The Sam Bankman-Fried empire crumbled. What happened? • Hacker News Board

Re: The Sam Bankman-Fried empire crumbled. What happened?

#131

Post by codyb » Thu, Nov 10, 2022, 7:42 PM UTC

bergenty wrote: post #106

mrguyorama wrote: post #89

I'm so tired of people who are lauded as geniuses because their lottery ticket bet paid off. Why are people so convinced that being rich means you're smart?

Because getting rich is one of the hardest things to do in society. It’s getting power + stability in one fell swoop and is everything humans are biologically built to value.

Well... not really right? Cause lots of people are rich through inheriance. And lots through the lottery.

SBY appears to have gotten very rich through a simple arbitrage trade. Props to him for exploring the space and making the moves... but it doesn't take a genius to see that if you can buy something for cheap in one place and sell it in another for more that you can make a bunch of money if you do it over and over.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#132

Post by pvg » Thu, Nov 10, 2022, 7:43 PM UTC

williamstein wrote: post #13

natdempk wrote: post #2

There is a part two available here with more opinion/analysis: https://newsletter.mollywhite.net/p/ftx-analysis

With potential for discussion here: https://news.ycombinator.com/item?id=33547135

That's a link to nowhere, not a 'potential discussion'. On HN it's better to keep the discussion of closely related things in one place otherwise it just gets repetitive. The splits, when they happen, are just more work for the moderators who end up having to merge this this stuff.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#133

Post by codyb » Thu, Nov 10, 2022, 7:44 PM UTC

fred_is_fred wrote: post #20

aniforprez wrote: post #16

Earlier quoted context omitted.

While I could say banks are equally guilty of doing shady stuff, the truth is banking is hundreds of years old and as such, has regulations and insurance behind it. Not regulating is how we get messes like the Housing Bubble in the 2000s in the US culminating in the crash in 2011. Crypto being a completely new space has no regulation and no checks and balances which leads to messes like this with companies playing ar…

Unfortunaely the draw for many isn't that they want a libertarian dream society with no rules, but rather they think they can get rich quick. The "banks are bad" is part of the appeal also. I have a cousin who works in the food service industry (think something like managing a Chipotle) and has put all his liquid assets into crypto and still thinks they will "pay off so he can retire". As for banks - as soon as these…

Unfortunately for your cousin, he's the bag holder that the people getting rich quick are going to take for a ride.

As far as I can tell.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#134

Post by wombatpm » Thu, Nov 10, 2022, 7:45 PM UTC

adamisom wrote: post #96

acjohnson55 wrote: post #93

Earlier quoted context omitted.

I don't think he lacks morals, but he seems to have a Lex Luthor "ends justify the means" way of thinking. If you're whole moral framework is effective altruism, then as long as the good you do with the money you accumulate is greater than the harm caused in its accumulation by a ratio that exceeds your alternatives, you're all good.

One remark I have on anti-"ends justify the means" is they always ignore the ends. The "ends" might literally be saving real people's lives, whose lives have value. I'm sure there are good arguments against the idea, but you must engage with the ends that you propose we forsake, or you're just not serious.

If curing cancer for the rest of humanity now and forever required knowingly experimenting on and absolutely killing a certain number of people now, how many people could you justify with an Effective-Altruism ethical framework?

Re: The Sam Bankman-Fried empire crumbled. What happened?

#135

Post by zeroclip » Thu, Nov 10, 2022, 7:45 PM UTC

polygamous_bat wrote: post #81

zeroclip wrote: post #53

Very informative and clearly written, kudos to Molly! The irony is that DeFi and blockchain protocols fixes this.

Unfortunately, it does not. Likes of FTX and Binance was created in the first place because on chain transaction is slow and expensive, and people don't like slow and expensive. Just because FTX blew up doesn't mean DeFi is at a better place than it was in the past. "DeFi fixes this" is like saying "moving back to horse drawn carriages will solve drunk driving fatalities!" Maybe, but no one wants to deal with horse s…

The lack of transparency in financial services - banks - was the whole reason Satoshi created Bitcoin. The people who choose to use FTX over a blockchain are either ignorant, not understanding their coins are insecure, or willing to take on additional risk to save a few dollars and trade a little faster. They are probably regretting it now that FTX is blowing up.

