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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

#121

Post by logifail »

josu wrote: post #94
Asparagirl wrote: post #34

They’re just one of several shiny fintech apps/websites running the same scam, a modern two-and-twenty on a ponzi — but with really nice UI. Alice (alice.co / @alice_finance) is another prominent one that may have lost customer funds, which was also using the Anchor protocol. It’s unclear how much they lost, but it’s interesting that Do Kwon’s name is still an actual logo listed on their home page. And Vertex Protoco…

I publicly called out LUNA/UST on Twitter a few times a few months before the collapse [0] [1]. Just stating this so it's clear that I don't have any interest defending them. That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not sa…

> I'm not saying it's a legitimate business

Umm, once it's not a legitimate business, it's fraudulent. Exactly what type of fraudulent is a somewhat secondary issue.

[of Boiler Room scams of old] "... often rely on high-pressure sales tactics, such as aggressive cold-calling, misinformation, and extravagant promises to assure buyers that they are buying "a sure thing." [..] The SEC requires brokers to adhere to strict standards when selling securities. Brokers may not misinform or omit material facts when selling securities; nor can they exaggerate their own track records. They are also required to have a “reasonable basis to believe that a recommended transaction or investment strategy is suitable for a customer.”"[0]

Ring any bells?

Do we think customers are really giving informed consent before putting their savings into these platforms?

[0] https://www.investopedia.com/terms/b/boilerroom.asp

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

#122

Post by dropnerd »

puranjay wrote: post #114
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?

As a recovering crypto bro, none of my other friends have been impacted by this entire UST/Luna meltdown at all Why? Because crypto bros are too degen to be okay with 15% yield lol

right, crypto nerds are swinging for multiple x, if not 100x or 1000x

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

#123

Post by mwattsun »

I'm gobsmacked at the amount of money people have entrusted to experimental beta software whose behavior at scale is unknown. It's fascinating to watch these systems spin out of control in a new kind of flash crash

https://en.wikipedia.org/wiki/Flash_crash

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

#124

Post by paulgb »

logifail wrote: post #121
josu wrote: post #94

Earlier quoted context omitted.

I publicly called out LUNA/UST on Twitter a few times a few months before the collapse [0] [1]. Just stating this so it's clear that I don't have any interest defending them. That being said, calling these platforms "ponzis" isn't correct, the most you can say is that they were front ends for a ponzi. It would be like setting up a front-end to receive investments, and then depositing the money with Madoff. I'm not sa…

> I'm not saying it's a legitimate business Umm, once it's not a legitimate business, it's fraudulent. Exactly what type of fraudulent is a somewhat secondary issue. [of Boiler Room scams of old] "... often rely on high-pressure sales tactics, such as aggressive cold-calling, misinformation, and extravagant promises to assure buyers that they are buying "a sure thing." [..] The SEC requires brokers to adhere to stric…

josu didn’t say it wasn’t fraudulent, just that it wasn’t a Ponzi scheme, which is a particular type of fraud. (I agree)

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

#125

Post by vkou »

rsynnott wrote: post #97
photon12 wrote: post #60

Earlier quoted context omitted.

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.

That raises an interesting ethical problem, really; should there be a duty to report this sort of thing, or is "scheme X is fundamentally flawed/a scam and investors will lose everything" legitimate proprietary information? As I understand it, various analysts were pretty sure at the time that Madoff's scheme was a Ponzi, but in general they didn't tell anyone (in fairness, one attempted to and had trouble getting li…

The SEC will pay you money if you report fraud, the problem is that it's not clear how illegal these schemes are, and for the ones that are illegal, whether or not the SEC will be able to build, and win a case.

Bitfinex, for example is being prosecuted. The SEC have cases against a few of the mid-level people, but the founder is hiding out somewhere in Asia, and will never see the inside of a US courtroom.

