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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

#621

Post by lazide »

AYBABTME wrote: post #535
bmitc wrote: post #458

Earlier quoted context omitted.

My thoughts are that FTX was maybe a legitimate business, but then Alameda was his trading baby that just happened to be run by kids, including himself, that have no idea what they're doing and was losing money left and right. Then using FTX customer funds was viewed as just a "let's move these funds over to get our trading back on track and when we do, we'll move them back". That's my honest guess if I'm being gener…

I think they thought they were honest and doing things properly, and didn't realize that their holding of FTT was making them as bad as the other frauds before. I think these ouroboros are complex enough that even main players don't necessarily understand the position they've put themselves in.

If by 'they thought they were honest and doing things properly' you think the same for Madoff, then oof.

Actions and results matter. Intentions can easily be bullshit and delusion.

If someone is committing multi-billion dollar fraud, there is a line that was crossed a LONG time ago.

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

#622

Post by gonehome »

throwaway0asd wrote: post #602
gonehome wrote: post #582

Earlier quoted context omitted.

The median HN user isn’t that bright and this topic in particular is one where the noise is such that the comments here are atypically bad. The outliers are great and make this site worth it, but on some topics (of which crypto is one) they’re hard to find.

There are valid reasons why discussions of crypto turn out so very bad: https://news.ycombinator.com/item?id=33117833

These aren't valid reasons - I don't want to get into a flame war though.

- Blockchain's main innovation is solving the double spend problem in a decentralized way.

- This means that self-custody is a new capability.

- Self-custody without a centralized authority is a big deal and can empower users (especially those in hostile countries or places with bad currencies).

- There's an extension of this with smart contracts and ethereum that allow for programmatic uses which can extend to completely transparent decentralized finance.

- zk-SNARKs allow for privacy to exist within the above systems.

That people don't self-custody because they don't understand how it works (and terrible UX) is a real problem and why most people should not be using cryptocurrency. They can still get screwed by regular collapses of fiat currency (and they do often), but they won't be helped by increasing their risk with something they don't understand.

The centralized exchange failures are independent of this and arguably a symptom of how centralized finance can cause problems because people don't self-custody funds. Your reasons dismiss the new capabilities they provide (self-custody, protection from government debasement of value, global use) and are an example of the type of HN response I'm talking about.

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

#623

Post by stripedfish7 »

lazide wrote: post #611
everfree wrote: post #597

Earlier quoted context omitted.

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 comp…

Crypto is incompatible with regulation and institutions because it was designed to be, and is consistently a part of the ethos espoused by pretty much all crypto players? Literally, the first sentence in the Bitcoin whitepaper (which arguably kicked off 'crypto' as a thing) is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going thro…

I don't understand your point. My grandfather tries to use only cash which allow 'payments to be sent directly from one party to another without going through a financial institution'.

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

#624

Post by santoshalper »

bwestergard wrote: post #606
everfree wrote: post #597

Earlier quoted context omitted.

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 comp…

Why bother with proof of work or proof of stake mechanisms if you want political regulation? In that case, you might as well empower a state's central bank to develop a payment mechanism, and task them with ensuring fairness and enforcing laws around taxes, illegal activity, etc.

Wouldn't that be crazy!?

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

#625

Post by iskander »

lazide wrote: post #611
everfree wrote: post #597

Earlier quoted context omitted.

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 comp…

Crypto is incompatible with regulation and institutions because it was designed to be, and is consistently a part of the ethos espoused by pretty much all crypto players? Literally, the first sentence in the Bitcoin whitepaper (which arguably kicked off 'crypto' as a thing) is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going thro…

That's the underlying payment network, but a whole "industry" of institutions have grown on top of it. Those can be regulated.

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

#626

Post by thinkcontext »

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.

The US generally protects retail investors from risk like this in other financial instruments and markets. This isn't really different, its just new enough that regulators haven't caught up. This kind of event could speed that up.

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

#627

Post by everfree »

krrrh wrote: post #568
nannal wrote: post #513

Earlier quoted context omitted.

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.

You really shouldn't be doing a significant amount of your business with people who don't trust you and who you don't trust. Blockchain advocates really underestimate how much of functioning economies simply work because of trust (with lawyers and courts as a backup), and how small the potential "I don't trust you" market is.

Courts and lawyers are the opposite of trusting who you're doing business with. If you actually trusted them, there would be no need for courts.

The "I don't trust you" market consists of everyone who does business using written contracts. So, nearly everyone.

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

#628

Post by vishnugupta »

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…

There’s this incredulous passage from Sequoia article that’s been taken down since. Make of it what you will

At this point, mid-2019, SBF decided to double down again—and scratch his own itch. He would bet Alameda’s multimillion-dollar trading profits on a new venture: a trading exchange called FTX. It would combine Coinbase’s stolid, regulation-loving approach with the kinds of derivatives being offered by Binance and others. He only gave himself a 20 percent chance of success, but, in his mind, SBF needed extreme risk to maximize the expected value of his lifetime earnings—and, therefore, the good his earn-to-give strategy could do. The fact that he was, by his own lights, overwhelmingly likely to fail was beside the point.

The point was this: When SBF multiplied out the billions of dollars a year a successful crypto-trading exchange could throw off by his self-assessed 20 percent chance of successfully building one, the number was still huge. That’s the expected value. And if you live your life according to the same principles by which you’d trade an asset, there’s only one way forward: You calculate the expected values, then aim for the largest one—because, in one (but just one) alternate future universe, everything works out fabulously. To maximize your expected value, you must aim for it and then march blindly forth, acting as if the fabulously lucky SBF of the future can reach into the other, parallel, universes and compensate the failson SBFs for their losses. It sounds crazy, or perhaps even selfish—but it’s not. It’s math. It follows from the principle of risk-neutrality.

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

#629

Post by santoshalper »

jrumbut wrote: post #613
barkingcat wrote: post #583

Earlier quoted context omitted.

even the idea of "declaring bankruptcy" is a modern regulated construct. In medieval times, if you "declare bankruptcy" your family and dependents get sold into slavery and your wife is sold off to the highest bidder who will buy your debt. In many previous times, if you couldn't pay debts you'd just be killed.

This idea of auctioning off someone's wife seemed (seems) unlikely to me in a medieval European context (since divorce was hard to come by). What I found was actually weirder: > In medieval Italy and southern France, it was common for the cedens to stand nude but for his shirt and strike a stone with his posterior ('vituperii lapis') while declaring 'cedo bonis'." The patent purpose of this ceremony was as much to sa…

The medieval version of "I Declare Bankruptcy!!!"

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

#630

Post by fullshark »

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…

From his flirtations with politics and regulations: get too big to fail.
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