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I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have

I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! 2. The entire article paints a dire picture based off of their appraisal of the assets. Again, nobody has any idea of what the liabilities truly are, so to speculate that Alameda is insolvent is making an unfounded leap. But the author of the article tries to lead us to believe that it’s an OK leap to make, because their assets are trash! Wrong. It’s lazy, it’s pandering to a certain crowd, and it’s dishonest. 3. Before reflecting on their extremely, extremely short handed analysis, they take their unfounded conclusions further and spin it through a prior framework that they made for Celsius, which is a totally different type of company with a totally different set of liabilities. Alameda does not lend money to retail. The author pulls a sleight of hand by taking one misleading statement, and transforming it before the reader can apply any skepticism to the original misleading statement. 4. Recently there have cropped up a set of anonymous people (otteroooo on Twitter, this guy) who purport themselves as insiders only to reveal themselves to be complete completely ignorant about the topic at hand. A lot of unsavory people have recognized there’s a cottage industry in endlessly pounding the table saying that the world is falling and that everything is a scam based off of extremely little public information and no access to any private sources. They are ambulance chasers. 5. We have a large contingent of people who just read the headline here, and assume, scam! And apply the pre-existing biases to the entire thing, with nothing insightful to add. *edited some dictation/autocorrect errors

PragmaticPulp 4y ago
> 4. Recently they have cropped up a set of anonymous people who purport themselves to be insiders only to reveal complete ignorance about the topic at hand (otteroo on Twitter, for instance). Can you clarify this? By “they” do you mean this Substack? I didn’t see anything about “otteroo” or Twitter insiders in a quick search of the Substack, but I didn’t exhaustively search the entire backlog.
- cryptoanon 4y ago
  I mean this guy as well as a bunch of people on Twitter who have been clout chasing ambulance chasers, running over the truth to chase a story. The formula is this: 1. Create an helpful explainer thread to explain some crisis (ex-post) 2. Start to make vague predictions about relatively easy to predict things (like that Celsius is going to go down, a couple days before it technically goes down). 3. Refer your readers back to your foresightedness 4. Get extremely excited as you receive DMs from people to check out x or y. 5. Lock your eyes on a juicy new company and start to make unfounded claims about said company, referring to a sole rando as a “source” (eg Nexo is insolvent!) 6. Create an expose on your new target, run shoddy analysis based on no actual data, and throw it into a larger conspiratorial framework that starts to implicate other actors. 7. All the while, build a captive audience who doesn’t know the better and eventually use that audience to run ads or to pay for your newsletter. 8. They can run this affinity scam because 1. What they say is not falsifiable, 2. you have an infinite timescale for which to be correct about any one company going bankrupt, 3. there are people out there who are earnestly trying to learn about the market and don’t know who to turn to, and 4. if you’re wrong, you’re not accountable to your actions because there was never any actual money on the line. There are serious issues in the industry, do not get me wrong. It’s kind of messed up that people who have no connections have to look into the void and decide whether they’re going to trust an internet rando or nobody at all. Disclosures need to be better. But the people writing these sensationalist pieces are part of the problem and not the solution.
  - wokwokwok 4y ago
    > if you’re wrong, you’re not accountable to your actions because there was never any actual money on the line. I mean, that's the risk you run right? Either you're a regulated system where you can avoid this kind of thing, or you're an unregulated system where you go 'screw the man', but you don't get the protections that are associated with the traditional financial system. There's some deep irony about complaining about it; isn't the 'good' thing about crypto? That's what people keep telling me anyway.
