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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

#901

Post by RustyRussell »

MacsHeadroom wrote: post #758
kranke155 wrote: post #714

Earlier quoted context omitted.

This is all very interesting. I am also starting to wonder whether CZ had a good idea this would happen because maybe Binance is structured similarly. Basically - is Binance solvent? I don’t know.

Binance leads the industry in proof of 1:1 reserves of custom holdings. CZ knew about FTX's finances because he was the original investor in FTX. The reason he had FTT to dump in the first place is because of that initial investment in FTX.

No, you're thinking of Kraken, which has been doing this for years (not an endorsement!). Binance just did it, by revealing their wallet addresses, and promised more in future.

Two important points: 1. Generally Proof of Reserves is a term where all holders can validate cryptographically that their funds are accounted for. This is harder because it's natural and efficient for an exchange to co-mingle multiple customers. 2. Doesn't mean they're solvent! They might owe customers $100bn for all anyone knows.

It's still far better than nothing, but FWIW their history of lying about their home jurisdiction, and massive "out of nowhere" growth is a huge red flag that you should be aware of (FTX did the latter even faster, of course, being founded in 2019!).

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

#902

Post by zen21 »

beambot wrote: post #685
vishnugupta wrote: post #628

Earlier quoted context omitted.

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 a…

Quick detour: expected value alone does not optimally maximize your long term outcome. Bet sizing (a la Kelly Criterion) is just as critical. E.g. if you had a weighted coin that was 50-50 odds with 3-to-1 payout, you wouldn't bet your whole bankroll on just one flip.

Why would a weighted coin have 50-50 odds? That sounds like a fair coin, and miscalculated odds.

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

#903

Post by bmitc »

pigtailgirl wrote: post #806
timmytokyo wrote: post #693

Earlier quoted context omitted.

Seeing these kids talk puts it even more into perspective. Just watch this video of Caroline Ellison, CEO of Alameda. https://www.youtube.com/watch?v=aW6SqLXw944

-- having watched a series of in depth interviews with Do Kwon - the interview with Sam Bankman-Fried on Odd Lots - and now this - I wonder if these children had any mentors? - where were the adults? --

I think the adults are the investors who are just older versions of these people that made billions selling some random website to Yahoo in the dot com bubble days.

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

#904

Post by kikokikokiko »

vgatherps wrote: post #869
jasonwatkinspdx wrote: post #477

Earlier quoted context omitted.

All of these places were offering insane APRs as well as other perks for staking your coins. So speculators park real money, expecting that they'll be smart enough to see the crash coming and slurping up that sweet return in the meantime. And it's glaringly obvious everyone offering these outsized returns is literally just pulling a ponzi.

FTX’s lending product was (theoretically) peer-to-peer, the rates were driven by actual borrow demand from other people. FTX was just a tremendously better derivatives exchange than everybody else when it was launched. To this day only Okex of the major exchanges has a competitive margin system imo. Continuous pnl realization and cleaner perpetual models are icing on the cake. Theft of user funds aside, SBF likely kn…

"... the rates were driven by actual borrow demand from other people..."

Or, alternatively, the rates were artificially inflated by a ponzi operator interested in getting more and more people joining the pyramid. Just like Coinbase, FTX was, with 99% certainty, not profitable. Of course, the creators of the pyramid WILL profit and take resources for themselves to buy things like, let's say, a 10% stake on Robinhood, or invest in many real state properties around the world, a la Do Kwon. People are just gullible, anyone who believed on those "crypto earn" vehycles, paying 5 to 10 times the market interest rates, is probably the same people that would buy magic beans from a random dude in Times Square.

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

#905

Post by xeromal »

sharkweek wrote: post #856

Howdy HN, as some of you may know from previous comments of mine, I’m always on the hunt for swag from dead companies (Lehman Brothers letterhead, Theranos shirts, Clinkle phone case, Enron desk art, et al). The more fraudulent the collapse, the more interested I am. I’d love to get ahead of the ball on this one so if anyone here has any, and I mean any, FTX swag you somehow have picked up over the years, I’m a very…

What size company are you looking for?

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

#906

Post by propogandist »

Animats wrote: post #389

"Voluntary Chapter 11" in Delaware. Figures. That gets them out from bankruptcy in the Bahamas, which is much tougher than US law. The Bahamas still has classic tough bankruptcy laws, where there's no debtor-in-possession reorganization. It's straight to liquidation, with a court-appointed receiver in charge. This should be, and may be, converted to a straight liquidation. Chapter 11 can be useful for restarting comp…

The former Enron Chairman has stepped in to be the new FTx CEO. Seems fitting.

https://blockworks.co/news/ftx-ceo-bankman-fried-resigns-ban...

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

#907

Post by majormajor »

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?

https://www.benzinga.com/markets/cryptocurrency/22/06/276307...

Predicted it, but was willing to make money off of suckers anyway, and then also caught himself with his own pants down despite knowing it was BS? Phenomenally stupid, or just plain corrupt and moderately stupid?

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

#908

Post by majormajor »

OptoContrarian wrote: post #285
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?

Scoopy in the Alchemix discord had this to say: "If you are on any CEX or CeFi app or earn product, get out RIGHT NOW. Rumors are swirling and it is possible that none of them are solvent. I am not kidding, really, get out now. I care too much for our community to not have said anything to warn you." Not sure what that all entails.

It means there's no such thing as a free lunch (aka anything giving you "guaranteed" magically higher-than-traditional-banks interest rates is probably shit).

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

#909

Post by dragonwriter »

aeternum wrote: post #898
hn_throwaway_99 wrote: post #57

Earlier quoted context omitted.

Nexo just proved that when there is a run on the bank, you want to be first in line: https://cointelegraph.com/news/nexo-dodges-219m-bullet-just-...

It's also quite possible they caused it. Fractional reserve banking by definition means keeping only a percentage of customer deposits readily available. Regulation also doesn't fully solve this, we still have fully regulated bank failures today: https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_U... What solves it is the Fed stepping in and agreeing to print money no matter what to cover customer deposits i…

> What solves it is the Fed stepping in and agreeing to print money no matter what to cover customer deposits if need be (FDIC insurance).

The FDIC is not related to the Fed, and certainly does not entail a commitment of mobetary policy (it involves a fiscal commitment by the USG, but the whole point of the Fed is to separate monetary policy from fiscal actions.)

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

#910

Post by svnt »

skinnymuch wrote: post #773
edwnj wrote: post #442

Earlier quoted context omitted.

The main attraction was access to pretty much any shitcoin and advanced leverage+trading features: - multiple sub accounts - 20x leverage with tiered liquidations - you could use your portfolio as collateral - advanced trading tools This is why it was so shocking to see them collapse for doing such a stupidly bad thing, the guy seemed super smart (albeit vegan+commie).

Where is he a commie? EA has insanely famous liberals like Steven Pinker on their side. If that’s what you’re trying to get at. Otherwise I’m puzzled since his main focus is EA.

For people who don’t allocate many neurons to discriminating between worldviews, apparently philanthropy == communism.
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