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I sincerely hope that I never meet Sam Bankman Fried, because if I did I do not know what I would do but it certainly wouldn't be legal. I was stupid and thoug

I sincerely hope that I never meet Sam Bankman Fried, because if I did I do not know what I would do but it certainly wouldn't be legal. I was stupid and thought that the 7+% interest I was getting from Gemini+GUSD+Genesis Holdings was a good idea, I put a good chunk of money in there, and as of right now the status for that appears to be in "limbo at best". It's particularly upsetting, because this all unfolded right after I got fired from my last job, when I really needed my liquid money to pay for things like "my mortgage" and "food". I'm fine now fiscally, and even wasn't in too much trouble back in November [1], but it make me lose multiple nights of sleep worrying about stuff, and also made me feel like an idiot for ever thinking that cryptocurrency was a good idea. [1] I have a good chunk of money stashed in stocks/ETFs, which I could have liquidated for money, but the market was pretty far down so I would have had to take a big haircut.

cwkoss 4y ago
FTX failure isnt a cryptocurrency problem, its a plain old boring case of financial mismanagement and fraud. Good reminder to all here that if you don't hold they private keys to your crypto, all you have is an IOU from a risky new business.
- CapstanRoller 4y ago
  How would holding keys to a crypto wallet full of FTT prevent large-scale fraud via currency manipulation and subsequent devaluation of your holdings? This is indeed a failure of crypto, because FTX was the one primarily in control of the coin supply.
  - EGreg 4y ago
    Bitcoiners ask the same thing about holding a bank account full of dollars, or in many other countries (like Lebanon, etc.) even worse currency, or they can just freeze your account, etc. Anyway, it should be clear to people that the 7% in an outside currency has to come from somewhere. And most of this stuff has been a zero-sum game so the money comes from: 1) Investors who bought the top 2) Traders who got liquidated 3) IPO investors who bought shares in a money-losing business model like WeWork 4) Advertisers whose ads didn’t pay off (yes, advertising is a zero-sum game too) Sadly, most people do not realize it’s a zero sum game and the bagholder class only grows and grows until the speculative bubble pops.
    - deleted 4y ago
      [deleted]
    - ebiester 4y ago
      If you have enough money, you will not be immune to rubber hose decryption attacks or other shows of force. Either you live in a country where you can trust your money system, or you don't.
      - ChainOfFools 4y ago
        It's always been my take that the reason ideological Bitcoin ghouls are so enthusiastic about directly contradicting their entire argument against government control over money, by lobbying countries like El Salvador to adopt Bitcoin as a national currency, is because they recognize (cf. lead pipe attack) that there is ultimately no replacing men with guns when it comes to defending the value of money. Quote back by math quote doesn't cut it when someone has a mortar aimed at the middle of your mining farm. Or even someone with a couple Jerry cans of gasoline, matches, and nothing to lose after some anon creep chilling in a Thai brothel pulled their life savings to fund his 'tech nomad' lifestyle. And since they are too fragmented and comically self-serving to organize anything like their own soveriegn state, they need to piggyback off an existing one.
- lazide 4y ago
  It’s a crypto issue. You can figure that out by restating their advertising/business model using ‘cash’ instead of crypto, and asking yourself how long they could go before getting shut down. Hint: they likely could never have even gotten to the point of taking customer deposits, or would have been shut down within weeks or months at most by regulators.
  - dlubarov 4y ago
    Then the issue isn't with crypto itself, but with the regulation of crypto.
    - phone8675309 4y ago
      Which is a philosophical issue with crypto - the first cryptocurrencies were designed specifically to avoid government regulation.
      - dlubarov 4y ago
        But here we're talking about exchanges. Resistance to government censorship/control only applies to on-chain activity, not centralized custodians.
        lazide 4y ago
        Most of the custodians work very hard to side step regulation and enable scams, albeit not necessarily openly on the second part, and are enabled by the on-chain primitives. Pretty hard to avoid gov’t oversight/regulation when a USD Wire and ACH goes through the fed, for instance. Easier when it goes through a blockchain which they can’t control. Which is why a lot of exchanges (and all the sketchy ones) use things like Tether and stablecoins, and avoid US banks.
    - __loam 4y ago
      It's wild to me that crypto bros will screech about decentralization and how the government shouldn't be able to tell you what to do with your money, then turn around and screech for goverment oversight and regulation. Absolutely nonsensical group of people.
- grey-area 4y ago
  And if you do hold the private keys to your crypto, all you hold is an IOU from a risky market full of fraud and rug pulls. Many coins have failed, many more will fail, and many if not all will drop to zero as the mania subsides. When that happens it doesn’t matter where your keys are if the market turns illiquid in seconds during a crash.
  - everfree 4y ago
    You hold "an IOU from a market"? I'm not sure that's how that works.
    - grey-area 4y ago
      Markets have varying levels of risk.
  - lesuorac 4y ago
    I mean it still kind of matters where your keys are if the market turns illiquid. Its the difference between losing an asset and not. I can definitely see a lot of cryptocurrencies losing a ton of a value but they do have a legitimate use for remittances. If you're transferring $1000 it doesn't matter if you convert it into 1 bitcoin or 100 bitcoins since your wife is cashing it out the next day for 20,000 pesos.
  - xk_id 4y ago
    Your argument applies equally to fiat finance too: in case of a catastrophe it all goes to zero or turns illiquid. The fact is that billions in locked value have accrued securely over the years in battle tested protocols like curve, aave and yearn.
    - grey-area 4y ago
