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Binance to acquire FTX

• WhiteOwlEd 4y ago
  There is an interesting irony to this in that SBF had contributed $38 million to PACs as part of this election cycle.
• dabeeeenster 4y ago
  It's a pyramid all the way down. So surely when there's only 1 exchange left standing, who is going to catch it when it falls?
  • kevmo314 4y ago
    Build new exchanges faster than they fall. It's the only way to keep the ponzi going.
    • Analemma_ 4y ago
      Easy to do in a world of 0% interest rates, not so much now. I think the entire crypto ecosystem is about to crash and burn hard as the Fed just keeps the rate hikes coming.
      • three_seagrass 4y ago
        Yeah the music stops when the naive outsiders stop having the extra cash into the system.
  • Scoundreller 4y ago
    Pretty sure the last remaining counterparty will be the mysterious and shadowy ▯ ▯ ▯ ▯, ▯ ▯ of Elbonia.
  • 2OEH8eoCRo0 4y ago
    Don't catch a falling knife.
  • boppo1 4y ago
    Gemini is doing fine last I checked.
• ushakov 4y ago
  How much?
• reducesuffering 4y ago
  SBF tweets for more clarification: https://twitter.com/SBF_FTX/status/1590012124864348160 https://twitter.com/SBF_FTX/status/1590012124864348160 Apparently this is for the international exchange business, FTX.com, but not FTX.us or Alameda quant trading firm.
• b0sk 4y ago
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• mjr00 4y ago
  So after SBF came out yesterday and said FTX was totally fine.. it turns out they were insolvent and needed to get bailed out to cover withdrawals? Never a dull moment in the world of crypto.
  • pranshum 4y ago
    "Every banker knows that if he has to prove he is worthy of credit, in fact his credit is gone." - Bagehot
    • oldgradstudent 4y ago
      They claim to be an exchange, not a bank, not investing user assets. https://twitter.com/SBF_FTX/status/1589598285798707202 https://twitter.com/SBF_FTX/status/1589598285798707202 The Bagehot quote is not SUPPOSED to apply.
      • colinmhayes 4y ago
        Did anyone actually believe they weren't loaning out user funds? How were they funding their massive leverage programs? How were they loaning all that money to SBF's trading firm?
      • matheusmoreira 4y ago
        > They claim to be an exchange, not a bank They're liars. They are literally banks with all of the drawbacks and none of the benefits. They do fractional reserve banking with user deposits.
        • oldgradstudent 4y ago
          I'm not sure why you are ruling out a Ponzi scheme so quickly.
          • matheusmoreira 4y ago
            I don't think a Ponzi scheme adequately explains the problems with centralized cryptocurrency exchanges. They're just banks. There are plenty of scammers in this space, I just don't think Binance is one of them. The problem is they leverage user deposits as gambling money. These corporations can't bear to watch a pile of money sitting around doing nothing while in their custody. They just need to loan it out.
• deleted 4y ago
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• dibt 4y ago
  https://twitter.com/SBF_FTX/status/1590012133307478016 https://twitter.com/SBF_FTX/status/1590012133307478016 >Note that http://FTX.us http://FTX.us and http://Binance.us http://Binance.us – two separate companies–are not currently impacted by this. http://FTX.us http://FTX.us withdrawals are and have been live, is fully backed 1:1, and operating normally. I wonder if this means SBF will continue operating FTX.us as a competitor to other US-based exchanges.
  • xxpor 4y ago
    Really seems like vindication for the US's regulatory scheme that in that it keeps US customers out of these shenanigans.
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  • qeternity 4y ago
    Asset custodians operate on trust. FTX has torched its trust. I don’t believe the US entity will be viable going forward.
• flanfly 4y ago
  Impressive. I wonder how much of this was planned by CZ.
  • deleted 4y ago
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• SilverBirch 4y ago
  So this is presumably going to stop the bleeding for customer deposits at FTX. I wonder how this all shakes out with Alameda - because it looked extremely likely that Alameda and FTX were doing a fair amount of business between each other, and now Alameda likely will be forced to unwind a load of illiquid shitcoin positions, CZ isn't going to want those loans outstanding (or maybe he will - pull the same move again and hold a gun to Alameda's head ready to force liquidition whenever he likes)
  • dibt 4y ago
    I think Alameda only held those positions in service to their market making operations, not FTX operations. The line between where FTX starts and Alameda ends always confused me.
• janmo 4y ago
  Title is incorrect, they signed a non-binding LOI. They will first do a lot of Due Diligence and might back out of the deal anytime.
  • alphabetting 4y ago
    Yeah. Binance seems to have all the leverage. https://twitter.com/ClarityToast/status/1590016720923930628?t=AKDy-RF2q5mCbWTDCGlSZA&s=19 https://twitter.com/ClarityToast/status/1590016720923930628?...
  • wmf 4y ago
    FTX needs cash right now and either Binance will provide it right now or they won't.
    • janmo 4y ago
      It seems withdrawals are halted, and there is no clarity of weather or not they have resumed after the announcement. Without withdrawals FTX will loose in importance and value every single hour. It is hard to build trust as a crypto exchange, but it is very easy and can be quick to lose it.
      • Scoundreller 4y ago
        > It is hard to build trust as a crypto exchange Iunno, it seems a lot easier than I ever expected (I don’t run one, just observing others)
• sherlock_h 4y ago
  Wow. What an outcome to the whole saga. I wonder what happened behind the scenes
  • datalopers 4y ago
    CZ triggered it, destroyed FTX, and now gets to be the hero.
    • JumpCrisscross 4y ago
      > CZ triggered it Binance called attention to the weakness. The underlying issues were all caused by FTX.
      • shapefrog 4y ago
        I cant believe that horrible charity triggered the collapse of Bernie Maddoff by asking for their money back.
      • returnInfinity 4y ago
        This exactly, blame FTX
• alphabetting 4y ago
  September's cover of Fortune was quite the jinx https://content.fortune.com/wp-content/uploads/2022/07/COV.W.0922.jpg?w=1440&q=75 https://content.fortune.com/wp-content/uploads/2022/07/COV.W...
  • anonu 4y ago
    I think SBF realized marketing is everything. Being the face of crypto, sponsoring sports stadiums, being on the cover of a widely distributed magazine, all part of the same playbook.
    • skippyboxedhero 4y ago
      The Superbowl ad curse.
      • rhaway84773 4y ago
        Lots of crypto cokpanies that did not advertise in the Super Bowl or whose founders were not profiled by Forbes or Fortune have also collapsed.
    • actionablefiber 4y ago
      But it turns out that wasn't true. It turns out "being able to cover customer withdrawals" is everything.
  • no_butterscotch 4y ago
    Looks like it was the "Or crash and burn" from the cover. Bad move on his part. I was wondering why he was throwing rescue tubes to silly projects. It seemed like he had too much money.