Also, it's very easy to con someone, but it's almost impossible to convince someone who has been conned that they've been cheated. If you do your due diligence, and disclose your findings, the marks will ignore you, the con artists will smear you in the press, start lawsuits against you, and everyone uninvolved will shrug their shoulders and 'both sides' your feud.

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

#126

Post by rvz »

KingOfCoders wrote: post #15

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

Anything that has DeFi yield farming on it with X% of returns per year is a textbook scam. It is neither 'stable' nor did anyone gain anything other than a loss.

It is another way for retail to hodl their bags for this lie called 'passive income' all into a loss while the VCs dump and exit scam with the founders.

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

#127

Post by hardwaresofton »

puranjay wrote: post #112
hardwaresofton wrote: post #75

Earlier quoted context omitted.

I think this is something like AI -- where people who are calling it "AI" are often sales people/hucksters (I mean this as little a pejorative sense as possible), and the people calling it "ML" are the practitioners/people you should be listening to. Once a phrase gains mainstream adoption and starts to rapidly lose meaning, I find that people who care dearly about that thing start calling it something else. That sai…

As someone who went heavy into crypto/web3, it does pain me to admit that there really are no use cases besides making money. Which isn’t a bad use case by itself, but after using practically hundreds of protocols and projects, there’s not a single one I’d use if there was no prospect of making money off of it. My dApp usage has cooled off almost completely. And all data shows that this is true for most others as wel…

> As someone who went heavy into crypto/web3, it does pain me to admit that there really are no use cases besides making money. Which isn’t a bad use case by itself, but after using practically hundreds of protocols and projects, there’s not a single one I’d use if there was no prospect of making money off of it. My dApp usage has cooled off almost completely. And all data shows that this is true for most others as well

I appreciate the candor -- I still hold out hope, thinking maybe PoS (with equally bought-in parties) could work, but at that point you might as well have regular old paper and pencil coordination/contracts...

The tech is novel, but the applications just don't seem to be falling into place at all... I even consider the ability for it to function as cool points (not NFTs but just a way to make and check exclusive tokens) is OK because it gives community builders a way to pull forward revenue. If I think of it like a self-hosted app for managing exclusive tokens then I can kind of see a use -- if before people didn't have an on-ramp to enforcing their own manufactured exclusivity then maybe it has some positive effects...

Unfortunately right now it looks like the ecosystem is just a backdoor to unregulated securities. Some of the automated exchange stuff (uniswap and co) seemed cool too though I haven't looked too deeply at them.

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

#128

Post by vkou »

negzero wrote: post #78
vkou wrote: post #53

Earlier quoted context omitted.

> 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.

Given you could get ~20% on anchor, why would you invest in something with lower return with no a priori reason to believe the returns are safer?

If a 20% better ponzi is better than a 15% one, again, I ask, why not a 1,500% one? There's new shitcoins born every day, promising these kinds of returns.

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

#129

Post by xnorswap »

Terr_ wrote: post #88
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…

By definition, a Ponzi scheme involves some kind of reporting fraud where you're being lied-to about how your investment was converted and how much of that converted asset there is. I'm not saying these aren't some other kind of scam but lots of people use "Ponzi" as if it meant any kind of scam... And generally speaking "how many thingy-coins do I own" is the one thing cryptocurrencies focus on making very difficult…

If everybody mis-uses a word then they're not mis-using it at all, the meaning of the word has simply changed.

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

#130

Post by Khoth »

nootropicat wrote: post #86
nrmitchi wrote: post #58

Earlier quoted context omitted.

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.

No, perfectly safe three digit APR yield was the norm for months, and high double digit - for about 1.5 years. Checking the contracts was easy, as usually they were copied from other projects and thus known. Often capital was locked doing nothing at all, sometimes just providing liquidity in a lp pair. Took a while for the absurd risk premium to go down to its real value of ~0, crashing safe yields. Ironically, this…

Why were people willing to pay a three digit APR yield to borrow assets then just keep those assets doing nothing at all?
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