24 ms·

FTX’s financial black hole leaves Binance balking at rescue plan

167 points by ahmedalsudani 4y ago

eddsh1994 4y ago
Makes sense, FTX are crumbling now and will move to Binance regardless
Alex3917 4y ago
Obviously. The only reason for them sending that tweet yesterday is if they were never seriously considering going through with the deal in the first place.
janmo 4y ago
No surprise to me, we are talking about a hole of probably over $6b. That's a lot of money for an exchange whose reputation has now been destroyed.
alphabetting 4y ago
Probably good for Binance they're not taking on those toxic books but impact on overall crypto market could be severe.
zen21 4y ago
gjvc 4y ago
background on the FTX leadership here https://www.youtube.com/watch?v=VbDiWXFxqr8&t=2144s https://www.youtube.com/watch?v=VbDiWXFxqr8&t=2144s
zeven7 4y ago
Translation: CZ (Binance CEO) has had enough time to liquidate volatile assets and set up shorts.
- mamonster 4y ago
  Why is this being downvoted, shorting the book of an entity you are supposed to be bailing out / in talks with has multiple historical precedents. Amaranth and JPM off the top of my head for the last time it happened.
- unmole 4y ago
  Which counterparty would be willing to take the other side of that trade?
  - yborg 4y ago
    This is crypto, there are plenty of retail 'to the moon' speculators that would be thrilled at the prospect of more sick gains. It's tulips all the way down.
    - unmole 4y ago
      FTT has thin liquidity and was already under significant selling pressure. It's highly unlikely Binance would have been able to build up a significant short position.
- firekvz 4y ago
  Noone taking the other side of that short. Is entirely fallacy/fantasy when people talks about shorting on crypto market. You can't win shorting actual crashes in unregulated markets, the only way u win shorting in crypto is that you were lucky to guess what a whale/org was doing at the same time so pretty much a russian roulette Marketmakers are not legit and all the movements are pretty much fabricated, its just not regulated and its obvious
  - mamonster 4y ago
    Is it any better if he is able to liquidate longs based on the balance sheet that he would not have liquidated had he not seen the balance sheet?
simple-thoughts 4y ago
SBF was the “model citizen” to USA regulators. It’s hilarious how some USA loved this known ponzi schemer while actively fighting legitimate projects like LBRY.
- m00dy 4y ago
  - xiphias2 4y ago
    Was. I doubt he will honor his future pledges.
- deleted 4y ago
  [deleted]
- JumpCrisscross 4y ago
  > SBF was the “model citizen” to USA regulators He very much wasn't. Probes had been ongoing for months [1]. [1] https://www.bloomberg.com/news/articles/2022-11-09/us-probes-ftx-empire-over-handling-of-client-funds-and-lending?srnd=premium https://www.bloomberg.com/news/articles/2022-11-09/us-probes...
pearjuice 4y ago
Why would they even consider taking them over? They killed a competitor by declaring them as insolvent. The damage has been done. The user funds SBF siphoned out of FTX aren't coming back and doubt CZ is going to refund them out of pocket IF they take them over. The tech behind FTX is probably the same or worse than what Binance has. Customer acquisition happens anyway as the people still wanting to stay active in crypto will probably go to Binance.
- johnvanommen 4y ago
  I was thinking the same thing. This reminds me of 2008, when companies were trying to get "rescued", such as Lehman, but Lehman couldn't make a compelling argument why they were worth acquiring, once the accounting books were opened.
  - deleted 4y ago
    [deleted]
  - new2this 4y ago
    "Fools Gold" does a great job of documenting this contagion effect (among other things) during the 2008 crash. Highly recommend
    - johnvanommen 4y ago
      Thanks! I'll check it out.
- firekvz 4y ago
  PR They are the biggest exchange now, they gotta look like they care and tried to help so they can attract all the ones who need a new home You still dont get crypto dinamics, is not about the tech, is about how much money you can extract from people trusting you
  - ddorian43 4y ago
    Pretty expensive PR. Just run some superbowl ads and name some stadiums.
djaouen 4y ago
This would (probably) be a mistake on CZ's part. Taking on FTX's customers would undoubtedly bring him more goodwill than letting its customers go down with the ship.
- DistantCl3ric 4y ago
  FTX customers have likely fled (those that can / could withdraw) to Binance already.
  - dodgerdan 4y ago
    Transfers of cryptocurrency from FTX have been frozen since yesterday.
    - stri8ed 4y ago
      Do you have a source for this?
      - method_capital 4y ago
        yes. anybody who has ftx funds.
        djbusby 4y ago
        *had
        yesBut00 4y ago
        [dead]
        ackbar03 4y ago
        Ouch
      - habibur 4y ago
        https://twitter.com/DeItaone/status/1590035367373086720 https://twitter.com/DeItaone/status/1590035367373086720
boojums 4y ago
Interesting to see how heavily Sam Bankman-Fried dontated in the recent midterm elections in the USA. He might run out of runway before those investments pay off. https://www.washingtonpost.com/politics/interactive/2022/top-election-donors-2022/ https://www.washingtonpost.com/politics/interactive/2022/top...
- deleted 4y ago
  [deleted]
- deleted 4y ago
  [deleted]
- memish 4y ago
  He was trying to get in on the Twitter deal too, for up to $5b. Elon was skeptical. Michael: Sam Bankman Fried is why I'm calling https://twitter.com/sbf_ftx/status/1514588820641128452 https://twitter.com/sbf_ftx/status/1514588820641128452 https://www.vox.com/platform/amp/recode/2021/3/20/22335209/sam-bank.man-fried-joe-biden-ftx-cryptocurrency-effective-altruism https://www.vox.com/platform/amp/recode/2021/3/20/22335209/s... https://ftx.us https://ftx.us Elon: ?? Elon: I'm backlogged with a mountain of critical work matters. ls this urgent? Michael: Wants 1-Sb. Serious about partner w/you. Same security you own Michael: Not urgent unless you want him to fly tomorrow. He has a window tomorrow then he's wed-Friday booked Michael: Could do $5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works it could get us $5bn equity in an hour Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network. Elon: ["disliked" "Could do $5bn ..."] Elon: So long as I don't have to have a laborious blockchain debate Elon: Strange that Orlando declined Elon: Please let him know that I would like to talk and understand why he declined Elon: Does Sam actually have $38 liquid? Michael: I think Sam has it yes. He actually said up to 10 at one point but in writing he said up to 5. He's into you. And he specifically said the blockchain piece is only if you liked it and not gonna push it. Orlando referred Sams interest to us and will be texting you to speak to say why he (Orlando) declined. We agree orlando needs to call you and explain given everything he said to us and you. Will make that happen We can push Sam to next week but I do believe you will like him. Ultra Genius and doer builder like your formula. Built FTX from scratch after MIT physics. Second to Bloomberg in donations to Biden campaign. https://danluu.com/elon-twitter-texts/#62 https://danluu.com/elon-twitter-texts/#62
hmate9 4y ago