  • sytelus 4y ago
    In general, when I see someone on the cover of Fortune, I expect their business's half-life to be about a year. This has been very consistent because of the process of getting on the cover of Fortune and kind of people who push to get on it
• ucha 4y ago
  SBF said "We don't invest client assets (even in treasuries)". [0] He then says the purpose of the transaction with Binance is to "clear out the liquidity crunches". [1] How could there be a liquidity crunch if assets are not invested? You can't do a bank run on an entity that doesn't function as a bank and doesn't invest clients assets... Something is shifty. [0] https://twitter.com/sbf_ftx/status/1589598285798707202 https://twitter.com/sbf_ftx/status/1589598285798707202 [1] https://twitter.com/sbf_ftx/status/1590012126701441025 https://twitter.com/sbf_ftx/status/1590012126701441025
  • ramish94 4y ago
    Welcome to the world of unregulated finance. There’s a reason the FDIC exists and all banks must be insured.
    • deleted 4y ago
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    • hanniabu 4y ago
      This has nothing to do with defi. This is purely centralized entity shenanigans.
    • ChainNet 4y ago
      There's nothing decentralized about FTX or Binance. They operate in an opaque manner like any traditional business, transparency comes from forced audits & regulation. Decentralized finance is built on chain where all assets are publicly auditable at all times. EDIT: parent comment talked about decentralized finance, then edited to remove mentions of defi
      • three_seagrass 4y ago
        Even without the edit, your response feels like a no-true-scotsman i.e. an attempt to remove bad actors who deal in decentralized cryptocurrencies from the purity that is defi. What are some large, successful defi organizations today?
• ramish94 4y ago
  I’m a little ignorant to the whole crypto ecosystem, so can someone give me a quick rundown on the chain of events that led to this? Seems a little out of left field. BTX, from the outside looking in, looked to be one of the more well run, stable crypto exchanges. $1.02 billion in revenue with $388M in net income in 2021. They didn’t go on any crazy hiring spree when they didn’t have to. Liquidity crisis implies that people are withdrawing cash they do not have, but if so, where did it go?
  • anonu 4y ago
    I can't help you but all I can say is empires rise and fall faster than a house of cards in this space.
  • hanniabu 4y ago
    https://techcrunch.com/2022/11/07/heres-the-rundown-on-the-binance-and-ftx-fiasco/ https://techcrunch.com/2022/11/07/heres-the-rundown-on-the-b...
  • JumpCrisscross 4y ago
    FTX bet customer funds through the CEO’s hedge fund on an FTX token [1]. The token price fell when this was revealed [2]. The hedge fund, and thus FTX, had less money than they owed lenders and customers. FTX found a bail-out in Binance; otherwise everyone would have lost their money. [1] https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/ https://www.coindesk.com/business/2022/11/02/divisions-in-sa... [2] https://www.coindesk.com/markets/2022/11/08/ftt-plummets-as-market-fears-possible-alameda-contagion/ https://www.coindesk.com/markets/2022/11/08/ftt-plummets-as-...
    • gitfan86 4y ago
      It isn't officially a bailout. They just said they intend to acquire FTX. But, once they look at the books they may backout out the deal, especially if most customers want to take their money out. What is the point of buying an exchange that has no customers?
• throwaway4good 4y ago
  So wouldn't this trigger and potentially be blocked by CFIUS? Given Binance's Chinese roots and the general anti-China sentiment in US politics. Here is an article about the twitter acquisition also with Binance/CZ onboard - this would similar or worse, no?: https://www.brookings.edu/research/the-national-security-grounds-for-investigating-musks-twitter-acquisition/ https://www.brookings.edu/research/the-national-security-gro... The national security grounds for investigating Musk’s Twitter acquisition
  • ajaimk 4y ago
    "Note that http://FTX.us http://FTX.us and http://Binance.us http://Binance.us – two separate companies–are not currently impacted by this."
  • throwaway4good 4y ago
    This is article says it is only the non-US part of FTX that is in play: https://www.cnbc.com/2022/11/08/binance-offers-to-buy-ftxs-non-us-operations-to-fix-liquidity-crunch.html https://www.cnbc.com/2022/11/08/binance-offers-to-buy-ftxs-n... Binance offers to buy FTX’s non-U.S. operations to fix ‘liquidity crunch’ The acquisition impacts only the non-US businesses, FTX.com. FTX.us will remain independent of Binance. The deal, according to Tweets from both Zhao and Bankman-Fried, rests on a non-binding letter of intent, pending full due diligence.
    • JumpCrisscross 4y ago
      > it is only the non-US part of FTX that is in play The U.S. subsidiary had to follow rules that made FTX’s shenanigans more difficult.
  • redox99 4y ago
    Isn't ftx.com[1] from the bahamas, and binance from the cayman islands? [1] Not ftx.us, which is not getting bought
  • drak0n1c 4y ago
    CZ has shut down the China branch, and was essentially banned since their crypto crackdown. He has been publicly critical of the CCP government too. The gov may not have much leverage over him.
• m00dy 4y ago
• deleted 4y ago
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• whatifs 4y ago
  smells like a crypto pump and dump to me, we shall see
  • Sysctl232 4y ago
    More like a dump and pump
• cm2012 4y ago
  Does ETH/ConsenSys win here?
• lordnacho 4y ago
  What's the background of the liquidity crisis at FTX?
  • edf13 4y ago
    CZ said it’s dumping all their tokens from Binance… FTX starts to fail… CZ snaps it up for a song
    • lordnacho 4y ago
      I heard that as well, but how did FTX put themselves in a position where that can happen? Leveraging up in your own token?
      • v8xi 4y ago
        There was a report that came out a few days ago claiming that Alameda Research (SBFs company) was insolvent / did not have enough cash to cover their FTT liabilities[1]. CZ begins dumping their FTX token to de-risk and that led to them actually being insolvent. [1] https://dirtybubblemedia.substack.com/p/is-alameda-research-insolvent https://dirtybubblemedia.substack.com/p/is-alameda-research-...
      • spaceman_2020 4y ago
        apparently they were playing VC with user deposits. This is why regulations exist.
• jo6gwb 4y ago
  SBF yesterday: "FTX is fine. Assets are fine." Can't trust a word out of this guy's mouth.
  • kwere 4y ago
    Funds are Safu -Bizonacci
  • pranshum 4y ago
    "Every banker knows that if he has to prove he is worthy of credit, in fact his credit is gone." - Bagehot
    • BLanen 4y ago
      "Exchanges"(Exchanges and brokerages in one) are not supposed to be banks. Everything can be withdrawn from brokerages without them being insolvent.
      • pranshum 4y ago
        If the brokerage provides leverage to its customers, it can be subject to the same sort of bank runs that a normal bank can.
    • edouard-harris 4y ago
      Indeed. And in this case, it was from one day to the next.
    • AlexMoffat 4y ago
      +1 That's a great book.
  • ww520 4y ago
    The assets are fine. Just the value of the assets is not sure.
  • ploppyploppy 4y ago
    I'm really glad this shyster is having light shed on his behaviour. It's always been odd to me how FTX made it so big so quickly.
• steveBK123 4y ago
  This is great, he was lecturing how stock exchanges should work & on the cover of Fortune as the next Warren Buffet all of what.. 8 weeks ago? SV fintech keeps reinventing all the mistakes of 19th century banking. BNPL is the next explosion btw.
