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People have already looked into this, and the claims on FTX' debt were valued at 5c on the dollar. Alameda has burned through billions, and most of what was lef

People have already looked into this, and the claims on FTX' debt were valued at 5c on the dollar. Alameda has burned through billions, and most of what was left were illiquid shitcoins and other worthless junk. Madoff, at least, was dealing with real assets.

panarky 4y ago
> burned through billions If Alameda lost the billions, then who won the billions? Who was on the other side of those trades?
- sam345 4y ago
  I'd be surprised if you could claw back actual trades on an open arms-length market assuming that's what the FTX exchange was. In Madoff's case, there were no trades at all. Madoff collected the money from his investors, generated fake statements showing inflated fake balances and profitable trades (that never actually occurred) and then selectively doled out limited cash redemptions until everyone demanded their money back at once and the whole thing came crashing down. In SBF's case, it looks like SBF took money from his customers, and then bought or sold crypto in arms-length transactions on an open exchange. If that's the case it's hard to see how they can get the money back from the other side of the trades where his counterparties were buying or selling on the market in good faith. I think the only hope is that if they can somehow get the assets from his affiliated entities and/or reclaim assets that SBF and/or his companies still have control over whether on the block chain or elsewhere.
- ericbarrett 4y ago
  Matt Levine has speculated that a bunch of the money was lost via market-making with insufficient controls (margin enforcement etc.). For example, as reported by the Financial Times (via Levine's Dec. 5 newsletter, "Crypto had a Credit Bubble"): [begin quote] In April 2021, a crypto token called MobileCoin — used for payments in the privacy-focused messaging app Signal — suddenly spiked in price from about $6 to almost $70, before crashing back down again almost as quickly. The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange. Alameda was forced to step in and assume the trader’s position to protect FTX. The trading company’s loss on this deal was at least in the hundreds of millions of dollars, the people said, and as high as $1bn, according to one of the people, wiping out a large share of Alameda’s 2021 trading profits. [end quote] ...So whomever was on the other side of positions like that. Savvy outsider or well-informed insider? Who knows! Maybe it can be reclaimed, or maybe it's long dispersed down a chain of dozens of crypto exchanges, tumblers, offshore fiat accounts, and so forth. I expect we'll learn a lot more over the next few weeks as the federal case ramps up and the bankruptcy executor delivers more findings.
  - oblio 4y ago
    Seeing this: > The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange. Makes calling regular currency "fiat" super ironic: > offshore fiat accounts It looks like at the end of the day, cryptocurrency is something people "fiat" out of thin air, "fair" algorithms and computers and systems be damned.
- coffeebeqn 4y ago
  The crypto market? You can’t just unwind the markets by a few months to fix things
- vkou 4y ago
  > Who was on the other side of those trades? Unrelated funds, and random morons from crypto's equivalent of r/wallstreetbets. It's very easy to lose a lot of money, really quickly in the markets.
