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Crypto trading firm Alameda Research might be insolvent

dirtybubblemedia.substack.com

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Re: Crypto trading firm Alameda Research might be insolvent

#141

Post by surewhatever1 »

dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

> As someone in the industry, ...

It's so delightful that the finance people are coming out all salty!

The number is going down. If you organize your life around this number going up, and it goes down, everyone is going to laugh.

You chose this life!

There is sometimes some meaning in finance somewhere. Like some VCs can get some meaning from, a biotech investment makes a great drug that helps people.

But what you chose, there is none. There will be many stages of grief, they do not happen in order or one at a time.

> First very simple point, to become insolvent you have to actually take a loss somewhere.

C'mon dude. Listen to yourself. It's over. This isn't peak cringe but it's getting there.

Re: Crypto trading firm Alameda Research might be insolvent

#142

Post by polygamous_bat »

cryptoanon wrote: post #100
polygamous_bat wrote: post #88

Earlier quoted context omitted.

You cannot complain something is misinformation without offering information to counter it. That never works, will never work. The only reason an article like this, speculative or not, has wind to it's sails because crypto is not regulated like equity and companies like Alameda does not have to publish regular financial reports that classic market participants moving billions of "dollars" have to publish.

What if I saw military helicopters flying above and told others “war has broken out!” I see how you can say that’s not misinformation, but wild speculation. For me, it’s both.

Turn on a TV. No news about a war? No war. Unless you think there is a deeper conspiracy to keeping a war secret.

There you go, some really simple sources of information to counter your misinformation.

Re: Crypto trading firm Alameda Research might be insolvent

#143

Post by pcthrowaway »

phphphphp wrote: post #11
pixelpoet wrote: post #6

I'm continually surprised by how many "major" crypto firms I've never heard of before (being familiar with the space) suddenly are regarded as big names when they go under. Wake me up when it's Kraken or something, i.e. a company someone may actually have heard of.

I'm not sure if this is sarcasm or not, but just in case it's sincere: Alameda are considered a lynch-pin of the crypto industry, they're holding up pretty much everything... and by extension, FTX is far more important than Kraken. If Alameda implode, it'll be far worse than 3AC's implosion. I don't think it's possible to kill the crypto industry, but Alameda's implosion would be the most likely event to cause it.

I work for another (much smaller) crypto market maker.

Alameda imploding would definitely cause a lot of specific assets to nosedive in the short-term, and a lot of volatility, but I think it'd be impossible for it to destroy crypto (perhaps the Solana blockchain, since they're heavily invested, but even that seems like a stretch).

That volatility would also be a ton of opportunity (for other market makers).

Things that could conceivably destroy crypto are more along the lines of coordinated regulation from an influential, multinational group, like the entirety of the G7

Re: Crypto trading firm Alameda Research might be insolvent

#144

Post by gjvc »

automatic6131 wrote: post #34
cryptoanon wrote: post #13

Earlier quoted context omitted.

Exactly. It seems like the author has very limited insight in the space. It makes you curious how they could come to such a headline/conclusion, when they spend the entire article, talking about the assets instead of the liabilities!

>It seems like the author has very limited insight in the space. lol. Lmao, even.

You ought to know by now that HN readers are experts on everything.

Re: Crypto trading firm Alameda Research might be insolvent

#145

Post by shorthistory »

blitzar wrote: post #101
neilc wrote: post #84

Earlier quoted context omitted.

> Alameda is helmed by quants from Jane Street etc., The CEO worked at Jane Street for less than 18 months and appears to have had a fairly junior role there. I'm sure they are smart folks but there's a limit to how much you can learn in 18 months, in your first job after college.

Nobody is leaving Jane Street after 18 months - straight out of college, of their own accord.

Was it only 18 months?

Wikipedia states: ...he returned there full-time after graduating [in 2014]. In September 2017, Bankman-Fried quit Jane Street...

Seems closer to 3 years, but it doesn't state whether he started there immediately after graduating or not.

