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

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

#151

Post by whatever1 » Thu, May 19, 2022, 9:38 AM UTC

onethought wrote: post #147

whatever1 wrote: post #136

Earlier quoted context omitted.

The problem is that you need an entire supply chain and manufacturing to provide you with your solar panel and gpu. We are mobilizing all these resources and manufacturing capacity to do what? Run infinite loops on a useless program? Meanwhile at my lab that works on bio simulations they could not find gpus to do their research.

I really don’t understand this line of thinking. Are gamers just running useless programs too? We mobilise resources for whatever people want to pay for… “why” they want to spend their money on that has never been an issue. Is Gucci wasting leather that could otherwise be used to make school shoes? Ban Gucci!

If gamers were swarming overnight* everything on the market like consumer, professional, server grade gpus then yes it would be problematic for the society.

* and also dumping them all together overnight

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

#152

Post by pjc50 » Thu, May 19, 2022, 9:42 AM UTC

From their website, is this really a sufficient disclaimer?

> Stablegains is not a bank and the assets stored in your Stablegains account are not insured by any private or governmental insurance plan (FDIC or SIPC), nor are they covered by any compensation scheme (including FSCS). There is a range of safeguards in place to help secure your deposits, however holding and depositing stablecoins with Stablegains and third party lending platforms still carries significant risk. Please carefully read our Terms of Use and Risk disclosures in our Learning Center before making a deposit. Any deposit with Stablegains and third party lending platforms is entirely your responsibility. You understand that your principal is at risk.

> Stablegains does not provide any financial, legal, or tax advice, nor should this website be viewed as an offer or inducement to make any financial decisions. The interest rate refers to the level of current daily interest payments, is not guaranteed for any specific period and may be modified in the future depending on the conditions in the lending markets used.

At least you know you can report them to the cops, which you should do if you have been a victim of fraud:

> Stablegains, Inc. is registered as a Money Services Business (MSB) number 31000211740426 with the US Financial Crimes Enforcement Network (FinCEN).

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

#153

Post by exdsq » Thu, May 19, 2022, 9:43 AM UTC

Honestly how was this ever a YC company? Some of their Web3 plays I totally get - things like building dev infrastructure as a SaaS helps a ton when it comes to blockchain development. But products on Web3 seem to risky, especially DeFi ones with no track record.

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

#154

Post by realusername » Thu, May 19, 2022, 9:43 AM UTC

underwater wrote: post #139

Their tagline is "Earn higher interest on your cash". And the website says "You can now earn up to 15% APY interest on your cash with Stablegains. This is 30x higher than in your traditional bank*." I don't see how they can justify making such a claim. Once you put the money into their system the cash is converted to UST. No one is earning interest on their cash. Comparing themselves to a bank, and using terminology…

When you're advertising higher yearly interests than Madoff, that should raise some warnings into people's head.

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

#155

Post by xtracto » Thu, May 19, 2022, 9:44 AM UTC

This made me think... back in 2012, a startup called Kueski (now a very successful BNPL in Mexico) applied for YC (twice in 2 years). The founders were rejected, even though the business model was sound and the economics were pretty well laid out (I know the CEO and ge is a really meticulous person).

The reason YC gave for the rejection was that Mexico was an unknown market, and they felt lending in there was too risky for them.

Makes me wonder what was the decision logic to accept this Stablegains, against that background it doesn't make any sense.

Was YC aware of the ponzi nature of this thing and decided to dip in? It just makes no sense.

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

#156

Post by pjc50 » Thu, May 19, 2022, 9:45 AM UTC

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…

Unfortunately, you can shout "this is a scam" from the hilltops and people won't listen.

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

#157

Post by xnorswap » Thu, May 19, 2022, 9:45 AM UTC

xtracto wrote: post #155

This made me think... back in 2012, a startup called Kueski (now a very successful BNPL in Mexico) applied for YC (twice in 2 years). The founders were rejected, even though the business model was sound and the economics were pretty well laid out (I know the CEO and ge is a really meticulous person). The reason YC gave for the rejection was that Mexico was an unknown market, and they felt lending in there was too ris…

YC invested in Coinbase in 2012. I suspect the success of that investment gave them (false?) confidence in their ability to navigate the crypto landscape in 2022.

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

#158

Post by nootropicat » Thu, May 19, 2022, 9:48 AM UTC

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…

Fraud logically can't be part of the mechanism of a ponzi scheme itself. A ponzi scheme is any financial scheme where old investors are paid exclusively by new investors, and without new investments the system doesn't generate any income at all. There are many different variations.

Lying about source of potential gains concerns marketing of it - which is something external and done by humans, and not part of the internal distribution of money flows. How can an algorithm itself commit fraud? It can't.

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

#159

Post by hbbio » Thu, May 19, 2022, 9:48 AM UTC

It's sad that such projects got into YC, when it was easy to tell that Luna/Terra was a ponzi. I looked at it earlier, and stayed away due to these red flags.

Blockchains themselves have a bright future though as a technology which is truly fantastic and keeps innovating rapidly. Right now, with all the negative press, it may be easy to dismiss it, but it will come back as a trustless computing platform that the world needs.

I am biased, as we chose to build in that domain but proud that we're developing actual new tech for smart contracts... YC, you can still accept us in the next batch :)

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

#160

Post by puranjay » Thu, May 19, 2022, 9:51 AM UTC

vkou wrote: post #135

puranjay wrote: post #112

Earlier quoted context omitted.

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. In 2022, is there any money to be made there, other than: 1. Money that comes from 'less lucky' entrants in the various zero sum schemes? 2. Money that comes from selling shovels to the con artists running #1? As a bystander, I'm not seeing any other ways that 'web3' is making money - and I'…

There really isn't. I'm deep in the crypto hole and have a whole bunch of close friends in private telegram groups scouring for opportunities. And collectively, we've only been down outside of a few lucky plays and/or airdrops (like the BAYC $APE airdrop).

Which is precisely why you see dApp usage numbers crater. Check out OpenSea's daily volume on Dune.xyz as an example - down to $30M/day from consistent $150M/day even a month ago.