  • mamonster 4y ago
    BNPL has already exploded though, but good call. Klarna is down about 90% in the private markets, Affirm about the same from all time high. Another good candidate is "AI-powered" insurance i.e Lemonade.
    • steveBK123 4y ago
      ZIRP is a hell of a drug. There's not a lot of innovation to be had on lending that is actually going to be considered legal. Unless they obfuscate it with AI, they are going to run afoul of some sort of anti-discriminatory laws. Credit score&history, income, capital.. go. Most of what BNPL actually turned out to be was just dumb money.
      • mamonster 4y ago
        Its also the fact that in a bear market / recessions usually most correlations go to 1(on the way down) and whatever risk metric you used previously justify having low default provisions suddenly doesn't work anymore. Wonder whether we will ever see the actual datasets that BNPL founders saw that made them decide it is a safe business. Probably like you said ZIRP,bullmarket delinquency percentages.
        • steveBK123 4y ago
          Yes, though they were already taking on serious credit losses before any normal creditors were.
        • astrange 4y ago
          Part of the supposed appeal of BNPL is that if the market gets risky, you have much more choice about how much new credit you can offer, since you're free to offer it per-purchase not per-customer. It makes more sense for a large retailer to run it themselves, though; there's not necessarily any value in a dedicated company selling it straight to customers.
• SilverBirch 4y ago
  You know what this makes me kind of wonder... back earlier in the year SBF made a big show of coming in and investing in a bunch of the companies that were collapsing due to the LUNA/3AC/Celsius problems. He stepped in and to some extent halted the unwinding of some of these issues. It turns out now that it's likely FTX is underwater, and Binance is basically doing the same thing - coming in, picking them up cheap and preventing them from really having to unwind. So It's perfectly possible this action does the exact same thing as last time - simply stalls the unwinding of this catastrophe, which in the end could possibly even prove Binance insolvent. At the end of the day we just end up in a situation where Binance itself has pricing power over tonnes of coins, and if the market comes back they'll be fine, but if the market continues to slide at some point they won't be able to support the market any more.
  • FormerBandmate 4y ago
    Binance has serious legal issues (governmental investigations) and isn't based out of any jurisdiction. A Binance failure would have consequences that are very hard to predict
    • idiotsecant 4y ago
      I'm not sure that binance has a reason to exist in the current world where defi is a thing. Things like Coinbase etc are your place to go if you want a fiat to crypto on-ramp or off-ramp or if you want a reasonably safe place to park crypto if you don't want to own it yourself. There are innumerable decentralized exchanges where a person can be absolutely (for some definition of the word) sure that the exchange won't be shutting down and taking your money before you're done doing your transaction. There are L2 DEX even that are approximately the same cost and same level of inconvenience as something like Binance. Why does it matter if Binance goes away? I'm not sure if it does!
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      • searchableguy 4y ago
• JumpCrisscross 4y ago
  Do we have a price/valuation?
  • locallost 4y ago
    Likely zero if FTX is not liquid enough to process withdrawals.
• boeingUH60 4y ago
  "We’re going to look back at a generation of successful founders and VCs with the realization that all of their talent was in creating a company during the bull market." - random tweet I came across that's very relevant here.
  • billjings 4y ago
    Dare Obasanjo: https://twitter.com/Carnage4Life/status/1589867071693017088 https://twitter.com/Carnage4Life/status/1589867071693017088
    • 3001 4y ago
      Total unrelated but son of https://en.wikipedia.org/wiki/Olusegun_Obasanjo https://en.wikipedia.org/wiki/Olusegun_Obasanjo. Numero uno looter of Africa
      • MaxHoppersGhost 4y ago
        Wow. I like how his son’s Twitter profile talks about inclusivity. Very brave.
      • melvinmelih 4y ago
        He very cleverly took his name out of his dad's wikipedia entry. It's still there in older versions: https://en.wikipedia.org/w/index.php?title=Olusegun_Obasanjo&oldid=15385739 https://en.wikipedia.org/w/index.php?title=Olusegun_Obasanjo...
      • bolasanibk 4y ago
        Not to be confused with the talented soccer player Sam Obisanya. https://ted-lasso.fandom.com/wiki/Sam_Obisanya#Dubai_Air_and_The_Return_of_Jamie_Tartt https://ted-lasso.fandom.com/wiki/Sam_Obisanya#Dubai_Air_and...
      • googlryas 4y ago
        Why even reference it then? We have understood that sins of the father are not the sins of the child since at least the book of exodus(~500BC). If that tweeter has done something wrong in his life, then talk about it. But he didn't really have a choice on who birthed him. From the wiki page: > Some of his children were resentful that he gave them no special privileges and treated their mothers poorly.
• max_ 4y ago
  Its funny how a few days back some people on HN were saying FTX is unlikely to be illiquid because SBF is a genius from JaneStreet.
  • wmf 4y ago
    He sacrificed FTX but kept his real baby Alameda.
    • acgt23 4y ago
      Alameda won’t be worth nearly as much without FTX - it was so successful because FTX fed it as much market data as it wanted and gave it priority market making etc. Also seemed to be sending it its own printed FTT tokens to secure loans for trading which was the cause of the insolvency rumors. Neither of those things benefit the owner of FTX unless they are also the owner of Alameda
    • deleted 4y ago
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    • ww520 4y ago
      Not sure how safe Alameda is. $6 billion out of $14 billion of Alameda assets is FTT based. With FTT tanking, its asset balance shrunk greatly. It might well has its own liquidity problem. Also with Biannce buying FTX, it can call back the loaned FTT from Alameda.
  • asdajksah2123 4y ago
    And people who knew what they were actually talking about were pointing out that it's unlikely anyone would have voluntarily left Jane Street as early as he did. But they were largely ignored.
    • type-r 4y ago
      I read he was there for over 4 years, is that abnormally short? Seems like a pretty normal period of time to me.
• thepasswordis 4y ago
  I am extremely bullish on crypto, and have been for the last decade. That said: the sooner we can get rid of these weird centralized exchanges and weird messiah figures the better. The next thing I thing will explode is Cardano, which appears to function approximately like a cult, with no actual product (as far as I can tell). Ethereum, LINK, and Bitcoin. Everything else is a distraction.
  • rapsey 4y ago
    Crypto would be perfect. If only humans were robots.
    • boc 4y ago
      Not really, quite the opposite in fact. If humans were robots they’d trust each other completely, meaning all financial transactions could be done instantly with a simple database. Humans are messy, so the solution we’ve arrived at is a database enforced by a complicated legal system + state power/violence (and arguably private power/violence via the mob). This works pretty well and powers trillions of dollars around the world. Crypto is a fundamental misunderstanding of what makes modern finance hard. It’s not about trust, it’s about enforcement. I don’t need to trust my bank, but I need to trust that somebody will make things right if my bank takes my money. That allows me to trust my bank with my life savings, even though I’ve never met my banker or even know a single employee at the bank. Crypto is missing this point and it’s why, despite following it since the beginning, I’ve never thought it has a future. It’s fundamentally solving the wrong problem.
