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It wasn’t a ponzi. He just took customers’ funds, gave them to Alameda and then gambled them away. To my knowledge there was no ponzi mechanism where older inv

It wasn’t a ponzi. He just took customers’ funds, gave them to Alameda and then gambled them away. To my knowledge there was no ponzi mechanism where older investors were paid from money invested by newer investors.

gizmo 3y ago
FTX offered an 8% yield on assets. Where does that yield come from? SBF also famously joked on the odd lots podcast that he was in the ponzi business.
- plagiarist 3y ago
  I remember looking at those yield percentages and feeling tempted. 6-8% seemed insanely high compared to the fed rate at the time. I passed because it seemed like the best case scenario for my finances is that I would be making some sort of defi loan to a cartel or warlord. It was obviously some form of pyramid scheme based on the rate alone.
- LatteLazy 3y ago
  Actually 8% is a pretty low yield for a crypto lending service. And very achievable in tradfi. Plus staking/lending was only a tiny part of their business. Ftx was a huge fraud. Just not the flavour you think!
  - gottorf 3y ago
    > And very achievable in tradfi. And where would you have achieved 8% yields in a liquid instrument, prior to the recent Fed rate hikes? From the end of the GFC (and the start of QE) until when the current hiking cycle began, 8% was basically the cap of junk bond yields[0]. Half the time, it was under 6%. Sure, you could probably have bought rental property or invested in a small business and come out above 8% yields, but those are highly illiquid and not comparable to deposits at FTX. [0]: https://fred.stlouisfed.org/series/BAMLH0A0HYM2EY https://fred.stlouisfed.org/series/BAMLH0A0HYM2EY
    - LatteLazy 3y ago
      6% is the average yield there for the index. Within it there are plenty of bonds paying 8, 10, 12 etc. And plenty of others defaulting. But none are ponzi schemes. The same applies to this. If someone offers you 400% it's a scam (Ponzi or otherwise). If someone offers you 8% it's risky or there is some other reason no one else has touched it. 8% is not inherently unachievable. Just good (and therefore likely there is some risk).
LatteLazy 3y ago
To me, the craziest thing is that he basically lucked into an insanely profitable position and STILL ended up losing so much on his dumb hedge fund he started stealing from clients...

gizmo 3y ago

FTX offered an 8% yield on assets. Where does that yield come from? SBF also famously joked on the odd lots podcast that he was in the ponzi business.

plagiarist 3y ago
I remember looking at those yield percentages and feeling tempted. 6-8% seemed insanely high compared to the fed rate at the time. I passed because it seemed like the best case scenario for my finances is that I would be making some sort of defi loan to a cartel or warlord. It was obviously some form of pyramid scheme based on the rate alone.
LatteLazy 3y ago
Actually 8% is a pretty low yield for a crypto lending service. And very achievable in tradfi. Plus staking/lending was only a tiny part of their business. Ftx was a huge fraud. Just not the flavour you think!
- gottorf 3y ago
  > And very achievable in tradfi. And where would you have achieved 8% yields in a liquid instrument, prior to the recent Fed rate hikes? From the end of the GFC (and the start of QE) until when the current hiking cycle began, 8% was basically the cap of junk bond yields[0]. Half the time, it was under 6%. Sure, you could probably have bought rental property or invested in a small business and come out above 8% yields, but those are highly illiquid and not comparable to deposits at FTX. [0]: https://fred.stlouisfed.org/series/BAMLH0A0HYM2EY https://fred.stlouisfed.org/series/BAMLH0A0HYM2EY
  - LatteLazy 3y ago
    6% is the average yield there for the index. Within it there are plenty of bonds paying 8, 10, 12 etc. And plenty of others defaulting. But none are ponzi schemes. The same applies to this. If someone offers you 400% it's a scam (Ponzi or otherwise). If someone offers you 8% it's risky or there is some other reason no one else has touched it. 8% is not inherently unachievable. Just good (and therefore likely there is some risk).

LatteLazy 3y ago

To me, the craziest thing is that he basically lucked into an insanely profitable position and STILL ended up losing so much on his dumb hedge fund he started stealing from clients...