    - tender_euler 4y ago
deleted 4y ago
[deleted]
phphphphp 4y ago
Alameda's story has many parallels with Celcius (and 3AC): if something happens that proves Alameda is insolvent, will you return to this analysis and hold the same viewpoint, that it's unhelpful to consider that their solvency may well hinge on value of illiquid nonsense assets? The problem Celcius had was not that they were lending to retail, it's that their entire investment thesis was based on insane bets with capital borrowed from retail investors. Celcius, Hodlnaut etc. were "lending" and "investing" with "credible" players like 3AC (who had a mythology much like Alameda's before they imploded). Yes, some skepticism is required when considering whether or not Alameda is insolvent (or at risk of becoming insolvent) but the analysis is helpful in highlighting why Alameda might be at risk.
- cryptoanon 4y ago
  3AC had been packed to the gills with uncollateralized loans. Since then, most lenders have recalled loans and cleaned up their toxic balance sheet.
  - xwolfi 4y ago
    How ?
  - RuggedPineapple 4y ago
    When it's collateralized with crypto it's uncollateralized. 3AC learned this. Like half the exchanges have learned this over the last year. There is no inherent value in any of them, there is no hard floor of assets, as the market continues to tank that 'collateral' becomes/remains worthless. It's turtles all the way down.
    - vgatherps 4y ago
      The 3AC saga wasn't because crypto collateralisation turned out to be bogus, it was just that lenders gave them un/undercollateralized loans. Their downbringing was taking cash liabilities, on leverage (the un/ndercollateralized part), and using that to make risky bets. They took a ton of leverage to bet that the GBTC/BTC spread would close (but it widened, a friend of mine called this killing them over a year in advance), iirc positions in stETH/ETH spreads, illiquid (but very profitable...) vc investments, as well as just going long crypto.
SilverBirch 4y ago
>If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Ok, this is kind of a fair point, if these loans are collateralized by the assets, then it's the lenders who have a problem. But that does actually mean there's someone out there who is going to get absolutely mugged. It's also a bit of a question who, other than some other SBF entity, would make these loans - who is accepting FTT as collateral? It also means that you need to apply that logic to their assets, meaning their supposed $14.6Bn you probably need to regard around $12Bn minimum to be absolutely worthless. I would absolutely not say they for sure insolvent, but these numbers do clearly look very worrying.
aabhay 4y ago
The loans are outstanding loans given to Alameda. This article is assessing the balance sheet, so assets (various junk coins) and liabilities (loans)
bhouston 4y ago
I think that Alameda should release its actual numbers, rather than to keep them private. Sunlight is the best disinfectant to these types of rumours. Right now I think that your response isn't any more credible than these other posts.
HelloNurse 4y ago
> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Fair point, but why do you seem to think you are defending Alameda? Collateralizing loans from fools with your own brand of worthless bullshit is the very definition of a Ponzi scheme.
- cryptoanon 4y ago
  What if the loans are minted DAI? How is that a Ponzi?
  - HelloNurse 4y ago
    Loans are money. Collaterals can be "minted DAI", whatever it is, or anything else that a fool can be convinced is valuable: that is the opportunity for Ponzi schemes.
  - mring33621 4y ago
    Please explain further what this means and how it helps.
  - polygamous_bat 4y ago
    The current circulating supply of DAI is slightly above 6B, so what you claimed is literally impossible. The average case scenario is some of it is ponzi mixed in with other non ponzi, and in my book I'll call even a "10% ponzi", a ponzi scheme. Maybe you have a different bar to calling something a ponzi, so knock yourself out.
