | occurring. | JumpCrisscross wrote: | > _you see a withdrawal limit, there is no doubt a bank | run is occurring_ | | This is not accurate. Withdrawal limits are there to | control fraud. | matheusmoreira wrote: | Signs on the ATMs of a failing bank explaining that you | can only withdraw $500 a day weren't put there due to | concerns about fraud. | astrange wrote: | A failing bank in the US will be taken over by another | healthy bank over the weekend (or overnight) with help | from the FDIC. You're not really at risk, at least if | you're the kind of person who can take their whole | account out in cash. The reason they'd put those signs up | is that the government doesn't feel like loosening fraud | regulations just because there's a bank run on. | guepe wrote: | Matt Leving from Money Stuff discussed it today (!). If | exchanges provide leverage products to customers, they | become banks (providing leverage, through funding | typically by other customer's deposit). So bank runs are | possible. | arcticbull wrote: | Ah will take a listen! Thanks! | JumpCrisscross wrote: | > _exchanges provide leverage products to customers_ | | Levine spoke about brokerages. When brokerages extend | credit, they can be subject to run dynamics. Not | exchanges. | lordnacho wrote: | What happens if an exchange extends credit? | | There's a reason the perp exchanges have a fund, it's the | capital that protects them from losing money on | overleveraged customers. Or rather it's the rainy day | fund that they lose out of when the delev happens. | | Not sure this is related though, mechanics of today are | not clear to me from what I've been able to find. | epa wrote: | It seems that Citadel may have short squeezed FTX's token and | created this. | snapcaster wrote: | Please don't tell me you own GME stock and blame Ken Griffin | for everything bad that has ever happened. Can't you people | just stay in your subreddits? | cheeze wrote: | Proof? | isthisthingon99 wrote: | you're getting downvoted by people who didn't get the joke. | Yizahi wrote: | kristjansson wrote: | Why is it apparently so difficult to run a solvent crypto | exchange? On the face, it shouldn't be too hard, just take | deposits, stick them in a wallet, and swap client balances in a | database. | | Is the temptation to maintain a reserve ratio < 1 just too great? | Do operators try to earn small, low-risk return on client funds | only to find there are no low-risk, positive-return assets in | crypto? Are the extending margin to clients or explicitly | stepping in as counterparty, and get exposed to losses as prices | move? | tim333 wrote: | The majority of crypto exchanges failing has been due to them | being hacked or assets stolen. It seems to be an ongoing | problem. It's kind of inherent to crypto transfers not being | reversible. In a regular stock exchange if a crook tries to | transfer the assets somewhere you can freeze or reverse the | transaction. Crypto not so much. | | The FTX issues seem to be something else - it's a bit unclear | what exactly at the moment. | | I've got some assets with FTX so I'm curious. As well as | holding crypto they do futures trading on it and I wouldn't be | surprised if Alameda Research, their privately held prop | trading fund is a counterparty to some of those and may have | gone bust. | [deleted] | fshbbdssbbgdd wrote: | Running a reserve ratio < 1 is a convenient way of funding | advertising to get more people to use your exchange. | | So the question you should be asking is: if there is a solvent | crypto exchange, how would I ever find out about it? | espadrine wrote: | Storing money costs money: at least the bank fees, if not the | negative interest rates. | | Processing money costs even more money: operations must be | scrutinized, international movements require validation and | communication, and various AML/CFT/Fraud procedures must | perform investigations etc. You have accounts in various | currencies, perform conversions to maintain liquidity... | | So I can see why they would start dipping their toes into | investments. Once they start, they probably don't consider | enforcing Basel III to their procedures, and things just | unfold. | theptip wrote: | > Why is it apparently so difficult to run a solvent crypto | exchange? | | Running a stock exchange is a hard business too; you are the | market maker, you set the spread, and the most sophisticated | investors in the world are trying to arbitrage you. Any mistake | can potentially ruin you. If you do you job right you take a | tiny sliver of profit from each transaction. | | Now consider crypto, where your ability to pause the market or | unwind clearly-erroneous transactions is reduced or removed. | | Sounds excruciatingly hard to me. | Bootvis wrote: | That's why you get outsiders on your exchange to make markets | and you just charge commissions and access fees. | JumpCrisscross wrote: | > _Running a stock exchange is a hard business too; you are | the market maker, you set the spread, and the most | sophisticated investors in the world are trying to arbitrage | you_ | | Normal markets aren't as centralised as crypto. The exchange | and market maker are separate. | pcthrowaway wrote: | It's pretty uncommon for exchanges to do all their market | making directly, and many of the ones that do still rely on | outside market making. | | FTX was almost the exception since Alameda spun out of it | IIRC | JumpCrisscross wrote: | > _pretty uncommon for exchanges to do all their market | making directly_ | | Point is, in real finance, it's pretty uncommon for | exchanges to do _any_ of their market making. Largely to | ensure they can project confidence in crises. Market | makers blow up. Exchanges shouldn 't. | SXX wrote: | This is just not the case. At least on Binance there are | number of market makers other than Binance itself and there | is a lot of tech built around this. I guess every major | crypto exchange after MtGox is as complex as normal | markets. | joyfylbanana wrote: | > Now consider crypto, where your ability to pause the market | or unwind clearly-erroneous transactions is reduced or | removed. | | These should be quite possible, no? Exchanges have | mainteinance pauses now and then, however if they had them | regularly that would drive customers away. Unwinding | transactions inside crypto exchanges is also not unheard of I | think. | chis wrote: | Probably the insolvent exchanges are able to offer lower costs | and better promotions to users. For instance Coinbase has | always charged way higher fees than FTX for simple buying and | selling of coins. | from wrote: | Sometimes they offer to cover withdrawal fees too. Still it | seems like they should be making money hand over fist. | favflam wrote: | Asset heavy. The computer systems to run one are expensive. | Compliance is expensive. Your return on assets are probably | lower than 5% in a regulated market. | | If you don't take extra risks to spruce up returns, you lose | money. | skippyboxedhero wrote: | From Twitch, interview with Wintermute CEO (another big crypto | MM) - https://www.twitch.tv/videos/1647004406?t=1h39m38s - had no | idea this coming either (who got hacked for $100m recently). | | Later in the video Martin Shkreli tells Do Kwon that prison isn't | so bad. | | Interesting interview. | [deleted] | [deleted] | spelunker wrote: | I thought Binance essentially caused all of this by dumping (and | advertising dumping) FTT tokens? And now that FTX is in distress | they're going to swoop in and buy a competitor? Kind of reminds | me of Luxottica buying out Oakley... | SevenNation wrote: | The slashdot piece just links to the real article: | | https://techcrunch.com/2022/11/08/binance-signs-letter-of-in... | | > Zhao (pictured above) said Binance reached the decision after | FTX asked the crypto behemoth for help. "To protect users, we | signed a non-binding LOI, intending to fully acquire FTX and help | cover the liquidity crunch. We will be conducting a full DD in | the coming days," he said in a tweet. | | This appears to be an admission of running a fractional reserve. | Otherwise where could a "liquidity crunch" come from. | | Hilariously, this is the origin story of Bitcoin. Can't trust | banks. Create electronic cash. Users are clueless about what to | do with the cryptographic material needed to secure electronic | cash. Users park funds at exchange. Exchange operator is a | criminal who embezzles the money away, or an incompetent boob who | just loses it. Exchange freezes withdrawals, temporarily at | first, while continuing to accept deposits. Mayhem ensues. Rinse | and repeat. | | The entire FTX team belongs behind bars. The VC team that backed | this hair-brained venture deserves everything coming to them. | lordnacho wrote: | What's the background of the liquidity crisis at FTX? | edf13 wrote: | CZ said it's dumping all their tokens from Binance... | | FTX starts to fail... | | CZ snaps it up for a song | lordnacho wrote: | I heard that as well, but how did FTX put themselves in a | position where that can happen? Leveraging up in your own | token? | spaceman_2020 wrote: | apparently they were playing VC with user deposits. | | This is why regulations exist. | v8xi wrote: | There was a report that came out a few days ago claiming | that Alameda Research (SBFs company) was insolvent / did | not have enough cash to cover their FTT liabilities[1]. CZ | begins dumping their FTX token to de-risk and that led to | them actually being insolvent. | | [1] https://dirtybubblemedia.substack.com/p/is-alameda- | research-... | drummer wrote: | Kids, this is why you never leave your crypto on an exchange. | robswc wrote: | absolutely wild how "fast" this happened. | bogomipz wrote: | Interesting just 6 weeks ago the news was that FTX was buying | Voyager Digital's assets for 1.4 billion dollar after winning a | bankruptcy auction. In July the news was that FTX provided | BlockFi with a $400 million line of credit and an option to buy | the company for 240 million.