151–160 of 309 posts
FTX literally has no CFO [1]. How is this possible for a billion dollar company and billions in client assets? How did the investors not insist on an adult to manage the their investment?
The CFO, and the credibility they bring to the table based on their track record and reputation, is part of the system that helps prevents situations like this.
[1]: https://www.ledgerinsights.com/ftx-warning-signs-no-cfo/
What the fresh hell? This isn't even an actual accounting balance sheet. He was trying to convince investors to put billions of dollars of actual money into FTX, and the best he could do is the sketchiest one-page Excel ever, complete with comments like "Hidden, poorly internally labled fiat@ account" (sic) worth 8 billion and warnings about typos ! No wonder CZ got cold feet.
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He's also being purposefully obtuse about his 2 largest regrets - the "poorly labeled" account and underestimating the size of the withdrawals. He's still behaving as if having billions of liabilities in real money backed by funny money "assets" is somehow acceptable and everything would have been fine if it wasn't for the "last week".
But maybe it could have been? I’m a complete crypto skeptic who would never touch anything like FTT, but it’s not an obvious Ponzi scheme. I think one of the troubles with crypto is that it’s very easy to operate what is effective a Ponzi scheme, without fully realizing it yourself.
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He's also being purposefully obtuse about his 2 largest regrets - the "poorly labeled" account and underestimating the size of the withdrawals. He's still behaving as if having billions of liabilities in real money backed by funny money "assets" is somehow acceptable and everything would have been fine if it wasn't for the "last week".
But maybe it could have been? I’m a complete crypto skeptic who would never touch anything like FTT, but it’s not an obvious Ponzi scheme. I think one of the troubles with crypto is that it’s very easy to operate what is effective a Ponzi scheme, without fully realizing it yourself.
I'm pretty certain most of us, at least in the BTC community, were mocking this yield farming as the new ICO since it's inception. The Effective Alturism, and his parent connection to Silicon Valley via Stanford make it clearer this was the typical disruptor cosplaying grifting that happens all the time: see Theranos.
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?
For that, they can't use FTX. They need USD or a stable coin like USDC.
They can't convert hundreds of millions of dollars of FTT to USDC since demand for FTT is relatively small. And a transaction like that might cause a huge decline in the price of FTT.
So they must have used ETH, BTC etc deposited by customers for swapping to USD or USDC.
I guess their theory must have been the surbowl ads, celebrity endorsemens and all would result in demand of FTT going up after some time. And they can later swap them back to customer funds when required.
But then crypto crashed.
Now customers want to withdraw the funds and they don't have it to give back. And nobody wants FTT.
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I think my understanding of central banking is quite correct. They don't incur a loss because the money they paid those assets with came out of nowhere. If you buy a car with $1000 that you printed with your money printer, and then sell the car for $800, you're still making a profit.
No, your understanding isn't quite correct. Many western central banks hold long dated bonds on their balance sheet which they are marking down due to increasing interest rates. Different central banks are dealing with this differently. In the US they are writing IOU s that essentially mean future surpluses will be used to pay back negative equity. The UK Treasury recently wired the BoE a large sum for much the same…
Incredible. To call all those "Less Liquid" tokens not "Illiquid" is a mastery in self-delusion. $2.1B SRM $981M SOL and then all the shitcoins built on those "technologies" where the tokens are their "shares" in those investments. But to call those tokens valuable assumes there's value in MAPS/OXY etc. But MAPS has a total market cap of $3.9m today - the forced liquidations in these positions will 100% crush these c…
SOL trades $100s of millions per day, which is actually extremely liquid in investment terms. "Less than liquid" is actually quite accurate for lesser known crypto. It's how assets like syndicated debt, that trade much less often, would be described on a balance sheet. "Illiquid" would be more like equity in a private company, where there is no active secondary market at all.
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Remember how the immaculately organized and professional appearing Wall St. firms did the exact same shit back in 2008? The only difference is really that they had the political clout to get a government bailout.
Which exact Wall St. firms took all their customer's deposits and bet them all on the Kentucky Horse Derby, while filling their balance sheets with their own equity, and self-printed scrip? There's a lot that went wrong in 2008, but none of it looked anything like this.
edit: And a ton of others, like every major investment bank (who also used customer funds as collateral for prop bets) except that the government bailed them out.
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But maybe it could have been? I’m a complete crypto skeptic who would never touch anything like FTT, but it’s not an obvious Ponzi scheme. I think one of the troubles with crypto is that it’s very easy to operate what is effective a Ponzi scheme, without fully realizing it yourself.
> I’m a complete crypto skeptic who would never touch anything like FTT, but it’s not an obvious Ponzi scheme. I think one of the troubles with crypto is that it’s very easy to operate what is effective a Ponzi scheme, without fully realizing it yourself. I'm pretty certain most of us, at least in the BTC community, were mocking this yield farming as the new ICO since it's inception. The Effective Alturism, and his p…
Being connected and well off, should now be a sign of lack of inventive mind than having one. VCs think they are risk takers but rather go for well connected SV folks unconsciously or consciously to avoid risks. I hope these two three episodes like Theranos put some sense in them.
I am quite surprised that nobody is talking about VCs (Sequoia) that happily poured money into this. What was their plan? Were they blind? Were they hoping to cash out before it crashed? Major investors usually get full visibility into the company.
This is the most important thing I was wondering about. If crypto businesses are shady and Ponzi schemes and these crypto guys are working mostly behind the scene, why would a VC like Sequoia invest in such firms? I somehow feel firms like Sequoia gave these crypto stuff some credibility and positive exposure. It was like, "don't worry, their business is legit and booming.'
I thought the rationale was already widely known by now: https://en.wikipedia.org/wiki/Greater_fool_theory
Or in more charitable terms: if an investment has a positive expected return according to their model (meaning that they think they can sell their shares / tokens in the case of some VCs), they do it.