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What Happened at Alameda Research

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Re: What Happened at Alameda Research

#231

Post by kasey_junk »

wikfwikf wrote: post #187
pigtailgirl wrote: post #182

Earlier quoted context omitted.

-- also it was out of their early stage fund - the vast majority of their money is in traditional investments - don't understand why everyone is so up in arms - they really think they know better than the most successful investment group in Canada? --

Why do an investment group which is successful in making large, traditional, real money investments think they know better than the numerous seasoned venture funds and experienced crypto investors who did not give $95m to FTX? What was it about FTX's lack of internal controls or experienced decision-makers which only TVG was able to identify as a source of value?

Lol. FTX’s investors were a whose who of “seasoned venture funds and experienced crypto investors”.

Sequoia, Third Point Iconiq etc. Coinbase Ventures gave them money. Blackrock was an investor.

If you want to see FTX as an indictment of the entire venture industry I think there is an argument to be had there. But picking on OTP is just a lazy rhetorical device. They made a similar investment to other funds in the industry they are in, that was a reasonable size of their portfolio in an investment style known to be risky.

Re: What Happened at Alameda Research

#232

Post by throwaway290 »

NickC25 wrote: post #205
Stranger43 wrote: post #199

Earlier quoted context omitted.

The problem is not with industry insiders leaving private enterprise to go work for the government, the problem is government regulators leaving the government to collect large paychecks from the companies they used to be tasked with regulating, i.e. that there is the appearance of personal benefits to regulate to the benefits of future employers rather then the general public. What's actually needed is government ag…

>but this is kind of hard to do when government work is not seen as something of particularly high status, Super easy to solve for - pay them more. With the amount of money the government has (the DoD has a nearly 2 trillion dollar yearly budget), it should be relatively trivial to be able to outspend the private sector. I hate paying taxes, but if those taxes go towards paying an extremely competent professional who…

I'm not sure paying more will help. It looks like greed can be boundless, so as long as power converts to money malicious actors will keep abusing it.

Perhaps we should make power unattractive to such types instead, making it not lucrative so that only crazy* individuals who are content with good enough clean salary seek it out of dumb* desire to make the world better.

* In a good way, obviously.

Re: What Happened at Alameda Research

#233

Post by pjc50 »

williamcotton wrote: post #68
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 ba…

> Does it make sense to allow representatives from various industries access to members of the legislative branches of government?

Yes.

It does not make sense to allow those industries to influence elections or the decisions of those elected by making political donations, though.

> Should there be federal laws related to cryptocurrencies?

Increasingly I think prohibition is the only option. Even if it's very leaky. It's far worse a mind virus than, say, TikTok. At least if it's illegal there won't be superbowl adverts for frauds.

Re: What Happened at Alameda Research

#234

Post by benjaminwootton »

DebtDeflation wrote: post #120

> Most news accounts seem to portray the scale of the bankruptcy as relatively small. This is a key point. They lost $16B in customer deposits. LTCM lost $4.6B in investor funds. Enron lost $11B in shareholder capital. Interestingly, while Madoff is widely quoted as having lost $65B, that was almost all fabricated paper wealth, actual losses were around $18B and $14.4B of that was recovered and returned. All of these…

Strangely, I am not hearing many stories from retail of big losses. There were tons of people coming out of the woodwork on Reddit and Twitter after the LUNA collapse. Not sure what that’s all about.

Re: What Happened at Alameda Research

#235

Post by pjc50 »

halukakin wrote: post #105

"FTX periodically uses a portion of its profits to buy back FTT tokens. This makes FTT kind of like stock in FTX: The higher FTX’s profits are, the higher the price of FTT will be." I think this is an interesting alternative to equity vesting. Not all countries have laws that make equity vesting possible. Also this could work if you are a US company and hiring from all abroad. You can give tokens to your employers ab…

> Not all countries have laws that make equity vesting possible.

However, if tokens are securities, that doesn't mean you can legally sell/give them tokens either.

Re: What Happened at Alameda Research

#236

Post by mudrockbestgirl »

matwood wrote: post #222
DebtDeflation wrote: post #120

> Most news accounts seem to portray the scale of the bankruptcy as relatively small. This is a key point. They lost $16B in customer deposits. LTCM lost $4.6B in investor funds. Enron lost $11B in shareholder capital. Interestingly, while Madoff is widely quoted as having lost $65B, that was almost all fabricated paper wealth, actual losses were around $18B and $14.4B of that was recovered and returned. All of these…

For another reference, 16B is Spotify's entire market cap. The amount lost here is staggering. And given what's leaked from their balance sheet, I don't see how people avoid jail time. I'll also add, if you want to really dig into FTX details, simply read Matt Levine's newsletters.

I think a lot of people are missing that it was not 16 liquid USD that was lost here. It was 16B of various assets on paper. That's different from a pretty liquid stock traded on the NYSE.

The 16B could've never been liquidated as 16B in cash because the liquidity for many of these assets is too low. Selling even just a small fraction would have crashed the market for many of these assets. It's impossible to know what the liquid worth of these assets was, but it was probably 5-10x less than what's on paper.

Re: What Happened at Alameda Research

#237

Post by Stranger43 »

NickC25 wrote: post #205
Stranger43 wrote: post #199

Earlier quoted context omitted.

The problem is not with industry insiders leaving private enterprise to go work for the government, the problem is government regulators leaving the government to collect large paychecks from the companies they used to be tasked with regulating, i.e. that there is the appearance of personal benefits to regulate to the benefits of future employers rather then the general public. What's actually needed is government ag…

>but this is kind of hard to do when government work is not seen as something of particularly high status, Super easy to solve for - pay them more. With the amount of money the government has (the DoD has a nearly 2 trillion dollar yearly budget), it should be relatively trivial to be able to outspend the private sector. I hate paying taxes, but if those taxes go towards paying an extremely competent professional who…

But is it easier to outspend the private contractors(staffed full of former generals) that end up rewarded contracts based on their ability to network with government officials?

The pentagon budget is a chronic scandal and a pretty good example of exactly how the private-public partnerships is creating a system where everyone benefits from the government being seen as inefficient.

Re: What Happened at Alameda Research

#238

Post by jpadkins »

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 voting changed anything, they'd make it illegal.

https://coinpedia.org/crypto-live-news/ftx-ceo-in-connection... https://www.foxbusiness.com/markets/sec-chairman-gary-gensle... https://twitter.com/bof_tob/status/1592247076100112385/photo... https://twitter.com/jchervinsky/status/1592173682687938560 https://twitter.com/SenLummis/status/1592212987259281408

This is speculation, but this is starting to fit the classic playbook of: 1) Create / seize a crisis 2) Have new regulation already ready to "address" crisis (using voter outrage to pass under rushed conditions) 3) Incrementally increase regulatory control (regulatory capture) 4) profit / increase power concentration

In this case, it's clear they are trying to establish CFTC control of eth & btc.

Re: What Happened at Alameda Research

#239

Post by naijaboiler »

wikfwikf wrote: post #6
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.

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?

despite being tentative, I would guess its the best explanation of what happened. Their handing out margins, and market-making approach with Alameda left them potentially liable to losing lots of money really fast.

Re: What Happened at Alameda Research

#240

Post by helsinkiandrew »

kristianov wrote: post #4

Two words: Ponzi Scheme.

This was nothing like a Ponzi scheme - the money was lost due to bad trades, poor collateral, bad accounting/compliance with probably a little bit of criminality thrown in at the end.

Although they were trading crypto it was more like an old fashioned/real money collapse.

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