      Well that level of risk certainly applies to some risky instruments (say CDOs), but I'd say there is far less risk in VWRL say than speculating on the value of a plethora of currencies which are almost purely vehicles for speculation rather than used for everyday transactions. Doesn't matter if you own your keys if nobody wants to buy your Crypto/NFT etc. Re your numbers, I'm afraid I don't trust any of the numbers in this market as none of them are audited.
- prepend 4y ago
  In FTX’s case it’s impossible to hold your keys, right. The condition to get interest payments is to allow them to manage your funds and invest/loan/etc. Is there any crypto “bank” that promises to pay interest while you hold your own keys?
  - cwkoss 4y ago
    There are decentralized staking mechanisms, but you do take risk in exchange for the interest rewards.
    - tornato7 4y ago
      If interest rates are any indication, depositing DAI on Aave for example is seen by the market as lower risk than US Govt treasuries. This makes some sense, as with treasuries you run the risk of not having access to your cash when you need it because of trade and settlement windows. Funds in Aave are 100% liquid.
prepend 4y ago
I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. I looked at these and they were so absurd there was no way I would invest. No fundamentals. No audit. No insurance. No stable company or bank. What was your thought process in putting funds here? Did you think it would just take longer to explode and you would be able to withdraw before? Did you genuinely believe?
- it_citizen 4y ago
  Being a true passive investor is much harder than most people think. We are flooded with stories of "amazing opportunities" and "systemic risks".
  - deleted 4y ago
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- deleted 4y ago
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- JumpCrisscross 4y ago
  > I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication Necessarily risky. Not necessarily fabrication. Between those two there is room for both productive gains and delusional optimism.
  - mrguyorama 4y ago
    Risk to return is non-linear, and at a system with a floor of 0%, 7% is an insane claim. Granted, this requires a reasonable amount of financial literacy, and plenty of people think they have that but don't.
    - maccard 4y ago
      > at a system with a floor of 0%, There's not a floor of 0%. Negative returns exist.
londons_explore 4y ago
> I could have liquidated for money, but the market was pretty far down so I would have had to take a big haircut. Humans in general cannot 'time the market'. To think that you can is a fool's errand. Therefore, the fact your stocks are down isn't a good reason not to sell them.
- tombert 4y ago
  I actually did end up selling some to pay the mortgage. It's not fun to realize a loss in my portfolio no matter what though!
  - robocat 4y ago
    Blaming SBF is almost pointless because you obviously needed the lesson - you did not learn previously by seeing the mistakes of others. You would have been taught the lesson eventually by some other random, and fortunately your lesson didn’t take you to zero in your retirement. That said, you clearly also get a lot of other things right: admitting your error, long term savings in a home, a good job, understanding what a portfolio is, plus other obviously smart decisions. Hopefully we all learn from your mistake - it is so easy to screw up or be beguiled into screwing up.
    - tombert 4y ago
      I mean, whether or not I needed to learn the lesson, I'm going to be upset with any human that outright steals money from me. I don't think that's weird. But yeah, fundamentally I suppose it's better for me to have been conned like this while I'm still relatively young, and where I didn't have all my net worth tied up in it. Honestly at this point, if anyone were to ask me for investing advice, I would tell them to stay the hell away from cryptocurrency.
- thunky 4y ago
  > Humans in general cannot 'time the market'. To think that you can is a fool's errand. OP wasn't trying to time the market. They had a liquidity issue and needed cash. > Therefore, the fact your stocks are down isn't a good reason not to sell them. Realizing a loss is the perfect reason not to sell. This is why smart people recommend having an emergency fund, so you don't have to take a hit and damage your long term goals when you find yourself in a short term pinch. Not selling is actually the most important part of owning stocks.
xapata 4y ago
> the market was pretty far down If you're an efficient-market believer, there's no such thing as a "down" market, because the price is always correct.
- kelnos 4y ago
  I think it's reasonable to believe in efficient markets, but also understand that pricing in markets is a) made up of imperfect information, and b) subject to outside influences like emotion, propaganda, etc.
  - xapata 4y ago
    Those are inconsistent beliefs, if we're talking about Eugene Fama's hypothesis.
    - Naga 4y ago
      Just like the rest of economics, the efficient market hypothesis is a nice model without any basis in reality. The fact that speculative bubbles exist should be enouh to disprove it.
      - xapata 4y ago
        I guess that's the big question. Market behavior certainly can look like there are speculative bubbles, but Fama hypothesizes a different interpretation of the evidence. I'm not a believer, but there is some value in the thought.
- mrguyorama 4y ago
  If you believe the efficient market hypothesis can actually apply to an existing stock market, I would like to offer you an incredible price to buy the Eiffel Tower! Hurry up! This offer is only valid for a few hours! People are lining up to get this offer
yieldcrv 4y ago
[flagged]
- tombert 4y ago
  "never learn", give me a fucking break. Cryptocurrency is just slow, bad, unregulated, pretend money. That's the reason it's so rife with fraud. If I had put my money into a boring FDIC insured bank I'd still have all of it right now. I thought cryptocurrency was a good idea, put my money into one of the more trusted exchanges, and now it's gone. I guess I could have stored my wallet on a hard drive or something, just like I could have withdrawn all my cash and put it under my mattress, but I really don't consider that progress. So I did learn; the banks are regulated for a reason.
  - mrguyorama 4y ago
    You could have literally had your money in SVB and come out better.
  - yieldcrv 4y ago