      • short_sells_poo 4y ago
        That's a very eloquent way of putting it, thank you. It's possibly even worse than just a misunderstanding though. I'm sure there are people in the Crypto industry who see core issue of enforcement, because the second wave (after Bitcoin first became mainstream) was all about smart contracts. E.g. there was an effort to move the subject of enforcement into the framework. After all, if the contracts that need enforcement are part of the crypto system, then enforcement can also happen in the same system. Right? Of course, this still falls short because no amount of mathematics will bridge that gap. At some point, the financial system (whether classical or based on blockchains) has to interact with the mind boggling mess of the real world. In the real world, 2+2 is not certain or deterministic at all. It can be debated, social implications weighed and the judge might say it's 4 and a bit, or slightly more than a pie. In some sense it feels like crypto would work perfectly in a world that is completely deterministic, measurable and is populated wholly by algorithms interacting with each other. The second order question then is: would such a world even need crypto?
• v8xi 4y ago
  Assuming due diligence goes through. I'm sure Binance won't know precisely where to locate any deal-tanking skeletons.
• JumpCrisscross 4y ago
  Ha, in exchange for extending a non-binding LOI, Binance got a competitor to admit they're illiquid.
  • polygamous_bat 4y ago
    Which seems like a huge L for FTX... until you start thinking about what the alternative must have been if this is what they chose.
    • JumpCrisscross 4y ago
      > what the alternative must have been It's clear it would have involved everyone losing their money and Bankman Fried being on the run à la Do Kwon.
      • polygamous_bat 4y ago
        I mean, that could still happen. I am not ready to give up hope yet.
• robswc 4y ago
  absolutely wild how "fast" this happened.
• wslh 4y ago
  How is Solana positioned in this context? Breakpoint Solana was a big event these days [1] [1] https://solana.com/breakpoint https://solana.com/breakpoint
• davydog187 4y ago
  Short explainer on the backstory https://www.milkroad.com/p/binance-vs-ftx-heres-happened-weekend https://www.milkroad.com/p/binance-vs-ftx-heres-happened-wee...
• skee8383 4y ago
  • returnInfinity 4y ago
    its related to tech and the valley
    • skee8383 4y ago
      It's a slippery slope. i've ran a few IRC and matrix channels. once the crypto people show up it all gets turned into a crypto circus. they will take over this site if it's allowed to continue. this site will literally be indistinguishble from coindesk.
      • willio58 4y ago
        Digital currency is the future even if 99% of the current ones out there are scams or scam-adjacent. To ban all talk about digital currency from a website all about the tech industry is just silly.
• caldarons 4y ago
  This piece on Alameda Research (also owner by SBF) was on HN a few days ago. It might end up being quite insightful... https://dirtybubblemedia.substack.com/p/is-alameda-research-insolvent https://dirtybubblemedia.substack.com/p/is-alameda-research-...
  • adrr 4y ago
    Question in the article is who holds the debt? My bet is that it is FTX.
• LatteLazy 4y ago
  Might be the first hostile takeover via crypto...
• 55555 4y ago
  Anyone here remember when SBF was offering Elon Musk a billion dollars to help him buy Twitter? What the hell was he thinking?
  • colinmhayes 4y ago
    He was probably thinking the offer would leak and give him publicity, which it did.
    • polygamous_bat 4y ago
      To be completely frank, it worked too (at least on me). If you asked me two weeks ago which company would go bankrupt first between FTX and Coinbase, I would be hard pressed to answer, even though we all have access to the financial documents of Coinbase and all we have from FTX is SBF glamor and hot air.
  • Scoundreller 4y ago
    Are you sure they didn’t make the deal?
    • reducesuffering 4y ago
      Yes, SBF didn't get a stake: https://danluu.com/elon-twitter-texts/#equity-financing-commitments-from-2022-05-05-sec-filing-https-www-sec-gov-archives-edgar-data-1418091-000110465922056055-tm2214608-1-sc13da-htm https://danluu.com/elon-twitter-texts/#equity-financing-comm...
  • jbverschoor 4y ago
    Yup.. The transcripts say he wanted to partner yup. Binance did finance, so maybe it's a way to get involved in Elon's inner circle.
• Bubble_Pop_22 4y ago
  Lots of stuff changed since the Middle Ages, antibiotics took the place of leeches, we know that the Earth revolves around the Sun, we can take pictures of Black Holes... What hasn't changed is that given the opportunity everybody wants to be a banker, invest other people's money and pocket the difference.
• kuratkull 4y ago
  Binance was threatening to dump a huge amount of FTT tokens on the market. FTX has a big+vulnerable position in FTT. FTX asked Binance to sell them the tokens for a fixed price, so as not to crash the FTT token price. Binance declined - this was yesterday/today. Of course the price of FTT crashed today. And now Binance buys FTX to help them out... smells like Binance played 4D chess all along. https://decrypt.co/113674/binance-moves-to-liquidate-its-entire-position-in-ftx-tokens https://decrypt.co/113674/binance-moves-to-liquidate-its-ent... https://decrypt.co/113788/binance-ceo-declines-alamedas-bid-to-buy-his-companys-ftx-tokens https://decrypt.co/113788/binance-ceo-declines-alamedas-bid-... https://decrypt.co/113866/battle-crypto-titans-ends-binance-acquires-ftx https://decrypt.co/113866/battle-crypto-titans-ends-binance-...
  • sytelus 4y ago
    FTX should never been in this position. They are an exchange. Nobody should be able to obliterate them by playing around with their crypto.
    • neural_thing 4y ago
      Hard agree. While Binance prompted the downfall, FTX created all the conditions for it by playing fast and loose with its clients' money.
    • ww520 4y ago
      They are an exchange that allows future trading and margin trading which require borrowing money/assets/coins. The FTT tokens were probably put up as collateral for loans. The drop of the FTT value probably triggers calls on those loans. Thus the liquidity crisis.
      • swyx 4y ago
        that makes FTX a "shadow bank", not merely an exchange.
        • ironick09 4y ago
• Bluecobra 4y ago
  Remember this is a NON-BINDING letter of intent. I wouldn't be surprised at all if this doesn't actually happen and just a bunch of ballyhoo. Unlike Twitter, FTX won't be able to drag CZ down to Delaware’s Chancery Court to force him to acquire it.
  • orsenthil 4y ago
    What is CZ?
    • aaur0 4y ago
      CEO of Binance - https://twitter.com/cz_binance https://twitter.com/cz_binance
    • deleted 4y ago
      [deleted]
  • spaceman_2020 4y ago
    All of SBF coins are going to crash like anything. All those tokens will be liquidated to pay lenders.
  • matheusmoreira 4y ago
    Indeed. Didn't stop the market from melting down though and it looks like FTT is going to zero. Wonder what happens if they decide not to buy it after all.
    • popcalc 4y ago
      I think that's what the OP meant...
• deleted 4y ago
  [deleted]
• perlgeek 4y ago
  Wasn't there a post hitting the HN front page just yesterday or two days ago about how FTX was close to being illiquid, and most of the top comments were about how wrong that analysis was? Or was that another crypto trader? If anybody could help my sieve-like brain, that would be very appreciated :-)
  • jaywalk 4y ago
    Yep, it was FTX.