The only likely outcome I can see is binance taking on just a part of the rumoured $6bn hole. For example covering deposits up to $100k (or whatever number) Earns goodwill and users while the size of the bill is smaller. Not sure how it would work from a legal standpoint but unfortunately 6 billion is too much (and I had a majority of my net worth in FTX as a trader)
- Lionga 4y ago
  - amanj41 4y ago
    the tone here is a little uncalled for.
    - etrautmann 4y ago
      agreed - I think there's a combo of schadenfreude and "I told you so" vibes from HN, where people have been generally skeptical throughout cryptocurrency's rise in popular mindshare.
      - orangepurple 4y ago
        I get the same feeling and shudder whenever HN has a new thread about password mangement systems. Most of the suggestions are super fragile and so many people give bad advice that will eventually result in collossal catastrophic data loss.
- isthisthingon99 4y ago
  > I had a majority of my net worth in FTX as a trader As a trader myself, this lesson is part of your risk management. I have multiple accounts with amounts that I wouldn't cry if they went to zero. I trade them together, and if AMP decides they hate me because I am too tall, it doesn't change my ability to trade until that issue is resolved. Edit: flagged??? huh...
datalopers 4y ago
SBF is no longer a member of the three-comma club. I can finally rest.
- AznHisoka 4y ago
  Maybe he cashed out a lot before this?
  - firekvz 4y ago
    he definetly did, where do you think the insolvency comes from ?
- CPLX 4y ago
  A lot of people lost a whole lot of money. Where do you think it went?
  - datalopers 4y ago
    Same place a number goes when you press backspace in your editor.
  - klyrs 4y ago
    From what I read, CZ liquidated his holdings of FTX's primary currency, which crashed its value. If that's the case, the "value" was due to scarcity. This "money" isn't gold-backed; it didn't "go" anywhere. It was a balloon. It deflated.
  - WoahNoun 4y ago
    There was no real money to begin with. If I create 1,000 tokens out of thin air and sell one to a friend for $1,000, I don't suddenly have $999,000 in net worth despite what crypto people try to claim.
  - paulusthe 4y ago
    It went to the exchanges. They pumped the coins on the way up - Google willybot - which sucked retail money in. The smart exchange fraudsters cashed out on the way up. The uber-greedy exchange fraudsters held on thinking they could get more $$ if the price goes up, only to see that the price didn't go up, causing balance sheet holes which result in their demise a la ftx
chasd00 4y ago
I'm just a fly on the wall with all the crypto drama but i thought Binance bailing out FTX was mainly to protect Binance and not just good will. I guess Binance figures they can survive without them.
- adastra22 4y ago
  I thought it was just so they could get due diligence info on their chief competitor and then back out.
  - cuteboy19 4y ago
    The exposed their main competitors lies about solvency without spending anything. I fully expect CZ to say that the hole was too big and that customers are now suffering due to FTXs recklessness
  - make3 4y ago
    yeah didn't they precipitate the crash by posting that they were doing thing similar to Luna, and then once the thing is crashing they say they'll buy it, and now they might not even buy it, I'm sure there's a lot of shit going on lol
    - viscanti 4y ago
      More than that. Their first move was cutting trading fees, which made FTT worthless (it was useful before for traders to use to reduce their trading fees but with free trading on Binance that became worthless). After Binance made FTT worthless, they then started to sell theirs off (knowing that it's worthless because it's a race to low/free fees). A bank run would have been inevitable anyway as large traders would rationally sell their FTT and move over to Binance for free trading (they pay zero fees and can pocket the money they can get from their FTT). CZ's tweet just accelerated things.
      - shawabawa3 4y ago
        Cutting trading fees did not make FTT worthless It might have won over some volume but it's not like FTXs volume dropped to zero overnight because of it
yieldcrv 4y ago
Reminder, what we like about crypto is no bailouts Just pure Machiavellian outcomes
- chrischattin 4y ago
  Bailouts ARE a Machiavellian outcome.
  - yieldcrv 4y ago
    Ok I’m looking for a word or idiom where mismanaged businesses without money fail, no matter how big they are or how many other businesses that failure will pull down Leaving only more resilient ones in their wake Let me know if you know a word for that
    - ksaxena 4y ago
      Darwinian
      - yieldcrv 4y ago
        They aren’t synonymous?
    - samizdis 4y ago
      Survival of the fittest, perhaps?
    - leganthropane 4y ago
      Machiavellian is such an odd word. People use it to mean mendacious, cunning, self-serving...but Machiavelli himself spent his later years in political exile. His seminal work reads like a groveling apology masquerading as advice to the politicians who had banished him. IMO, the word works fine for describing someone who gambled on their own dubious advice and lost. Even moreso if the loss stems from a cyclical event, like the boom/bust nature of financial institutions which let the Medicis buy their way to political power in the 1400s.
    - 4y ago
cbtacy 4y ago
This would like result in a 5 year "nuclear winter" for crypto VC FYI.
- danrocks 4y ago
  Let's make it 100 years.
- pjc50 4y ago
  Huge losses haven't stopped anyone investing in crypto so far.
  - piva00 4y ago
    When money was cheap and easy dumb investors could throw it around. Not the case anymore...
- ssnistfajen 4y ago
  A winter for sure, but likely shorter than 5 assuming overall economy isn't going to be stuck in a depression. Crypto winters have been getting shorter and shorter thanks to increased awareness and increased participation.
  - danrocks 4y ago
    1) Big assumption there about the economy not getting stuck in a depression. We're still raising interest rates. It's just the beginning. 2) Crypto winters have become shorter? Sure. But have also become more extreme, with deeper and more sudden losses. Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset.
    - ssnistfajen 4y ago
      >Big assumption there about the economy not getting stuck in a depression. The political cost of being in a depression is far too severe for those in power to not prevent it. They are armed with far more tools and knowledge today than 1929. This will be merely yet another recession in a long history of human society oscillations. >Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset. I do agree with that, but it's a result of crypto being played by the same people who played tech stocks and fair weather assets. The OG evangelists who saw it represent the antithesis of the current world order have pretty much disappeared as crypto picked up attention from VCs.
whatifswow 4y ago
tittiebitty 4y ago
best move now is for coinbase to pick up the rest of FTX US operations
deleted 4y ago
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jonpurdy 4y ago
Question from someone who hasn't been involved in crypto since baby was born in 2021: We all know that this can happen to centralized exchanges and using a DEX will protect your assets (the ones that don't go to $0 on their own like LUNA and FTT). In the past, trading was always much more expensive due to the blockchain overhead compared to trading on a CEX, not to mention liquidity problems with smaller alts and DEXs. Is this still the case? Do folks day trade using DEXs for small amounts or are they still limited to longer-term trading due to the overhead?