    Its funny how you did it again, so once again, its weird how you don't feel like an idiot for ever thinking that custodying your money in mismanaged opaque businesses was the problem. yes, you should have stored your self-custodied your assets and cryptocurrency does not exist for any other reason. unlike banks and brokerage houses, crypto exchanges exist for passing through to your destination: self custody. who said anything about "progress"? so now you want to pretend like you adopted some ethos about a cryptocurrency future but ignored everything about how to use crypto and pretend you burned because "you believed", but only in a mismanaged business that catered to your greed? okay that's a legitimately hilarious take. as the late steve jobs said: you're holding it wrong.
    - tombert 4y ago
      What lesson should I be learning here exactly? Again, if I had "custody'd my money in an opaque business" like, you know, A BANK, I would have been fine. Clearly the "opaqueness" isn't an issue. But I agree, if you want to have your digital monopoly money, it's probably better to play with that on a hard drive and never actually do anything with it.
fundad 4y ago
It takes a big person to admit it and I think this is the first.
jmyeet 4y ago
I'm sorry for your loss but I hope you take this as a lesson that crypto is just snake oil. Some in these comments try and paint this as just an FTX problem but it's not. For cryptoskeptics such as myself it's been fascinating to watch as the crypto world speedruns the lessons of debt, finance and the banking system that led them to work the way they do. A lot of otherwise smart people in other areas discovered those smarts don't automatically transfer to disrupting the financial system. What ultimately underlies the financial system--including crypto--is trust and, beyond that, the military might of governments. To your specific case, I saw a quote (that I can't find) that basically said that any investment consistently offering above-market returns is eitehr a scam or has risks that you cannot see. Bear Stearns returned above market returns every month until it didn't, and that was that.
- tombert 4y ago
  Yep, I replied in a sister comment [1], I am wholly turned off by cryptocurrency at this point. I was kind of enamored with the tech behind blockchains (and to some extent I suppose I still kind of am), and saw the insane growth it was going through, and drank the stupid kool-ade. Seeing it all go pear-shaped has really highlighted why we regulate banks in the way that we do. It's not perfect, but I sleep better knowing that an actually-insured bank won't really run away with my money. [1] https://news.ycombinator.com/item?id=35907377 https://news.ycombinator.com/item?id=35907377
e63f67dd-065b 4y ago
This reminds me of an old finance joke my professor told me (this was when rates were 0): if somebody offers you 20% interest p.a. on an FDIC insured account, and you put in $1,000,000 today, how much money will you have in 5 years? The correct answer is 0, because you're being scammed.
- TinyRick 4y ago
  Wouldn't the correct answer be $250k due to the FDIC insurance?
  - e63f67dd-065b 3y ago
    Late reply, but basically: I pinky swear that my NotAScamBank is FDIC insured, and that it has 20% interest p.a., would you like to deposit money with me? Obviously the FDIC is gonna take a look and say "hah no, go away", NotAScamBank knows this, and won't even bother applying. It's a scam, why would they be honest about FDIC status?
  - Rexxar 4y ago
    Why would they be honest on FDIC insurance if they lie on rate ?
  - thallium205 4y ago
    Today’s FDIC would reimburse the full amount and honor the investment terms.
latchkey 4y ago
Interestingly, even today you can still get much better than 7% in DeFi. No need to give your money to a curly haired dude living in a condo on an island. Who, at the time, was making a lot more than that on your funds. In DeFi, you give your money to a "smart" contract, which can of course still get hacked or what not. Always assess your risk/reward ratio. Where does the yield come from? Collateralized lending/borrowing markets. People are still gambling with crypto and they can do it better, if they can borrow funds. It got a lot smaller after the collapse of FTX, but hasn't stopped at all. Aave still has $7.5b locked up.
- tornato7 4y ago
  Aave rates are sub-3%
  - latchkey 4y ago
    Aave isn't the only site out there. That was just an example.
    - somsak2 4y ago
      feels weird to provide an example that is less than half of the rates we were talking about, any others?
      - latchkey 4y ago
        DeFi is a fascinating (to me) set of money lego's to effectively become your own bank. Like writing code, it takes a bit of time and effort to really dig in and understand the mechanics of providing liquidity. There is a lot of risk and a lot of reward. It is a bit of a minefield, but you do it long enough, you learn ways to navigate safely. If you have any experience in currency conversion, this is the equivalent to that. If you've travelled you've probably bought and sold currency at the airports. If you're in Saigon, you get the best USD->VND rates not at the airport, but by going to the gold dealers who have shops on the streets. You have to shop around to different stores to find the best rates. DeFi enables you to effectively be that conversion service (gold dealer). But instead of USD->VND, it is ETH->BTC (or whatever cryptos you want to provide liquidity for, or lend/borrow). I personally find this a fascinating aspect of crypto that few understand or even care to look into. It goes far beyond just the gambling aspect of buy/hold and number go up (or down). It turns into real finance and an actual valid use case for crypto. Sure, crypto is re-inventing the same old stuff that people have been doing for ages, but at least now people globally have the ability to try out these mechanics, instead of just leaving it up to the bankers (or gold dealers) to get rich on your money. I love the concept of power to the people. That said, I'm not here to give financial advice about how to get the best rates. There is nothing weird about that. I'm just saying they are out there if you want to look for them and learn more about it all. Aave is just an example of the fact that a single site has a $7.5b market. Of course, if there is a market that large, there is going to be many other sites than that, and it is all quite competitive. If you're interested in this, please do your own research.
gist 4y ago
