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> Earlier at the same event, CZ [said] the crypto industry “will be fine,” and there was “significant interest” in his proposal for a crypto recovery fund. Oh

> Earlier at the same event, CZ [said] the crypto industry “will be fine,” and there was “significant interest” in his proposal for a crypto recovery fund. Oh hell no. I'd rather let crypto collapse, take the banks down with them, and bail out the banks again, than enable the creation of a second parallel class of wealth-extracting, economy-manipulating parasites.

r00fus 4y ago
Agree, but let's let banks fail and put them in receivership. Nationalize them if needed. Anyone speculating in crypto shouldn't get backstop by government. Wasn't the whole DeFi argument that fiat/government could be bypassed?
- ptudan 4y ago
  DeFi and FTX (and all the CEXs/Centralized lending platforms who credited FTX) are basically on opposite ends of the spectrum. Most who are getting fucked by this fiasco are retail who have never touched DeFi.
  - m00dy 4y ago
    Yes, DeFi has a high barrier to get into. But, once you are in the rabbit hole, there is no going back...
  - whimsicalism 4y ago
    Ridiculous you are getting downvoted for stating something that is clearly true.
  - aww_dang 4y ago
    FTX was in bed with regulators and SBF was calling for more regulatory capture. The "reasonable regulation" trope is fit for parody.
- beaned 4y ago
  Anyone speculating in crypto should be let to fail, but anyone speculating in stocks or housing should be backstopped... Why?
  - whimsicalism 4y ago
    because crypto is icky and weird
  - nemo44x 4y ago
    Because a government is only as strong as its businesses and buildings/assets. Crypto is on another tier and apart from government.
  - JackFr 4y ago
    Well, speculators should not be backstopped at all. But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.
  - JumpCrisscross 4y ago
    > but anyone speculating in stocks or housing should be backstopped... Why? Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets. I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.
  - hnews_account_1 4y ago
    Before trying so hard to put your thoughts into the ether, stop for a moment and ask yourself if you can’t find the answer to that question. Is everyone on the fucking planet wrong? Or are you being stupid? Are stocks different from crypto? Why was there a need to bail out mortgage buyers? Did everyone just wake up one day and make a decision or is there detailed reasoning available for your perusal should you choose to look?
- happyopossum 4y ago
  Nationalizing all banks seems like the worst option of them all. There is no precedent in history of a society built around government owned banks that doesn’t include oppression and failure.
  - ProjectArcturis 4y ago
    Nationalize, recapitalize, and reprivatize. So that the benefits of government recapitalization don't get captured by the same people who caused the crisis.
  - courgette 4y ago
    Is’t what happened in 1929 in the us ? https://www.federalreservehistory.org/essays/emergency-banking-act-of-1933 https://www.federalreservehistory.org/essays/emergency-banki... Title 2 above seems to describe a government appointed regulator in case of failure.
    - JumpCrisscross 4y ago
      > Title 2 above seems to describe a government appointed regulator in case of failure Receivership is different from nationalisation. It’s aimed at winding down or disposing of the asset on a short timeline. For comparison, we’re FTX in receivership, its assets would be controlled by a third party whose job would be to protect it for users’ benefit.
  - ethbr0 4y ago
    Semi-independent federal reserves? We can quibble about fiat/currency vs banking, but technically the government owns all money. Granted, retail and last-mile banking seems a poor fit for government control. Although from memory Japan offers retail banking services through their postal service? (for historical quirk reasons, see: https://en.m.wikipedia.org/wiki/Japan_Post_Bank https://en.m.wikipedia.org/wiki/Japan_Post_Bank )
memish 4y ago
Let them fail full stop. If there's any lesson from 2008, it's this. Do not bail out banks and their execs.
- Loughla 4y ago
  I think where we go wrong is in bailing them out, but not nationalizing them afterward. If we're going to make the losses public, then the gains afterwards become public as well. The executives, though, should be prosecuted, or at the very least removed from being executives and board members at any financial or ancillary institution ever again. But for real. Why not nationalize the failed institutions? It's not as if the incentives can get more perverse than they are now, unless I'm missing something.
  - triceratops 4y ago
    Because that's communism. (Not even /s, that's the actual argument people make)
    - soperj 4y ago
      Same with fire depts, police, medicare, sewage, roads?
      - triceratops 4y ago
        Don't shoot the messenger. I didn't say I agreed with the argument. For example, anyone who is in favor of "smaller government" should support of the "Defund the police" movement. They do not. That should tell you something about the state of critical thinking. Public healthcare is "communism" but police and the armed forces are somehow not. I've made literally the same argument to someone on here a while back. Here it is: https://news.ycombinator.com/item?id=25503815 https://news.ycombinator.com/item?id=25503815
