[HN Gopher] We will not pursue the potential acquisition of FTX ___________________________________________________________________ We will not pursue the potential acquisition of FTX Author : sbuccini Score : 203 points Date : 2022-11-09 21:06 UTC (1 hours ago) (HTM) web link (twitter.com) (TXT) w3m dump (twitter.com) | fdgsdfogijq wrote: | The funny thing is for six months I have been checking FTX for | open developer positions. Thinking surely, the best place in | crypto must be hiring good devs like me. And there have been no | postings at all! And word on the street is their devs actually | building the exchange made a middling salary with zero stock. I | always found it odd, how could they not be hiring? even during | the downturn? And now I know why, it was all a scam. | ZephyrBlu wrote: | They were hiring. I applied a few months ago and got an email | from them, but never followed up. | firekvz wrote: | They just hire people from other places, cheaper labor, I know | at least 4 southamericans who worked for them in the past, 100% | remote, same talent as an US dev, and 1/4 of the cost | skippyboxedhero wrote: | It wasn't. They just ran with significantly less staff (iirc, | less than 30). If they wanted you, they got in touch. | | FTX wasn't a scam either. Their business was a licence to print | money but, as so often happens in finance, managed to spin shit | from gold. | fdgsdfogijq wrote: | That's not what I have heard. Specifically know people who | have gotten offers, mostly in the 150k range with zero stock. | Alameda research is also just random devs that went to MIT | with a few years experience. Impressive to go to that school, | but clearly not experienced enough to run a real finance | operation. Zero real finance people. | | If they were serious they would have hired portfolio managers | with decades of experience. | | Its the same thing as three arrows capital, random people | ending up with a bunch of capital, overestimating their | intelligence due to a bull market run, and ending up with | nothing | mi_lk wrote: | definitely know one guy hired by FTX intl in the past 6 | months | | so "If they wanted you, they got in touch." seems true to | me | [deleted] | fdgsdfogijq wrote: | "If they wanted you, they got in touch." | | you make it sound like a prestigious elite club. it was a | scam, and it should be called out as such. | | also again i personally know two people that received | stingy offers from them | squidbeak wrote: | Concealing from users they were gambling with their funds - | and not a scam? | throw827474737 wrote: | Hey, in crypto not all is a scam. Some are a proper pyramid | scheme, others outright betrayal, and few are just stupid | or for fun (: | pearjuice wrote: | No surprise whatsoever. They killed a competitor, avoided being | on the hook for ~$6B in missing funds and without paying anything | they are basically inheriting all FTX customers still happy to | trade crypto. FTX or whatever is left will be under massive legal | scrutiny for years to come. The "institutional investors" they | were attracting and lobbying for are the kind of folks you don't | want legal battles with. | | Meanwhile, FTX is still operating (!), accepting new users and | accepting customer deposits even though it is insolvent. If you | haven't been following the crypto news much or aren't on Twitter, | you will have received ZERO direct communication from FTX that | they are insolvent (not even an email). This is coming from | someone who went on the record[0] trying to lobby, blaming the | financial industry for lack of transparency and taking on too | much risk and publicly lying that FTX doesn't use customer funds | to trade (tweets have since been deleted)[1] | | [0] https://twitter.com/HaloCrypto/status/1590417311839981569 | | [1] https://cointelegraph.com/news/ftx-founder-sam-bankman- | fried... | 6d6b73 wrote: | Ponzi doesnt want to buy failed Ponzi? How surprising. | giantrobot wrote: | Game recognizes game. | seydor wrote: | good for binance customers. | Animatronio wrote: | I don't think it very good for them either. They might feel | secure for a couple more days, but the crash is surely coming | for them as well. | alexk307 wrote: | Maybe people will finally get some sense and stop storing their | wealth in digital currency that is backed by absolutely nothing. | I think a lot of dominoes are about to fall in the crypto world | scottiebarnes wrote: | The Bitcoin protocol and network continues to operate exactly | as expected. Here, people trusted a "bank" (an exchange acting | like a bank), and got burned when the bank gambled and lost. | sytelus wrote: | Without exchanges like FTX or Coinbase, how should general | public acquire crypto? | rahen wrote: | Bisq, of course. | | https://bisq.network | | With a bit more manpower, they could make the UI more | usable to the general public. I wish