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They’re just one of several shiny fintech apps/websites running the same scam, a modern two-and-twenty on a ponzi — but with really nice UI. Alice (alice.co /

They’re just one of several shiny fintech apps/websites running the same scam, a modern two-and-twenty on a ponzi — but with really nice UI. Alice (alice.co / @alice_finance) is another prominent one that may have lost customer funds, which was also using the Anchor protocol. It’s unclear how much they lost, but it’s interesting that Do Kwon’s name is still an actual logo listed on their home page. And Vertex Protocol (vertexprotocol.com / @vertex_protocol) recently raised $8.5m to launch a trading platform based on the Anchor protocol, but because their Phase 1 beta had just closed and the open launch was not planned until this summer, it looks like they may have just barely dodged the bullet? What I’m really curious about are the new and (of course) unregulated “insurance” products meant to cover catastrophic crypto depegs, as happened to Terra/Luna. Unslashed (https://app.unslashed.finance/cover https://app.unslashed.finance/cover) is supposed to kick in after fourteen days, I believe. We’re not quite there yet, it’s barely a week so far. But I’m sure with this kind of implied loss reserves, it’ll be fine… https://mobile.twitter.com/CurveFinance/status/1416392630754238465 https://mobile.twitter.com/CurveFinance/status/1416392630754...

josu 4y ago
I publicly called out LUNA/UST on Twitter a few times a few months before the collapse [0] [1]. Just stating this so it's clear that I don't have any interest defending them. That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not saying that it is a legitimate business, just not a ponzi. And I'm not defending these companies either, a very light DD [2] made it obvious that the LUNA-UST mechanism was broken and the collapse was inevitable. It's really messed up that they put clients' money at risk, and that they lost it. I also think that YC is somewhat responsible for this. What makes the situation even worse is that the collapse didn't happen from one day to the next, they actually had time to pull the money out at a 0.5%-5% loss, but they still decided to wait and see if it would repeg. [0] https://twitter.com/josusanmartin/status/1478185473499615233 https://twitter.com/josusanmartin/status/1478185473499615233 [1] https://twitter.com/josusanmartin/status/1478188494463848448 https://twitter.com/josusanmartin/status/1478188494463848448 [2] This DD took me less than 1 hour: https://twitter.com/josusanmartin/status/1524323026942242818 https://twitter.com/josusanmartin/status/1524323026942242818
- saalweachter 4y ago
  > That being said, calling these platforms "ponzis" isn't correct I feel like "ponzi" has become the "magazine/clip" derailer of crypto discussions.
  - xnorswap 4y ago
    Some very smart people mistake being pedantic for being smart. It's very easy to join a "conversation" by picking up a pedantic point. Compare that to arguing over the fundamentals which actually requires some knowledge and experience. By being pedantic it's very easy to "win" an argument, you're entering with a position you consider factually correct. It's not at all productive as you indicate, and actually harms more productive conversation by de-railing the conversation.
  - CPLX 4y ago
    A ponzi is when an investment that supposedly produces a return actually pays the funds needed to deliver that return from new entrants to the scheme rather than productive enterprise. Given that there’s literally no productive return-producing enterprise underpinning any of this it’s totally fine to consider the word ponzi at least loosely applicable to the entire concept of cryptocurrency as practiced.
