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This last week has been a rollercoaster. I've been in crypto since a long time ago and have seen quite a bit, but this FTX implosion takes the crown. And to be

This last week has been a rollercoaster. I've been in crypto since a long time ago and have seen quite a bit, but this FTX implosion takes the crown. And to be honest, I don't think its over.

rvba 4y ago
What is the difference between this, terraluna earlier this year or MTGox?
- crypt1d 4y ago
  Luna was quite bad, but it was pretty straight-forward path to death that everyone saw from a mile away. Not many people predicted that FTX and SBF will fall from grace within a timespan of 48hrs. The whole thing is also so full of scandals, theft and corruption we will be reading about this in the news for weeks to come. mtGox was so early in crypto, there wasn't any institutional capital or major players, mostly retail/regular folks experimenting with shiny new tech. FTX is an intermingled web of retail, institutions and big name investors as well as having their own investments, huge donations to politicians, lobbying arm, etc. The fallout from this will set us back for years.
  - unboxingelf 4y ago
    I suspect this will be the catalyst for “regulation clarity”.
    - willmadden 4y ago
      It sure is interesting how they extended their tentacles into as many other companies and projects as possible (SBF even approached Elon about financing the Twitter acquisition) while knowing they were financing these deals with customer deposits, before blowing it up in the most spectacular way possible… I can’t imagine a series of actions that would be more destructive to the industry. The actions don’t make sense unless they were taken to maximize the potential fallout. The deep regulatory and political connections are also interesting…
      - AlexandrB 4y ago
        The idea that this is some kind of "op" is undermined by the fact that SBF was broadcasting his own lack of trustworthiness for a long time. Remember that exchange with Matt Levine where SBF all but admits to running a Ponzi scheme[1]? That was half a year ago. I think the idea that this is some kind of 4D chess move by regulators is a convenient way for the gullible idiots who believed in this stuff to put the blame on something other than their own credulousness. The guy basically admitted to running a Ponzi scheme. Why did you continue to trust him??? [1] 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...
        willmadden 4y ago
        At no point did he admit to investing customer deposits in defi or similar schemes without their consent in that interview. FTX’s terms even state that they would never do that. His actions since Alameda blew up were not rational, even if we assume that he was operating a Ponzi scheme the entire time. He bailed out as many failed projects as he could and attempted to make investments with funds he did not have after the collapse of his ponzi started. A ponzi operator who sees their house of cards collapsing is going to look for ways to get more money into the ponzi unencumbered with the hope that they can make back the losses before anyone notices. They are not going to allocate what precious little capital they still have to investments that do not contribute more capital to the ponzi. Yet this is exactly what SBF did. It doesn’t make any sense. Yet the regulation authorities are considering (that SBF literally authored) does very little to address the root causes of centralized exchange collapse, and is more or less designed to give power to regulators first and protect investors as a distant second. What is needed are proof of reserves that include both assets and liabilities for centralized exchanges. Centralized exchanges shouldn’t be able to lock up 100mm USD worth in customer Ethereum deposits for staking, when their exchange allows someone to buy that 100mm USD in ETH and withdraw it from the exchange before they can unlock the ETH and use it to fund the withdrawal without delay. If the exchange is going to allow customers to stake ETH on their exchange, the actual customers' ETH must be staked, and shouldn't be accounted for separately than the staked ETH deposit. That is the core of the issue with centralized exchanges that play shell games with customer funds. They create financial risk if customer deposits are not backed 1:1 and mirroring the financial decisions of the depositor. Anything less is a ponzi, no matter how much window dressing is applied. It's worth noting that banks are ponzi schemes, but they can borrow funds at the discount rate at will, and must meet capital requirements, so the damage their ponzi schemes can cause is limited. There is no lender of last resort in crypto. Centralized exchanges cannot behave like banks!
