Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences • Hacker News Board

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#171

Post by wpietri » Sat, Dec 24, 2022, 1:24 AM UTC

sillysaurusx wrote: post #16

She’s the queen of wallstreetbets. I think she’ll hold the yolo record for a long time. I wish we knew what the fateful market play was that sunk her ship. She mentioned she’s not a fan of stop losses, so I wonder if she went to bed with an open market position and woke up to negative three billion. Also I wonder if the entity on the other side of that trade realized they were making someone insolvent. It’ll be inter…

> the fateful market play was that sunk her ship

Having seen a much smaller trading failure up close, my guess is that it wasn't just one thing that sunk them. Instead, a bet or two went bad and then they tried to make up the losses through a series of ever-more-extreme plays.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#172

Post by bnralt » Sat, Dec 24, 2022, 1:26 AM UTC

xur17 wrote: post #128

ummonk wrote: post #67

Earlier quoted context omitted.

My conspiracy theory is that USDT is actually well backed, but the Tether people intentionally make it look shady so they can buy the dip and arbitrage against panic selling. Some volatility would actually increase their ability to profit.

My current theory is that they are not fully backed, but they are backed enough for it to not really matter (ex: if they are 95% backed with highly liquid assets, it's very unlikely that they'll ever breach that). And given the current interest rates, they could just be parking it all in short term US treasuries, and slowly fixing the issue. If they play their cards right, they can migrate to something that is both f…

Agreed, I wouldn't be surprised if that were the case. In order to find yourself insolvent, you not only need to have losses in the principle greater than your gains, but you also need to have people trying to pull out enough money that you can't cover it.

IE, if 50% of the principal was spent on crypto gambling and Tether lost ~80% of it (so they lost 40% of the total principal), and the other 50% was put in safe assets and they got 20% of that (10% of the principal), they'd be down to 70% of the principal. But they're only going to be insolvent if people try to cash out 70% of the Tether in circulation at once. And like you said, just putting that into fairly safe investments is going to undo a lot of the damage. Heck, even just getting the returns an online savings account is giving now would have them make back the principal in about a decade.

Which isn't to say they won't fall apart. But I think a lot of people go to far assuming that their collapse is inevitable.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#173

Post by wpietri » Sat, Dec 24, 2022, 1:26 AM UTC

TylerE wrote: post #166

ChuckMcM wrote: post #104

Earlier quoted context omitted.

I think Elon threw his hat in the ring for "most wealth lost by and individual in a single year." And I agree, it is a really tough game to play. And now the table stakes are basically unreachable by most.

Are either in even the same ballpark as the SoftBank guy? Didn’t he light something like $40b on fire one year?

It depends on how we're counting, but Musk is down over $100 billion in the last year: https://www.cnn.com/2022/12/07/business/elon-musk-wealth/ind...

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#174

Post by nradov » Sat, Dec 24, 2022, 1:26 AM UTC

jjulius wrote: post #151

TeMPOraL wrote: post #136

Earlier quoted context omitted.

They were going to lose their money either way. The funny bit isn't people who were taken advantage of, but that the one taking the advantage actually sees some negative consequences of it.

I can agree with that, the unfortunate bit is that a couple of others (even the one I was replying to before you replied) have responded to my post actually laughing at the victims.

Which victims, the account holders or investors? I think we can all agree that idiot investors like SoftBank and Sequoia Capital deserve a little laughter.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#175

Post by dan-robertson » Sat, Dec 24, 2022, 1:28 AM UTC

sillysaurusx wrote: post #16

She’s the queen of wallstreetbets. I think she’ll hold the yolo record for a long time. I wish we knew what the fateful market play was that sunk her ship. She mentioned she’s not a fan of stop losses, so I wonder if she went to bed with an open market position and woke up to negative three billion. Also I wonder if the entity on the other side of that trade realized they were making someone insolvent. It’ll be inter…

I think you’re anchoring too much on the stop-loss thing. It’s pretty reasonable for a trading firm to not rely on such mechanisms. One would hope they would have a more sophisticated way to manage risks. I’ve no idea what happened in this case though.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#176

Post by wpietri » Sat, Dec 24, 2022, 1:31 AM UTC

jjulius wrote: post #112

pretendscholar wrote: post #68

Earlier quoted context omitted.

Yes it is quite funny when people get surprised that a get rich scheme isn’t real.

Even those who aren't informed enough to know better than to be taken advantage of?

In general I have a lot of sympathy for scam victims. But not for anybody in cryptocurrencies, not lately. The slightest of due diligence would have turned up the enormous set of concerns. They had every opportunity to know that there were risks; they just chose to ignore them. I would feel worse for somebody who bought magic beans than a person who "invested" in cryptocurrency in the last few years.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#177

Post by cycomanic » Sat, Dec 24, 2022, 1:32 AM UTC

jjulius wrote: post #121

Hamuko wrote: post #65

Earlier quoted context omitted.

Well, if you're going to roll the dice with an unregulated securities market because you want massive profits, it helps to have a sense of humour about it.

Yeah, because victims of financial fraud always know the risks. /s

The issue is that culture has developed into idolizing people just for getting rich. So naturally everyone aspires to this. Moreover lots of these people talk about it like its easy with just a little "financial knowledge" while in fact many just got lucky on some high risk bets (and often enough were already well off enough so they did not need to worry about the losses). Therefore people fall for Nigerian Prince schemes or FTX or many other schemes, they are essentially greedy and want to be one of the ones who make it rich without any real contribution. I'm not sure if one needs to feel sorry for the people loosing something, however I definitely think the current culture of idolizing money is toxic.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#178

Post by ChuckMcM » Sat, Dec 24, 2022, 1:36 AM UTC

darth_avocado wrote: post #135

ChuckMcM wrote: post #104

Earlier quoted context omitted.

I think Elon threw his hat in the ring for "most wealth lost by and individual in a single year." And I agree, it is a really tough game to play. And now the table stakes are basically unreachable by most.

If “Money lost” means stock valuation decline or overpaying for another company, that he may be able to salvage. And not yolo on meme stonks and realize all the losses.

Well to be fair the Alameda fiasco had them over valuing FTT tokens (which is kind of like over paying for a stock right?) I mean she didn't "lose" money, the assets that she collateralized her loans with became worthless so she couldn't repay them. But I think that gets way into accounting arcana which Matt Levine does a much better job of explaining than I ever could!

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#179

Post by ARandomerDude » Sat, Dec 24, 2022, 1:38 AM UTC

gnicholas wrote: post #163

Is it a coincidence that CE and SBF were both raised by professors at elite institutions (MIT/Stanford)? Or are these just two people who were academically successful and parlayed that success into what looks to be a massive fraud?

Given that most of the university establishment is a massive fraud, it seems they likely drank in the culture from a young age.

Re: Caroline Ellison, CEO of Alameda Research, pleads guilty to seven offences

#180

Post by hanklazard » Sat, Dec 24, 2022, 1:43 AM UTC

maxbond wrote: post #167

roland35 wrote: post #75

Earlier quoted context omitted.

That's crazy. I'm thinking Hanlon's razor applies here, there is absolutely no evidence that tether is legit.

We need a razor that says, "if you think someone is playing chess with additional dimensions, they're probably just making a series of blunders and the consequences haven't yet manifested." A lesson I've taken from the last few years is that consequences can take a very, very long time, but that doesn't mean their strategy is working even if the tactics seem to be succeeding in the short term.

That’s Maxbond’s Razor