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Obviously it's not as bad in my case, but this entire thing has made me empathize a lot more with the victims of Bernie Madoff. SBF was happy to cook the books

Obviously it's not as bad in my case, but this entire thing has made me empathize a lot more with the victims of Bernie Madoff. SBF was happy to cook the books to suit his needs, but now he's upset that there are consequences to committing felonies affecting millions of people? He wanted his sentence commuted to five or six years?? Utterly ridiculous. People have gotten worse sentences for dealing a bit of dope with no real victims. SBF stole about 14 grand from me personally, not to mention all the other victims of Gemini Earn [1] and FTX where he seemed to think that a Ponzi scheme was sustainable. [1] Yes yes I read the Gemini Earn emails too, I know the Gemini is claiming that they're going to give all our money back. I'll believe it when I see it. Until I get my money back I'm going to continue to say that it was an unregistered security that toppled over because of SBF and Genesis' fraud.

danpalmer 3y ago
I’m sorry you were affected, I hope it works out as well for you as possible. The problems for the victims are huge though. What’s often missed, or purposefully overlooked by people, is the appreciation of assets. If you put money in FTX and doubled it, but then lost, getting back what you originally put in is a significant harm. People made financial decisions on the basis they had increased their holdings. Another issue is how the compensation is recovered. With Madoff it was recovered from victims. That is, if you put your money in, and then over the decades took out more than you originally put in (easy given the apparent rate of return), the administrators sued you for the difference and pulled back in, some cases, millions of dollars, bankrupting people who were otherwise living off their pensions. Whether that was the morally right thing to do or not is a hard call to make, not one I would want to make, but that’s a very significant harm caused by Madoff that is often overlooked.
- pavlov 3y ago
  > “If you put money in FTX and doubled it, but then lost, getting back what you originally put in is a significant harm” Paper wins inside a scam were never real money.
  - tombert 3y ago
    I don't think they are claiming that it was real money, but most people who weren't named Sam Bankman-Fried didn't know it was a scam. I put my money into Vanguard ETFs. I think that's generally considered an OK thing to do. I might see my returns go up, and so I decide to remodel my kitchen. If it turned out that Vanguard was actually not doing what they claimed, and someone posts about how "paper wins inside a scam were never real money", well yeah, no shit, but I didn't know it was a scam. If I had known that Gemini Earn was a scam, I don't think I would have given them my money.
    - pavlov 3y ago
      I’m sorry that happened. I didn’t mean for my reply to be so dismissive. I was trying to make the point that compensating scam victims based on the asset value that was claimed by the scammers (rather than the money put in by the victims) would be very difficult in the general case. Imagine a pyramid scheme that promises 50% daily returns, and shows you the gains on a website. You can only get some of that money out when you’ve recruited N people as investors. Everyone at the bottom of the pyramid is seeing a massive paper gain when the scheme collapses. There might not be enough money in the world to compensate them for the asset value they imagined. FTX was a milder version of the same because they showed users asset values but didn’t actually have matching backing assets. (Yes, banks do this too, in the sense that they don’t hold cash to account for the sum of all balances. That’s why they are so heavily regulated.)
  - danpalmer 3y ago
    I make financial decisions based on the value of my pension, which could theoretically go to zero. Yes there's risk, but to not make a decision based on it is another kind of risk. This is all to skip over the fact that you may have "cashed out" the risky bit back into dollars and, rightly so, think you were very low risk at that point.
    - nradov 3y ago
      Come on. It's disingenuous to compare an obvious scam like cryptocurrency with a pension. The levels of risk are orders of magnitude different. And in the USA at least, most pensions are insured by the PBGC so they can't literally go to zero even if the sponsoring company fails.
- tombert 3y ago
  Yeah, that's more or less how I was doing things. I believed the idiotic claims of super-high interest for GUSD on Gemini Earn, I planned things around it, then it's locked down and I'm not able to withdraw. I'd be very happy to get my money back for the GUSD. I care less about the other cryptocurrencies because that was always just gambling to me anyway, but I believed the FDIC claims that Gemini had on their website and thought GUSD was safe. In hindsight, it was very stupid, and I really don't need anyone to lecture me about how they would never fall for a scam like that again here, as has happened multiple times already. I guess I'm not at much risk of being sued to recover assets, since I'm way negative due to Gemini Earn, but it didn't even occur to me that that was a possibility; now I'm kind of glad I didn't withdraw all my funds like a week before.