- deleted 4y ago
  [deleted]
- paulusthe 4y ago
  It's not a fair point. If Alameda goes down, then ftx goes down, and if ftx goes down and is clearly wash trading (the most interesting finding in the article imo), then prices will plummet. It's not just a problem for the bank, it's threatening to the crypto ecosystem. Just as it would be if the binance tether thing ever implodes
Mistletoe 4y ago
The guy that wrote it, Dirty Bubble, was big on the Celsius exposé train and he is trying to strike gold again. Idk how accurate any of it is though but that’s Dirty Bubble’s history and backstory. Kind of like FatMan and Luna. They want to stay relevant and get the next “big scoop”.
- cryptoanon 4y ago
  They gladly and unapologetically have posted fake material for engagement https://twitter.com/otteroooo/status/1548010114136715264 https://twitter.com/otteroooo/status/1548010114136715264
  - vgatherps 4y ago
    Is this otteroooo trying to get famous again under a new name?
- deleted 4y ago
  [deleted]
NotYourLawyer 4y ago
> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! No, the risk is to both Alameda and the lender. An undercollateralized loan doesn’t just go away. It’s partially secured and partially unsecured debt.
zby 4y ago
> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! What does that mean? How collateralization changes Alameda risk? It reduces the lender risk a bit - but it does not touch the borrower risk at all: https://www.investopedia.com/terms/c/collateral.asp https://www.investopedia.com/terms/c/collateral.asp "In the event that the borrower does default, the lender can seize the collateral and sell it, applying the money it gets to the unpaid portion of the loan. The lender can choose to pursue legal action against the borrower to recoup any balance remaining."
- moomin 4y ago
  I think OP is assuming things work the way US mortgages work, where you can walk away from the house. I think OP is labouring under a misapprehension here.
- guelo 4y ago
  That depends on the terms of the loans. Can be recourse or non-recourse.
  - zby 4y ago
    Right - but it looks like an exception not the standard way: https://www.investopedia.com/terms/n/nonrecoursedebt.asp https://www.investopedia.com/terms/n/nonrecoursedebt.asp Would you expect the Alameda loans to be non-recourse?
ikeboy 4y ago
ZachXBT has repeatedly accused people with little to no evidence, he's a step up from most of the anon FUD accounts but by no means perfect.
- cryptoanon 4y ago
  You’re right. I edited that in later but I’m going to take it out. He’s made some pretty damning accusations based on circumstantial evidence.
jerf 4y ago
This is a popular idea, but it's not just wrong, it's both systematically and personally dangerous. I am entitled to come to conclusions based on the partial information I have. If someone doesn't like those conclusions, it's on them to increase my access to information. The alternative means that anyone and everyone can hide anything they like behind partial information, then declare any suspicions baseless and groundless based on their own hiding of information. I speak only to this. Whether the linked article did a good job of their analysis I don't know. I'm just saying, the idea that people are not entitled to come to conclusions based on partial information is not valid. The conclusions come to should be hedged and made with the understanding that information is partial, but there is no obligation to not come to them. Otherwise you're obligating yourself to walk naked into almost any old scam you can imagine. This idea doesn't scale out into the real world where people happily abuse this.
- FoomFries 4y ago
  What we are entitled to do, what is polite to do and what we can do for clickthroughs are three different things. Coming to conclusions on partial information may as well be jumping to them in many circumstances. The ideal approach would be to add a disclaimer of where the fact to supposition transitions, and if the conclusion is sensible at least source similar cases. If it walks like a duck and quacks like a duck it’s probably a duck. Or a duck robot, or my kid running around with my phone again imitating a duck while watching duck YouTube videos. Whatever the conclusion, state facts but don’t state conclusions as facts.