- wmf 4y ago
  AFAIK faster and cheaper DEXes keep coming out every few months but not on Ethereum; they're either on L2s or faster chains like Avalanche.
- unicornmama 4y ago
  AFAIK based on the data from coinmarketcap virtually all trading happens on CEX. Someone prove me wrong.
  - pa7x1 4y ago
    https://medium.com/@Ignas_defi_research/2022-state-of-defi-price-performance-tvl-trading-volume-development-activity-and-more-ad928813a070 https://medium.com/@Ignas_defi_research/2022-state-of-defi-p... DEX volume seems to be around 10-20% of CEX volume. But CEX is easier to overstate as it's cheap, sometimes commission-less. While DEX volume always carries a cost.
- miohtama 4y ago
  DEX market share as a volume was 25% - 33% of spot market during the peak. It might have taken a hit since Terra went down, though. For some trading pair likes ETH/USD it is actually cheaper to trade on DEXes (Uniswap v3) where you get 0.05% fee as opposite to Coinbase that charges you 0.6%. The events like FTX should prod the markets more towards DEXes. Also now there are futures DEXes available like dYdX, Perp.fi and others making it possible for more professinal trades to utilise DEXes.
bob234 4y ago
Animats 4y ago
So due diligence showed how big a hole FTX is in. No surprise. As I said yesterday, about 50% of announce M&A deals fall through. This deal looked unlikely to succeed. If FTX was out of cash but had a lot of money tied up in things that are slow to sell, like factories or real estate, a merger would make sense. But this is crypto. No big tangible assets. If FTX is well into negative territory, there's no hope. Next stop for FTX is bankruptcy. Does FTX.us have any exposure to FTX.intl? They're not supposed to. But do they? The SEC and CFTC are now investigating to find out.[1] Bloomberg: "US financial regulators are investigating whether beleaguered crypto-exchange FTX.com properly handled customer funds, as well as its relationship with other parts of Sam Bankman-Fried’s crypto empire..." In other crypto collapses, we've seen "assets" that were actually loans to affiliated parties. Loans that became worthless. At FTX's web site, "https://ftx.com/intl https://ftx.com/intl", there is no mention of any problems. Typical. [1] https://www.bloomberg.com/news/articles/2022-11-09/us-probes-ftx-empire-over-handling-of-client-funds-and-lending https://www.bloomberg.com/news/articles/2022-11-09/us-probes...
- eddsh1994 4y ago
  How can DD find a hole within a day of announcing? It seems too fast. To me, I assume it's CZ getting FTX to explode and then be the firm everyone comes to without having to acquire them. Edit: Fair enough, thanks for the input repliers! I thought DD was a much slower event to prepare this information and get legal stuff set up with NDAs etc..
  - quickthrowman 4y ago
    > How can DD find a hole within a day of announcing? It seems too fast. CZ: “Can I see your balance sheet? Oh, it says here you have $10B in assets and $16B in liabilities. Welp, good luck finding a buyer, I withdraw my LOI to purchase FTX”
  - sottol 4y ago
    We'll see, but I think you can ask for some topline numbers and evaluate if it's even worth digging deeper. I'm sure this is not about accounting for a million, or two, or even a hundred.
deleted 4y ago
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ahmedalsudani 4y ago
Oops, should have checked new. There's a previous submission from a different source: https://news.ycombinator.com/item?id=33535015 https://news.ycombinator.com/item?id=33535015
- dang 4y ago
  The main discussion was at https://news.ycombinator.com/item?id=33533088 https://news.ycombinator.com/item?id=33533088 but since the bloomberg.com article has more background, I think we can merge those comments hither. Thanks!
nowherebeen 4y ago
https://archive.is/yXMXm https://archive.is/yXMXm
yashg 4y ago
When numbers in billions of $ are mentioned with regards to these crypto exchanges, is there really that much actual money at stake or is that the imagined value of all the magic tokens that are supposedly traded on these exchanges?
- Lionga 4y ago
  It is all just magic tokens valued at a 10 to 100 times inflated value of crypto internal leverage.
- mumbisChungo 4y ago
  volume is disproportionately in 1:1 USD stablecoins, bitcoin, and ethereum. you can sort the landing page here by 24H volume for a quick glance, or you can check the exchanges tab for more detail: https://www.coingecko.com/ https://www.coingecko.com/
  - londons_explore 4y ago
    But there are large questions over how 1:1 those stablecoins really are...
    - mumbisChungo 4y ago
      This is the one I have used for years: https://www.centre.io/usdc-transparency https://www.centre.io/usdc-transparency
  - Lionga 4y ago
    If just 10% of the "1:1 USD stablecoins" where cashed out today their price would fall 99%. And bitcoin and ethereum are also just at a "value" that's inflated 10 to 100 times due to crypto internal leverage.
    - mumbisChungo 4y ago
      No, USDT and USDC are both backed on a 1:1 basis by banking custodians which are regularly audited.
benjaminwootton 4y ago
Say I buy some Bitcoin or ETH and send it to FTX. Do we now know that: A) FTX were not segregating those client funds; B) They were speculating with them after SBF said “not even invested in treasuries”; C) Seperately, they were leveraging up FTT on their balance sheet. FTT price fall seems to be the catalyst, but this shouldn’t impact segregated client funds unless they are also being used in funky ways, right? Surely one of the above is bad enough, but all 3 is an astounding abuse of trust no? I have defended Crypto and even dabbled in the industry for a while, but this is shocking to find one of the blue chip names losing client funds.
- NotYourLawyer 4y ago
  >I have defended Crypto and even dabbled in the industry for a while, but this is shocking to find one of the blue chip names losing client funds. Entertaining? Absolutely. Shocking? Not to anyone who’s been paying attention.
- Animats 4y ago
  There's FTX.intl and FTX.us. They're supposed to be separate. The SEC and the CFTC just started investigating how separate. FTX.us is either OK or some people are going to jail. Too soon to tell which.
  - darkteflon 4y ago
    There’s also an FTX Japan, although as far as I know it was wholly sold to a local buyer earlier this year. I had assumed they remained related only by brand. The FTX.intl insolvency makes me wonder whether they’ll be affected. Edit: FTX Japan has halted withdrawals too.
- kikokikokiko 4y ago
  Does anybody really find it surprising that a company that engaged in schemes that promised to "monetize" the deposits of clients, at rates 5 to 10 times larger than the current interest rates you can find in traditional vehicles, was a scam down to the core? The owner of said company was even boasting about how his products were PONZI SCHEMES. Anybody that "invested" in those stupid Defi magic beans deserve to lose it all, unfortunately.
sottol 4y ago
I assume interest rate climate and losses will start an outflow of money from crypto. I wonder how Tether will handle this. They seemed too big to fail but this is looking serious.
- Denniz 4y ago
  Good point. That is true for all Stablecoins. The question is, do they have the liquidity? Right now it is very very profitable for them. They can earn interest rates for free, without a high risk.
