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Blockfi agrees to pay $100M in penalties and pursue registration

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Re: Blockfi agrees to pay $100M in penalties and pursue registration

#151

Post by ryanSrich »

almost wrote: post #150
ryanSrich wrote: post #109

Earlier quoted context omitted.

Conflating anything related to crypto as a scam is just lazy and anti-intellectual. This is one of HN's weakest traits IMO. I find great value in following topics and threads on HN, but it's unrelenting hate for crypto and crypto adjacent topics is unfounded.

Boy are we going to look stupid when a non-scam crypto use comes out! Total egg on our collective faces! One of these days! I mean obviously not today, but soon, right?

How is me taking some bitcoin and purchasing something online instantly with near zero fees a scam? Please explain with precise language how that is a scam. That's a use case. Now tell me how it's a scam.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#152

Post by ryanSrich »

Tarsul wrote: post #119
ryanSrich wrote: post #109

Earlier quoted context omitted.

Conflating anything related to crypto as a scam is just lazy and anti-intellectual. This is one of HN's weakest traits IMO. I find great value in following topics and threads on HN, but it's unrelenting hate for crypto and crypto adjacent topics is unfounded.

you're right but what I find even more jarring in crypto-threads is that usually the only argument (or at least the most prolific one) from the pro-crypto side is that the argument of the anti-crypto side is off-based. But that is not an argument pro-crypto that's at most an argument that's crypto-neutral. But maybe that's enough for the pro-crypto crowd because neutrality means that the show goes on. Nevertheless, i…

Being pro-crypto is like being pro-internet or pro-money. It doesn't make sense to say that. If I use Bitcoin to buy something legally online is that a scam? Am I getting scammed? Is the other person getting scammed? I just don't understand why people ignore the fact that crypto is a utility. Sure, you can hate a company that scams users into thinking their crypto token has some intrinsic value and then rug pulls a month later. I'm unsure how that's an indictment of the crypto as a technology. That's like hating email because people use it to execute phishing scams.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#153

Post by bluecalm »

ryanSrich wrote: post #151
almost wrote: post #150

Earlier quoted context omitted.

Boy are we going to look stupid when a non-scam crypto use comes out! Total egg on our collective faces! One of these days! I mean obviously not today, but soon, right?

How is me taking some bitcoin and purchasing something online instantly with near zero fees a scam? Please explain with precise language how that is a scam. That's a use case. Now tell me how it's a scam.

Even the most blatant scams, literal pyramids called MLMs often have some useful product to muddy the waters. I mean you can after all but that toothpaste and shampoo from Amway and use it!

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#154

Post by snapcaster »

abritrum wrote: post #53

I (along with other) have been filing whistleblower reports on blatant price manipulation on an OTC stock for the entirety of last year (about 30 reports of naked short selling, wash trading). Not one peep from the SEC. It's been eye-opening to see the amount of fraud in the financial markets that goes unchecked. Sometimes I question my sanity that I persist in this stock and whether what I see is illegal. Good to se…

Gamestop bagholder I presume? How do you detect or prove naked shorting or wash trading?

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#155

Post by [deleted] »

ryanSrich wrote: post #109
Animats wrote: post #74

Basically, the Investment Act of 1934 says: 1. You have to file a prospectus (an S-1) before collecting money. 2. You have to disclose a lot of stuff, like who's really behind this, where the money goes, what the risks are, what's happened so far, and what the business plan is. 3. Lying in an S-1 is a crime. Crypto schemes tend to violate 1), because 2) would show that their scheme is a scam, and if they tried to cov…

Conflating anything related to crypto as a scam is just lazy and anti-intellectual. This is one of HN's weakest traits IMO. I find great value in following topics and threads on HN, but it's unrelenting hate for crypto and crypto adjacent topics is unfounded.

[deleted]

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#156

Post by xmonkee »

ryanSrich wrote: post #151
almost wrote: post #150

Earlier quoted context omitted.

Boy are we going to look stupid when a non-scam crypto use comes out! Total egg on our collective faces! One of these days! I mean obviously not today, but soon, right?

How is me taking some bitcoin and purchasing something online instantly with near zero fees a scam? Please explain with precise language how that is a scam. That's a use case. Now tell me how it's a scam.

Tell me what you're buying.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#157

Post by babyshake »

Animats wrote: post #59
matthewdgreen wrote: post #47

Earlier quoted context omitted.

>Did they fail to make interest payments as promised? Did they advertise an interest rate the they didn't fulfill? You could say more or less the same thing about Bernie Madoff's fund, at least right up until the end. I'm not saying that BlockFi is doing anything wrong here, but simply having good results for a while in a bull market doesn't make everything magically ok.

Exactly. Ponzi schemes deliver high interest rates, paid for by later investors. Until they don't, because the invested capital is gone. There's are too many of those in the crypto space.