  • wmf 4y ago
    Yes, concerns about Alameda's insolvency infected FTX. In retrospect these "concerns" may have been disinfo designed to destroy FTX.
    • perlgeek 4y ago
      ... or might have been a good prediction. An exchange shouldn't rely on public opinion for solvency.
  • jo6gwb 4y ago
    https://dirtybubblemedia.substack.com/p/is-alameda-research-insolvent https://dirtybubblemedia.substack.com/p/is-alameda-research-...
  • teuobk 4y ago
    Yup, here's the HN thread: https://news.ycombinator.com/item?id=33464494 https://news.ycombinator.com/item?id=33464494
  • chasebank 4y ago
    Wow, usually the HN thread hindsight comes years after. That is quite a fascinating read.
• gringoDan 4y ago
  Some level-headed commentary on the developing situation via Cas Piancey and Bennett Tomlin: https://www.youtube.com/watch?v=B2UFswUMQqI https://www.youtube.com/watch?v=B2UFswUMQqI
• polygamous_bat 4y ago
  On an unrelated note, I really hope to never see this clown's (SBF) face or name in any of the Effective Altruism docs/post/communications. Really irks me to see some new age robber baron to be the face of twenty-first century altruism, notwithstanding my other issues with EA.
  • sasattack 4y ago
    it's perfect since it's a total sham to distract from the wedding wealth gap
• ww520 4y ago
  Bitcoin balance on FTX Exchange have gone negative [1]. The withdrawals have been disabled on FTX. It's probably the AltCoins bought with the BTC by FTX have gone down in value and the BTC are gone for good. When people withdraw against BTC, there aren't enough. [1] https://cryptoslate.com/bitcoin-balance-on-ftx-exchange-goes-negative-coinglass/ https://cryptoslate.com/bitcoin-balance-on-ftx-exchange-goes...
• Bubble_Pop_22 4y ago
  Such an amazing theatrical play. So FTX is AIG and Binance gets to play the Fed. What happens in the second act when Binance transitions to its next role of Lehman but there is nobody to play the Fed?
• adam_arthur 4y ago
  The ultimate shell game...
• kristjansson 4y ago
  Why is it apparently so difficult to run a solvent crypto exchange? On the face, it shouldn't be too hard, just take deposits, stick them in a wallet, and swap client balances in a database. Is the temptation to maintain a reserve ratio < 1 just too great? Do operators try to earn small, low-risk return on client funds only to find there are no low-risk, positive-return assets in crypto? Are the extending margin to clients or explicitly stepping in as counterparty, and get exposed to losses as prices move?
  • fshbbdssbbgdd 4y ago
    Running a reserve ratio < 1 is a convenient way of funding advertising to get more people to use your exchange. So the question you should be asking is: if there is a solvent crypto exchange, how would I ever find out about it?
    • kristjansson 4y ago
      Presumably transaction fees, market data fees, etc. would provide enough revenue to fund advertisements?
      • fshbbdssbbgdd 4y ago
        Advertising is a market, you see ads for whoever is willing to bid the highest. It seems like Coinbase had to raise money to get big. FTX arrived to the scene later. It would be hard to compete by bootstrapping from organic growth.
        • kristjansson 4y ago
          Taking outside money doesn't preclude solvency
  • TimJRobinson 4y ago
    The reason FTX got to #2 exchange in only 3 years is because they were using customer funds and leverage to grow rapidly. If they hadn't done this they might have been much smaller. There are hundreds of exchanges now, most work exactly as you describe but don't make headlines because they don't grow rapidly then collapse.
• spelunker 4y ago
  I thought Binance essentially caused all of this by dumping (and advertising dumping) FTT tokens? And now that FTX is in distress they're going to swoop in and buy a competitor? Kind of reminds me of Luxottica buying out Oakley...
• ilrwbwrkhv 4y ago
  All of these folks need to be in prison along with Andreeson Horowitz. All bloody crooks the lot of them. The largest ponzi scheme in the history of humanity and they wonder why the world is not getting better.
  • dibt 4y ago
    Did AH take money from retail investors? I suppose you can claim they pumped these products. I'm not convinced it's any different than what happens with an IPO that started with VC money. I'm not saying it's good, just that it's as bad as anything that's regulated.
    • shuckles 4y ago
      Would you consider cashing out pre-ICO tokens for bogus projects to “accredited investors” (ie retails) as “taking money”?
      • dibt 4y ago
        I have no doubt that anybody that had access to pre-release allocations were well aware of the risks. Net worth was likely checked. They don't need to be treated like a child. Probably a civil matter anyway - no expectation of jail, which was what the parent commenter referenced.
        • shuckles 4y ago
          I was referring to insiders selling at ICO to retails. I’m sure insiders were savvy and made plenty of money.
    • wolski 4y ago
      https://www.youtube.com/watch?v=kSXQgCP3WQw&t=1620s https://www.youtube.com/watch?v=kSXQgCP3WQw&t=1620s A good explanation on how these schemes usually work out.
  • beambot 4y ago
• partiallypro 4y ago
  What if Binance looks under the hood (this is not a binding acquisition yet) and just says it's not worth it? What happens to everyone's deposit? I find it ironic that the "decentralized" nature of crypto is becoming more and more centralized. If FTX dies, beit via acquisition or just utter collapse, Binance would be a near monopoly.
• Aaronstotle 4y ago
  Every exchange needs to show proof of reserves, I don't have much faith that Binance is in much better shape than FTX.
  • Bubble_Pop_22 4y ago
    Exchanges big wallet are public info on the blockchain IIRC. The huge problem is that you'll never know if they add up because you'd need confirmation from every user of the exchange who'd have to self-declare their crypto-wealth in some sort of Slack or Telegram group so that you then can compare the 2 totals and see if x=y. Will never happen. They are black boxes. Only them know if 1:1
  • ploppyploppy 4y ago
    Kraken do: https://www.kraken.com/en-gb/proof-of-reserves https://www.kraken.com/en-gb/proof-of-reserves
• paulpauper 4y ago
  And total market meltdown continues. Not good enough.
• skippyboxedhero 4y ago
  From Twitch, interview with Wintermute CEO (another big crypto MM) - https://www.twitch.tv/videos/1647004406?t=1h39m38s https://www.twitch.tv/videos/1647004406?t=1h39m38s - had no idea this coming either (who got hacked for $100m recently). Later in the video Martin Shkreli tells Do Kwon that prison isn't so bad. Interesting interview.
• deleted 4y ago
  [deleted]
• Patrol8394 4y ago
  > and said FTX was totally fine I want to think that by now people have learned that "totally fine" in crypto means that they are not. Also, wasn't FTX gonna buy Voyager?
