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We will not pursue the potential acquisition of FTX
- alexk307 4y agoMaybe people will finally get some sense and stop storing their wealth in digital currency that is backed by absolutely nothing. I think a lot of dominoes are about to fall in the crypto world
- sicp-enjoyer 4y agoAn exchange explodes almost every year. I doubt anything substantial has changed. In fact, binance looks better than ever.
- sgt101 4y agoWell, absent the implosion of general confidence in crypto and the likely hawkish reaction of regulators - I agree.
- sicp-enjoyer 4y agoLooking like I am wrong on this one, as the media coverage grows.
- Mistletoe 4y agoWhat backs this? https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Might of USA and all that? Yes I’ve heard all that before. Rome, France, England… https://en.wikipedia.org/wiki/Debasement https://en.wikipedia.org/wiki/Debasement https://en.wikipedia.org/wiki/Assignat https://en.wikipedia.org/wiki/Assignat https://en.wikipedia.org/wiki/The_Great_Debasement https://en.wikipedia.org/wiki/The_Great_Debasement History is more on the side of it happening than not. “The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” -Satoshi Nakamoto
- thr0wawayf00 4y ago> History is more on the side of it happening than not. Is this true? Of all the years that various countries have used traditional fiat currency, has debasement happened more years than it hasn't? I don't think so but I'm not certain. Obviously, nobody can predict the future here, and history tells us that all empires come to an end at some point. But we're watching crypto speed-run through all of the issues that the American banking system had in the Free Banking era leading up to the creation of the Fed. Operating in this trustless crypto system still makes it possible for people in control to do stupid things which threaten the viability of the entire system. Personally, I think cases like this prove that wealth concentration in the hands of the few leads to these situations. It's a not a government problem, it's a concentration of wealth and power problem. Individuals shouldn't have this much money or power to act so recklessly, but we accept the outcome as a consequence of our winner-take-all culture.
- jdasdf 4y ago>Is this true? Of all the years that various countries have used traditional fiat currency, has debasement happened more years than it hasn't? I don't think so but I'm not certain. Do you know of any currency over the past 200 years that has suffered deflation throughout that period? I don't mean "occasionally has one year with deflation", I mean, the real value of 1 unit of that currency 200 years ago was less than what it is today.
- thr0wawayf00 4y agoCertainly major currencies have experienced periods of deflation (i.e. the Great Depression, the Great Recession, etc.). But deflation is a sign of weakening economy as well. There's an obsession with inflation, but the reality is that some inflation is inevitable in a growing economy as demand outpaces supply. Economists agree pretty consistently on that.
- jdasdf 4y agoI want to be very clear here, because I believe you're saying what you are saying because you have been taught that way, and because the mainstream media and general economic literature seem to hold that view, and so you, in good faith, are merely repeating it. You are wrong. The economist that agree with that view are also wrong, or they are biased by conflicts of interest. The central banks that support and propagate that view, have a significant conflict of interest as well. I heavily recommend you consider the incentives of the people teaching that view, and that you re-think from the most elementary of economic principles how exactly that would work. There is no long term benefit to monetary inflation. I cannot repeat this enough, monetary inflation, just like monetary deflation, is a distortion on the market, and like any other distortions on the market, it has a net negative expected value. Of course this negative expected value is distributed throughout the entire economy, whereas the benefits are concentrated on one entity, the issuer of the currency, which is the central bank and the state by association.
- nightski 4y agoDo you typically invest all of your wealth in one thing? Because for most of us I imagine that is not the case.
- scottiebarnes 4y agoThe Bitcoin protocol and network continues to operate exactly as expected. Here, people trusted a "bank" (an exchange acting like a bank), and got burned when the bank gambled and lost.
- sytelus 4y agoWithout exchanges like FTX or Coinbase, how should general public acquire crypto?
- rahen 4y agoBisq, of course. https://bisq.network https://bisq.network With a bit more manpower, they could make the UI more usable to the general public. I wish there was an iOS/Android version too.
- scottiebarnes 4y agoUse an exchange that publishes proof of reserves, and take custody of your crypto immediately.
- taormina 4y agoWhat was the point of decentralizing then?