there was an | iOS/Android version too. | scottiebarnes wrote: | Use an exchange that publishes proof of reserves, and take | custody of your crypto immediately. | eddsh1994 wrote: | There's a big peer to peer market, fwiw | _jal wrote: | > continues to operate exactly as expected | | Yep: as a set of primitives on which to build sorting | mechanisms for fools and money. | scottiebarnes wrote: | Tell me more about the rock solidness of the housing | market, or government bonds. | sytelus wrote: | At present no major currency is backed by anything material but | trust. USD, for example, is only viable because, at the deepest | level, trust in it is enforced by US army. There are three | major class of people who need digital currency: (1) who are | super rich and won't care about putting their 1% of wealth for | "diversify and forget", (2) who need to transfer money eyes off | from governments, (3) people who need alternative to be | manipulated away from US fed. As long as there exist a group of | people needing digital currency there is an intrinsic value | assigned to that currency. | polrjoy wrote: | Chinese yuan is economically backed by state owned companies | that routinely sell essential goods and services at below | market prices when they otherwise would rise too fast. | ummonk wrote: | If the crypto-bros had a militia as powerful as the US army | then perhaps crypto would be worth something. | [deleted] | pessimizer wrote: | > USD, for example, is only viable because, at the deepest | level, trust in it is enforced by US army. | | That's a very deep level. At the practical level, USD is | viable because court judgements in the US can be settled in | dollars (e.g. if somebody is held responsible for killing | your goats, you can't demand to be paid back in goats), and | US taxes are owed in dollars. | | At the deepest level, taxes and courts are maintained by the | US government, which I suppose you can say is protected by | the US military? | | Saying that the _high dollar_ is protected by the US military | makes more sense. But the dollar itself is protected by the | magnitude and reach of the entire US government, which is | only partially maintained and extended by killing people. | jonstewart wrote: | > trust in it is enforced by the US army | | That's not exactly "absolutely nothing", to use the parent's | phrase. | sgt101 wrote: | At it's deepest level the $ is viable because of the consent | of the people of the USA. The US Army isn't either capable of | enforcing law in the USA or exercising influence out of the | USA without that consent. | matai_kolila wrote: | Yeah but like, the US is a lot more likely to be around in 20 | years, so this argument doesn't really make any sense. | | Honestly I'm sick of hearing it; yes we know, all money is | made up, that's not an interesting point anymore. Society is | okay with that, but it doesn't mean you can just make up | another currency, that's not how it works. | sytelus wrote: | That's exactly how it works. When you issue IOU, you issue | your own currency. When a company issues stock, they are in | fact issuing their own currency. All contracts are in fact | a currency that can be sold, bought, invested and | transacted. World debt is far far larger than actually | currency in circulation. How does that happen? Because we | make up "currency" all the time. | matai_kolila wrote: | No, that's not the same thing at all. For every other | example of currency besides the government's currency, | there's a tangible thing backing that unit. | | Crypto still doesn't have that, and that matters. To what | degree is up for debate, but it does matter. Only | governments apparently can get away with the unbacked | currency, because they otherwise back it with enforced | societal rules (a.k.a. laws). | keneda7 wrote: | What other currencies are there in todays world other | than fiat (government's currency back by nothing)? I was | trying to think of something other than crypto and really | came up blank. | | Sure some corporations have things like CompanyX dollars | that they could give out to employees who then redeem | them for something. But in these situations those dollars | are back by nothing. | CyanBird wrote: | > No, that's not the same thing at all. | | Per Mark Blyth | | Money, to be useful is what Economists call three things; | A Unit of Account A Unit of Exchange A Store of Value: | A hedge against uncertainty Crypto is not money, so what | is it? Is what the Chinese Central Bank characterized | three years ago as Digital Gambling Asset | NovemberWhiskey wrote: | Other things we're fed up of: people making up their own | weird and arbitrary definitions of "currency". | kortilla wrote: | No, contracts are not currencies. The whole point of | distinguishing between currencies and other | securities/debt is that a currency has the property of | being a