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BlockFi files for bankruptcy as FTX fallout spreads

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Re: BlockFi files for bankruptcy as FTX fallout spreads

#41

Post by whoknew1122 »

corndoge wrote: post #8
jmclnx wrote: post #5

> A representative from BlockFi did not immediately respond to requests for comment. Well I am sure the "representative from BlockFi" made out just fine working for BlockFi. I wonder if all these failures will finally tag these crypto companies as ponzi schemes ? Then these people will face real consequences.

“Ponzi scheme” is a specific type of financial fraud and isn’t a synonym for overexposure, excessive leverage, poor management, or even fraud in general. I do not think labeling things as Ponzi schemes which are not Ponzi schemes is helpful. Nor do I understand how that would help with effecting “real consequences.” The consequences faced by company personnel should be consequent to any wrongdoing.

In the legal sense, a 'Ponzi Scheme' has a specific meaning. In conversation, the definition is a bit looser. Sorta like how expressive has a different definition when you say 'that is an expressive programming language' and 'that is an expressive face'.

Crypto, as a whole, is about early adopters trying to convince newcomers that crypto has value. If the early adopters can't convince anyone that crypto has value, it's just a bunch of math and wasted electricity.

Early adopters try to convince laymen to 'invest' in crypto (i.e. buy crypto from the early adopters). Then the second generation crypto adopters have to find new marks to buy their crypto. Ad infinitum, until someone is left holding the bag. Then you sprinkle in some jpgs that people purchase despite anyone being able to right click and save it, rug pulls, and overall idiocy that happens when you give people billions of dollars without checking to see if they're observing basic organizational principles (i.e. are they running payroll out of a Slack room?).

Mingle it all together and you get a house of cards that's remarkably similar to a Ponzi scheme, yet doesn't exactly fit the bill. Sort of like how MLMs are legally distinct from Ponzi schemes for... reasons, I guess.

Saying that crypto shouldn't be considered a Ponzi scheme is a bit pedantic when the outcome is the same (i.e. the last person is always holding the bag, so you have to keep trying to convince someone to buy into your idea).

Re: BlockFi files for bankruptcy as FTX fallout spreads

#42

Post by nootropicat »

Nursie wrote: post #26
PM_me_your_math wrote: post #21

Earlier quoted context omitted.

Is it wrong to assume that this is because the industry is mostly built upon a house of cards or because of bad actors? Objectively asking.

It's a house of cards, all interlinked and interdependent, all 'investing' in each others' black boxes that magically produce returns, suspiciously in tokens they self-issue, swapping 'billions' in imaginary value and claiming billions more in assets which all mysteriously evaporate in the light of day. And at the bottom of it all, one of the first dominos to tumble, was a company called 3 Arrows Capital, which promi…

>And at the bottom of it all, one of the first dominos to tumble, was a company called 3 Arrows Capital, which promised to generate revenue by buying crypto-dickbutt NFTS... and then went on the run. I'm not even kidding.

They lost borrowed funds in a ponzi scheme called Luna. I get that you wanted to poke at nfts, but the last remark may make someone think this is how it actually went down.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#43

Post by Auracle »

redwood wrote: post #23
paulgb wrote: post #2

> At the start of the year, there were three big North American retail crypto lenders. Now all three are bankrupt. https://twitter.com/kadhim/status/1597250428378705921

To confirm, what makes Coinbase different is that it's not a lender?

As far as I know only interest you can earn on Coinbase is from staking coins - and Coinbase actually takes a portion of that profit for themselves.

I remember looking at all of these now defunct businesses wondering just how they could have such high interest rates on your coins. In what should be a surprise to no one it was too good to be true.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#44

Post by notyourwork »

badpun wrote: post #33
traveler01 wrote: post #25

Earlier quoted context omitted.

That's the thing, you only depend on centralized actors if you want to. The entire point of cryptocurrencies are to not depend on centralized institutions that can screw you over.

When designing the iPhone, one of Apple's findings was that majority of people struggle with understanding the concept of the file system (and hence, there's no visible file system in iOS). In such world, only a small minority of people will be interested in decentralized cryptocurrencies, as the bar of technical skills required is too high for most people. This is what led to the success of centralized cryptobanks.

Ding ding ding! Crypto isn’t cool to majority, nor do most want to (or need to) care about it. People want to spend money and if crypto makes that happen so be it. Society had been sending money for awhile without crypto and the edge cases crypto addressed are just that, edge cases.

