23 ms·
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 crun
by 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 agoWelcome to the world of unregulated finance. There’s a reason the FDIC exists and all banks must be insured.
- deleted 4y ago[deleted]
- hanniabu 4y agoThis has nothing to do with defi. This is purely centralized entity shenanigans.
- ChainNet 4y agoThere'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 agoEven 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?
- TimJRobinson 4y agohttps://defillama.com/ https://defillama.com/ - there are hundreds. Almost all are open source and transparent.
- potatototoo99 4y agoTornado Cash is pretty successful.
- colinmhayes 4y agonot sure about this one.
- sperm 4y agoUniswap. Large in terms of volume, not org size.
- ChainNet 4y agoUniswap, Curve DAO, AAVE, Compound, Lido, MakerDAO...
- null0pointer 4y agoI don't see at all how you can say calling out literally centralized companies as "not-decentralized" is no-true-scotsman. It's just an obvious fact. > What are some large, successful defi organizations today? In my opinion, if there is an organization behind it then it is, by definition, not decentralized. Yes, even the ones that operate fully on-chain.
- three_seagrass 4y ago>literally centralized companies as "not-decentralized" So defi is only 100% decentralized everything, even if the financial tools are decentralized? That feels like an appeal to purity if ever there were one.
- null0pointer 4y ago
- hi5eyes 4y ago
- w1nst0nsm1th 4y agoI did not comment but I have some insight on regular finance and took a Udemy course on building your own crypto... And I came to the conclusion that SBF is a crook and the whole crypto space is build on thin air.
- hi5eyes 4y agocongrats on needing to take an entire course to come to that conclusion?
- w1nst0nsm1th 4y agoWell, at least, I knew concretly what it was about (i mean the code is more expressive than a random tl;dr of a white paper). Beside, It's more the remembering of the unfolding of the Subprime crisis and the financial books I read back then that raised the red flag.
- miohtama 4y agoNote that FTX.us is regulated under some US licenses and is unaffected. What was blown up was FTX.com operation that is licensed and regulated in Bahamas. [insert coconut meme.gif here]
- kolbe 4y agoThe FDIC is just a ruse to let "useful idiots" think that everything is okay. In reality, the FDIC charges banks 90% less than the actuarial value of the risk they take on, and banks make wildly risky loans/bets all the time, knowing it's "heads I win, tails the taxpayer loses." Insofar as you can call US Finance any better than crypto, it's because of socialized losses. IMO, bank failures are a much more appropriate solution.
- lottin 4y agoWhat is the 'actuarial value' of the risk a bank takes on?
- kolbe 4y agoI can tell you a bank like say JP Morgan Chase, who is charged 5bp a year (i.e. 5 cents for every $100 dollars), has a much higher chance of catastrophic failure than 1 in 2000. Many banks just like them fail every few decades, and it was generous of me to only say they're undercharged by 90% (i.e. 1 in 200 odds), when the reality is probably more within a range like 1 in 20 to 1 in 100.
- lottin 4y agoSo you're making this numbers up? If banks are being undercharged, the insurer will be incurring losses. It's as simple as that.
- kolbe 4y agoThe insurer is the United States government. They take losses on things all the time. It's called "socialized losses." I referred to it before, and it sounds like you don't even understand these finance 101 (or even basic high school civics) topics, so why are you insulting anyone?
- lottin 4y agoThe insurer is a corporation with its own financial statements, so it's pretty easy to see if it's operating at a loss (and thus subsidising the banking industry) or at a profit (not subsidising it). I guess you didn't know that either.
- shapefrog 4y ago12:38 PM · Nov 7, 2022 2) FTX has enough to cover all client holdings. [0] 4:03 PM · Nov 8, 2022 2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. [1] has enough to cover all client holdings ---> not enough to cover all client holding in 24 hours. Either they lost a billion or so dollars of client segregated funds in a day down the back of the sofa or it was a lie the whole time.
- ramish94 4y agoHe mentions that they have everyone’s money, and then the very next tweet says “we’ll clear out liquidity crunches”. Literally a contradiction.
- shapefrog 4y ago“we’ll clear out liquidity crunches” - they have everyone’s money if they get more money from someone else.
- mistercheph 4y agoGiving them the benefit of doubt, this is not a contradiction. The statement means that they have enough illiquid assets to cover the withdrawal that they are working on converting into liquidity.
- viscanti 4y agoBut they're meant to store the customer assets in a cold wallet. They're not meant to invest them in illiquid assets that would need to be liquidated to give people their money. If it's not a contradiction, it's an intentionally misleading statement to avoid admitting they let Alameda Research invest the money when the entities are supposed to be completely separated.
- shawabawa3 4y agoThe extremely charitable read is that 1. They have all the funds 2. Many are in cold storage or otherwise inaccessible in short term 3. Their cold storage restore process is so slow they need emergency help to provide liquidity in the meantime Seems more like that they've either embezzled client funds or been hacked/lost some cold storage keys
- max_ 4y agoNow it is clear that he was lying. They stopped processing withdrawals according to on chain data.[0] [0]: https://www.theblock.co/post/184176/ftx-appears-to-have-stopped-processing-withdrawals-on-chain-data-show https://www.theblock.co/post/184176/ftx-appears-to-have-stop...
- jefftk 4y ago> They stopped processing withdrawals If you look at the comments on https://news.ycombinator.com/item?id=33518961 https://news.ycombinator.com/item?id=33518961 that article missed that FTX uses multiple addresses for withdrawals.
