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FTX to file for U.S. bankruptcy, CEO resigns

reuters.com

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Re: FTX to file for U.S. bankruptcy, CEO resigns

#591

Post by derangedHorse »

twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

It seems like you're conflating the value of crypto with the recent blunders of crypto-focused businesses. The fundamental value of cryptocurrency is being able to self-custody tokens of value without relying on any other mechanism besides the proper functioning of the blockchain and its respective rules. What we're seeing here is a lack of clarity/regulation amongst world governments on how crypto and the businesses that manage them should be treated.

The promise of DeFi has a higher barrier of entry for those unfamiliar with the technicalities of interacting with decentralized systems, but they generally have more transparency in management of funds than crypto-centric businesses. All code running on the blockchain can be audited and so can the funds held within smart contracts. There are plenty of valid criticisms that can be made of various cryptocurrencies with those models of on-chain finance (and even with the value of cryptocurrencies themselves), but criticism of cryptocurrencies deriving from bad businesses that manage them shouldn't be one of them in my opinion.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#592

Post by pclmulqdq »

twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

This is the downright civilized version of what happens in the financial wild west. SBF will likely keep possession of his entrails and his head.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#593

Post by jfghi »

tasubotadas wrote: post #555
twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

Why does this need to be regulated? We already have banks for that. And it's not like regulation saved them from being able to become insolvent.

Because financial fraud isn’t a victimless crime.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#594

Post by thwayunion »

mumbisChungo wrote: post #572
thwayunion wrote: post #491

Earlier quoted context omitted.

> can we STOP the blind short-term speculation on the promise of extreme wealth I first played around with blockchain in 2011 or so and I still don't know what actual utility this technology is supposed to have. I have never -- never -- encountered a value-producing use case for cryptocurrency that can't be solved by either signed git commits or a SQL database. Around 2015 a lot of people I thought were smart enough…

I think you have to want or need decentralization in order to buy into most of the use-cases of the technology, either because you don't trust institutions or because you're in a part of the world where either the institutions aren't safe or the currency isn't. Assuming you do believe that decentralization is nice to have, applications like decentralized banking (ie. lending, borrowing, exchange of assets) become val…

I do not see any need in my life for the combination of high finance and decentralization. Centralized and highly regulated high finance is bad enough, and already something I try to avoid except when absolutely necessary. My economic life is highly decentralized, but with extremely high trust and very little financialization, so no need for what crypto people mean when they say "decentralization". DeFi, in my life, means the neighbor down the street leaves a you-owe-me note when she drops off eggs, a debt instrument that I can settle using any number of currencies recognized by the local economy; I most often opt to pay in HomeBrewCoin.

> I think the BTC whitepaper is a brilliant example of human ingenuity

I largely have the same problem as hinkley (sibling comment): I had seen most or all of these ideas prior to the emergence of BTC. I first countered Merkle trees... gosh, forever ago. Got really into cryptography in the 90s. Etc. The idea of creating a currency backed by PoW didn't seem ingenious; it seemed like a particularly silly application of otherwise quite useful technologies. AFAICT it still is mostly useless, except that it made some people very wealthy.

Anyways, I'll go back to yelling at kids to stop picking my tulips.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#595

Post by tsimionescu »

nannal wrote: post #513
thwayunion wrote: post #491

Earlier quoted context omitted.

> can we STOP the blind short-term speculation on the promise of extreme wealth I first played around with blockchain in 2011 or so and I still don't know what actual utility this technology is supposed to have. I have never -- never -- encountered a value-producing use case for cryptocurrency that can't be solved by either signed git commits or a SQL database. Around 2015 a lot of people I thought were smart enough…

I don't trust you, you don't trust me, neither of us trust the guy who owns the git server but I need to give you something without anyone being able to stop us.

Simple: there's no way to do this transaction - at least not scalably. Are you implying that BTC can somehow solve this?

