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FTX balance sheet, revealed

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Re: FTX balance sheet, revealed

#181

Post by lottin »

cormacrelf wrote: post #167
lottin wrote: post #156

Earlier quoted context omitted.

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.

Central banks care a lot about money supply. They do not want to have to print money to account for a debt on the balance sheet, because that (eventually) devalues the currency they operate, and causes deflation which they regard as bad for the economy. They wish to use the money printer when they choose (and provide maximum effect for its valid use cases), not because they are forced. There is a money printing capac…

You got it the other way around. The only reason they buy bonds to increase the money supply. So if they do buy a bond, they will pay with newly created reserves. That's the whole point. And it's impossible to lose money by purchasing an asset that it cost you nothing to buy.

Re: FTX balance sheet, revealed

#182

Post by recuter »

ealexhudson wrote: post #165
recuter wrote: post #136

Earlier quoted context omitted.

I don't know which discord the reply to me is supposed to be linking to but here it is in text form. A true scandal is opening for the Biden administration. April 25, 2019: Biden announces his presidential campaign. 13 days later, Sam Bankman-Fried, son of Barbara Fried ( Stanford Professor and co-founder of political fundraising organization "Mind-the-Gap), launches #FTX crypto exchange. The exchange is magically an…

But I thought the whole complaint about SBF was the enormous lengths he was going to in order to increase regulation, and effectively pull up the drawbridge behind him? I think the whole point about campaign financing is well made, but the idea (implied) that this was some massive Dem ruse feels incredibly far-fetched, given the various investors and others involved. If you scratch at the senior leadership of many co…

There is no such idea implied, if anything I mean to say the opposite. We have to stop looking at things through a narrow political lens.

Whatever noises SBF was making about regulation - what actually appears to have happened is that he was (at best) incompetent and simply playing to whatever audience was listening. Who knows, maybe he even drank his own koolaid. After all he is so virtuous on other matters, surely this would all work out somehow, he is one of the good guys.

His regulators meanwhile (at best) placed undue trust in him for reasons ranging from shared politics and values on various unrelated issues to very large donations vaguely to their benefit. And why shouldn't they, after all he is so virtuous on other matters, surely this would all work out somehow, he is one of the good guys. One of them. And never mind how he got the money for the donations let's not stare a gift horse in the mouth. We can do a lot of good with those donations, after all, we are the good guys.

You don't need to assume a nefarious ruse. No nefarious scheming is actually necessary for any of this. Although since everything is politicized it will be assumed. Has been assumed. And is sort of implied in the discord quote. That is another unfortunate part of the problem. The people who were pointing out the smoke defaulted to harping on the conspiracy aspects because they are more interested in the political affiliation of the wrongdoers than the actual wrongdoing. Inadvertently providing cover for FTX to operate even longer.

In short, a bunch of incestuous wankers feeding into each others delusions and all too willing to look the other way on things they'd never let slide for their political opponents. FTX would never have happened had the founders politics been different, surely you see that.

And I'm sure if this pairing would have been a red instead of blue the same thing would have happened.

Scrutiny seems now to only be reserved for political enemies. Scandals are not swept under the rug unless they are by political allies.

Re: FTX balance sheet, revealed

#183

Post by [deleted] »

slawwwc wrote: post #177
lend000 wrote: post #60

Earlier quoted context omitted.

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.

[deleted]

Re: FTX balance sheet, revealed

#184

Post by SilverBirch »

Using the word "Liquid" in the context of these accounts is... I don't know? Fraudulent? I understand that in the context of real finances things might be illiquid - it might take time to sell your house, or if you're a particularly big holder of stock in a company you founded you might have liquidity problems divesting over time. But it's really just taking the piss describing a lot of this stuff as "illiquid". FTT is a coin that they have made up themselves, which they themselves own the vast majority of, and which only had value in connection to the exchange that they just bankrupted. So no, it isn't "illiquid" its "worthless". It's not just that they'll take a hair cut if they liquidate it quickly, they could never liquidate even a significant portion of this. This whole thing started when CZ tried to liquidate 500m in FTT and the whole of FTX collapsed, they're now claiming their remaining FTT tokens are worth $600m (down from $6Bn). It's just so absurd to suggest you can mark to market like that.

Re: FTX balance sheet, revealed

#185

Post by UncleMeat »

lordnacho wrote: post #127
emilsedgh wrote: post #70

Earlier quoted context omitted.

