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What Happened at Alameda Research

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Re: What Happened at Alameda Research

#381

Post by jwozn »

55555 wrote: post #129
martynr wrote: post #108

Earlier quoted context omitted.

FWIW: as a bona fide user of various anti-parkinsonian medications for their intended purpose, I can say with a degree of confidence that the speculation on cognitive impact (and impairment) is very plausible - and that the article is factually correct on the side effects in a Parkinson’s context. God knows what they would do to a brain with a “normal” dopamine level. It’s also worth noting (and quite frankly pretty…

There was a VERY interesting article on HN recently about the risk-taking/compulsive side effects of dopamine drugs.

Got a link? Would be interested in reading this.

Re: What Happened at Alameda Research

#382

Post by oldgradstudent »

pjc50 wrote: post #228
belter wrote: post #147

Earlier quoted context omitted.

If only these calls for regulation from the two persons in this interview, could have been heard on time. Most interestingly, and as it's obvious from the interview, regulators were watching these children playing and only poking gently. At correct time: https://youtu.be/2ozjiX1E7ZA?t=25

The secret is that regulators can only have a fairly limited effect, and retrospectively. As well as the inherent jurisdiction difficulties in operating out of the Bahamas. Mind you, that's something crypto investors wanted : freedom from government! There's a real "accountability overhang" not just in crypto but so many other things. Justice is slow and getting slower.

> The secret is that regulators can only have a fairly limited effect

Not in this case.

A momentary glance from a distance at the balance sheet by a semi competent bank supervisor would have noticed the fraud.

The question: do you hold your users' assets in segregated account is easily asked and easily answered with no.

Re: What Happened at Alameda Research

#383

Post by par »

55555 wrote: post #129
martynr wrote: post #108

Earlier quoted context omitted.

FWIW: as a bona fide user of various anti-parkinsonian medications for their intended purpose, I can say with a degree of confidence that the speculation on cognitive impact (and impairment) is very plausible - and that the article is factually correct on the side effects in a Parkinson’s context. God knows what they would do to a brain with a “normal” dopamine level. It’s also worth noting (and quite frankly pretty…

There was a VERY interesting article on HN recently about the risk-taking/compulsive side effects of dopamine drugs.

link?

Re: What Happened at Alameda Research

#384

Post by tfehring »

matthewdgreen wrote: post #327
tommica wrote: post #306

Earlier quoted context omitted.

But those coins were most likely purchased with real money?

Yes, but how much real money is the question. I'm not doubting that real money was lost, just wondering if $16B of actual customer dollars ever flowed into the exchange.

It's easy to see how FTX's assets could be "worth" $16B in the absence of any real money coming into play, but I don't see how they could get to $16B in liabilities that way. The most obvious possibility would be if their liabilities were also denominated in thinly-traded shitcoins, but at this point it seems clear that that wasn't the case.

Re: What Happened at Alameda Research

#385

Post by prego_xo »

robertlagrant wrote: post #363
prego_xo wrote: post #344

Earlier quoted context omitted.

Considering that "pretend money" is purchased with "real money", this distinction doesn't matter much. I guess it just depends on if you consider property valuable despite not having a green tint and dead political figure on it.

The question being asked is if the pretend money has risen in value subsequent to purchase, then is the amount lost the real money used to purchase it, or the pretend money at peak (or another) valuation.

With both the 16 billion figure being preceded by the U.S dollar sign, and FTX being an exchange for many different cryptocurrencies at drastically different values, they were probably adding up the dollars invested by stockholders and the dollars input into the website. After all, their FTT coin crashed and burned completely, and many other currencies are also dipping to record lows. If they valued the dollar based on current prices, then it would be multiples of $16B instead.

Either way, the inclusion of "astronomically overvalued cryptocurrency" as a descriptor definitely makes it seem more like a slight towards crypto than an honest question of the valuation. Put simply, a lot of people lost a lot of money.

Re: What Happened at Alameda Research

#386

Post by anonymoushn »

SnowHill9902 wrote: post #373
anonymoushn wrote: post #122

Earlier quoted context omitted.

This isn't true? If you aggregate utility across universes using addition and have utility linear in wealth then you maximize your aggregate utility by going all-in on every favorable bet. Kelly turns out to be equivalent to maximizing expected log-wealth, if one stays within a single universe, or to maximizing the probability that one will eventually have more wealth than any agent in the same universe that employs…

You are still using infinite universes: expected value and probability still are calculated across an ensemble of parallel universes.

This is the worst comment I have ever read. There are reasonable definitions of expected value and probability that do not require infinitely many universes to figure out whether you should raise pre-flop with aces.

Re: What Happened at Alameda Research

#387

Post by anonymoushn »

matthewdgreen wrote: post #260
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…

I wonder how much of those $16B in customer deposits were actually lightly-traded altcoins that could never have been liquidated at anything close to that value? There is no doubt they defrauded people of a lot of (real!) money, but my guess is a huge chunk of that $16B top-line figure is fantasyland dog-coin nonsense. Whereas the LTCM and Enron investors at least started with real cash.

You can just look at SBF's excel spreadsheet describing his own liabilities, they are mostly in dollars

Re: What Happened at Alameda Research

#388

Post by anonymoushn »

elie222 wrote: post #287
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…

They haven’t lost 16b though. Unclear if we have accurate info from Sam but the situation is more like 9b in liabilities with 70% of that in liquid and illiquid assets. People getting back that much is highly optimistic but the 16b doesn’t seem accurate at all. FTX already paid users out $5b btw

The starting point is the assumption that FTX's equity sales left them with a few billion and Alameda's trading left them with a few billion. You have to burn through these billions and then dig a ten billion dollar hole.

Re: What Happened at Alameda Research

#389

Post by naijaboiler »

simiones wrote: post #369
JamesianP wrote: post #364

Earlier quoted context omitted.

I think the "gambling" you referred to was their point, not the accounting games they subsequently played to try and get back into the black.

My point is that the real problem isn't that Alameda was over-leveraged or gambling, it's that SBF stole user funds from FTX to try to rescue Alameda. This is not what (some of) those other companies did.

from SBF perspective Alameda & FTX are the same. Yeah yeah they are separate legal entities, but in actual practise, one market-made for the other, and he treated them like one is left hand, the other is right hand So yeah Alameda gambled, overleverated and lost money just like nearly every other financial crises in history, SBF then fraudulently moved money from FTX to cover Alameda's gambling losses. I won't be shocked if FTX has alway been the source of funding for Alameda's gambling, just that Alameda was winning when everything was rosy. then the crypto market turned

Re: What Happened at Alameda Research

#390

Post by naijaboiler »

jasode wrote: post #229
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.

>this is exactly what happended at FTX/Alameda. A bunch of "smart" guys [...] No, they're different situations. The current details trickling out of the FTX scandal is that CEO Samuel Bankman-Fried secretly used customer funds to prop up Alameda which is unethical and criminal . This is fraud. In contrast, the LTCM guys lost billions honestly and transparently via flawed math models based on overconfident assumptions…

ignore the fraudulent part of covering up the money, how Alameda lost money is the same as how LTCM guys lost money. guys who think they are too smart and made wrong predictions about the market. That part is very very similar. SBF then compounded it by layering fraud on top of the "im too smart to fail" losses by using customer funds to cover up the losses.
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