  - asdajksah2123 4y ago
    Except in the real world if people are actually putting their money down based on what those conclusions might be, you have to jump to something. And the right thing to do is to jump to the most likely one based on the information available to you (adjusted for the consequences if you're wrong). In this case, the most likely conclusion appears to be based on the info presented that it may be insolvent, and further, acting as if it is insolvent means you lose on limited upside if you're wrong, but avoid significant downside if you're right. If Alameda is not a fan of this conclusion and if it's gaining traction in the community they can refute whatever might be wrong in the analysis and if nothing is wrong, provide the additional missing information that will correct the conclusion. This is what CEOs and CFOs for public companies do everyday. Present their company's thesis to the public and refute analysts' theses where they think they're either wrong and/or don't have sufficient information. Why do you think they take so much time out of their schedules to do interviews on Bloomberg, CNBC, etc. Alameda doesn't need to go down that route, but that doesn't mean independent analysis with conclusions based on incomplete information is a faulty process.
adamsmith143 4y ago
>1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Doesn't take a genius to figure out why a hedge fund needs 7B in loans. They aren't a tech giant expanding in a new direction or acquiring competitors. It's pretty clear why a hedge fund needs a massive cash infusion. Also interesting that they collateralize the loans with Tokens majority owned by Alameda and FTX so it's unlikely were they forced to liquidate to pay off their loans that they could get any where near the quoted value of the tokens.
- vgatherps 4y ago
  I'm assuming you are implying that alameda is taking loans to cover insolvency? There are plenty of reasons why a trading firm takes loans (it's also possible the FTT is structured as a long, inflating said number) 1. I want to short X, but don't actually have X. I borrow X and sell it. 2. I want to sell X and buy a derivative paying people who are long the derivative. Goto step 2. 3. I want to trade X but don't know how ahead of time, so i need inventory of X in case I want to sell RIGHT NOW. I don't want to actually have exposure to a ton of X, so I borrow it instead. Very common for a market maker like alameda, although there's no way they actually need billions of collateral for market making purposes. 4. I can borrow X, and put it in a defi yield farm for a better rate than what I borrowed it for. 5. I have a ton of Y, and I don't have any plans to use it soon. I put Y up as collateral to borrow X which I can meaningfully trade. This gets you in a lot of trouble when Y values goes down and X doesn't. Say "Four Bullets Investments" has some BTC, they post BTC as collateral to borrow dollars, and use that to buy more BTC. Then BTC goes down a lot - oops! Not making value judgements on what risks are and aren't entailed here, just pointing out that there are reasons aside from covering losses. 1-3+5 equally apply in tradfi as well. The really interesting thing, which you touched upon, is to what extent are they collateralising loans with FTT. COllateralising loans with a coin you hold isn't unusual at all, but what's unusual is that the potential FTT collateral size is monstrous compared to realistic available liquidity minus alameda. Posting BTC is one thing since there are liquid spot markets trading billions a day, not to mention derivatives. But FTT? Good luck liquidation even 10-20MM without moving markets a lot.
standeven 4y ago
The title of the article is not “Alameda Research is Insolvent!”. Instead it poses the question, “Is Alameda Research Insolvent?”. Depending on the unknown liabilities, it very well could be.
- yellowapple 4y ago
  And by posing it as a yes/no question, it brings to mind Betteridge's law of headlines.
janmo 4y ago
Ubelievable, only 6 days later, and not only did Alameda collapse, but also FTX and SBF himself
tsimionescu 4y ago
A whole week later, turns out you were dead wrong and the article was spot on.

