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With FTX and now Goldman buying up assets from dying crypto companies, it looks like a bigger crypto crash will now start to hit the rest of the financial markets. Interesting times coming if there are more issues with USDD and/or tether.
Why?
Question: Who owns the deposited assets? Don't the original owners have dibs? Or can Goldman just pull the rug and say "ours now". That would seem crazy.
Earlier quoted context omitted.
Wall street is in on the crypto idea. They see a future. Soon (a few years?) we will see the crypto craze back on. Maybe not as crazy and better regulated but it will be there. The "Turn a $1000 into a $million craze" is probably no more. But crypto is here to stay. A few wall street firms have started to recommend Crypto as an investment. Goldman probably sees a future where their clients will have crypto assets so…
The one thing of value that crypto actually delivers (and which will never be replicated in tradfi because of incentives of existing players) is atomic multi-party transactions across unrelated parties. Something like a flash loan would never exist in tradfi. Being able to borrow billions with _no_ risk of loss due to execution delays between borrowing money and executing a trade means more liquidity and lower risk f…
IMO you said it perfectly and it's worth emphasizing for programmer types:
> The one thing of value that crypto actually delivers [...] is atomic multi-party transactions across unrelated parties.
I wouldn't say it's the one/only thing though: Ethereum builds a trustless computation platform on top this core primitive, which I think is pretty fundamental and impressive (especially when you consider Vitalik Buterin was 21 when he created it, and already had a long career of writing for Bitcoin Magazine; in particular this article from 2014 criticising Bitcoin's centralisation: https://bitcoinmagazine.com/business/opinion-on-mining-14032...).
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I’ve seen a couple examples of a somewhat opposite scenario where founder does well, sells to MBA for a lot, business struggles, founder repurchases for much less, then brings business back to profitability
DELL and Apple are a good example of your scenario. And Microsoft and Google are examples where the founders handed the company to an MBA and the companies profits greatly increased. But I've seen these happen much less.
> Ballmer joined Microsoft on June 11, 1980, and became Microsoft's 30th employee, the first business manager hired by Gates
> [Ballmer] left the MBA program at Stanford University
Ballmer is what Marisa Mayer was (or vice versa). An employee that latched onto a rocket. What made the company successful wasn’t them but the founder. By the time you can hire the 10th employee, risk is already greatly reduced.
I think that the title sounds kind of funny because (according to crypto detractors) there are no assets.
Smart move.. best time to buy, and even if the ethos/price of crypto dies - the infrastructure is still extremely valuable to a bank.
With FTX and now Goldman buying up assets from dying crypto companies, it looks like a bigger crypto crash will now start to hit the rest of the financial markets. Interesting times coming if there are more issues with USDD and/or tether.
Earlier quoted context omitted.
Wall street is in on the crypto idea. They see a future. Soon (a few years?) we will see the crypto craze back on. Maybe not as crazy and better regulated but it will be there. The "Turn a $1000 into a $million craze" is probably no more. But crypto is here to stay. A few wall street firms have started to recommend Crypto as an investment. Goldman probably sees a future where their clients will have crypto assets so…
The one thing of value that crypto actually delivers (and which will never be replicated in tradfi because of incentives of existing players) is atomic multi-party transactions across unrelated parties. Something like a flash loan would never exist in tradfi. Being able to borrow billions with _no_ risk of loss due to execution delays between borrowing money and executing a trade means more liquidity and lower risk f…
If Goldman are raising money from investors it's probably because they think they can charge those investors for advising on and structuring a deal. It doesn't mean Goldman are buying Celsius. It's only a vote of confidence in Celsius to the extent that it means Goldman think they can find people who want to buy it and who will pay an investment bank to do so.
$2B for what was suppose to be $12B of AUM. Doesn’t sound like a vote of confidence. Question is what priority are funds distributed. Depositors are unsecured creditors. Are there secured creditors that would be before them?
A troubled company's balance sheet usually looks like:
Assets: A Mess
Liabilities: A Mess
None of the claimholders (liabilities) know what they can withdraw, when, etc. A "buying asset" bailout often happens when someone (like Goldman here) comes in to buy only the gross assets. They will pay $2 bln in cash for the assets, and divorce the two messes. The two companies afterwards are now:
NewCo:
Asset: A Mess
Liabilities: None, other than their new single equityholder, Goldman.
OldCo:
Asset: $2bln
Liabilies: A Mess.
NewCo is controlled by one person (or a tight group) and can unwind its positions slowly at leisure, waiting for prices to go up, with no more (financial) liquidations.
OldCo has a much easier time. All creditors are called to line up in order. A judge decides who is most senior. The senior most people go collect their money (chunk of $2bln first). People queue up until the money is gone. In the highly unlikely case there is any money left after all claims are paid, the money goes to the old Celcius equityholders.
Doesn't say how much of their own money they'll risk.