widely used medium of exchange. | | The contract I have with my plumber to plumb my toilet is | not something you can use to buy lunch. | addajones wrote: | Exactly how it works... but you left out the US Army part | this time? You kind of need that to give it value. | Nothing else will. USD. | cheeselip420 wrote: | But what if you declare it? Like bankruptcy, but in | reverse? | buitreVirtual wrote: | Storing wealth means that you can get your wealth out later. In | this case, people are just giving it away. | sicp-enjoyer wrote: | An exchange explodes almost every year. I doubt anything | substantial has changed. In fact, binance looks better than | ever. | sgt101 wrote: | Well, absent the implosion of general confidence in crypto | and the likely hawkish reaction of regulators - I agree. | Mistletoe wrote: | What backs this? | | https://fred.stlouisfed.org/series/M2SL | | Might of USA and all that? Yes I've heard all that before. | Rome, France, England... | | https://en.wikipedia.org/wiki/Debasement | | https://en.wikipedia.org/wiki/Assignat | | https://en.wikipedia.org/wiki/The_Great_Debasement | | History is more on the side of it happening than not. | | "The root problem with conventional currency is all the trust | that's required to make it work. The central bank must be | trusted not to debase the currency, but the history of fiat | currencies is full of breaches of that trust." -Satoshi | Nakamoto | thr0wawayf00 wrote: | > History is more on the side of it happening than not. | | Is this true? Of all the years that various countries have | used traditional fiat currency, has debasement happened more | years than it hasn't? I don't think so but I'm not certain. | | Obviously, nobody can predict the future here, and history | tells us that all empires come to an end at some point. But | we're watching crypto speed-run through all of the issues | that the American banking system had in the Free Banking era | leading up to the creation of the Fed. Operating in this | trustless crypto system still makes it possible for people in | control to do stupid things which threaten the viability of | the entire system. | | Personally, I think cases like this prove that wealth | concentration in the hands of the few leads to these | situations. It's a not a government problem, it's a | concentration of wealth and power problem. Individuals | shouldn't have this much money or power to act so recklessly, | but we accept the outcome as a consequence of our winner- | take-all culture. | jdasdf wrote: | >Is this true? Of all the years that various countries have | used traditional fiat currency, has debasement happened | more years than it hasn't? I don't think so but I'm not | certain. | | Do you know of any currency over the past 200 years that | has suffered deflation throughout that period? | | I don't mean "occasionally has one year with deflation", I | mean, the real value of 1 unit of that currency 200 years | ago was less than what it is today. | thr0wawayf00 wrote: | Certainly major currencies have experienced periods of | deflation (i.e. the Great Depression, the Great | Recession, etc.). But deflation is a sign of weakening | economy as well. There's an obsession with inflation, but | the reality is that some inflation is inevitable in a | growing economy as demand outpaces supply. Economists | agree pretty consistently on that. | nightski wrote: | Do you typically invest all of your wealth in one thing? | Because for most of us I imagine that is not the case. | shmatt wrote: | CZ knew about the bad leverage to begin with, which is why he | tweeted about selling all of the FTT | | What are the chances he never intended to buy FTX, just to | destroy it after their public back and forth? It's almost like a | reverse Musk - he sent a purchase offer with an option to back | out no matter what | | CZ knew from day 1 all he needed to do was crash FTT just enough, | and the rest would happen organically | rr808 wrote: | CZ seems like a genius, but I'm sure he's panicking now, he | doesn't benefit from killing the whole alt-coin world - which | increasingly looks like happening. | eddsh1994 wrote: | I called it and saw many others call it too. Cause a run on | FTX, get due diligence and say it's F**ed, and get their user- | base for free. | | My concern is how much funding FTX and SBF in particular were | giving to EA/AGI Safety research labs and charities. There's | going to be some significant knock on effects there when the | money is no longer available. | Animatronio wrote: | What user base? FTX is unable to process withdrawals right | now (and who knows if they ever will be), so the money's gone | meaning users won't simply migrate to Binance. | eddsh1994 wrote: | Basically any r/cc user who was in FTX and wants to invest | part of their next paycheck? | Animatronio wrote: | As the saying goes "Fool me once ..." | eddsh1994 