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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

#51

Post by shafyy »

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…

I remember YC stating that they will "forfeit" (probably not the right legal term) their shares in companies that turn out to do unethical things. Now, let's see if they stick to their principles.

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

#52

Post by monkey_monkey »

okwubodu wrote: post #46
oefrha wrote: post #36

Earlier quoted context omitted.

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.

Sure but as long as they (the VC) are shielded from liability, it's not their problem. Society is something other folk can worry about. And if things get really bad, then a quick essay on lessons learnt, we should all move on, etc.

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

#53

Post by vkou »

devoutsalsa wrote: post #8
riffraff wrote: post #4

I imagine (and hope) those 5k where mostly crypto bros who knew what they were getting into. Who else expects 15% returns from a "safe" investment?

I didn't invest because it was only 15% gains. Sad, but true. I actually read them their material & saw it was based on Anchor Protocol. When I saw that it was based on UST, and I couldn't figure how UST was backed by anything I understood, I opted out. One of the few times in crypto where I felt "do you won research" paid off for me.

> I didn't invest because it was only 15% gains

I'm confused. Were you looking for a cryptocoin that was promising 1,500% gains?

Anyone promising a safe 15% return in a world where your savings account earns 0.15% interest is trying to rob you.

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

#55

Post by nrmitchi »

shafyy wrote: post #51
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…

I remember YC stating that they will "forfeit" (probably not the right legal term) their shares in companies that turn out to do unethical things. Now, let's see if they stick to their principles.

“Forfeiting” shares in a company that has raised a couple million and funding and lost $42M in user funds seems like a bit of an empty gesture from YC

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

#56

Post by ramraj07 »

okwubodu wrote: post #46
oefrha wrote: post #36

Earlier quoted context omitted.

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.

It wasn’t lost, it went from one crypto idiot to another crypto idiot.

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

#57

Post by faeriechangling »

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 don't see how stablecoins are fundamentally a ponzi scheme, it's really not hard to imagine a sustainable stablecoin business model - reinvest what people pay into the stablecoin, keep risk low so you don't lose your principal and end up unable to repay debtors, keep enough in reserves that the stablecoin doesn't collapse in a bank run, and cross your fingers. Now, you certainly COULD turn this entire scheme into a ponzi scheme, and I would be freaking shocked if it didn't turn out several stablecoins were Ponzi schemes, but it's totally possible for a stablecoin to sustain itself without constantly seeking new deposits in principle.

Stablecoins are literally modernised promissory notes and the people hawking them are unregulated banks. It's incredible the people selling these stablecoins are not being regulated as if they are banks.

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

#58

Post by nrmitchi »

nootropicat wrote: post #48
Ekaros wrote: post #40

Earlier quoted context omitted.

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.

I feel like “safe” needs a giant asterisk applied to it in this sentence.

Just because something didn’t explode previously, doesn’t mean it was safe until now.

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

#59

Post by chii »

KingOfCoders wrote: post #15

"Stablegains makes earning with DeFi simple and safe for consumers and businesses alike."

There's no such thing as a free lunch, and you cannot earn above inflation returns without taking on risk.

Even money market funds, which is what stablecoins are similar to for fiat currencies, are not without risk.

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

#60

Post by photon12 »

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…

There were funds that did due diligence and built out models of the Luna/Terra/Anchor ecosystem and realized it was unstable.

You can talk to the people who built their models and they have lots of fun things to say about the ordeal.

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