- lvl102 4y ago
  SBF was hailed as a crypto savior just a few weeks ago after the Luna fallout. He was viewed as Warren Buffett during the financial crisis. Perhaps Coinbase will be the ultimate winner here if crypto somehow survives. I imagine more than 75-80% of the assets tied to crypto will liquidate in coming weeks. I don’t think this will be “just another” crypto blow up. It’s end game time.
  - swalsh 4y ago
    I trust Coinbase as a public company, but not more than I'd be willing to lose on a trip to Vegas.
- xeromal 4y ago
  I think MTGox was actually worse just due to the small size of the market then and how much of a joke their security was. FTX just seems like a fleecing job that tons of crypto exchanges and businesses have pulled off. MTGox was sheer incompetence.
  - zeven7 4y ago
    I would consider the moral failure of SBF to be worse than the incompetence of Karpeles. Also, SBF was a billionaire hobnobbing with politicians and celebrated by Forbes. Karpeles was some confused dev on his computer who loved his cat and wanted to build a coffee shop. SBF's failure is going to have larger consequences outside the crypto sphere.
    - mi_lk 4y ago
      Is there anything happen to Karpeles for what he did with mtgox?
      - richardknop 4y ago
        He was in a custody for about a year, he was later sentenced to a suspended year in prison. He still lives in Tokyo, no idea what he does for work now though.
    - lupire 4y ago
      Jeffrey Epstein funneled hundreds of million of dollars (and 16-yr-old girls) through politicians and business celebrities, and there were trivial consequences outside his family. SBF just stumbled into money and spread it around, like the Oculus guy.
cycrutchfield 4y ago
If you believe there is more to come and this isn’t over, are you still holding crypto?
- xtracto 4y ago
  I've been in cryptocurrencies/blockchain since 2012. I "missed" the BTC boat and got into ETH early. I'm of the thought that CeFi services like Ftx, Nexo, Coinbase and similar are stupid. The only thing that should exist is simple Exchanges between Fiat and cryptocurrency. But everything else is just a scam IMHO. Why would you do a CeFi in crypto , when theres more TAM in doing it normal FIAT? Because you want to Avoid regulation and scrutiny. Anyways, through all this saga, I see ETH is still at $1200, which has held pretty well. I think the right price is around $600, how it was on Nov 2020, before all speculation. The rest of the price is just people playing around. But that's not what ETH is for, and these high prices are hurting it's real goal. I'm definitely still holding crypto. Mostly ETH, because I believe in the core technology. I've done some smart contracts and have a couple ideas for the future. But man, I surely hope all cryptos crash and burn this time, so that speculators stop polluting the technology.
  - unboxingelf 4y ago
    I can see a future where payments happens over lightning, BTC is savings, and apps/games/entertainment are built on ETH. However I’ve grown less confident in ETHs longevity following the move to PoS. I’m concerned about the centralization of control and influence (eg transactions being dropped, tornado cash), lack of ability to withdrawal staked ETH, and general lack of trust created by the extreme number of scams. How do you view ETH long term, particularly wrt the proximity it has to these seemingly endless scams?
  - oldgradstudent 4y ago
    > I think the right price is around $600, Why $600 and not $351, $17, or $15,000? What fundamental reason is there for any specific price?
    - 4y ago
booleandilemma 4y ago
A rollercoaster or a skydive without a parachute?
misiti3780 4y ago
Another interesting thought I keep going back to is .... since crypto is really zero sum, who the hell was on the other side of these horrible trades that has billions now?
- crypt1d 4y ago
  At this point it wouldn't surprise me if they siphoned off the money by being on the other side of those trades via different entities...
- SkyMarshal 4y ago
  I suppose in this case it's probably a negative sum game. The assets in question are the FTT token that Alameda mined and gave to FTX as collateral, in return for real customer assets from FTX that Alameda used to gamb... er trade with. But FTT then went to zero, tanked the whole market, and the customer assets Alameda holds lost value too. Everybody loses.
- bombcar 4y ago
  Supposedly from what I'm hearing from /r/buttcoin rumors, Alameda was very bad at trading, so the billions have gone to the people doing the opposite trades from Alameda, which were being funded by FTX to try to gamble back the amounts lost.

