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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

#381

Post by nootropicat »

Terr_ wrote: post #373
nootropicat wrote: post #158

Earlier quoted context omitted.

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 lure…

Again, the fraud requirement is literally impossible - it's a category error - an algorithm can't commit fraud.

It was conflated in the past because without smart contracts ponzi schemes were necessarily executed by people.

>Unsustainable optimistic speculation != Ponzi Scheme

Speculation on a token that doesn't generate any income and isn't backed by anything is one version of a ponzi scheme, yes.

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

#382

Post by Kritik_Agrawal »

VCs and Incubators providing support to such "startups" (I would really not like to call these entities legitimate startups) causes them to look credible to the public in general and that's why so many people get duped. I am honestly skeptical about this whole Web3 thing, and while a connection has really managed to make my opinion a little less extreme, I think most of us agree that this kind of "startups" cause more harm than good

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

#383

Post by jshappy23 »

Well alice let everyone know they are using anchor, and allowed people to transfer UST out of the wallet. Stablegain pretended to do more sophesitcated defi and misled customers that they were using USDC as the main coin, and money was made from lending USDC to overcollaterlized positions in bluechip tokens(BTC, ETH)

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

#384

Post by capitol_ »

ramraj07 wrote: post #56
okwubodu wrote: post #46

Earlier quoted context omitted.

$42 million of real people’s money was lost. That’s a net negative to society whether or not it shows up on a balance sheet.

It wasn’t lost, it went from one crypto idiot to another crypto idiot.

No, it's even worse, it went from one idiot to a scam artist that will use the money to build more scams.

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

#385

Post by grey-area »

lbriner wrote: post #312
grey-area wrote: post #113

Earlier quoted context omitted.

About 5 seconds thought would be enough to see the risks, and the same goes for the rest of the crypto ecosystem. Even the name of UST is clearly meant to con people who confuse it with USDT. It's scams upon scams all the way down. Even if your figures seem out of date, your argument against UST also holds for USDT (which underpins much of the crypto price bubble): There is 7B USD in circulation and the market cap of…

You say this, possibly as someone who knows a lot about this stuff but there are plenty of people (including engineers) who don't know enough to refute the bold claims made by the crypto-evangelists and who be convinced that "obviously X is bad, but our product is completely different". I personally have lots of misgivings about various crypto but I really don't have enough expertise to argue against someone telling…

So why is your default position that they are right and this is a new paradigm?

Surely the onus is on those promoting such schemes to convincingly explain their workings; if you can get 20% a year the explanation had better be good...

This is just the last resort of a scoundrel who knows they can’t explain their scam.

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

#386

Post by grey-area »

paganel wrote: post #65
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…

Probably not much else to invest on right at this moment, at least not at this level ("small" start-ups wanting to "change the world"). I was honestly believing that the web3 bullsh.t were just some young people who didn't know any better or some scam-artists (or both), I didn't actually think for a second that a "serious" VC like YC would put money into something like that. Looks like I was wrong.

a16z is also heavily invested in crypto and nft startups.

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

#387

Post by dang »

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…

No moderator touched this post. Moreover, it spent 10 hours on the front page.

Your comment makes me think you might be under a misimpression of how HN moderation works, so here's a refresher.

We moderate HN less, not more, when YC or a YC startup is the story. That doesn't mean we don't moderate at all (though in the case of this particular thread, we literally did not moderate it at all—any perception that made it seem that we did was completely mistaken). This is literally the #1 rule of HN moderation. It's the first thing that PG drilled into me when he trained me to do this job years ago. I hadn't even had a chance to grab a chair yet.

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

The reason we have this rule is that the good will of the community is literally the only value HN has, and that is not worth risking.

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

#388

Post by negzero »

vkou wrote: post #128
negzero wrote: post #78

Earlier quoted context omitted.

Given you could get ~20% on anchor, why would you invest in something with lower return with no a priori reason to believe the returns are safer?

If a 20% better ponzi is better than a 15% one, again, I ask, why not a 1,500% one? There's new shitcoins born every day, promising these kinds of returns.

There are almost definitely a priori reasons to think a 1500% one is much riskier. 20% is in the realm of possibility considering you could get ~15% yields from crypto.com, there were also some powerful players with deep pockets funding anchor paying the difference, and that there was almost 20bn$ TVL.

Stablegains had nothing going for it, in fact it had all of the risk with none of the reward. 1500% APYs are usually attached to LPs carrying huge risks of impermanent loss rather than stablecoin staking and are usually very transient in that they evaporate within hours.

FWIW I disagree with Anchor being termed a ponzi.

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

#389

Post by fshbbdssbbgdd »

alasdair_ wrote: post #372
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 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.

The I-bond is subsidized by the US government. Its rate has no relevance to the FDIC. They are great though! I strongly encourage anyone who is eligible to park money there before they give it to Gemini!

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

#390

Post by jsjohnst »

paulgb wrote: post #229
adrr wrote: post #212

Earlier quoted context omitted.

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 me…

> but it does have some implications for culpability

In many jurisdictions around the world, there isn’t much of any difference between “directly handed the loaded gun to the killer” and “pulled the trigger and killed someone”.

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