- chromatin 4y agoCrypto? Who knows (or cares), but Bitcoin on the other hand has a robust P2P marketplace: Bisq https://bisq.network/ https://bisq.network/ Hodl Hodl https://hodlhodl.com/ https://hodlhodl.com/ Robosats https://learn.robosats.com/ https://learn.robosats.com/
- netheril96 4y agoIn a practical note, you can just use FTX and Binance to convert between USD and BTC. Withdraw them as soon as possible so your funds safe (as long as the BTC network)
- eddsh1994 4y agoThere’s a big peer to peer market, fwiw
- sytelus 4y agoAt present no major currency is backed by anything material but trust. USD, for example, is only viable because, at the deepest level, trust in it is enforced by US army. There are three major class of people who need digital currency: (1) who are super rich and won't care about putting their 1% of wealth for "diversify and forget", (2) who need to transfer money eyes off from governments, (3) people who need alternative to be manipulated away from US fed. As long as there exist a group of people needing digital currency there is an intrinsic value assigned to that currency.
- polrjoy 4y agoChinese yuan is economically backed by state owned companies that routinely sell essential goods and services at below market prices when they otherwise would rise too fast.
- ummonk 4y agoIf the crypto-bros had a militia as powerful as the US army then perhaps crypto would be worth something.
- CaptainZapp 4y ago> At present no major currency is backed by anything material but trust. While this is true in theory I trust the Swiss National Bank (in my case) significantly more than all those two bit shysters running crypto exchanges, while being extremely economical with the truth in all their communications.
- deleted 4y ago[deleted]
- jonstewart 4y ago> trust in it is enforced by the US army That's not exactly "absolutely nothing", to use the parent's phrase.
- sgt101 4y agoAt it's deepest level the $ is viable because of the consent of the people of the USA. The US Army isn't either capable of enforcing law in the USA or exercising influence out of the USA without that consent.
- buitreVirtual 4y agoStoring wealth means that you can get your wealth out later. In this case, people are just giving it away.
- bmitc 4y agoWhat happens to all the companies that FTX gobbled up? Was that just a ploy to try to stabilize the crypto space? Are those companies that were going defunct now going to go defunct again?
- deleted 4y ago[deleted]
- cwkoss 4y agoSounds like FTX wasn't willing to accept their lowball offer.
- RadixDLT 4y ago"Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient and we believe in time that outliers that misuse user funds will be weeded out by the free market."
- woeirua 4y agoHonestly, I think this is a really dumb move by Binance. They have taken a look under the hood, determined that FTX is bankrupt and then told everyone that is the case. Now there's going to be a widespread crypto panic that is going to cause other exchanges to collapse, and ultimately I expect Binance too will go down.
- infotogivenm 4y agoDumb? It would be shockingly out-of-character if Binance isn’t utilizing strategies to make fat, fat stacks here.
- rippercushions 4y agoDon't shoot the messenger: the actual problem is that FTX is insolvent, and that would have come to light sooner or later anyway.
- colinmhayes 4y agoBinance loans customer funds too… maybe not to themselves but it could still come crumbling down
- shawabawa3 4y agoBinance only loans customer funds if you opt in to a yield product (I hope, who knows)
- dorkwood 4y agoBinance is in a good position since they now know who to short.
- thepasswordis 4y agoI hope this kills the "disheveled awkward guy must actually be a genuis!" meme forever.
- landoftheice 4y ago
- googlryas 4y agoCan someone who has a clue tell me which happened? Did SBF/FTX break the law and will see jail time? Or did they break regulations and will receive a fine? Or is it just a tough cookies situation?
- ALittleLight 4y agoI hope so. Crypto scams hurt real people who put real money into this thing. Whatever "financial engineering" happened to vaporize X billion surely did more harm, and to many more people, than the average felony theft. There are so many laws, so many jurisdictions involved, and so much complexity and ambiguity that it seems basically certain laws were broken. So, we have broken laws and injured parties - seems correct to pursue criminal charges.
- paulpauper 4y agoIf I had a $1 for everyone who "called it" or "knew it"...
- vba616 4y agoThere is a transcript out there where Levine was talking to "SBF": "Matt: (27:13) I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good." https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm... Plenty of people read/listened to that. Perhaps nobody called it, but a lot of people aren't shocked. I think more people have "called" the collapse of Tether, but you know, eventually maybe they will be right?
- churchill 4y agoFrom reports I've heard floating around, Alameda was making >$1M per day doing their good ol' prop trading. If that's true (and that's a big if) then all SBF had to do was simply stick to the playbook. Do you prop trading on the side, help customers transact crypto via FTX. How do you even mess it up this badly?
- zomglings 4y agoBy getting greedy and treating FTX user funds as capital to deploy in the prop trading firm.