And speed and costs are already a solved problem - see L2 rollups.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#136

Post by JamesianP » Thu, Nov 10, 2022, 7:45 PM UTC

adamisom wrote: post #96

acjohnson55 wrote: post #93

Earlier quoted context omitted.

I don't think he lacks morals, but he seems to have a Lex Luthor "ends justify the means" way of thinking. If you're whole moral framework is effective altruism, then as long as the good you do with the money you accumulate is greater than the harm caused in its accumulation by a ratio that exceeds your alternatives, you're all good.

One remark I have on anti-"ends justify the means" is they always ignore the ends. The "ends" might literally be saving real people's lives, whose lives have value. I'm sure there are good arguments against the idea, but you must engage with the ends that you propose we forsake, or you're just not serious.

I wouldn't say they ignore it, but rather they categorically have decided that is an unethical justification. E.g. it doesn't matter if experimenting on patients without their consent saves more lives in the future, it is still wrong. Perhaps you might argue that this is an absolute position they can't really hold to for everything. But I think people prefer to find other ways to justify such cases.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#137

Post by jrochkind1 » Thu, Nov 10, 2022, 7:47 PM UTC

diab0lic wrote: post #128

wmf wrote: post #59

Earlier quoted context omitted.

No good investments are insured and FTX isn't a fund.

Plenty of good investments are insured. There are whole classes of investment that simply would not be sane to do without insurance. Taking an example from every day life: People buy investment properties and most of the time they insure them.

Investment properties not generally insured against loss in market value, no matter how drastic.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#138

Post by ignoramous » Thu, Nov 10, 2022, 7:47 PM UTC

aniforprez wrote: post #16

ARandumGuy wrote: post #11

I think this should be a warning to anyone still invested in other crypto companies or exchanges. Everything seems like it's going well, until the music stops and the exchange is insolvent. FTX is not unique. A lot of crypto exchanges are doing just as much shady stuff. When you put your money with these companies, you're betting that "no really, this one is above board!" That's an extremely risky game to play when t…

While I could say banks are equally guilty of doing shady stuff, the truth is banking is hundreds of years old and as such, has regulations and insurance behind it. Not regulating is how we get messes like the Housing Bubble in the 2000s in the US culminating in the crash in 2011. Crypto being a completely new space has no regulation and no checks and balances which leads to messes like this with companies playing ar…

> ...has regulations and insurance behind it.

And billion dollar bailouts. With a few billions every decade or so, FTX probably survives such crises multiple times over.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#139

Post by mewse-hn » Thu, Nov 10, 2022, 7:50 PM UTC

labrador wrote: post #42

I'm having a hard time understanding why organizations like the Ontario Teachers’ Pension Plan has money in uninsured crypto funds. Somebody has some explaining to do. Sequoia Writes Off Entire $210MM FTX Investment; Here Are All The Other Funds That Are Losing Billions In FTX https://www.zerohedge.com/markets/here-are-all-funds-are-abo... Edit: 25 billion dollars up in smoke Ontario Teachers’ Pension Plan faces a hi…

  He said the investment was part of Teachers’ strategy to learn about the crypto business and whether it gives the right balance of risks and returns. “I don’t think we have the answer to that question yet,” Mr. Taylor said.

Holy shit.. they were openly investing in something they don't understand??

Re: The Sam Bankman-Fried empire crumbled. What happened?

#140

Post by molsongolden » Thu, Nov 10, 2022, 7:50 PM UTC

low_tech_love wrote: post #66

Matt Levine's talk with SBF is definitely the most bizarrely depressing (or funny, depending on your mood) thing you'll read today. Hell, this week? https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...

This is a great quick read and it's interesting because it's an abstraction of many other markets (not just DeFi).

Reminds me of Damodaran's[0] focus on price vs. value when evaluating equities:

>I have long drawn a distinction between price and value, two terms that get used interchangeably in both academia and practice, but with very different drivers and implications. As we watch stock indices around the world gain and lose trillions each day, it is worth remembering that markets are pricing mechanisms, not value mechanisms, or as Ben Graham would put it, they are voting machines, not weighting machines, at least in the short term.

[0](Well-respected finance/valuation professor at NYU for anyone not familiar) https://pages.stern.nyu.edu/~adamodar/