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FTX balance sheet, revealed

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Re: FTX balance sheet, revealed

#81

Post by mudrockbestgirl »

lordnacho wrote: post #58
mudrockbestgirl wrote: post #34

Okay, but... how? How did they manage to lose so much money by running a popular exchange that should bring in tons of fees? Even if they were gambling with part of the deposits, how can they lose 90% of all assets? You'd have to be actively trying to lose money to be this bad... Also, where does Alameda fit into the picture?

Seems like Alameda was critical to the how of it. What's not clear to me is what they gambled on that lost money. Business model ought to be simple, the exchange earns loads of fees, and Alameda makes markets on it, earning spreads. Just putting a lid on the risk there should be enough to keep people occupied, no need to print your own money for extra leverage.

Exactly. With the perfect order flow information and ability to front-run other MMs and takers Alameda should've been highly profitable just making markets on FTX. How could they lose so much money...

Re: FTX balance sheet, revealed

#82

Post by chii »

blue_light_man wrote: post #61
mym1990 wrote: post #53

Earlier quoted context omitted.

Why trust the tech if it is built by the same untrustworthy people? The truth is that for something to be truly spectacular in moving humanity along, you need both tech AND people. You named a bunch of celebrities…OF COURSE you shouldn’t trust those people, you don’t even know them. Not trusting anyone is just a good way to grow old and bitter about the social state of the world.

I should have clarified. By don't trust people I mostly meant people you know from Internet and have never had a meaningful relationships with.

they have provided no evidence for which trust should be placed on their company or product.

Trust needs to be earned, and over a long time. Even a large company like google, have lost the trust they used to have, and have barely retained any back.

Re: FTX balance sheet, revealed

#83

Post by KirillPanov »

wumpus wrote: post #37
Shank wrote: post #17

The "before this week" column seems to be attempting to draw sympathy by saying "but everything was fine before, seriously!" when in reality it just proved that, even in the best of worlds, they had an extremely optimistic view of the entire crypto ecosystem, including its liquidity. I can't believe they seriously held that much of their total value in their own issued token. That's just preposterous. Imagine if JP M…

Remember the Wirecard collapse, where there was a fake bank account in the Phillipines that allegedly had $2.1 billion USD in it? This is the crypto equivalent.

Garnished with a dash of Bernie Madoff.

Re: FTX balance sheet, revealed

#84

Post by miked85 »

lordnacho wrote: post #58
mudrockbestgirl wrote: post #34

Okay, but... how? How did they manage to lose so much money by running a popular exchange that should bring in tons of fees? Even if they were gambling with part of the deposits, how can they lose 90% of all assets? You'd have to be actively trying to lose money to be this bad... Also, where does Alameda fit into the picture?

Seems like Alameda was critical to the how of it. What's not clear to me is what they gambled on that lost money. Business model ought to be simple, the exchange earns loads of fees, and Alameda makes markets on it, earning spreads. Just putting a lid on the risk there should be enough to keep people occupied, no need to print your own money for extra leverage.

Just watching a video of the Alameda CEO explains a lot.

Re: FTX balance sheet, revealed

#85

Post by wyclif »

wumpus wrote: post #37
Shank wrote: post #17

The "before this week" column seems to be attempting to draw sympathy by saying "but everything was fine before, seriously!" when in reality it just proved that, even in the best of worlds, they had an extremely optimistic view of the entire crypto ecosystem, including its liquidity. I can't believe they seriously held that much of their total value in their own issued token. That's just preposterous. Imagine if JP M…

Remember the Wirecard collapse, where there was a fake bank account in the Phillipines that allegedly had $2.1 billion USD in it? This is the crypto equivalent.

Yes, it was actually two accounts: BDO Unibank and Bank of the Philippine Islands.

Re: FTX balance sheet, revealed

#86

Post by usrusr »

blue_light_man wrote: post #61
mym1990 wrote: post #53

Earlier quoted context omitted.

Why trust the tech if it is built by the same untrustworthy people? The truth is that for something to be truly spectacular in moving humanity along, you need both tech AND people. You named a bunch of celebrities…OF COURSE you shouldn’t trust those people, you don’t even know them. Not trusting anyone is just a good way to grow old and bitter about the social state of the world.

I should have clarified. By don't trust people I mostly meant people you know from Internet and have never had a meaningful relationships with.

But if you trust people on the internet, at least your personal life won't implode in formation with your financials. MLM like herbalife and countless smaller ones, many of them in financials also on the product side, had already been preying on personal relationships before Satoshi even tossed his first coin at a hash function. Don't trust anything that looks to good to be true, and be wary of those that might be carefully tuned to stay just below that threshold.

Re: FTX balance sheet, revealed

#87

Post by dna_polymerase »

password4321 wrote: post #54
mudrockbestgirl wrote: post #46

Earlier quoted context omitted.

I don't know about FTX, but Binance has been shady from the very beginning. They got large quickly because they listed all kinds of **coins, had negative trading fee promotions, and in general did lots of shady growth hacking marketing tactics and partnerships. If you wanted to gamble altcoins, those would be on Binance, but not listed on Coinbase. That was many years ago when they started out of course. I'm curious…

Still get emails from Binance constantly: "Earn 3.6%/3.9%/4.1% when you stake ... FTM/ONE/ROSE". Just scrolling down, they offered 15% on DOT back in August!

