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What Happened at Alameda Research

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Re: What Happened at Alameda Research

#61

Post by kasey_junk »

lordnacho wrote: post #30

Makes some sense. When stuff is messy, you can do financially stupid things. I've sat on desks that lost money from not realizing some very simple things like having options with upcoming dividends. If SBF really was on drugs and playing League of Legends badly, perhaps he also didn't know what was happening in his shop. But... you have all this money. Hire an adult? Almost anyone who's had a trading desk job would t…

I’m no expert in the space but was under the impression FTX was still considered a low volume exchange. If Alameda mm was still providing substantial volume they may have felt the price they were paying being bad at trading was worth it from a marketing point of view. This was the same crew buying stadium naming rights and over paying for eSports teams.

As for hiring an adult, have you seen some of the things they’ve said in public? They thought the adults were wrong! Like on a mathematical level. People that far into their own cult-think don’t want outside help.

Finally, the Ontario Teachers thing feels extremely overblown. They put in 75m of ~220b aum. That’s a minuscule investment in a category that was clearly part of their highly speculative book. I think people keep bringing it up for the “think of the teachers!” benefit, but of a pension fund doesn’t have some outsized return opportunities on their book they’ll not be able to cover their outflows under certain future economic scenarios.

Re: What Happened at Alameda Research

#62

Post by nl »

blitzar wrote: post #34
nl wrote: post #21

Earlier quoted context omitted.

Actually it's almost the opposite. This piece speculates very strongly about SBF's stimulant usage degradating his cognitive abilities. Eg: > If the above observations about SBF’s personality and competence are even half true, that would go a great deal toward explaining Alameda’s losses. The entire article goes into much further depth. But it doesn't even speculate about malice.

"their systems became unprofitable" - "Alameda & FTX jointly continued to lose large amounts of money" - "uncompetitive market-making strategies, risky lending practices" - "erratic behavior and unprofitable gambling". > losing all the money accidentally rather than malice (far more likely) They sound an awful lot like trading / accidental losses than malice to me.

Yes to be clear I agree. I'm saying the article doesn't claim malice.

Re: What Happened at Alameda Research

#64

Post by howmayiannoyyou »

flanked-evergl wrote: post #9

Before or after they were bribing politicians for favourable regulation for FTX at the detriment of their competitors who were not fraudulent? https://prospect.org/power/sam-bankman-frieds-multimillion-d... > Crypto’s supporters in Congress are determined to ignore the massive gap in capacity between the two agencies; in fact, they likely understand that its incapacity is part of its appeal to FTX. A bill proposed by…

Nobody will be voted out. You cannot get elected without cash, but if you do then you can't remain in office without it. You also won't influence legislation without money in your campaign or PAC wallets.

If HN users want to impact policy and legislation, its not happening without donating a lot of money (or to a limited extent time) en masse to lobbyists and institutes that believe in whatever it is you believe in.

Better to be slapped with the truth, than kissed with a lie, and having worked in politics, this is the truth.

Re: What Happened at Alameda Research

#65

Post by TheOtherHobbes »

rkagerer wrote: post #26
wikfwikf wrote: post #6

Earlier quoted context omitted.

But the author makes it very clear in the second par "our claims only remain tentative at best". Isn't it much more useful to write something which actually tries to answer the question of what happened, albeit with appropriate caveats, than something which doesn't advance the understanding of the reader at all?

There's so much rampant speculation in this article... for me it lost a degree of credibility around the point he fixated on the drug aspect. Despite all the disclaimers. Yes, it paints one picture of how the losses could have added up, but I'm looking forward to more exhaustively investigated reports grounded in more than heresay and gossip.

Completely unrealistic.

You'll never find rampant drug abuse in the financial industry.

Certainly not on Wall St.

Re: What Happened at Alameda Research

#66

Post by remoroid »

rxyz wrote: post #55
remoroid wrote: post #54

For even more context of how bad SBF was at League of Legends, a large part of their player-base is children and teens. You would not expect a normal functioning 30 year old man to lose to 12 year olds after years of playing with the frequency he did.

I don't think League is a popular game in that demographic. I see it as a old man/woman game now, like counter strike

Do you have any data to back that up? Do you not understand that the lowest ranked players on the server are going to disproportionately include children that are bad?