> I sincerely hope that I never meet Sam Bankman Fried, because if I did I do not know what I would do but it certainly wouldn't be legal. You are insinuating physical violence (I will assume) which is never acceptable. And in your case you made a mistake ie 'I put a chunk of money in there' and further SBF had no control over this: 'because this all unfolded right after I got fired from my last job, when I really needed my liquid money to pay for things like "my mortgage" and "food".' The takeaway for others is events happen in life. Could be someone's fault could be nobody's fault. Having all your eggs (or no eggs) in one basket can and does lead often to disaster. Sorry for the harsh way of putting this. What you are indicating is that you had no cushion and made the mistake of being lured by a high return and ignored potentially any downsides. (Gemini is not and did not claim to be an FDIC insured bank. Also crypto can and does lose value unlike money in a bank. Even if you had been able to get 7% return if crypto loses value you lose money. Same as or similar to a dividend paying stock).
- alexb_ 4y ago
  It's easy to say it's never acceptable when it's not your life savings that have been stolen.
- tombert 4y ago
  > You are insinuating physical violence (I will assume) which is never acceptable. I mean, the guy stole about more than ten thousand dollars from me. I wouldn't actually hurt him, I was engaging in a bit of hyperbole (which I feel you're deliberately refusing to understand), but fundamentally I am not going to lose a ton of sleep if something bad happens to SBF. > and further SBF had no control over this: 'because this all unfolded right after I got fired from my last job, when I really needed my liquid money to pay for things like "my mortgage" and "food".' No, but it is why I am especially upset over this stuff. If it had happened when I was gainfully employed at the time I would obviously be upset to have thirteen grand stolen from me, but it especially hurt because I was a victim of all the layoffs that happened last year. I didn't claim there was some divine rationality, which I also think you are deliberately not understanding. > Having all your eggs (or no eggs) in one basket can and does lead often to disaster. > Sorry for the harsh way of putting this. What you are indicating is that you had no cushion In the post that you are responding to, I mention that I did have a cushion, and I didn't put all my eggs in one basket. I had a fair bit of stock and ETFs. I had to sell in a down market, so that wasn't fun, but I feel like you didn't finish reading the post. > Also crypto can and does lose value unlike money in a bank. Even if you had been able to get 7% return if crypto loses value you lose money This was GUSD, which was ostensibly pegged 1-to-1 to the US dollar, so it wasn't supposed to be able to "lose value" in any substantial way. > Gemini is not and did not claim to be an FDIC insured bank. No, but the verbiage on this was less clear on this in the past: https://web.archive.org/web/20211201224824/https://www.gemini.com/dollar https://web.archive.org/web/20211201224824/https://www.gemin.... Thanks johnmaguire in this post: https://news.ycombinator.com/item?id=35907642 https://news.ycombinator.com/item?id=35907642
3327 4y ago
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nonethewiser 4y ago
The term “cryptocurrency” is WAY more inclusive than the thing you invested in.
unyttigfjelltol 4y ago
Forget the math, the tech, the error you made-- that lots of people made-- is we must evaluate the trustworthiness of the people running the show, and run like heck from any whiff of lack of integrity. My impression of the FTX folks was they exhibited catastrophic lack of maturity, at minimum. Now, the cynic says that perhaps folks were desensitized by shortcomings of crypto culture in general... which to my mind is a cautionary sign for anyone speculating in that area who has not yet been separated from their stake.
- tombert 4y ago
  I didn’t actually do anything with FTX, at least not directly; I did not realize that the Gemini Earn program had anything to do with FTX or SBF until after everything collapsed. I didn’t feel like the Gemini people were terribly unprofessional; at least not outwardly.
  - tornato7 4y ago
    I think it shows some professionalism that the Winklevoss twins have committed $100M of their own capital to pay back Earn users. They are trying to do the right thing.
guardiangod 4y ago
Don't feel too bad about it. Wealth wise, what doesn't kill you makes you stronger. Once you made it thru the tough time, you can always rebuild (unlike say, health).
birdyrooster 4y ago
I have a friend in a similar boat who lost hist entire life savings in Gemini
- tombert 4y ago
  My heart goes out to him...he's in a way worse situation than I was/am. I was in a position that gave me more headaches than I'd like; unpleasant but fundamentally I'll get over it (most of my savings are in ETFs and treasury bills). I was able to sell some stock at a bit of a loss, pay for my mortgage and food until I found another decent job. It sucks, I don't like losing money on my investments when I know I could have waited them out had I been employed, but fundamentally not earth-shattering. But I did read stories about people who really bought into cryptocurrencies, and were really taken for everything they were worth by the Gemini Earn program, which it sounds like your friend was. I can only hope that the SEC lawsuit against Gemini is successful, and all the investors are made whole; I cannot speak for your friend, but I'd be happy enough to forfeit my interest if I could get my principal back.
- tornato7 4y ago
  He can sell claims on the secondary market for ~50-70% of what he's owed, BTW
  - eaenki 4y ago
    where
    - tornato7 4y ago
      https://www.cherokeeacq.com/ https://www.cherokeeacq.com/
crtified 4y ago
> made me feel like an idiot for ever thinking that cryptocurrency was a good idea The very broad notion of digital currency involving cryptography is as good, bad or ugly as any number of other everyday concepts and mechanisms. There's no special inherent evil in that broad notion. Your investment choice, on the other hand, was average. Not terrible. Average. That is, you diversified, you lost some, but you're still around to play the game, and still ranking very highly in the overall human race affluence stakes. Snake Oil, or even simpler, mundanely-poor investments, from all walks of life, are the true basis of idiot bait. Digital currency involving cryptography simply is what it is. It's quite likely that the near-to-medium future of humanity will involve quite a lot of it, in some form or another (not at all like most of the current forms, of course).

