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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

#741

Post by lazide »

iskander wrote: post #625
lazide wrote: post #611

Earlier quoted context omitted.

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.

Sure. The problem I’ve seen is there is zero value add (and significant costs and value loss) when that happens over a normal bank.

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

#742

Post by saurik »

HDThoreaun wrote: post #645
Auracle wrote: post #608

Earlier quoted context omitted.

I feel perfectly fine having my crypto stored on Coinbase’s end. As far as I know their business model makes perfect sense and they don’t take the weirdly big risks all of these falling dominoes have. Also, if Coinbase goes bankrupt and takes everyone’s crypto with them I feel everything will crash to essentially 0.

> their business model makes perfect sense Well they can't make money because all the other exchanges offer better fees/lower spreads since they're loaning customer money out. They'll never be big enough to actually makea. profit while there are shady exchanges offering a better product(until it collapses).

There aren't many compliant exchanges operating in the US, though; Coinbase seriously even raised their fees a couple years ago because they thought they could do so, even while other exchanges are trying to lower them: they aren't merely competing on fees.

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

#743

Post by Animats »

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…

So what happens to crypto now?

A reasonably likely possibility is that the SEC starts sending letters to every issuer and exchange that sells to US persons. If you're an issuer, you have to register as a security or get a no-action letter that says yours is a utility token. If you're an exchange or a broker, you have to register as an exchange or a broker. Sign up for FINRA regulation and pay SIPC premiums. They did that to ICO issuers back in 2017, which is why you don't see many ICOs any more. NFTs were a workaround for that, but the SEC has been saying that bulk NFT issues and fractional NFTs are probably securities.

The SEC has been reluctant to do this, partly because they were still litigating over whether crypto issues are securities, and partly due to political pressure. Last week, the SEC won SEC vs. LBRY with a decision that crypto is almost always a security. Much of the political pressure came from FTX, which is now a political liability. FTX donated to both Republicans and Democrats. Now, on Capitol Hill, key committee leaders from both parties are against them.[1] The SEC is now ready to act.[2]

The crypto industry sees regulation coming and is freaking out. It's not that filing an S-1 is that hard. It's that you have to give all the info crypto issuers like to hide, such as where the money is going, the business plan, and who's running the thing. Under penalty of perjury.

(I want to see an S-1 for Yuga Labs (Bored Ape Yacht Club / Otherside). They raised $400 million, printed some pictures, and threw some raves. That could be the most fun S-1 to read since BOYSTOYS.COM did an IPO for a strip club.)

There are fewer offshore havens available. China pulled the plug on crypto mining. (Literally. Power was cut to crypto mines.) Cyprus cracked down. Japan, post Mt. Gox, licenses and regulates crypto exchanges. Bahaman regulators were about to take FTX into liquidation. Cyprus cracked down after the binary option debacle. There's still Bulgaria.

What will be left after all the sketchy operators are shut down?

[1] https://www.cnbc.com/2022/11/11/crypto-meltdown-washington-t...

[2] https://finance.yahoo.com/news/sec-chair-gensler-slams-non-1...

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

#744

Post by saurik »

btilly wrote: post #310
faefox wrote: post #87

I've seen some comments saying that this is all delayed fallout from the Luna/Terra collapse last spring, it's just that FTX had the means (its own token that it could pump and move around its own entities) to paper over the hole in its balance sheet until now. Can anyone more familiar with the situation elaborate? How much further will the contagion spread?

How much further? By their own figures, Tether is now undercapitalized and just had billions withdrawn. They made those payments. But, as Hemmingway said, bankruptcy tends to happen gradually and then all at once. Tether is in a hole. Nobody knows how close they are to not making payments. But when they implode, it will be sudden and the blast radius will be large. Does Tether weather this squall? Based on history, p…

> By their own figures, Tether is now undercapitalized...

Where has Tether stated this? Last I heard--today--Tether has continued to claim the opposite.

(edit to add, 45 minutes later:) I see patio11 makes the same claim, but I've now read both his recent articles on this and he is making a LOT of extremely stretched assumptions to pull off this reasoning, and even then the best he has is that it must have momentarily become insolvent in the past :/. And so like, maybe they are undercapitalized... but if they are it is because they are lying, not because their own figures somehow demonstrate such.

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

#747

Post by SantalBlush »

coffeebeqn wrote: post #670
AYBABTME wrote: post #535

Earlier quoted context omitted.

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.

Let’s not treat senior management and owners of a company that has gambled away billions of dollars of customers (and investors) money as kids. They should get jail time from what I’ve read so far. They were either criminally stupid or did this on purpose. It really wasn’t that complex. This isn’t even close to 2008 complexity since this was all happening within one organization With the same owner SBF.

"Never attribute to incompetence that which can be adequately explained by greed."

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

#748

Post by twblalock »

Animats wrote: post #743
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…

So what happens to crypto now? A reasonably likely possibility is that the SEC starts sending letters to every issuer and exchange that sells to US persons. If you're an issuer, you have to register as a security or get a no-action letter that says yours is a utility token. If you're an exchange or a broker, you have to register as an exchange or a broker. Sign up for FINRA regulation and pay SIPC premiums. They did…

Crypto seems like the kind of risky/novel investment the accredited investor program was designed for.

Of course that would kill crypto.

In general I’m glad the government let the experiment be run. I was not one of the people saying crypto should be banned, and I’m still not. But at this point I think it should be regulated, for the same reason most other investments are.

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

#749

Post by stouset »

dist1ll wrote: post #702
HDThoreaun wrote: post #634

Earlier quoted context omitted.

You're always going to need a centralized ramp to convert crypto to fiat though. If everyone thinks they're scams crypto has a big problem.

Yeah, but the conversion happens very quickly. Deposit, trade, withdraw. Unfortunately, people leave tons of money on exchanges, for long periods of time. That's the problem. That's what the majority of exchange users are doing.

People leave money on exchanges because the alternatives are worse. They're almost as dangerous (if not more so): how many people have lost millions or billions due to malware, forgotten passwords, failed hard drives, death of the owner and inability to transfer that wealth to their heirs, etc.?

All of these problems are solvable with ludicrous levels of complication and confusion, and the average person doesn't even realize they need to take these sorts of measures until they've irrecoverably lost everything.

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

#750

Post by gilrain »

sillysaurusx wrote: post #36
leereeves wrote: post #23

Earlier quoted context omitted.

Yeah, just yesterday SBF tweeted: > This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow. https://twitter.com/SBF_FTX/status/1590709195892195329

That’s the one. Thanks for linking it. Was he in denial? Lying? Clueless? I have no idea at this point. He seemed earnest and genuine, but everything he’s saying is the exact opposite of reality. Maybe he was having an anxiety attack. I had one once, and it completely sucks. It ruins your ability to form logical thoughts. (It’s rare to see someone so powerful be so confidently mistaken. The confidence is the part I’m…

> He seemed earnest and genuine, but everything he’s saying is the exact opposite of reality.

Con man is short for “confidence” man for a reason. What they’re good at is gaining the unmerited confidence of others. You got played by his charisma. Remember this for next time.

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