PragmaticPulp 4y ago

> 4. Recently they have cropped up a set of anonymous people who purport themselves to be insiders only to reveal complete ignorance about the topic at hand (otteroo on Twitter, for instance). Can you clarify this? By “they” do you mean this Substack? I didn’t see anything about “otteroo” or Twitter insiders in a quick search of the Substack, but I didn’t exhaustively search the entire backlog.

cryptoanon 4y ago
I mean this guy as well as a bunch of people on Twitter who have been clout chasing ambulance chasers, running over the truth to chase a story. The formula is this: 1. Create an helpful explainer thread to explain some crisis (ex-post) 2. Start to make vague predictions about relatively easy to predict things (like that Celsius is going to go down, a couple days before it technically goes down). 3. Refer your readers back to your foresightedness 4. Get extremely excited as you receive DMs from people to check out x or y. 5. Lock your eyes on a juicy new company and start to make unfounded claims about said company, referring to a sole rando as a “source” (eg Nexo is insolvent!) 6. Create an expose on your new target, run shoddy analysis based on no actual data, and throw it into a larger conspiratorial framework that starts to implicate other actors. 7. All the while, build a captive audience who doesn’t know the better and eventually use that audience to run ads or to pay for your newsletter. 8. They can run this affinity scam because 1. What they say is not falsifiable, 2. you have an infinite timescale for which to be correct about any one company going bankrupt, 3. there are people out there who are earnestly trying to learn about the market and don’t know who to turn to, and 4. if you’re wrong, you’re not accountable to your actions because there was never any actual money on the line. There are serious issues in the industry, do not get me wrong. It’s kind of messed up that people who have no connections have to look into the void and decide whether they’re going to trust an internet rando or nobody at all. Disclosures need to be better. But the people writing these sensationalist pieces are part of the problem and not the solution.
- wokwokwok 4y ago
  > if you’re wrong, you’re not accountable to your actions because there was never any actual money on the line. I mean, that's the risk you run right? Either you're a regulated system where you can avoid this kind of thing, or you're an unregulated system where you go 'screw the man', but you don't get the protections that are associated with the traditional financial system. There's some deep irony about complaining about it; isn't the 'good' thing about crypto? That's what people keep telling me anyway.
  - tender_euler 4y ago

deleted 4y ago

[deleted]

phphphphp 4y ago

Alameda's story has many parallels with Celcius (and 3AC): if something happens that proves Alameda is insolvent, will you return to this analysis and hold the same viewpoint, that it's unhelpful to consider that their solvency may well hinge on value of illiquid nonsense assets? The problem Celcius had was not that they were lending to retail, it's that their entire investment thesis was based on insane bets with capital borrowed from retail investors. Celcius, Hodlnaut etc. were "lending" and "investing" with "credible" players like 3AC (who had a mythology much like Alameda's before they imploded). Yes, some skepticism is required when considering whether or not Alameda is insolvent (or at risk of becoming insolvent) but the analysis is helpful in highlighting why Alameda might be at risk.

cryptoanon 4y ago
3AC had been packed to the gills with uncollateralized loans. Since then, most lenders have recalled loans and cleaned up their toxic balance sheet.
- xwolfi 4y ago
  How ?
- RuggedPineapple 4y ago
  When it's collateralized with crypto it's uncollateralized. 3AC learned this. Like half the exchanges have learned this over the last year. There is no inherent value in any of them, there is no hard floor of assets, as the market continues to tank that 'collateral' becomes/remains worthless. It's turtles all the way down.
  - vgatherps 4y ago
    The 3AC saga wasn't because crypto collateralisation turned out to be bogus, it was just that lenders gave them un/undercollateralized loans. Their downbringing was taking cash liabilities, on leverage (the un/ndercollateralized part), and using that to make risky bets. They took a ton of leverage to bet that the GBTC/BTC spread would close (but it widened, a friend of mine called this killing them over a year in advance), iirc positions in stETH/ETH spreads, illiquid (but very profitable...) vc investments, as well as just going long crypto.

SilverBirch 4y ago

>If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Ok, this is kind of a fair point, if these loans are collateralized by the assets, then it's the lenders who have a problem. But that does actually mean there's someone out there who is going to get absolutely mugged. It's also a bit of a question who, other than some other SBF entity, would make these loans - who is accepting FTT as collateral? It also means that you need to apply that logic to their assets, meaning their supposed $14.6Bn you probably need to regard around $12Bn minimum to be absolutely worthless. I would absolutely not say they for sure insolvent, but these numbers do clearly look very worrying.

aabhay 4y ago

The loans are outstanding loans given to Alameda. This article is assessing the balance sheet, so assets (various junk coins) and liabilities (loans)

bhouston 4y ago

I think that Alameda should release its actual numbers, rather than to keep them private. Sunlight is the best disinfectant to these types of rumours. Right now I think that your response isn't any more credible than these other posts.