- churchill 4y agoI know, right? Soon the defi community will be calling for the own version of Glass-Steagall. What is old is new again, I guess. Knowing when to stop is genius.
- cinquemb 4y agoSome how a bunch of cex's behind the doors lending ops now is defi? Meanwhile, some how magic internet money (abracadabra.money), with people bitching about their bad debt on chain for months is still solvent, while ftx is dumpsterfire...
- ETH_start 4y agoThis is not DeFi. This is CeFi that caters to crypto. The major DeFi apps have had no problems this cycle. So perhaps not surprisingly, Uniswap - which is a preeminent DeFi app - now has deeper liquidity on many important trading pairs than the largest CEXes: https://uniswap.org/blog/uniswap-v3-dominance https://uniswap.org/blog/uniswap-v3-dominance
- mccorrinall 4y agoLol, yes on spot, but no one trades spot! The sweet leverage lays within the future market.
- scrlk 4y agoJust a PSA for any FTX users out there: please make sure you get details of your balances, deposits, withdrawals and trade history whilst the site is still up. You can download it as a CSV - I'd also take screenshots to be on the safe side. Save yourself a potential headache when you come to do your taxes down the line.
- jcpham2 4y ago^ This I had sparse information for the first OG BTC lending website and that information would’ve been super useful to all sorts of three letter authorities in retrospect. It was only $7500 at the time but that has slightly ballooned over the years
- deleted 4y ago[deleted]
- firefoxkekw 4y agoFTX in need of 8 billions according to the wsj. https://archive.ph/lXRAd https://archive.ph/lXRAd
- churchill 4y agoCharles Dickens words in, A Tale of Two Cities describes the cryptospace (at least for the past couple of months perfectly): It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way--in short, the period was so far like the present period that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only."
- Havoc 4y agoBit harsh after threatening to dump a huge amount of there token. What looked like a cunning strategem now just looks recklessly destructive
- kristjansson 4y agoIt seems clearer that FTX (and Alameda) ran off the cliff following the SOL/Anchor/Celsius debacle, and this (and Binance's involvement) is really only the splat of them hitting the ground.
- miohtama 4y agoA lot of key personnel quit during the last few months. They likely knew about the gap.
- twblalock 4y agoIt's amazing how all of this was based on personal credibility, and a single Tweet caused the death spiral to start. Wells Fargo isn't going to go out of business if the CEO of Bank of America insults it on Twitter. But even if it did, there is FDIC insurance for deposits, and nobody whose balances were under the insurance limits will lose a penny. FTX succeeded solely based on the reputation and personal credibility of its founder. One tweet from the CEO of a rival exchange and the whole thing came crashing down, taking a significant bite out of the value of many cryptocurrencies. So, even people who didn't have accounts at FTX are hurt by their assets losing value.
- deleted 4y ago[deleted]
- iKlsR 4y agoWhat tweet was that? Just seeing the news and trying to back track and get the context and leadup.
- papercrane 4y agoThis is the tweet that's been credited with starting all this. https://twitter.com/cz_binance/status/1589283421704290306 https://twitter.com/cz_binance/status/1589283421704290306 For context this tweet is referring to reports that a very large percentage of Alameda's holdings are FTT.
- deleted 4y ago[deleted]
- ipv6ipv4 4y agoRead the comments here. They are a lot like the LiveStreamFail subreddit - minor celebrity gossip. In that context, it’s not so surprising that a tweet had the effect it had.
- FormerBandmate 4y agoPeople don’t have their life savings wrapped up in Twitch streamers
- vgatherps 4y agoSbf could have printed money if he didn’t get so greedy. Maybe ftx would have been a top 10 exchange, instead of the third largest. Maybe alameda would have been a standard successful prop shop (though they were really struggling as trading got more competitive). He would have just been worth a few billion. But here we are now. I have a lot of friends on the inside and nobody knew at all. These friends knowingly kept money there confident the rumors weren’t true. I don’t know how much all of alameda knew but I don’t think the rank and-file knew the full story. And how do you even lose 8bn? Did alameda become a shop making leveraged long crypto bets? Using a shitcoin as collateral? I know they’re smarter than that, so what happened????
- chollida1 4y agoHow are you aware of how profitable alemedas trading was? I haven’t seen any data on it
- vgatherps 4y agoI worked at a crypto trading firm ~two years ago and became good friends with some people at both alameda and ftx during that time. I obviously don’t get to look at balance sheets or daily pnl or anything though so it’s all second hand and lagged.