        soperj 4y ago
        Right, forgot about the armed forces :)
topspin 4y ago
> crypto recovery fund Is there anything Inflation can't do?
scottiebarnes 4y ago
Confused, do you think you'll be forced to participate in this crypto recovery fund or something?
tschwimmer 4y ago
The development of centralized exchanges into a class of companies equal to the existing financial infrastructure is unlikely to happen. Unlike traditional finance, the use cases for crypto seem to be mainly speculative. You can't pay your rent, buy a car or pay taxes using crypto, so it's unlikely that you'll be very affected by the rise or fall of these exchanges unless you choose to participate yourself.
- whimsicalism 4y ago
  There are massive black market uses and massive uses for people evading capital controls in the rest of the world. Crypto can basically function as an extended version of dollarization in countries that have institutionally failed to manage their own currency (think the naira or the Turkish lira).
alexose 4y ago
Are you saying that regular, mainstream banks have enough crypto exposure that they're in actual trouble? If so, any particular ones that you think are at risk of failing? (Apologies if this is a dumb question. I don't follow crypto news very closely.)
- ourmandave 4y ago
  Not sure if any US banks got so far as legitimizing crypto. There was a big lobbying push to fool representatives into making the ponzi circus legit. But then FTX suddenly disappeared below the waves, so I think that's on hold right now.
- v8xi 4y ago
  I follow pretty closely and have not seen any evidence or heard any rumors that there are any reputable banks with significant direct exposure. Many of the banks that might fall would be ones whose primary customers are people in the crypto space but really its all shrouded in mystery. VC firms and PE, on the other hand, are probably going to see a lot of bloodshed
- sdiacom 4y ago
  My understanding is that banks have invested directly to some extent in the safer end of crypto (Bitcoin) and indirectly on more risky stuff, through funding crypto hedge funds and the like. I don't have any sources that I trust at hand, but a quick Google search shows aggregated data about investment banks and the assets they hold on the crypto economy: https://www.blockdata.tech/blog/general/top-banks-investing-in-crypto-and-blockchain-may-2022-update https://www.blockdata.tech/blog/general/top-banks-investing-... For better or for worse, it doesn't seem big enough of an investment to actually bring down traditional banking.
jstrong 4y ago
the "crypto recovery fund" is not a govt bailout, it's binance investing private money into firms that are struggling to survive in the short-term: https://news.yahoo.com/cryptocurrencies-rally-binance-ceo-announces-142035885.html https://news.yahoo.com/cryptocurrencies-rally-binance-ceo-an...
- JumpCrisscross 4y ago
  > Binance investing private money into firms that are struggling to survive in the short-term It’s a fake suggestion since the problem currently facing crypto is insolvency, not illiquidity. No amount of money would make FTX a good asset beyond the value of the cash itself.
  - jstrong 4y ago
    > No amount of money would make FTX a good asset whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.
    - JumpCrisscross 4y ago
      > exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021 Lots of things are good businesses, that doesn’t give a neighbouring trash pile value. Any amount of cash pumped into FTX would be better spent capitalising a new exchange. They’re not only insolvent, but fraudulently so in a very public way.
worik 4y ago
> and bail out the banks again, This time, please, can we not bail out the bankers?
- sdiacom 4y ago
  Ideally, yes. But if we haven't figured out a way around the whole "too big to fail" thing, let's not bail out the fake economy along with the real economy.
  - worik 4y ago
    > "too big to fail" I get bailing out the banks. But we can bankrupt the owners, in the case of partnerships, and cancel the shares of public companies.
aww_dang 4y ago
As I understand it CZ was referring to an entirely private fund to provide liquidity to projects he felt are worth saving. This is not another gov. supported bailout. >“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify," https://twitter.com/cz_binance/status/1592044496174612482 https://twitter.com/cz_binance/status/1592044496174612482
- sdiacom 4y ago
  Ah, that would be interesting to see. I wonder, where would the money coming from for this fund? Would it be real money, or magic beans money? What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
  - aww_dang 4y ago
    Indeed some 40% of Binance's reserves are in their own tokens. https://markets.businessinsider.com/news/currencies/crypto-news-binance-reserves-are-mostly-busd-binancecoin-cz-sbf-2022-11 https://markets.businessinsider.com/news/currencies/crypto-n... >What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"? As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business. You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.
lostlogin 4y ago
That would be an actual full circle, and would have recreated what they claimed to oppose.

r00fus 4y ago

Agree, but let's let banks fail and put them in receivership. Nationalize them if needed. Anyone speculating in crypto shouldn't get backstop by government. Wasn't the whole DeFi argument that fiat/government could be bypassed?

