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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

#51

Post by Auracle »

ARandomerDude wrote: post #15
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.

That sounds nice in theory, but of course these companies are free to sit down and hammer out professional standards without the government telling them to. "We really want to be told what to do but nobody will" is code for "I'm not doing anything until the government makes me, and I'll redirect blame to the glacially slow government the whole time."

That’s easy to say, but that’s going to make those companies uncompetitive. Look at how fast FTX overtook Coinbase, a long established player that - as far as anyone can tell - isn’t doing anything shady.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#52

Post by largepeepee »

skrebbel wrote: post #27
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’m not convinced there’s any destruction of value when the entire value proposition is a lie. When I tell you my lemonade stand is worth a billion, and you believe it for a while, and then you realize it isn’t really, no value was destroyed.

There is value, in that a generation of moderately wealthy idiots got convinced that monkey pictures are worth something.

Like a cult brainwashing, they have attached their identities to those worthless pictures and now are trapped in greedy stupidity.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#53

Post by anonymousab »

whoknew1122 wrote: post #41
corndoge wrote: post #8

Earlier quoted context omitted.

“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…

I can understand wanting a term for the specific kind of grift we see with crypto.

Making it such that "crypto scheme" or something like that is the new term for this chicanery would be nice. Clean, obvious, and appropriately stigmatory.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#54

Post by Nursie »

nootropicat wrote: post #42
Nursie wrote: post #26

Earlier quoted context omitted.

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.

It is part of what they were doing, part of their investment strategy to grow the funds that were invested with them was to nfts such as "cryptodickbutt #1462". Look it up if you don't believe me.

Yes, I'm sure that Terra/Luna was a big part of it, and you're right that it's worth calling out, it may even have been the single biggest factor. But it wasn't the only way 3AC squandered invested funds.

Perhaps Terra/Luna should be called out as the first domino to fall, it was indeed spectacular. If it was a ponzi it was a complex one with extra steps, an algorithmic stablecoin that was metastable at best, and IIRC a lending protocol that charged less for loans than it paid for deposits. All sorts of crazy.

But 3AC still invested in dickbutt...

Re: BlockFi files for bankruptcy as FTX fallout spreads

#55

Post by seydor »

fdgsdfogijq wrote: post #50
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…

VC wealth redistribution

Re: BlockFi files for bankruptcy as FTX fallout spreads

#56

Post by overkill28 »

> BlockFi has said it had “significant exposure” to FTX and its sister company Alameda Research LLC, including taking a $400 million credit line from FTX U.S. that also gave FTX an option to buy the company. > > BlockFi was one of several struggling crypto firms that signed deals to be rescued by FTX in the past months. The agreement is now in jeopardy as FTX itself sorts through its financial trouble and is subject to federal and state investigations. > > It also holds assets at FTX.com and made loans to crypto trading firm Alameda partly secured by FTX’s FTT tokens.

https://www.wsj.com/articles/blockfi-files-for-bankruptcy-as...

So FTX lent money to BlockFi, and BlockFi lent money to Alameda, and Alameda owed money back to FTX? And BlockFi's money was stored on FTX and denominated in a "currency" that relied on FTX's performance for value?

This all lends credence to the theory that we instinctively knew was true: SBF was just doling out money to crypto firms in the spring to prop up the system a little longer, but ultimately it all relied on users injecting new money into the system.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#57

Post by bena »

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.

Eh. Words are going to word.

People conflate ponzi schemes and pyramid schemes as well.

However, I'm having trouble finding where it is not. Money paid out must come from new investors. If I buy crypto for $1, I need someone willing to buy it for $2 to make money. My returns come not from any utility, but from more people investing in it.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#58

Post by CharlieDigital »

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.

> 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

It's a "damned if you do, damned if you don't" situation. Mainly because of the outsized lobbying power of the wealthy folks backing VC's backing crypto.

Clamp down on crypto with regulations and many, many wealthy political contributors are going to be pissed off by stifling growth. Don't clamp down and you get the situation we're in now where everyone is losing their shirts.

What about the middle ground? I think we can only now talk about it because enough wealthy people also lost big chunks of their investment in these last few months.

BTW, despite whatever implied connections to FTX Gary Gensler has, his series of talks at MIT on blockchain[0] technologies leads me to believe that there are few people better equipped to navigate this from a political perspective.

[0] https://youtu.be/EH6vE97qIP4

Re: BlockFi files for bankruptcy as FTX fallout spreads

#60

Post by fear-anger-hate »

rahen wrote: post #14
sdiacom wrote: post #6

Earlier quoted context omitted.

Sure, but you can't use DeFi to trade fiat for crypto. You can use DeFi to trade crypto for crypto, or for crypto that pretends to be fiat. Saying "centralised exchanges bad, DeFi good" misses the point that the main use case of centralised exchanges is not covered by DeFi.

> Sure, but you can't use DeFi to trade fiat for crypto. Of course you can, both ways. - https://bisq.network - https://learn.robosats.com

Bisq is a really impressive project. Upon first hearing about it I was a bit skeptical at how a decentralized peer to peer exchange would work in practice, but now that I've used it a few times with no issues, it really does seem like the best way to do fiat crypto exchanges. Really hope that bisq and other similar services get the recognition they deserve now that the trust in cex's has taken a fall.
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