vasco 4y ago
So not long ago FTX was going to save Celsius, then balked. Now Binance was going to save FTX, then balked. When Binance needs saving, is that the end, or is there another turtle under these three turtles?
- TedDoesntTalk 4y ago
  Coin base?
- jwmoz 4y ago
  When the feds catch CZ which they inevitably will it will be truly over.
  - jcpham2 4y ago
    Pretty sure Binance was the first exchange to socialize the losses of a hack into an aidropped token to all users - which then allowed users of the exchange to gamble on the future on whether or not they’d be made whole. Feels like the origin story of BNB chain to me
    - rabf 4y ago
      That was Bitfinex, and honestly it was the best possible outcome. Far better than what ftx users are likely to get.
      - jcpham2 4y ago
        You are correct, my bad
    - richardknop 4y ago
      That was Bitfinex as far as I remember, exchange based in Hong Kong. They are the guys behind Tether which also many people think is not backed up by real assets.
      - jcpham2 4y ago
strangattractor 4y ago
This is like strapping yourself to a boat anchor as the boat sinks.
thetli8 4y ago
My understanding is that Binance can step in as a potential savior because Binance is safe themselves and the company doesn't fear a liquidity crisis themselves. But, their whole premise of consumer confidence is based off of SAFU[1] which seems to hold quite a bit of their own BNB coin[2]. Maybe I'm missing something but isn't Binance just insuring funds... with their own coins? (ie. what Alameda basically did with FTT tokens) 1. Couldn't Binance be subject to the same rundown FTX just experienced? / How could Binance realistically rescue FTX at all? 2. Was this offer ever serious? [1] https://academy.binance.com/en/glossary/secure-asset-fund-for-users https://academy.binance.com/en/glossary/secure-asset-fund-fo... [2] https://bscscan.com/address/0x4B16c5dE96EB2117bBE5fd171E4d203624B014aa https://bscscan.com/address/0x4B16c5dE96EB2117bBE5fd171E4d20...
- kikowi 4y ago
  Their premise is that they are not doing fractional reserves and actually have all user funds available at all times. SAFU is just an additional safeguard and was primarily created to compensate for hacks (it was used one time when Binance was hacked for $50M). IMO Binance has billions of their own cash reserves (not user funds), based on their activity in the last year (acquision of coinmarketcap for 0.4B, commiting $1B to boost crypto projects and companies etc.. this must be a fraction of their overall worth and in that case, $6B should also not be a huge issue, especially since they can get a lot of goodwill and millions of FTX users). Binance collects billions of dollars from fees every year and also get money from their external investments (e.g. Binance invested in FTX and sold their shares last year for $2B ($1.5B and $0.5B FTT)).
- Lionga 4y ago
  Your funds are SAFU, if not CZ will personally print even more BNB so he has enough funds, don't worry. Trust him bro.
  - cuteboy19 4y ago
    And if there is a hack he can just turn off the chain. It's foolproof
yieldcrv 4y ago
Brian Armstrong low key based in that interview: "We aren't engaged in complex financial arrangements with counterparties... that we own"
low_tech_love 4y ago
Whenever news like these are discussed here in HN I get flabbergasted by the amount of technical mumbo-jumbo you guys are able to throw around in the comments. It is genuinely impressive how much deep technical knowledge you have about this. I wonder if there is really no other place you could apply this? Like, what is the point of having all this deep technical knowledge about two hundred different fake coins (and their complex economic-engineering interplay) when there isn’t place in the real world even for the largest one?
- EVa5I7bHFq9mnYK 4y ago
  I once played a very sophisticated online mmporg ... the amount of information I possessed about all the skills and equipments dwarfs that of cryptobros) Let them play)
- GaryNumanVevo 4y ago
  Also, despite people having deep knowledge of these coins / cryptocurrencies, absolutely zero awareness of timeless financial scams.
- ouid 4y ago
  Put a pigeon in a box and hook up a lever to give a reward after a random amount of time has passed, and the pigeon will go absolutely fucking insane trying to figure it out.
- TomSwirly 4y ago
  People memorize the Bible and the Quran.
- deanCommie 4y ago
  I mean what you're describing is the central core of the grift. Complex sounding technical mumbo-jumbo delivered with supreme confidence and seeming internal consistency is how you convince the plebs to invest their life savings in various forms of crypto. 0.1% understand the original underlying technology 0.9% understands the applications possible to be built on top of it 99% are following the 1% and writing governmental and financial policy, and voting with their wallets. I wish I could say we will look back and shake our heads at it like we do today at Tulip Mania, but I suspect we're watching the birth and childhood of a new religion. Crypto isn't going anywhere for the rest of our lives, and just as we have to keep vigilantly fighting against Scientology permeating tax policy, or religion in general always attempting to undermine secular society, Crypto will continue to be a thorn in society for a long time.
peterweyand 4y ago
What are the risks for generalized financial contagion in the traditional sector? I understand that crypto has been a way for wealthy individuals to hide funds from taxation, so if a bunch of wealthy dweebs lose their shirts I don't particularly care. On the other hand, I don't want to see this sparking another housing crisis or currency/FX crisis.
- UncleEntity 4y ago
  Back in the dotcom bust pretty much everyone said “yeah, they knew the risks” and generally didn’t care about the losses. When the housing bubble collapsed you had millions of people who probably didn’t know the risks (because everyone with a voice was saying housing prices never go down) and politicians cared a whole lot. I’d say even if the whole crypto craze went bust overnight all you’d get is a collective shrug.
- adrr 4y ago
  Depends if Alameda goes down. They have billions of debt and we don't know who provided the capital. It could be traditional finance or it could be VTX. We just don't know yet.
Railsify 4y ago
How does this happen? Were they just stealing funds?
- kayamon 4y ago
  Yes. All banks do this. If everyone went to their bank tomorrow and asked for their money back you’d see the same thing.
  - Railsify 4y ago
    Was FTX within their rights to do this?
SilverBirch 4y ago
This is good news. The obvious suspicion was that Binance would bail out FTX to cover for the fact that Binance aren’t truly solvent themselves- in exactly the same way FTX did with other crypto projects earlier this year. We all know at this point FTX was underwater, so Binance stepping to take a big loss on it would’ve been a strong red flag.
- shapefrog 4y ago
  You might throw a years profit at it to restore confidence in the system and buy up market share. But making losers whole to the tune of 5/6/7/10 years of profits would be a massive red flag ...
dang 4y ago
A newer thread now has the top of the stack: We will not pursue the potential acquisition of FTX - https://news.ycombinator.com/item?id=33537821 https://news.ycombinator.com/item?id=33537821 - Nov 2022 (15 comments)