ptudan 4y ago
DeFi and FTX (and all the CEXs/Centralized lending platforms who credited FTX) are basically on opposite ends of the spectrum. Most who are getting fucked by this fiasco are retail who have never touched DeFi.
- m00dy 4y ago
  Yes, DeFi has a high barrier to get into. But, once you are in the rabbit hole, there is no going back...
- whimsicalism 4y ago
  Ridiculous you are getting downvoted for stating something that is clearly true.
- aww_dang 4y ago
  FTX was in bed with regulators and SBF was calling for more regulatory capture. The "reasonable regulation" trope is fit for parody.
beaned 4y ago
Anyone speculating in crypto should be let to fail, but anyone speculating in stocks or housing should be backstopped... Why?
- whimsicalism 4y ago
  because crypto is icky and weird
- nemo44x 4y ago
  Because a government is only as strong as its businesses and buildings/assets. Crypto is on another tier and apart from government.
- JackFr 4y ago
  Well, speculators should not be backstopped at all. But if you feel there’s no difference between stocks (an enforceable legal claim on the real property and intellectual property of an on going enterprise), housing (real property) and crypto (nothing, literally nothing) then there’s no point in discussing it.
- JumpCrisscross 4y ago
  > but anyone speculating in stocks or housing should be backstopped... Why? Crypto is cauterised. There were inklings of institutionalisation, but the Fed raised rates before that took hold. This means the people and wealth in crypto can vanish without compromising much else, a statement I cannot make about most industries or assets. I would also venture that most people suggesting we not backstop crypto were also opposed to bailing out banks. But unlike with banks or housing, there is no broader interest in crypto.
- hnews_account_1 4y ago
  Before trying so hard to put your thoughts into the ether, stop for a moment and ask yourself if you can’t find the answer to that question. Is everyone on the fucking planet wrong? Or are you being stupid? Are stocks different from crypto? Why was there a need to bail out mortgage buyers? Did everyone just wake up one day and make a decision or is there detailed reasoning available for your perusal should you choose to look?
happyopossum 4y ago
Nationalizing all banks seems like the worst option of them all. There is no precedent in history of a society built around government owned banks that doesn’t include oppression and failure.
- ProjectArcturis 4y ago
  Nationalize, recapitalize, and reprivatize. So that the benefits of government recapitalization don't get captured by the same people who caused the crisis.
- courgette 4y ago
  Is’t what happened in 1929 in the us ? https://www.federalreservehistory.org/essays/emergency-banking-act-of-1933 https://www.federalreservehistory.org/essays/emergency-banki... Title 2 above seems to describe a government appointed regulator in case of failure.
  - JumpCrisscross 4y ago
    > Title 2 above seems to describe a government appointed regulator in case of failure Receivership is different from nationalisation. It’s aimed at winding down or disposing of the asset on a short timeline. For comparison, we’re FTX in receivership, its assets would be controlled by a third party whose job would be to protect it for users’ benefit.
- ethbr0 4y ago
  Semi-independent federal reserves? We can quibble about fiat/currency vs banking, but technically the government owns all money. Granted, retail and last-mile banking seems a poor fit for government control. Although from memory Japan offers retail banking services through their postal service? (for historical quirk reasons, see: https://en.m.wikipedia.org/wiki/Japan_Post_Bank https://en.m.wikipedia.org/wiki/Japan_Post_Bank )

memish 4y ago

Let them fail full stop. If there's any lesson from 2008, it's this. Do not bail out banks and their execs.

Loughla 4y ago
I think where we go wrong is in bailing them out, but not nationalizing them afterward. If we're going to make the losses public, then the gains afterwards become public as well. The executives, though, should be prosecuted, or at the very least removed from being executives and board members at any financial or ancillary institution ever again. But for real. Why not nationalize the failed institutions? It's not as if the incentives can get more perverse than they are now, unless I'm missing something.
- triceratops 4y ago
  Because that's communism. (Not even /s, that's the actual argument people make)
  - soperj 4y ago
    Same with fire depts, police, medicare, sewage, roads?
    - triceratops 4y ago
      Don't shoot the messenger. I didn't say I agreed with the argument. For example, anyone who is in favor of "smaller government" should support of the "Defund the police" movement. They do not. That should tell you something about the state of critical thinking. Public healthcare is "communism" but police and the armed forces are somehow not. I've made literally the same argument to someone on here a while back. Here it is: https://news.ycombinator.com/item?id=25503815 https://news.ycombinator.com/item?id=25503815
      - soperj 4y ago
        Right, forgot about the armed forces :)

topspin 4y ago

> crypto recovery fund Is there anything Inflation can't do?

scottiebarnes 4y ago

Confused, do you think you'll be forced to participate in this crypto recovery fund or something?