- cedivad 4y agoThis is a great preview of what will happen in the wake of the Great Tether Collapse.
- doorman2 4y agoToo bad FTX is crashing. I don't know where else I can buy (put) options on crypto.
- babyshake 4y agoWhat is so strange about this and seems a bit fishy is how quickly this has all happened. How has Binance decided in about 24 hours to not do the deal? With other deals of this type, this process typically takes weeks if not months. Any insights?
- az226 4y agoCZ is playing 4D chess. FTX goes down and customers flee to Binance. Why pay for something that will be free? Or pay pennies on pennies on the dollar in bankruptcy court where nobody will be bidding except maybe with a 10-foot pole.
- cinntaile 4y agoI guess his new name will be Sam Fried.
- FrasiertheLion 4y agoBank Man Fried
- cuteboy19 4y agoCalled it! But it is very concerning that people think this is Binance fault somehow. They were not the ones who misused the funds. They were not the ones who over leveraged. All CZ did was to point out that Mr. Fried was not being honest
- MihaiSandor 4y agoIt sounds like this Web3 space is not decentralized at all. With those 4-5 crypto exchanges we cannot talk about bulding real businesses on those technologies, we are super early.
- randomsearch 4y agoSuper early, or... such systems tend to centralisation. There are very few successfully distributed systems I can think of. Bittorrent is on. I guess we could argue some markets in the economic sense are distributed. But in reality even both of those are part-centralised. Just turns out centralisation is usually more efficient and more convenient.
- yashg 4y agoWhy does a gambling den shutting down make so much noise? New ones will crop up in no time, probably from the same people.
- cuteboy19 4y agoFor most exchanges there are not many assets worth liquidating. The code and infra is standard, exchange A does not gain much from having exchange B's code. There are generally no special client relations you want to inherit. The offices are probably rented if not remote. The branding is valuable but adversarial to your own. Essentially an exchange can be summed up as total crypto assets minus total crypto liabilities. If that number is negative then the exchange is just gone, no point in buyout. The exception is binance which is basically AWS for crypto exchanges. https://cloud.binance.com/ https://cloud.binance.com/
- djaouen 4y agoWho cares lol
- LatteLazy 4y agoWhy pay to clean up the mess you made when you can just profit from it?
- oli5679 4y agoThis article is excellent. In general I would strongly recommend following Matt Levine (you can sign up to newsletter for free). It seems completely insane to use FTT token as collateral in the way FTX did. https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal?sref=htOHjx5Y https://www.bloomberg.com/opinion/articles/2022-11-09/bankma...
- cmckn 4y agoIs the “traditional” finance world this…incestuous? As a casual observer, the crypto ecosystem is almost entirely made up of folks printing Monopoly money, hyping it until it’s nominally worth something, loaning it to each other, and then gambling with the loans everyone took out.
- WJW 4y agoExtremely interesting to see how this will end. IIRC, Alameda research had a huge position in FTT which will presumably go under now.
- wellthatsawrap1 4y agoHopefully with jail time
- skippyboxedhero 4y agoSBF was one of the biggest political donors to the party in govt. He seems to have done all the shady stuff with Alameda (and said it was arms-length). And whilst Alameda's CEO said multiple things that would have got you in trouble with regulated products (saying they had $10bn in secret assets, making a public offer to buy FTT to manipulate the price)...this is crypto. I will make an exception to this: if they do not manage to make everyone whole or if there is public outrage that overwhelms his purchased politicians then it is over and multiple people will do time.
- JustLurking2022 4y agoHint: they're not making people whole, they don't have any assets with which to do so. That's why Binance ran the other direction.
- skippyboxedhero 4y agoRight, but if the choice is between SBF paying $5bn or going to jail for 30 years...then what? The facts aren't clear, but SBF has money outside FTX. Even if the loss was manageable, I suspect that Binance never intended to do any deal. They had absolutely no incentive to do so.
- shawabawa3 4y agoSBF has allegedly already filed for bankruptcy
- kra34 4y agohttps://www.bloomberg.com/news/articles/2022-11-09/binance-seen-likely-to-balk-at-ftx-deal-after-spotting-deep-hole https://www.bloomberg.com/news/articles/2022-11-09/binance-s... Estimated 6 Billion USD of a hole on the FTX side.
- adrr 4y agoDoes this number match the debt on Alameda's balance sheet?
- snowypine 4y agoWow, after only one day of due diligence.