Re: FTX to file for U.S. bankruptcy, CEO resigns

#597

Post by everfree »

twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

I don't see why crypto is incompatible with regulation and institutions. Crypto is a unit of account, not some magical lawless thing that's doomed to never have a regulation written about it. In fact, places like New York already have pretty strict regulations requiring specific licenses for crypto-related businesses.

Crypto crises like these are in general due to regulation not having caught up yet, not because companies that involve crypto are inherently un-regulatable. Crypto is speed-running banking regulation over again. It's an ugly process, but the end result will be crypto institutions that are strictly regulated like banks (and/or existing banks will start to handle crypto just like they do any other foreign currency balance).

As for the current state of things, FTX is (was) a Bahamas company not subject to the financial oversight of the general western world. The public would generally hesitate to wire large amounts of money off to some company in the Bahamas, but when it's crypto, people don't think twice about it for some reason. After the FTX blow-up, perhaps more people will. It's hard to prevent people from wiring money off to a company in some other country that has much looser financial regulations, but that's not a crypto problem, it's a financial education problem.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#598

Post by jasmer »

shorthistory wrote: post #423

Can anyone speculate what Bankman-Fried's exit plan was? Was this a fraud that got out of control, or premeditated? If it was premeditated, what was the exit plan? Did he expect to be able to gamble with customer funds indefinitely? Were the Effective Altruism intimations genuine? Why, if Alameda was a market maker, and they therefore presumably have some form of insight into the markets, did they then decide to take…

The part where he was lending out deposits to make big bets looks very problematic, and hopefully illegal.

The CEO described how a feasible 'pyramid' could work with Levine on Bloomberg and it looks like he was doing just that.

This is basically a smart kid breaking all the rules, doing mostly what he was allowed to do legally with all of the misrepresentation and hyper - plus a little bit of illegal stuff which is all you need along with the massive leverage that comes along with it.

But I would say aside from his shenanigans - this is a crypto problem. At the base of the pyramid was an 'asset worth nothing' well ... of of crypto is essentially that.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#599

Post by tsimionescu »

RetpolineDrama wrote: post #546
thwayunion wrote: post #491

Earlier quoted context omitted.

> can we STOP the blind short-term speculation on the promise of extreme wealth I first played around with blockchain in 2011 or so and I still don't know what actual utility this technology is supposed to have. I have never -- never -- encountered a value-producing use case for cryptocurrency that can't be solved by either signed git commits or a SQL database. Around 2015 a lot of people I thought were smart enough…

>I have never -- never -- encountered a value-producing use case for cryptocurrency that can't be solved by either signed git commits or a SQL database. I've heard a lot of people used it to buy drugs on the internet.

That works for a while - when it's an obscure new thing that the government doesn't know to look for. Afterwards, it becomes a public unchangeable ledger of the entire network of illegal trading.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#600

Post by JamesianP »

bananapub wrote: post #532
kasey_junk wrote: post #516

Earlier quoted context omitted.

A “universal” api for moving money between financial institutions that don’t have existing relationships would be extremely valuable and could unlock innovation in everything from payments to mortgages. But the blockchain space has an extreme bias against the existing finance world. Frequently products in the space want to tear it down as they view it as predatory. This leaves us with the current situation, the crypt…

I swear to god, half of the problem with cryptocurrency is Americans not understanding what a functional personal banking system looks like. The big American banks just never bothered to move beyond the 1970s, and so otherwise fairly well-informed Americans in tech assume you need some sort of completely mad system like "consume the power of Spain making a distributed merkel tree full of partial hash collisions" to m…

Well I mean the US is the biggest and richest rich country by a large margin. And has maintained a continuously functioning financial system for centuries now (though I do wish they would let it crash and be replaced sometimes when it so-richly deserved to). So it is kinda hardest to implement here, especially with every state having their own banking rules.

The banks are adding some instant money transfer services in the last few years though.

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