tschwimmer 4y ago

The development of centralized exchanges into a class of companies equal to the existing financial infrastructure is unlikely to happen. Unlike traditional finance, the use cases for crypto seem to be mainly speculative. You can't pay your rent, buy a car or pay taxes using crypto, so it's unlikely that you'll be very affected by the rise or fall of these exchanges unless you choose to participate yourself.

whimsicalism 4y ago
There are massive black market uses and massive uses for people evading capital controls in the rest of the world. Crypto can basically function as an extended version of dollarization in countries that have institutionally failed to manage their own currency (think the naira or the Turkish lira).

alexose 4y ago

Are you saying that regular, mainstream banks have enough crypto exposure that they're in actual trouble? If so, any particular ones that you think are at risk of failing? (Apologies if this is a dumb question. I don't follow crypto news very closely.)

ourmandave 4y ago
Not sure if any US banks got so far as legitimizing crypto. There was a big lobbying push to fool representatives into making the ponzi circus legit. But then FTX suddenly disappeared below the waves, so I think that's on hold right now.
v8xi 4y ago
I follow pretty closely and have not seen any evidence or heard any rumors that there are any reputable banks with significant direct exposure. Many of the banks that might fall would be ones whose primary customers are people in the crypto space but really its all shrouded in mystery. VC firms and PE, on the other hand, are probably going to see a lot of bloodshed
sdiacom 4y ago
My understanding is that banks have invested directly to some extent in the safer end of crypto (Bitcoin) and indirectly on more risky stuff, through funding crypto hedge funds and the like. I don't have any sources that I trust at hand, but a quick Google search shows aggregated data about investment banks and the assets they hold on the crypto economy: https://www.blockdata.tech/blog/general/top-banks-investing-in-crypto-and-blockchain-may-2022-update https://www.blockdata.tech/blog/general/top-banks-investing-... For better or for worse, it doesn't seem big enough of an investment to actually bring down traditional banking.

jstrong 4y ago

the "crypto recovery fund" is not a govt bailout, it's binance investing private money into firms that are struggling to survive in the short-term: https://news.yahoo.com/cryptocurrencies-rally-binance-ceo-announces-142035885.html https://news.yahoo.com/cryptocurrencies-rally-binance-ceo-an...

JumpCrisscross 4y ago
> Binance investing private money into firms that are struggling to survive in the short-term It’s a fake suggestion since the problem currently facing crypto is insolvency, not illiquidity. No amount of money would make FTX a good asset beyond the value of the cash itself.
- jstrong 4y ago
  > No amount of money would make FTX a good asset whatever your opinion of crypto, exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021.
  - JumpCrisscross 4y ago
    > exchanges have generally been great businesses. lots of small fees add up to significant revenue. Binance generated $20 billion revenue in 2021 Lots of things are good businesses, that doesn’t give a neighbouring trash pile value. Any amount of cash pumped into FTX would be better spent capitalising a new exchange. They’re not only insolvent, but fraudulently so in a very public way.

worik 4y ago

> and bail out the banks again, This time, please, can we not bail out the bankers?

sdiacom 4y ago
Ideally, yes. But if we haven't figured out a way around the whole "too big to fail" thing, let's not bail out the fake economy along with the real economy.
- worik 4y ago
  > "too big to fail" I get bailing out the banks. But we can bankrupt the owners, in the case of partnerships, and cancel the shares of public companies.

aww_dang 4y ago

As I understand it CZ was referring to an entirely private fund to provide liquidity to projects he felt are worth saving. This is not another gov. supported bailout. >“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis. More details to come soon. In the meantime, please contact Binance Labs if you think you qualify," https://twitter.com/cz_binance/status/1592044496174612482 https://twitter.com/cz_binance/status/1592044496174612482

sdiacom 4y ago
Ah, that would be interesting to see. I wonder, where would the money coming from for this fund? Would it be real money, or magic beans money? What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"?
- aww_dang 4y ago
  Indeed some 40% of Binance's reserves are in their own tokens. https://markets.businessinsider.com/news/currencies/crypto-news-binance-reserves-are-mostly-busd-binancecoin-cz-sbf-2022-11 https://markets.businessinsider.com/news/currencies/crypto-n... >What does it mean for a financial product to be "otherwise strong" when it is "in a liquidity crisis"? As to the rest of it, it is similar to any other speculative investment. If they like the future prospects, they'll assist. A liquidity crisis means there are not enough liquid assets to proceed with business. You can read this as Binance seeking to eat the lunch of those which are unable to withstand depositors running for the exit. If there's no prospect of future luncheons, there's no bailout. The bit about stemming the hysteria and "we're all in this together" is the magnanimous marketing language you'd expect.

lostlogin 4y ago

That would be an actual full circle, and would have recreated what they claimed to oppose.