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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

#351

Post by antisthenes »

MrMan wrote: post #198
antisthenes wrote: post #32

Earlier quoted context omitted.

Usually it's the risk premium. Which makes sense for these ponzi schemes. Exorbitant returns - extremely high probability of ending up at the bottom of the pyramid.

risk premium arises from supply and demand in markets typically with some kind of quoting system. free money out of nowhere isnt really "risk premium" in that sense.

I am not familiar with the specifics of their business model, but the definition of risk premium allows for multiple types of risk.

A company being unable to meet its original obligations due to a bad business model is a type of financial risk that falls under this definition.

> risk premium arises from supply and demand in markets typically with some kind of quoting system.

Risk premium arises any time there exists an investment that's riskier than the safest possible investment (whatever it may be). No other conditions are necessary.

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

#352

Post by josu »

shkkmo wrote: post #288
josu wrote: post #184

Earlier quoted context omitted.

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.

I don't think Hanlon's razor is safe to apply in the finacial/cryptocurrency space.

Then you haven't spent enough time in the cryptocurrency space.

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

#353

Post by caseyf »

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 had $50 in Alice just to play with it.

"Due to unprecedented market conditions on the Terra blockchain - most notably risks of TerraUSD de-pegging as previously disclosed in (help.alice.co......) the UST to USD offramp is unavailable...we are unfortunately uncertain when ramp services will be resumed.

For information on alternative paths to convert to USD please see..."

the alternative paths are withdrawing to a wallet or exchange and getting 8 cents on the dollar.

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

#354

Post by SilasX »

xur17 wrote: post #280
nrmitchi wrote: post #39

Earlier quoted context omitted.

Tbh they very well may have. Didn’t think same kind of shit happen in the BTC crazy circa 2017?

It sounds like they were going all in with their customers' money, so it kind of makes sense for them to deposit investor money in UST as well. In the case of a depeg, they are screwed (since all of their customer money is gone) regardless of where they placed their capital. Might as well take full advantage..

Aren't there regs about where you can store investors' unused money?

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

#355

Post by dragonwriter »

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.

“Its not a Ponzi, it's just paper thin layer of indirection on top of a Ponzi, which is often how most victims of a Ponzi scheme are brought in” is maybe not as important of a distinction as you are making it out to be.

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

#356

Post by moneywoes »

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…

Great insight. Unrelated but what is the sortino achieved with your delta neutral strategies? If it possible for a regular joe to get in?

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

#357

Post by moneywoes »

puranjay wrote: post #112
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…

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…

Do you think the gold rush is over? I was just getting a start in. Are there any areas you would suggest focusing on. The fomo is killing me tbh

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

#358

Post by SilasX »

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…

Thanks for the more detailed links!

I'm curious why you call the first one cryptic though? It seems the opposite to me: it refers to all the elements by their actual, real-cryptocurrency-world names. To me, "cryptic" would mean that it abstracted away from all the actual terminology used, and just describes it in terms of pure mathematical finance, which would be cryptic since you'd be left wondering, "uh, what is this referring to? Is this an actual thing?"

I also don't see how it works as a recruiting tool. This is a space that involves exploiting domain knowledge, and it's trying to bring in expert outsiders who just haven't yet used their analytical expertise in this domain. But tweets heavily depend on you already knowing how all these protocols work (e.g. what staking/minting/gauge weight mean). Such a person, if an expert analyst as well, would already be working in the field or exploiting that knowledge themselves, and you wouldn't be plucking such diamonds out of the Twitter rough.

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

#359

Post by kgwgk »

dropnerd wrote: post #258
bhouston wrote: post #253

Earlier quoted context omitted.

They didn't plan for a black swam. I think that they only kept so much money around to do redemptions (fractional reserve) assuming that there wouldn't be a run on the bank. But then when a run on the bank happened, they were screwed as they had been locking up the funds.

startups usually dont have enough resources for a black swan. but this collapse was entirely predictable- many analysts pointed it out and were mocked by kwon and the self-described LUNAtics. founders either didn't do enough diligence, or didn't care.

Also startup’s black swan effects are usually of the form “our service is no more” rather than “your savings are no more”.

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

#360

Post by landemva »

lbriner wrote: post #315
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…

If they are unregulated then it isn't a crime until it is a crime, and in this case, by then far too late to sort out. Even when it does go wrong, there still might not be a crime any more serious than being an idiot, obviously would be different if the company misrepresents itself for gain, which would be fraud. I suspect that many of these people genuinely believe their own hype, which is how they convince others t…

If sold to people in USA and if SEC deems it should have been registered as a security, then get ready for a well-deserved enforcement action. Would not want to be an American and on board of directors or a senior contributor or part owner.
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