167 points by ahmedalsudani 4y ago

eddsh1994 4y ago

Makes sense, FTX are crumbling now and will move to Binance regardless

Obviously. The only reason for them sending that tweet yesterday is if they were never seriously considering going through with the deal in the first place.

janmo 4y ago

No surprise to me, we are talking about a hole of probably over $6b. That's a lot of money for an exchange whose reputation has now been destroyed.

alphabetting 4y ago

Probably good for Binance they're not taking on those toxic books but impact on overall crypto market could be severe.

zen21 4y ago

gjvc 4y ago

background on the FTX leadership here https://www.youtube.com/watch?v=VbDiWXFxqr8&t=2144s https://www.youtube.com/watch?v=VbDiWXFxqr8&t=2144s

zeven7 4y ago

Translation: CZ (Binance CEO) has had enough time to liquidate volatile assets and set up shorts.

mamonster 4y ago
Why is this being downvoted, shorting the book of an entity you are supposed to be bailing out / in talks with has multiple historical precedents. Amaranth and JPM off the top of my head for the last time it happened.
unmole 4y ago
Which counterparty would be willing to take the other side of that trade?
- yborg 4y ago
  This is crypto, there are plenty of retail 'to the moon' speculators that would be thrilled at the prospect of more sick gains. It's tulips all the way down.
  - unmole 4y ago
    FTT has thin liquidity and was already under significant selling pressure. It's highly unlikely Binance would have been able to build up a significant short position.
firekvz 4y ago
Noone taking the other side of that short. Is entirely fallacy/fantasy when people talks about shorting on crypto market. You can't win shorting actual crashes in unregulated markets, the only way u win shorting in crypto is that you were lucky to guess what a whale/org was doing at the same time so pretty much a russian roulette Marketmakers are not legit and all the movements are pretty much fabricated, its just not regulated and its obvious
- mamonster 4y ago
  Is it any better if he is able to liquidate longs based on the balance sheet that he would not have liquidated had he not seen the balance sheet?

simple-thoughts 4y ago

SBF was the “model citizen” to USA regulators. It’s hilarious how some USA loved this known ponzi schemer while actively fighting legitimate projects like LBRY.

m00dy 4y ago
- xiphias2 4y ago
  Was. I doubt he will honor his future pledges.
deleted 4y ago
[deleted]
JumpCrisscross 4y ago
> SBF was the “model citizen” to USA regulators He very much wasn't. Probes had been ongoing for months [1]. [1] https://www.bloomberg.com/news/articles/2022-11-09/us-probes-ftx-empire-over-handling-of-client-funds-and-lending?srnd=premium https://www.bloomberg.com/news/articles/2022-11-09/us-probes...

pearjuice 4y ago

Why would they even consider taking them over? They killed a competitor by declaring them as insolvent. The damage has been done. The user funds SBF siphoned out of FTX aren't coming back and doubt CZ is going to refund them out of pocket IF they take them over. The tech behind FTX is probably the same or worse than what Binance has. Customer acquisition happens anyway as the people still wanting to stay active in crypto will probably go to Binance.

johnvanommen 4y ago
I was thinking the same thing. This reminds me of 2008, when companies were trying to get "rescued", such as Lehman, but Lehman couldn't make a compelling argument why they were worth acquiring, once the accounting books were opened.
- deleted 4y ago
  [deleted]
- new2this 4y ago
  "Fools Gold" does a great job of documenting this contagion effect (among other things) during the 2008 crash. Highly recommend
  - johnvanommen 4y ago
    Thanks! I'll check it out.
firekvz 4y ago
PR They are the biggest exchange now, they gotta look like they care and tried to help so they can attract all the ones who need a new home You still dont get crypto dinamics, is not about the tech, is about how much money you can extract from people trusting you
- ddorian43 4y ago
  Pretty expensive PR. Just run some superbowl ads and name some stadiums.

djaouen 4y ago

This would (probably) be a mistake on CZ's part. Taking on FTX's customers would undoubtedly bring him more goodwill than letting its customers go down with the ship.

DistantCl3ric 4y ago
FTX customers have likely fled (those that can / could withdraw) to Binance already.
- dodgerdan 4y ago
  Transfers of cryptocurrency from FTX have been frozen since yesterday.
  - stri8ed 4y ago
    Do you have a source for this?
    - method_capital 4y ago
      yes. anybody who has ftx funds.
      - djbusby 4y ago
        *had
        yesBut00 4y ago
        [dead]
        ackbar03 4y ago
        Ouch
    - habibur 4y ago
      https://twitter.com/DeItaone/status/1590035367373086720 https://twitter.com/DeItaone/status/1590035367373086720

boojums 4y ago

Interesting to see how heavily Sam Bankman-Fried dontated in the recent midterm elections in the USA. He might run out of runway before those investments pay off. https://www.washingtonpost.com/politics/interactive/2022/top-election-donors-2022/ https://www.washingtonpost.com/politics/interactive/2022/top...

deleted 4y ago
[deleted]
deleted 4y ago
[deleted]
memish 4y ago
He was trying to get in on the Twitter deal too, for up to $5b. Elon was skeptical. Michael: Sam Bankman Fried is why I'm calling https://twitter.com/sbf_ftx/status/1514588820641128452 https://twitter.com/sbf_ftx/status/1514588820641128452 https://www.vox.com/platform/amp/recode/2021/3/20/22335209/sam-bank.man-fried-joe-biden-ftx-cryptocurrency-effective-altruism https://www.vox.com/platform/amp/recode/2021/3/20/22335209/s... https://ftx.us https://ftx.us Elon: ?? Elon: I'm backlogged with a mountain of critical work matters. ls this urgent? Michael: Wants 1-Sb. Serious about partner w/you. Same security you own Michael: Not urgent unless you want him to fly tomorrow. He has a window tomorrow then he's wed-Friday booked Michael: Could do $5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works it could get us $5bn equity in an hour Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network. Elon: ["disliked" "Could do $5bn ..."] Elon: So long as I don't have to have a laborious blockchain debate Elon: Strange that Orlando declined Elon: Please let him know that I would like to talk and understand why he declined Elon: Does Sam actually have $38 liquid? Michael: I think Sam has it yes. He actually said up to 10 at one point but in writing he said up to 5. He's into you. And he specifically said the blockchain piece is only if you liked it and not gonna push it. Orlando referred Sams interest to us and will be texting you to speak to say why he (Orlando) declined. We agree orlando needs to call you and explain given everything he said to us and you. Will make that happen We can push Sam to next week but I do believe you will like him. Ultra Genius and doer builder like your formula. Built FTX from scratch after MIT physics. Second to Bloomberg in donations to Biden campaign. https://danluu.com/elon-twitter-texts/#62 https://danluu.com/elon-twitter-texts/#62

hmate9 4y ago

The only likely outcome I can see is binance taking on just a part of the rumoured $6bn hole. For example covering deposits up to $100k (or whatever number) Earns goodwill and users while the size of the bill is smaller. Not sure how it would work from a legal standpoint but unfortunately 6 billion is too much (and I had a majority of my net worth in FTX as a trader)