• bogomipz 4y ago
  Interesting just 6 weeks ago the news was that FTX was buying Voyager Digital’s assets for 1.4 billion dollar after winning a bankruptcy auction. In July the news was that FTX provided BlockFi with a $400 million line of credit and an option to buy the company for 240 million.[1][2] Now the crypto bailout savior is being bailed out? [1] https://www.cnbc.com/2022/09/27/bankrupt-crypto-lender-voyager-to-sell-assets-to-sam-bankman-frieds-ftx.html https://www.cnbc.com/2022/09/27/bankrupt-crypto-lender-voyag... [2] https://techcrunch.com/2022/07/01/ftx-us-deal-with-troubled-crypto-lender-blockfi-floats-acquisition-with-up-to-240m-purchase-price/ https://techcrunch.com/2022/07/01/ftx-us-deal-with-troubled-...
• TravelTechGuy 4y ago
  Some more background: the companies were engaged in fighting over regulations, and on a personal basis between the 2 CEOs. It went down to really childish levels at some point. But one thing is undeniable: SBF (FTX CEO) was trying to weaponize US regulation against his biggest rival CZ (Binance CEO). CZ retaliated by selling the FTT token, exposed the fact FTX was over-leveraged, and took over. This is, as the kids on Twitter say, the embodiment of the old "F#$k around, find out". Along the way every FTX client who couldn't withdraw, and every crypto user losing value got screwed - but why should these 2 characters care? The space just became more centralized, and whatever smidge of trust was left after the Celsius debacle has evaporated.
  • jonas21 4y ago
    For those not up to date on crypto people, SBF is Sam Bankman-Fried [1] and CZ is Changpeng Zhao [2]. I don't know why they insist on being called by their initials like they're some sort of ticker symbol. [1] https://en.wikipedia.org/wiki/Sam_Bankman-Fried https://en.wikipedia.org/wiki/Sam_Bankman-Fried [2] https://en.wikipedia.org/wiki/Changpeng_Zhao https://en.wikipedia.org/wiki/Changpeng_Zhao
    • sneak 4y ago
      It’s common in many internet circles to refer to prominent people by their initials. Hackerdom has a long tradition of this: rms gls esr jwz et al. It also tends to happen in US federal politics for some reason (jfk rfk gwb fdr et al) but not to everyone.
      • deleted 4y ago
        [deleted]
      • woodruffw 4y ago
        There's a little bit of cargo-culting with the practice: I thought CZ was short for the Czech Republic. The only reason I know "SBF" is because the New Yorker obliged him in that William MacAskill piece.
      • 4y ago
• eftychis 4y ago
  I think the title is incorrect (someone else noted too!). It should be "Binance sends non-binding Letter of Intent [to buy] to FTX." Less sexy, more accurate. Also, extremely likely they are trying to consolidate power and they orchestrated this situation I'd say. This "smells" hostile takeover, but in a currency setting. a) They sold FTT in a "dumpy"/reevaluate its price way b) they were asked for a loan or partial buy to add influx c) they sent a "we will just buy you."d) They sent messages that would erode the trust to the eyes of the world. Rings a bell? (Spoiler: see Twitter.)
• seaucre 4y ago
  Would love to see Sorkin's version of the negotiation between SBF and Binance.
• majani 4y ago
  I'm glad a big government supporter such as SBF is out of crypto leadership. Crypto is an anarchist experiment and it should remain that way
  • andirk 4y ago
    Why not both? Centralized where people trust, decentralized where people don't trust. In my interpretation, the Bitcoin white paper states that BTC is an answer to _the lack of regulation_ that allowed the fat cats to abuse the money supplies. It's kind of ironic, but to see crypto as purely anarchistic is to ignore that it is essentially _democratized_ money. Both: I use exchanges as well as cold storage.
    • TremendousJudge 4y ago
      I never understood. Where's the democracy here, exactly? A regular user cannot afford to participate in the decision making of the system in any meaningful way. In fact, today, most users don't even directly use it, instead relying on processors such as Coinbase. The "not your keys, not your coins" meme exists due to this. The original paper described a democratic system where people voted with their processors, but failed to take into account that people with more processors get more votes. I find it hard to argue that the system as it currently exists is more democratic than the currency emitted by the central bank of your country.
      • ballofrubber 4y ago
        Arguably a lot of discussion is open to anyone (Bitcoin mailing list, Core github repo), where anyone is free to post their opinion on topics themselves. It is not democratic as in "you have a vote to force others to comply to the majority", but more a democratic in "you can try to convince enough people that the major chain becomes how you like it, while the others run a minority fork". People think "where the money goes, is where the miners go", but the blocksize wars showed that "where the users go, is where the miners go". Miners themselves don't decide on bitcoin rules, users do. So I personally think that bitcoin is not necessarily democratic, but still highly people/community vs money driven.
• SevenNation 4y ago
  The slashdot piece just links to the real article: https://techcrunch.com/2022/11/08/binance-signs-letter-of-intent-to-acquire-ftx/ https://techcrunch.com/2022/11/08/binance-signs-letter-of-in... > Zhao (pictured above) said Binance reached the decision after FTX asked the crypto behemoth for help. “To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch. We will be conducting a full DD in the coming days,” he said in a tweet. This appears to be an admission of running a fractional reserve. Otherwise where could a "liquidity crunch" come from. Hilariously, this is the origin story of Bitcoin. Can't trust banks. Create electronic cash. Users are clueless about what to do with the cryptographic material needed to secure electronic cash. Users park funds at exchange. Exchange operator is a criminal who embezzles the money away, or an incompetent boob who just loses it. Exchange freezes withdrawals, temporarily at first, while continuing to accept deposits. Mayhem ensues. Rinse and repeat. The entire FTX team belongs behind bars. The VC team that backed this hair-brained venture deserves everything coming to them.
• blobbers 4y ago
  Seems like a non-binding agreement. DD has not yet been done, deal could fall through. SBF just got Jack Ma'ed by CZ.
• pjc50 4y ago
  > whatever smidge of trust Turns out the "trustless" in crypto means "you can't trust anyone".
  • k2enemy 4y ago
    Also turns out that "decentralized" in practice means "centralized"
    • ahzhou 4y ago
      Centralization is more efficient than consensus building.
      • acjohnson55 4y ago
        This is true. Don't know why people are down voting you. But it calls into question why we need centralized exchanges of decentralized assets. The answer, of course, is financial speculation and sophisticated shell games that make some folks billionaires at the cost of the marks who get suckered into believing they're getting in the ground floor of the next big thing.
      • pshc 4y ago
        Only if the central entity can be trusted not to become a corrupt rent seeker. (Looks meaningfully at TicketMaster)
        • ahzhou 4y ago
          I agree with this as well. Efficiency is orthogonal to desirable outcomes. My point is that things tend towards centralization because the market rewards efficiency.
    • joyfylbanana 4y ago
      Nobody forces you to use Binance or FTX. I have been using Bitcoin for 10 years and I've always stored more 90% of my BTC in my own self-custody wallet, only used exchanges briefly.
