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Binance to acquire FTX

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Re: Binance to acquire FTX

#191

Post by ChainNet »

three_seagrass wrote: post #145
ChainNet wrote: post #37

Earlier quoted context omitted.

There's nothing decentralized about FTX or Binance. They operate in an opaque manner like any traditional business, transparency comes from forced audits & regulation. Decentralized finance is built on chain where all assets are publicly auditable at all times. EDIT: parent comment talked about decentralized finance, then edited to remove mentions of defi

Even without the edit, your response feels like a no-true-scotsman i.e. an attempt to remove bad actors who deal in decentralized cryptocurrencies from the purity that is defi. What are some large, successful defi organizations today?

Uniswap, Curve DAO, AAVE, Compound, Lido, MakerDAO...

Re: Binance to acquire FTX

#192

Post by short_sells_poo »

boc wrote: post #140
rapsey wrote: post #81

Earlier quoted context omitted.

Crypto would be perfect. If only humans were robots.

Not really, quite the opposite in fact. If humans were robots they’d trust each other completely, meaning all financial transactions could be done instantly with a simple database. Humans are messy, so the solution we’ve arrived at is a database enforced by a complicated legal system + state power/violence (and arguably private power/violence via the mob). This works pretty well and powers trillions of dollars around…

That's a very eloquent way of putting it, thank you. It's possibly even worse than just a misunderstanding though. I'm sure there are people in the Crypto industry who see core issue of enforcement, because the second wave (after Bitcoin first became mainstream) was all about smart contracts. E.g. there was an effort to move the subject of enforcement into the framework. After all, if the contracts that need enforcement are part of the crypto system, then enforcement can also happen in the same system. Right?

Of course, this still falls short because no amount of mathematics will bridge that gap. At some point, the financial system (whether classical or based on blockchains) has to interact with the mind boggling mess of the real world. In the real world, 2+2 is not certain or deterministic at all. It can be debated, social implications weighed and the judge might say it's 4 and a bit, or slightly more than a pie.

In some sense it feels like crypto would work perfectly in a world that is completely deterministic, measurable and is populated wholly by algorithms interacting with each other. The second order question then is: would such a world even need crypto?

Re: Binance to acquire FTX

#194

Post by sroussey »

appleflaxen wrote: post #166
mistercheph wrote: post #96

Earlier quoted context omitted.

Giving them the benefit of doubt, this is not a contradiction. The statement means that they have enough illiquid assets to cover the withdrawal that they are working on converting into liquidity.

IMO this would contradict what the GP comment asserts: that SBF said "We don't invest client assets (even in treasuries)".

I thought FTX Alemeda (the trading side) invested into their own token, which is tanking thus causing problems.

Alemeda has like $14b assets and $8b in liabilities. But of that $14b, $5b are in their own token (FTT) which is kinda?? worth nothing at this very moment. So now the assets and liabilities are more equally matched, but less margin for shifting values of tokens.

I don’t know, but the derivative of their assets looks scary the last 24hr.

Disclaimer: not a crypto person

Re: Binance to acquire FTX

#195

Post by bogomipz »

Interesting just 6 weeks ago the news was that FTX was buying Voyager Digital’s assets for 1.4 billion dollar after winning a bankruptcy auction. In July the news was that FTX provided BlockFi with a $400 million line of credit and an option to buy the company for 240 million.[1][2] Now the crypto bailout savior is being bailed out?

[1] https://www.cnbc.com/2022/09/27/bankrupt-crypto-lender-voyag...

[2] https://techcrunch.com/2022/07/01/ftx-us-deal-with-troubled-...

Re: Binance to acquire FTX

#196

Post by eftychis »

shapefrog wrote: post #26
ucha wrote: post #16

SBF said "We don't invest client assets (even in treasuries)". [0] He then says the purpose of the transaction with Binance is to "clear out the liquidity crunches". [1] How could there be a liquidity crunch if assets are not invested? You can't do a bank run on an entity that doesn't function as a bank and doesn't invest clients assets... Something is shifty. [0] https://twitter.com/sbf_ftx/status/158959828579870720…

12:38 PM · Nov 7, 2022 2) FTX has enough to cover all client holdings. [0] 4:03 PM · Nov 8, 2022 2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. [1] has enough to cover all client holdings ---> not enough to cover all client holding in 24 hours. Either they los…

As other people said, usually a lot of assets are illiquid in 24 hours. You can say I have money to buy this house, but if I ask you for the money the next 24 hours, most people will say they need more time to liquidate.

It is actually irresponsible to the users (risk management wise) to be keeping all that cash in hand 24/7. The easiest bad case example: are you keeping all your savings under your mattress?

Edit/to commenters below: I understand there are emotions, but that's simply how things work. As other fellow commenters noted, banks do not keep or even promise they do keep your money($) under their "mattress."

Say you deposited in EUR. The exchange and everyone borrows in USD, so your EUR become USD -- no way out of it. EUR goes down, and then there is a bank run. Even if as the bank were irresponsible and kept 100% liquid, they can not serve everyone 1:1 in 24h. Nobody can give you that guarantee, besides your local grocery store. We are thinking these things at the wrong scale.

We are not trying to shift blame away from FTX -- already the whole relationship was sketchy. But claims about keeping 100% USD with a 24h cashout in a worldwide scale is not something on the table right now. I get worried when people feel comfortable believing those statements.

Re: Binance to acquire FTX

#198

Post by jaywalk »

perlgeek wrote: post #124

Wasn't there a post hitting the HN front page just yesterday or two days ago about how FTX was close to being illiquid, and most of the top comments were about how wrong that analysis was? Or was that another crypto trader? If anybody could help my sieve-like brain, that would be very appreciated :-)

Yep, it was FTX.

Re: Binance to acquire FTX

#199

Post by [deleted] »

idiotsecant wrote: post #84
FormerBandmate wrote: post #70

Earlier quoted context omitted.

Binance has serious legal issues (governmental investigations) and isn't based out of any jurisdiction. A Binance failure would have consequences that are very hard to predict

I'm not sure that binance has a reason to exist in the current world where defi is a thing. Things like Coinbase etc are your place to go if you want a fiat to crypto on-ramp or off-ramp or if you want a reasonably safe place to park crypto if you don't want to own it yourself. There are innumerable decentralized exchanges where a person can be absolutely (for some definition of the word) sure that the exchange won't…

[deleted]

Re: Binance to acquire FTX

#200

Post by jo6gwb »

perlgeek wrote: post #124

Wasn't there a post hitting the HN front page just yesterday or two days ago about how FTX was close to being illiquid, and most of the top comments were about how wrong that analysis was? Or was that another crypto trader? If anybody could help my sieve-like brain, that would be very appreciated :-)

https://dirtybubblemedia.substack.com/p/is-alameda-research-...
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