Lionga 4y ago
- amanj41 4y ago
  the tone here is a little uncalled for.
  - etrautmann 4y ago
    agreed - I think there's a combo of schadenfreude and "I told you so" vibes from HN, where people have been generally skeptical throughout cryptocurrency's rise in popular mindshare.
    - orangepurple 4y ago
      I get the same feeling and shudder whenever HN has a new thread about password mangement systems. Most of the suggestions are super fragile and so many people give bad advice that will eventually result in collossal catastrophic data loss.
isthisthingon99 4y ago
> I had a majority of my net worth in FTX as a trader As a trader myself, this lesson is part of your risk management. I have multiple accounts with amounts that I wouldn't cry if they went to zero. I trade them together, and if AMP decides they hate me because I am too tall, it doesn't change my ability to trade until that issue is resolved. Edit: flagged??? huh...

datalopers 4y ago

SBF is no longer a member of the three-comma club. I can finally rest.

AznHisoka 4y ago
Maybe he cashed out a lot before this?
- firekvz 4y ago
  he definetly did, where do you think the insolvency comes from ?
CPLX 4y ago
A lot of people lost a whole lot of money. Where do you think it went?
- datalopers 4y ago
  Same place a number goes when you press backspace in your editor.
- klyrs 4y ago
  From what I read, CZ liquidated his holdings of FTX's primary currency, which crashed its value. If that's the case, the "value" was due to scarcity. This "money" isn't gold-backed; it didn't "go" anywhere. It was a balloon. It deflated.
- WoahNoun 4y ago
  There was no real money to begin with. If I create 1,000 tokens out of thin air and sell one to a friend for $1,000, I don't suddenly have $999,000 in net worth despite what crypto people try to claim.
- paulusthe 4y ago
  It went to the exchanges. They pumped the coins on the way up - Google willybot - which sucked retail money in. The smart exchange fraudsters cashed out on the way up. The uber-greedy exchange fraudsters held on thinking they could get more $$ if the price goes up, only to see that the price didn't go up, causing balance sheet holes which result in their demise a la ftx

chasd00 4y ago

I'm just a fly on the wall with all the crypto drama but i thought Binance bailing out FTX was mainly to protect Binance and not just good will. I guess Binance figures they can survive without them.

adastra22 4y ago
I thought it was just so they could get due diligence info on their chief competitor and then back out.
- cuteboy19 4y ago
  The exposed their main competitors lies about solvency without spending anything. I fully expect CZ to say that the hole was too big and that customers are now suffering due to FTXs recklessness
- make3 4y ago
  yeah didn't they precipitate the crash by posting that they were doing thing similar to Luna, and then once the thing is crashing they say they'll buy it, and now they might not even buy it, I'm sure there's a lot of shit going on lol
  - viscanti 4y ago
    More than that. Their first move was cutting trading fees, which made FTT worthless (it was useful before for traders to use to reduce their trading fees but with free trading on Binance that became worthless). After Binance made FTT worthless, they then started to sell theirs off (knowing that it's worthless because it's a race to low/free fees). A bank run would have been inevitable anyway as large traders would rationally sell their FTT and move over to Binance for free trading (they pay zero fees and can pocket the money they can get from their FTT). CZ's tweet just accelerated things.
    - shawabawa3 4y ago
      Cutting trading fees did not make FTT worthless It might have won over some volume but it's not like FTXs volume dropped to zero overnight because of it

yieldcrv 4y ago

Reminder, what we like about crypto is no bailouts Just pure Machiavellian outcomes

chrischattin 4y ago
Bailouts ARE a Machiavellian outcome.
- yieldcrv 4y ago
  Ok I’m looking for a word or idiom where mismanaged businesses without money fail, no matter how big they are or how many other businesses that failure will pull down Leaving only more resilient ones in their wake Let me know if you know a word for that
  - ksaxena 4y ago
    Darwinian
    - yieldcrv 4y ago
      They aren’t synonymous?
  - samizdis 4y ago
    Survival of the fittest, perhaps?
  - leganthropane 4y ago
    Machiavellian is such an odd word. People use it to mean mendacious, cunning, self-serving...but Machiavelli himself spent his later years in political exile. His seminal work reads like a groveling apology masquerading as advice to the politicians who had banished him. IMO, the word works fine for describing someone who gambled on their own dubious advice and lost. Even moreso if the loss stems from a cyclical event, like the boom/bust nature of financial institutions which let the Medicis buy their way to political power in the 1400s.
  - 4y ago

cbtacy 4y ago

This would like result in a 5 year "nuclear winter" for crypto VC FYI.

danrocks 4y ago
Let's make it 100 years.
pjc50 4y ago
Huge losses haven't stopped anyone investing in crypto so far.
- piva00 4y ago
  When money was cheap and easy dumb investors could throw it around. Not the case anymore...
ssnistfajen 4y ago
A winter for sure, but likely shorter than 5 assuming overall economy isn't going to be stuck in a depression. Crypto winters have been getting shorter and shorter thanks to increased awareness and increased participation.
- danrocks 4y ago
  1) Big assumption there about the economy not getting stuck in a depression. We're still raising interest rates. It's just the beginning. 2) Crypto winters have become shorter? Sure. But have also become more extreme, with deeper and more sudden losses. Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset.
  - ssnistfajen 4y ago
    >Big assumption there about the economy not getting stuck in a depression. The political cost of being in a depression is far too severe for those in power to not prevent it. They are armed with far more tools and knowledge today than 1929. This will be merely yet another recession in a long history of human society oscillations. >Cryptos seem to be: 1) a tech stock 2) a "fair weather" asset. I do agree with that, but it's a result of crypto being played by the same people who played tech stocks and fair weather assets. The OG evangelists who saw it represent the antithesis of the current world order have pretty much disappeared as crypto picked up attention from VCs.

whatifswow 4y ago

tittiebitty 4y ago

best move now is for coinbase to pick up the rest of FTX US operations

deleted 4y ago

[deleted]

jonpurdy 4y ago

Question from someone who hasn't been involved in crypto since baby was born in 2021: We all know that this can happen to centralized exchanges and using a DEX will protect your assets (the ones that don't go to $0 on their own like LUNA and FTT). In the past, trading was always much more expensive due to the blockchain overhead compared to trading on a CEX, not to mention liquidity problems with smaller alts and DEXs. Is this still the case? Do folks day trade using DEXs for small amounts or are they still limited to longer-term trading due to the overhead?