> What's not clear to me is what they gambled on that lost money. My guess would be other crypto ventures. All these crypto companies pumped each other with no products/assets (Stadium names and soccer team sponsorships with no products to sell!) and invested in each other. The economy had so much excess money and they got pumped and they thought this is what "investing" is. Economy's bubble burst and suddenly their…

But any kind of illiquid venture investment is just money out of your trading capital. Maybe Tom Brady takes tokens in exchange for doing adverts, but I doubt that stadium uses FTT to pay its employees. Likewise with any other venture, you need cold hard cash. Swapping whatever cash you have for FTT in order to invest it elsewhere just seems insane. You've got a business that creates cash, and needs it for deposits a…

It does seem like it would be so easy to not fuck this up. Fees are high on the crypto exchanges and you've got so many people day trading or even trading via automation that you should do well.

But I can imagine how it happens. It is some massive fucking bull market and you see your peers doing shady things (20% APR! Zero risk!) and making shit loads of money. You've got this trading arm that is making shit loads of money during the bull market. So you do a little double dipping and it work! Hooray you are making everybody richer! So you do a little more. And a little more. And then oops Alameda is losing a lot of money. But don't worry this is just a blip. Those folks are smart. Hmmm... this is taking longer than we thought to come back. They just need some temporary money to get through this. Don't worry, they've still got huge assets. Oh fuck, their assets are tanking and they are still losing money. Kaboom.

You need to have somebody in the room who can say "yes I know this strategy is making money right now but we absolutely cannot do this." And it is already hard to have that person in the room normally, let alone when you are a company make up of people in their 20s who are told they can do no wrong and also believe that it is their moral duty to make a shit ton of money so they can funnel it into some weird effective altruism mission. If you believe you are saving the world then that 20th billion is still important, whereas if you just want to be rich as fuck then it really isn't.

Re: FTX balance sheet, revealed

#186

Post by pooper »

mkagenius wrote: post #159
Melting_Harps wrote: post #154

Earlier quoted context omitted.

> 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…

> this was the typical disruptor cosplaying grifting 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.

Problem is that this is only apparent in hindsight. How do you tell apart Theranos and something like Color Labs[techcrunch]? Sometimes it isn't even clear in hindsight. From the outside, both are novel ideas. Both had talented workers working on novel ideas.

I don't know enough/anything about biochemistry so I don't know if the vision Theranos sold was even possible but how do I know that the all public all the time but only to someone physically nearby you photo sharing idea (of color) would work either?

How do you decide who to back?

[Techcrunch] https://techcrunch.com/2011/03/23/color-looks-to-reinvent-so...

Edit: another post on HN: what is "growth hacking"? https://news.ycombinator.com/item?id=33582002

Re: FTX balance sheet, revealed

#187

Post by lottin »

manholio wrote: post #172
lottin wrote: post #156

Earlier quoted context omitted.

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 f…

Central bank reserves are not a liability because they don't entail a financial obligation. They're only listed as a liability on the balance sheet because it's convenient from an accounting perspective. When a central bank buys a bond, they use reserves, which are not a liability in a financial sense, therefore the central bank makes an instant profit. Even if the bond were to lose 80% of its value, the central bank would still make a 20% profit. Bankrupting a central bank is a lot harder than you think.

Re: FTX balance sheet, revealed

#188

Post by UncleMeat »

SnowHill9902 wrote: post #176
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.

I, for one, do not like the trend of the financialization of everything. It is surveillance capitalism times 1000. Where all human behavior becomes an object to bet on.

Re: FTX balance sheet, revealed

#189

Post by jasonwatkinspdx »

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.'

SBF invested heavily in Sequoia as a limited partner. Him raising money from Sequoia in return was a way of adding legitimacy to his empire. Sequoia's motivation was simply to make money. Even famous VC firms aren't immune to making dumb decisions or falling for some fantasy hype rationale. Sequoia had a very fawning blog piece on SBF up that paints a very unfavorable picture of the decision making here, and hilariously enough they were proud of it until the bubble popped.

Re: FTX balance sheet, revealed

#190

Post by SilverBirch »

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.

If you listen to the All-In podcast, or the Pivot podcast there have definitely been some rumblings about certain VC firms doing extremely questionable things with regards to crypto. They don't name names because... well, they don't want to burn bridges/get sued. But it's not difficult to guess which firms will be under scrutiny, Chris Dixon obviously is the most outspoken crypto guy. The question over the next few years is - how have his funds performed. If they've performed anything like crypto he's going to give terrible returns, if they haven't performed anything like crypto I think people would like to know how he managed to create a crypto investment strategy that had a positive ROI, given that the only way money has been made in the cyrpto space so far is pump and dump.
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