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FTX balance sheet, revealed

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Re: FTX balance sheet, revealed

#221

Post by paulusthe »

darkerside wrote: post #180
bjornsing wrote: post #92

Earlier quoted context omitted.

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.

No, they're not. The definition of "Ponzi scheme" is not "something financial I think is a scam" as most people use it. It's a very specific type of financial fraud.

"Everything is a Ponzi" is a lazy analysis only made possible by having a lazy definition of what a Ponzi scheme is

Re: FTX balance sheet, revealed

#222

Post by _fat_santa »

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.

The hole in Wirecard's balance sheet almost doesn't seem that bad when you see what kind of hole FTX has.

Re: FTX balance sheet, revealed

#223

Post by acdha »

linuxftw wrote: post #201
pooper wrote: post #186

Earlier quoted context omitted.

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…

As a lay person, it might be difficult. As a well funded VC, I'd expect due diligence beyond the level of 'let me see your balance sheet' before investing millions of dollars. One particular item of fraud was the claim that their machines were on helicopters in US-led war zones. Okay, show me the contract details for this, or some kind of evidence this is actually true, and then I will verify with the counter party t…

> As a well funded VC, I'd expect due diligence beyond the level of 'let me see your balance sheet' before investing millions of dollars.

Yes. At the time it was not hard to find people who did have expertise in the relevant fields expressing skepticism. It definitely wouldn’t have been hard to kick $50k in consulting work to some postdoc to act as your advisor when the investment is orders of magnitude greater.

Re: FTX balance sheet, revealed

#224

Post by kranke155 »

largepeepee wrote: post #106
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…

And a week ago you would have included FTX in that KYC "western" list esp since they had so many big "western" investors and Washington's ears including the SEC. Not to mention Bitcoin and crypto were created out of the failures of the trusted KYC "western" banking standards of 2008. You are literally repeating blind trust mantra based on region bias that has just failed again this week. Crypto is about avoiding the…

FTX pretended to be that but they were based in the Bahamas.

Also Kraken has verifiable proof of reserves.

Kraken and FTX/Binance are essentially not even in the same business (Binance is almost certainly quasi criminal or dodgy if not worse).

Re: FTX balance sheet, revealed

#225

Post by acdha »

FollowingTheDao wrote: post #175
bjornsing wrote: post #92

Earlier quoted context omitted.

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 li…

I think your second paragraph is correct but contradicts the first. It’s not that these aren’t obvious so much as some people really wanting to find ways to ignore that so they can get rich without feeling like a scammer.

Re: FTX balance sheet, revealed

#226

Post by catbird »

oldgradstudent wrote: post #119
stephen_g wrote: post #69

Earlier quoted context omitted.

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.…

What does it mean here that “the shareholders will take a hit?” Do the shareholders normally receive some regular payments that would stop (or be reduced) in that situation?

I know nothing about finance, but the stories unfolding this week have me interested to learn more about how all this works.

Re: FTX balance sheet, revealed

#227

Post by unboxingelf »

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.

Oh SBF realized it was a ponzi, he literally described it as such in an interview!

Re: FTX balance sheet, revealed

#228

Post by darkerside »

paulusthe wrote: post #221
darkerside wrote: post #180

Earlier quoted context omitted.

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.

No, they're not. The definition of "Ponzi scheme" is not "something financial I think is a scam" as most people use it. It's a very specific type of financial fraud. "Everything is a Ponzi" is a lazy analysis only made possible by having a lazy definition of what a Ponzi scheme is

A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.

Many things from MLM to social security to VC markets can be viewed as a Ponzi scheme.

Re: FTX balance sheet, revealed

#229

Post by carlivar »

paulusthe wrote: post #221
darkerside wrote: post #180

Earlier quoted context omitted.

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.

No, they're not. The definition of "Ponzi scheme" is not "something financial I think is a scam" as most people use it. It's a very specific type of financial fraud. "Everything is a Ponzi" is a lazy analysis only made possible by having a lazy definition of what a Ponzi scheme is

Here's the definition:

https://www.investopedia.com/terms/p/ponzischeme.asp

I think the point is that there are more structures out there like this than we think. Social Security for example. Just do a web search and you'll see it's a rather mainstream question. Also there are so many unfunded public pensions that could meet the definition.

Perhaps the difference is transparency. We know these public programs are currently in bad shape, but private schemes are completely opaque until they collapse.

Re: FTX balance sheet, revealed

#230

Post by jrochkind1 »

davemp wrote: post #216
jrochkind1 wrote: post #212

Earlier quoted context omitted.

I believe there isn't a lot of historical evidence that state-backed currencies emerged to deal with undesirable aspects of barter. That's pretty much just a myth people decided made sense, rather than something that happened in history. We mostly don't know why money/currency came into existence, it happened so long ago. There is some evidence that at least in some places it was to fund armies or generally provide m…

There may not be historical evidence, but first principles tell me that most people prefer cash to trading pelts for groceries every week.

"first principles tell me" is a pretty poor way of knowing what happened in actual history. In this case, it's just you wild guessing about the desires of people thousands of years ago whose lives were nothing like yours.

I mean, we don't need any kind of science or history if we could just be like "this story makes sense to me, so it must be true." I guess it's appropriate for our post-fact world.

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