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Crypto trading firm Alameda Research might be insolvent

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Re: Crypto trading firm Alameda Research might be insolvent

#161

Post by jefftk »

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.

Huh? Leaving Jane Street to start crypto trading isn't what I would do, but it seems to have worked out well for them. Why does that suggest they didn't choose to leave?

Re: Crypto trading firm Alameda Research might be insolvent

#162

Post by Analemma_ »

ethanbond wrote: post #85
cryptoanon wrote: post #66

Earlier quoted context omitted.

I’m not saying alameda is not insolvent. Im saying that the burden of proof is on the author to prove that they are insolvent.

Good news for crypto world that there are still people like yourself, I suppose. It's quite the strategy to assume everything with Entity X is above board based on the (intentional) lack of information and then when it turns out to be a scam, there's Entity Y where you can place the same assumption of legitimacy based on the same intentional lack of transparency.

"This time is different [even though all the publicly-available evidence thus far indicates it's exactly the same]" is the calling card of the crypto booster who desperately needs the music to keep playing so they're not holding the bag.

Re: Crypto trading firm Alameda Research might be insolvent

#164

Post by jefftk »

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…

> I liked it better when it was uncorrelated.

Is there a theorem that says returns never stay uncorrelated, because everyone want to diversify?

Re: Crypto trading firm Alameda Research might be insolvent

#165

Post by dcist »

paulusthe wrote: post #127
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…

Sure, but at some point real dollars enter the financial equation, backed by these coins, none of which are probably priced correctly to serve as collateral. The ftt coin is shady as hell though. A 40% trading rebate for holding $1m is insane; that's nothing. And it's not open to anybody touching the US - a blatant attempt to prevent US regulations, which would catch this stuff. It's very weird for exchange owners to…

The trading fees for crypto exchanges are also insane, which enriches the exchange operators.

Re: Crypto trading firm Alameda Research might be insolvent

#166

Post by janmo »

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…

We know that on Jun 30th Alameda had $134m in liquid assets, at the same time it came out that they owe the bankrupt Voyager Digital around $650m USD.

On Jul 8th Alameda research tweeted: "happy to return the Voyager loan and get our collateral back whenever works for voyager".

Simple question here, how do they return $650m USD, if they only have $134m in liquid assets (cash) and the rest is in illiquid tokens such as FTT, MAPS and other tokens with fancy names and inflated marketcaps?

Re: Crypto trading firm Alameda Research might be insolvent

#167

Post by FabHK »

jefftk wrote: post #164
JohnJamesRambo wrote: post #117

Earlier quoted context omitted.

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…

> I liked it better when it was uncorrelated. Is there a theorem that says returns never stay uncorrelated, because everyone want to diversify?

Well, everyone wants to diversify, so everyone is willing to pay a premium for assets that are uncorrelated to the market, thus depressing their expected return. That's one of the basic insights of the CAPM. But that effect should not affect the correlation.

Re: Crypto trading firm Alameda Research might be insolvent

#168

Post by DebtDeflation »

deetsb wrote: post #150
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…

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 wip…

>You can always sell assets (at a haircut of course) to evade cash flow insolvency

If the assets in question are marketable securities (stocks and bonds), traded commodities, or real estate, then that's generally true. If the asset is some shitcoin for which no real market exists, not so much.

Re: Crypto trading firm Alameda Research might be insolvent

#169

Post by janmo »

vgatherps wrote: post #37

EDIT: Should preface all of this by being very, very, clear that we don’t know what the liabilities are so can’t judge too much. It’s fun to assume their liabilities are cash, but if they’ve borrowed 2.5bn of “unspecified crypto” as in the report and still have the same “unspecified crypto” borrow is healthy whether or not the price changes. I this it’s extremely unlikely all their liabilities are cash. Surprise surp…

We know from the Voyager Digital CH11 filing that Alameda owes them $650m USD, and has not repaid them so far, instead FTX the exchange affiliated to Alameda is trying to acquire Voyager digital assets.

I presume that a lot is also owed to BlockFi, which explains why SBF is trying to bail them out so that he doesn't have to repay them.

Re: Crypto trading firm Alameda Research might be insolvent

#170

Post by FabHK »

pcthrowaway wrote: post #143
phphphphp wrote: post #11

Earlier quoted context omitted.

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 t…

> 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

Sounds like a plan.

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