I’m intrigued by crypto but merely because I’m a nerd. I don’t care about crypto when it comes to my day to day life.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#45

Post by highwaylights »

Nursie wrote: post #26
PM_me_your_math wrote: post #21

Earlier quoted context omitted.

Is it wrong to assume that this is because the industry is mostly built upon a house of cards or because of bad actors? Objectively asking.

It's a house of cards, all interlinked and interdependent, all 'investing' in each others' black boxes that magically produce returns, suspiciously in tokens they self-issue, swapping 'billions' in imaginary value and claiming billions more in assets which all mysteriously evaporate in the light of day. And at the bottom of it all, one of the first dominos to tumble, was a company called 3 Arrows Capital, which promi…

I remember just as the pandemic was kicking off someone at work tried to convince me that they were all going to get rich on a pornography based token (pornies or spermies or something like that. Whatever it was it was the murkiest sounding thing ever.) I haven’t looked it up to see how that worked out in the end, but my guess is he’s still waiting for his riches.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#46

Post by anonymousab »

nscalf wrote: post #9

For what it's worth, all reasonable people in the crypto space want regulation to make sure these types of poor lending practices don't continue. Regulators have been slow and ineffective when it comes to crypto, which has lent itself to the crypto v SEC narrative, but all the adults in the room known there is a need for some regulation.

The biggest "adult in the room" by far, whom was pushing for regulation, turned out to be another scammer that was simply trying to regulate away his competitors and enshrine his own fraudulent crypto scheme as the only sanctioned one.

The crypto community's truest Scotsman proved to be just as terrible as everyone outside perceives the crypto space to be. Benefit of the doubt simply can't be given for what "reasonable crypto people" say at this point.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#47

Post by solotronics »

Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions explicitly you don't need any trusted third party. A whole lot of people think they can make money outsmarting the original concepts of Bitcoin and they get scammed in new ways each cycle.

https://nakamotoinstitute.org/trusted-third-parties/

Re: BlockFi files for bankruptcy as FTX fallout spreads

#48

Post by dfadsadsf »

nscalf wrote: post #9

For what it's worth, all reasonable people in the crypto space want regulation to make sure these types of poor lending practices don't continue. Regulators have been slow and ineffective when it comes to crypto, which has lent itself to the crypto v SEC narrative, but all the adults in the room known there is a need for some regulation.

if anything collapse of Luna, FTX and BlockFI showed that regulations are not urgent or really needed. Regulations in finance are needed when collapse threaten real economy or regular people (similar to contagion from housing market or Bear Stearns in 2008 financial crisis). With FTX collapsing with zero repercussion on broader economy, why regulate it? If people want to play casino, let them play casino.

Right now crypto is a closed ecosystem with no practical use cases beyond gambling or ponzi. Crypto failed as anti-inflation hedge. If real businesses or people start using crypto for something useful then regulations will be needed but this time is not now.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#49

Post by A4ET8a8uTh0 »

badpun wrote: post #33
traveler01 wrote: post #25

Earlier quoted context omitted.

That's the thing, you only depend on centralized actors if you want to. The entire point of cryptocurrencies are to not depend on centralized institutions that can screw you over.

When designing the iPhone, one of Apple's findings was that majority of people struggle with understanding the concept of the file system (and hence, there's no visible file system in iOS). In such world, only a small minority of people will be interested in decentralized cryptocurrencies, as the bar of technical skills required is too high for most people. This is what led to the success of centralized cryptobanks.

I hate how accurate this comment is. Without going too far with examples, PGP exists, but using it is simply harder so most people default to an easier email sending.

Now.. the question remains as to whether it would be the same, if it tech was not made so accessible ( some people would be forced to learn since the bar was high ). I mostly think that battle is already lost.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#50

Post by fdgsdfogijq »

propter_hoc wrote: post #16

Somehow these guys peaked at about 900 employees, according to linkedin ( https://www.linkedin.com/company/blockfi ) They've raised about a billion dollars of VC - https://www.crunchbase.com/organization/blockfi-inc/investor... (note, CB lists $1.4b, of which 400M is debt from FTX, which I imagine they never got) Unbelievable the amount of destruction of value here... it's just total carnage.

I talked to an employee that left last spring. She said they had literally no idea what they were doing. The founders are just ivy educated 30 year olds. So they decided to just start hiring everyone they could from paypal, to move into "blockchain payments". They paid huge sums. The directors there had no experience ever managing huge teams of people. It was a giant mess of unqualified people funded by cheap capital.

She also said the money movements on the blockchain facilitated by BlockFi were done manually by blockfi employees. The software was a facade and wasnt trusted for large sums of money

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