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Crypto brothers front-ran the front-runners

bloomberg.com

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Re: Crypto brothers front-ran the front-runners

#11

Post by hanniabu »

joeldw wrote: post #5

Correct me if my understanding is wrong, but there are no crypto transactions involved with arbitrage in the common case. Arbitrage is concerned with the relative price of two assets, for example BTC/USD. There is no bitcoin transferred from exchange A to exchange B, simply the trade of USD to BTC on exchange A and BTC to USD on exchange B.

That is done, but you need a lot of capital due to bitcoin's slow block times. You'll need to have capital on both places to take advantage of the price differential since the price will shift to much by the time you migrate funds from one CEX to another.

But this post isn't about bitcoin, it's about Ethereum. Ethereum is where all the innovation and most of the financial activity occurs. Arbitrage MEV comes from different onchain decentralized exchanges, slippage, defi liquidations, etc.

Re: Crypto brothers front-ran the front-runners

#12

Post by hanniabu »

blackhawkC17 wrote: post #7

I really don’t see what these guys did wrong. Good for them for making away with $25 million…the government should leave them alone. After all, crypto bros wanted decentralized finance where code is law. But they’ll run to the government when someone outsmarts them. Reminds me of people from corrupt countries parking their money in countries with strong rule of law, where they know it can’t be seized without due proc…

It's not hypocrisy. These people aren't these ones advocating for cypherpunk. They are mostly wallstreet bros that have carved a lucrative market. They see stealing from others as completely fine, but if people do the same thing to them which they're doing to others they throw a hissy fit and use their connects to make an example and set precedent.

Re: Crypto brothers front-ran the front-runners

#13

Post by JumpCrisscross »

akira2501 wrote: post #6

I'm uncomfortable with the tax dollars of hard working people being used to defend the likes of those who use robots with million dollar wallets to rake up the low hanging fruit of digital arbitrage on an entirely unregulated network. They wanted the rewards that came with this risk. Now that they got hustled, they cry foul, and the DOJ is going to spend huge amounts of money litigating their case? Perhaps it is in a…

> they got hustled, they cry foul, and the DOJ is going to spend huge amounts of money litigating their case?

Do we know how the case originated? I similarly agree this seems bizarre. It’s probably illegal. But unless it’s setting an important precedent it seems like a waste of public money.

Re: Crypto brothers front-ran the front-runners

#14

Post by hanniabu »

JumpCrisscross wrote: post #13
akira2501 wrote: post #6

I'm uncomfortable with the tax dollars of hard working people being used to defend the likes of those who use robots with million dollar wallets to rake up the low hanging fruit of digital arbitrage on an entirely unregulated network. They wanted the rewards that came with this risk. Now that they got hustled, they cry foul, and the DOJ is going to spend huge amounts of money litigating their case? Perhaps it is in a…

> they got hustled, they cry foul, and the DOJ is going to spend huge amounts of money litigating their case? Do we know how the case originated? I similarly agree this seems bizarre. It’s probably illegal. But unless it’s setting an important precedent it seems like a waste of public money.

> But unless it’s setting an important precedent

It is

Re: Crypto brothers front-ran the front-runners

#15

Post by robbyiq999 »

This just screams arbitrary application of rules to an entirely new system. How can you enforce rules for something with such a murky definition of the actors and their actions? Sure it “looks like” old finance, but it most certainly isn’t.

This exercise of arbitrary rules on a murky, hardly even legally defined entirely new system, is why I can see the reasoning for something like defi to want to exist.

Re: Crypto brothers front-ran the front-runners

#16

Post by blackmesaind »

zoklet-enjoyer wrote: post #4

These guys did nothing wrong.i was pretty happy when this happened. It's funny seeing the guys running MEV bots all butthurt when someone out smarts them. But it's scary that the DOJ is siding with them.

From my understanding as well, they didn't exploit a bug in Ethereum, but in the MEV bots' parsers. Hopefully all those Google searches for a Saul Goodman-esque Cryptocurrency lawyer will pay off.

Re: Crypto brothers front-ran the front-runners

#17

Post by wyager »

blackhawkC17 wrote: post #7

I really don’t see what these guys did wrong. Good for them for making away with $25 million…the government should leave them alone. After all, crypto bros wanted decentralized finance where code is law. But they’ll run to the government when someone outsmarts them. Reminds me of people from corrupt countries parking their money in countries with strong rule of law, where they know it can’t be seized without due proc…

> crypto bros wanted decentralized finance where code is law

Ethereum and associated "defi" people are emphatically not the same people as the "code is law" people. One of the first things Ethereum did was throw out the whole notion of "the rules are the rules" during this event, when they rolled back the entire ethereum blockchain after a clever trade that wiped out a (now defunct) shitcoining operation: https://en.m.wikipedia.org/wiki/The_DAO

Lumping everyone into "crypto bro" is doomed to incorrectly predict the social-political dynamics here

Re: Crypto brothers front-ran the front-runners

#18

Post by teh_infallible »

joeldw wrote: post #5

Correct me if my understanding is wrong, but there are no crypto transactions involved with arbitrage in the common case. Arbitrage is concerned with the relative price of two assets, for example BTC/USD. There is no bitcoin transferred from exchange A to exchange B, simply the trade of USD to BTC on exchange A and BTC to USD on exchange B.

Arbitrage definitely happens in crypto. It’s how prices stay consistent across exchanges. If you have a small decentralized exchange with relatively low liquidity, arbitrage bots come in to capitalize on price discrepancies across exchanges.

Re: Crypto brothers front-ran the front-runners

#19

Post by chollida1 »

The way they tracked this really leads me to think this was a fund like wintermute, Jump or DRW that got screwed in this case.

They would have done all the detective work and then went to the authorities with a case fully done. I just don't see the government putting resources into tracking this the way that the fund that lost out on their sandwich trade would.

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