wrote: | Regardless of opinions it's a sizable user base! And, | assuming there's another bull run at some point, it'll | grow again. | headsoup wrote: | That's a big assumption at this point. | kuratkull wrote: | Seems pretty likely. The moment FTX publicly accepted the | buyout idea they were doomed as a company, it wouldn't have | mattered if Binance actually bought them after that. | shapefrog wrote: | The Wall Street Journal in its report quoted Binance as saying: | "Our hope was to be able to support FTX's customers to provide | liquidity, but the issues are beyond our control or ability to | help." | | Big if true | redox99 wrote: | That quote comes literally from the tweet linked in this post | pavlov wrote: | Why does anyone trust Binance either? They're notoriously shady | about where they operate and what assets they actually hold, to | the point that they're officially not headquartered anywhere. | | If you have $100k at Binance, is there any reason to believe you | could withdraw it tomorrow? Any contract you may have with | Binance is made with a local shell company that could just as | well be a hot dog stand. Any money you've sent them is | effectively nowhere. | | FTX was supposed to be above the board and they collapsed in a | day. A few months ago FTX was the white knight buying out | distressed crypto companies. Why would Binance do any better? | nfw2 wrote: | Potentially dumb question here; I am no expert on crypto or | finance. | | Isn't the collapse of FTX in some ways evidence in favor of | decentralized currency rather than against it? As evidenced by | 2008, firms gambling with other people's money doesn't seem to be | specific to DeFi. | | If coin exchanges had some legal obligation to just be wallet and | marketplace services instead of investment engines, could that | help prevent this sort of fiasco (and the 2008 one) happening in | the future? On the other hand, perhaps this solution could be | equally applicable to traditional banks. | ricardou wrote: | This whole thing is such a mess. Binance's statement is quite | scathing. It is a shame that crypto institutions continue to fold | after mismanagement. The free money era will sure take a couple | more entities with it. | maxerickson wrote: | Maybe organizations is a better word there. | grey-area wrote: | It would be amusing if this deliberate attack by Binance also | caused other frauds like Tether and eventually Binance to | collapse too. | | People will simply lose faith in crypto entirely and avoid the | whole market. | chasd00 wrote: | I certainly have no faith in crypto. The returns look nice but | I know i'm not informed enough to get out while the getting's | good so I'll have to pass. | Kukumber wrote: | Why would they buy a government sponsored ponzi scheme | | Congrats on Binance for dodging the bullet | nrmitchi wrote: | Real answer? If the value of maintaining trust in the over-all | ponzi environment is worth more to you than the lost value of | the failed ponzi scheme, it might be worth buying the other | ponzi scheme. | foobiekr wrote: | That is almost certainly the only reason they were even | considering this. | secretsatan wrote: | Independent ponzi schemes FTW! | churchill wrote: | From reports I've heard floating around, Alameda was making >$1M | per day doing their good ol' prop trading. If that's true (and | that's a big if) then all SBF had to do was simply stick to the | playbook. Do you prop trading on the side, help customers | transact crypto via FTX. | | How do you even mess it up this badly? | zomglings wrote: | By getting greedy and treating FTX user funds as capital to | deploy in the prop trading firm. | JumpCrisscross wrote: | In the thick of it, illiquidity and insolvency blur. But not | after the fact. | | As usual, Levine put it best: "the problem is not a timing | mismatch, in which FTX's customers asked for their cash back but | FTX did not have enough ready cash because it had long-term but | money-good loans out. The problem is that FTX took its customers' | money and traded it for a pile of magic beans, and now the beans | are worthless and there's a huge hole in the balance sheet" [1]. | | Before one is insolvent, illiquidity and insolvency are circular | questions of asset value. After the fact, it shouldn't take | someone more than a few minutes to come to a conclusion. (There | is a deeper discussion on the folly of accepting as collateral | assets correlated with confidence in oneself. I recommend reading | the article.) | | [1] | https://www.bloomberg.com/opinion/articles/2022-11-09/bankma... | warinukraine wrote: | Hah I called them magic beans yesterday! | | https://news.ycombinator.com/item?id=33524912 | sgt101 wrote: | We've been here a long time ago : | https://en.wikipedia.org/wiki/Beenz.com | simonjgreen wrote: | Wow I had forgotten all about that. | | I remember a lot of hype