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The Sam Bankman-Fried empire crumbled. What happened?

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Re: The Sam Bankman-Fried empire crumbled. What happened?

#101

Post by jasonwatkinspdx »

KptMarchewa wrote: post #91
eftychis wrote: post #47

Earlier quoted context omitted.

And to amend a bit, to give the whole perspective: And one of the triggers started when around 2005 the FED started raising interest rates. Which it had lowered more dramatically due to 9/11. https://www.bankrate.com/banking/federal-reserve/history-of-... Let that sync in, is my 2c. (Extra:The FED interest rates takes 2 years to kick in to Adjustable Rate Mortgages which where the first to fall.)

Back then large percent of mortgages were adjustable rate, the amount of those now is a single digit. https://i2.wp.com/financialsamurai.com/wp-content/uploads/20...

It was even worse than that. I worked for Wells Fargo doing credit checks at the time. The entire system was set up to rubber stamp loans without looking too closely. That'd be a problem for whatever downstream sucker bought it. At the time I had a bit of a robin hood attitude about it: if it's not illegal and follows policy that these subprime folks historically discriminated against get a bigger loan so be it. Now I have a more complex view on it, and see it as much more brazenly predatory.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#102

Post by zen21 »

saurik wrote: post #35
aniforprez wrote: post #16

Earlier quoted context omitted.

While I could say banks are equally guilty of doing shady stuff, the truth is banking is hundreds of years old and as such, has regulations and insurance behind it. Not regulating is how we get messes like the Housing Bubble in the 2000s in the US culminating in the crash in 2011. Crypto being a completely new space has no regulation and no checks and balances which leads to messes like this with companies playing ar…

Centralized financial exchange markets are at least somewhat regulated and notably FTX.US is supposedly A-OK. Just because some stuff in crypto doesn't have regulations doesn't mean it is a free-for-all.

What does A-OK mean? No exposure at all?

Re: The Sam Bankman-Fried empire crumbled. What happened?

#103

Post by latchkey »

antasvara wrote: post #52
ARandumGuy wrote: post #11

I think this should be a warning to anyone still invested in other crypto companies or exchanges. Everything seems like it's going well, until the music stops and the exchange is insolvent. FTX is not unique. A lot of crypto exchanges are doing just as much shady stuff. When you put your money with these companies, you're betting that "no really, this one is above board!" That's an extremely risky game to play when t…

In a lot of ways, crypto is just relearning the basic lessons of finance that banks and corporations learned decades ago. Things like "don't allow customers to use your company's assets as collateral" and "using a bunch of leverage on volatile crypto" are much less frequent in traditional finance, specifically due to regulation or the fact that these strategies have tried and failed before. This isn't to say that dec…

Everyone keeps saying regulation is the key, however in todays thread about 'not getting rich trading options' [0], all I see is people talking about how they lost money or that the game is rigged by the biggest players... and that is in one of the most regulated and well known markets on the planet.

I don't see how regulation fixes anything.

[0] https://news.ycombinator.com/item?id=33547658

Re: The Sam Bankman-Fried empire crumbled. What happened?

#104

Post by tl »

no_wizard wrote: post #65
fred_is_fred wrote: post #20

Earlier quoted context omitted.

Unfortunaely the draw for many isn't that they want a libertarian dream society with no rules, but rather they think they can get rich quick. The "banks are bad" is part of the appeal also. I have a cousin who works in the food service industry (think something like managing a Chipotle) and has put all his liquid assets into crypto and still thinks they will "pay off so he can retire". As for banks - as soon as these…

My "hot take" if you will: SEC and FDIC aren't usually, to the general public, negatively seen due to their mission. Its the fact they don't prevent criminal / unethical behaviors beforehand, and banks get away with alot before anyone intervenes. I actually don't think the average US citizen is "anti regulation" with this. I think - and I include myself in this - that we see agencies like the SEC (more so than the FD…

> Its the fact they don't prevent criminal / unethical behaviors beforehand, and banks get away with alot before anyone intervenes.