• dQw4w9WgXcQ 4y ago
  Will be interesting to see how this assertive prediction from "someone in the industry" a few days ago plays out: >> Regardless if FTT collapses, it wouldn't matter cause insolvency both the asset and liability side of the balance sheet would go down. [1] We got our FTT collapse today, let's see if the "experts" are correct. [1] https://news.ycombinator.com/item?id=33467429 https://news.ycombinator.com/item?id=33467429
  • DEDLINE 4y ago
    Was just thinking about this comment
  • guelo 4y ago
    Lol wouldn't be surprised if dcolkitt is SBF or someone near him
• moneycantbuy 4y ago
  I hope MLB umpires continue to wear the FTX logo plastered all over their uniforms for the coming years.
• locallost 4y ago
  As Matt Levine just pointed out in his newsletter, FTX was doing the same to bail out other failing crypto companies in the summer. Now it needs a bail out itself. What will happen to Binance in a few months if the system is now unwinding? That's the question right, if it's a system problem or FTX was greedy and over leveraged. For me it smells like a system issue because it's all based on funny money.
• pbreit 4y ago
  The current headline "Binance Acquires FTX" is wrong. There's only a "non-binding Letter of Intent" in place.
• blueblisters 4y ago
  This is probably going to have ripple effects in unrelated industries - FTX Foundation, presumably funded by FTX/Alameda/SBF’s personal wealth, has been been the biggest funder of AGI projects and labs this year. They were the biggest funder (in a $500M fundraise) for Anthropic, which is (atm) a non-profit AI alignment lab. They also funded a bunch of esoteric EA projects which likely rely on them for continued funding - https://ftxfuturefund.org/our-grants/ https://ftxfuturefund.org/our-grants/
  • oldgradstudent 4y ago
    > AGI projects > AI alignment lab > EA projects So what you're saying is that nothing of value was lost?
• deleted 4y ago
  [deleted]
  • deleted 4y ago
    [deleted]
• dang 4y ago
  Url changed from https://slashdot.org/story/22/11/08/1612256/binance-to-acquire-ftx https://slashdot.org/story/22/11/08/1612256/binance-to-acqui..., which points to this. Submitters: "Please submit the original source. If a post reports on something found on another site, submit the latter." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Edit: we changed the URL again—this time from https://techcrunch.com/2022/11/08/binance-signs-letter-of-intent-to-acquire-ftx/ https://techcrunch.com/2022/11/08/binance-signs-letter-of-in... to a different one that seems to give more background and more explanation. (via https://news.ycombinator.com/item?id=33523192 https://news.ycombinator.com/item?id=33523192, but no comments there)
• thedangler 4y ago
  I don't know if this is posed yet but FTX.com is different than FTX.us which GameStop Partnered with. I've seen lots of confusion and FUD arround this.
• squokko 4y ago
  This entire market sector creates nothing of value: the way to parse this is something like "Daniel Negreanu wins $15 billion pot against Phil Ivey in non-televised hand."
• zaps 4y ago
  The umps get new jackets!
• bob234 4y ago
  I'm sorry for your loss.
  • dougmwne 4y ago
    One low effort comment for AI, one giant leap for AI?
• drummer 4y ago
  Kids, this is why you never leave your crypto on an exchange.
• havefunbesafe 4y ago
  There was a looming liquidity crunch because the people running exchanges are... well... lying about reserves.
  • ploppyploppy 4y ago
    Kraken aren't: https://www.kraken.com/en-gb/proof-of-reserves https://www.kraken.com/en-gb/proof-of-reserves
• neonate 4y ago
  https://archive.ph/I7ZRD https://archive.ph/I7ZRD
• radicaldreamer 4y ago
  It's not even binding, so Binance could take a look under the hood and say no thanks. No idea whether FTX can cover withdrawals at this point or what the collateral damage will be.
• hericium 4y ago
  BTW, what ever happened to Catherine Coley, CEO of Binance US?
• whoknew1122 4y ago
  Wait, am I to understand that decentralized finance is becoming more... centralized? That doesn't seem right... /s
  • chucknthem 4y ago
    It's one centralized entity acquiring another centralized entity, so it's more like the centralized brokers of crypto just became more centralized.
• sergimas15 4y ago
  awesome
• insane_dreamer 4y ago
  DeFi --> CeFi
  • danrocks 4y ago
    --> Fi
• sytelus 4y ago
  Crypto had been interesting experiment. My take away is that there cannot be decentralized currency or finance. Dectralization does not prevent bad actors. Someone with an army and authority must be there to punish bad actors and keep them in check or otherwise they are out to con you. The argument that people just need to be smart to not get dupped does not work.
  • wslh 4y ago
    My takeaway is that cryptocurrencies will continue to exist like the BitTorrent protocol remains used even when Netflix, and all exist.
• Elizabeh 4y ago
• SevenNation 4y ago
  > One question that might be too early to answer is: Why was there a liquidity crunch in the first place? ... The simplest way to run the business is to take deposits from customers, buy crypto for the customers, keep everything segregated, and make money on commissions. ... This is the only question, because it feeds into all of the other questions. My prediction is that this deal isn't going anywhere. Where there's smoke, there's fire. And Binance is in no position to know how many skeletons are in the closets. The last thing any company wants in the current financial environment is big liabilities coming out of nowhere. And judging from the childish way in which FTX was run, there's skeletons o' plenty. Binance wants nothing to do with the piece of hot garbage because it too is in the same position as FTX. The last thing Binance needs is an FTX landmine spooking customers and triggering Binance's own bank run. The deal is going nowhere and FTX, along with its numbskull depositors, are dead meat.
• secretsatan 4y ago
  Who knows, i’m just going to rant that I never got into it, i heard about it right at the start, started looking into it, like maybe do it like i used to let idle time on seti. Maybe now i’d be a billionaire. It would seem like an odd way to be one. But i got put off it right away by libertarian conspiracy believing types, always knew way more than me about the secret machinations of the world that are forever kept free from us, and of course, they knew something i didn’t, this secret knowledge was given away for free if you knew the right people. In a way, i credit them with a renewed interest in programming, as this guy told me about writing a twitter bot to pump gold whenever they’re idol told them too, i did actually think to myself, this guy thinks they’re a programmer when they repurposed a script while i can actually write useful apps, so i’ll give them that.
• misil 4y ago
  Can we perhaps take this opportunity to pour one out for Matt Levine? I can't think of any writer/journalist who can bring an often esoteric topic like present day financial shenanigans to life with such clear, intuitive and bitingly funny writing. His coverage of the whole Elon/Twitter saga alone is second to none.
• eternalban 4y ago
  A friend visiting from Iran and I were discussing the current wave of boycotts in Iran against companies that are controlled by the regime. He related that consensus in Iran is that after a certain size (or if in important sector) all companies are part owned if not controlled by Sepah (IRGC - a terrorist organization). So while 'Nobitex' doesn't mention anything about who is running it on their website, you can be certain that it is a very important company as far as IRGC is concerned. Which brings us to the legal question (IANAL) of how much legal exposure is Binance facing here, given that the Iranian-American community is gearing up to legally excise ("wipe from pages of history") all elements of IR from access to US government, commerce, academia, lobbies, communications, and of course finance, and those who support the Islamic Republic here in USA, and their terrorist IRGC will face legal consequences. From Reuters: "Crypto giant Binance has processed Iranian transactions with a value of $8 billion since 2018 despite U.S. sanctions intended to cut Iran off from the global financial system, blockchain data show. "Almost all the funds, some $7.8 billion, flowed between Binance and Iran's largest crypto exchange, Nobitex, according to a review of data from leading U.S. blockchain researcher Chainalysis. Nobitex offers guidance on its website on how to skirt sanctions." https://www.reuters.com/business/finance/exclusive-crypto-exchange-binance-helped-iranian-firms-trade-8-billion-despite-2022-11-04/ https://www.reuters.com/business/finance/exclusive-crypto-ex...