Re: What Happened at Alameda Research

#67

Post by tpxl »

kasey_junk wrote: post #61
lordnacho wrote: post #30

Makes some sense. When stuff is messy, you can do financially stupid things. I've sat on desks that lost money from not realizing some very simple things like having options with upcoming dividends. If SBF really was on drugs and playing League of Legends badly, perhaps he also didn't know what was happening in his shop. But... you have all this money. Hire an adult? Almost anyone who's had a trading desk job would t…

I’m no expert in the space but was under the impression FTX was still considered a low volume exchange. If Alameda mm was still providing substantial volume they may have felt the price they were paying being bad at trading was worth it from a marketing point of view. This was the same crew buying stadium naming rights and over paying for eSports teams. As for hiring an adult, have you seen some of the things they’ve…

> FTX was still considered a low volume exchange

According to a random source, they moved volume on the order of 500 billion. Transaction fees of 0.1% for 500 billion is a lot of million to keep the lights on.

Re: What Happened at Alameda Research

#68

Post by williamcotton »

flanked-evergl wrote: post #9

Before or after they were bribing politicians for favourable regulation for FTX at the detriment of their competitors who were not fraudulent? https://prospect.org/power/sam-bankman-frieds-multimillion-d... > Crypto’s supporters in Congress are determined to ignore the massive gap in capacity between the two agencies; in fact, they likely understand that its incapacity is part of its appeal to FTX. A bill proposed by…

If the cup is half empty it's called bribing. Otherwise it's called lobbying.

I don't know anything about the CFTC in particular but I'm familiar with the general idea of lobbying and the role it plays in a representative government.

Elected officials have to interface with basically every industry in the country. How is any specific representative in a legislature going to have the knowledge required to vote on a banking act? Or a bill pertaining to power plants? Or cryptocurrencies?

Does it make sense to allow representatives from various industries access to members of the legislative branches of government? How else could Cynthia Lummis or Kirsten Gillibrand make an informed decision when writing federal laws related to cryptocurrencies? Should there be federal laws related to cryptocurrencies? Should legislatures have a government regulatory agency that enforces federal laws? Who is going to write those laws? Should there be a federal agency like the SEC, but specifically for cryptocurrency? Is that the CFTC? Who should make up the CFTC? Who should make up the SEC? Are the people who are qualified to work for industry more or less qualified to work in the agency that regulates the industry? Who is best qualified to lobby for the industry? For the people who work for the regulatory agencies or lobby for industry, are they owners or laborers in the regulated industry? What if everyone at least wrote their name down on a big public list and said who they worked for and published when they met and who from which government position they met with?

Are there easy answers to these questions? How the hell has any of this ever worked?

Re: What Happened at Alameda Research

#69

Post by nl »

oldgradstudent wrote: post #51
blitzar wrote: post #34

Earlier quoted context omitted.

"their systems became unprofitable" - "Alameda & FTX jointly continued to lose large amounts of money" - "uncompetitive market-making strategies, risky lending practices" - "erratic behavior and unprofitable gambling". > losing all the money accidentally rather than malice (far more likely) They sound an awful lot like trading / accidental losses than malice to me.

Alameda was a hedge fund. It could lose all of its money and it would be totally fine. The moment they touched customer funds it became fraud and theft. This was not accidental. Losing it in trading might have been, but it was trading with stolen funds.

I agree with that. I don't think this was malice though - just extreme stupidity (and hopefully criminal). I think they thought they could trade their way out of it.

That's different to malice which goes to motivations.

Re: What Happened at Alameda Research

#70

Post by trompetenaccoun »

lawrenceyan wrote: post #32
gillesjacobs wrote: post #3

I like how OP opens smugly by calling the NYT article a fluff piece, then proceeds to immediately cite anonymous Twitter anecdotes as better sources. He's right about the specific NYT article not including much pertinent information, but they're a serious journalistic publication and have verification standards for sources.

The person who wrote this post is pretty well known in the crypto space. Not saying that what was written here is guaranteed to be accurate, but it's likely to be much closer to reality than what the New York Times put out. To be clear, I enjoyed Levine's commentary on the situation so it's not just because I dislike mainstream publications.

Never heard of them, I've been in the crypto space for many years. Their social media looks like it's run by a teenager and I'm not not being facetious, it literally reads like a 14 year old boy runs the account. The person also writes so many tweets they'd hardly have time for serious work. Over 90% are jokes, memes and rumors.

https://nitter.cz/0xfbifemboy

Not sure how this stuff makes it to the top on HN.

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