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YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

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Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#41

Post by dmitrygr »

bsamuels wrote: post #17
devoutsalsa wrote: post #13

Earlier quoted context omitted.

They explain the risks on their website: https://stablegains.zendesk.com/hc/en-us/articles/4402687751...

They explain the risks, while excluding the risk of, you know, the stablecoin depegging. This is like the 10th algo stablecoin to eat shit. You would think by now, a risk person could adequately describe these existential risks. Stablegains was a rent collecting middleman. The risks are not characterized adequately on this page, and there ought to be some level of liability.

They added a much more reasonable risk explanation after the event happened. Click the link that the submission is. Look at the before and after pictures

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#43

Post by cinntaile »

ihalip wrote: post #16
devoutsalsa wrote: post #13

Earlier quoted context omitted.

They explain the risks on their website: https://stablegains.zendesk.com/hc/en-us/articles/4402687751...

If there are risks, how can the 15% be guaranteed?

"You can now earn up to 15% APY interest on your cash with Stablegains. This is 30x higher than in your traditional bank*."

Up to

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#44

Post by nrmitchi »

smugma wrote: post #35
bsamuels wrote: post #17

Earlier quoted context omitted.

They explain the risks, while excluding the risk of, you know, the stablecoin depegging. This is like the 10th algo stablecoin to eat shit. You would think by now, a risk person could adequately describe these existential risks. Stablegains was a rent collecting middleman. The risks are not characterized adequately on this page, and there ought to be some level of liability.

“There is a non-zero risk that the peg does not recover to 100%.”

If you’re taking this from their Twitter thread after this whole situation happened, that is definitely not the same thing as an upfront risk factor when collecting investments from people.

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#45

Post by usrn »

dmitrygr wrote: post #10
devoutsalsa wrote: post #9

Earlier quoted context omitted.

A poor decision does not equal fraud.

Promising a guaranteed 15% return is fraud. There is no place in reality where you can * guarantee * that kind of return.

Most marketing is arguably fraudulent. I don't think these scams are good at all but part of me really wishes there were more just to force people to think twice when they see marketing from eg Apple or Tesla.

EDIT: s/advertising/marketing/g I don't really think of them as separate but that's a good point.

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#46

Post by okwubodu »

oefrha wrote: post #36
okwubodu wrote: post #30

The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doing what YC does and don’t claim to, but the jig here was so transparent that the smallest drop of “street smart” should’ve been enough to set off some alarms. We’re approaching a point where being passed over for “culture fit” is a compliment. Hopefully the emb…

If they’re unlucky they lose $500k, which is nothing. If they’re lucky they get a Coinbase. Why not.

$42 million of real people’s money was lost. That’s a net negative to society whether or not it shows up on a balance sheet.

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#47

Post by davidgerard »

Remembering the early days of bitcoin, and Pirateat40's Bitcoin Savings and Trust ponzi (BTCST) from 2012.

That also had a pile of feeder ponzis hanging off the side. They'd claim to be completely uncorrelated with BTCST, but just put their coins into BTCST.

Crypto has now gone beyond replaying old scams from the history of finance, and is now just replaying old scams from the history of crypto. But now they're VC-funded.

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#48

Post by nootropicat »

Ekaros wrote: post #40
nootropicat wrote: post #37

The whole idea was to become a middleman to a ponzi scheme and charge a performance fee. They described what they are doing in their documentation, but the core ethical problem here is that the only users that would use their service are those incapable of understanding how UST/Terra worked, because anyone capable of understanding would just deposit funds directly and get higher APR for the same risk! Extremely preda…

I just wish the liability could be extended to enablers that is funders... Sometimes I think companies should not really be limited liability...

I think investors probably didn't know. High safe defi yield existed for most of 2020 and 2021 - during that time it would be legit. It's possible that's how it happened - first plan based on safe yield that disappeared (exactly because it was high and safe), but instead of closing down founders decided to become middlemen to a ponzi.

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#49

Post by davidgerard »

oefrha wrote: post #36
okwubodu wrote: post #30

The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doing what YC does and don’t claim to, but the jig here was so transparent that the smallest drop of “street smart” should’ve been enough to set off some alarms. We’re approaching a point where being passed over for “culture fit” is a compliment. Hopefully the emb…

If they’re unlucky they lose $500k, which is nothing. If they’re lucky they get a Coinbase. Why not.

yep. The scam is:

1. VCs provide a ton of money, to incentivise token issuers.

2. The issuers pump out a pile of tokens that would constitute unregistered penny stocks. The VCs buy in.

3. If the SEC doesn't bust the issuers, the VCs make a bundle, and much quicker than they could funding a productive company.

4. If the SEC does bust the issuers, the poor widdle investors are protected from the evil issuers, who have to refund investors - the VCs don't lose.

It's the gig economy of penny stock scams, with the legal risk being borne by the issuers.

Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers

#50

Post by mdemare »

usrn wrote: post #45
dmitrygr wrote: post #10

Earlier quoted context omitted.

Promising a guaranteed 15% return is fraud. There is no place in reality where you can * guarantee * that kind of return.

Most marketing is arguably fraudulent. I don't think these scams are good at all but part of me really wishes there were more just to force people to think twice when they see marketing from eg Apple or Tesla. EDIT: s/advertising/marketing/g I don't really think of them as separate but that's a good point.

Tesla doesn't pay for ads.
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