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> Contagion is a poor word > "Contagion" suggest completely innocent players getting affected and dragging others. ??? That is what is happening in the FTX sa
by dmak 4y ago
> Contagion is a poor word
> "Contagion" suggest completely innocent players getting affected and dragging others.
??? That is what is happening in the FTX saga...
What are you talking about?
- skrebbel 4y agoFor years plenty of people have kindly explained to whoever would listen that crypto is 99.9% a scam. Uninformed individuals buying into the hype are victims, but every investor in FTX or any related firm knew exactly what they were doing and chose to take the risk they took. They’re responsible for their losses and complicit in the scam.
- Telamon 4y agoExcept that FTX isn't "crypto" it is/was a centralised exchange, a company just like others. So whether you believe crypto itself is a scam or not, this is straight up old-style fraud from a company doing things they shouldn't, so not really the same thing.
- ves 4y agoFTX had enormous crypto holdings and made investments in companies you’d definitely consider crypto companies, notwithstanding that there aren’t any “pure” exchanges in the crypto world anyway—they all get their noses in it.
- compsciphd 4y agoFTX wasn't just an exchange for crypto. they had their own crypto token, FTT. the whole fraud is based around the fact that the valuation of FTT was in reality fraudulent.
- Telamon 4y agoNo it isn't. That's what SBF is trying to tell people to make it sound like it's just a story of incompetence and incorrect valuations. They stole user deposits which were specifically not meant to have anything done to them but be held and used them in the trading arm/to prop up other things. The price of FTT shouldn't have mattered to anyone not holding FTT. But yes the precipitant here was that they had clearly been thinking "oh we have loads of FTT still so can always sell that to cover user withdrawals and won't get caught".
- compsciphd 4y agook, I agree with that too, but I also strongly believer that FTT (and most tokens) are created to enable fraud such as this (we can use our fradulent token as a means of collateral). Perhaps your argument is, even without FTT they would have found other means of stealing peoples deposits with a different cover story, and I guess I buy that as well.
- donavanm 4y agoJust use their list of "assets" to illustrate your point. In descending order from the back-of-the-envelope balance sheet of doom: SRM $2,187M "other ventures" $1,475M GDA $1,150M SOL $981M MAPS $616M FTT $553M Anthropic $500M "locked" USDT $500M HOOD $472M USD in Ledger Prime $200M USDB $73M PYTH $63M OXY $54M ETHE $53M TWTR $43M STG $45M FIDA $36M DAI $28M DOT $28M and so on in to irrelevancy. Its a bunch of garbage "coins-that-definitely-arent-unregulated-securities" (SOL, MAPS, OXY, MSOL) and related garbage producers (SRM, GDA, etc). More or less their entire set of assets is either crap that they made up to sell to rubes, or crap that someone else made for FTX to invest in and sell to rubes. They dont and never did have meaningful assets to back teh house of cards once they stole their customers real USD. https://d1e00ek4ebabms.cloudfront.net/production/7ab64a3b-6ce0-47cc-96ac-5e2d2a8c5d6c.png https://d1e00ek4ebabms.cloudfront.net/production/7ab64a3b-6c...
- johnnymorgan 4y agoThe root basis for the for all of the fraud Sammie boy engaged in starts with the FTT token. Now the no true Scotsman fallacy people are throwing around is just that, FTX is and was a crypto company.
- anonymoushn 4y agoDo you mean that before FTX directed customers to wire deposits to Alameda and then immediately misappropriated the funds, they launched a token? like, one of them temporally preceded the other, even though the actions were unrelated?
- anonymoushn 4y agoThis is incorrect, they just stole customer funds. They could do that without issuing a token.
- davidgerard 4y ago> Except that FTX isn't "crypto" nobody buys this line
- johnnymorgan 4y ago> it's not real communism Same thing all the time, true believers have a hard time being critical of themselves. FTX was a crypto company full stop
- skinnymuch 4y agoIf you’re trying to equate communism stuff with Stalin or something then of course there will be reasonable push back. You’ll find a lot less if talking specifics like Lenin or Cuba. Otherwise communism and politics are a lot more complicated and nuanced than the simplicity that is cryptocurrency.