wmf 4y ago
AFAIK faster and cheaper DEXes keep coming out every few months but not on Ethereum; they're either on L2s or faster chains like Avalanche.
unicornmama 4y ago
AFAIK based on the data from coinmarketcap virtually all trading happens on CEX. Someone prove me wrong.
- pa7x1 4y ago
  https://medium.com/@Ignas_defi_research/2022-state-of-defi-price-performance-tvl-trading-volume-development-activity-and-more-ad928813a070 https://medium.com/@Ignas_defi_research/2022-state-of-defi-p... DEX volume seems to be around 10-20% of CEX volume. But CEX is easier to overstate as it's cheap, sometimes commission-less. While DEX volume always carries a cost.
miohtama 4y ago
DEX market share as a volume was 25% - 33% of spot market during the peak. It might have taken a hit since Terra went down, though. For some trading pair likes ETH/USD it is actually cheaper to trade on DEXes (Uniswap v3) where you get 0.05% fee as opposite to Coinbase that charges you 0.6%. The events like FTX should prod the markets more towards DEXes. Also now there are futures DEXes available like dYdX, Perp.fi and others making it possible for more professinal trades to utilise DEXes.

bob234 4y ago

Animats 4y ago

So due diligence showed how big a hole FTX is in. No surprise. As I said yesterday, about 50% of announce M&A deals fall through. This deal looked unlikely to succeed. If FTX was out of cash but had a lot of money tied up in things that are slow to sell, like factories or real estate, a merger would make sense. But this is crypto. No big tangible assets. If FTX is well into negative territory, there's no hope. Next stop for FTX is bankruptcy. Does FTX.us have any exposure to FTX.intl? They're not supposed to. But do they? The SEC and CFTC are now investigating to find out.[1] Bloomberg: "US financial regulators are investigating whether beleaguered crypto-exchange FTX.com properly handled customer funds, as well as its relationship with other parts of Sam Bankman-Fried’s crypto empire..." In other crypto collapses, we've seen "assets" that were actually loans to affiliated parties. Loans that became worthless. At FTX's web site, "https://ftx.com/intl https://ftx.com/intl", there is no mention of any problems. Typical. [1] https://www.bloomberg.com/news/articles/2022-11-09/us-probes-ftx-empire-over-handling-of-client-funds-and-lending https://www.bloomberg.com/news/articles/2022-11-09/us-probes...

eddsh1994 4y ago
How can DD find a hole within a day of announcing? It seems too fast. To me, I assume it's CZ getting FTX to explode and then be the firm everyone comes to without having to acquire them. Edit: Fair enough, thanks for the input repliers! I thought DD was a much slower event to prepare this information and get legal stuff set up with NDAs etc..
- quickthrowman 4y ago
  > How can DD find a hole within a day of announcing? It seems too fast. CZ: “Can I see your balance sheet? Oh, it says here you have $10B in assets and $16B in liabilities. Welp, good luck finding a buyer, I withdraw my LOI to purchase FTX”
- sottol 4y ago
  We'll see, but I think you can ask for some topline numbers and evaluate if it's even worth digging deeper. I'm sure this is not about accounting for a million, or two, or even a hundred.

deleted 4y ago

[deleted]

ahmedalsudani 4y ago

Oops, should have checked new. There's a previous submission from a different source: https://news.ycombinator.com/item?id=33535015 https://news.ycombinator.com/item?id=33535015

dang 4y ago
The main discussion was at https://news.ycombinator.com/item?id=33533088 https://news.ycombinator.com/item?id=33533088 but since the bloomberg.com article has more background, I think we can merge those comments hither. Thanks!

nowherebeen 4y ago

https://archive.is/yXMXm https://archive.is/yXMXm

yashg 4y ago

When numbers in billions of $ are mentioned with regards to these crypto exchanges, is there really that much actual money at stake or is that the imagined value of all the magic tokens that are supposedly traded on these exchanges?

Lionga 4y ago
It is all just magic tokens valued at a 10 to 100 times inflated value of crypto internal leverage.
mumbisChungo 4y ago
volume is disproportionately in 1:1 USD stablecoins, bitcoin, and ethereum. you can sort the landing page here by 24H volume for a quick glance, or you can check the exchanges tab for more detail: https://www.coingecko.com/ https://www.coingecko.com/
- londons_explore 4y ago
  But there are large questions over how 1:1 those stablecoins really are...
  - mumbisChungo 4y ago
    This is the one I have used for years: https://www.centre.io/usdc-transparency https://www.centre.io/usdc-transparency
- Lionga 4y ago
  If just 10% of the "1:1 USD stablecoins" where cashed out today their price would fall 99%. And bitcoin and ethereum are also just at a "value" that's inflated 10 to 100 times due to crypto internal leverage.
  - mumbisChungo 4y ago
    No, USDT and USDC are both backed on a 1:1 basis by banking custodians which are regularly audited.

benjaminwootton 4y ago

Say I buy some Bitcoin or ETH and send it to FTX. Do we now know that: A) FTX were not segregating those client funds; B) They were speculating with them after SBF said “not even invested in treasuries”; C) Seperately, they were leveraging up FTT on their balance sheet. FTT price fall seems to be the catalyst, but this shouldn’t impact segregated client funds unless they are also being used in funky ways, right? Surely one of the above is bad enough, but all 3 is an astounding abuse of trust no? I have defended Crypto and even dabbled in the industry for a while, but this is shocking to find one of the blue chip names losing client funds.

NotYourLawyer 4y ago
>I have defended Crypto and even dabbled in the industry for a while, but this is shocking to find one of the blue chip names losing client funds. Entertaining? Absolutely. Shocking? Not to anyone who’s been paying attention.
Animats 4y ago
There's FTX.intl and FTX.us. They're supposed to be separate. The SEC and the CFTC just started investigating how separate. FTX.us is either OK or some people are going to jail. Too soon to tell which.
- darkteflon 4y ago
  There’s also an FTX Japan, although as far as I know it was wholly sold to a local buyer earlier this year. I had assumed they remained related only by brand. The FTX.intl insolvency makes me wonder whether they’ll be affected. Edit: FTX Japan has halted withdrawals too.
kikokikokiko 4y ago
Does anybody really find it surprising that a company that engaged in schemes that promised to "monetize" the deposits of clients, at rates 5 to 10 times larger than the current interest rates you can find in traditional vehicles, was a scam down to the core? The owner of said company was even boasting about how his products were PONZI SCHEMES. Anybody that "invested" in those stupid Defi magic beans deserve to lose it all, unfortunately.

sottol 4y ago

I assume interest rate climate and losses will start an outflow of money from crypto. I wonder how Tether will handle this. They seemed too big to fail but this is looking serious.