• patrickbuckley 4y ago
  CZ has pledged to have binance do proof of reserves going forward. This is a positive development in what is overall a shitty situation. https://twitter.com/cz_binance/status/1590055819416330240?t=Nx8e5U2_SdNN5UVDhVF4nA&s=19 https://twitter.com/cz_binance/status/1590055819416330240?t=...
• orsenthil 4y ago
  So how was FTX sponsoring all those Warriors Basket Ball games and players ?
• Ptchd 4y ago
  Wasn't FTX a company bailing out other crypto companies?
• csomar 4y ago
  > If you are a crypto exchange and you have a liquidity crunch and you cannot process withdrawals, and you don’t get a bailout, then your future equity value is basically zero. If you tweet to all your customers “sorry we’re out of money for a bit so no more trading and we’re going to hang on to your money, but things will get better,” they will not get better. This is incorrect and coming from Levine, it's surprising. Especially, that the crypto ecosystem had an exchange that had just that (Bitfinex) and convinced users to take up the loss and carry operations (I was one of them). The exchange is still operating and one of the major exchanges in crypto. > You don’t have a ton of time to negotiate, and they don’t have a ton of time to do due diligence. How does the buyer know that there are no huge disasters lurking on your balance sheet? They don’t, and they don’t have much time to find out, and your liquidity crunch is not an encouraging sign. You are having a disaster now! They probably have a good idea. Crypto balances, at least the two largest, are public. And Binance is a large (largest?) exchange, so they probably can make a good guess of their balance sheets. > A lot of FTX’s business is in perpetual futures, a leveraged product, sometimes levered 20 to 1. If you are an exchange and you are in this sort of business, you will need to come up with the extra $100 to lend to your customer. Presumably that doesn’t come from your equity: You are doing some sort of borrowing, perhaps from other customers, 2 perhaps from outside financing sources, perhaps from your affiliated hedge fund, etc. This is also incorrect. There is no borrowing in derivative futures. The writer didn't really do his research. This is a case of cascading margin calls, but for very big guys. FTX tried to bail out some smaller guys but ended up getting margin called itself. Now Binance is picking the trade which carries itself a risk for getting margin called (ie: A liquidity crisis inside Binance). This will be the most optimistic scenario for Crypto, as it'll wipe out the largest exchange that it is enabling this scam industry and also changing the crypto culture (no-KYC, Decentralized, Trust-less, Permission-less etc...)
• GoldenMonkey 4y ago
  Predicting this 4D chess move by CZ… ends very badly for CZ… As CZ becomes massive target for the SEC. And is sued into oblivion for insider trading, laundering or whatever they can make stick. By whatever jurisdiction CZ/Binance has any ties to… and the US/SEC/Fed can strong-arm.
• firekvz 4y ago
  What really amazes me about the whole thing is that after celcius and now ftx, tether manages to have peoples' trust and manages to have a bunch of apologists, to the point that in this whole threat there is 0 mention about usdt or tether, while it should at least be mentioned or discussed in here, even tho it has no direct relation, they are the org with most obscure and shady things about them, even the whole business of binance was built around their USDT pairs it's also quite funny how Binance now acts as a total legit org that has not wrongdoings when they have shown no proof of their BUSD backings and they built their empire on top of tether
  • dibt 4y ago
    >...What really amazes me about the whole thing is that after celcius and now ftx, tether manages to have peoples' trust... I've never held/used Tether, and that won't change. There's no reason to use it. However, it's worth pointing out that Tether DID go through what FTX is going through right now. They handled it surprisingly well. This article says they had $10 billion redemptions in May: https://www.cnbc.com/2022/05/17/tether-usdt-redemptions-fuel-fears-about-stablecoins-backing.html https://www.cnbc.com/2022/05/17/tether-usdt-redemptions-fuel... This article says they had $1.6 billion redemptions in June: https://www.coindesk.com/markets/2022/06/15/tether-sees-new-wave-of-redemptions-as-fear-of-market-contagion-spreads/ https://www.coindesk.com/markets/2022/06/15/tether-sees-new-... There are rumors that FTX was/is missing as much as $5 billion of customer deposits. That's what lead to their withdrawal issues. >while it should at least be mentioned or discussed in here, even tho it has no direct relation It's a stable coin, not a centralized exchange. No comparison. Though, both should be able to honor 100% of withdraws at any moment. You are likely to label me as an apologist. Again, I don't trust it. I couldn't care less if it stops existing tomorrow. I just haven't seen any concrete evidence it can't honor redemptions. The opposite was proven in May and June.
    • qeternity 4y ago
      > This article says they had $10 billion redemptions in May This is only impressive if they actually had $10B of cash and equivalents to return/liquidate in that period. Of course the accusation is that Tether is largely unbacked, and so redeeming $10B of nothing is a lot less impressive.
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• UGIForAll 4y ago
  • alexb_ 4y ago
    This comment was generated by AI. Does HN allow for AI comments on submissions?
    • yorwba 4y ago
      The guidelines don't specifically call out that case, and I don't think they need to. If someone can automate the process of generating good HN comments I don't see a problem. https://xkcd.com/810/ https://xkcd.com/810/ But clearly this particular attempt isn't doing so well.
      • pvg 4y ago
        https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=author%3Adang%20%22don%27t%20allow%20bots%22&sort=byPopularity&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
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• 1995moz 4y ago
  Could it be that it is SBF who is playing CZ by potentially involving US regulatory apparatus (CIFUS) and resulting scrutiny into Binance? In the weirdo-world-of-crypto(TM), anything is possible?
• acyou 4y ago
  The name Sam Bankman-Fried came up quite a lot in Twitter v. Musk. I wonder if he ended up with a stake in the acquisition deal. If SBF was a sizable backer of the Twitter buyout, this more than anything could take Twitter out at the knees.
• listenallyall 4y ago
  Not surprised at all. They went all-in on a disastrous Super Bowl commercial -- certainly not the only reason for their downfall but representative of leadership more concerned with image than product. https://news.ycombinator.com/item?id=30424299 https://news.ycombinator.com/item?id=30424299
• jbverschoor 4y ago
  I dunno man.. Binance financed the twitter acquisition. Samuel Friedman from FTX wanted to partner with Elon. Sounds like a way to structure power within twitter TBH.
• drumhead 4y ago
  Nicest thing about the Crypto bust is that HN isnt flooded with articles about the latest coin of Blockchain tech.
• xch 4y ago
  just listen to torrent protocol designer already and end these shitshows chia.net