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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 dul
by 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 agoThey 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 agoDid 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 agoI'm not sure why you are ruling out a Ponzi scheme so quickly.
- matheusmoreira 4y agoI 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.
- Yizahi 4y ago
- epa 4y agoIt seems that Citadel may have short squeezed FTX's token and created this.
- cheeze 4y agoProof?
- snapcaster 4y agoPlease don't tell me you own GME stock and blame Ken Griffin for everything bad that has ever happened. Can't you people just stay in your subreddits?
- epa 4y agoHello, your comment does not follow guidline "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive." per https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. Please be more constructive.
- snapcaster 4y agoI understand that. I think you are likely missing some context and what is motivating comments like the one I responded to. Long story short a cult developed around gamestock bag holders that didn't manage to sell the top and now they're shitting up every discussion on the internet related to finance or investing. It's starting to really annoy me now that it's escaped reddit
- isthisthingon99 4y agoyou're getting downvoted by people who didn't get the joke.
- matheusmoreira 4y agoCrypto? This is nothing but a good old bank run.
- JumpCrisscross 4y ago> nothing but a good old bank run Exchanges aren't subject to bank runs. If an exchange (or even broker) cries run, they were taking novel risks.
- matheusmoreira 4y agoThey aren't brokerages, they're banks pretending to be exchanges. They do fractional reserve banking with user deposits.
- arcticbull 4y agoFractional reserve in the context of banking is completely different because the FDIC backstops runs and the Fed backstops the FDIC. Nobody backstops FTX or any other crypto exchange so its better described here as 'the yolo lifestyle'. A modern day bank run in traditional finance is functionally impossible* (up to the FDIC insurance limits, and often higher in practice - there were no imposed limits at WaMu for instance).
- guepe 4y agoMatt Leving from Money Stuff discussed it today (!). If exchanges provide leverage products to customers, they become banks (providing leverage, through funding typically by other customer's deposit). So bank runs are possible.
- arcticbull 4y agoAh will take a listen! Thanks!
- JumpCrisscross 4y ago