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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

#161

Post by doomroot »

hardwaresofton wrote: post #75
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 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…

Believe it or not… it’s on bitcoin. It’s fascinating watching a largely un-steared bitcoin attempt to scale.

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

#163

Post by puranjay »

hardwaresofton wrote: post #127
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. 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 w…

The one thing that still makes me excited for this tech is web wallets and being able to pay/send money with them. If they are widely adopted, and a safe stablecoin (maybe even a CBDC) becomes the defacto transacting currency with quick on/off ramps, it would really change the way we pay for things online.

Like buying a monthly subscription for a tool like, say, Icy.tools, is so much faster when you can pay directly with metamask. No accounts, no logins, no credit card screens.

The catch, of course, is that for the tech to get adopted by the mainstream, you will need way more regulations and safeguards. Maybe KYC on wallets (which means creating accounts/logins), maybe the ability to reverse transactions to reduce fraud.

All of these regulations might introduce enough friction that the final experience doesn't differ much from current legacy systems.

But a built-in browser wallet that makes payments (including micropayments) easier is really needed. It's the only antidote to our current advertising dependent model of the web.

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

#164

Post by renonce »

Khoth wrote: post #130
nootropicat wrote: post #86

Earlier quoted context omitted.

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?

High APR = High Total Value Locked (TVL) = Potential to steal someone's money = Attract crypto investments

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

#165

Post by compsciphd »

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…

> 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 saying that it is a legitimate business, just not a ponzi.

Something like this happened with Madoff in a very similar manner to what you describe.

Madoff was a board member on one the schools at Yeshiva University. J. Ezra Merkin was on Yeshiva University's investment committee. Merkin funneled some of the University's money directly into his own fund which turned out to be 100% invested in Madoff.

Now, in some ways this is an even bigger ethical breach. lets say Merkin didn't know that Madoff was sketchy, why does he have to use his fund as a middle man for the University's funds when Madoff is on the board so he presumably can invest the funds directly with Madoff. The only reason is to skim off the top. For others, who didn't have an entry into Madoff's funds themselves, perhaps the middleman has value (assuming the middleman really believes in the underlying investment, if they are just there to skim off the top, the I would say they are not fundamentally different than ponzi themselves, as they are just pulling a Sgt Shultz, "I see nothing, I hear nothing, I know nothing")

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

#166

Post by charcircuit »

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…

Insurace is another site who offered insurance for the UST depeg. They had a very poor estimation for the risk and had the price at only 2% annually for the amount insured. They were covering 22.2 million worth of UST and as of a few days ago they had claims submitted totalling 7.3 million worth.

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

#167

Post by flaviut »

Ekaros wrote: post #144
chii wrote: post #59

Earlier quoted context omitted.

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.

Can you even earn below inflation without risks? Actually you can't even keep your money/wealth without risks...

TIPS and I Bonds

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

#168

Post by koolba »

ramraj07 wrote: post #56
okwubodu wrote: post #46

Earlier quoted context omitted.

$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.

Arguably the second one is not an idiot. Or at least not as much.

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

#169

Post by devoutsalsa »

Khoth wrote: post #70
devoutsalsa wrote: post #9

Earlier quoted context omitted.

A poor decision does not equal fraud.

It does when the poor decision is to run a ponzi scheme e: ah, only acting as the middlemen between the end user and a ponzi scheme. Probably that'll give them and their VC backers enough plausible deniability to avoid being arrested.

This wasn’t a Ponzi scheme.

A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors.

https://www.investor.gov/introduction-investing/investing-ba...

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

#170

Post by whatever1 »

hbbio wrote: post #159

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 worl…

Trustless computing might have a future, trustless money no.
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