A better example is the IRS with a double standard of overzealous enforcement against individuals and small business who cannot defend themselves and complete non-enforcement against higher tiers of wealthy.

In the case of the SEC or FDIC, this has resulted in the near elimination of smaller fish aside from protective carveouts like the Durbin Exempt Interchange.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#105

Post by mikeyouse »

labrador wrote: post #42

I'm having a hard time understanding why organizations like the Ontario Teachers’ Pension Plan has money in uninsured crypto funds. Somebody has some explaining to do. Sequoia Writes Off Entire $210MM FTX Investment; Here Are All The Other Funds That Are Losing Billions In FTX https://www.zerohedge.com/markets/here-are-all-funds-are-abo... Edit: 25 billion dollars up in smoke Ontario Teachers’ Pension Plan faces a hi…

The Ontario Teachers Pension Plan invests in tons of things, it's like CALPERS. They're present on the cap table of nearly every company you've heard of because they have a hundreds of billions of assets and are chasing yield. They didn't have money on FTX, but had invested in FTX like they do with tons of other VC investments.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#106

Post by bergenty »

mrguyorama wrote: post #89

I'm so tired of people who are lauded as geniuses because their lottery ticket bet paid off. Why are people so convinced that being rich means you're smart?

Because getting rich is one of the hardest things to do in society. It’s getting power + stability in one fell swoop and is everything humans are biologically built to value.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#107

Post by whateveracct »

SanjayMehta wrote: post #49
simonw wrote: post #12

This is such an excellent write-up - showcases a veteran Wikipedia editor's ability to synthesize something comprehensive from a huge array of rapidly changing sources.

SBF's Wikipedia page is being vandalized right now. https://en.wikipedia.org/wiki/Sam_Bankman-Fried https://archive.is/2022.11.10-162501/https://en.wikipedia.or...

Seems like a tangent

Re: The Sam Bankman-Fried empire crumbled. What happened?

#108

Post by steveBK123 »

AnimalMuppet wrote: post #73
eftychis wrote: post #47

Earlier quoted context omitted.

And to amend a bit, to give the whole perspective: And one of the triggers started when around 2005 the FED started raising interest rates. Which it had lowered more dramatically due to 9/11. https://www.bankrate.com/banking/federal-reserve/history-of-... Let that sync in, is my 2c. (Extra:The FED interest rates takes 2 years to kick in to Adjustable Rate Mortgages which where the first to fall.)

Interesting. Question, though, and coming back on topic: Did the rising interest rates trigger this (FXT)? There might be a path here, and it would not have the two-year delay of adjustable rate mortgages.

Rising rates usually ends up showing us who was swimming naked.

The business models that relied on a perpetual supply of new capital, & other overly risky gambles become less attractive to investors when you can go get 5-7% on some boring bond with no risk.

You also have liquidation spirals as speculative investors need to sell asset X because of margin calls on asset Y. Which then causes a margin call on customer2 who owns asset X which has now gone down so they go sell some asset Z.. and so on.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#109

Post by mjaques »

jjmorrison wrote: post #95

Can someone explain to me why they can't solve this by moving the money back from Alameda to FTX? Assuming Alameda is not that bad at investing money, most of the loan should still be there no?

This is exactly what I was wondering.

It's possible (likely) that Alameda has invested that money in iliquid assets or assets that have since lost value. Also, since the loans of FTX to Alameda were backed by FTT, which has since collapsed, even if FTX makes a margin call, the collateral has a fraction of the original value.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#110

Post by mikeyouse »

kzzzznot wrote: post #90
dibt wrote: post #83

Earlier quoted context omitted.

>How would blockchain be used to fix this? All of the things that are being reported on this situation would not have been possible on a DEX. Decentralized exchanges (DEX) exist on-chain. They incorporate automatic market making (AMM), not a third-party market maker with an association to the exchange. The DEX does not have custody of user funds, and it would be impossible to hide a multi-billion dollar hole in an ex…

Do they work in practice?

Kind of..

Solend is a major one that's currently falling over.. and apparently just disappeared $6M worth of users' assets;

https://twitter.com/patio11/status/1590725993324777472

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