- petesergeant 4y ago> this is straight up old-style fraud from a company Traditional banks definitely go up bankrupt, and regulated financial entities definitely break laws, but it seems to happen with alarming frequency with crypto companies. Given that the only two proven use-cases for crypto are doing an end-run around regulation/laws (however foolish or unjust people may believe those rules to be) and speculation/gambling, it also doesn't seem that surprising?
- Telamon 4y agoI would probably add a distinction that one of the main current use-cases proven is avoiding restrictions rather than regulation/laws. I think a much more positive case can be made for working around limitations that are put in by large players in various industries to make it harder for the common person to do something or start a business in a given area, even in cases where there aren't specific laws around it.
- petesergeant 4y ago> avoiding restrictions rather than regulation/laws Could you give an example? Most of the ones I've seen are regulations/laws that someone simply thinks are unjust, eg a country's currency controls or avoiding laws designed to stop money laundering.
- mrguyorama 4y agoOr, you know, explicitly trying to make sure north korea can sell the crypto they make with ransomware.
- vageli 4y ago> Traditional banks definitely go up bankrupt, and regulated financial entities definitely break laws, but it seems to happen with alarming frequency with crypto companies. Traditional finance can be just as bad. Remember the savings and loan crisis? Just as regulations had to catch up with banking so too will they for cryptocurrency exchanges.
- femto113 4y agoAmong its other endeavors, FTX created FTT, a token that had a peak notional market cap just under $10B, and that value seems to have been used to paper over massive holes in the FTX balance sheet. Massive, unexplained movements of FTT between FTX and Alameda Research[1] presaged the imminent collapse of both companies, and Binance dumping their FTT holdings was the precipitating event. FTX is about as "crypto" as you can get. [1] https://cointelegraph.com/news/alameda-research-ftt-token-transfer-from-september-fuels-wild-speculations https://cointelegraph.com/news/alameda-research-ftt-token-tr...
- adastra22 4y agoA self-issued asset is an unregistered security and has nothing to do with decentralized cryptocurrencies like bitcoin or Ethereum.
- pavlov 4y agoIf FTX isn’t crypto, then I guess Binance, Coinbase and Crypto.com aren’t crypto either? Funny how crypto pumpers, when they were looking to sell some NFTs or whatever, have been more than happy to promote these exchanges as easy ways for retail investors to get their money into the system. But when the shit hits the fan, now the same crypto pumpers are saying that real crypto is something completely else.
- rahen 4y ago> If FTX isn’t crypto, then I guess Binance, Coinbase and Crypto.com aren’t crypto either? Indeed they're not. "cryptos" are cryptocurrencies, like Bitcoin. FTX and alike are centralized exchanges (CEX). This confusion is like calling banks and Wall Street "the US Dollar". And when Madoff and Lehman Brothers happen, calling out on the USD instead of the fraudsters. The USD allows to do money laundering, fund terrorism and create scams, but that doesn't mean it is a scam itself, or that it should be banned, or that people who use the USD participate in a scam.
- pixl97 4y agoEh, USD is not just the dollar, it is an entire set of systems that include regulations that prevent fraud schemes. The USD without these systems would be the broken joke BTC is currently.
- dmak 4y agoThat's right, they are not crypto. They are exchanges. They operate very similar to stock exchanges except the asset classes they operate around are different. People pointing at crypto's failure right now would be equivalent to TD Ameritrade blowing up and saying stocks failed.
- dmak 4y agoI think your comment is a bit misinformed. Your reply is written as if crypto itself failed when it was the exchange that failed. They took client assets and re-invested into other companies which also serviced retail investors. This collapse is due to poor corporate accounting and controls.
- anonymousab 4y ago"Crypto" encompasses both the technologies and the systems created and the external effects they generate on the world. When the result is a bunch of scammy centralized exchanges crumbling? That's what "real" crypto is, regardless of any initial guiding light goals. Just like how the USSR and its actions were "real" communism, regardless of how close they mapped to original utopian dreams about what communism would be. How it plays out in the Real world is what matters, and what makes it the Real thing.