[1][2] Now the crypto bailout savior | is being bailed out? | | [1] https://www.cnbc.com/2022/09/27/bankrupt-crypto-lender- | voyag... | | [2] https://techcrunch.com/2022/07/01/ftx-us-deal-with- | troubled-... | flanfly wrote: | Impressive. I wonder how much of this was planned by CZ. | [deleted] | 55555 wrote: | Anyone here remember when SBF was offering Elon Musk a billion | dollars to help him buy Twitter? What the hell was he thinking? | colinmhayes wrote: | He was probably thinking the offer would leak and give him | publicity, which it did. | polygamous_bat wrote: | To be completely frank, it worked too (at least on me). If | you asked me two weeks ago which company would go bankrupt | first between FTX and Coinbase, I would be hard pressed to | answer, even though we all have access to the financial | documents of Coinbase and all we have from FTX is SBF glamor | and hot air. | Scoundreller wrote: | Are you sure they didn't make the deal? | reducesuffering wrote: | Yes, SBF didn't get a stake: https://danluu.com/elon-twitter- | texts/#equity-financing-comm... | dQw4w9WgXcQ wrote: | Will be interesting to see how this assertive prediction from | "someone in the industry" a few days ago plays out: | | >> Regardless if FTT collapses, it wouldn't matter cause | insolvency both the asset and liability side of the balance sheet | would go down. [1] | | We got our FTT collapse today, let's see if the "experts" are | correct. | | [1] https://news.ycombinator.com/item?id=33467429 | guelo wrote: | Lol wouldn't be surprised if dcolkitt is SBF or someone near | him | DEDLINE wrote: | Was just thinking about this comment | [deleted] | jo6gwb wrote: | SBF yesterday: | | "FTX is fine. Assets are fine." | | Can't trust a word out of this guy's mouth. | xur17 wrote: | If I've learned anything, the moment you start seeing posts | like "funds are safe", "withdrawals are flowing" from an | exchange, it's game over, and time to gtfo if it's not already | too late. | kwere wrote: | Funds are Safu -Bizonacci | pranshum wrote: | "Every banker knows that if he has to prove he is worthy of | credit, in fact his credit is gone." - Bagehot | AlexMoffat wrote: | +1 That's a great book. | BLanen wrote: | "Exchanges"(Exchanges and brokerages in one) are not supposed | to be banks. Everything can be withdrawn from brokerages | without them being insolvent. | pranshum wrote: | If the brokerage provides leverage to its customers, it can | be subject to the same sort of bank runs that a normal bank | can. | edouard-harris wrote: | Indeed. And in this case, it was from one day to the next. | ploppyploppy wrote: | I'm really glad this shyster is having light shed on his | behaviour. It's always been odd to me how FTX made it so big so | quickly. | ww520 wrote: | The assets are fine. Just the value of the assets is not sure. | v8xi wrote: | Assuming due diligence goes through. I'm sure Binance won't know | precisely where to locate any deal-tanking skeletons. | dang wrote: | Url changed from | https://slashdot.org/story/22/11/08/1612256/binance-to-acqui..., | which points to this. | | Submitters: " _Please submit the original source. If a post | reports on something found on another site, submit the latter._ " | | https://news.ycombinator.com/newsguidelines.html | | Edit: we changed the URL again--this time from | https://techcrunch.com/2022/11/08/binance-signs-letter-of-in... | to a different one that seems to give more background and more | explanation. (via https://news.ycombinator.com/item?id=33523192, | but no comments there) | ilrwbwrkhv wrote: | All of these folks need to be in prison along with Andreeson | Horowitz. All bloody crooks the lot of them. The largest ponzi | scheme in the history of humanity and they wonder why the world | is not getting better. | beambot wrote: | _Largest_ might be a stretch. I suggest spending some time | reading about John Law, the South Sea Bubble, and the | Mississippi Company. When you realize that all of these ponzi | schemes ultimately resulted in modern central banking, you | might reasonably contend that the largest ponzi scheme is still | sitting right here in plain sight -- with crypto illuminating | (mocking?) the essence of fiat-denominated "wealth" and | "money". | rottencupcakes wrote: | Is it really a ponzi scheme if it's enforced via threat of | violence? | beambot wrote: | Perhaps -- in the same way that the difference between a | religion & a cult is really just a matter of scale and mass | acceptance. | | To be clear: I'm not advocating against the model of money | as we know it today... All models are wrong, but some are | useful. | boppo1 wrote: | Can you give us a TL;DR on how those schemes resulted in | modern central banking? It's challenging to find solid info | on the introduction/acceptance of central banking as the | status quo. Lots of it veers hard into conspiracy theory and | information that I can tell is wrong from a handful of | college finance courses. | | I know this is the second (or third) central banking paradigm | that has existed in the US. The last one got shut down by ol' | AJ, but I don't really understand how that all went down and | how it's different (or similar) to what we have now. | beambot wrote: | The ~1 hour YouTube series _The History of Paper Money_ by | _Extra Credit_ is a good, factual starting point presented | in an entertaining fashion: | https://www.youtube.com/watch?v=-nZkP2b-4vo | dibt wrote: | Did AH take money from retail investors? I suppose you can | claim they pumped these products. I'm not convinced it's any | different than what happens with an IPO that started with VC | money. I'm not saying it's good, just that it's as bad as | anything that's regulated. | wolski wrote: | https://www.youtube.com/watch?v=kSXQgCP3WQw&t=1620s A good | explanation on how these schemes usually work out. | shuckles wrote: | Would you consider cashing out pre-ICO tokens for bogus | projects to "accredited investors" (ie retails) as "taking | money"? | dibt wrote: | I have no doubt that anybody that had access to pre-release | allocations were well aware of the risks. Net worth was | likely checked. They don't need to be treated like a child. | | Probably a civil matter anyway - no expectation of jail, | which was what the parent commenter referenced. | shuckles wrote: | I was referring to insiders selling at ICO to retails. | I'm sure insiders were savvy and made plenty of money. | havefunbesafe wrote: | There was a looming liquidity crunch because the people running | exchanges are... well... lying about reserves. | ploppyploppy wrote: | Kraken aren't: https://www.kraken.com/en-gb/proof-of-reserves | locallost wrote: | As Matt Levine just pointed out in his newsletter, FTX was doing | the same to bail out other failing crypto companies in the | summer. Now it needs a bail out itself. | | What will happen to Binance in a few months if the system is now | unwinding? That's the question right, if it's a system problem or | FTX was greedy and over leveraged. For me it smells like a system | issue because it's all based on funny money. | JumpCrisscross wrote: | Ha, in exchange for extending a non-binding LOI, Binance got a | competitor to admit they're illiquid. | polygamous_bat wrote: | Which seems like a huge L for FTX... until you start thinking | about what the alternative must have been if this is what they | chose. | JumpCrisscross wrote: | > _what the alternative must have been_ | | It's clear it would have involved everyone losing their money | and Bankman Fried being on the run a la Do Kwon. | polygamous_bat wrote: | I mean, that could still happen. I am not ready to give up | hope yet. | wslh wrote: | How is Solana positioned in this context? Breakpoint Solana was a | big event these days [1] | | [1] https://solana.com/breakpoint | SilverBirch wrote: | So this is presumably going to stop the bleeding for customer | deposits at FTX. I wonder how this all shakes out with Alameda - | because it looked extremely likely that Alameda and FTX were | doing a fair amount of business between each other, and now | Alameda likely will be forced to unwind a load of illiquid | shitcoin positions, CZ isn't going to want those loans | outstanding (or maybe he will - pull the same move again and hold | a gun to Alameda's head ready to force liquidition whenever he | likes) | dibt wrote: | I think Alameda only held those positions in service to their | market making operations, not FTX operations. | | The line between where FTX starts and Alameda ends always | confused me. | ww520 wrote: | Bitcoin balance on FTX Exchange have gone negative [1]. The | withdrawals have been disabled on FTX. It's probably the AltCoins | bought with the BTC by FTX have gone down in value and the BTC | are gone for good. When people withdraw against BTC, there aren't | enough. | | [1] https://cryptoslate.com/bitcoin-balance-on-ftx-exchange- | goes... | steveBK123 wrote: | This is great, he was lecturing how stock exchanges should work & | on the cover of Fortune as the next Warren Buffet all of what.. 8 | weeks ago? | | SV fintech keeps reinventing all the mistakes of 19th century | banking. | | BNPL is the next explosion btw. | steveBK123 wrote: | Found it: | | Speaking with the Financial Times on July 14, Bankman-Fried | stated that if FTX can become the top crypto exchange and | supplant rivals such as Coinbase and Binance, the idea of | purchasing giants such as Goldman Sachs and CME group is not | off the table: | | "If we are the biggest exchange, [buying Goldman Sachs and CME] | is not out of the question at all." | | https://cointelegraph.com/news/billionaire-sbf-says-ftx-may-... | 22SAS wrote: | >"If we are the biggest exchange, [buying Goldman Sachs and | CME] is not out of the question at all." | | JFC, what an arrogant twat! | mamonster wrote: | BNPL has already exploded though, but good call. Klarna is down | about 90% in the private markets, Affirm about the same from | all time high. | | Another good candidate is "AI-powered" insurance i.e Lemonade. | skippyboxedhero wrote: | Insurance is already "AI-powered"...insurance companies | employ statisticians to build prices, and they have been | using low-cost distribution since the 90s. | | Speaking generally, insurance was one of the first industries | to deploy technology effectively in their core business. They | are still doing that. | | The issue with companies like Lemonade is that they are | rebranding the same product as "AI" (afaik, Lemonade is just | taking share by offering cheaper prices...doesn't sound quite | as appealing as "AI"). | rhaway84773 wrote: | This. I'm not sure what Lemonade does differently from | other insurers than providing a nicer UI. | | They likely also have lower costs due to eliminating the | middle men whose job is to translate text on the screen | into words spoken to a customer. | | So their lower costs could actually be legitimate. | skippyboxedhero wrote: | Obviously this does vary because retail insurance is | usually sold locally but the middle men were eliminated | years ago. | | First, it was phones. This happened in the early 90s. | Then it was internet which was largely finished by the | early 2010s. The only exception for this is that online | price-comparison websites have added back some | distribution costs...but you still need to spend on | marketing if you are online (generally speaking, online | ads aren't cheap, I know insurers in my market that have | moved away from price-comparison/online advertising | because of the cost). | weswilson wrote: | There are still plenty of middle men in insurance. There | are Carriers, MGA's, Agency Networks/Aggregators, and | Brokers. | | Large insurance carriers (think Geico, etc) with enough | market share (and captive agents) have the vertical | integration that eliminates the middle men, but there is | a whole world of insurance that most people don't realize | each taking their cut. | skippyboxedhero wrote: | Which is why I said it depends on local situation. None | of those exist where I am. | FormerBandmate wrote: | Their stock value is down, but they still are financially | solvent. Lehman didn't explode when it fell from $60 to $6, | it exploded when it went bankrupt. They're a lot closer to it | now then a year ago, however | twelve40 wrote: | they are losing like what, $700 mil a year? with the | current cost of capital, probably not solvent for very | long. | FormerBandmate wrote: | Yeah, they're fucked. They're just not dead (yet) | boppo1 wrote: | How do you keep track of private markets? Are you involved in | the business? | steveBK123 wrote: | ZIRP is a hell of a drug. There's not a lot of innovation to | be had on lending that is actually going to be considered | legal. Unless they obfuscate it with AI, they are going to | run afoul of some sort of anti-discriminatory laws. | | Credit score&history, income, capital.. go. | | Most of what BNPL actually turned out to be was just dumb | money. | mamonster wrote: | Its also the fact that in a bear market / recessions | usually most correlations go to 1(on the way down) and | whatever risk metric you used previously justify having low | default provisions suddenly doesn't work anymore. | | Wonder whether we will ever see the actual datasets that | BNPL founders saw that made them decide it is a safe | business. Probably like you said ZIRP,bullmarket | delinquency percentages. | astrange wrote: | Part of the supposed appeal of BNPL is that if the market | gets risky, you have much