cwkoss 4y ago

FTX failure isnt a cryptocurrency problem, its a plain old boring case of financial mismanagement and fraud. Good reminder to all here that if you don't hold they private keys to your crypto, all you have is an IOU from a risky new business.

CapstanRoller 4y ago
How would holding keys to a crypto wallet full of FTT prevent large-scale fraud via currency manipulation and subsequent devaluation of your holdings? This is indeed a failure of crypto, because FTX was the one primarily in control of the coin supply.
- EGreg 4y ago
  Bitcoiners ask the same thing about holding a bank account full of dollars, or in many other countries (like Lebanon, etc.) even worse currency, or they can just freeze your account, etc. Anyway, it should be clear to people that the 7% in an outside currency has to come from somewhere. And most of this stuff has been a zero-sum game so the money comes from: 1) Investors who bought the top 2) Traders who got liquidated 3) IPO investors who bought shares in a money-losing business model like WeWork 4) Advertisers whose ads didn’t pay off (yes, advertising is a zero-sum game too) Sadly, most people do not realize it’s a zero sum game and the bagholder class only grows and grows until the speculative bubble pops.
  - deleted 4y ago
    [deleted]
  - ebiester 4y ago
    If you have enough money, you will not be immune to rubber hose decryption attacks or other shows of force. Either you live in a country where you can trust your money system, or you don't.
    - ChainOfFools 4y ago
      It's always been my take that the reason ideological Bitcoin ghouls are so enthusiastic about directly contradicting their entire argument against government control over money, by lobbying countries like El Salvador to adopt Bitcoin as a national currency, is because they recognize (cf. lead pipe attack) that there is ultimately no replacing men with guns when it comes to defending the value of money. Quote back by math quote doesn't cut it when someone has a mortar aimed at the middle of your mining farm. Or even someone with a couple Jerry cans of gasoline, matches, and nothing to lose after some anon creep chilling in a Thai brothel pulled their life savings to fund his 'tech nomad' lifestyle. And since they are too fragmented and comically self-serving to organize anything like their own soveriegn state, they need to piggyback off an existing one.
lazide 4y ago
It’s a crypto issue. You can figure that out by restating their advertising/business model using ‘cash’ instead of crypto, and asking yourself how long they could go before getting shut down. Hint: they likely could never have even gotten to the point of taking customer deposits, or would have been shut down within weeks or months at most by regulators.
- dlubarov 4y ago
  Then the issue isn't with crypto itself, but with the regulation of crypto.
  - phone8675309 4y ago
    Which is a philosophical issue with crypto - the first cryptocurrencies were designed specifically to avoid government regulation.
    - dlubarov 4y ago
      But here we're talking about exchanges. Resistance to government censorship/control only applies to on-chain activity, not centralized custodians.
      - lazide 4y ago
        Most of the custodians work very hard to side step regulation and enable scams, albeit not necessarily openly on the second part, and are enabled by the on-chain primitives. Pretty hard to avoid gov’t oversight/regulation when a USD Wire and ACH goes through the fed, for instance. Easier when it goes through a blockchain which they can’t control. Which is why a lot of exchanges (and all the sketchy ones) use things like Tether and stablecoins, and avoid US banks.
  - __loam 4y ago
    It's wild to me that crypto bros will screech about decentralization and how the government shouldn't be able to tell you what to do with your money, then turn around and screech for goverment oversight and regulation. Absolutely nonsensical group of people.
grey-area 4y ago
And if you do hold the private keys to your crypto, all you hold is an IOU from a risky market full of fraud and rug pulls. Many coins have failed, many more will fail, and many if not all will drop to zero as the mania subsides. When that happens it doesn’t matter where your keys are if the market turns illiquid in seconds during a crash.
- everfree 4y ago
  You hold "an IOU from a market"? I'm not sure that's how that works.
  - grey-area 4y ago
    Markets have varying levels of risk.
- lesuorac 4y ago
  I mean it still kind of matters where your keys are if the market turns illiquid. Its the difference between losing an asset and not. I can definitely see a lot of cryptocurrencies losing a ton of a value but they do have a legitimate use for remittances. If you're transferring $1000 it doesn't matter if you convert it into 1 bitcoin or 100 bitcoins since your wife is cashing it out the next day for 20,000 pesos.
- xk_id 4y ago
  Your argument applies equally to fiat finance too: in case of a catastrophe it all goes to zero or turns illiquid. The fact is that billions in locked value have accrued securely over the years in battle tested protocols like curve, aave and yearn.
  - grey-area 4y ago
    Well that level of risk certainly applies to some risky instruments (say CDOs), but I'd say there is far less risk in VWRL say than speculating on the value of a plethora of currencies which are almost purely vehicles for speculation rather than used for everyday transactions. Doesn't matter if you own your keys if nobody wants to buy your Crypto/NFT etc. Re your numbers, I'm afraid I don't trust any of the numbers in this market as none of them are audited.
prepend 4y ago
In FTX’s case it’s impossible to hold your keys, right. The condition to get interest payments is to allow them to manage your funds and invest/loan/etc. Is there any crypto “bank” that promises to pay interest while you hold your own keys?
- cwkoss 4y ago
  There are decentralized staking mechanisms, but you do take risk in exchange for the interest rewards.
  - tornato7 4y ago
    If interest rates are any indication, depositing DAI on Aave for example is seen by the market as lower risk than US Govt treasuries. This makes some sense, as with treasuries you run the risk of not having access to your cash when you need it because of trade and settlement windows. Funds in Aave are 100% liquid.