- lmm 4y ago
  Ever wondered where the money to make crypto go up was coming from?
  - Scoundreller 4y ago
    I’m surprised bitcoin is holding up as well as it is
    - kkielhofner 4y ago
      I don't pretend to fully understand markets but movement on BTC, etc with all of these developments is just further proof to me there is no connection between any of these coins and reality. As another example, when Ethereum successfully moved to proof of stake without a hitch (an ultimately impressive and challenging development) the price actually went down. I don't understand anything in this space.
      - mthoms 4y ago
        Lots of events are already "priced in" before they happen. That is, investors have anticipated the upcoming event (eg Ethereum upgrade) and the stock/token price has already moved accordingly. https://obliviousinvestor.com/what-does-it-mean-for-something-to-be-priced-in/ https://obliviousinvestor.com/what-does-it-mean-for-somethin...
        kkielhofner 4y ago
        Even with that how does this[0] chart make any sense? [0] - https://www.coindesk.com/embedded-chart/tcPpzTgN6bBC9 https://www.coindesk.com/embedded-chart/tcPpzTgN6bBC9
      - panarky 4y ago
        It's not clear to me that the collapse of corrupt crypto exchanges should make the price of bitcoin drop. What is the mechanism exactly? It's not like FTX holds a shitload of bitcoin and now suddenly they have to sell it all, driving down the price. Is the mechanism just some kind of psychological thing, where a centralized criminal enterprise is associated with "crypto", even though it was mostly esoteric shit like FTT and MobileCoin and not bitcoin, but since bitcoin is also "crypto" then people who hold it would sell it because FTX folded? It's like saying the collapse of Bear Stearns and Lehman Brothers should somehow make US dollars worth less.
- ShredKazoo 4y ago
  One blogger's estimate of their losses: >Voyager/BlockFi acquisition: 1.5b >LUNA exposure: 1b >KCG-style algo crash: 1b >FTT/SRM collateral maintenance: 2b >Venture capital: 2b >Real estate, branding, other frivolous spending: 2b >FTT drop from $22 to $4: 4b >Discretionary longs going bad: 2b >Total: 15.5 billion https://milkyeggs.com/?p=175 https://milkyeggs.com/?p=175
  - seanhunter 4y ago
    Reminds me of the famous quote by the footballer George Best “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”
- tananaev 4y ago
  A lot of it is probably stolen. A lot went into thousands of worthless altcoins and their devs got rich. Another big portion is probably advertising. They spent big on YouTube influencers. Basically a lot of people got rich and a lot more people got screwed.
  - heartbeats 4y ago
    Altcoin devs are not paid well; Bitcoin devs make entirely normal SWE salaries according to public information, and I can't imagine DogeCoin or whatever is any better. All the big money is in marketing, since that's what creates the value.
    - oblio 4y ago
      By devs he probably doesn't mean software devs, but coin creators.
- gitfan86 4y ago
  There was never "billions" of deposits in the first place. Someone mints a coin and pays FTX 5 million to list it. Then that person pays influencers and invests themselves to get the price of the coin to go up. Now on paper that coin is worth "100 million". But in reality only 8 million dollars has been spent.
  - rvba 4y ago
    This is often very ignored in analysis, most (if not all) those coins have prizes based on inflated valuations.

