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VC and private equity vultures have been buying up FTX debt at a loss since the collapse, with this being the singular reason why, to make a huge profit off the

VC and private equity vultures have been buying up FTX debt at a loss since the collapse, with this being the singular reason why, to make a huge profit off the Anthropic shares. Any retail investor that sees this as a possibility of getting their money back is about to be disappointed once again.

earthwalker99 3y ago
Correct. Workers will never win at a game designed by capital. The only path forward is exercising labor power by withdrawing it for political ends.
- ajhurliman 3y ago
  Even though this has been down voted into oblivion, I’ll bite: to what political ends would you propose the labor class exercise their power?
  - earthwalker99 3y ago
    To the same ends the capitalist class has if they choose. I think the risk is necessary to take, given how the alternative has worked out.
  - __loam 3y ago
    It's wild to me that tech workers will still downvote stuff like this after the season of layoffs we just had. Google is "trimming the fat" while making 18 billion a quarter. To what end? How about preserving the middle class and ending the monopoly power of these firms?
    - skulk 3y ago
      Because they're temporarily embarrassed founders who could _totally_ see themselves having to make a decision like this.
- nrook 3y ago
  This is a non sequitur. "Investors might buy senior debt in a defunct crypto marketplace" is not actually a problem facing labor as a class.
pinkmuffinere 3y ago
I’m a noob. Question 1: Why would VC and private equity have a stronger claim as compared to a retail investor in this case? My guess is that “retail investor” here means customers of FTX, who were investing in crypto. VC/private equity has a stake in the company itself now after buying shares, so I guess they come first in the chain — is that right? Question 2: If a “retail investor” somehow obtained shares of FTX, would they have the same strength of claim as VC/private equity?
- wmf 3y ago
  They don't have any stronger claim. I assume all customer claims are being treated equally. They bought the claims because they have access to capital, a longer time horizon, and/or a better understanding of the ultimate payout value.
- Tuna-Fish 3y ago
  FTX declared bankruptcy in November '22. At the date they did so, any debts anyone had against them were essentially frozen and converted into dollars at the rate of that day. As FTX converts their assets into money, they will pay back all of their creditors in order of priority, with taxes coming first, then customer deposits, then normal debt, and last what remains goes to holders of the stock (leaving out a lot of nuance here). Normally when a bank (or whatever FTX was) goes under with customer money missing, people lower in the pecking order don't really expect to see any money back, so they would be looking to offload whatever FTX owes them to anyone dumb enough to buy it, at whatever valuation it would fetch. The play is that if you are a savvy investor who knows that FTX holds an illiquid rapidly appreciating asset that might be valuable enough to pay every creditor, toxic FTX debt sold at pennies for the dollar might suddenly look very enticing. For the private equity to make bank here, then all retail investors have to first be made whole (to the dollar valuation of whatever they held in November 22 at that time), but they are not going to see any profit. The profit goes to whoever who managed to buy debt at low valuations. If Anthropic shares appreciate enough that FTX makes every creditor whole, the rest goes to the stockholders which are mostly FTX employees and also mostly going to be in prison, which is a weird outcome.
  - 3y ago

earthwalker99 3y ago

Correct. Workers will never win at a game designed by capital. The only path forward is exercising labor power by withdrawing it for political ends.

ajhurliman 3y ago
Even though this has been down voted into oblivion, I’ll bite: to what political ends would you propose the labor class exercise their power?
- earthwalker99 3y ago
  To the same ends the capitalist class has if they choose. I think the risk is necessary to take, given how the alternative has worked out.
- __loam 3y ago
  It's wild to me that tech workers will still downvote stuff like this after the season of layoffs we just had. Google is "trimming the fat" while making 18 billion a quarter. To what end? How about preserving the middle class and ending the monopoly power of these firms?
  - skulk 3y ago
    Because they're temporarily embarrassed founders who could _totally_ see themselves having to make a decision like this.
nrook 3y ago
This is a non sequitur. "Investors might buy senior debt in a defunct crypto marketplace" is not actually a problem facing labor as a class.

pinkmuffinere 3y ago

I’m a noob. Question 1: Why would VC and private equity have a stronger claim as compared to a retail investor in this case? My guess is that “retail investor” here means customers of FTX, who were investing in crypto. VC/private equity has a stake in the company itself now after buying shares, so I guess they come first in the chain — is that right? Question 2: If a “retail investor” somehow obtained shares of FTX, would they have the same strength of claim as VC/private equity?

wmf 3y ago
They don't have any stronger claim. I assume all customer claims are being treated equally. They bought the claims because they have access to capital, a longer time horizon, and/or a better understanding of the ultimate payout value.
Tuna-Fish 3y ago
FTX declared bankruptcy in November '22. At the date they did so, any debts anyone had against them were essentially frozen and converted into dollars at the rate of that day. As FTX converts their assets into money, they will pay back all of their creditors in order of priority, with taxes coming first, then customer deposits, then normal debt, and last what remains goes to holders of the stock (leaving out a lot of nuance here). Normally when a bank (or whatever FTX was) goes under with customer money missing, people lower in the pecking order don't really expect to see any money back, so they would be looking to offload whatever FTX owes them to anyone dumb enough to buy it, at whatever valuation it would fetch. The play is that if you are a savvy investor who knows that FTX holds an illiquid rapidly appreciating asset that might be valuable enough to pay every creditor, toxic FTX debt sold at pennies for the dollar might suddenly look very enticing. For the private equity to make bank here, then all retail investors have to first be made whole (to the dollar valuation of whatever they held in November 22 at that time), but they are not going to see any profit. The profit goes to whoever who managed to buy debt at low valuations. If Anthropic shares appreciate enough that FTX makes every creditor whole, the rest goes to the stockholders which are mostly FTX employees and also mostly going to be in prison, which is a weird outcome.
- 3y ago