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What Happened at Alameda Research

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Re: What Happened at Alameda Research

#261

Post by EamonnMR »

jasmer wrote: post #220
SilverBirch wrote: post #172

Earlier quoted context omitted.

I'm not biased towards the NYT, what I'm saying is that what the NYT is doing is a different thing from this article. The NYT is an interview with SBF, interspersed with the story of what happened, and the NYT will stick to what it can actually prove. You're pissed the NYT is biased towards SBF but it's not - it's an literally an interview with SBF, you're not meant to take what SBF is saying in there uncritically. W…

The NYT is not supposed to 'stick with what they can prove'. That's definitely not the bar they have or else they wouldn't be able to publish much. Journalists should be a bit cynical, dig for info. The NYT has more resources than anyone, and should be able to ask around, do some actual blockchain work, interview others. This story looks like one of the biggest frauds in history, likely because it is, it's the job of…

They might be working on that article, but such an article will take time because they'll want to reach out to the anonymous posters and talk to them directly, find people who can do the chain analysis, verify people's stories, etc.

Re: What Happened at Alameda Research

#262

Post by gruez »

simiones wrote: post #223
naijaboiler wrote: post #219

Earlier quoted context omitted.

this is exactly what happended at FTX/Alameda. A bunch of "smart" guys who backstopped and over-extended loans to players, and their losses were magnified with their over-leveraged positions, that was backed up with assets with no values. That's exactly what happens in just about every financial scandal.

FTX took customer deposits (which were supposed to be held in custody and untouched, according to their TOS) and loaned them out to Alameda to gamble with. That is entirely different from being over-leveraged and having your debts default.

>FTX took customer deposits (which were supposed to be held in custody and untouched, according to their TOS)

Can you provide the exact wording? At least when it comes traditional finance, if there's margin involved (FTX most definitely has margin), your deposits/holdings are fair game for your broker to use as they please.

https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_ma...

>Some margin accounts allow the brokerage firm to lend out securities in the account to a third-party, at any time without notice or compensation to the account holder, if the investor has any outstanding margin loan in the account

Re: What Happened at Alameda Research

#263

Post by gruez »

paulusthe wrote: post #202
mkj wrote: post #159

Earlier quoted context omitted.

If they lost it through bad bets, who was on the winning side of those bets?

Crypto shorts

Ironically keeping a short position to benefit from this collapse is pretty risky. Shorting requires leverage by necessity, which means you'll have to turn to an exchange like FTX, which has the possibility of collapsing. Decentralized lending protocols aren't much better, as collapses a few months ago has shown.

Re: What Happened at Alameda Research

#264

Post by huimang »

trompetenaccoun wrote: post #70
lawrenceyan wrote: post #32

Earlier quoted context omitted.

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.

"The person also writes so many tweets they'd hardly have time for serious work."

This statement makes zero sense. What is the arbitrary threshold of tweets to "serious work"? What correlation is there to making tweets and writing articles? This is just a weird form of elitism - congrats on not posting tweets, I guess.

Re: What Happened at Alameda Research

#265

Post by jasonwatkinspdx »

bee_rider wrote: post #189
lordnacho wrote: post #80

Earlier quoted context omitted.

OTP put in something like that in the fund I was at. Yes it's small for them but it's still serious, the guy in charge wants to move on to bigger things. Oh and I totally forgot to comment on the math. Kelly criterion, I don't get how the guy could have studied physics at MIT and not understood it. It's simply a result that tells you how much to bet of your stash if you are presented with some repeated betting opport…

I don’t want to besmirch this particular person I’ve never met, but I definitely have met engineers who look at the stock market, look at their sophomore or junior level signal processing class and decide that all those Econ guys are a bunch of dummies and they could totally beat the market with some Fourier transforms or whatever (the fact that investing firms hired a bunch of quants is left unaddressed). So, I coul…

I'm friends with a retired quant, and one thing I learned from him is the big firms on wall street will hire the absolute most brilliant people they can even to work on utterly banal well known basic strategies. PhD's doing high school math. Because when you're moving billions, nothing is actually basic.

Re: What Happened at Alameda Research

#266

Post by HideousKojima »

gruez wrote: post #262
simiones wrote: post #223

Earlier quoted context omitted.

FTX took customer deposits (which were supposed to be held in custody and untouched, according to their TOS) and loaned them out to Alameda to gamble with. That is entirely different from being over-leveraged and having your debts default.

>FTX took customer deposits (which were supposed to be held in custody and untouched, according to their TOS) Can you provide the exact wording? At least when it comes traditional finance, if there's margin involved (FTX most definitely has margin), your deposits/holdings are fair game for your broker to use as they please. https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_ma... >Some margin accounts allow th…

"You control the Digital Assets held in your Account," says Section 8.2 of the terms. "Title to your Digital Assets shall at all times remain with you and shall not transfer to FTX Trading." The terms continue: "None of the Digital Assets in your Account are the property of, or shall or may be loaned to, FTX Trading; FTX Trading does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading."

https://www.axios.com/2022/11/12/ftx-terms-service-trading-c...

Re: What Happened at Alameda Research

#267

Post by H8crilA »

onlyrealcuzzo wrote: post #227
H8crilA wrote: post #100

> When loans were recalled in early 2022, an emergency decision was made to use FTX users’ deposits to repay creditors. Just so you know, this is a clear and obvious prison sentence in normal finance. Also FTX itself was trading with customer deposits instead of just keeping them like an exchange is supposed to do, which is also prison in normal finance. Matt Levine wrote a good piece on this debacle, and will probab…

FTX supposedly collected 0.1% commission on $100B+ volume per day. Why couldn't they just get a loan to cover their losses?

No one in their right mind wants to lend to scammers. They took customers money and used it for their own goals (unsuccessful trading). I cannot express how fucked up that is.

Re: What Happened at Alameda Research

#268

Post by qsi »

As often is the case, Matt Levine has an amazingly detailed, horrific and informative rundown of it all at

https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-...

The FTX "balance sheet" (which was a spreadsheet) had a cell called "hidden, poorly internally labled ‘fiat@’ account”.

Another key bit from Levine:

"If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison."

And that's not all. This is fraud on a truly epic scale... Read the whole thing.

Edited to add that the HIDDEN POORLY INTERNALLY LABELED Account had a value of negative $8 billion.

Re: What Happened at Alameda Research

#269

Post by pjc50 »

nisegami wrote: post #248
pge wrote: post #206

Earlier quoted context omitted.

Isn't this essentially what a PAC is?

My understanding is that a PAC can pay for advertising and campaign costs but I'm suggesting literally just giving it to them, straight to their bank account.

You've got to launder it a little bit to make it look respectable.
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