HelloNurse 4y ago

> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Fair point, but why do you seem to think you are defending Alameda? Collateralizing loans from fools with your own brand of worthless bullshit is the very definition of a Ponzi scheme.

cryptoanon 4y ago
What if the loans are minted DAI? How is that a Ponzi?
- HelloNurse 4y ago
  Loans are money. Collaterals can be "minted DAI", whatever it is, or anything else that a fool can be convinced is valuable: that is the opportunity for Ponzi schemes.
- mring33621 4y ago
  Please explain further what this means and how it helps.
- polygamous_bat 4y ago
  The current circulating supply of DAI is slightly above 6B, so what you claimed is literally impossible. The average case scenario is some of it is ponzi mixed in with other non ponzi, and in my book I'll call even a "10% ponzi", a ponzi scheme. Maybe you have a different bar to calling something a ponzi, so knock yourself out.
deleted 4y ago
[deleted]
paulusthe 4y ago
It's not a fair point. If Alameda goes down, then ftx goes down, and if ftx goes down and is clearly wash trading (the most interesting finding in the article imo), then prices will plummet. It's not just a problem for the bank, it's threatening to the crypto ecosystem. Just as it would be if the binance tether thing ever implodes

Mistletoe 4y ago

The guy that wrote it, Dirty Bubble, was big on the Celsius exposé train and he is trying to strike gold again. Idk how accurate any of it is though but that’s Dirty Bubble’s history and backstory. Kind of like FatMan and Luna. They want to stay relevant and get the next “big scoop”.

cryptoanon 4y ago
They gladly and unapologetically have posted fake material for engagement https://twitter.com/otteroooo/status/1548010114136715264 https://twitter.com/otteroooo/status/1548010114136715264
- vgatherps 4y ago
  Is this otteroooo trying to get famous again under a new name?
deleted 4y ago
[deleted]

NotYourLawyer 4y ago

> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! No, the risk is to both Alameda and the lender. An undercollateralized loan doesn’t just go away. It’s partially secured and partially unsecured debt.

zby 4y ago

> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! What does that mean? How collateralization changes Alameda risk? It reduces the lender risk a bit - but it does not touch the borrower risk at all: https://www.investopedia.com/terms/c/collateral.asp https://www.investopedia.com/terms/c/collateral.asp "In the event that the borrower does default, the lender can seize the collateral and sell it, applying the money it gets to the unpaid portion of the loan. The lender can choose to pursue legal action against the borrower to recoup any balance remaining."

moomin 4y ago
I think OP is assuming things work the way US mortgages work, where you can walk away from the house. I think OP is labouring under a misapprehension here.
guelo 4y ago
That depends on the terms of the loans. Can be recourse or non-recourse.
- zby 4y ago
  Right - but it looks like an exception not the standard way: https://www.investopedia.com/terms/n/nonrecoursedebt.asp https://www.investopedia.com/terms/n/nonrecoursedebt.asp Would you expect the Alameda loans to be non-recourse?

ikeboy 4y ago

ZachXBT has repeatedly accused people with little to no evidence, he's a step up from most of the anon FUD accounts but by no means perfect.

cryptoanon 4y ago
You’re right. I edited that in later but I’m going to take it out. He’s made some pretty damning accusations based on circumstantial evidence.

jerf 4y ago

This is a popular idea, but it's not just wrong, it's both systematically and personally dangerous. I am entitled to come to conclusions based on the partial information I have. If someone doesn't like those conclusions, it's on them to increase my access to information. The alternative means that anyone and everyone can hide anything they like behind partial information, then declare any suspicions baseless and groundless based on their own hiding of information. I speak only to this. Whether the linked article did a good job of their analysis I don't know. I'm just saying, the idea that people are not entitled to come to conclusions based on partial information is not valid. The conclusions come to should be hedged and made with the understanding that information is partial, but there is no obligation to not come to them. Otherwise you're obligating yourself to walk naked into almost any old scam you can imagine. This idea doesn't scale out into the real world where people happily abuse this.