prepend 4y ago

I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. I looked at these and they were so absurd there was no way I would invest. No fundamentals. No audit. No insurance. No stable company or bank. What was your thought process in putting funds here? Did you think it would just take longer to explode and you would be able to withdraw before? Did you genuinely believe?

it_citizen 4y ago
Being a true passive investor is much harder than most people think. We are flooded with stories of "amazing opportunities" and "systemic risks".
- deleted 4y ago
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JumpCrisscross 4y ago
> I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication Necessarily risky. Not necessarily fabrication. Between those two there is room for both productive gains and delusional optimism.
- mrguyorama 4y ago
  Risk to return is non-linear, and at a system with a floor of 0%, 7% is an insane claim. Granted, this requires a reasonable amount of financial literacy, and plenty of people think they have that but don't.
  - maccard 4y ago
    > at a system with a floor of 0%, There's not a floor of 0%. Negative returns exist.

londons_explore 4y ago

> I could have liquidated for money, but the market was pretty far down so I would have had to take a big haircut. Humans in general cannot 'time the market'. To think that you can is a fool's errand. Therefore, the fact your stocks are down isn't a good reason not to sell them.

tombert 4y ago
I actually did end up selling some to pay the mortgage. It's not fun to realize a loss in my portfolio no matter what though!
- robocat 4y ago
  Blaming SBF is almost pointless because you obviously needed the lesson - you did not learn previously by seeing the mistakes of others. You would have been taught the lesson eventually by some other random, and fortunately your lesson didn’t take you to zero in your retirement. That said, you clearly also get a lot of other things right: admitting your error, long term savings in a home, a good job, understanding what a portfolio is, plus other obviously smart decisions. Hopefully we all learn from your mistake - it is so easy to screw up or be beguiled into screwing up.
  - tombert 4y ago
    I mean, whether or not I needed to learn the lesson, I'm going to be upset with any human that outright steals money from me. I don't think that's weird. But yeah, fundamentally I suppose it's better for me to have been conned like this while I'm still relatively young, and where I didn't have all my net worth tied up in it. Honestly at this point, if anyone were to ask me for investing advice, I would tell them to stay the hell away from cryptocurrency.
thunky 4y ago
> Humans in general cannot 'time the market'. To think that you can is a fool's errand. OP wasn't trying to time the market. They had a liquidity issue and needed cash. > Therefore, the fact your stocks are down isn't a good reason not to sell them. Realizing a loss is the perfect reason not to sell. This is why smart people recommend having an emergency fund, so you don't have to take a hit and damage your long term goals when you find yourself in a short term pinch. Not selling is actually the most important part of owning stocks.

xapata 4y ago

> the market was pretty far down If you're an efficient-market believer, there's no such thing as a "down" market, because the price is always correct.

kelnos 4y ago
I think it's reasonable to believe in efficient markets, but also understand that pricing in markets is a) made up of imperfect information, and b) subject to outside influences like emotion, propaganda, etc.
- xapata 4y ago
  Those are inconsistent beliefs, if we're talking about Eugene Fama's hypothesis.
  - Naga 4y ago
    Just like the rest of economics, the efficient market hypothesis is a nice model without any basis in reality. The fact that speculative bubbles exist should be enouh to disprove it.
    - xapata 4y ago
      I guess that's the big question. Market behavior certainly can look like there are speculative bubbles, but Fama hypothesizes a different interpretation of the evidence. I'm not a believer, but there is some value in the thought.
mrguyorama 4y ago
If you believe the efficient market hypothesis can actually apply to an existing stock market, I would like to offer you an incredible price to buy the Eiffel Tower! Hurry up! This offer is only valid for a few hours! People are lining up to get this offer

yieldcrv 4y ago

[flagged]

tombert 4y ago
"never learn", give me a fucking break. Cryptocurrency is just slow, bad, unregulated, pretend money. That's the reason it's so rife with fraud. If I had put my money into a boring FDIC insured bank I'd still have all of it right now. I thought cryptocurrency was a good idea, put my money into one of the more trusted exchanges, and now it's gone. I guess I could have stored my wallet on a hard drive or something, just like I could have withdrawn all my cash and put it under my mattress, but I really don't consider that progress. So I did learn; the banks are regulated for a reason.
- mrguyorama 4y ago
  You could have literally had your money in SVB and come out better.
- yieldcrv 4y ago
  Its funny how you did it again, so once again, its weird how you don't feel like an idiot for ever thinking that custodying your money in mismanaged opaque businesses was the problem. yes, you should have stored your self-custodied your assets and cryptocurrency does not exist for any other reason. unlike banks and brokerage houses, crypto exchanges exist for passing through to your destination: self custody. who said anything about "progress"? so now you want to pretend like you adopted some ethos about a cryptocurrency future but ignored everything about how to use crypto and pretend you burned because "you believed", but only in a mismanaged business that catered to your greed? okay that's a legitimately hilarious take. as the late steve jobs said: you're holding it wrong.
  - tombert 4y ago
    What lesson should I be learning here exactly? Again, if I had "custody'd my money in an opaque business" like, you know, A BANK, I would have been fine. Clearly the "opaqueness" isn't an issue. But I agree, if you want to have your digital monopoly money, it's probably better to play with that on a hard drive and never actually do anything with it.