They offered this because it’s the staking reward the Polkadot network rewards for staking your coins. Binance just offers you to stake with them and in turn gives you part of the rewards. The 15% are paid in DOT though, so your dollar return is dependent on DOTs performance.

Re: FTX balance sheet, revealed

#88

Post by igorkraw »

wolpoli wrote: post #47
Shank wrote: post #17

The "before this week" column seems to be attempting to draw sympathy by saying "but everything was fine before, seriously!" when in reality it just proved that, even in the best of worlds, they had an extremely optimistic view of the entire crypto ecosystem, including its liquidity. I can't believe they seriously held that much of their total value in their own issued token. That's just preposterous. Imagine if JP M…

> Imagine if JP Morgan Chase's entire value was in JP Morgan Chase stock, and they just reported that as their value in cash. It's like recursive valuation. While I think real world finance is on much more stable ground than crypto, I thought it'll be funny to point out that many of the world's central banks back their liabilities (the currency they issue) with own government's bonds. Luckily, the bonds are denominat…

I wrote a whole post because I misread your first line as "while some people think" and set out to "tell people on the internet they are wrong", but since we seem to actually agree with another, I'll post the below as an agreeing addendum to make the point just how much more stable real economics and finance are than crypto BS. And also because I wrote it already.

---

This is not "luckily", it's by design, and there's a couple of other key differences as well.

1.Modern central banking implements an artificial separation between government and CB (an imperfect one), that attempts to make this less recursive...

2. ...but the key difference here is that the value of the dollar ultimately derives from the fact you need to pay US taxes with it. If you want to do business in the US, you need to get some USD to pay taxes in which are then used to keep the US a place to do business in. It is exactly the same model as FTT except that instead of paying "taxes" to trade on one of many market places, the US is a giant nonfungible place, with lots of difficult to move assets and people, serving a fucknormous circular economy with a staggering amount of real world consumption - i.e., a place you want to or have to do business in even if there's shock...

3. ...and has a monopoly on the violence (in the form of laws, courts, police and military) that actually enables the notions private property that enables this all. If the US government collapses your dollars are worthless whether they are backed by a bond or not.

4. Finally, neither the CB nor the government are up for sale or needs to generate profits or shareholder value. All they need to care about is continuing the system in a way that its constituents want (I'm not specifying the aggregation method, oligarchs are still constituents)

So overall, and with the fact that this is a system which has been iterated on for hundreds of years(thousands if you count legal code), yeah, it's a lot more stable

Re: FTX balance sheet, revealed

#89

Post by vgatherps »

lordnacho wrote: post #58
mudrockbestgirl wrote: post #34

Okay, but... how? How did they manage to lose so much money by running a popular exchange that should bring in tons of fees? Even if they were gambling with part of the deposits, how can they lose 90% of all assets? You'd have to be actively trying to lose money to be this bad... Also, where does Alameda fit into the picture?

Seems like Alameda was critical to the how of it. What's not clear to me is what they gambled on that lost money. Business model ought to be simple, the exchange earns loads of fees, and Alameda makes markets on it, earning spreads. Just putting a lid on the risk there should be enough to keep people occupied, no need to print your own money for extra leverage.

In addition to earning a spread you lose from toxic trades, i.e. someone trading when your quote is stale.

Alameda has a strong incentive to knowingly do bad trades on ftx, i.e. stale quotes + spreads too small, since it increases legitimate volume numbers and generates ftx fees (gains in ftx fees offset trade loss). It's unknown if this happened or to what extent, but it can be very costly to do this in large size.

Re: FTX balance sheet, revealed

#90

Post by bmitc »

Does he really expect anyone to believe his “poorly labeled internal ... account” story? How can you have $8 BILLION mislabeled? As in, if he transferred or loaned it to Alameda, literally no one was asking: wait, where did this sum of money, so large that it is a massive percentage of our value and could crash the company, come from? Despite all the idiocies that we’re learning about, it is still hard to believe.

Another thing is, it seems like this spreadsheet was hand-crafted by Sam Bankman-Fried just before their emergency meetings this past week. Why wasn’t this something that already existed for all top executives to see? How was it not just a printable document or report but was instead something he just typed up? Because no, it is not obvious that a balance sheet of a supposedly multi-billion dollar company would contain typos. Typos!? I mean, come on.

Then again, I have worked with people similar to how Sam Bankman-Fried seems to operate. Not the possible sociopathic tendencies he appears to have but the sort of twitchy smarts he does seem to have. People like that can sometimes think so fast with a lot of confidence that they create this wake of stuff behind them as they work. They “solve” (i.e., move through) problems so fast, that everyone gets lost in the wake and can’t catch up to find all the mistakes left behind or tie the loose ends together. They consider a problem solved if it’s essentially solved but doesn’t have details thought out or if there are possible mistakes that can be “easily” solved in ways not apparent to anyone else. If there’s no one around to slow these types of workers down, it can be complete chaos where you have one person spearheading away through the bushes, while everyone else is getting slapped in the face with the branches snapping back and thorns. At some point everyone gives up trying to follow. Then the person is off on their own where they lose sight of whatever actual problem they were solving and lose track of the bigger picture.

It is entirely possible that that is a component of what has happened here, coupled with some sociopathy, megalomania, and billions of dollars of funding in Sam Bankman-Fried’s case.

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