- dmak 4y agoI think you are conflating your understanding of the definitions. Stock exchanges run exchanges to trade stocks. Crypto exchanges also run exchanges to trade cryptocurrencies. FTX is an exchange that trades cryptocurrencies. FTX went under and pulled all companies it invested in with it. However, the cryptocurrencies are still running. What FTX did was criminal and it's well documented and more of it is still being discovered. It's just odd that you would suggest an asset class results in "scammy centralized exchanges crumbling". It would be like saying: > "Stocks" encompasses both the technologies and the systems created and the external effects they generate on the world. When the result is a bunch of scammy centralized exchanges crumbling? That's what "real" stock is, regardless of any initial guiding light goals.
- topranks 4y ago“Crypto” has incentives that have caused this to happen over and over again.
- lynx23 4y agoA person with so much too much money that they invest in scams like crypto doesnt deserve pity. They are no victims. In a sense, that is financial darwinism at its best.
- mrguyorama 4y agoPeople don't deserve to be exploited just because they don't know better.
- deleted 4y ago[deleted]
- lynx23 4y agoThere is a difference between greed and plain uninformedness. Those that invested into crypto are clearly greedy, wanting to multiply their money without providing any value to the society.
- twawaaay 4y agoYep. Thank you. I have been doing this and have been constantly downvoted. People just don't understand that it is fundamentally broken as it is. Not only it is broken as a financial instrument, it is a magnet for shady people and shady money.
- dmak 4y agoI am unsure if you are knowledgable about the situation with FTX given your comments. However, I do want to hear your opinion. Could you share what was broken about crypto in this FTX case?
- JKCalhoun 4y agoI know this is going to sound heretical but perhaps crypto is broken because it is not regulated. Exhibit A: FTX
- dmak 4y agoTo be fair, FTX isn't a result of crypto being unregulated. Operating an exchange is regulated to some extent, but this is a story of failed corporate governance amongst many other things.
- twawaaay 4y agoFTX is exactly because of it being unregulated or where there was regulation -- it being absolutely inadequate and ineffective. Any sane regulator would not allow the shit happening that happened in FTX. This is not a company making bad business decisions. This is company making bad criminal decisions with the money they did not own and were not free to do what they pleased and creating impression of value in a fraudulent way.
- lordfrito 4y ago"Failed corporate governance" is the root of most crimes like this. It just means that no one was watching the hen house. What's criminal here is that it wasn't just failed governance, there was literally no governance. They comingled funds (it's just a big pile of cash, right?) and didn't even consider risk. [1] This is what happens when Scooby and The Gang run a hedge fund. Zoiks! The point of regulation is that it ensures that companies have frameworks like this in place, and that the actors are playing fairly. Mainly because we can't trust some people among us to not take advantage of having access to other peoples money. You can't build a civilization on the back of "Trust me bro I'm good for it". Think about it, why do people regularly hand over their money to their bank, when they've never met the people actually running it? We trust that if we put money in, that later it will come back out. But why? It's because regulation solves the trust problem, if your bank is FDIC insured you're covered. Thanks government! Yes regulation is an evil, but a necessary evil. It's a tax on everyone because some people can't be trusted with the keys to the bank vault. The government ties their hands, that's a good thing. It's harder to raid the cookie jar with one hand tied behind your back. [1] https://www.yahoo.com/video/sam-bankman-fried-said-hed-131733118.html https://www.yahoo.com/video/sam-bankman-fried-said-hed-13173...
- WinstonSmith84 4y agoThis comment is just as dumb as someone which would accuse tradfi of being 99.9% scam because they fell for Bernie Madoff. Complicit is however the lobbied senate giving sbf a platform, but even worse is the SEC / Gensler, borderline criminal, definitely negligent and incompetent.
