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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

#361

Post by fshbbdssbbgdd »

ryanSrich wrote: post #335
fshbbdssbbgdd wrote: post #329

Earlier quoted context omitted.

You’re saying that there’s an account with FDIC coverage that pays 5-8% returns? Please provide a link. This doesn’t line up with my understanding of banking regulations. The current risk-free return of a callable loan on dollars is less than 1%, so I don’t see how the FDIC would agree to guarantee 5-8%.

The link is literally in the comment you’re replying to

This page makes it clear that funds in Gemini Earn are not insured: https://support.gemini.com/hc/en-us/articles/360056367771-Ar...

I don’t blame you for getting that impression, though. The Gemini dollar marketing page talks about earning high yields, and it talks about FDIC protection. It doesn’t explicitly mention whether you can get the yields and the insurance as the same time, but the answer is no.

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

#362

Post by dropnerd »

SilasX wrote: post #358
dropnerd wrote: post #203

Earlier quoted context omitted.

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 th…

they hid the answer to find junior analysts instead of stating the solution outright

https://twitter.com/galois_capital/status/148693794923729715...

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

#363

Post by dropnerd »

Agamus wrote: post #337
dropnerd wrote: post #118

Earlier quoted context omitted.

it's fraud

The whole thing reminds me of something more like baseball cards or other collectibles, where the monetary value rests in a collective belief in the inherent value. How much of the real value of cryptocurrency is not monetary? How much of the value is in the existential value of participation, e.g. Dogecoin?

networks derive their value from participation. ex. if the us government held 100% of dollars or berkeley had 100% of internet connected devices or jack had 100% of twitter accounts, these dollars or devices or accounts wouldn't be very useful

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

#364

Post by SilasX »

dropnerd wrote: post #362
SilasX wrote: post #358

Earlier quoted context omitted.

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 th…

they hid the answer to find junior analysts instead of stating the solution outright https://twitter.com/galois_capital/status/148693794923729715...

Well, yeah, of course they hid the answer. My point was that making it cryptic would be removing the real names of the referents.

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

#366

Post by dropnerd »

nivertech wrote: post #293
dropnerd wrote: post #252

Earlier quoted context omitted.

algo stablecoins work fine when they're overcollateralized, like dai. the industry keeps chasing undercollateralized algo stablecoins because of capital efficiency. jon wu explains to laura shin, worth a watch: https://twitter.com/laurashin/status/1525505300219961344

> algo stablecoins work fine when they're overcollateralized, like dai. DAI/MakerDAO isn't an algorithmic "stablecoin", it's an unregistered SEF (Swap Execution Facility) which should be regulated by the CFTC in the US, and similar agencies in other parts of the world. The only reason DAI didn't broke the USD peg during the "crypto" bear market, is because OG's cost base of ETH was zero to 30 cents, and their objecti…

stablecoins don't promise to hold the peg 100%. they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government.

what about makerdao makes it reliant on dao goodwill? the incentive to restore the peg is the expectation of profits from liquidating the overextended.

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

#367

Post by humbleMouse »

Terr_ wrote: post #88
nootropicat wrote: post #37

The whole idea was to become a middleman to a ponzi scheme and charge a performance fee. They described what they are doing in their documentation, but the core ethical problem here is that the only users that would use their service are those incapable of understanding how UST/Terra worked, because anyone capable of understanding would just deposit funds directly and get higher APR for the same risk! Extremely preda…

By definition, a Ponzi scheme involves some kind of reporting fraud where you're being lied-to about how your investment was converted and how much of that converted asset there is. I'm not saying these aren't some other kind of scam but lots of people use "Ponzi" as if it meant any kind of scam... And generally speaking "how many thingy-coins do I own" is the one thing cryptocurrencies focus on making very difficult…

No post body was provided.

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

#368

Post by nivertech »

dropnerd wrote: post #366
nivertech wrote: post #293

Earlier quoted context omitted.

> algo stablecoins work fine when they're overcollateralized, like dai. DAI/MakerDAO isn't an algorithmic "stablecoin", it's an unregistered SEF (Swap Execution Facility) which should be regulated by the CFTC in the US, and similar agencies in other parts of the world. The only reason DAI didn't broke the USD peg during the "crypto" bear market, is because OG's cost base of ETH was zero to 30 cents, and their objecti…

stablecoins don't promise to hold the peg 100%. they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government. what about makerdao makes it reliant on dao goodwill? the incentive to restore the peg is the expectation of profits from liquidating the overextended.

>stablecoins don't promise to hold the peg 100%.

I didn't said that. Once they're listed on "exchanges" or traded on DEX, their price isn't under control of the protocol, and in theory can be anything.

>they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government.

MMFs are funds with the NAV which supposed to be around $1.00 (that in addition to earning an interest). In case the NAV goes under $0.95, the fund has to be liquidated. See "Breaking the Buck":

https://www.investopedia.com/terms/b/breaking-the-buck.asp

https://www.investopedia.com/articles/mutualfund/08/money-ma...

>what about makerdao makes it reliant on dao goodwill? the incentive to restore the peg is the expectation of profits from liquidating the overextended.

Why people kept locking ETH in MakerDAO CDPs over and over during the "crypto" bear market, when ETH was in the free fall? It doesn't make sense from the economic PoV. It only makes sense if your ETH is cheap and you want to prove that MakerDAO works.

Different agents optimize for different things. Some (most?) optimize for size of their wallet/bank account, others want to save their project/ecosystem. Both types are rational.

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

#369

Post by xtracto »

gzer0 wrote: post #200

Quick comparison between archive.org March 27th snapshot 27 March 2022 > There are no lock-up periods. Withdraw your funds any time and keep the interest you earned. 18 May 2022 > There are no long-term lock-up periods. These guys are going under. [1] https://web.archive.org/web/20220308041252/https://www.stabl...

I wonder what Jordan Gillespie, Kasey Cook and Kai Pedersen think now of the Stablegains product and service.

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

#370

Post by moistly »

riffraff wrote: post #4

I imagine (and hope) those 5k where mostly crypto bros who knew what they were getting into. Who else expects 15% returns from a "safe" investment?

I have a (ex-) friend who falls for every MLM scam that comes along. Naturally, she put everything into crypto. She would undoubtedly think she could make 15% with no risk. I believe a huge number of the MLM gullible are the dupes involved in these scams.
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