fundad 4y ago

It takes a big person to admit it and I think this is the first.

jmyeet 4y ago

I'm sorry for your loss but I hope you take this as a lesson that crypto is just snake oil. Some in these comments try and paint this as just an FTX problem but it's not. For cryptoskeptics such as myself it's been fascinating to watch as the crypto world speedruns the lessons of debt, finance and the banking system that led them to work the way they do. A lot of otherwise smart people in other areas discovered those smarts don't automatically transfer to disrupting the financial system. What ultimately underlies the financial system--including crypto--is trust and, beyond that, the military might of governments. To your specific case, I saw a quote (that I can't find) that basically said that any investment consistently offering above-market returns is eitehr a scam or has risks that you cannot see. Bear Stearns returned above market returns every month until it didn't, and that was that.

tombert 4y ago
Yep, I replied in a sister comment [1], I am wholly turned off by cryptocurrency at this point. I was kind of enamored with the tech behind blockchains (and to some extent I suppose I still kind of am), and saw the insane growth it was going through, and drank the stupid kool-ade. Seeing it all go pear-shaped has really highlighted why we regulate banks in the way that we do. It's not perfect, but I sleep better knowing that an actually-insured bank won't really run away with my money. [1] https://news.ycombinator.com/item?id=35907377 https://news.ycombinator.com/item?id=35907377

e63f67dd-065b 4y ago

This reminds me of an old finance joke my professor told me (this was when rates were 0): if somebody offers you 20% interest p.a. on an FDIC insured account, and you put in $1,000,000 today, how much money will you have in 5 years? The correct answer is 0, because you're being scammed.

TinyRick 4y ago
Wouldn't the correct answer be $250k due to the FDIC insurance?
- e63f67dd-065b 3y ago
  Late reply, but basically: I pinky swear that my NotAScamBank is FDIC insured, and that it has 20% interest p.a., would you like to deposit money with me? Obviously the FDIC is gonna take a look and say "hah no, go away", NotAScamBank knows this, and won't even bother applying. It's a scam, why would they be honest about FDIC status?
- Rexxar 4y ago
  Why would they be honest on FDIC insurance if they lie on rate ?
- thallium205 4y ago
  Today’s FDIC would reimburse the full amount and honor the investment terms.

latchkey 4y ago

Interestingly, even today you can still get much better than 7% in DeFi. No need to give your money to a curly haired dude living in a condo on an island. Who, at the time, was making a lot more than that on your funds. In DeFi, you give your money to a "smart" contract, which can of course still get hacked or what not. Always assess your risk/reward ratio. Where does the yield come from? Collateralized lending/borrowing markets. People are still gambling with crypto and they can do it better, if they can borrow funds. It got a lot smaller after the collapse of FTX, but hasn't stopped at all. Aave still has $7.5b locked up.

tornato7 4y ago
Aave rates are sub-3%
- latchkey 4y ago
  Aave isn't the only site out there. That was just an example.
  - somsak2 4y ago
    feels weird to provide an example that is less than half of the rates we were talking about, any others?
    - latchkey 4y ago
      DeFi is a fascinating (to me) set of money lego's to effectively become your own bank. Like writing code, it takes a bit of time and effort to really dig in and understand the mechanics of providing liquidity. There is a lot of risk and a lot of reward. It is a bit of a minefield, but you do it long enough, you learn ways to navigate safely. If you have any experience in currency conversion, this is the equivalent to that. If you've travelled you've probably bought and sold currency at the airports. If you're in Saigon, you get the best USD->VND rates not at the airport, but by going to the gold dealers who have shops on the streets. You have to shop around to different stores to find the best rates. DeFi enables you to effectively be that conversion service (gold dealer). But instead of USD->VND, it is ETH->BTC (or whatever cryptos you want to provide liquidity for, or lend/borrow). I personally find this a fascinating aspect of crypto that few understand or even care to look into. It goes far beyond just the gambling aspect of buy/hold and number go up (or down). It turns into real finance and an actual valid use case for crypto. Sure, crypto is re-inventing the same old stuff that people have been doing for ages, but at least now people globally have the ability to try out these mechanics, instead of just leaving it up to the bankers (or gold dealers) to get rich on your money. I love the concept of power to the people. That said, I'm not here to give financial advice about how to get the best rates. There is nothing weird about that. I'm just saying they are out there if you want to look for them and learn more about it all. Aave is just an example of the fact that a single site has a $7.5b market. Of course, if there is a market that large, there is going to be many other sites than that, and it is all quite competitive. If you're interested in this, please do your own research.