danpalmer 3y ago

I’m sorry you were affected, I hope it works out as well for you as possible. The problems for the victims are huge though. What’s often missed, or purposefully overlooked by people, is the appreciation of assets. If you put money in FTX and doubled it, but then lost, getting back what you originally put in is a significant harm. People made financial decisions on the basis they had increased their holdings. Another issue is how the compensation is recovered. With Madoff it was recovered from victims. That is, if you put your money in, and then over the decades took out more than you originally put in (easy given the apparent rate of return), the administrators sued you for the difference and pulled back in, some cases, millions of dollars, bankrupting people who were otherwise living off their pensions. Whether that was the morally right thing to do or not is a hard call to make, not one I would want to make, but that’s a very significant harm caused by Madoff that is often overlooked.

pavlov 3y ago
> “If you put money in FTX and doubled it, but then lost, getting back what you originally put in is a significant harm” Paper wins inside a scam were never real money.
- tombert 3y ago
  I don't think they are claiming that it was real money, but most people who weren't named Sam Bankman-Fried didn't know it was a scam. I put my money into Vanguard ETFs. I think that's generally considered an OK thing to do. I might see my returns go up, and so I decide to remodel my kitchen. If it turned out that Vanguard was actually not doing what they claimed, and someone posts about how "paper wins inside a scam were never real money", well yeah, no shit, but I didn't know it was a scam. If I had known that Gemini Earn was a scam, I don't think I would have given them my money.
  - pavlov 3y ago
    I’m sorry that happened. I didn’t mean for my reply to be so dismissive. I was trying to make the point that compensating scam victims based on the asset value that was claimed by the scammers (rather than the money put in by the victims) would be very difficult in the general case. Imagine a pyramid scheme that promises 50% daily returns, and shows you the gains on a website. You can only get some of that money out when you’ve recruited N people as investors. Everyone at the bottom of the pyramid is seeing a massive paper gain when the scheme collapses. There might not be enough money in the world to compensate them for the asset value they imagined. FTX was a milder version of the same because they showed users asset values but didn’t actually have matching backing assets. (Yes, banks do this too, in the sense that they don’t hold cash to account for the sum of all balances. That’s why they are so heavily regulated.)
- danpalmer 3y ago
  I make financial decisions based on the value of my pension, which could theoretically go to zero. Yes there's risk, but to not make a decision based on it is another kind of risk. This is all to skip over the fact that you may have "cashed out" the risky bit back into dollars and, rightly so, think you were very low risk at that point.
  - nradov 3y ago
    Come on. It's disingenuous to compare an obvious scam like cryptocurrency with a pension. The levels of risk are orders of magnitude different. And in the USA at least, most pensions are insured by the PBGC so they can't literally go to zero even if the sponsoring company fails.
tombert 3y ago
Yeah, that's more or less how I was doing things. I believed the idiotic claims of super-high interest for GUSD on Gemini Earn, I planned things around it, then it's locked down and I'm not able to withdraw. I'd be very happy to get my money back for the GUSD. I care less about the other cryptocurrencies because that was always just gambling to me anyway, but I believed the FDIC claims that Gemini had on their website and thought GUSD was safe. In hindsight, it was very stupid, and I really don't need anyone to lecture me about how they would never fall for a scam like that again here, as has happened multiple times already. I guess I'm not at much risk of being sued to recover assets, since I'm way negative due to Gemini Earn, but it didn't even occur to me that that was a possibility; now I'm kind of glad I didn't withdraw all my funds like a week before.