- lordfrito 4y agoI would love to know who in power knew what, and who looked the other way. It reeks of corruption. Rep Tom Emmer was one of the original "Blockchain 8" who asked the SEC to back off of asking tough questions in the crypto space. [1] Of note, 5 of them received direct campaign donations from FTX. Now Emmer recently is on the record saying the FTX debacle isn't really FTX's fault, it's the SECs fault for letting this happen. [2] In his own words here. [3] You can't make this stuff up. [1] https://prospect.org/power/congressmembers-tried-to-stop-secs-inquiry-into-ftx/ https://prospect.org/power/congressmembers-tried-to-stop-sec... [2] https://www.theatlantic.com/ideas/archive/2022/12/ftx-crypto-currency-sam-bankman-fried-regulators/672351/ https://www.theatlantic.com/ideas/archive/2022/12/ftx-crypto... [3] https://twitter.com/RepTomEmmer/status/1504117902080942084 https://twitter.com/RepTomEmmer/status/1504117902080942084
- borbulon 4y agoIn fact one could argue that the majority of investors knew precisely that it was a scam, precisely that it was a house of cards and, blinded by their own greed, thought they could get in and out before it all fell down taking some other sucker with it. The people I feel bad for in this situation are the people on the receiving end of the pension funds that bought into it.
- int0x2e 4y agoIt seems like there are plenty of people essentially thinking something along the lines of: "I know this is a useless asset that only an idiot would think has real value, but I will get in and unload it on a bigger idiot before the crash...". The issue with investing using the "bigger idiot hypothesis, is that sometimes, you are the biggest idiot and are left holding the bag of sh$#. Sadly, it seems that often the biggest idiots somehow end up in governments and financial institutions.
- jboy55 4y agoThe Ontario teachers pension fund invested $95 million into FTX that they have to write off. They have $295 billion under management, so 0.03% of their assets were lost. In the last week the Canadian dollar fluctuated between from 75 down to 73 cents on the US dollar, or 4% of its value. I don't think the teachers pensions are affected by the fluctuations of the USD based portfolio of the fund, and they certainly aren't going be affected by the FTX investment.
- JKCalhoun 4y agoHmmm... Everyone knows when they approach a roulette wheel that the odds are 37 to 1 against them. I'm not sure the same could be said for crypto investors. And, honestly, I have no particular sympathy for them because even my low-brow self saw all kinds of red flags and stayed away from crypto. But I'm not going to claim they all went in with their eyes wide open. There was some serious hype/subterfuge going on that no doubt fooled a lot of people.
- ghaff 4y agoIt's easy to write off anyone who got into the crypto space at all as grifters and scammers--or maybe rich people/institutions who made a small side bet because "why not?" But you probably also have some number of people who can't see their way to ever having six figures of savings and they see other people getting rich and think "Why not me?"
- JKCalhoun 4y agoI know. Might as well throw in Powerball and slot machines as well. I have at least one friend that makes risky investments for the very reason you gave: he's not going to get rich any other way. I still disagree with him though. I prefer the "get rich slow" schemes over all the others - even though it means I'll never own a yacht.
- mrguyorama 4y agoI the rigged system around me but that doesn't make playing the lottery smart.
- 55555 4y agoEvery teacher in Ontario lost $600.
- xwolfi 4y agoNobody's innocent in crypto. You cant wish to be the last survivor hoarding wealth when a system you try to destroy implodes and then turn back when you get your nose bloody "taxpayers, can you regulate my Anarchy, it's not working as advertised".
- luckylion 4y agoIs that different from regular banking/finance/investment/speculation?
- species9606 4y agoI’d say that’s true up to a point, and that point is when unsophisticated customers watch an FTX commercial during the Super Bowl and then send $10K into SBF’s pocket. Those people are innocent.
- quickthrower2 4y agoCrypto and stonk gambling are the contagion I would say, with this being a specific bacterium.
- Nifty3929 4y agoThey're saying that "contagion" is where people not even related to the failure are getting hurt. So if an innocent person who put money into FTX loses it, that's bad, but not "contagion" since it's still limited to people who were directly related to what was going on. But if FTX were to collapse, causing other failures, and now someone who has never heard of crypto or FTX loses money in their ordinary money market account or something, that would be contagion.