- cannaceo 4y agoMy personal belief is that binance agreed with no intention to carry out the deal. CZ tapdanced on FTX's grave on twitter with critical comments yesterday. It is now unlikely that anyone else will want to step up to look at the deal.
- deleted 4y ago[deleted]
- ignoramous 4y agoI'd say Stripe but unlikely given their missed IPO window. Perhaps, Amazon, if they are feeling lucky?
- deleted 4y ago[deleted]
- JustLurking2022 4y agoIf Amazon wanted into crypto, they'd be big in crypto already. Why on earth would anyone touch goods this damaged?
- pearjuice 4y agoMy prediction: nobody will touch FTX and whatever is left of it will be in legal battles for years to come. Most will get auctioned to recoup the big fish making the most noise and maybe pennies after that for individual users which had funds on FTX. There is near zero value in an exchange-brand which took a reputational hit as big as this.
- masklinn 4y agoWhy would they want to take on what is reported to be net 6bn in liabilities?
- tommica 4y agoWhy waste money on something that is burning out anyways? Also conveniently mentioning "potential", they really want to make sure people understand that there never was anything binding going on.
- jefftk 4y agoIf FTX was at least close to solvent it could have been worth acquiring for the customer relationships.
- deleted 4y ago[deleted]
- 6d6b73 4y agoPonzi doesnt want to buy failed Ponzi? How surprising.
- giantrobot 4y agoGame recognizes game.
- seydor 4y agogood for binance customers.
- Animatronio 4y agoI don't think it very good for them either. They might feel secure for a couple more days, but the crash is surely coming for them as well.
- shapefrog 4y agoThe Wall Street Journal in its report quoted Binance as saying: "Our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help." Big if true
- redox99 4y agoThat quote comes literally from the tweet linked in this post
- Kukumber 4y agoWhy would they buy a government sponsored ponzi scheme Congrats on Binance for dodging the bullet
- secretsatan 4y agoIndependent ponzi schemes FTW!
- nrmitchi 4y agoReal answer? If the value of maintaining trust in the over-all ponzi environment is worth more to you than the lost value of the failed ponzi scheme, it might be worth buying the other ponzi scheme.
- foobiekr 4y agoThat is almost certainly the only reason they were even considering this.
- JumpCrisscross 4y agoIn the thick of it, illiquidity and insolvency blur. But not after the fact. As usual, Levine put it best: “the problem is not a timing mismatch, in which FTX’s customers asked for their cash back but FTX did not have enough ready cash because it had long-term but money-good loans out. The problem is that FTX took its customers’ money and traded it for a pile of magic beans, and now the beans are worthless and there’s a huge hole in the balance sheet” [1]. Before one is insolvent, illiquidity and insolvency are circular questions of asset value. After the fact, it shouldn’t take someone more than a few minutes to come to a conclusion. (There is a deeper discussion on the folly of accepting as collateral assets correlated with confidence in oneself. I recommend reading the article.) [1] https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal https://www.bloomberg.com/opinion/articles/2022-11-09/bankma...
- pseudosavant 4y agoFTX going under due to magic beans reminds me so much of Lehman Brothers going under in 2008. That time the magic beans were "mortgage backed securities" that somehow took low-quality debt, mixed it up with some magic, and out came high-quality debt, only it didn't.
- kristjansson 4y agoThe problem with MBS was always the zero-sum nature of the alchemy. They took 100 low-quality loans in, and returned 10 high-quality loans, 30 ok-ish loans, and 60 dog-shit loans. No harm no foul, until the dog-shit tranches were marketed as ok-ish, and alchemists believed they we're really creating gold.
- dragontamer 4y agoCDOs weren't the problem. You see, mixing together dog-shit __ONCE__ isn't that big of a deal. CDO-squared (CDOs of CDOs) were a problem. If you took those 60 dog-shit loans, mixed them together, and created 10 high quality loans out of them, problems began to occur. Even then, it wasn't the CDO-squared that collapsed the whole thing. It was the CDS: the "insurance" (so to speak) on the CDO-squared that made things go haywire.
- dang 4y agoPrevious related thread, now pushed down the stack: FTX’s financial black hole leaves Binance balking at rescue plan - https://news.ycombinator.com/item?id=33535161 https://news.ycombinator.com/item?id=33535161 - Nov 2022 (353 comments)
- mumbisChungo 4y agoThe silly thing is that FTX was a money printing machine. There was no reason to start gambling with user funds, aside from greed, hubris, and stupidity. Similarly, Sam's fund Alameda was delta-neutral until some time in 2021, which is something that also could have profitably continued in perpetuity, but they got greedy and started making directional bets with leverage.
