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Crypto trading firm Alameda Research might be insolvent

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Re: Crypto trading firm Alameda Research might be insolvent

#111

Post by LatteLazy »

adamsmith143 wrote: post #104
LatteLazy wrote: post #49

Earlier quoted context omitted.

Only the 5.8bn in FTT is being claimed to be worthless. Not the full 14.6bn in assets. If that's true (and the article itself lists reasons it isn't true!?), that still leaves 8.8bn in other assets, vs 8.0bn in debts. The article itself says the same when it says 88% of equity. Equity is assets less debts. So as long as they have any equity left at all, they're not insolvent.

You assume that during a firesale they would actually get value approaching what they claim is worth 14.6B. Since FTX and Alamaeda are by far the largest holders of FTT and significant holders of Solana they will destroy the market for both if they had to sell. It's likely the real value of their assets is far lower, as the other commenter suggested.

I'm just taking the numbers from the article itself and the assumption that FTT specifically is worthless (extreme enough on it's own).

If you assume a fire-sale on everything, then everyone is insolvent all the time...

Re: Crypto trading firm Alameda Research might be insolvent

#112

Post by CyberDildonics »

Mistletoe wrote: post #63
phphphphp wrote: post #58

Earlier quoted context omitted.

3AC was a prop trading firm flush with cash… until the curtain was lifted and it turns out it was just a big fraud. Alameda is a prop firm flush with cash… Why do you assume that Alameda isn’t “packed to the gills” with financial gremlins? If you asked anybody in the space about 3AC or Alameda 12 months ago, you’d have heard the same thing about them: prop trading firms that have been hugely successful investing thei…

Alameda is helmed by quants from Jane Street etc., they are supposed to do better with regard to risk management, forecasting, bet sizing. Their whole M.O. is that they are smarter and actually do math and that is the source of their success. https://www.alameda-research.com/our-team Whether that is true or not, I don’t know. But from their tweets and podcasts it does seem they approach things very differently and in…

they are supposed to do better with regard to risk management, forecasting, bet sizing.

According to who? Themselves?

Re: Crypto trading firm Alameda Research might be insolvent

#113

Post by NickM »

x1ph0z wrote: post #70
phphphphp wrote: post #11

Earlier quoted context omitted.

I'm not sure if this is sarcasm or not, but just in case it's sincere: Alameda are considered a lynch-pin of the crypto industry, they're holding up pretty much everything... and by extension, FTX is far more important than Kraken. If Alameda implode, it'll be far worse than 3AC's implosion. I don't think it's possible to kill the crypto industry, but Alameda's implosion would be the most likely event to cause it.

The whole point of crypto was to be decentralized. For one company to go down and cause the industry to implode means the industry is on the wrong path and needs to be reset.

A decentralized system can still die if nobody wants to use it anymore. If prices continue to fall as a result of more and more flywheels and ponzi schemes coming to light, and more and more people keep losing their shirts as a result of companies getting hacked/going backrupt/etc., then we may start seeing negative feedback loops as more and more people give up and leave.

Arguably this has already started happening.

Re: Crypto trading firm Alameda Research might be insolvent

#114

Post by vgatherps »

polygamous_bat wrote: post #77
cryptoanon wrote: post #66

Earlier quoted context omitted.

I’m not saying alameda is not insolvent. Im saying that the burden of proof is on the author to prove that they are insolvent.

That is the craziest proposition that I have heard today. The author posited a hypothesis based on whatever public information they could gather. Either Alameda comes out to refute it, or they don't (they haven't yet, as far as I know), in which case people can draw their own conclusion. The fact that SBF, one of the most outspoken mouthpieces of the crypto boom, has chosen to remain silent, provides some circumstant…

A point that is getting missed is that nobody knows what the liabilities are. At one extreme, if the liabilities are all cash, alameda is in a dire place. At the other, if the liabilities are just the tokens on their balance sheet, there's nothing particularly interesting.

Any statement a bout their insolvency is a statement about their liabilities, which is just speculation.

Re: Crypto trading firm Alameda Research might be insolvent

#115

Post by vgatherps »

RuggedPineapple wrote: post #54
cryptoanon wrote: post #40

Earlier quoted context omitted.

3AC had been packed to the gills with uncollateralized loans. Since then, most lenders have recalled loans and cleaned up their toxic balance sheet.

When it's collateralized with crypto it's uncollateralized. 3AC learned this. Like half the exchanges have learned this over the last year. There is no inherent value in any of them, there is no hard floor of assets, as the market continues to tank that 'collateral' becomes/remains worthless. It's turtles all the way down.

The 3AC saga wasn't because crypto collateralisation turned out to be bogus, it was just that lenders gave them un/undercollateralized loans. Their downbringing was taking cash liabilities, on leverage (the un/ndercollateralized part), and using that to make risky bets. They took a ton of leverage to bet that the GBTC/BTC spread would close (but it widened, a friend of mine called this killing them over a year in advance), iirc positions in stETH/ETH spreads, illiquid (but very profitable...) vc investments, as well as just going long crypto.