more choice about how much new | credit you can offer, since you're free to offer it per- | purchase not per-customer. | | It makes more sense for a large retailer to run it | themselves, though; there's not necessarily any value in | a dedicated company selling it straight to customers. | steveBK123 wrote: | Yes, though they were already taking on serious credit | losses before any normal creditors were. | janmo wrote: | Title is incorrect, they signed a non-binding LOI. They will | first do a lot of Due Diligence and might back out of the deal | anytime. | alphabetting wrote: | Yeah. Binance seems to have all the leverage. | | https://twitter.com/ClarityToast/status/1590016720923930628?... | wmf wrote: | FTX needs cash right now and either Binance will provide it | right now or they won't. | janmo wrote: | It seems withdrawals are halted, and there is no clarity of | weather or not they have resumed after the announcement. | | Without withdrawals FTX will loose in importance and value | every single hour. | | It is hard to build trust as a crypto exchange, but it is | very easy and can be quick to lose it. | Scoundreller wrote: | > It is hard to build trust as a crypto exchange | | Iunno, it seems a lot easier than I ever expected | | (I don't run one, just observing others) | Bubble_Pop_22 wrote: | Lots of stuff changed since the Middle Ages, antibiotics took the | place of leeches, we know that the Earth revolves around the Sun, | we can take pictures of Black Holes... | | What hasn't changed is that given the opportunity everybody wants | to be a banker, invest other people's money and pocket the | difference. | neonate wrote: | https://archive.ph/I7ZRD | sherlock_h wrote: | Wow. What an outcome to the whole saga. I wonder what happened | behind the scenes | datalopers wrote: | CZ triggered it, destroyed FTX, and now gets to be the hero. | JumpCrisscross wrote: | > _CZ triggered it_ | | Binance called attention to the weakness. The underlying | issues were all caused by FTX. | returnInfinity wrote: | This exactly, blame FTX | shapefrog wrote: | I cant believe that horrible charity triggered the collapse | of Bernie Maddoff by asking for their money back. | SilverBirch wrote: | You know what this makes me kind of wonder... back earlier in the | year SBF made a big show of coming in and investing in a bunch of | the companies that were collapsing due to the LUNA/3AC/Celsius | problems. He stepped in and to some extent halted the unwinding | of some of these issues. It turns out now that it's likely FTX is | underwater, and Binance is basically doing the same thing - | coming in, picking them up cheap and preventing them from really | having to unwind. | | So It's perfectly possible this action does the exact same thing | as last time - simply stalls the unwinding of this catastrophe, | which in the end could possibly even prove Binance insolvent. At | the end of the day we just end up in a situation where Binance | itself has pricing power over tonnes of coins, and if the market | comes back they'll be fine, but if the market continues to slide | at some point they won't be able to support the market any more. | fdgsdfogijq wrote: | In retrospect, something very shady about those deals they | made. There may have been more contagion than let on. Or FTX | themselves was financially tied to those assets, and was the | true actor swindling people through ponzi yield farming | schemes. | shapefrog wrote: | Pure speculation - but I am going to go ahead and speculate | that they lost most of the money when everything collapsed a | few months ago in the defi blow up. | | They doubled down and bought up distressed assets for cents on | the dollar, hoping to make it back. A few months on, these bets | are worth $0 and there is a $5bn hold in the balance sheet. | | If binance havent been f'ing around on the side gambling on the | price, and just collect their brokerage on their exchange they | will have plenty of cash to make FTX customers whole, restore | some faith in the system and dominate the market place. | FormerBandmate wrote: | Binance has serious legal issues (governmental investigations) | and isn't based out of any jurisdiction. A Binance failure | would have consequences that are very hard to predict | from wrote: | Binance reminds me of https://en.wikipedia.org/wiki/Bank_of_C | redit_and_Commerce_In... but I don't think they're stealing | customer money. It is amazing that they have evaded American | regulators so long. I think one day they are going to disable | trading in dollars. | FormerBandmate wrote: | Honestly, I think FTX is biting off way more than they can | chew. They're really well-connected for the crypto | industry, knifing them will definitely get the attention of | regulators and that could blow up the entire thing. Their | only real asset is being perceived as too big to fail but | they're not exactly acting in ways that endears them to the | federal government | pjc50 wrote: | Unless Mr CZ is on the moon, he very much is based out of | some jurisdiction. It just might not be extraditable to the | US. | FormerBandmate wrote: | He keeps moving around. I think he's based out of Dubai | now, but there's been seven countries or so over the past 5 | years | idiotsecant wrote: | I'm not sure that binance has a reason to exist in the | current world where defi is a thing. | | Things like Coinbase etc are your place to go if you want a | fiat to crypto on-ramp or off-ramp or if you want a | reasonably safe place to park crypto if you don't want to own | it yourself. | | There are innumerable decentralized exchanges where a person | can be absolutely (for some definition of the word) sure that | the exchange won't be shutting down and taking your money | before you're done doing your transaction. There are L2 DEX | even that are approximately the same cost and same level of | inconvenience as something like Binance. | | Why does it matter if Binance goes away? I'm not sure if it | does! | [deleted] | searchableguy wrote: | Binance is the biggest exchange by a _huge margin_. It | dwarfs coinbase and FTX. | | They are also huge investors in crypto and any winding up | will have an impact on a significant number of companies. | | They control a significant portion of stablecoin, defi, and | chain market too. | | Their impact would be felt outside the crypto space if they | ever go down. | rhaway84773 wrote: | All the more reason for them to go down sooner rather | than later because they're eventually gonna go down, so | better now where they will have less impact outside the | crypto world than they would a few months or years later. | TomSwirly wrote: | If it's going to happen, better sooner than later. | eftychis wrote: | I mean we are wishing here for an economic catastrophe. | What am I missing? | pasttense01 wrote: | It's not an economic catastrophe: currently the real | economy is not strongly affected by what happens in the | crypto-economy--and we need to keep it that way! | rideontime wrote: | So, report back here for the same thread in a few months? | Who'll it be next? | warinukraine wrote: | Yes, because the entire space is predicated on some magic beans | having intrinsic value, which they don't. And then people | realize that magic bean number N is also worthless, everyone | exposed to magic bean number N goes bankrupt. | rhaway84773 wrote: | This is the crypto ponzi falling apart. First the smaller | ponzis fall apart so the larger ponzis need to step in so the | fact that the entire thing is one big Ponzi doesn't get fully | exposed. | | The Ponzi falling and subsequent cover up by the bigger Ponzi | keeps going up the chain until those at the top of the Ponzi | food chains collapse. | | Right now it looks like that might be Binance. | eftychis wrote: | I think the title is incorrect (someone else noted too!). It | should be "Binance sends non-binding Letter of Intent [to buy] to | FTX." | | Less sexy, more accurate. | | Also, extremely likely they are trying to consolidate power and | they orchestrated this situation I'd say. This "smells" hostile | takeover, but in a currency setting. a) They sold FTT in a | "dumpy"/reevaluate its price way b) they were asked for a loan or | partial buy to add influx c) they sent a "we will just buy | you."d) They sent messages that would erode the trust to the eyes | of the world. | | Rings a bell? (Spoiler: see Twitter.) | WhiteOwlEd wrote: | There is an interesting irony to this in that SBF had contributed | $38 million to PACs as part of this election cycle. | partiallypro wrote: | What if Binance looks under the hood (this is not a binding | acquisition yet) and just says it's not worth it? What happens to | everyone's deposit? | | I find it ironic that the "decentralized" nature of crypto is | becoming more and more centralized. If FTX dies, beit via | acquisition or just utter collapse, Binance would be a near | monopoly. | alphabetting wrote: | September's cover of Fortune was quite the jinx | | https://content.fortune.com/wp-content/uploads/2022/07/COV.W... | no_butterscotch wrote: | Looks like it was the "Or crash and burn" from the cover. Bad | move on his part. | | I was wondering why he was throwing rescue tubes to silly | projects. It seemed like he had too much money. | anonu wrote: | I think SBF realized marketing is everything. Being the face of | crypto, sponsoring sports stadiums, being on the cover of a | widely distributed magazine, all part of the same playbook. | skippyboxedhero wrote: | The Superbowl ad curse. | rhaway84773 wrote: | Lots of crypto cokpanies that did not advertise in the | Super Bowl or whose founders were not profiled by Forbes or | Fortune have also collapsed. | moneycantbuy wrote: | I hope MLB umpires continue to wear the FTX logo plastered all | over their uniforms for the coming years. | davydog187 wrote: | Short explainer on the backstory | https://www.milkroad.com/p/binance-vs-ftx-heres-happened-wee... | seaucre wrote: | Would love to see Sorkin's version of the negotiation between SBF | and Binance. | skee8383 wrote: | returnInfinity wrote: | its related to tech and the valley | skee8383 wrote: | It's a slippery slope. i've ran a few IRC and matrix | channels. once the crypto people show up it all gets turned | into a crypto circus. they will take over this site if it's | allowed to continue. this site will literally be | indistinguishble from coindesk. | willio58 wrote: | Digital currency is the future even if 99% of the current | ones out there are scams or scam-adjacent. To ban all talk | about digital currency from a website all about the tech | industry is just silly. | caldarons wrote: | This piece on Alameda Research (also owner by SBF) was on HN a | few days ago. It might end up being quite insightful... | | https://dirtybubblemedia.substack.com/p/is-alameda-research-... | adrr wrote: | Question in the article is who holds the debt? My bet is that | it is FTX. | Bubble_Pop_22 wrote: | Such an amazing theatrical play. | | So FTX is AIG and Binance gets to play the Fed. | | What happens in the second act when Binance transitions to its | next role of Lehman but there is nobody to play the Fed? | radicaldreamer wrote: | It's not even binding, so Binance could take a look under the | hood and say no thanks. No idea whether FTX can cover withdrawals | at this point or what the collateral damage will be. | dibt wrote: | https://twitter.com/SBF_FTX/status/1590012133307478016 | | >Note that http://FTX.us and http://Binance.us - two separate | companies-are not currently impacted by this. http://FTX.us | withdrawals are and have been live, is fully backed 1:1, and | operating normally. | | I wonder if this means SBF will continue operating FTX.us as a | competitor to other US-based exchanges. | xxpor