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FTX balance sheet, revealed

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Re: FTX balance sheet, revealed

#111

Post by TuringTest »

laserlight wrote: post #73
throwaway290 wrote: post #64

Earlier quoted context omitted.

Funny how my takeaway (as someone completely removed from the action) has been the opposite: don't trust the tech, filter for trustworthy people. Time and time again we are shown that tech is not solving the human problem of greed and malice, and some kinds of tech rather amplify it.

How do you tell that people are trustworthy in the first place?

By iterated experimentation, mostly. Social relations are a skill built on give-and-take actions on all levels, from the trivial chit-chat to lifetime friendships.

https://ncase.me/trust/

Re: FTX balance sheet, revealed

#112

Post by djbebs »

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?

They stole clients assets and used them to:

1- Gamble with them

2- pay themselves

3- lobby the government

4- bailout other failing crypto companies.

Everything here could have been done with any non-crypto exchange.

Re: FTX balance sheet, revealed

#113

Post by RantyDave »

libraryatnight wrote: post #94
pigtailgirl wrote: post #33

"What are President tokens? President tokens are ERC-20 tokens that will be redeemable for either $1 or $0 based on if Trump wins or loses the Presidential election. These markets act as tradeable prediction markets where the market price of TRUMPWIN should be roughly equal to the probability that Trump will win the election and the market price of TRUMPLOSE should be roughly equal to 1 minus that probability. TRUMPW…

Someone just mint the Camacho coins already

Camacho was a good president. He knew he was out of his depth, sought the best advice he could and was willing to take politically difficult risks for the good of his people. Unlike, say....

Re: FTX balance sheet, revealed

#114

Post by grey-area »

dgudkov wrote: post #96
blue_light_man wrote: post #36

The only lesson I learend from this whole debacle is never trust people and organisations you know from the Internet no matter how famous or humble or good they are. Trust the tech. But never the people. Especially for financial advices. Be it Sequoia. Or Yc. PG, Chamath, Mark Cuban ,Balaji or the Collision brothers. Tom Brady or SBF or CZ. Never fucking trust people or organisations. They are all here for their fina…

That sounds techno-utopian to me. You can't get around trust to people. Technology is run by people using rules and abstractions people agreed to adhere to.

Yes avoiding trust and attempting to construct something trustless is the biggest flaw in the bitcoin whitepaper.

Trust and identity are fundamental in financial transactions.

Re: FTX balance sheet, revealed

#115

Post by arminiusreturns »

irusensei wrote: post #105

The whole thing that is bugging me is that they made big political donations to both D and R. They use the money they conjured out of thin air and backed politicians with it. They probably backed the politicians who were most friendly to them. Those politicians might have won and that dirty money might have done a difference. Does that sound moral to you? I think it’s absolutely terrifying. Every candidate that recei…

Banksters have been doing it for much longer and people hardly bat an eye at it.

Edit to add more substance and thought:

I know it's uncomfortable to address but it's true. On top of the money pulled out of "thin air" via electronic means by the central bank (US Treasury asks for a billion, fed manifests it in exchange for bonds, w/ the US fed at a 6% profit rake scheme, not sure about BoE, etc), the normal everyday banks as part of the fractional reserve system pull money out of "thin air" by loaning out more than they have on deposit. Furthermore, the fractional reserve rate which used to be 10% has been busted down to 0 afaik currently. Literally they can loan out money they don't have and the regional fed will bail them out with liquidity if it gets too bad.

I've known this for a while but in 2016 when I was considering running for congress and started digging into the funding sources of the incumbent, I started noticing a lot of NY banks donating to this random congressman, and pivoting out found that vast swaths of politicians have banks themselves donating money.

Re: FTX balance sheet, revealed

#116

Post by djbebs »

collaborative wrote: post #13
TotoHorner wrote: post #7

Earlier quoted context omitted.

Nope. Was constantly telling users that funds were 100% backed.

Backed by liquidity or by assets? I thought the article said that 90% of the funds were liabilities

Exchange business models are supposed to be 100% different from banks.

If exchanges are using fractional reserves of any kind or amount, they have already committed fraud.

Re: FTX balance sheet, revealed

#117

Post by bmitc »

irusensei wrote: post #105

The whole thing that is bugging me is that they made big political donations to both D and R. They use the money they conjured out of thin air and backed politicians with it. They probably backed the politicians who were most friendly to them. Those politicians might have won and that dirty money might have done a difference. Does that sound moral to you? I think it’s absolutely terrifying. Every candidate that recei…

I think all political donations above a certain level should be scrutinized and audited and then banned at higher levels. But I don’t think the politicians care. They removed the limits to political donations and haven’t looked back, and it has been chaos ever since.

I was disturbed by Robert Mercer’s dastardly part in the 2016 election, both his donations, his people placing, and his technical consulting. The guy is basically a real life Bond villain. When you look into the other top donors of the Republican Party, you start seeing some real Machiavellian characters. The Democratic donors are not far behind in terms of greed and power, but it sure seems like some of the Republican donors just want the world to burn if it means they can keep their wealth.

Re: FTX balance sheet, revealed

#118

Post by throwaway290 »

laserlight wrote: post #73
throwaway290 wrote: post #64

Earlier quoted context omitted.

Funny how my takeaway (as someone completely removed from the action) has been the opposite: don't trust the tech, filter for trustworthy people. Time and time again we are shown that tech is not solving the human problem of greed and malice, and some kinds of tech rather amplify it.

How do you tell that people are trustworthy in the first place?

Look for signals and be skeptical I guess. Watch for over-promising. For someone giving advice, try to imagine how they could be paid or gain from selling you on this, or whether they could be influenced by people who do. For someone offering to take your money, do due diligence, look for track record and whether they make legal recourse early available. For example, transacting in cash or something similarly attractive to money launderers could be a red flag. (And yes 98% of subject industry should probably not be trusted so your filter has to be really selective.)

Re: FTX balance sheet, revealed

#119

Post by oldgradstudent »

stephen_g wrote: post #69
collaborative wrote: post #5

Was he managing funds with a 10% fractional banking policy?

Bank deposits, of course, are >100% backed (by a mix of assets), the 10% reserve ratio is just specifying a minimum amount of one kind of asset (central bank reserves). Most countries don’t have the same kind of explicit reserve requirement and most have plenty stable banking systems.

> Bank deposits, of course, are >100% backed (by a mix of assets),

The reserves are there to provide liquidity for people who want to withdraw their funds in normal times.

The assets are mostly loans. The lenders sometimes fail to repay the loan, and the collateral may not be worth as much as initially estimated.

The bank has capital requirements, so that if loans are not replayed, the bank shareholders take the hit.

If the capital is depleted beyond a certain point, the regulators (and the FDIC in the US) take over the bank, wipe out the shareholders, and install new management. Depositors are repayed up to the insured amount and if there are remaining funds they go to the insured depositors, creditors, and shareholders in that order.

That's of course how thing are supposed to be done. In reality, large connected banks are often bailed out.

Re: FTX balance sheet, revealed

#120

Post by rxyz »

mudrockbestgirl wrote: post #46
jjallen wrote: post #40

The thing that I always wondered about with FTX (and Binance frankly) is how did they get so big so quickly. What did they have that caused so many people to use _their_ exchange. This is still unexplained and was a major red flag. Usually to grow that big takes many years. Just look at Coinbase.

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…

FTX splashed money on sponsorships and ads. It either had a lot of investor money or was a ponzi from the beginning
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