Do we have a price/valuation?
Likely zero if FTX is not liquid enough to process withdrawals.
Binance to acquire FTX
281–290 of 790 posts
Re: Binance to acquire FTX
#282Some more background: the companies were engaged in fighting over regulations, and on a personal basis between the 2 CEOs. It went down to really childish levels at some point. But one thing is undeniable: SBF (FTX CEO) was trying to weaponize US regulation against his biggest rival CZ (Binance CEO). CZ retaliated by selling the FTT token, exposed the fact FTX was over-leveraged, and took over. This is, as the kids o…
For those not up to date on crypto people, SBF is Sam Bankman-Fried [1] and CZ is Changpeng Zhao [2]. I don't know why they insist on being called by their initials like they're some sort of ticker symbol. [1] https://en.wikipedia.org/wiki/Sam_Bankman-Fried [2] https://en.wikipedia.org/wiki/Changpeng_Zhao
It’s common in many internet circles to refer to prominent people by their initials. Hackerdom has a long tradition of this: rms gls esr jwz et al. It also tends to happen in US federal politics for some reason (jfk rfk gwb fdr et al) but not to everyone.
Re: Binance to acquire FTX
#283"We’re going to look back at a generation of successful founders and VCs with the realization that all of their talent was in creating a company during the bull market." - random tweet I came across that's very relevant here.
There was an entire book about this that became famous during the 2008 financial crisis:
Fooled by Randomness by Nassim Taleb
https://www.amazon.com/Fooled-Randomness-Hidden-Markets-Ince...
It's literally about how options traders and the like can be lucky for 10 or 20 years, but they are actually idiots who destroy the economy.
They think they are skilled, and others think they are skilled, but it's luck. You can also call it "anti-luck" because their short-term actions can cause the long-term crisis.
This book was a #1 best seller, as were most of Taleb's books, but for some reason whenever I mention it to anybody, I get blank stares.
I think it's just really hard for people to understand phenomena that occur at time scales of say more than a decade.
(BTW Another good book about recurring economic cycles is Dalio's 2022 The Changing World Order. All of this stuff has happened before. This is separate from crypto, and relates to the global economic environment.)
Re: Binance to acquire FTX
#284Earlier quoted context omitted.
They aren't brokerages, they're banks pretending to be exchanges. They do fractional reserve banking with user deposits.
Fractional reserve in the context of banking is completely different because the FDIC backstops runs and the Fed backstops the FDIC. Nobody backstops FTX or any other crypto exchange so its better described here as 'the yolo lifestyle'. A modern day bank run in traditional finance is functionally impossible* (up to the FDIC insurance limits, and often higher in practice - there were no imposed limits at WaMu for inst…
Matt Leving from Money Stuff discussed it today (!). If exchanges provide leverage products to customers, they become banks (providing leverage, through funding typically by other customer's deposit).
So bank runs are possible.
Re: Binance to acquire FTX
#285I'm glad a big government supporter such as SBF is out of crypto leadership. Crypto is an anarchist experiment and it should remain that way
That experiment already failed to be honest.
Cryptocurrencies were prophesized to get rid of banks. Instead exchanges reinvented banks with all the drawbacks and none of the benefits.
Cryptocurrencies were supposed to be in wide circulation just like USD, eliminating the need for fiat on/off ramps. Instead we got these centralized corporations and endless KYC/AML surveillance with none of the regulation and government backing.
Real cryptocurrency is what you have in your wallet. How many of us hold our own coins? Pretty much everyone keeps "their" coins at the exchange...
Re: Binance to acquire FTX
#286The current headline "Binance Acquires FTX" is wrong. There's only a
"non-binding Letter of Intent" in place.
Re: Binance to acquire FTX
#287SBF 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…
Well, if the customers are holding FTT and they're trying to get rid of their FTT, that could cause the liquidity crisis. The crisis isn't with the customer assets, it's with their FTT side of the business.
Re: Binance to acquire FTX
#288Its funny how a few days back some people on HN were saying FTX is unlikely to be illiquid because SBF is a genius from JaneStreet.
He sacrificed FTX but kept his real baby Alameda.
Not sure how safe Alameda is. $6 billion out of $14 billion of Alameda assets is FTT based. With FTT tanking, its asset balance shrunk greatly. It might well has its own liquidity problem.
Also with Biannce buying FTX, it can call back the loaned FTT from Alameda.
Re: Binance to acquire FTX
#289Earlier quoted context omitted.
Are you seriously asking? He lied like every other exchange does. The man's middle name is Bankman for god's sake.
I don't understand how his middle name relates to anything about this situation.
Perhaps a quip on the untrustworthy nature of bankers.
Re: Binance to acquire FTX
#290This is probably going to have ripple effects in unrelated industries - FTX Foundation, presumably funded by FTX/Alameda/SBF’s personal wealth, has been been the biggest funder of AGI projects and labs this year. They were the biggest funder (in a $500M fundraise) for Anthropic, which is (atm) a non-profit AI alignment lab. They also funded a bunch of esoteric EA projects which likely rely on them for continued funding - https://ftxfuturefund.org/our-grants/