wrote: | Really seems like vindication for the US's regulatory scheme | that in that it keeps US customers out of these shenanigans. | [deleted] | blobbers wrote: | Seems like a non-binding agreement. DD has not yet been done, | deal could fall through. | | SBF just got Jack Ma'ed by CZ. | JumpCrisscross wrote: | Do we have a price/valuation? | locallost wrote: | Likely zero if FTX is not liquid enough to process withdrawals. | [deleted] | cm2012 wrote: | Does ETH/ConsenSys win here? | pbreit wrote: | The current headline "Binance Acquires FTX" is wrong. There's | only a "non-binding Letter of Intent" in place. | squokko wrote: | This entire market sector creates nothing of value: the way to | parse this is something like "Daniel Negreanu wins $15 billion | pot against Phil Ivey in non-televised hand." | hericium wrote: | BTW, what ever happened to Catherine Coley, CEO of Binance US? | kuratkull wrote: | Binance was threatening to dump a huge amount of FTT tokens on | the market. FTX has a big+vulnerable position in FTT. FTX asked | Binance to sell them the tokens for a fixed price, so as not to | crash the FTT token price. Binance declined - this was | yesterday/today. Of course the price of FTT crashed today. And | now Binance buys FTX to help them out... smells like Binance | played 4D chess all along. | | https://decrypt.co/113674/binance-moves-to-liquidate-its-ent... | | https://decrypt.co/113788/binance-ceo-declines-alamedas-bid-... | | https://decrypt.co/113866/battle-crypto-titans-ends-binance-... | danrocks wrote: | > FTX asked Binance to sell them the tokens for a fixed price, | so as not to crash the FTT token price. | | Why would Binance decline this opportunity? If FTX, Binance, | and the market knew FTT would just crash, it sounds like a | given that Binance should take advantage of the fixed price | instead of losing hundreds of millions of dollars "letting the | market decide". | colinmhayes wrote: | Because they wanted to create a liquidity crisis in FTX that | would force FTX to sell itself for a discount? | mikekoscinski wrote: | Presumably, it is more appealing to Binance to kill their | largest competitor than it is to realize a return on a | minority investment. | oldgradstudent wrote: | It depends on the fixed price offered by FTX. | | If FTX could pay the current market price, then they could | have absorb whatever Binance sold on the open market. | | They probably offered a deep discount. | pbreit wrote: | That sounds like 1D chess. | gowings97 wrote: | colinmhayes wrote: | FTT is not a stablecoin | yieldcrv wrote: | Okay, random non sequitur | | This isnt a thread about stablecoins | andirk wrote: | I earned $1,200 from Gemini's stablecoin GUSD's interest last | year. Withdrew the extra and bought some nice pendant lights | for my new kitchen. | rchaud wrote: | I understand many did well with Bitconnect too... | andirk wrote: | Not a stablecoin. Bitconnect is my favorite crypto scam | so far! It was so obviously a scam, and the bros | promoting it were even dumber than that shitcoin. | | A lot of crypto projects can appear scammy because a | handful of people are working on something and their | token goes through the roof then crashes with no | wrongdoing on the part of the project. Invest in | projects, not coins! | [deleted] | TravelTechGuy wrote: | Some more background: the companies were engaged in fighting | over regulations, and on a personal basis between the 2 CEOs. | It went down to really childish levels at some point. | | But one thing is undeniable: SBF (FTX CEO) was trying to | weaponize US regulation against his biggest rival CZ (Binance | CEO). CZ retaliated by selling the FTT token, exposed the fact | FTX was over-leveraged, and took over. | | This is, as the kids on Twitter say, the embodiment of the old | "F#$k around, find out". | | Along the way every FTX client who couldn't withdraw, and every | crypto user losing value got screwed - but why should these 2 | characters care? The space just became more centralized, and | whatever smidge of trust was left after the Celsius debacle has | evaporated. | pjc50 wrote: | > whatever smidge of trust | | Turns out the "trustless" in crypto means "you can't trust | anyone". | k2enemy wrote: | Also turns out that "decentralized" in practice means | "centralized" | Jommi wrote: | in which part of this discussion has anyone talked about | something decentralized? This is about two centralized | exchanges that hold custody of users cryptoassets | m00dy wrote: | Future is decentralized. Even CZ knows this :) | ahzhou wrote: | Centralization is more efficient than consensus building. | joyfylbanana wrote: | Nobody forces you to use Binance or FTX. I have been | using Bitcoin for 10 years and I've always stored more | 90% of my BTC in my own self-custody wallet, only used | exchanges briefly. | xmonkee wrote: | What have you been "using" Bitcoin for, may I ask? | joemazerino wrote: | You may not ;) | joyfylbanana wrote: | - Long term "Savings account" - a volatile one, of course | - I buy stuff from online with it, household items (In | country I live you can basically buy anything with BTC) - | Travel, I book hotels/flight with it and once I rented a | boat for a family trip | | In addition to that I now and then try to pay with | Bitcoins at other stores. Last time got excited about | boltcards (https://github.com/boltcard/boltcard) there | are few places in my country which accept it, but it is | quite a new thing. | joemazerino wrote: | Dexes like uniswap have been doing just fine | m00dy wrote: | So few people understand this. But, don't worry. Great | inventions need some time to be realized. | astrange wrote: | Does anyone both use these and correctly report their | taxes? The accounting seems like a pain. | majani wrote: | I'm glad a big government supporter such as SBF is out of | crypto leadership. Crypto is an anarchist experiment and it | should remain that way | mrtksn wrote: | Rest assured that the regulations are coming because the | crypto simply did a speed-run of unregulated securities | market and repeated every fraud or scam that the | traditional markets went through over the history. | | In the process, huge fortunes were created and libertarians | were empowered(but not enough to be the main political | power). Congrats to them but there's nothing anarchist left | in crypto, they even end up consolidated and centralised. | No interesting business models or financing came out of it | except for ransomware. | | The silver linings might be that the crypto regulations can | be made with the current technology and globalisation in | mind, hopefully. | thr0wawayf00 wrote: | Exactly, it's bizarre to read about the wildcat banking | era in the US and why the Fed was created while | simultaneously looking around at the rate of mainstream | crypto scams and institutional failures nowadays. | | The Fed sure isn't without its issues, but it was created | to solve the exact problems that we're now seeing | proliferate via the crypto space. | TeMPOraL wrote: | > _the crypto simply did a speed-run of unregulated | securities market and repeated every fraud or scam that | the traditional markets went through over the history._ | | I think the whole endeavor may end up _strengthening_ the | traditional economy - crypto space repeating centuries of | fraud in a decade is effectively a booster shot - | suddenly it 's obvious _why_ all those laws ended up in | the books in the first place. | | > _and libertarians were empowered(but not enough to be | the main political power)_ | | In a sense, they've discovered a novel way of attempting | to gain power - I don't think many people expected | someone could wish a parallel economy into being and | leverage that to for political gain. | caeril wrote: | Regulations are coming? On a fully public ledger? | | You understand that BTC, ETH, and every derivative non- | privacy-coin is exactly what the regulators have been | salivating for, right? Why regulate a non-repudiable | chain-of-custody that mathematically proves your | serfs'/slaves' assets that you can seize at will? | | > libertarians were empowered(but not enough to be the | main political power). | | You should re-examine the GOP, particularly the tickets | on today's ballots. This ain't your grandfather's GOP. | woodruffw wrote: | > Crypto is an anarchist experiment and it should remain | that way | | What exactly _makes_ it remain that way? | | I don't say this as a cheap "gotcha": what's the governance | structure that _makes_ it an anarchist experiment, | specifically, and not just a free-for-all? | secretsatan wrote: | Ha! One massive feudal lord just crushed another and all | the serfs lost their money. This isn't anarchy, it's a | monopoly | World177 wrote: | I wouldn't be so sure. The monopolist had a $100,000,000 | theft last month, [1] after a $1 billion dollar loss from | LUNA in the summer. [2] | | [1] https://www.nytimes.com/2022/10/07/business/binance- | hack.htm... | | [2] https://decrypt.co/100530/binance-ceo-says-exchange- | never-so... | nullc wrote: | > a big government supporter such as SBF | | A supporter or another crook LARPing as pro-regulation | because it makes some people ignore red-flags? | | Constantly braying about the "the law" is part of the the | main act of the highest profile scammer claiming to have | created Bitcoin. | | Fact is that saying a lot of vague "pro regulation" things | doesn't likely subject you to any additional regulatory | scrutiny, it's a free move even when you are waste deep in | the cookie jar. But some people are going to notice it and | consider it evidence that you're all above board. | Eduard wrote: | > Constantly braying about the "the law" is part of the | the main act of the highest profile scammer claiming to | have created Bitcoin. | | Whom are you alluding to? | nullc wrote: | Craig Wright. It's refreshing to encounter someone who | hasn't seen that scammers circus. | | In the latest season we find Wright trying to steal | literally billions of dollars worth of Bitcoin while | constantly yelling that everyone who doesn't support him | is a criminal. If he weren't financially ruining people | with vexatious litigation it would all be pretty funny. | matheusmoreira wrote: | That experiment already failed to be honest. | | Cryptocurrencies were prophesized to get rid of banks. | Instead exchanges reinvented banks with all the drawbacks | and none of the benefits. | | Cryptocurrencies were supposed to be in wide circulation | just like USD, eliminating the need for fiat on/off ramps. | Instead we got these centralized corporations and endless | KYC/AML surveillance with none of the regulation and | government backing. | | _Real_ cryptocurrency is what you have in your wallet. How | many of us hold our own coins? Pretty much everyone keeps | "their" coins at the exchange... | psychlops wrote: | The coins have failed because the exchanges failed and | people use them incorrectly. Got it. | nyolfen wrote: | "too soon to say" | Geee wrote: | Only about 10% (2M) of bitcoin are on exchanges: | https://www.coinglass.com/Balance | aeyes wrote: | You also have to take the ~4M estimated coins with lost | keys into account. | | If these stats are correct we closer to 15%. Which is a | lot. I would have expected 0.1%. | Geee wrote: | It could be less, but it's not that much. People say | often that "most" coins are held on exchanges, which is | far from true. | caeril wrote: | No, there's still Monero and ZCash. And most holders do | have their own non-custodial wallets. Or at least wallet | seeds from intermediaries like MetaMask. | | The speculative frenzy with FedCoins like BTC and ETH | will obviously fall to baseline, but the true use case | for cryptocurrency