- cellis 4y agoThere’s a Bloomberg article that goes over why this is a bit more nuanced than “gambling with customers funds”. In short, it’s either one or both of poor risk management ( margin traders can’t post collateral and the collateral they had was FTT which went to zero ) and black swan bank runs ( Binance CEO tweets about risky FTT causing bank run causing further drops ). In fact “gambling with customer funds” was by design. Coinbase, to their credit, lost business to the cexes and FTXs for not allowing derivative and defi lending / margin trading. So the customers should have known the fatalistic game they played. If you have a subscription I recommend it. - https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal https://www.bloomberg.com/opinion/articles/2022-11-09/bankma...
- wfleming 4y agoFWIW you can subscribe to Matt Levine’s column as email newsletter without being a Bloomberg subscriber. (That doesn’t help for reading already-published columns, but of course there are other ways around paywalls.)
- xwolfi 4y agoI bit the bullet and pay for Bloomberg now, it's too good too consistently.
- mumbisChungo 4y ago>In fact “gambling with customer funds” was by design. This is not accurate. The ToS for FTX explicitly said that customer funds would not be used for investment purposes. While it didn't explicitly say it wouldn't be used for lending, it was a broad assumption in the industry that the exchange was solvent and could back user assets on a 1:1 basis. It is widely believed now that Alameda went deep underwater during the collapse of the Luna ponzi (this one was quite literally structured like a ponzi) and borrowed a large amount from FTX to bail themselves out of it. In the wake of this, FTX had a shortage of hard assets and a fat bag of FTT that the loan was issued against, which is what exposed them acutely to a bank run and/or price decrease in FTT.
- YeBanKo 4y agoOk, so here is FTX’s CEO Sam Bankman Fried explains how the Ponzi scheme works using crypto farming as an example: https://www.youtube.com/watch?v=KZYqL79GDXU&t=1276s https://www.youtube.com/watch?v=KZYqL79GDXU&t=1276s
- calculated 4y agoThat's hilarious :)
- pearjuice 4y agoNo surprise whatsoever. They killed a competitor, avoided being on the hook for ~$6B in missing funds and without paying anything they are basically inheriting all FTX customers still happy to trade crypto. FTX or whatever is left will be under massive legal scrutiny for years to come. The "institutional investors" they were attracting and lobbying for are the kind of folks you don't want legal battles with. Meanwhile, FTX is still operating (!), accepting new users and accepting customer deposits even though it is insolvent. If you haven't been following the crypto news much or aren't on Twitter, you will have received ZERO direct communication from FTX that they are insolvent (not even an email). This is coming from someone who went on the record[0] trying to lobby, blaming the financial industry for lack of transparency and taking on too much risk and publicly lying that FTX doesn't use customer funds to trade (tweets have since been deleted)[1] [0] https://twitter.com/HaloCrypto/status/1590417311839981569 https://twitter.com/HaloCrypto/status/1590417311839981569 [1] https://cointelegraph.com/news/ftx-founder-sam-bankman-fried-removes-assets-are-fine-flood-from-twitter https://cointelegraph.com/news/ftx-founder-sam-bankman-fried...
- ricardou 4y agoThis whole thing is such a mess. Binance's statement is quite scathing. It is a shame that crypto institutions continue to fold after mismanagement. The free money era will sure take a couple more entities with it.
- maxerickson 4y agoMaybe organizations is a better word there.
- shmatt 4y agoCZ knew about the bad leverage to begin with, which is why he tweeted about selling all of the FTT What are the chances he never intended to buy FTX, just to destroy it after their public back and forth? It's almost like a reverse Musk - he sent a purchase offer with an option to back out no matter what CZ knew from day 1 all he needed to do was crash FTT just enough, and the rest would happen organically
- twblalock 4y agoThe results of his actions will hurt him too, by causing severe damage to the market his business participates in.
- miohtama 4y agoProbably the gap in FTX balances, $10B, was much more than anyone estimated. Maybe even FTX themselves did not know.
- eddsh1994 4y agoI called it and saw many others call it too. Cause a run on FTX, get due diligence and say it’s F**ed, and get their user-base for free. My concern is how much funding FTX and SBF in particular were giving to EA/AGI Safety research labs and charities. There’s going to be some significant knock on effects there when the money is no longer available.