This last week has been a rollercoaster. I've been in crypto since a long time ago and have seen quite a bit, but this FTX implosion takes the crown. And to be honest, I don't think its over.

rvba 4y ago

What is the difference between this, terraluna earlier this year or MTGox?

crypt1d 4y ago
Luna was quite bad, but it was pretty straight-forward path to death that everyone saw from a mile away. Not many people predicted that FTX and SBF will fall from grace within a timespan of 48hrs. The whole thing is also so full of scandals, theft and corruption we will be reading about this in the news for weeks to come. mtGox was so early in crypto, there wasn't any institutional capital or major players, mostly retail/regular folks experimenting with shiny new tech. FTX is an intermingled web of retail, institutions and big name investors as well as having their own investments, huge donations to politicians, lobbying arm, etc. The fallout from this will set us back for years.
- unboxingelf 4y ago
  I suspect this will be the catalyst for “regulation clarity”.
  - willmadden 4y ago
    It sure is interesting how they extended their tentacles into as many other companies and projects as possible (SBF even approached Elon about financing the Twitter acquisition) while knowing they were financing these deals with customer deposits, before blowing it up in the most spectacular way possible… I can’t imagine a series of actions that would be more destructive to the industry. The actions don’t make sense unless they were taken to maximize the potential fallout. The deep regulatory and political connections are also interesting…
    - AlexandrB 4y ago
      The idea that this is some kind of "op" is undermined by the fact that SBF was broadcasting his own lack of trustworthiness for a long time. Remember that exchange with Matt Levine where SBF all but admits to running a Ponzi scheme[1]? That was half a year ago. I think the idea that this is some kind of 4D chess move by regulators is a convenient way for the gullible idiots who believed in this stuff to put the blame on something other than their own credulousness. The guy basically admitted to running a Ponzi scheme. Why did you continue to trust him??? [1] 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...
      - willmadden 4y ago
        At no point did he admit to investing customer deposits in defi or similar schemes without their consent in that interview. FTX’s terms even state that they would never do that. His actions since Alameda blew up were not rational, even if we assume that he was operating a Ponzi scheme the entire time. He bailed out as many failed projects as he could and attempted to make investments with funds he did not have after the collapse of his ponzi started. A ponzi operator who sees their house of cards collapsing is going to look for ways to get more money into the ponzi unencumbered with the hope that they can make back the losses before anyone notices. They are not going to allocate what precious little capital they still have to investments that do not contribute more capital to the ponzi. Yet this is exactly what SBF did. It doesn’t make any sense. Yet the regulation authorities are considering (that SBF literally authored) does very little to address the root causes of centralized exchange collapse, and is more or less designed to give power to regulators first and protect investors as a distant second. What is needed are proof of reserves that include both assets and liabilities for centralized exchanges. Centralized exchanges shouldn’t be able to lock up 100mm USD worth in customer Ethereum deposits for staking, when their exchange allows someone to buy that 100mm USD in ETH and withdraw it from the exchange before they can unlock the ETH and use it to fund the withdrawal without delay. If the exchange is going to allow customers to stake ETH on their exchange, the actual customers' ETH must be staked, and shouldn't be accounted for separately than the staked ETH deposit. That is the core of the issue with centralized exchanges that play shell games with customer funds. They create financial risk if customer deposits are not backed 1:1 and mirroring the financial decisions of the depositor. Anything less is a ponzi, no matter how much window dressing is applied. It's worth noting that banks are ponzi schemes, but they can borrow funds at the discount rate at will, and must meet capital requirements, so the damage their ponzi schemes can cause is limited. There is no lender of last resort in crypto. Centralized exchanges cannot behave like banks!
lvl102 4y ago
SBF was hailed as a crypto savior just a few weeks ago after the Luna fallout. He was viewed as Warren Buffett during the financial crisis. Perhaps Coinbase will be the ultimate winner here if crypto somehow survives. I imagine more than 75-80% of the assets tied to crypto will liquidate in coming weeks. I don’t think this will be “just another” crypto blow up. It’s end game time.
- swalsh 4y ago
  I trust Coinbase as a public company, but not more than I'd be willing to lose on a trip to Vegas.
xeromal 4y ago
I think MTGox was actually worse just due to the small size of the market then and how much of a joke their security was. FTX just seems like a fleecing job that tons of crypto exchanges and businesses have pulled off. MTGox was sheer incompetence.
- zeven7 4y ago
  I would consider the moral failure of SBF to be worse than the incompetence of Karpeles. Also, SBF was a billionaire hobnobbing with politicians and celebrated by Forbes. Karpeles was some confused dev on his computer who loved his cat and wanted to build a coffee shop. SBF's failure is going to have larger consequences outside the crypto sphere.
  - mi_lk 4y ago
    Is there anything happen to Karpeles for what he did with mtgox?
    - richardknop 4y ago
      He was in a custody for about a year, he was later sentenced to a suspended year in prison. He still lives in Tokyo, no idea what he does for work now though.
  - lupire 4y ago
    Jeffrey Epstein funneled hundreds of million of dollars (and 16-yr-old girls) through politicians and business celebrities, and there were trivial consequences outside his family. SBF just stumbled into money and spread it around, like the Oculus guy.