FoomFries 4y ago
What we are entitled to do, what is polite to do and what we can do for clickthroughs are three different things. Coming to conclusions on partial information may as well be jumping to them in many circumstances. The ideal approach would be to add a disclaimer of where the fact to supposition transitions, and if the conclusion is sensible at least source similar cases. If it walks like a duck and quacks like a duck it’s probably a duck. Or a duck robot, or my kid running around with my phone again imitating a duck while watching duck YouTube videos. Whatever the conclusion, state facts but don’t state conclusions as facts.
- asdajksah2123 4y ago
  Except in the real world if people are actually putting their money down based on what those conclusions might be, you have to jump to something. And the right thing to do is to jump to the most likely one based on the information available to you (adjusted for the consequences if you're wrong). In this case, the most likely conclusion appears to be based on the info presented that it may be insolvent, and further, acting as if it is insolvent means you lose on limited upside if you're wrong, but avoid significant downside if you're right. If Alameda is not a fan of this conclusion and if it's gaining traction in the community they can refute whatever might be wrong in the analysis and if nothing is wrong, provide the additional missing information that will correct the conclusion. This is what CEOs and CFOs for public companies do everyday. Present their company's thesis to the public and refute analysts' theses where they think they're either wrong and/or don't have sufficient information. Why do you think they take so much time out of their schedules to do interviews on Bloomberg, CNBC, etc. Alameda doesn't need to go down that route, but that doesn't mean independent analysis with conclusions based on incomplete information is a faulty process.

adamsmith143 4y ago

>1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! Doesn't take a genius to figure out why a hedge fund needs 7B in loans. They aren't a tech giant expanding in a new direction or acquiring competitors. It's pretty clear why a hedge fund needs a massive cash infusion. Also interesting that they collateralize the loans with Tokens majority owned by Alameda and FTX so it's unlikely were they forced to liquidate to pay off their loans that they could get any where near the quoted value of the tokens.

vgatherps 4y ago
I'm assuming you are implying that alameda is taking loans to cover insolvency? There are plenty of reasons why a trading firm takes loans (it's also possible the FTT is structured as a long, inflating said number) 1. I want to short X, but don't actually have X. I borrow X and sell it. 2. I want to sell X and buy a derivative paying people who are long the derivative. Goto step 2. 3. I want to trade X but don't know how ahead of time, so i need inventory of X in case I want to sell RIGHT NOW. I don't want to actually have exposure to a ton of X, so I borrow it instead. Very common for a market maker like alameda, although there's no way they actually need billions of collateral for market making purposes. 4. I can borrow X, and put it in a defi yield farm for a better rate than what I borrowed it for. 5. I have a ton of Y, and I don't have any plans to use it soon. I put Y up as collateral to borrow X which I can meaningfully trade. This gets you in a lot of trouble when Y values goes down and X doesn't. Say "Four Bullets Investments" has some BTC, they post BTC as collateral to borrow dollars, and use that to buy more BTC. Then BTC goes down a lot - oops! Not making value judgements on what risks are and aren't entailed here, just pointing out that there are reasons aside from covering losses. 1-3+5 equally apply in tradfi as well. The really interesting thing, which you touched upon, is to what extent are they collateralising loans with FTT. COllateralising loans with a coin you hold isn't unusual at all, but what's unusual is that the potential FTT collateral size is monstrous compared to realistic available liquidity minus alameda. Posting BTC is one thing since there are liquid spot markets trading billions a day, not to mention derivatives. But FTT? Good luck liquidation even 10-20MM without moving markets a lot.

standeven 4y ago

The title of the article is not “Alameda Research is Insolvent!”. Instead it poses the question, “Is Alameda Research Insolvent?”. Depending on the unknown liabilities, it very well could be.

yellowapple 4y ago
And by posing it as a yes/no question, it brings to mind Betteridge's law of headlines.

janmo 4y ago

Ubelievable, only 6 days later, and not only did Alameda collapse, but also FTX and SBF himself

tsimionescu 4y ago

A whole week later, turns out you were dead wrong and the article was spot on.