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FTX balance sheet, revealed

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Re: FTX balance sheet, revealed

#171

Post by ilrwbwrkhv »

mayankkaizen wrote: post #150
tasubotadas wrote: post #144

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.'

Some kaching on the side. ;)

Seriously though, a lot of influencers promoting this stuff have been getting paid in cold hard US dollars to promote these scams.

How do I know? I spoke to influencers to talk about my portfolio companies and many of them told me the crazy amount of cash they were getting paid from these scammers. Think 25,000 for a channel with hardly 100k followers.

That's why I feel like Sequoia partners should be investigated thoroughly. If a terrorist organization gets investments, don't we investigate those investors as well?

If you drop morals, like a16z did, by supporting another scammer and gritting on crypto, it's a very lucrative business.

Re: FTX balance sheet, revealed

#172

Post by manholio »

lottin wrote: post #156
loftil wrote: post #140

Earlier quoted context omitted.

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…

You're repeating the same nonsense. How can a bond that the central bank got for free make the central bank lose money? Please explain.

The coin the central bank issues is a liability in its balance sheet. If it prints 1 trillion, uses it to buy 1 trillion worth of commercial paper and those assets lose 10%, then the bank has liabilities worth 1 trillion (outstanding currency) but only 900 billion in assets to cover them. Technically in default, but also in a very special economic position, because no body expects the central bank to ever cover its full liabilities.

Re: FTX balance sheet, revealed

#173

Post by rvba »

lottin wrote: post #99
bjornsing wrote: post #95

Earlier quoted context omitted.

If my understanding is correct the Swedish central bank, Riksbanken (which happens to be the oldest in the world), has said that whey do not want to hold their QE assets to maturity and that they are essentially bankrupt. They will be bailed out by the tax payers of course.

You're probably understanding it wrong. Central banks have little or no debt, and they can "print" reserves at no cost. Reserves is the stuff they pay their debts off with. As a result it's virtually impossible for a central bank to go bankrupt.

A central bank can go bankrupt - it cannot keep printing money forever.

When we look at places with hyper-inflation, at some point people lose all their "faith" in a currency (and in the central bank). People no longer want to receive a currency that can be printed at 'no cost', because this currency will only keep losing value due to constant printing. They demand other, "hard" currency, or just use barter. Of course it is illegal, but in case of hyper-inflation the fabric of the society is rapidly dissolving - those who had some savings were effectively robbed by the central bank/government, those who sold some physical good - are now "bagholding" some coin that will become worthless fast.. The spiral of inflation can become so tough that noone will accept banknotes or electronic money, since it is better to hold physical goods.

As far as I remember in places with real hyper-inflation (Zimbawbe?) the central banks introduced so many new banknotes that they couldnt even afford to print them -> the paper-mills didnt accept the banknotes, since they knew those would not be worth anything in few days.

Other example is how after people would use stacks of paper currency to buy basics like bread.

Paper currency is a very useful invention because it really facilitates trade, same can be said about credit cards - but in times of hyper-inflation often the credit cards stop working - due to no electricity. So people jump to another hard currency (e.g. in Yugoslavia or Africa they only accepted US dollars or euros and basically gave up on own currencies, even if it was illegal).

[on a side note, I bought few of those '100 trillion' Zimbabwean dollar banknotes and this was one my my best investments ever - bought them for something like 2 USD each and now they seem to be worth 150-300 USD each. The value here is that it is a 'novelty' item - that can be used as an example of hyper-inflation; all the economy 101 books show it as an example]

Re: FTX balance sheet, revealed

#174

Post by [deleted] »

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?

[deleted]

Re: FTX balance sheet, revealed

#175

Post by FollowingTheDao »

bjornsing wrote: post #92
pakitan wrote: post #75

Earlier quoted context omitted.

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.

Ponzi schemes are not obvious, until they’re totally obvious. That’s why they keep happening.

A lot of people will explain to others that it’s a Ponzi scheme, but those people are making so much money that hey don’t want to hear it.

Crypto is a Ponzi scheme, and it always was. I’m not just talking about these companies, being Ponzi schemes, I’m talking about the whole ecosystem being a Ponzi scheme.

You can either listen to those of us telling you cook those a Ponzi scheme or you can focus on your greed. Your choice.

Re: FTX balance sheet, revealed

#176

Post by SnowHill9902 »

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…

That’s actually very useful. It’d allow one to hedge risks with new synthetic derivatives instead of creating weird proxies with stocks.

Re: FTX balance sheet, revealed

#177

Post by slawwwc »

lend000 wrote: post #60
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.

Binance was publishing fake volume numbers (basically a sine wave chart) up until ~2018. They faked it until they made it. The only reputable exchanges are KYC/western based Coinbase, Kraken, Gemini, and perhaps some of the smaller US based companies. Honorable mention to Bitmex, which was truly financially innovative (basically what FTX and other crypto futures exchanges tried to copy) and admitted exactly what it w…

I would also add Bitstamp to the reputable exchanges list. It's operating since 2011 and holds many operating licences across EU and US.

Re: FTX balance sheet, revealed

#178

Post by codetrotter »

greiskul wrote: post #161
igorkraw wrote: post #88

Earlier quoted context omitted.

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'…

Exactly. People that say that the value of fiat money is fake, never think about taxes. You want to own a house? The government mandates that you acquire and give them a certain amount of US dollars. Even if you did every single transaction in your life with other assets, paying for stuff with gold and chickens, at the end of the day, the tax man will come for you, and the tax man only takes dollars.

I want to pay my taxes in BTC or ETH. I remain hopeful that one day I will be able to. Until then, fiat taxes it is.

Re: FTX balance sheet, revealed

#179

Post by cypress66 »

mayankkaizen wrote: post #152
rippercushions wrote: post #9

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.

You are implying that CZ is doing something more legit and transparent. I belive both were on the same boat and playing the same game. It is just that FTX lost the game first.

Binance definitely seems to have a better ratio of assets to liabilities.

Re: FTX balance sheet, revealed

#180

Post by darkerside »

bjornsing wrote: post #92
pakitan wrote: post #75

Earlier quoted context omitted.

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.

Most things are on some level a Ponzi scheme.

That said, I think the real problem here was undercapitalization. It seems akin to throwing a party at your home that has a structural addition not up to code, and then when it collapses under the weight, saying it was just bad luck.

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