cycrutchfield 4y ago

If you believe there is more to come and this isn’t over, are you still holding crypto?

xtracto 4y ago
I've been in cryptocurrencies/blockchain since 2012. I "missed" the BTC boat and got into ETH early. I'm of the thought that CeFi services like Ftx, Nexo, Coinbase and similar are stupid. The only thing that should exist is simple Exchanges between Fiat and cryptocurrency. But everything else is just a scam IMHO. Why would you do a CeFi in crypto , when theres more TAM in doing it normal FIAT? Because you want to Avoid regulation and scrutiny. Anyways, through all this saga, I see ETH is still at $1200, which has held pretty well. I think the right price is around $600, how it was on Nov 2020, before all speculation. The rest of the price is just people playing around. But that's not what ETH is for, and these high prices are hurting it's real goal. I'm definitely still holding crypto. Mostly ETH, because I believe in the core technology. I've done some smart contracts and have a couple ideas for the future. But man, I surely hope all cryptos crash and burn this time, so that speculators stop polluting the technology.
- unboxingelf 4y ago
  I can see a future where payments happens over lightning, BTC is savings, and apps/games/entertainment are built on ETH. However I’ve grown less confident in ETHs longevity following the move to PoS. I’m concerned about the centralization of control and influence (eg transactions being dropped, tornado cash), lack of ability to withdrawal staked ETH, and general lack of trust created by the extreme number of scams. How do you view ETH long term, particularly wrt the proximity it has to these seemingly endless scams?
- oldgradstudent 4y ago
  > I think the right price is around $600, Why $600 and not $351, $17, or $15,000? What fundamental reason is there for any specific price?
  - 4y ago

booleandilemma 4y ago

A rollercoaster or a skydive without a parachute?

misiti3780 4y ago

Another interesting thought I keep going back to is .... since crypto is really zero sum, who the hell was on the other side of these horrible trades that has billions now?

crypt1d 4y ago
At this point it wouldn't surprise me if they siphoned off the money by being on the other side of those trades via different entities...
SkyMarshal 4y ago
I suppose in this case it's probably a negative sum game. The assets in question are the FTT token that Alameda mined and gave to FTX as collateral, in return for real customer assets from FTX that Alameda used to gamb... er trade with. But FTT then went to zero, tanked the whole market, and the customer assets Alameda holds lost value too. Everybody loses.
bombcar 4y ago
Supposedly from what I'm hearing from /r/buttcoin rumors, Alameda was very bad at trading, so the billions have gone to the people doing the opposite trades from Alameda, which were being funded by FTX to try to gamble back the amounts lost.