    - daanlo 4y ago
      By this definition most crypto wouldn‘t be a ponzi. E.g. bitcoin doesn‘t claim that funds are invested in productive entreprise. It is clear that it is only a value store (like gold). Whether it is any good at storing value long term, we will see.
      - spankalee 4y ago
        Bitcoin proponents definitely (for a time) claimed that it was Bitcoin's utility as a currency that gave it value in the first place. That everyone would need some because everyone would use it to transact. That's a claim of an inherent investment value that didn't actually exist, making Bitcoin exactly like a distributed Ponzi scheme.
headmelted 4y ago
The thing that has shocked me about all of this over the last year or so is how seemingly easy it is to just start issuing debit cards to people. Maybe there's more regulation than I realise (and the emperor has more layers of clothes than Joey Tribbiani), but I'm not seeing it. I assumed issuance of payment methods was much more strictly controlled than this due to the risk of contagion if the issuer can't meet it's obligations after the transaction (are card payments instant delivery between institutions these days? I always assumed there was a clearing period in the background).
- MacsHeadroom 4y ago
  There are multiple physical card APIs, costing around 50¢ + shipping to provision cards. All you need is a photo ID and e-signature to start issuing unlimited cards with any name stamped on them in less than 10 minutes. Notably, these cards require online funds verification and settlement for every transaction. Some cards you might get through a bank or major card company may not, for convenience sake. But these cards do, for the obvious reason. They're essentially pre-paid cards that load instantly (at the point of transaction) from a larger balance the dev/company controls. There are even multiple APIs for creating card issuing APIs, checking account issuing APIs, etc. These have itemized pricing that looks more like AWS/GC/Azure pricing and are more complicated to use, in the same way AWS is more complicated than running everything on a single Digital ocean droplet.
charcircuit 4y ago
Insurace is another site who offered insurance for the UST depeg. They had a very poor estimation for the risk and had the price at only 2% annually for the amount insured. They were covering 22.2 million worth of UST and as of a few days ago they had claims submitted totalling 7.3 million worth.
- wolongong942 4y ago
break_the_bank 4y ago
Coinbase & Sequoia funded Indian version of the same thing has similar problems. They claim not to be using anchor while their landing page mentioned anchor before UST de pegged https://mobile.twitter.com/daglihet/status/1524004220868780034 https://mobile.twitter.com/daglihet/status/15240042208687800... I’m guessing they don’t have enough users and can make people whole using their seed fund.
Accacin 4y ago
Oh dear, I checked out the alice.io site and at the bottom they mention being "Trusted by the best", one of the best being Do Kwon. Awkwardddd.
caseyf 4y ago
I had $50 in Alice just to play with it. "Due to unprecedented market conditions on the Terra blockchain - most notably risks of TerraUSD de-pegging as previously disclosed in (help.alice.co......) the UST to USD offramp is unavailable...we are unfortunately uncertain when ramp services will be resumed. For information on alternative paths to convert to USD please see..." the alternative paths are withdrawing to a wallet or exchange and getting 8 cents on the dollar.
vinniejames 4y ago
Found another one from YC, that was fast https://techcrunch.com/2022/05/23/pebble-crypto-stablecoins-gift-cards-yield-traditional-banks-finance/ https://techcrunch.com/2022/05/23/pebble-crypto-stablecoins-...