- max_ 4y agoHe admits they were illiquid and needed Binance to cover withdrawals 1:1. >Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. It may take a bit to settle etc. [0]: https://twitter.com/SBF_FTX/status/1590012124864348160 https://twitter.com/SBF_FTX/status/1590012124864348160
- jefftk 4y agoSorry, edited my comment to quote the section of yours I was trying to reply to
- skippyboxedhero 4y agoThey have one BTC. Form an orderly queue to receive your portion. https://www.coindesk.com/business/2022/11/08/ftxs-bitcoin-balance-plunges-to-just-one/ https://www.coindesk.com/business/2022/11/08/ftxs-bitcoin-ba...
- shapefrog 4y agoThis a.m. before securing an emergency lifeline from rival Binance, FTX was canvassing deep pockets in Silicon Valley and Wall St — think billionaires, not institutions — ppl familiar told me & @lmatsakis @SaacksAttack. Two of the ppl he was seeking more than $1bn. https://twitter.com/lizrhoffman/status/1590021299295768578 https://twitter.com/lizrhoffman/status/1590021299295768578 He / his people didnt call me, but I would have passed anyway
- toomuchtodo 4y ago> One person briefed on the fundraising blitz said what started as a $1bn ask was looking more like $5bn-$6bn by midday.
- JumpCrisscross 4y ago> SBF said "We don't invest client assets (even in treasuries)" We know that was false when it was said, given the Alameda balance sheet. (FTX invested in Alameda which made risky loans to crypto folks and bought FTT, which FTX minted [1].) [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...
- ucha 4y agoNowhere does it say that FTX invested in Alameda. Alameda invested in FTT which is minted by FTX which is not the same thing.
- JumpCrisscross 4y ago> Alameda invested in FTT which is minted by FTX FTX issued FTT to Alameda. We have no idea what Alameda gave them as collateral, but it's clear it wasn't cash. Lending is a form of investing. (I don't get what unlocked versus collateral FTX on Alameda's balance sheet means.)
- ucha 4y agoHow can you say it's clear it wasn't cash? What's the source? Also, FTX minted FTT out of nothing - effective cost zero - so no matter what they received in exchange, even if they had received nothing that is not an investment unless they received Alameda equity. I agree that lending is a form of investment but nothing says that they received a loan in exchange. You could still be right, but it's all speculation :)
- JumpCrisscross 4y ago> How can you say it's clear it wasn't cash? FTT spiraled and FTX went insolvent.
- 4y ago
- chaosbolt 4y agoAre you seriously asking? He lied like every other exchange does. The man's middle name is Bankman for god's sake.
- Aaronstotle 4y agoI don't understand how his middle name relates to anything about this situation.
- prottog 4y agoPerhaps a quip on the untrustworthy nature of bankers.
- chaosbolt 4y agoIt's an obvious joke a 3 year old kid would understand, if that kid didn't value signal by implying someone was an antisemite because of an unrelated joke that is.
- 55555 4y agoFor sure. I don't even think Bankman is jewish -- that's the Fried half.
- kgwgk 4y agoAnd he's Fried now.
- deleted 4y ago[deleted]
- dbreunig 4y agoYou mean the guy who said he named his other co "Alameda Research" so it wouldn't sound like a bank, even though it basically is, might be shifty?
- carnitine 4y agoHow is a prop crypto firm a bank? Laughable
- PaywallBuster 4y agohttps://www.investopedia.com/terms/c/cashandcashequivalents.asp https://www.investopedia.com/terms/c/cashandcashequivalents.... > Cash and cash equivalents refers to the line item on the balance sheet that reports the value of a company's assets that are cash or can be converted into cash immediately. > Cash equivalents include bank accounts and marketable securities such as commercial paper and short-term government bonds. > Cash equivalents should have maturities of three months or less. Don't know specifics on FTX/Alameda but this is probably normal to a degree for banks/brokers or just any regular business?
- ForHackernews 4y agoIt's all lies. Just like everything else involving cryptocurrency.
- purpleblue 4y agoWell, if the customers are holding FTT and they're trying to get rid of their FTT, that could cause the liquidity crisis. The crisis isn't with the customer assets, it's with their FTT side of the business.
- cguess 4y agoCan't have a run if you can't withdrawl!
- matheusmoreira 4y agoThey lied to everyone of course. Never trust these corporations. They're sitting on huge piles of consumer deposits, of course they're gonna leverage that money. They cannot resist the temptation.
- jiveturkey 4y agoCould be technically true? They don't "invest" client assets, not even in treasuries, ie actual investments. They "speculate" client assets, in tokens.
- nl 4y agoThe linked article addresses this: > Why was there a liquidity crunch in the first place? A crypto exchange is a weird sort of business, in many ways more like a brokerage than a traditional exchange. > 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. You will have some customers who owe you money, and others whom you owe money. You will be like a bank. If everyone to whom you owe money demands their money back at once, you will need to get the money back from the ones who owe you money, which might be hard. (You might not have a contractual right to demand the money back right away, or it might be rude and bad for business, or you might have to liquidate them to get the money back and that would blow up the value of your collateral.) In broad strokes this is a reasonable description of what happened to Bear Stearns, a brokerage that financed its customers’ positions. [2] (footnote in original article): Effectively a perpetual future involves you borrowing from and lending to your customer in offsetting ways: If the price goes up, you owe money to the long and the short owes money to you. If the short doesn’t pay you, then you still owe money to the long.