still exists. | andirk wrote: | Why not both? Centralized where people trust, decentralized | where people don't trust. In my interpretation, the Bitcoin | white paper states that BTC is an answer to _the lack of | regulation_ that allowed the fat cats to abuse the money | supplies. It's kind of ironic, but to see crypto as purely | anarchistic is to ignore that it is essentially | _democratized_ money. Both: I use exchanges as well as cold | storage. | TremendousJudge wrote: | I never understood. Where's the democracy here, exactly? | A regular user cannot afford to participate in the | decision making of the system in any meaningful way. In | fact, today, most users don't even directly use it, | instead relying on processors such as Coinbase. The "not | your keys, not your coins" meme exists due to this. The | original paper described a democratic system where people | voted with their processors, but failed to take into | account that people with more processors get more votes. | I find it hard to argue that the system as it currently | exists is more democratic than the currency emitted by | the central bank of your country. | m00dy wrote: | well, honestly speaking, Bitcoin community looks to be | committed to preserve 21million as max supply. That's a | big promise and I love it. | ballofrubber wrote: | Arguably a lot of discussion is open to anyone (Bitcoin | mailing list, Core github repo), where anyone is free to | post their opinion on topics themselves. | | It is not democratic as in "you have a vote to force | others to comply to the majority", but more a democratic | in "you can try to convince enough people that the major | chain becomes how you like it, while the others run a | minority fork". | | People think "where the money goes, is where the miners | go", but the blocksize wars showed that "where the users | go, is where the miners go". Miners themselves don't | decide on bitcoin rules, users do. | | So I personally think that bitcoin is not necessarily | democratic, but still highly people/community vs money | driven. | jrumbut wrote: | This is a terrifying definition of democracy, "you don't | get a vote but there is an informal and non-binding | channel to lodge complaints." | | That's not democratic at all! | webXL wrote: | > "you have a vote to force others to comply to the | majority" | | is _less_ terrifying to you? | cmeacham98 wrote: | What you're arguing for is "you have a vote (well you | don't, but people much richer than you do) to force | others to comply to a very small minority", how is that | better than majority rule? | ballofrubber wrote: | Well there are no votes, so you can't force anyone to run | anything. You run what you like and hope others do as | well. As I said miners follow users, not companies. | nyolfen wrote: | i urge you to compare this to any presently-existing | monetary system or software project | ballofrubber wrote: | It might not be "democratic", to me personally it seems | fair as you are not forced to run the rules that are | imposed by others. It might not be the wise decision, but | the market will decide on the "better" rules. | andirk wrote: | Democracy can be defined as a popularity contest; | democracy does not = good. When I and others say | "democratized money", it's not to say it is identical to | the definition of democracy as it pertains to a populous | voting 1 person 1 vote. More like "money that is not | controlled by a single source but rather as large a group | as cares to participate who also have access to and | knowledge of the tech". | ballofrubber wrote: | Additionaly it's also different as in "the majority does | not change my rules", they can be wrong in the long run | and my rules become majority again. | TeMPOraL wrote: | > _" you can try to convince enough people that the major | chain becomes how you like it, while the others run a | minority fork"._ | | FWIW, that is also true for fiat. You can become an | economist, or a journalist, or a politician, or a pundit, | and try to convince your country to do economics | differently. It's a tall order, but it's been known to | succeed. If this seems harder than the equivalent for | blockchains, it's only because cryptocurrencies have | _much fewer users_ , so your voice seems more powerful. | ballofrubber wrote: | Good point. I think the subtle difference is that the | traditional political democracy coerces the minority to | use the system how they like it (ofc. not everywhere, | maybe more on the money/legal tender side of things), | whereas with Bitcoin there is no coercion by the | majority. The majority would accept one set of currency, | while others might use another, however markets will | probably always decide on a winner when it comes to | currency, which could feel as if you are "forced". | Definitely a nuanced topic. | lern_too_spel wrote: | > Crypto is an anarchist experiment | | And, like every anarchist experiment before it, it failed. | It continues to draw in new suckers every day, and that is | a problem for society. | | It doesn't matter if you didn't cause the problem. Because | you live in that society, you still have to pay the cost to | fix it or continue to take the losses from the problem | existing. | | It's the same with slavery, not educating blacks, and then | not employing blacks in America. I had nothing to do with | it. My family had nothing to do with it. But because I live | in America, I have to either pay the cost to fix the | problem or pay the ongoing cost of crime that the problem | produces. Taking on the cost of problems others created is | the cost of living in society, just as benefiting from the | value that others create is the benefit of living in | society. | | The time to regulate crypto and cut our future losses was | yesterday. | codehalo wrote: | >But because I live in America, I have to either pay the | cost to fix the problem or pay the ongoing cost of crime | that the problem produces. | | The "crime" the problem produces allow a lot of white men | to put their kids through college, fooling themselves | into thinking they are stopping "bad guys". | | If you dont keep them busy, they would create far more | crime than you think black folk do. They might even start | storming the White House. | ohgodplsno wrote: | To be fair to anarchists, it extremely often failed | because of outside forces being violent towards them. | Nothing in anarchy is inherently doomed to failure, and | is a better demonstration of democracy than anything we | have currently. (Because if there's anything an anarchist | loves more than voting, it's one more voting round). | | Calling cryptocurrencies "anarchist" is walking on the | corpse of actual anarchists and taking a big, steaming | shit on them. Anarcho-capitalists have nothing to do with | anarchy and are just kids whose bedtime reading was, | regrettably, Ayn Rand. | jrm4 wrote: | Every anarchist experiment failed? | | The Internet's still around, buddy. | svachalek wrote: | The Internet was created by DARPA and while it got a | little wild in the 90s, neither its origins or current | form in any way resemble anarchy. | Eduard wrote: | Just because "The Internet"'s _mainstream_ may not | resemble anarchy, this doesn't prohibit other parts to | resemble anarchy. In fact there are a lot of examples | active and thriving "on the Internet" fulfilling various | definitions of anarchy. | namaria wrote: | The thing created by a US Government agency at the height | of the Cold War is your example of anarchist success | story? | appleflaxen wrote: | And over-leveraged, for a brokerage, is a major problem. A | brokerage is not a bank, and account-holders are not earning | interest. Therefore if you are taking their funds and doing | something else with them (a pre-requisite for insolvency, | unless you are hacked) is a major red flag for illegality. | jonas21 wrote: | For those not up to date on crypto people, SBF is Sam | Bankman-Fried [1] and CZ is Changpeng Zhao [2]. I don't know | why they insist on being called by their initials like | they're some sort of ticker symbol. | | [1] https://en.wikipedia.org/wiki/Sam_Bankman-Fried | | [2] https://en.wikipedia.org/wiki/Changpeng_Zhao | Analemma_ wrote: | Because they think the people they're most similar to are | respected old-school hackers (rms, jwz, etc.) instead of | carnival hucksters like P. T. Barnum. | alliao wrote: | i can just imagine jwz squirming at the idea of this and | it is way too funny... | [deleted] | RC_ITR wrote: | You see the same thing with Middle East Leaders - MBS, MBZ, | etc. | | When the names are even semi-complex and the reach is | global, people default to acronyms. | [deleted] | CamelCaseName wrote: | They go by acronyms on social media, namely twitter, the | main place people interact with them | | https://twitter.com/cz_binance | | https://twitter.com/SBF_FTX | rvba wrote: | CZ is Czechia though | conductr wrote: | DPR fans? | SilasX wrote: | Because Bankman-Fried is a mouthful/typeful to say every | time, and Changpeng is a big, non-western name, and Zhao | too common by itself. | | Source: me referring to one of them in conversation a lot | with no incentive to kowtow to his preferred branding. | sneak wrote: | It's common in many internet circles to refer to prominent | people by their initials. Hackerdom has a long tradition of | this: rms gls esr jwz et al. It also tends to happen in US | federal politics for some reason (jfk rfk gwb fdr et al) | but not to everyone. | [deleted] | woodruffw wrote: | There's a little bit of cargo-culting with the practice: | I thought CZ was short for the Czech Republic. The only | reason I know "SBF" is because the New Yorker obliged him | in that William MacAskill piece. | bombcar wrote: | At least the political ones (some) came about for | clarification (JFK and RFK are both Kennedies, GWB is to | distinguish from "Bush"). Others come from their names | being long or hard to remember/pronounce/spell (I suspect | this is what happened with AOC). | pitt1980 wrote: | The Robert Caro books about Lyndon B Johnson detail his | effort to force meme "LBJ" as a reference to him. | | (Mostly in terms of insisting various communications | employees use it in press releases and what not). | | It seems he liked the iconography of it, especially in | putting himself in similar company to FDR. | | Both his daughters have the LBJ initials, his wife is | mostly known as Lady Bird Johnson (a nickname that | predates their relationship, but is not her given name) | cossatot wrote: | OT: Are those books worth reading? I loved the Power | Broker but the LBJ books are a whole lot to get through. | pitt1980 wrote: | Short answer, yes. | | Longer answer - from my prospective - I enjoyed the first | book Path to Power the most, which revolves around LBJs | early life up to becoming a US Representative. I thought | it was very on par with the Power Broker. That an the | Power Broker would probably be my first recommendation to | an ambitious college kid who wants to know the real | Politik of how the world works. | | The next book Means of Assent was my least favorite of | Caro's books, but still highly enjoyable. | | Master of the Senate and Passage of Power are both great. | But sort of specific to LBJs spot in life. Great, but I'm | not sure they sparked my thinking quite the way the Power | Broker and Path to Power did. | Taek wrote: | Can't forget pg and sama | dpflan wrote: | Maybe: Crypto is full of acronyms, token tickers are a | great example and apropos here --> their names have been | "tokenized"...? | rich_sasha wrote: | Ownership of personhood as documented by holding an NFT. | dboreham wrote: | You've been reading the DID spec. | TeMPOraL wrote: | Which is basically an energy-wasting