Re: Crypto trading firm Alameda Research might be insolvent

#116

Post by asdajksah2123 »

FoomFries wrote: post #82
jerf wrote: post #71

Earlier quoted context omitted.

This is a popular idea, but it's not just wrong, it's both systematically and personally dangerous. I am entitled to come to conclusions based on the partial information I have. If someone doesn't like those conclusions, it's on them to increase my access to information. The alternative means that anyone and everyone can hide anything they like behind partial information, then declare any suspicions baseless and grou…

What we are entitled to do, what is polite to do and what we can do for clickthroughs are three different things. Coming to conclusions on partial information may as well be jumping to them in many circumstances. The ideal approach would be to add a disclaimer of where the fact to supposition transitions, and if the conclusion is sensible at least source similar cases. If it walks like a duck and quacks like a duck i…

Except in the real world if people are actually putting their money down based on what those conclusions might be, you have to jump to something.

And the right thing to do is to jump to the most likely one based on the information available to you (adjusted for the consequences if you're wrong).

In this case, the most likely conclusion appears to be based on the info presented that it may be insolvent, and further, acting as if it is insolvent means you lose on limited upside if you're wrong, but avoid significant downside if you're right.

If Alameda is not a fan of this conclusion and if it's gaining traction in the community they can refute whatever might be wrong in the analysis and if nothing is wrong, provide the additional missing information that will correct the conclusion.

This is what CEOs and CFOs for public companies do everyday. Present their company's thesis to the public and refute analysts' theses where they think they're either wrong and/or don't have sufficient information. Why do you think they take so much time out of their schedules to do interviews on Bloomberg, CNBC, etc.

Alameda doesn't need to go down that route, but that doesn't mean independent analysis with conclusions based on incomplete information is a faulty process.

Re: Crypto trading firm Alameda Research might be insolvent

#117

Post by JohnJamesRambo »

polygamous_bat wrote: post #98
Mistletoe wrote: post #44

This might explain why Sam Trabucco the former co-CEO abruptly left out of the blue a few months ago… https://fortune.com/crypto/2022/08/25/sam-trabucco-quits-co-... For those not in the know, Alameda is THE trading firm in crypto that everyone always assumes is causing liquidations. For them to be insolvent would be a huge deal. It’s crazy to watch greed pollute the minds of crypto trading firms like Three Arrows Ca…

Am I correct in understanding your argument that "so long as numbers keep going up, all will be fine"? Because there is a possibility that crypto never gains back the hype as late 2020, and Bitcoin never reaches the high of $69K ever again, in which case people who "bought and hold" at that time (including those who were encouraged to be "brave" by Matt Damon in a crypto.com ad) will never see (a portion of) their mo…

If you are anticipating human greed evaporating, then yes, crypto will go to zero. My experiences so far in life have shown that to not be likely.

People holding stocks may never see ATH either, it’s the risk we take for the mental construct we believe in.

History says they probably will, as long as they hold a diverse portfolio.

Unfortunately crypto has become just a leveraged bet on the stock market and has lost much of its uncorrelated asset status. If the stock market recovers, crypto recovers even harder. Ethereum price is like a higher leverage TQQQ if you check the charts. I liked it better when it was uncorrelated.

Re: Crypto trading firm Alameda Research might be insolvent

#118

Post by tom-thistime »

dcolkitt wrote: post #108

As someone in the industry, it's almost certainly not . First very simple point, to become insolvent you have to actually take a loss somewhere. They may have a lot of junk tokens on their balance sheet, and these tokens may be overmarked, but Alameda's cost basis (most of them were from seed rounds) is still way below their current value. With Three Arrows it was very obvious where the loss was from, they were hyper…

On 2022 11/4 7:50 am Pacific, this was the top-ranked comment on this article on HN.

Re: Crypto trading firm Alameda Research might be insolvent

#119

Post by shawabawa3 »

mritchie712 wrote: post #74
rufusroflpunch wrote: post #56

Earlier quoted context omitted.

Owning and holding Bitcoin is not a scam. That's about it.

It'd be pretty easy to create a "defi credit union" that's not a scam, it'd just be hard to cut thru all the noise. Give 3% to 5% yields on saving, lend at 8% to 12%. The problem is people see "230% yields" (which are scams) and wouldn't know your legit 5% yield is for real.

There are tons of legit projects that do exactly that

The most well known is probably Maker https://makerdao.com/en/

But there's also Aave, Benqi, and a bunch of others.

Re: Crypto trading firm Alameda Research might be insolvent

#120

Post by rippercushions »

LatteLazy wrote: post #111
adamsmith143 wrote: post #104

Earlier quoted context omitted.

You assume that during a firesale they would actually get value approaching what they claim is worth 14.6B. Since FTX and Alamaeda are by far the largest holders of FTT and significant holders of Solana they will destroy the market for both if they had to sell. It's likely the real value of their assets is far lower, as the other commenter suggested.

I'm just taking the numbers from the article itself and the assumption that FTT specifically is worthless (extreme enough on it's own). If you assume a fire-sale on everything, then everyone is insolvent all the time...

A fire-sale of (say) a skyscraper in Manhattan is a very different proposition to a fire-sale of random shitcoins.
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