- miohtama 4y agoThis would not have happened unless Sam had gambled with customer deposits. Hard to blame CZ here.
- eddsh1994 4y agoI'm not blaming CZ! I'm thinking about knock-on effects from this due to SBF's donations being cut off
- bhouston 4y ago> AGI Safety research labs If they are not part of a university, it is probably pretty sketchy anyhow.
- misiti3780 4y agoDoes anyone here think SBF will be prosecuted?
- idoh 4y agoWhat crime was committed? I'm asking in a neutral way. Simply losing billions of dollars of other people's money isn't necessarily illegal.
- wollsmoth 4y agoyeah crypto deposits don't have the same protections as securities which is why you don't want to leave them in an exchange wallet. I'm going to guess somewhere in here there's enough for a fraud charge though. I don't know enough to explain why, but my hunch is he didn't lose all this money by going around and making honest mistakes.
- redox99 4y agoHe claimed literally days ago that funds were backed. That seems like fraud. https://twitter.com/augginator/status/1590117110818443265 https://twitter.com/augginator/status/1590117110818443265
- cbtacy 4y agoAmong other things, he perjured himself in front of Congress.
- from 4y agoA good prosecutor can make any act that involves the internet and something sketchy wire fraud.
- misiti3780 4y agoim not sure either, but it sounds like the same situation as three arrows capital and those founders disappeared
- TheAlchemist 4y agoWhat's even more funny is that Binance make it look like they are a stable financial institution, and it's thanks to their high standards that they won't acquire FTX. Binance is most probably much more of a fraud than FTX. Binance doesn't even have physical headquarters in any country in this world - and the reason is that they are being actively investigated or banned almost everywhere.
- mrtksn 4y agoI don't know about it, Binance has become a gold standard in crypto exchange business. Here on HN it was always about Coinbase likely because its an American company but for the rest of the world, it's all about Binance and the rest of the world is huge. How huge? About an order of magnitude to Coinbase. If Binance goes, crypto isn't coming back.
- JumpCrisscross 4y ago> Binance has become a gold standard in crypto exchange business This was FTX and Alameda like a week ago.
- potatototoo99 4y agoNot really, FTX was barely in the top 10 for spot, though better in futures. Plus there are DEX and AMM.
- nu11ptr 4y agoFTX was #2 globally. Binance is #1. I'm not sure exactly what ranking mechanism is used to determine that, but that seems to be consensus from a variety of sources.
- Nathanba 4y agoI've never even heard of FTX and I've been in the crypto space for many years. Binance however was always near the top since it came out. There was one american exchange that used to be nr.1 but became irrelevant after they weren't allowed to serve non-americans anymore. I can't remember the name and it isn't in the top 300 anymore, maybe they had to shut down. EDIT: I just checked and FTX was only founded 3 years ago
- paulpauper 4y agoMSTR down 50% in 2 days. That will also be going to zero, too given how much debt it carries. Leverage on an such a volatile but likely worthless asset is financial suicide. What were these people thinking. Leverage on index funds is pretty risky, but on bitcoin? Makes no sense.
- celestialcheese 4y agoWill they be put into forced liquidation on 130k BTC?
- pedalpete 4y agoAre you referring to Microstrategy? Or some other MSTR? Google is showing down 30% over the last 4 days. https://www.google.com/search?q=MSTR&sourceid=chrome&ie=UTF-8 https://www.google.com/search?q=MSTR&sourceid=chrome&ie=UTF-... At the same time, if you are talking MSTR, Saylor must be concerned.
- paulpauper 4y agoMicroStrategy
- Marazan 4y agoLol
- fdgsdfogijq 4y agoThe funny thing is for six months I have been checking FTX for open developer positions. Thinking surely, the best place in crypto must be hiring good devs like me. And there have been no postings at all! And word on the street is their devs actually building the exchange made a middling salary with zero stock. I always found it odd, how could they not be hiring? even during the downturn? And now I know why, it was all a scam.
- skippyboxedhero 4y agoIt wasn't. They just ran with significantly less staff (iirc, less than 30). If they wanted you, they got in touch. FTX wasn't a scam either. Their business was a licence to print money but, as so often happens in finance, managed to spin shit from gold.
