Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

twitter.com

Post reply on HN
Print view View original

181–190 of 411 posts

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

#181

Post by charcircuit »

devoutsalsa wrote: post #169
Khoth wrote: post #70

Earlier quoted context omitted.

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...

If anything it was closer to a pump and dump with Luna.

I don't get why calling it a Ponzi is so popular when there wasn't something paying returns using other people's money.

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

#182

Post by Khoth »

devoutsalsa wrote: post #169
Khoth wrote: post #70

Earlier quoted context omitted.

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...

It's obfuscated by splitting the components into multiple cryptocurrencies with multiple actors, but that's what's going on. People were staking UST for 19.5% returns, and if you cut through the fluff, those returns came from later people putting their money in hoping to get those returns themselves. (and because UST was a stablecoin those returns were (ostensibly) in dollars, not just inflation of the coin value)

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

#183

Post by charcircuit »

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.

From what I can tell they weren't promising a guaranteed return. Although their landing page used to not say "up to 15%" they had a section in their knowledgebase saying 15% APY is just an upper bound.

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

#184

Post by josu »

yunohn wrote: post #171
josu wrote: post #137

Earlier quoted context omitted.

IANAL, but anything between fraud and gross negligence I guess.

Fraud is very obvious. Which part of it is simply “gross negligence”?

They drank the kool-aid and actually thought that the risk of a depeg was very low, or that they would be able to pull out the money in time?

Hanlon's razor.

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

#185

Post by devoutsalsa »

Khoth wrote: post #182
devoutsalsa wrote: post #169

Earlier quoted context omitted.

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...

It's obfuscated by splitting the components into multiple cryptocurrencies with multiple actors, but that's what's going on. People were staking UST for 19.5% returns, and if you cut through the fluff, those returns came from later people putting their money in hoping to get those returns themselves. (and because UST was a stablecoin those returns were (ostensibly) in dollars, not just inflation of the coin value)

You just described banks. Banks take deposits & lend the money out at a higher rate. This is what anchor protocol was all about. Pay high interest, and lend at even higher interest.

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

#186

Post by devoutsalsa »

charcircuit wrote: post #181
devoutsalsa wrote: post #169

Earlier quoted context omitted.

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...

If anything it was closer to a pump and dump with Luna. I don't get why calling it a Ponzi is so popular when there wasn't something paying returns using other people's money.

People like throwing the word scam around a lot, too. I don't think this was a scam. It was simply a shit financial product based on deluded fundamentals.

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

#187

Post by nootropicat »

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?

Nobody paid that in borrowing, that APR was generated by minting new tokens that could be sold to someone else.

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

#188

Post by kgwgk »

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…

It wasn’t so obvious for some people…

https://www.hbs.edu/faculty/Pages/profile.aspx?facId=697248

https://medium.com/terra-money/have-you-met-marco-216ca2a8b9...

https://assets.website-files.com/611153e7af981472d8da199c/61...

https://cdck-file-uploads-global.s3.dualstack.us-west-2.amaz...

Why did you decide to join Terra?

I thought Terra provided the perfect environment to apply what I learned in my research. Ensuring the stability of a digital currency closely resembled the issues faced by central banks in deciding monetary policy measures, while the lessons learned in studying trading in the equity and bond markets are crucial in guarding against potential manipulation by malicious market participants.

What do you think are Terra’s strengths compared to other blockchain projects or potential competitors?

There are several, but I will mention just three. First, there is no improvisation. In fact, our strong research team stays grounded and informed by the latest research in economics and finance, devoting a lot of attention in making sure that Terra’s ecosystem remains stable. Second, top eCommerce companies in Asia are pushing for Terra’s adoption, ensuring that Terra will be widely used from the start. Finally, the team is composed by a diverse and uniquely qualified set of people that are excited to collaborate in solving one of the most exciting challenges of our time.

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

#190

Post by SilasX »

dropnerd wrote: post #119
rsynnott wrote: post #97

Earlier quoted context omitted.

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…

for context for others following along, Galois Capital went public with their criticism months before they started shorting. most people didn't listen. https://twitter.com/galois_capital

Was there a specific tweet you meant to link? That just goes to Galois’s profile page.
Post reply on HN