in the dot-com era around that | ArtWomb wrote: | The NFTs of 1997: "etoy shares compel people to think | about the elusive and amorphous nature of Internet art. | One of the many controversies about Net art is that there | is no original copy; an artist can't exactly "sell" a | home page to a collector. The "shares" play with the idea | of ownership and the Net, as well as spoof absurdly | overvalued Net stock" ;) | | https://www.villagevoice.com/1999/11/30/e-toy-story/ | pseudosavant wrote: | FTX going under due to magic beans reminds me so much of Lehman | Brothers going under in 2008. That time the magic beans were | "mortgage backed securities" that somehow took low-quality | debt, mixed it up with some magic, and out came high-quality | debt, only it didn't. | kristjansson wrote: | The problem with MBS was always the zero-sum nature of the | alchemy. They took 100 low-quality loans in, and returned 10 | high-quality loans, 30 ok-ish loans, and 60 dog-shit loans. | No harm no foul, until the dog-shit tranches were marketed as | ok-ish, and alchemists believed they we're really creating | gold. | dragontamer wrote: | CDOs weren't the problem. You see, mixing together dog-shit | __ONCE__ isn't that big of a deal. | | CDO-squared (CDOs of CDOs) were a problem. If you took | those 60 dog-shit loans, mixed them together, and created | 10 high quality loans out of them, problems began to occur. | | Even then, it wasn't the CDO-squared that collapsed the | whole thing. It was the CDS: the "insurance" (so to speak) | on the CDO-squared that made things go haywire. | ethbr0 wrote: | The central MBS problem seemed to be ratings-based- | regulation + free-market-unregulated-ratings-agencies. | | In hindsight, it should have been structured like | government insurance servicers: subject to random and | _regular_ audits, with $$$ fines if they turn up anything | fishy. | | If you don't want corruption, engineer a system where not | being corrupt is more profitable... | btown wrote: | Archive link to the Levine column linked above: | https://archive.ph/CxJqM | SilasX wrote: | That's why I hate when people in these discussions refer to | needing/providing "liquidity". It feels like such a weasel | word. Unless you _know_ enough to conclude it's really a cash | flow mismatch, then don't mince words or overcomplicate it. | | Money. They need some g/d m/fing money. Maybe they need it as | arms-length loans on legitimately illiquid capital. Maybe they | need underpriced loans for the risk of the business. Maybe they | just need a giant dump of free cash. | | But it's money they need. To weasel it away as "liquidity" is | to assume something you probably have no way of knowing until | later. | | It was _particularly_ dubious in the case of FTX, whose assets | were in popular cryptocurrencies, which are traded every | millisecond. You can absolutely find a buyer instantly! At | about the same price it traded for five minutes ago! Just not | at the price you _need it to be_. | | "No, no, the _fair market price_ is actually much higher, it's | just that there's only one guy who would actually buy it all | right now!" No. Stop. We already have a word for an asset that | exactly one person wants to pay a positive price for: worthless | (because they only have to outbid everyone else). | | Sorry, /rant | Marazan wrote: | Lol | smcl wrote: | Quite. And may I add: lmao | scrlk wrote: | Just a PSA for any FTX users out there: please make sure you get | details of your balances, deposits, withdrawals and trade history | whilst the site is still up. | | You can download it as a CSV - I'd also take screenshots to be on | the safe side. | | Save yourself a potential headache when you come to do your taxes | down the line. | [deleted] | WJW wrote: | Extremely interesting to see how this will end. IIRC, Alameda | research had a huge position in FTT which will presumably go | under now. | mdolon wrote: | Their website has been taken down (marked private): | https://www.alameda-research.com/ | wellthatsawrap1 wrote: | Hopefully with jail time | skippyboxedhero wrote: | SBF was one of the biggest political donors to the party in | govt. He seems to have done all the shady stuff with Alameda | (and said it was arms-length). And whilst Alameda's CEO said | multiple things that would have got you in trouble with | regulated products (saying they had $10bn in secret assets, | making a public offer to buy FTT to manipulate the | price)...this is crypto. | | I will make an exception to this: if they do not manage to | make everyone whole or if there is public outrage that | overwhelms his purchased politicians then it is over and | multiple people will do time. | ignoramous wrote: | If and after cryptocurrency becomes deeply intertwined with | the economy (like Banks), I wonder bailouts would be the norm | besides relatively inconsequential jail times? | | I