- fdgsdfogijq 4y agoThat's not what I have heard. Specifically know people who have gotten offers, mostly in the 150k range with zero stock. Alameda research is also just random devs that went to MIT with a few years experience. Impressive to go to that school, but clearly not experienced enough to run a real finance operation. Zero real finance people. If they were serious they would have hired portfolio managers with decades of experience. Its the same thing as three arrows capital, random people ending up with a bunch of capital, overestimating their intelligence due to a bull market run, and ending up with nothing
- mi_lk 4y agodefinitely know one guy hired by FTX intl in the past 6 months so "If they wanted you, they got in touch." seems true to me
- fdgsdfogijq 4y ago"If they wanted you, they got in touch." you make it sound like a prestigious elite club. it was a scam, and it should be called out as such. also again i personally know two people that received stingy offers from them
- pavlov 4y agoWhy does anyone trust Binance either? They’re notoriously shady about where they operate and what assets they actually hold, to the point that they’re officially not headquartered anywhere. If you have $100k at Binance, is there any reason to believe you could withdraw it tomorrow? Any contract you may have with Binance is made with a local shell company that could just as well be a hot dog stand. Any money you’ve sent them is effectively nowhere. FTX was supposed to be above the board and they collapsed in a day. A few months ago FTX was the white knight buying out distressed crypto companies. Why would Binance do any better?
- firekvz 4y agoThey slowly built/clean their reputation, bitcoin going up to 70k made everyone just forget the past. But yeah, they are probally the most shady ones, but the fact they actually have no offices and no govs after them, makes it easier to hide your operations, its the same for tether that has managed to get so big with absolutely no offices, no employees or anything. Both are best friends.
- twblalock 4y agoWhy did anyone trust FTX either? The trust was really based on the credibility of the person running it, and the fact they had bailed out some other failing exchanges. But there were no hard facts. In fact it seemed like all it took was a public quarrel with the founder of another exchange to start the ball rolling toward total collapse -- again, because it was all based on personal credibility.
- rippercushions 4y agoIt's almost as if crypto tokens are intrinsically worthless!
- tim333 4y agoThough that's not really the issue here. Obviously they were worth something to the people buying and selling them.
- nfw2 4y agoPotentially dumb question here; I am no expert on crypto or finance. Isn't the collapse of FTX in some ways evidence in favor of decentralized currency rather than against it? As evidenced by 2008, firms gambling with other people's money doesn't seem to be specific to DeFi. If coin exchanges had some legal obligation to just be wallet and marketplace services instead of investment engines, could that help prevent this sort of fiasco (and the 2008 one) happening in the future? On the other hand, perhaps this solution could be equally applicable to traditional banks.
- MacsHeadroom 4y agoAbsolutely, this was a failure of TradFi/CeFi. DeFi had no problems throughout these past few days. No Dex ever had withdrawals/transactions take longer than seconds, as always. No Dex ever used user funds secretly (impossible on a public ledger), etc. The lesson here is that TradFi is not safe. Not your keys, not your coins.
- colinsane 4y agoevidence for you, and i (though i’d argue it’s transparency more than decentralization that matters in this case), but that’s certainly not the widespread sentiment. consider also the number of non-custodial failures in this space ranging all the way back to The DAO. at the end of the day, Tether market cap is and has been >> Dai market cap for almost its entire existence. that tells you all you need to know.
- mudrockbestgirl 4y agoIt's not a dumb question. You're right that it's absolutely an argument for DeFi, but it comes with tradeoffs: - Bugs in the code means all capital may be lost. That's potentially worse. - The profit margins aren't nearly as high. If you're a centralized entity or a bank you can do all kinds of shady stuff behind the scenes with customer funds to fill your own pockets. It has happened over and over again both in TradFi and CeFi. In DeFi, you can't do that since it's fully transparent and backed. Good for the consumer, but not not as good for business growth. Many traditional finance entities have become as big as they are because they did shady stuff but didn't get caught. I'm just not talking about crypto exchanges here, but also traditional banks.
- grey-area 4y agoIt would be amusing if this deliberate attack by Binance also caused other frauds like Tether and eventually Binance to collapse too. People will simply lose faith in crypto entirely and avoid the whole market.
- chasd00 4y agoI certainly have no faith in crypto. The returns look nice but I know i'm not informed enough to get out while the getting's good so I'll have to pass.
- gammarator 4y ago> the returns look nice Only if you cherry pick when you imagine you would have entered/exited the market
- cactusplant7374 4y agoBinance lost a lot of money on Luna. They are being cautious.
- sfusato 4y agoWe shouldn't need to have faith, yet here we are. Maybe we could build back better after a much needed great reset.