form of the Blue | Checkmark? | ww520 wrote: | Isn't FTT like FTX's own issuing tokens? It's like printing | one's own money. But when the backing firm fails, the printed | money is worthless, just like what LUNA issued by Terra had | become. | kuratkull wrote: | Yeah. I can't be bothered to verify, but i remember that | Binance has a huge double-digit percentage of all FTT tokens | in circulation. Dumping all of them would crash the tokens | value. And since this is FTX's own token, they would hurt a | lot, maybe even terminally. | miohtama wrote: | It only matters if FTX was using FTT as a collateral for | accounting purposes for a valuation that is not realistic | considering the liquidity of a position size. | potatototoo99 wrote: | And of course they were, what else would they keep it | pumped up for. | [deleted] | [deleted] | ww520 wrote: | Just went over the issues on the balance sheet of Alameda | Research, which is SBF's trading company. | | Of the $14.6 billion assets Alameda manages, almost $6 | billion is FTT based. Alameda has heavy investment in Solana, | Serum, and other alt-coins. It looks like the drop in their | value has lowered Alameda's asset balance. Alameda borrowed | FTT tokens from FTX to put them as assets in the balance | sheet to shore it up. The size of the asset balance is | probably used to obtain loans and liquidity. | | FTX issues FTT tokens (print money) => lends to Alameda to | put under the asset balance => Alameda borrows money from | outside against its assets or uses the asset/coins to invest | in others => win with thin air! | | The crashing of the FTT token not only tanked FTX, it's going | to tank Alameda Research as well since its asset balance | suddenly shrunk and might have liquidity problem. | | The tanking of Alameda is going to another Three Arrow | Capital event since Alameda invests in lots of other cryptos. | It might be forced to liquidated those investments. Expect | another bloodbath in the crypto space. | johnvanommen wrote: | > FTX issues FTT tokens (print money) => lends to Alameda | to put under the asset balance => Alameda borrows money | from outside against its assets or uses the asset/coins to | invest in others => win with thin air! | | The Federal Reserve issues US dollars (print money) => US | Treasury borrows money from The Federal Reserve, Japan, | China and the UK against its assets or uses the asset/coins | to invest in others => win with thin air! | SilasX wrote: | > The size of the asset balance is probably used to obtain | loans and liquidity. | | 1) Lenders don't care about the liability side? | | 2) How does "liquidity" differ from "loans" here? That is, | when would they do this to achieve one but not the other? | ww520 wrote: | 1. We don't know what the lending basis for FTT from FTX | vs the claimed value of FTT on Alameda's book. FTX lent | FTT at $10 to Alameda and then FTT inflated to $50 would | mean Alameda has $50 asset vs $10 liability. | | It's reported that Alameda Research has $14.6 billion in | assets and $8 billion in liabilities. Some claim that | Alameda's assets are "entirely illiquid." Nobody knows | how bad things are. The only thing is that FTX has | stopped the withdraws. | | 2. Loans for long term and liquidity for short term? Like | overnight lending. | | Edit: add more info. | SilasX wrote: | 1) What is that replying to? I was asking why the | borrowed FTT would make them more capable of getting | loans if it came with a corresponding liability. That | would only make sense if lenders didn't care about the | liability balance sheet, which is ... non standard. | | Edit: That is, you said the "size of the asset balance" | is used to obtain loans. That makes it sound like merely | increasing assets -- even if they come with liabilities, | makes them more capable of getting loans. | [deleted] | jimcavel888 wrote: | purple_ferret wrote: | Binance continues to amaze. | | Does anyone even know where it operates out of these days? | danrocks wrote: | They have a lot of positions open at their Singapore and Hong | Kong... offices? | FormerBandmate wrote: | They said they'd announce it shortly in July | (https://decrypt.co/105376/where-is-binance-hq-ceo-cz-says- | co...). Since then, nothing | | They got regulatory approval to operate in Dubai and have | offices there, so maybe there | (https://www.coindesk.com/policy/2022/09/20/binance- | secures-l...) | tommek4077 wrote: | The fabric of the internet. | yieldcrv wrote: | There is a pool of capital that pays people working for them | onchain. They can also do fiat via local subsidiaries, and | local contracts for compliance and litigation. | | It's almost like it doesn't matter. | | For accountability, it barely matters. For financial products | they offer, it also barely matters. Most jurisdictions are | too small to say anything and all their customers can | circumvent any geo-restriction. They have distinct | subsidiaries in major markets like USA. | ForHackernews wrote: | > smells like Binance played 4D chess all along | | It's not really "4D chess" to screw over your competitor to | corner the market. | | That's like, business 101. | rchaud wrote: | Business 101 is buy low, sell high. | | Winning an evenly matched game of prisoner's dilemma with | billions at stake is about as close to 4D chess there is. | wesapien wrote: | I'm not too familiar but can you elaborate on how the | screwing happened. | gpderetta wrote: | Market manipulation is not exactly business 101. | astrange wrote: | Typically you don't expect Bank of America and Chase to do | this to each other. | acchow wrote: | This doesn't sound like very complicated chess. Sounds like | those Hong Kong TV shows I watched when I was 13 | danrocks wrote: | Having lived in Hong Kong and watched some of these old | shows, I concur. | ucha wrote: | SBF said "We don't invest client assets (even in treasuries)". | [0] | | He then says the purpose of the transaction with Binance is to | "clear out the liquidity crunches". [1] | | How could there be a liquidity crunch if assets are not invested? | You can't do a bank run on an entity that doesn't function as a | bank and doesn't invest clients assets... Something is shifty. | | [0] https://twitter.com/sbf_ftx/status/1589598285798707202 | | [1] https://twitter.com/sbf_ftx/status/1590012126701441025 | dbreunig wrote: | You mean the guy who said he named his other co "Alameda | Research" so it wouldn't sound like a bank, even though it | basically is, might be shifty? | carnitine wrote: | How is a prop crypto firm a bank? Laughable | ramish94 wrote: | Welcome to the world of unregulated finance. | | There's a reason the FDIC exists and all banks must be insured. | miohtama wrote: | Note that FTX.us is regulated under some US licenses and is | unaffected. What was blown up was FTX.com operation that is | licensed and regulated in Bahamas. | | [insert coconut meme.gif here] | hi5eyes wrote: | good comment to ignore, like most of the comments itt. almost | no one in here has any idea what theyre saying much less | doing/knowing about anything on-chain | w1nst0nsm1th wrote: | I did not comment but I have some insight on regular | finance and took a Udemy course on building your own | crypto... | | And I came to the conclusion that SBF is a crook and the | whole crypto space is build on thin air. | [deleted] | hanniabu wrote: | This has nothing to do with defi. This is purely centralized | entity shenanigans. | ChainNet wrote: | There's nothing decentralized about FTX or Binance. They | operate in an opaque manner like any traditional business, | transparency comes from forced audits & regulation. | | Decentralized finance is built on chain where all assets are | publicly auditable at all times. | | EDIT: parent comment talked about decentralized finance, then | edited to remove mentions of defi | three_seagrass wrote: | Even without the edit, your response feels like a no-true- | scotsman | | i.e. an attempt to remove bad actors who deal in | decentralized cryptocurrencies from the purity that is | defi. | | What are some large, successful defi organizations today? | null0pointer wrote: | I don't see at all how you can say calling out literally | centralized companies as "not-decentralized" is no-true- | scotsman. It's just an obvious fact. | | > What are some large, successful defi organizations | today? | | In my opinion, if there is an organization behind it then | it is, by definition, not decentralized. Yes, even the | ones that operate fully on-chain. | three_seagrass wrote: | >literally centralized companies as "not-decentralized" | | So defi is 100% decentralized _everything_ , even if the | financial tools are decentralized cryptocurrencies? | potatototoo99 wrote: | Tornado Cash is pretty successful. | colinmhayes wrote: | not sure about this one. | sperm wrote: | Uniswap. Large in terms of volume, not org size. | ChainNet wrote: | Uniswap, Curve DAO, AAVE, Compound, Lido, MakerDAO... | kolbe wrote: | The FDIC is just a ruse to let "useful idiots" think that | everything is okay. In reality, the FDIC charges banks 90% | less than the actuarial value of the risk they take on, and | banks make wildly risky loans/bets all the time, knowing it's | "heads I win, tails the taxpayer loses." | | Insofar as you can call US Finance any better than crypto, | it's because of socialized losses. IMO, bank failures are a | much more appropriate solution. | lottin wrote: | What is the 'actuarial value' of the risk a bank takes on? | shapefrog wrote: | 12:38 PM * Nov 7, 2022 2) FTX has enough to cover all client | holdings. [0] | | 4:03 PM * Nov 8, 2022 2) Our teams are working on clearing out | the withdrawal backlog as is. This will clear out liquidity | crunches; all assets will be covered 1:1. This is one of the | main reasons we've asked Binance to come in. [1] | | has enough to cover all client holdings ---> not enough to | cover all client holding in 24 hours. Either they _lost_ a | billion or so dollars of client segregated funds in a day down | the back of the sofa or it was a lie the whole time. | eftychis wrote: | As other people said, usually a lot of assets are illiquid in | 24 hours. You can say I have money to buy this house, but if | I ask you for the money the next 24 hours, most people will | say they need more time to liquidate. | | It is actually irresponsible to the users (risk management | wise) to be keeping all that cash in hand 24/7. The easiest | bad case example: are you keeping all your savings under your | mattress? | | Edit/to commenters below: I understand there are emotions, | but that's simply how things work. As other fellow commenters | noted, banks do not keep or even promise they do keep your | money($) under their "mattress." | | Say you deposited in EUR. The exchange and everyone borrows | in USD, so your EUR become USD -- no way out of it. EUR goes | down, and then there is a bank run. Even if as the bank were | irresponsible and kept 100% liquid, they can not serve | everyone 1:1 in 24h. Nobody can give you that guarantee, | besides your local grocery store. We are thinking these | things at the wrong scale. | | We are not trying to shift blame away from FTX -- already the | whole relationship was sketchy. But claims about keeping 100% | USD with a 24h cashout in a worldwide scale is not something | on the table right now. I get worried when people feel | comfortable believing those statements. | shapefrog wrote: | > risk management wise | | Short dated government bonds would be the safest. But tweet | 0 he litterally says they dont do that, they keep the cash | under the mattress and you can have it if you stop by. | People stopped by and there was no cash under the | mattress... | eftychis wrote: | I agree. And it is sketchy when people