panarky 4y ago

> burned through billions If Alameda lost the billions, then who won the billions? Who was on the other side of those trades?

sam345 4y ago
I'd be surprised if you could claw back actual trades on an open arms-length market assuming that's what the FTX exchange was. In Madoff's case, there were no trades at all. Madoff collected the money from his investors, generated fake statements showing inflated fake balances and profitable trades (that never actually occurred) and then selectively doled out limited cash redemptions until everyone demanded their money back at once and the whole thing came crashing down. In SBF's case, it looks like SBF took money from his customers, and then bought or sold crypto in arms-length transactions on an open exchange. If that's the case it's hard to see how they can get the money back from the other side of the trades where his counterparties were buying or selling on the market in good faith. I think the only hope is that if they can somehow get the assets from his affiliated entities and/or reclaim assets that SBF and/or his companies still have control over whether on the block chain or elsewhere.
ericbarrett 4y ago
Matt Levine has speculated that a bunch of the money was lost via market-making with insufficient controls (margin enforcement etc.). For example, as reported by the Financial Times (via Levine's Dec. 5 newsletter, "Crypto had a Credit Bubble"): [begin quote] In April 2021, a crypto token called MobileCoin — used for payments in the privacy-focused messaging app Signal — suddenly spiked in price from about $6 to almost $70, before crashing back down again almost as quickly. The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange. Alameda was forced to step in and assume the trader’s position to protect FTX. The trading company’s loss on this deal was at least in the hundreds of millions of dollars, the people said, and as high as $1bn, according to one of the people, wiping out a large share of Alameda’s 2021 trading profits. [end quote] ...So whomever was on the other side of positions like that. Savvy outsider or well-informed insider? Who knows! Maybe it can be reclaimed, or maybe it's long dispersed down a chain of dozens of crypto exchanges, tumblers, offshore fiat accounts, and so forth. I expect we'll learn a lot more over the next few weeks as the federal case ramps up and the bankruptcy executor delivers more findings.
- oblio 4y ago
  Seeing this: > The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange. Makes calling regular currency "fiat" super ironic: > offshore fiat accounts It looks like at the end of the day, cryptocurrency is something people "fiat" out of thin air, "fair" algorithms and computers and systems be damned.
coffeebeqn 4y ago
The crypto market? You can’t just unwind the markets by a few months to fix things
vkou 4y ago
> Who was on the other side of those trades? Unrelated funds, and random morons from crypto's equivalent of r/wallstreetbets. It's very easy to lose a lot of money, really quickly in the markets.
lmm 4y ago
Ever wondered where the money to make crypto go up was coming from?
- Scoundreller 4y ago
  I’m surprised bitcoin is holding up as well as it is
  - kkielhofner 4y ago
    I don't pretend to fully understand markets but movement on BTC, etc with all of these developments is just further proof to me there is no connection between any of these coins and reality. As another example, when Ethereum successfully moved to proof of stake without a hitch (an ultimately impressive and challenging development) the price actually went down. I don't understand anything in this space.
    - mthoms 4y ago
      Lots of events are already "priced in" before they happen. That is, investors have anticipated the upcoming event (eg Ethereum upgrade) and the stock/token price has already moved accordingly. https://obliviousinvestor.com/what-does-it-mean-for-something-to-be-priced-in/ https://obliviousinvestor.com/what-does-it-mean-for-somethin...
      - kkielhofner 4y ago
        Even with that how does this[0] chart make any sense? [0] - https://www.coindesk.com/embedded-chart/tcPpzTgN6bBC9 https://www.coindesk.com/embedded-chart/tcPpzTgN6bBC9
    - panarky 4y ago
      It's not clear to me that the collapse of corrupt crypto exchanges should make the price of bitcoin drop. What is the mechanism exactly? It's not like FTX holds a shitload of bitcoin and now suddenly they have to sell it all, driving down the price. Is the mechanism just some kind of psychological thing, where a centralized criminal enterprise is associated with "crypto", even though it was mostly esoteric shit like FTT and MobileCoin and not bitcoin, but since bitcoin is also "crypto" then people who hold it would sell it because FTX folded? It's like saying the collapse of Bear Stearns and Lehman Brothers should somehow make US dollars worth less.
ShredKazoo 4y ago
One blogger's estimate of their losses: >Voyager/BlockFi acquisition: 1.5b >LUNA exposure: 1b >KCG-style algo crash: 1b >FTT/SRM collateral maintenance: 2b >Venture capital: 2b >Real estate, branding, other frivolous spending: 2b >FTT drop from $22 to $4: 4b >Discretionary longs going bad: 2b >Total: 15.5 billion https://milkyeggs.com/?p=175 https://milkyeggs.com/?p=175
- seanhunter 4y ago
  Reminds me of the famous quote by the footballer George Best “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”
tananaev 4y ago
A lot of it is probably stolen. A lot went into thousands of worthless altcoins and their devs got rich. Another big portion is probably advertising. They spent big on YouTube influencers. Basically a lot of people got rich and a lot more people got screwed.
- heartbeats 4y ago
  Altcoin devs are not paid well; Bitcoin devs make entirely normal SWE salaries according to public information, and I can't imagine DogeCoin or whatever is any better. All the big money is in marketing, since that's what creates the value.
  - oblio 4y ago
    By devs he probably doesn't mean software devs, but coin creators.
gitfan86 4y ago
There was never "billions" of deposits in the first place. Someone mints a coin and pays FTX 5 million to list it. Then that person pays influencers and invests themselves to get the price of the coin to go up. Now on paper that coin is worth "100 million". But in reality only 8 million dollars has been spent.
- rvba 4y ago
  This is often very ignored in analysis, most (if not all) those coins have prizes based on inflated valuations.