josu 4y ago

I publicly called out LUNA/UST on Twitter a few times a few months before the collapse [0] [1]. Just stating this so it's clear that I don't have any interest defending them. That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not saying that it is a legitimate business, just not a ponzi. And I'm not defending these companies either, a very light DD [2] made it obvious that the LUNA-UST mechanism was broken and the collapse was inevitable. It's really messed up that they put clients' money at risk, and that they lost it. I also think that YC is somewhat responsible for this. What makes the situation even worse is that the collapse didn't happen from one day to the next, they actually had time to pull the money out at a 0.5%-5% loss, but they still decided to wait and see if it would repeg. [0] https://twitter.com/josusanmartin/status/1478185473499615233 https://twitter.com/josusanmartin/status/1478185473499615233 [1] https://twitter.com/josusanmartin/status/1478188494463848448 https://twitter.com/josusanmartin/status/1478188494463848448 [2] This DD took me less than 1 hour: https://twitter.com/josusanmartin/status/1524323026942242818 https://twitter.com/josusanmartin/status/1524323026942242818

saalweachter 4y ago
> That being said, calling these platforms "ponzis" isn't correct I feel like "ponzi" has become the "magazine/clip" derailer of crypto discussions.
- xnorswap 4y ago
  Some very smart people mistake being pedantic for being smart. It's very easy to join a "conversation" by picking up a pedantic point. Compare that to arguing over the fundamentals which actually requires some knowledge and experience. By being pedantic it's very easy to "win" an argument, you're entering with a position you consider factually correct. It's not at all productive as you indicate, and actually harms more productive conversation by de-railing the conversation.
- CPLX 4y ago
  A ponzi is when an investment that supposedly produces a return actually pays the funds needed to deliver that return from new entrants to the scheme rather than productive enterprise. Given that there’s literally no productive return-producing enterprise underpinning any of this it’s totally fine to consider the word ponzi at least loosely applicable to the entire concept of cryptocurrency as practiced.
  - daanlo 4y ago
    By this definition most crypto wouldn‘t be a ponzi. E.g. bitcoin doesn‘t claim that funds are invested in productive entreprise. It is clear that it is only a value store (like gold). Whether it is any good at storing value long term, we will see.
    - spankalee 4y ago
      Bitcoin proponents definitely (for a time) claimed that it was Bitcoin's utility as a currency that gave it value in the first place. That everyone would need some because everyone would use it to transact. That's a claim of an inherent investment value that didn't actually exist, making Bitcoin exactly like a distributed Ponzi scheme.

headmelted 4y ago

The thing that has shocked me about all of this over the last year or so is how seemingly easy it is to just start issuing debit cards to people. Maybe there's more regulation than I realise (and the emperor has more layers of clothes than Joey Tribbiani), but I'm not seeing it. I assumed issuance of payment methods was much more strictly controlled than this due to the risk of contagion if the issuer can't meet it's obligations after the transaction (are card payments instant delivery between institutions these days? I always assumed there was a clearing period in the background).

MacsHeadroom 4y ago
There are multiple physical card APIs, costing around 50¢ + shipping to provision cards. All you need is a photo ID and e-signature to start issuing unlimited cards with any name stamped on them in less than 10 minutes. Notably, these cards require online funds verification and settlement for every transaction. Some cards you might get through a bank or major card company may not, for convenience sake. But these cards do, for the obvious reason. They're essentially pre-paid cards that load instantly (at the point of transaction) from a larger balance the dev/company controls. There are even multiple APIs for creating card issuing APIs, checking account issuing APIs, etc. These have itemized pricing that looks more like AWS/GC/Azure pricing and are more complicated to use, in the same way AWS is more complicated than running everything on a single Digital ocean droplet.

charcircuit 4y ago

Insurace is another site who offered insurance for the UST depeg. They had a very poor estimation for the risk and had the price at only 2% annually for the amount insured. They were covering 22.2 million worth of UST and as of a few days ago they had claims submitted totalling 7.3 million worth.

wolongong942 4y ago

break_the_bank 4y ago

Coinbase & Sequoia funded Indian version of the same thing has similar problems. They claim not to be using anchor while their landing page mentioned anchor before UST de pegged https://mobile.twitter.com/daglihet/status/1524004220868780034 https://mobile.twitter.com/daglihet/status/15240042208687800... I’m guessing they don’t have enough users and can make people whole using their seed fund.

Accacin 4y ago

Oh dear, I checked out the alice.io site and at the bottom they mention being "Trusted by the best", one of the best being Do Kwon. Awkwardddd.

caseyf 4y ago

I had $50 in Alice just to play with it. "Due to unprecedented market conditions on the Terra blockchain - most notably risks of TerraUSD de-pegging as previously disclosed in (help.alice.co......) the UST to USD offramp is unavailable...we are unfortunately uncertain when ramp services will be resumed. For information on alternative paths to convert to USD please see..." the alternative paths are withdrawing to a wallet or exchange and getting 8 cents on the dollar.

vinniejames 4y ago

Found another one from YC, that was fast https://techcrunch.com/2022/05/23/pebble-crypto-stablecoins-gift-cards-yield-traditional-banks-finance/ https://techcrunch.com/2022/05/23/pebble-crypto-stablecoins-...