give a guarantee | we know they can't keep. | Bubble_Pop_22 wrote: | > It is actually irresponsible to the users (risk | management wise) to be keeping all that cash in hand 24/7. | The easiest bad case example: are you keeping all your | savings under your mattress? | | "We never block withdrawls" is the new "We don't crash | ever" as seen in the Facebook movie. | | If you are in the crypto exchange business you gotta do | both actually. Don't crash the website and don't suspend | withdrawls ever. | rhaway84773 wrote: | If you take other people's money by promising you will be | keeping their money under your mattress, yes, you should | keep all that money under the mattress or you'll be behind | bars for fraud. | candiddevmike wrote: | I'm not a business masquerading as a bank, lol. | beambot wrote: | Banks don't have cash on hand equal to assets either... | oldgradstudent wrote: | Real banks have access to a lender of last resort. | | Shadow banks don't. | shapefrog wrote: | The CEO of a band has never say they have everyones money | sitting in the safe waiting for them to pick it up | whenever they wanted it. | | FTX CEO litterally said that in his tweet. | beambot wrote: | My read of the situation: SBF's comments were about | assets (balance sheet) rather than FTX's liquidity. I | believe SBF was saying (paraphrasing) "Our balance sheet | is fine; FTX doesn't invest customer assets; we're | processing withdrawals as fast as possible." That's | different than saying "we have 100% liquidity." | | Banks make similar statements all the time -- they | require regular audits of assets (stress tests) and | maintain some minimum levels of liquidity. | treis wrote: | Banks say that they don't invest deposits? | beambot wrote: | In the Glass-Steagall sense, they probably shouldn't. | Mixing commercial banking and investment banking was | illegal from 1933-1999, and it is (arguably) one of the | underlying factors in the 2008 financial crisis. | | Note: There's a difference between being a custodian of | customers' investments (brokerage / commercial banking) | versus proactively investing customer deposits | (investment banking). | cmeacham98 wrote: | Going to need a _huge_ source on that claim. Investing | customer funds is the primary way banks make their money, | and has been that way essentially since the invention of | banking. | | From https://en.wikipedia.org/wiki/Fractional- | reserve_banking: | | "Fractional-reserve banking predates the existence of | governmental monetary authorities" | oldgradstudent wrote: | Banks lend deposits. That's how they make their money. | They have to keep some part of the deposits as a reserve. | | Real regulated banks have access to the Fed to borrow in | a case of a bank run. | yucky wrote: | If everybody walked into their bank right now to withdrawal, | they couldn't cover either. | | Right? | lmm wrote: | They'd cover it. They might need to call up the fed, but | they'd cover it. | pcai wrote: | But their point was: FTX doesn't purport to be a bank | kikokikokiko wrote: | It doesn't purport to be a HUGE PONZI either, but... Just | another normal day in crypto land. | astrange wrote: | I mean, the CEO does literally tell people he's running a | Ponzi. | | https://www.bloomberg.com/news/articles/2022-04-25/sam- | bankm... | kasey_junk wrote: | https://www.fdic.gov/news/press-releases/2022/ftx- | harrison-l... | | Well... | rhaway84773 wrote: | And that's why banks are heavily regulated and get | protections. | | If FTX wanted protections against a bank run they could | also choose to be regulated as a bank. | | Cryptocons want us to both treat crypto scams as banks and | not banks depending on what suits them in the moment, just | like they want us to treat cryptocurrencies as assets or | currencies based on what suits their argument in the | moment. | | All to hide the fact that it's a mediocre technology which | has been surpassed by many other technologies for most of | its possible uses and is nothing more than a Ponzi scheme | designed to enrich its original backers. | rchaud wrote: | You may as well say "if everybody jumped off a bridge at | the same time...." | | How many bank runs have there been in 2022 in the developed | world? | | The reason people don't try to pull their money out all at | once is because their deposits are insured, because their | bank pays into an insurance pool. | yucky wrote: | The reason people don't try to pull their money out all | at once is because their deposits are insured, because | their bank pays into an insurance pool. | | Only up to $250k. | smcl wrote: | https://fortune.com/2022/05/23/record-number-american- | househ... | | That wouldn't be a problem for the majority of Americans | astrange wrote: | If you go over $250k, you can just open accounts at other | banks to keep being insured. Or get your own insurance I | suppose. | smcl wrote: | My point was that if many would struggle to put together | $400 in cash, they're likely unaffected by a $250k upper | limit on insured deposits | ramish94 wrote: | He mentions that they have everyone's money, and then the | very next tweet says "we'll clear out liquidity crunches". | | Literally a contradiction. | crystaln wrote: | It's not a contradiction. It's easy to have illiquid funds. | For example cold storage or locked funds. | drexlspivey wrote: | There is a time delta between the statements, assets worth | $10B on one day could be worth $5b the next | shapefrog wrote: | "we'll clear out liquidity crunches" - they have everyone's | money if they get more money from someone else. | mistercheph wrote: | Giving them the benefit of doubt, this is not a | contradiction. The statement means that they have enough | illiquid assets to cover the withdrawal that they are | working on converting into liquidity. | lottin wrote: | What do you mean illiquid? Worthless? | piva00 wrote: | Illiquid just means that you can't cash it in quickly. | | Cash is 100% liquid while a house is illiquid you might | have millions US$ parked there but only if you manage to | sell it, then you convert it into liquid cash. | | Liquidity is a measure of how easy it'd be to trade a | thing for another thing you want. | appleflaxen wrote: | IMO this would contradict what the GP comment asserts: | that SBF said "We don't invest client assets (even in | treasuries)". | sroussey wrote: | I thought FTX Alemeda (the trading side) invested into | their own token, which is tanking thus causing problems. | | Alemeda has like $14b assets and $8b in liabilities. But | of that $14b, $5b are in their own token (FTT) which is | kinda?? worth nothing at this very moment. So now the | assets and liabilities are more equally matched, but less | margin for shifting values of tokens. | | I don't know, but the derivative of their assets looks | scary the last 24hr. | | Disclaimer: not a crypto person | viscanti wrote: | But they're meant to store the customer assets in a cold | wallet. They're not meant to invest them in illiquid | assets that would need to be liquidated to give people | their money. If it's not a contradiction, it's an | intentionally misleading statement to avoid admitting | they let Alameda Research invest the money when the | entities are supposed to be completely separated. | shawabawa3 wrote: | The extremely charitable read is that | | 1. They have all the funds | | 2. Many are in cold storage or otherwise inaccessible in | short term | | 3. Their cold storage restore process is so slow they | need emergency help to provide liquidity in the meantime | | Seems more like that they've either embezzled client | funds or been hacked/lost some cold storage keys | astrange wrote: | The normal way to handle this would be insurance or a | line of credit, not selling your company to your | competitor overnight. | viscanti wrote: | In that scenario they could point to some of the wallets | to help calm the fears the money isn't available. Or they | could approach a number of different lenders who would be | comfortable lending at high interest rates if the money | is there but slow to access. They only sell if we're in | the non-charitable case. | wmf wrote: | They're _totally_ solvent but no one is willing to lend | them money? | lokar wrote: | "Every banker knows that if he has to prove that he is | worthy of credit, however good may be his arguments, in | fact his credit is gone." | miohtama wrote: | FTX/Alameda holds tons of illiquid FTT tokens that they | cannot sell and which Binance was dumping. Thus, they | might have not technically lied. But they were still | wrong from the accounting perspective - they surely | understood that FTT token cannot be used to cover gaps in | large scale. | | It was the question that matters "how fast you can | process user withdrawals and with what risk" | | Sam owns 8% of Robin Hood that is worth around ~$1B - he | could sell that and cover some of the gap. But what we do | not know yet is the size of the gap in time and space. | FTX had $6B withdrawals pending on Tuesday. | lancesells wrote: | > Sam owns 8% of Robin Hood that is worth around ~$1B - | he could sell that and cover some of the gap. | | Not knowing too much about this space have you ever seen | anything like this happen? A CEO using their personal | wealth to cover their customers funds seems unlikely. | tanseydavid wrote: | Free Jon Corzine! | dmitrygr wrote: | > have you ever seen anything like this happen? A CEO | using their personal wealth to cover their customers | funds | | No, but I would love to see it happen, enforced by a | court, and backed by a promise of jail time if the CEO | fails to comply in a timely fashion. | fantasyman1 wrote: | spuz wrote: | Remember that blockchain transactions are slow and FTX has | over 1m users. Even in the most positive of scenarios, I | would not be surprised if it took days to clear the backlog | of withdrawal requests. | rhaway84773 wrote: | "How to destroy the entire basis for blockchain technology | in 1 sentence". | zoklet-enjoyer wrote: | Slow blockchain transactions and it would be shocking if | they didn't stake user assets. Most (all?) proof of stake | chains have lock up periods. Atom and other Cosmos chains | are usually 21 days. | EVa5I7bHFq9mnYK wrote: | Indeed, all Bitcoin blocks today are full. There is no | physical possibility to withdraw all those funds. That's | why Binance must implement Lightning deposits/withdrawals, | like Kraken did. | smoldesu wrote: | Adding L2 chains to this equation dumps the frying pan | into the fire. We don't need more points-of-failure, it's | bad enough as-is. | EVa5I7bHFq9mnYK wrote: | Inability to process more than 5 tx a second for entire | world is a major point-of-failure that L2 chain cures. | jdprgm wrote: | Not sure what people are talking about here, bitcoin | mempool doesn't even have a notably large backlog at the | moment and fees are currently low/normal: | https://mempool.space/ | | Exchange withdrawals are one to many for btc helping keep | size down and most other chains shouldn't have any issues. | Don't see how FTX or really any exchange should be | bottlenecked by blockchains here. | aaronharnly wrote: | It seems to my layperson's eye that that would be a reason | to get a loan for a week or a month, not to sell the | company. | somuchfordonor wrote: | You forgot 8 hours ago: Hacker News commenters are in total | denial: | | https://news.ycombinator.com/item?id=33518961 | chx wrote: | > it was a lie the whole time. | | how many of these y'all need before you learn: _all crypto is | a scam_. It never was anything else, it never will be | anything else because it _can not be_ anything else. | | There's an awful lot of fancy piled on the simple fact that | all crypto"currencies" are _negative sum games_. The only | disagreement is whether this is an entirely new type of scam | , a "Nakamoto Scheme" or the difference between these and | the classic Ponzi are irrelevant like the difference between | a CRT and a HDTV and then we are looking at a Ponzi. | jiveturkey wrote: | Could be technically true? | | They don't "invest" client assets, not even in treasuries, ie | actual investments. | | They "speculate" client assets, in tokens. | PaywallBuster wrote: | https://www.investopedia.com/terms/c/cashandcashequivalents.... | | > Cash and cash equivalents refers to the line item on the | balance sheet that reports the value of a company's assets that | are cash or can be converted into cash immediately. | | > Cash equivalents include bank accounts and marketable | securities such as commercial paper and short-term government | bonds. | | > Cash equivalents should have maturities of three months or | less. | | Don't know specifics on FTX/Alameda but this is probably normal | to a degree for banks/brokers or just any regular business? | max_ wrote: | Now it is clear that he was lying. | | They stopped processing withdrawals according to on chain | data.