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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

#221

Post by hbbio »

whatever1 wrote: post #170
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.

Money is a use case that attracts scams indeed, and will be harder to get right.

But we're building for a future where apps like Calendly can be smart contracts. With new blockchains* that have a very low tx fee (imagine $0.00001 / tx), I clearly see many services migrate to smart contracts.

They won't require any subscription, existing data is never at risk of being wiped out, and hopefully we will keep optimizing app and data size enough to get back to apps that just work, without the cruft or bad incentives. We're here to make that happen!

* New research papers suggest we can reach > 100k tx / sec with great safety and liveness properties

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

#222

Post by josu »

adrr wrote: post #212
paulgb wrote: post #124

Earlier quoted context omitted.

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)

So how is the 20% interest created? Excuse my ignorance on crypto. I don’t understand how UST can drop 90% when I assume it required some sort payment of some other currency/coins to get mint them. I heard it was tens billions of UST was minted. So what happened to these coins? Were they used to pay out the interest?

Read Matt Levine's columns on Luna, or listen to the most recent podcast from Odd Lots with Galois Capital.

They answer all your question and are much more cohesive than anything I could type here.

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

#223

Post by xnorswap »

saalweachter wrote: post #206
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…

> That being said, calling these platforms "ponzis" isn't correct I feel like "ponzi" has become the "magazine/clip" derailer of crypto discussions.

Some very smart people mistake being pedantic for being smart.

It's very easy to join a "conversation" by picking up a pedantic point. Compare that to arguing over the fundamentals which actually requires some knowledge and experience.

By being pedantic it's very easy to "win" an argument, you're entering with a position you consider factually correct.

It's not at all productive as you indicate, and actually harms more productive conversation by de-railing the conversation.

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

#224

Post by phphphphp »

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…

I don’t mean this as a slight against YC, but the world has changed and YC is mostly just a brand now.

YC was unique in that 15 years ago the narrative around raising money was radically different: YC was the only game in town that understood the amount of potential being ignored by traditional investors, and so they had a smorgasbord of excellent opportunities to pick from.

The world is very different now, YC demonstrated that their model worked and nowadays everyone has learned from YC…

…that means there’s no longer this vastly underserved market of brilliant teams that just need a little capital and a little faith and a little guidance, which is the market YC excelled in, nowadays everybody understands that and any competent team could raise money with their eyes closed.

Nowadays getting into YC remains perceived as prestigious but it’s not, really, compared to what it once was: the cycle sizes are huge and the quality has plummeted.

I don’t believe YC, as an organisation, is actively intending to benefit from ponzi-like companies, but YCs thesis (bet on a good team and they will do good things) is very vulnerable to a good team working on a god awful idea that has serious fallout when the market conditions have normalised insane behaviour: a decade ago, StableGains wouldn’t have made it into YC because no YC team would have thought it was sensible.

So, while YC should be held accountable, it’s ultimately a market problem, we’re in a market that values these awful predatory financial propositions, hence almost every prestigious investment organisation has some exposure to this sort of company (it’s just not blown up for all of them, yet, but soon come).

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

#225

Post by hardwaresofton »

im3w1l wrote: post #218
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…

To mean this sounds like it's trying to shift the blame to an outgroup. I think we have to acknowledge that there are bad people within our (SWE) ranks too.

You’re right, I did not mean to exclude SWE from the group of hucksters, I agree that they’re part of it.

The number of developers became a key metric for coins to project legitimacy and there are certainly SWEs who are bad actors and/or knowingly contributing

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

#226

Post by RF_Savage »

jacquesm wrote: post #90
shafyy wrote: post #62

Earlier quoted context omitted.

Of course. But I bet they're still not going to do it...

They stayed in Installmonetizer and Scribd afaict.

Scribd at least was interesting. I wonder if it has any future as a platform for selling documents and articles.

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

#227

Post by hardwaresofton »

doomroot wrote: post #161
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…

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

Any examples? This like lightning seen to have under delivered and sharding/rollups/etc seem to be still research grade.

Scaling also doesn’t seem to be in the interest of miners who essentially provide the network security…

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

#228

Post by ryanSrich »

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…

VCs mostly fund crypto to make incredible amounts of money by pumping and dumping on retail. Take Solana as an example. 40% of their initial supply was allocated to insiders. Giving those VCs and founders the ability to dump on retail. It’s truly abhorrent behavior [1]

1. https://youtu.be/nBHH0k8EOHE

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

#229

Post by paulgb »

adrr wrote: post #212
paulgb wrote: post #124

Earlier quoted context omitted.

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)

So how is the 20% interest created? Excuse my ignorance on crypto. I don’t understand how UST can drop 90% when I assume it required some sort payment of some other currency/coins to get mint them. I heard it was tens billions of UST was minted. So what happened to these coins? Were they used to pay out the interest?

To be clear, I was interpreting josu's “these platforms” as the layers on top of UST, not inclusive of UST itself. He also mentions that they might be ”front ends for a ponzi” which is basically where I fall on this. (So, to your question, the answer would be that the yields in fact do come from a ponzi mechanic)

This is a pretty meaningless distinction if you invested in them, because you were exposed to the same mechanics, but it does have some implications for culpability because it's the difference between “should have known it was a ponzi” and “actually operated a ponzi”.

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

#230

Post by RandomLensman »

gitfan86 wrote: post #210
rsynnott wrote: post #143

Earlier quoted context omitted.

> 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. This was absolutely a thing; most large Ponzi schemes have feeder funds. https://www.reuters.com/article/us-pwc-madoff-settlement-idU...

Indirection seems to be very valuable with scams. The 2008 housing crash had a lot of layers: 1. Loan Application (Borrower Lying about income) 2. Mortgage Originator ( Not validating loan application ) 3. Mortgage Back Security Creators ( Obfuscate what is in the security ) 4. Ratings Agencies ( Not being honest that step 3 happened ) 5. Sellers of MBS ( Not being honest that steps 1-4 exist ) I don't know enough ab…

6. Buyer not caring about any of this
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