It was all for charity. People are mean. https://twitter.com/The_Prologuist/status/158967849854920704...
Look, I’m a savvy investor who builds marketing teams and would never fall for this, but I think other people will, so I’m going to invest.
FTX held less than $1B in liquid assets against $9B in liabilities
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Re: FTX held less than $1B in liquid assets against $9B in liabilities
#22"Currently, all U.S. banks are subject to a balance sheet leverage ratio, which requires them to maintain a ratio of tier 1 capital to balance sheet assets at a minimum level of 4%. In order to be well-capitalized, banks must achieve a 5% minimum leverage ratio" So FTX had an 11% leverage ratio, pretty good.
You must consider what the banks are lending with that ratio. It’s mostly mortgages, which are far less risky than what FTX was doing.
Hard to quantify far less but a few orders of magnitude probably isn’t too “far off.”
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#2310% liquid doesn't necessarily concern me when considering a bank. But, they have many more routes to liquidity than FTX (Liam from the fed, loans from other banks, etc.). And even still, 10% isn't legal for a bank if their liquid assets are too volatile.
450 mil was in SBFs Robinhood investment, and FTX clearly didn't have any other avenues towards liquidity. 10% without an out was a predictably bad idea
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#24There should be more discussion about how to store value without counterparty risk. Most people think it is as easy as ordering a hardware wallet, following the process the wallet software suggests and - hurray! - your keys, your coins! But it is not that easy. You also have to cut the wallet manufacturer and the software developer out of the loop. I have yet to see a description on how to safely create a wallet that…
Ethereum multi-sig wallets do the trust side fantastically side very well.
In addition you get ways to handle lost keys, ownership changes, and the ability to require multiple people to sign off on any action.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#25It was all for charity. People are mean. https://twitter.com/The_Prologuist/status/158967849854920704...
We should have trusted Larry David on FTX...
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#26There should be more discussion about how to store value without counterparty risk. Most people think it is as easy as ordering a hardware wallet, following the process the wallet software suggests and - hurray! - your keys, your coins! But it is not that easy. You also have to cut the wallet manufacturer and the software developer out of the loop. I have yet to see a description on how to safely create a wallet that…
https://www.crowdsupply.com/sutajio-kosagi/precursor
This aims to address these issues. Verifiable hardware and open source OS and wallet.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#27> In all, the spreadsheet says FTX Trading’s assets were $900mn of “liquid” assets, $5.5bn of “less liquid” assets consisting of crypto tokens Aren't tokens supposed to be "liquid" or is this a different way of saying the tokens are worthless?
Tokens are very liquid, until they are not. And sadly with both FTT, Luna and so many others, that transition seems to happen instantly and without any warning.
Well, I guess the warning would be that someone created something from nothing and said it was worth a few Billion dollars, but other than that, it's a surprise event to everyone - just ask Sequoia Capital and Forbes.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#28It was all for charity. People are mean. https://twitter.com/The_Prologuist/status/158967849854920704...
Look, I’m a savvy investor who builds marketing teams and would never fall for this, but I think other people will, so I’m going to invest.
The greater fool game is probably fun, but I am too dumb to play it.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#2910% liquid doesn't necessarily concern me when considering a bank. But, they have many more routes to liquidity than FTX (Liam from the fed, loans from other banks, etc.). And even still, 10% isn't legal for a bank if their liquid assets are too volatile. 450 mil was in SBFs Robinhood investment, and FTX clearly didn't have any other avenues towards liquidity. 10% without an out was a predictably bad idea
FTX isn’t a bank. They aren’t supposed to operate as a fractional reserve. Coinbase would be crucified by the SEC if they did this.
Re: FTX held less than $1B in liquid assets against $9B in liabilities
#30There should be more discussion about how to store value without counterparty risk. Most people think it is as easy as ordering a hardware wallet, following the process the wallet software suggests and - hurray! - your keys, your coins! But it is not that easy. You also have to cut the wallet manufacturer and the software developer out of the loop. I have yet to see a description on how to safely create a wallet that…
Multisig, with hardware from different companies, no one of which could constitute a quorum of your keys.
If you have even just a 2-of-3 keyset with one Ledger, one Trezor, and a Coldcard, none of those companies can screw you by itself.
If you go up to 3-of-5, it's even more robust.
You can set it up yourself using FOSS like Electrum.
Or you can hire somebody like Casa[0] to get it all set up and set up the infrastructure to verify Casa App is doing exactly what it says it's doing.
ETA: There are lots of airgapped wallets. Coldcard, Keystone, and Passport all work airgapped.