wonder what's going on / will happen in countries where | governments (or citizens en masse) have endorsed / adopted | cryptocurrencies? | dang wrote: | Previous related thread, now pushed down the stack: | | _FTX's financial black hole leaves Binance balking at rescue | plan_ - https://news.ycombinator.com/item?id=33535161 - Nov 2022 | (353 comments) | googlryas wrote: | Can someone who has a clue tell me which happened? | | Did SBF/FTX break the law and will see jail time? | | Or did they break regulations and will receive a fine? | | Or is it just a tough cookies situation? | ALittleLight wrote: | I hope so. Crypto scams hurt real people who put real money | into this thing. Whatever "financial engineering" happened to | vaporize X billion surely did more harm, and to many more | people, than the average felony theft. | | There are so many laws, so many jurisdictions involved, and so | much complexity and ambiguity that it seems basically certain | laws were broken. So, we have broken laws and injured parties - | seems correct to pursue criminal charges. | kra34 wrote: | https://www.bloomberg.com/news/articles/2022-11-09/binance-s... | | Estimated 6 Billion USD of a hole on the FTX side. | adrr wrote: | Does this number match the debt on Alameda's balance sheet? | paulpauper wrote: | If I had a $1 for everyone who "called it" or "knew it"... | RadixDLT wrote: | "Every time a major player in an industry fails, retail consumers | will suffer. We have seen over the last several years that the | crypto ecosystem is becoming more resilient and we believe in | time that outliers that misuse user funds will be weeded out by | the free market." | misiti3780 wrote: | Does anyone here think SBF will be prosecuted? | idoh wrote: | What crime was committed? I'm asking in a neutral way. Simply | losing billions of dollars of other people's money isn't | necessarily illegal. | misiti3780 wrote: | im not sure either, but it sounds like the same situation as | three arrows capital and those founders disappeared | cbtacy wrote: | Among other things, he perjured himself in front of Congress. | wollsmoth wrote: | yeah crypto deposits don't have the same protections as | securities which is why you don't want to leave them in an | exchange wallet. I'm going to guess somewhere in here there's | enough for a fraud charge though. I don't know enough to | explain why, but my hunch is he didn't lose all this money by | going around and making honest mistakes. | redox99 wrote: | He claimed literally days ago that funds were backed. That | seems like fraud. | | https://twitter.com/augginator/status/1590117110818443265 | TheAlchemist wrote: | What's even more funny is that Binance make it look like they are | a stable financial institution, and it's thanks to their high | standards that they won't acquire FTX. Binance is most probably | much more of a fraud than FTX. | | Binance doesn't even have physical headquarters in any country in | this world - and the reason is that they are being actively | investigated or banned almost everywhere. | bamazizi wrote: | ^this ... The whole space seems like a mirage | lizknope wrote: | It seems like it because it is. | | No regulations, no protections, only idiots "invest" in this | garbage. | | It's just one scam after another | jjtheblunt wrote: | We could ask how long till Binance implodes. | mrtksn wrote: | I don't know about it, Binance has become a gold standard in | crypto exchange business. Here on HN it was always about | Coinbase likely because its an American company but for the | rest of the world, it's all about Binance and the rest of the | world is huge. How huge? About an order of magnitude to | Coinbase. | | If Binance goes, crypto isn't coming back. | naveen99 wrote: | mtgox was bigger too. There are other reasons for a crypto | winter like high interest rates and a newly credible us | central bank. Rest of the world is not bigger when it comes | to non residential real estate: private equity, venture, | tech, finance. | JumpCrisscross wrote: | > _Binance has become a gold standard in crypto exchange | business_ | | This was FTX and Alameda like a week ago. | potatototoo99 wrote: | Not really, FTX was barely in the top 10 for spot, though | better in futures. Plus there are DEX and AMM. | dogman144 wrote: | Correct until the last I think. Every exchange is looking | international because they know what you're saying too. If | Binance goes, there's a mix of enough international toeholds | from regulated exchanges and enough defi to keep the markets | live. | rahen wrote: | "Not your keys not your coins". I wonder how people can trust | those CEX to store their funds. Private keys should be hosted | on a cold wallet, period. | thepasswordis wrote: | I hope this kills the "disheveled awkward guy must actually be a | genuis!" meme forever. | landoftheice wrote: | Bankman | | Fried | | Dimon | | Powell | | Yellen | | Stein | | Wicz | | Blum | | Gold | | Silver | | Epstein | | Weinstein | | Cohen | paulpauper wrote: | MSTR down 50% in 2 days. That will also be going to zero, too | given how much debt it carries. Leverage on an such a volatile | but likely worthless asset is financial suicide. What were these | people thinking. Leverage on index funds is pretty risky, but on | bitcoin? Makes no sense. | pedalpete wrote: | Are you referring to Microstrategy? Or some other MSTR? | | Google is showing down 30% over the last 4 days. | https://www.google.com/search?q=MSTR&sourceid=chrome&ie=UTF-... | | At the same time, if you are talking MSTR, Saylor must be | concerned. | paulpauper wrote: | MicroStrategy | snowypine wrote: | Wow, after only one day of due diligence. | baq wrote: | 'show me what you have and how much you owe' 'it's $10B and | $16B' 'no thanks' | cannaceo wrote: | My personal belief is that binance agreed with no intention to | carry out the deal. CZ tapdanced on FTX's grave on twitter with | critical comments yesterday. It is now unlikely that anyone | else will want to step up to look at the deal. | ignoramous wrote: | I'd say Stripe but unlikely given their missed IPO window. | Perhaps, Amazon, if they are feeling lucky? | [deleted] | pearjuice wrote: | My prediction: nobody will touch FTX and whatever is left | of it will be in legal battles for years to come. Most will | get auctioned to recoup the big fish making the most noise | and maybe pennies after that for individual users which had | funds on FTX. There is near zero value in an exchange-brand | which took a reputational hit as big as this. | masklinn wrote: | Why would they want to take on what is reported to be net | 6bn in liabilities? | mumbisChungo wrote: | The silly thing is that FTX was a money printing machine. There | was no reason to start gambling with user funds, aside from | greed, hubris, and stupidity. | | Similarly, Sam's fund Alameda was delta-neutral until some time | in 2021, which is something that also could have profitably | continued in perpetuity, but they got greedy and started making | directional bets with leverage. | jti107 wrote: | reminds me of LTCM...they were making bank until the Asian bank | crisis and Russia defaulting on their debt | | https://www.dailymotion.com/video/x225si7 | oldgradstudent wrote: | Very different. LTCM was making massive, very risky bets | while pretending they were safe. | | They were making insanely leveraged bets on real assets. | | FTX seems to me to much closer to Madoff. | | They were printing their own Monopoly money and pretending it | was worth billions. | pclmulqdq wrote: | FTX was the next iteration of beanie babies. | | They held a huge supply of an illiquid asset that they made | the market on. No surprise that they would offer a high | price and then say "these are worth a lot." This happened | with beanie baby sellers: they would corner the market on | one model and the jack the price. The problem is that | nobody else thought they were worth that much. | | Then, FTX made it worse by allowing people to borrow | against them at the valuation of "a lot," and borrowing | against them at the same valuation. | jeffreyrogers wrote: | LTCM actually was doing a lot of the risk management people | later said they should do. Their problem was the trades | they were doing were more crowded than the realized and | they couldn't unwind them cheaply because everyone else was | doing the same thing. Plus once people realized they were | struggling other market participants started betting | against them. There have been other similar situations | since then. In August 2007 most of the big quant funds lost | double digit percentages in a few days when someone had to | unwind a portfolio and statarb strategies stopped working. | mumbisChungo wrote: | The core of the issue here was not ponzinomics, it was the | exchange gambling directly with user funds, by way of | unsecured loans to a hedge fund controlled by the founders. | | Fraud? Yes. But users weren't buying into a ponzi, they | were using a centralized exchange product with the | understanding that reserves were whole, when in reality | they were secretly fractional reserves. | lizknope wrote: | SBF literally describes a magic ponzi box | | https://www.youtube.com/watch?v=C6nAxiym9oc | nullc wrote: | Why do you think a single thing they told the public was ever | truthful? | | It seems naive to me. | mumbisChungo wrote: | I'm not sure what you mean by this exactly. Many of the | things they said to the public are not true, but these | currencies use permanent, public ledgers, so you can see | where the money goes if you look carefully. | TedDoesntTalk wrote: | Does the ledger capture loans of user funds held by FTX? | mumbisChungo wrote: | Yes | PaulWaldman wrote: | >The silly thing is that FTX was a money printing