What do you suggest are the reasons for his leaving?

Re: Crypto trading firm Alameda Research might be insolvent

#146

Post by JumpCrisscross »

mritchie712 wrote: post #74
rufusroflpunch wrote: post #56

Earlier quoted context omitted.

Owning and holding Bitcoin is not a scam. That's about it.

It'd be pretty easy to create a "defi credit union" that's not a scam, it'd just be hard to cut thru all the noise. Give 3% to 5% yields on saving, lend at 8% to 12%. The problem is people see "230% yields" (which are scams) and wouldn't know your legit 5% yield is for real.

> be pretty easy to create a "defi credit union" that's not a scam, it'd just be hard to cut thru all the noise. Give 3% to 5% yields on saving, lend at 8% to 12%

This is a bank. Running a bank is not easy.

Re: Crypto trading firm Alameda Research might be insolvent

#147

Post by polygamous_bat »

JohnJamesRambo wrote: post #117
polygamous_bat wrote: post #98

Earlier quoted context omitted.

Am I correct in understanding your argument that "so long as numbers keep going up, all will be fine"? Because there is a possibility that crypto never gains back the hype as late 2020, and Bitcoin never reaches the high of $69K ever again, in which case people who "bought and hold" at that time (including those who were encouraged to be "brave" by Matt Damon in a crypto.com ad) will never see (a portion of) their mo…

If you are anticipating human greed evaporating, then yes, crypto will go to zero. My experiences so far in life have shown that to not be likely. People holding stocks may never see ATH either, it’s the risk we take for the mental construct we believe in. History says they probably will, as long as they hold a diverse portfolio. Unfortunately crypto has become just a leveraged bet on the stock market and has lost mu…

> If you are anticipating human greed evaporating, then yes, crypto will go to zero.

Your assumption does not only rely on human greed but also on an upper limit on human creativity.

You are also making a (strong, imo) assumption that humans will not find a new and more creative outlet for their greed (aka pump and dump schemes) that is not crypto. Crypto is already associated in the public minds with many grifts and scams, and it may be much simpler at some point to create a new scheme rather than recycling old ones.

Re: Crypto trading firm Alameda Research might be insolvent

#148

Post by guelo »

zby wrote: post #61
cryptoanon wrote: post #8

I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are…

> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender! What does that mean? How collateralization changes Alameda risk? It reduces the lender risk a bit - but it does not touch the borrower risk at all: https://www.investopedia.com/terms/c/collateral.asp "In the event that the borrower does default, the lender can seize the collateral and se…

That depends on the terms of the loans. Can be recourse or non-recourse.

Re: Crypto trading firm Alameda Research might be insolvent

#149

Post by shorthistory »

toyg wrote: post #139
kennend3 wrote: post #133

Earlier quoted context omitted.

> First very simple point, to become insolvent you have to actually take a loss somewhere. This has absolutely NOTHING to do with being insolvent. "Insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company, at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency. " Insolvency deals wit…

- internet person says he works in the crypto space - is actually financially illiterate Checks out, sadly.

Why would a market maker hold so much of an asset.

Market makers do not typically hold $B of anything.

Alameda does not need to borrow so much FTT to make markets.

Re: Crypto trading firm Alameda Research might be insolvent

#150

Post by deetsb »

kennend3 wrote: post #133
dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

> First very simple point, to become insolvent you have to actually take a loss somewhere. This has absolutely NOTHING to do with being insolvent. "Insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company, at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency. " Insolvency deals wit…

I'd argue balance sheet insolvency is really the most colloquial definition insolvency. You can always sell assets (at a haircut of course) to evade cash flow insolvency (arguably that's closer to illiquidity really), but you can't do anything to get out of balance sheet insolvency except restructure your liabilities.

Alameda being in balance sheet insolvency would depend on their assets taking enough of a hit to wipe out the equity buffer.

To Doug's point the junk tokens are likely at book value on their balance sheet

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