Denniz 4y ago
Good point. That is true for all Stablecoins. The question is, do they have the liquidity? Right now it is very very profitable for them. They can earn interest rates for free, without a high risk.

vasco 4y ago

So not long ago FTX was going to save Celsius, then balked. Now Binance was going to save FTX, then balked. When Binance needs saving, is that the end, or is there another turtle under these three turtles?

TedDoesntTalk 4y ago
Coin base?
jwmoz 4y ago
When the feds catch CZ which they inevitably will it will be truly over.
- jcpham2 4y ago
  Pretty sure Binance was the first exchange to socialize the losses of a hack into an aidropped token to all users - which then allowed users of the exchange to gamble on the future on whether or not they’d be made whole. Feels like the origin story of BNB chain to me
  - rabf 4y ago
    That was Bitfinex, and honestly it was the best possible outcome. Far better than what ftx users are likely to get.
    - jcpham2 4y ago
      You are correct, my bad
  - richardknop 4y ago
    That was Bitfinex as far as I remember, exchange based in Hong Kong. They are the guys behind Tether which also many people think is not backed up by real assets.
    - jcpham2 4y ago

strangattractor 4y ago

This is like strapping yourself to a boat anchor as the boat sinks.

thetli8 4y ago

My understanding is that Binance can step in as a potential savior because Binance is safe themselves and the company doesn't fear a liquidity crisis themselves. But, their whole premise of consumer confidence is based off of SAFU[1] which seems to hold quite a bit of their own BNB coin[2]. Maybe I'm missing something but isn't Binance just insuring funds... with their own coins? (ie. what Alameda basically did with FTT tokens) 1. Couldn't Binance be subject to the same rundown FTX just experienced? / How could Binance realistically rescue FTX at all? 2. Was this offer ever serious? [1] https://academy.binance.com/en/glossary/secure-asset-fund-for-users https://academy.binance.com/en/glossary/secure-asset-fund-fo... [2] https://bscscan.com/address/0x4B16c5dE96EB2117bBE5fd171E4d203624B014aa https://bscscan.com/address/0x4B16c5dE96EB2117bBE5fd171E4d20...

kikowi 4y ago
Their premise is that they are not doing fractional reserves and actually have all user funds available at all times. SAFU is just an additional safeguard and was primarily created to compensate for hacks (it was used one time when Binance was hacked for $50M). IMO Binance has billions of their own cash reserves (not user funds), based on their activity in the last year (acquision of coinmarketcap for 0.4B, commiting $1B to boost crypto projects and companies etc.. this must be a fraction of their overall worth and in that case, $6B should also not be a huge issue, especially since they can get a lot of goodwill and millions of FTX users). Binance collects billions of dollars from fees every year and also get money from their external investments (e.g. Binance invested in FTX and sold their shares last year for $2B ($1.5B and $0.5B FTT)).
Lionga 4y ago
Your funds are SAFU, if not CZ will personally print even more BNB so he has enough funds, don't worry. Trust him bro.
- cuteboy19 4y ago
  And if there is a hack he can just turn off the chain. It's foolproof

yieldcrv 4y ago

Brian Armstrong low key based in that interview: "We aren't engaged in complex financial arrangements with counterparties... that we own"

low_tech_love 4y ago

Whenever news like these are discussed here in HN I get flabbergasted by the amount of technical mumbo-jumbo you guys are able to throw around in the comments. It is genuinely impressive how much deep technical knowledge you have about this. I wonder if there is really no other place you could apply this? Like, what is the point of having all this deep technical knowledge about two hundred different fake coins (and their complex economic-engineering interplay) when there isn’t place in the real world even for the largest one?

EVa5I7bHFq9mnYK 4y ago
I once played a very sophisticated online mmporg ... the amount of information I possessed about all the skills and equipments dwarfs that of cryptobros) Let them play)
GaryNumanVevo 4y ago
Also, despite people having deep knowledge of these coins / cryptocurrencies, absolutely zero awareness of timeless financial scams.
ouid 4y ago
Put a pigeon in a box and hook up a lever to give a reward after a random amount of time has passed, and the pigeon will go absolutely fucking insane trying to figure it out.
TomSwirly 4y ago
People memorize the Bible and the Quran.
deanCommie 4y ago
I mean what you're describing is the central core of the grift. Complex sounding technical mumbo-jumbo delivered with supreme confidence and seeming internal consistency is how you convince the plebs to invest their life savings in various forms of crypto. 0.1% understand the original underlying technology 0.9% understands the applications possible to be built on top of it 99% are following the 1% and writing governmental and financial policy, and voting with their wallets. I wish I could say we will look back and shake our heads at it like we do today at Tulip Mania, but I suspect we're watching the birth and childhood of a new religion. Crypto isn't going anywhere for the rest of our lives, and just as we have to keep vigilantly fighting against Scientology permeating tax policy, or religion in general always attempting to undermine secular society, Crypto will continue to be a thorn in society for a long time.

peterweyand 4y ago

What are the risks for generalized financial contagion in the traditional sector? I understand that crypto has been a way for wealthy individuals to hide funds from taxation, so if a bunch of wealthy dweebs lose their shirts I don't particularly care. On the other hand, I don't want to see this sparking another housing crisis or currency/FX crisis.

UncleEntity 4y ago
Back in the dotcom bust pretty much everyone said “yeah, they knew the risks” and generally didn’t care about the losses. When the housing bubble collapsed you had millions of people who probably didn’t know the risks (because everyone with a voice was saying housing prices never go down) and politicians cared a whole lot. I’d say even if the whole crypto craze went bust overnight all you’d get is a collective shrug.
adrr 4y ago
Depends if Alameda goes down. They have billions of debt and we don't know who provided the capital. It could be traditional finance or it could be VTX. We just don't know yet.

Railsify 4y ago

How does this happen? Were they just stealing funds?

kayamon 4y ago
Yes. All banks do this. If everyone went to their bank tomorrow and asked for their money back you’d see the same thing.
- Railsify 4y ago
  Was FTX within their rights to do this?

SilverBirch 4y ago

This is good news. The obvious suspicion was that Binance would bail out FTX to cover for the fact that Binance aren’t truly solvent themselves- in exactly the same way FTX did with other crypto projects earlier this year. We all know at this point FTX was underwater, so Binance stepping to take a big loss on it would’ve been a strong red flag.

shapefrog 4y ago
You might throw a years profit at it to restore confidence in the system and buy up market share. But making losers whole to the tune of 5/6/7/10 years of profits would be a massive red flag ...

dang 4y ago

A newer thread now has the top of the stack: We will not pursue the potential acquisition of FTX - https://news.ycombinator.com/item?id=33537821 https://news.ycombinator.com/item?id=33537821 - Nov 2022 (15 comments)