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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

#371

Post by tshaddox »

mhh__ wrote: post #333
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…

I don't know if it should be illegal to be a fool. Where is the line between an outright scam and just people believing their own bullshit.

Isn't that ultimately one of the purposes of financial regulations? Like you're not allowed to start a pyramid scheme even if you don't know that phrase or concept, don't realize that it's fundamentally unsound, and don't intend to take advantage of people.

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

#372

Post by alasdair_ »

fshbbdssbbgdd wrote: post #329
ryanSrich wrote: post #250

Earlier quoted context omitted.

> Like what, people are just going to give you money without you doing anything? That’s disingenuous. When you put money into a high yield savings account, or even into a fiat backed 1:1 stablecoin you’re doing something. You’re providing liquidity. A high yield savings account (2-4%) or yield on a fiat backed 1:1 stablecoin (5-8%) is risky in the sense that you need to trust a bank (or exchange), but that’s eased by…

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 current i-bond rate is 9.68%

If you are a us citizen, you can buy $10k per year from treasurydirect.gov

It’s “risk free” in that it’s guaranteed by the us treasury.

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

#373

Post by Terr_ »

nootropicat wrote: post #158
Terr_ wrote: post #88

Earlier quoted context omitted.

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…

Fraud logically can't be part of the mechanism of a ponzi scheme itself. A ponzi scheme is any financial scheme where old investors are paid exclusively by new investors, and without new investments the system doesn't generate any income at all. There are many different variations. Lying about source of potential gains concerns marketing of it - which is something external and done by humans, and not part of the inte…

> A ponzi scheme is ANY financial scheme where old investors are paid exclusively by new investors

No, that assumption (emphasis added) is popular but utterly false.

In a Ponzi scheme, cash from new buy-ins gets FRADULENTLY reported to existing participants as dividends from the underlying business or investment.

That fraudulent reporting of fake-dividends is essential to the scheme, because it's how the scammer lures in successive waves of investors to keep it perpetuated.

Unsustainable optimistic speculation != Ponzi Scheme

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

#374

Post by rchaud »

bombcar wrote: post #245
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…

YC is just a VC firm. They avoid known risks and embrace unknown ones: that’s the whole point. They don’t “understand” Mexico and are scared that their investment will get Pemex’d or something - and since that’s a known financial risk their backers would be like “wtf you doing?” But “unknown” risks (even if actually quite easy to see) don’t have the same pushback from their investors. In fact, their investors may be…

> But “unknown” risks (even if actually quite easy to see) don’t have the same pushback from their investors.

Malcolm Gladwell had a phrase for this in a 1996 article about a vacation town that favoured hiring temp workers from the Caribbean (Gladwell is part-Caribbean) instead of black Americans who lived in nearby towns.

The employers made a decision on the basis known unknowns and unknown knowns. Gladwell described it thusly:

"Better the ghetto you don't know than the ghetto you know".

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

#375

Post by rchaud »

namdnay wrote: post #332
JoeAltmaier wrote: post #301

Earlier quoted context omitted.

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.

which "bank owners"?

Why, the ones with "all the money" of course! /s

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

#376

Post by rchaud »

nemothekid wrote: post #342
Invictus0 wrote: post #290

Earlier quoted context omitted.

Excuse my language, but why the fuck would I want my calendar on the blockchain, and also pay for the privilege?

Hopefully the transactions fees would be so high and the confirmation times so long, that it forces your manager to think twice about scheduling that "check-in" 2 days before a customer demo.

You may be on to something. If I smash my router, my manager can't possibly assign me another Jira ticket.

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

#377

Post by puranjay »

moneywoes wrote: post #357
puranjay wrote: post #112

Earlier quoted context omitted.

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

100% over for now. No one is making any money right now, except for developers getting salaries and smart contract auditors

Whether it comes back or not will depend, imo, on Bitcoin adhering to the 4 year cycle. So far, Bitcoin has gone up after every halving. Bitcoin leads and the market follows on the “inevitability” of Bitcoin going up after a halving.

But Bitcoin has also only existed in a relaxed regulatory regime and a monetary policy of low rates and cheap money. Now cheap money is off the table and the market has become too big to go unregulated.

If Bitcoin doesn’t go up in the next cycle, it might just break faith in the market and then who knows?

I’d check back in mid-late 2023 if I were you. You might also want to learn some solidity development. All the decent devs I know who were active from 2019 onwards made 8 figures this run

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

#378

Post by dropnerd »

nivertech wrote: post #368
dropnerd wrote: post #366

Earlier quoted context omitted.

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…

> MMF liquidated

from your link:

> In 2008 however, the day after Lehman Brothers Holdings Inc. filed for bankruptcy, one money market fund fell to 97 cents after writing off the debt it owned that was issued by Lehman. This created the potential for a bank run in money markets [...] the next day the United States Treasury announced a program to insure the holdings of publicly offered money market funds so that should a covered fund break the buck, investors would be protected to $1 NAV

if the US Treasury insured $ust, luna would have been fine

---

> Why people kept locking ETH in MakerDAO CDPs over and over during the "crypto" bear market, when ETH was in the free fall?

they're long eth. it's not altruistic, it's incentive alignment.

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

#379

Post by uncomputation »

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…

Came here to say just this, this ranks higher than anything on the front page currently and is not very old. Usually HN algorithm allows a slow fall for high vote posts like this. This one’s quick descent right off the top 100 seems human-made.

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

#380

Post by nootropicat »

nrmitchi wrote: post #262
nootropicat wrote: post #194

Earlier quoted context omitted.

Generated tokens were different than what you had to deposit to get them. Deposited funds were (almost always) completely safe.

If you were doing this though (using funds to mint other tokens to sell), the principle was clearly not in USD, so there was still a risk of the bottom falling out on whatever you were holding funds in. You also can't really add "almost always" to "completely safe". It's either "completely safe", or it's not. This statement is just "it works 100% of the time 65% of the time", but with words rather than numbers. "It's…

>If you were doing this though (using funds to mint other tokens to sell), the principle was clearly not in USD

It was often in usd.

>"It's 'completely safe', until it's not" which is exactly the point that I and others in this thread started with.

The meaning was: almost all smart contracts were safe, meaning you had to at least check the code before depositing.

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