[0] | | [0]: https://www.theblock.co/post/184176/ftx-appears-to-have- | stop... | skippyboxedhero wrote: | They have one BTC. Form an orderly queue to receive your | portion. | | https://www.coindesk.com/business/2022/11/08/ftxs-bitcoin- | ba... | jefftk wrote: | _> They stopped processing withdrawals_ | | If you look at the comments on | https://news.ycombinator.com/item?id=33518961 that article | missed that FTX uses multiple addresses for withdrawals. | max_ wrote: | He admits they were illiquid and needed Binance to cover | withdrawals 1:1. | | >Our teams are working on clearing out the withdrawal | backlog as is. This will clear out liquidity crunches; all | assets will be covered 1:1. This is one of the main reasons | we've asked Binance to come in. It may take a bit to settle | etc. | | [0]: https://twitter.com/SBF_FTX/status/1590012124864348160 | jefftk wrote: | Sorry, edited my comment to quote the section of yours I | was trying to reply to | chaosbolt wrote: | Are you seriously asking? He lied like every other exchange | does. The man's middle name is Bankman for god's sake. | Aaronstotle wrote: | I don't understand how his middle name relates to anything | about this situation. | prottog wrote: | Perhaps a quip on the untrustworthy nature of bankers. | kgwgk wrote: | And he's Fried now. | shapefrog wrote: | This a.m. before securing an emergency lifeline from rival | Binance, FTX was canvassing deep pockets in Silicon Valley and | Wall St -- think billionaires, not institutions -- ppl familiar | told me & @lmatsakis @SaacksAttack. Two of the ppl he was | seeking more than $1bn. | | https://twitter.com/lizrhoffman/status/1590021299295768578 | | He / his people didnt call me, but I would have passed anyway | toomuchtodo wrote: | > One person briefed on the fundraising blitz said what | started as a $1bn ask was looking more like $5bn-$6bn by | midday. | matheusmoreira wrote: | They lied to everyone of course. Never trust these | corporations. They're sitting on huge piles of consumer | deposits, of course they're gonna leverage that money. They | cannot resist the temptation. | ForHackernews wrote: | It's all lies. Just like everything else involving | cryptocurrency. | purpleblue wrote: | Well, if the customers are holding FTT and they're trying to | get rid of their FTT, that could cause the liquidity crisis. | The crisis isn't with the customer assets, it's with their FTT | side of the business. | cguess wrote: | Can't have a run if you can't withdrawl! | JumpCrisscross wrote: | > _SBF said "We don't invest client assets (even in | treasuries)"_ | | We know that was false when it was said, given the Alameda | balance sheet. (FTX invested in Alameda which made risky loans | to crypto folks and bought FTT, which FTX minted [1].) | | [1] https://www.coindesk.com/business/2022/11/02/divisions-in- | sa... | ucha wrote: | Nowhere does it say that FTX invested in Alameda. | | Alameda invested in FTT which is minted by FTX which is not | the same thing. | JumpCrisscross wrote: | > _Alameda invested in FTT which is minted by FTX_ | | FTX issued FTT to Alameda. We have no idea what Alameda | gave them as collateral, but it's clear it wasn't cash. | Lending is a form of investing. (I don't get what unlocked | versus collateral FTX on Alameda's balance sheet means.) | ucha wrote: | How can you say it's clear it wasn't cash? What's the | source? | | Also, FTX minted FTT out of nothing - effective cost zero | - so no matter what they received in exchange, even if | they had received _nothing_ that is not an investment | unless they received Alameda equity. I agree that lending | is a form of investment but nothing says that they | received a loan in exchange. | | You could still be right, but it's all speculation :) | JumpCrisscross wrote: | > _How can you say it 's clear it wasn't cash?_ | | FTT spiraled and FTX went insolvent. | lmm wrote: | Doesn't mean they never received any cash. Maybe the CEO | spent it all on crack and hookers. | tootie wrote: | I know the SEC is struggling to stay on top of the crypto | market, but it certainly seems like SBF should be in an | absolutely huge amount of legal jeopardy right now. And if he | isn't, then the crypto market is beyond saving and deserves | to die. | JumpCrisscross wrote: | > _SEC...it certainly seems like SBF should be in an | absolutely huge amount of legal jeopardy right now_ | | FTX U.S. is fine. To the degree Americans are hurt, it's | investors in the international entity. If anyone deserves | regulatory scrutiny, it's the institutional investors | betting fiduciary assets on crypto. | [deleted] | Bluecobra wrote: | Remember this is a NON-BINDING letter of intent. I wouldn't be | surprised at all if this doesn't actually happen and just a bunch | of ballyhoo. Unlike Twitter, FTX won't be able to drag CZ down to | Delaware's Chancery Court to force him to acquire it. | matheusmoreira wrote: | Indeed. Didn't stop the market from melting down though and it | looks like FTT is going to zero. Wonder what happens if they | decide not to buy it after all. | popcalc wrote: | I think that's what the OP meant... | orsenthil wrote: | What is CZ? | [deleted] | aaur0 wrote: | CEO of Binance - https://twitter.com/cz_binance | spaceman_2020 wrote: | All of SBF coins are going to crash like anything. All those | tokens will be liquidated to pay lenders. | boeingUH60 wrote: | "We're going to look back at a generation of successful founders | and VCs with the realization that all of their talent was in | creating a company during the bull market." - random tweet I came | across that's very relevant here. | billjings wrote: | Dare Obasanjo: | https://twitter.com/Carnage4Life/status/1589867071693017088 | 3001 wrote: | Total unrelated but son of | https://en.wikipedia.org/wiki/Olusegun_Obasanjo. Numero uno | looter of Africa | MaxHoppersGhost wrote: | Wow. I like how his son's Twitter profile talks about | inclusivity. Very brave. | melvinmelih wrote: | He very cleverly took his name out of his dad's wikipedia | entry. It's still there in older versions: https://en.wikip | edia.org/w/index.php?title=Olusegun_Obasanjo... | niyikiza wrote: | Wow! That's next level Ad Hominem & Genetic fallacies | bolasanibk wrote: | Not to be confused with the talented soccer player Sam | Obisanya. https://ted- | lasso.fandom.com/wiki/Sam_Obisanya#Dubai_Air_and... | googlryas wrote: | Why even reference it then? We have understood that sins of | the father are not the sins of the child since at least the | book of exodus(~500BC). | | If that tweeter has done something wrong in his life, then | talk about it. But he didn't really have a choice on who | birthed him. | | From the wiki page: | | > Some of his children were resentful that he gave them no | special privileges and treated their mothers poorly. | [deleted] | billjings wrote: | I went to Georgia Tech with Dare. It's a great school, | but it's not exactly the kind of place you send your | scions of privilege. | 3001 wrote: | Thats funny, sure going to Gtech for an American as an | undergrad doesn't scream privilege but seeing that today | the total cost of going to such school will run you | around 400k as an international student, while millions | of people graduate high school in Nigeria and have to go | through the hunger games of Jamb for extremely limited | spots due to the lack of investment in education lead by | his dad and cohorts tells a different tale. | | Someone like him not born to such father in Nigeria, will | likely be an high school teacher getting paid $100 every | 4 months. | googlryas wrote: | Are you just assuming his dad paid for his school? Do you | know if he received any scholarships? Do you know the | finances of his mother/mother's side of the family? | httpz wrote: | Majority of early startups still don't make it past the valley | of death even during a bull market. | | This is like saying every great sailor happened to sail when | the wind was blowing in the right direction. | chubot wrote: | There was an entire book about this that became famous during | the 2008 financial crisis: | | _Fooled by Randomness_ by Nassim Taleb | | https://www.amazon.com/Fooled-Randomness-Hidden-Markets-Ince... | | It's literally about how options traders and the like can be | lucky for 10 or 20 years, but they are actually idiots who | destroy the economy. | | They think they are skilled, and others think they are skilled, | but it's luck. You can also call it "anti-luck" because their | short-term actions can cause the long-term crisis. | | This book was a #1 best seller, as were most of Taleb's books, | but for some reason whenever I mention it to anybody, I get | blank stares. | | I think it's just really hard for people to understand | phenomena that occur at time scales of say more than a decade. | | (BTW Another good book about recurring economic cycles is | Dalio's 2022 _The Changing World Order_. All of this stuff has | happened before. This is separate from crypto, and relates to | the global economic environment.) | lordnacho wrote: | > whenever I mention it to anybody, I get blank stares. | | Maybe it's the circles you move in. In finance nobody hasn't | heard of it. | | Well deserved reputation too, it really changed how I saw | things. It's weird because even as someone who studied | probability and stats, I hadn't thought it would change my | entire worldview. | tanseydavid wrote: | This book was my introduction to Taleb and I loved it. I | recommend it frequently. | niyikiza wrote: | Great book. It was my introduction to Taleb as well It | profoundly shaped how I interpret markets and approach my own | investments. | Patrol8394 wrote: | > and said FTX was totally fine | | I want to think that by now people have learned that "totally | fine" in crypto means that they are not. | | Also, wasn't FTX gonna buy Voyager? | Aaronstotle wrote: | Every exchange needs to show proof of reserves, I don't have much | faith that Binance is in much better shape than FTX. | Bubble_Pop_22 wrote: | Exchanges big wallet are public info on the blockchain IIRC. | The huge problem is that you'll never know if they add up | because you'd need confirmation from every user of the exchange | who'd have to self-declare their crypto-wealth in some sort of | Slack or Telegram group so that you then can compare the 2 | totals and see if x=y. | | Will never happen. They are black boxes. Only them know if 1:1 | ploppyploppy wrote: | Kraken do: https://www.kraken.com/en-gb/proof-of-reserves ___________________________________________________________________ (page generated 2022-11-08 23:00 UTC)