machine. | There was no reason to start gambling with user funds, aside | from greed, hubris, and stupidity. | | Where were their profits derived? Was it from taking their | slice of every transaction? Or selling their freshly minted | coins? If it was the latter, that only works for so long, just | ask the Fed. | oldgradstudent wrote: | > Where were their profits derived? | | Is there any reason to believe there were any profits ever? | mumbisChungo wrote: | Of course. They were one of the highest volume exchanges, | taking a % of every transaction. | | Unfortunately, they got greedy and started lending money | (to themselves in Alameda, where it was gambled away) | mumbisChungo wrote: | Trading fees on billions of dollars of volume. | nfw2 wrote: | In this case, where do the liabilities come from? | | Edit: nvm I guess this thread is about FTX's original | business model | cellis wrote: | There's a Bloomberg article that goes over why this is a bit | more nuanced than "gambling with customers funds". In short, | it's either one or both of poor risk management ( margin | traders can't post collateral and the collateral they had was | FTT which went to zero ) and black swan bank runs ( Binance CEO | tweets about risky FTT causing bank run causing further drops | ). In fact "gambling with customer funds" was _by design_. | Coinbase, to their credit, lost business to the cexes and FTXs | for not allowing derivative and defi lending / margin trading. | So the customers should have known the fatalistic game they | played. | | If you have a subscription I recommend it. - | https://www.bloomberg.com/opinion/articles/2022-11-09/bankma... | brobinson wrote: | https://archive.ph/CxJqM | wfleming wrote: | FWIW you can subscribe to Matt Levine's column as email | newsletter without being a Bloomberg subscriber. (That | doesn't help for reading already-published columns, but of | course there are other ways around paywalls.) | mumbisChungo wrote: | >In fact "gambling with customer funds" was by design. | | This is not accurate. The ToS for FTX explicitly said that | customer funds would not be used for investment purposes. | While it didn't explicitly say it wouldn't be used for | lending, it was a broad assumption in the industry that the | exchange was solvent and could back user assets on a 1:1 | basis. | | It is widely believed now that Alameda went deep underwater | during the collapse of the Luna ponzi (this one was quite | literally structured like a ponzi) and borrowed a large | amount from FTX to bail themselves out of it. In the wake of | this, FTX had a shortage of hard assets and a fat bag of FTT | that the loan was issued against, which is what exposed them | acutely to a bank run and/or price decrease in FTT. | potatototoo99 wrote: | The issue wasn't the bank run. FTX could just have halted | withdrawals, CEX do it all the time. The issue was FTT | collaterized loans or equivalent, because they gambled too | hard. And I doubt their users were aware of the risks, sBF | himself guaranteed on Twitter the day before. | r00fus wrote: | If something doesn't make sense after a detailed review - my | instinct is that there is hidden knowledge that I don't have. | bowsamic wrote: | That instinct will mislead you. It denies stupidity and | irrational choices and leads to conspiracy theories | oldgradstudent wrote: | > FTX was a money printing machine | | Turns out, they were a Monopoly money printing machine. | woeirua wrote: | Honestly, I think this is a really dumb move by Binance. They | have taken a look under the hood, determined that FTX is bankrupt | and then told everyone that is the case. Now there's going to be | a widespread crypto panic that is going to cause other exchanges | to collapse, and ultimately I expect Binance too will go down. | infotogivenm wrote: | Dumb? It would be shockingly out-of-character if Binance isn't | utilizing strategies to make fat, fat stacks here. | YeBanKo wrote: | Ok, so here is FTX's CEO Sam Bankman Fried explains how the Ponzi | scheme works using crypto farming as an example: | https://www.youtube.com/watch?v=KZYqL79GDXU&t=1276s | tommica wrote: | Why waste money on something that is burning out anyways? Also | conveniently mentioning "potential", they really want to make | sure people understand that there never was anything binding | going on. | jefftk wrote: | If FTX was at least close to solvent it could have been worth | acquiring for the customer relationships. | firefoxkekw wrote: | FTX in need of 8 billions according to the wsj. | | https://archive.ph/lXRAd | [deleted] | bmitc wrote: | What happens to all the companies that FTX gobbled up? Was that | just a ploy to try to stabilize the crypto space? Are those | companies that were going defunct now going to go defunct again? ___________________________________________________________________ (page generated 2022-11-09 23:00 UTC)