BlockFi and apps offering 7-8% interest on stablecoins aren't themselves likely to be ponzi schemes. If these "USDT isn't backed by anything" predictions come to pass, then they are part of a ponzi scheme. FWIW I think it is very unlikely that this prediction is true.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#158

Post by NelsonMinar »

ryanSrich wrote: post #109
Animats wrote: post #74

Basically, the Investment Act of 1934 says: 1. You have to file a prospectus (an S-1) before collecting money. 2. You have to disclose a lot of stuff, like who's really behind this, where the money goes, what the risks are, what's happened so far, and what the business plan is. 3. Lying in an S-1 is a crime. Crypto schemes tend to violate 1), because 2) would show that their scheme is a scam, and if they tried to cov…

Conflating anything related to crypto as a scam is just lazy and anti-intellectual. This is one of HN's weakest traits IMO. I find great value in following topics and threads on HN, but it's unrelenting hate for crypto and crypto adjacent topics is unfounded.

We are literally discussing a company being found by the SEC to have sold an investment asset without appropriate disclosure and that asset being closed to American investors. This is not the example to make your case with.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#159

Post by hermitdev »

cwp wrote: post #146
Animats wrote: post #141

Earlier quoted context omitted.

And that is why S-1 filings exist - to provide the answer to such questions. Somewhere, for this to work, there must be people paying more than 9.25% to borrow money. Who are they? What collateral are they putting up? Whatever the borrowers are doing must be high risk, or they wouldn't be paying interest that high. In effect, this is a junk bond they're selling - high interest, with a high chance of losing the princi…

Well, the downside is capped at "you lose all the money you invested". I think. Did I miss something?

In general, yeah, you're capped at everything you invested basically ceasing to exist. Unless you bought on margin. Then, you can end up owing money, even if the asset is worthless.

Not crypto related, but one of the things that made the financial collapse of 2008 so much worse were the number of institutions that were over leveraged at the time and couldn't make the margin calls when assets started tanking. The fund I worked for at the time was leveraged as high as 40:1 at one point around that period. We exited the crisis leveraged closer to 10:1.

The problem with firms being overleveraged is when the margin call comes, it starts a snowball effect. To make the margin call, you have to liquidate assets, most likely at a loss, which further drives asset prices in the market down, increasing margin requirements in a vicious feedback loop. It's not uncommon for a firm hit with a big margin call like this to end up having to sell everything for pennies on the dollar.

I won't name names, but I worked a few high profile blowups during my tenure in finance, one of which was the very high profile bankruptcy of one of the banks that was allowed to fail in the US another was a boutique hedge fund that doubled down on a bad energy bet. Neither was pretty. But, in both cases, the root cause was the same: failure to properly understand the risk of the investments they were making either in part or in whole. Data quality in the risk system at the large bank was especially atrocious, BTW.

Re: Blockfi agrees to pay $100M in penalties and pursue registration

#160

Post by ryanSrich »

schmichael wrote: post #123
ryanSrich wrote: post #109

Earlier quoted context omitted.

Conflating anything related to crypto as a scam is just lazy and anti-intellectual. This is one of HN's weakest traits IMO. I find great value in following topics and threads on HN, but it's unrelenting hate for crypto and crypto adjacent topics is unfounded.

> it's unrelenting hate for crypto and crypto adjacent topics is unfounded. How is it unfounded? The carbon and ewaste problems are well documented. Any fixes for that (eg Proof of Stake) have either compromised Bitcoin's original focus on decentralization, continually delayed release, or both. Over a decade after Bitcoin's launch few use cases have emerged and none of them have proven durable. The ICO craze came and…

> How is it unfounded? The carbon and ewaste problems are well documented.

Without a benchmark this means nothing. Just because a new technology contributes to ewaste we should just ignore it and bury it? No use in trying to fix it right? Just kill the technology because it contributes to ewaste. That doesn't make any sense. Not to mention the majority of the uproar around Crypto being a danger to the environment is completely overblown https://www.cnbc.com/2021/07/20/bitcoin-mining-environmental...

> Over a decade after Bitcoin's launch few use cases have emerged and none of them have proven durable

Durable in what sense? I can take some Bitcoin right now and purchase almost anything I want. Seems like that money use case is pretty durable to me.

> The ICO craze came and went. DeFi is still muddling along with ever more convoluted cryptoshadows of regulated fiat finance. NFTs are all the rage but currently about as intellectually stimulating as baseball cards. Hacks and scams abound far beyond any other industry.

You're just conflating scams with crypto as a technology. If you can't find merit in cryptocurrency while at the same time thinking NFTs are mostly a scam you lack imagination.

I'll be the first one to admit I think the following are all mostly scams, useless, or only serve to create bag holders:

- NFTs

- DAOs

- ICOs (not really a thing anymore)

That doesn't deter me one bit from thinking that Bitcoin, ETH, and a handful of layer 1s are genuinely useful in creating technology to digitize money and decentralize finance. How long is it going to take? Idk. 10 years seems like not enough time. Idk why people are complaining about the lack of use cases. Something as ground breaking as disrupting the banking system is going to be a multi-decade long endeavour. Scams will come and go. That seems like a natural progression.

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