4 ms·

They weren't really scamming, but got scammed along with several other companies that were trying to be legit. They made large loans to three arrows capital bec

They weren't really scamming, but got scammed along with several other companies that were trying to be legit. They made large loans to three arrows capital because on the surface it seemed like a legit serious business hedge fund, but it turned out it making tons of high risk bets in the crypto scene that fell apart when the market crashed.

sgjohnson 4y ago
By this logic banks putting garbage mortgages in their CDOs and having them AAA rated wasn’t scamming either. It’s just that they also got scammed when the market crashed! Oh, wait, they got bailed out.
- bb88 4y ago
  I can see hashtags like this start circulating shortly. #NoBailoutsForCrypto
  - pluc 4y ago
    somebody needs to make a BAIL token
kareemsabri 4y ago
In what way did it seem like a "legit serious business hedge fund"? I'm unclear how Celsius got scammed making loans to a hedge fund that is on record as investing exclusively in crypto since 2018 [1] - did the hedge fund lie about their positions? 1. https://www.smh.com.au/business/markets/school-friends-started-their-own-firm-now-they-are-among-the-world-s-largest-crypto-holders-20210526-p57v6b.html https://www.smh.com.au/business/markets/school-friends-start...
- djbusby 4y ago
  It seems "legit" because both orgs already believed in the "Power of Crypto". Like if we both, a priori, believe the earth is flat, we'd seem "legit" to each other.
- ayngg 4y ago
  Celsius got huge deposits based on unsustainable yield guarantees (17% I think), they took that crypto and used it as collateral on defi protocols, then took the loans they got and gave it to funds like 3ac, who made money on leveraged carry trades that eventually worked up to Luna which was offering an absurd 20% apy through anchor which was completely unsustainable but basically kept afloat by Luna itself dumping money into it. Everyone could see they were running out of money which would eventually cause them to blow up, which caused people to eventually jump ship, which caused Luna to implode because it was fundamentally flawed but people were either too greedy or didn't do their due diligence to avoid it, which caused all of their assets to vaporize as they tried to defend their stablecoin peg. With 3ac insolvent, nobody that lent to them could get their capital back, which meant they could no longer repay their defi loans which caused them to be liquidated as prices dropped and they couldn't post additional collateral. With their funds locked or liquidated, they had nothing to return to depositors who wanted their stuff back. To be charitable you could say they weren't outright scamming people, but anyone with a nose should have smelled the enormous stench of death coming from the entire thing.
  - remflight 4y ago
    Good old fashioned counter party risk.
  - deleted 4y ago
    [deleted]
adrr 4y ago
Was three arrows a scam or just acting like a hedgefund? It’s well known hedgefunds can go bust like LTCM. Especially if you’re doing arbitrage and your thesis is two disparate assets are price linked.
- JumpCrisscross 4y ago
  > well known hedgefunds can go bust like LTMS LTCM’s managers didn’t skip bail and go full fugitive [1]. [1] https://www.cnbc.com/2022/07/12/founders-of-bankrupt-crypto-hedge-fund-three-arrows-go-missing.html https://www.cnbc.com/2022/07/12/founders-of-bankrupt-crypto-...
- hailwren 4y ago
  The whole 3AC story hasn't come out yet, but the rumor is that they were able to use the same collateral with different lenders. On top of that, they offered to "manage" portions of their vc investment treasuries. So, a scam.
adam_arthur 4y ago
Guaranteeing double digit yields on what is effectively a pyramid scheme is a scam enough in my eyes

sgjohnson 4y ago

By this logic banks putting garbage mortgages in their CDOs and having them AAA rated wasn’t scamming either. It’s just that they also got scammed when the market crashed! Oh, wait, they got bailed out.

bb88 4y ago
I can see hashtags like this start circulating shortly. #NoBailoutsForCrypto
- pluc 4y ago
  somebody needs to make a BAIL token

kareemsabri 4y ago

In what way did it seem like a "legit serious business hedge fund"? I'm unclear how Celsius got scammed making loans to a hedge fund that is on record as investing exclusively in crypto since 2018 [1] - did the hedge fund lie about their positions? 1. https://www.smh.com.au/business/markets/school-friends-started-their-own-firm-now-they-are-among-the-world-s-largest-crypto-holders-20210526-p57v6b.html https://www.smh.com.au/business/markets/school-friends-start...

djbusby 4y ago
It seems "legit" because both orgs already believed in the "Power of Crypto". Like if we both, a priori, believe the earth is flat, we'd seem "legit" to each other.
ayngg 4y ago
Celsius got huge deposits based on unsustainable yield guarantees (17% I think), they took that crypto and used it as collateral on defi protocols, then took the loans they got and gave it to funds like 3ac, who made money on leveraged carry trades that eventually worked up to Luna which was offering an absurd 20% apy through anchor which was completely unsustainable but basically kept afloat by Luna itself dumping money into it. Everyone could see they were running out of money which would eventually cause them to blow up, which caused people to eventually jump ship, which caused Luna to implode because it was fundamentally flawed but people were either too greedy or didn't do their due diligence to avoid it, which caused all of their assets to vaporize as they tried to defend their stablecoin peg. With 3ac insolvent, nobody that lent to them could get their capital back, which meant they could no longer repay their defi loans which caused them to be liquidated as prices dropped and they couldn't post additional collateral. With their funds locked or liquidated, they had nothing to return to depositors who wanted their stuff back. To be charitable you could say they weren't outright scamming people, but anyone with a nose should have smelled the enormous stench of death coming from the entire thing.
- remflight 4y ago
  Good old fashioned counter party risk.
- deleted 4y ago
  [deleted]

adrr 4y ago

Was three arrows a scam or just acting like a hedgefund? It’s well known hedgefunds can go bust like LTCM. Especially if you’re doing arbitrage and your thesis is two disparate assets are price linked.

JumpCrisscross 4y ago
> well known hedgefunds can go bust like LTMS LTCM’s managers didn’t skip bail and go full fugitive [1]. [1] https://www.cnbc.com/2022/07/12/founders-of-bankrupt-crypto-hedge-fund-three-arrows-go-missing.html https://www.cnbc.com/2022/07/12/founders-of-bankrupt-crypto-...
hailwren 4y ago
The whole 3AC story hasn't come out yet, but the rumor is that they were able to use the same collateral with different lenders. On top of that, they offered to "manage" portions of their vc investment treasuries. So, a scam.

adam_arthur 4y ago

Guaranteeing double digit yields on what is effectively a pyramid scheme is a scam enough in my eyes