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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

#301

Post by JoeAltmaier »

bombcar wrote: post #241
JoeAltmaier wrote: post #205

Earlier quoted context omitted.

Um, how all the super-rich got that way. Interest, dividends, annuities, heck any financial instruments at all. But sure, lets make it a moral good that we don't (get to) have money too. The 1% deserve all the money!

Almost all of not all of the current super rich got that way by owning shares in their company. Tesla, Amazon, etc.

Then there's the bank owners etc. They got rich when banks were deregulated and then began skimming from every transaction. You do that for long enough, you have all the money.

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

#302

Post by fartcannon »

phphphphp wrote: post #224
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 demons…

Yeah, and unfortunately the YC comment section has a real end days of Slashdot vibe. You can really feel it on these crypto posts.

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

#303

Post by djbebs »

devoutsalsa wrote: post #185
Khoth wrote: post #182

Earlier quoted context omitted.

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.

Except anchor was lending at lower rates.

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

#304

Post by AlexandrB »

dropnerd wrote: post #203
SilasX wrote: post #190

Earlier quoted context omitted.

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

its months and months worth of tweets, and that's all they talked about during this year. first a cryptic puzzle as a recruiting tool for analysts: https://twitter.com/Galois_Capital/status/148693793605468979... followed by months of warnings like this: https://twitter.com/Galois_Capital/status/151217543903232819... and threads pushing the systemic risk angle: https://twitter.com/Galois_Capital/status/150461116699529…

Some of the replies to that second tweet thread are hilarious in retrospect:

> But is this any more likely to happen than, say, the global thermonuclear war that is held at bay by the principle of MAD? I feel like we are surrounded by doomsday scenarios; economic and existential. Who would pull the pin on this one? Or is the problem blind faith in an algo? - https://twitter.com/thestephoflife/status/151220218743844864...

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

#305

Post by Ruphin »

ipnon wrote: post #299

This all could have been prevented with a limit order sell at 0.99 UST per USD.

There is always some fluctuation in the market, and it is impossible to tell if after hitting .99 it will go back to 1.0 or drop to 0. Sure, you mitigate risk of the asset going to 0 with this strategy, but at the same time you bleed 1% of your investment every time the market has a small shock that brings it below 0.99

So what about 0.98 then, or any arbitrary value between 1 and 0? The lower you go, the lower the chance it will bounce back to 1, but the higher your loss if it does. Ultimately it all balances out and each of these bets is just another gamble with no outsized return.

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

#306

Post by yunohn »

josu wrote: post #184
yunohn wrote: post #171

Earlier quoted context omitted.

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.

That’s possible, though I would expect more due diligence from a (unregulated quasi) bank…

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

#307

Post by nullc »

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…

Feeder funds are a normal part of the structure of modern ponzis, Madoff had them too. Pirate40 had them. They're ubiquitous and an important part of scaling up these fraudulent operations. Essentially all HYIPs have them.

Not only do feeders increase the sales force the reduction in yield by the feeder's profit margin actually helps hit more of the potential market: People hear 20% apy and assume it's a scam... but 15% apy? 10% apy? -- starts just sounding like a good deal.

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

#308

Post by BoiledCabbage »

ipnon wrote: post #299

This all could have been prevented with a limit order sell at 0.99 UST per USD.

Oh your right, they almost invented perpetual motion, but forgot to add this one doodad. If they add they doodad they will have succeeded in inventing it and surely we'll all get great gains. /s

The entire process is fundamentally flawed. No adjustment will fix a faulty premise. Please stop pushing faulty thinking like this.

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

#309

Post by lbriner »

frob wrote: post #289
eis wrote: post #266

Another negative story about a YC company which has risen to the front page of HN and then seems to be getting a lot of pressure to get ranked down. It has more points and is fresher then a handful of other stories on the frontpage but ranks lower and is falling quickly. And when mentioned in the past, the reason often is the invisible anti-flamewar or similar features. What is it this time? Elon needs to buy HN and…

Wow, you're absolutely right. This story about how HN invested in an obvious Ponzi scheme (seriously, if the name Stablegains doesn't throw off alarm bells, you deserve to lose your money) fell over 10 spaces in the time it took me to click to the comments, read your comment, and click back to check.

I don't know what due-diligence that YC do but I can imagine, as someone who only knows the basics of crypto-currency, of being sucked into some confident founder telling me that, "of course it is safe, it uses stable coins".

The risks seem really obvious after everything falls through but there are plenty of other companies that are "obvious scams" who happen to have made it by luck/skill/investment.

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

#310

Post by AlexandrB »

teraflop wrote: post #274
itsoktocry wrote: post #219

Earlier quoted context omitted.

And the YC board looked at this and funded it. That's unbelievable, isn't it?

Not unbelievable at all. I've pointed this out before, and I'll probably have cause to do so again, but Y Combinator has twice funded companies whose entire business model is smuggling: https://techcrunch.com/2014/08/13/backpack-connects-you-with... https://techcrunch.com/2016/01/28/shypmate-pays-travelers-to...

They also funded a second life knock off that claims it will become the meta verse: https://www.playdreamworld.com

https://www.youtube.com/watch?v=_w3fZMkE69s

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