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

theguardian.com

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

#191

Post by KMag »

baobabKoodaa wrote: post #29
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…

> She mentioned she’s not a fan of stop losses At the volume they were trading, stop losses are no longer practical. The market is not infinitely deep.

Not to mention that during events like the flash crash of 2010, even small volume traders with stop losses got screwed.

A stop-limit order in some cases works better than a stop loss order, but if there's a rapid crash that's not going to bounce back, a stop-limit order will be worse. There's really no substitute for robust alerting for abnormal market conditions and getting eyeballs on the problem quickly.

(I was writing execution algos for a Fortune 500 broker dealer during the 2010 flash crash.)

(This is not trading advice. Don't mistake it for trading advice.)

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

#192

Post by EMM_386 »

gnicholas wrote: post #165
vkou wrote: post #164

Earlier quoted context omitted.

People who went to elite schools hang out with other people who went to elite schools. This isn't particularly surprising.

I was referring to the hubris that is presumably required to even attempt a fraud on this scale. Were the uniquely able to get away with this because of their bona fides, or were they uniquely predisposed to attempt this, due to the circumstances of their upbringing?

They did both get hired by Jane Street, which is not so easy to do to.

So they did have the "smarts", it just depends on if this started out as, or became, a massive fraud.

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

#193

Post by dragonwriter »

baobabKoodaa wrote: post #29
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…

> She mentioned she’s not a fan of stop losses At the volume they were trading, stop losses are no longer practical. The market is not infinitely deep.

Sure, stop losses are a retail-investor tool that subsitutes for not having a 24/7 active (human or algorithmic) dedicated decision-maker deciding when to try to unwind a position, for situations where your position is negligible relative to the market.

It's kind of a weird thing to talk down even of you aren't in the segment that uses them (though, I guess not if you are trying to sell people on hands-off investment in an actively managed fund rather than directly trading more fundamental securities themselves.)

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

#194

Post by nradov »

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…

There are rumors that a significant fraction of Tether assets are in Chinese commercial paper. Fine for now, but a serious recession or political turmoil in China would impair the value of those assets.

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

#195

Post by remote_phone »

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…

Her comment on stop losses are right on the money. Anyone who trades large amounts of money never enters actual stop losses into the system, they have mental stop losses. Stop losses are actively hunted by algorithms and a quick way to make money by blowing through stop losses and then buying back at the bottom.

Having mental stop losses is the real way to trade, as well as the discipline to sell when your mental stop losses are hit. I don’t know if she had the second part, but the first part about not having hard stop losses is correct if you’re a large trader.

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

#196

Post by dragonwriter »

nradov wrote: post #186
super256 wrote: post #120

Earlier quoted context omitted.

If you trade highly leveraged stuff, you need stop losses; otherwise there is a considerable chance you will go bankrupt. Especially when you take bets on interest rate decisions, take the sweeps at market open and other stuff (you can gain a few hundred points on NQ1! per contract easily during such times). Also, it's a psychological thing: traders think in risk. If they were mistaken with a trade idea, they close t…

Stop loss orders can work reasonably well for retail investors trading small positions in liquid securities, but they aren't completely reliable. Sometimes prices make a sudden discontinuous drop on bad news and blow past the limit order before it can be executed. Or if trading is halted they become useless. And for institutional investors trading large positions in less liquid markets, stop loss orders barely work a…

Sure, and a helmet and bulletproof vest with trauma plates doesn’t stop you from getting killed by shot in the face.

But the lack of complete protection is a pretty bad argument against using the available protection.

(There's some things a stop-limit is better for than a regular stop loss, but I'm not convinced that they are generally superior except in the technical sense that any stop loss can be issued as a stop-limit with a $0 limit.)

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

#197

Post by chank »

Is this just a big deal because crypto or purely because of the amount of money defrauded?

This whole thing is sort of bizarre to me. It just seems to me a lot of people are blaming crypto as part of this problem when it was basically a couple of people who let the popularity/success of what they created get to their head and began to cover up mistakes of mismanagement and poor decision making. Now they face the full brunt of the law for that as they well should.

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

#198

Post by malandrew »

owlglass wrote: post #54
MarcelOlsz wrote: post #22

Earlier quoted context omitted.

Yes. Exactly. Every day I wake up and I have to hear about some next cunt I've never heard of before. "Richest before 30!". Some other trillionaire. Some other little kid son of ivy's who ran away with another billion. It's always some fucking scam. Every fucking day. What is the point anymore? I'm a regular cunt who wants to do regular cunt things but I have to wake up to news that Google is planning a 30B "tech par…

While watching these people use their privilege to steal so much money is frustrating, I don't see how some Ivey League twenty-something's wrongdoing prevents you from doing regular things.

in aggregate, the spending power of the world’s fraudsters does inflate the cost of many of life’s luxuries to be outside the reach of more and more people.

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

#199

Post by enkid »

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?

People used the association with the elite institutions as a substitution for any sort of analysis about their strategy or actual credentials. It's not that the association caused the issue, but it allowed these people access to people and money they normally would never have. You aren't more likely to be a crook if you have parents who are professors at MIT, but your scams are more likely to be successful and people are less likely to use common sense because they are more likely to accept things they don't understand if they perceive someone as smarter than them. Something similar happened with LTCM, which brought together multiple Nobel laureates in economics only to go bankrupt 3 years after its founding.
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