gist 4y ago

> I sincerely hope that I never meet Sam Bankman Fried, because if I did I do not know what I would do but it certainly wouldn't be legal. You are insinuating physical violence (I will assume) which is never acceptable. And in your case you made a mistake ie 'I put a chunk of money in there' and further SBF had no control over this: 'because this all unfolded right after I got fired from my last job, when I really needed my liquid money to pay for things like "my mortgage" and "food".' The takeaway for others is events happen in life. Could be someone's fault could be nobody's fault. Having all your eggs (or no eggs) in one basket can and does lead often to disaster. Sorry for the harsh way of putting this. What you are indicating is that you had no cushion and made the mistake of being lured by a high return and ignored potentially any downsides. (Gemini is not and did not claim to be an FDIC insured bank. Also crypto can and does lose value unlike money in a bank. Even if you had been able to get 7% return if crypto loses value you lose money. Same as or similar to a dividend paying stock).

alexb_ 4y ago
It's easy to say it's never acceptable when it's not your life savings that have been stolen.
tombert 4y ago
> You are insinuating physical violence (I will assume) which is never acceptable. I mean, the guy stole about more than ten thousand dollars from me. I wouldn't actually hurt him, I was engaging in a bit of hyperbole (which I feel you're deliberately refusing to understand), but fundamentally I am not going to lose a ton of sleep if something bad happens to SBF. > and further SBF had no control over this: 'because this all unfolded right after I got fired from my last job, when I really needed my liquid money to pay for things like "my mortgage" and "food".' No, but it is why I am especially upset over this stuff. If it had happened when I was gainfully employed at the time I would obviously be upset to have thirteen grand stolen from me, but it especially hurt because I was a victim of all the layoffs that happened last year. I didn't claim there was some divine rationality, which I also think you are deliberately not understanding. > Having all your eggs (or no eggs) in one basket can and does lead often to disaster. > Sorry for the harsh way of putting this. What you are indicating is that you had no cushion In the post that you are responding to, I mention that I did have a cushion, and I didn't put all my eggs in one basket. I had a fair bit of stock and ETFs. I had to sell in a down market, so that wasn't fun, but I feel like you didn't finish reading the post. > Also crypto can and does lose value unlike money in a bank. Even if you had been able to get 7% return if crypto loses value you lose money This was GUSD, which was ostensibly pegged 1-to-1 to the US dollar, so it wasn't supposed to be able to "lose value" in any substantial way. > Gemini is not and did not claim to be an FDIC insured bank. No, but the verbiage on this was less clear on this in the past: https://web.archive.org/web/20211201224824/https://www.gemini.com/dollar https://web.archive.org/web/20211201224824/https://www.gemin.... Thanks johnmaguire in this post: https://news.ycombinator.com/item?id=35907642 https://news.ycombinator.com/item?id=35907642

3327 4y ago

[dead]

nonethewiser 4y ago

The term “cryptocurrency” is WAY more inclusive than the thing you invested in.

unyttigfjelltol 4y ago

Forget the math, the tech, the error you made-- that lots of people made-- is we must evaluate the trustworthiness of the people running the show, and run like heck from any whiff of lack of integrity. My impression of the FTX folks was they exhibited catastrophic lack of maturity, at minimum. Now, the cynic says that perhaps folks were desensitized by shortcomings of crypto culture in general... which to my mind is a cautionary sign for anyone speculating in that area who has not yet been separated from their stake.

tombert 4y ago
I didn’t actually do anything with FTX, at least not directly; I did not realize that the Gemini Earn program had anything to do with FTX or SBF until after everything collapsed. I didn’t feel like the Gemini people were terribly unprofessional; at least not outwardly.
- tornato7 4y ago
  I think it shows some professionalism that the Winklevoss twins have committed $100M of their own capital to pay back Earn users. They are trying to do the right thing.

guardiangod 4y ago

Don't feel too bad about it. Wealth wise, what doesn't kill you makes you stronger. Once you made it thru the tough time, you can always rebuild (unlike say, health).

birdyrooster 4y ago

I have a friend in a similar boat who lost hist entire life savings in Gemini

tombert 4y ago
My heart goes out to him...he's in a way worse situation than I was/am. I was in a position that gave me more headaches than I'd like; unpleasant but fundamentally I'll get over it (most of my savings are in ETFs and treasury bills). I was able to sell some stock at a bit of a loss, pay for my mortgage and food until I found another decent job. It sucks, I don't like losing money on my investments when I know I could have waited them out had I been employed, but fundamentally not earth-shattering. But I did read stories about people who really bought into cryptocurrencies, and were really taken for everything they were worth by the Gemini Earn program, which it sounds like your friend was. I can only hope that the SEC lawsuit against Gemini is successful, and all the investors are made whole; I cannot speak for your friend, but I'd be happy enough to forfeit my interest if I could get my principal back.
tornato7 4y ago
He can sell claims on the secondary market for ~50-70% of what he's owed, BTW
- eaenki 4y ago
  where
  - tornato7 4y ago
    https://www.cherokeeacq.com/ https://www.cherokeeacq.com/

crtified 4y ago

> made me feel like an idiot for ever thinking that cryptocurrency was a good idea The very broad notion of digital currency involving cryptography is as good, bad or ugly as any number of other everyday concepts and mechanisms. There's no special inherent evil in that broad notion. Your investment choice, on the other hand, was average. Not terrible. Average. That is, you diversified, you lost some, but you're still around to play the game, and still ranking very highly in the overall human race affluence stakes. Snake Oil, or even simpler, mundanely-poor investments, from all walks of life, are the true basis of idiot bait. Digital currency involving cryptography simply is what it is. It's quite likely that the near-to-medium future of humanity will involve quite a lot of it, in some form or another (not at all like most of the current forms, of course).