The silly thing is that FTX was a money printing machine. There was no reason to start gambling with user funds, aside from greed, hubris, and stupidity. Similarly, Sam's fund Alameda was delta-neutral until some time in 2021, which is something that also could have profitably continued in perpetuity, but they got greedy and started making directional bets with leverage.
There’s a Bloomberg article that goes over why this is a bit more nuanced than “gambling with customers funds”. In short, it’s either one or both of poor risk management ( margin traders can’t post collateral and the collateral they had was FTT which went to zero ) and black swan bank runs ( Binance CEO tweets about risky FTT causing bank run causing further drops ). In fact “gambling with customer funds” was by desi…
We will not pursue the potential acquisition of FTX
131–140 of 440 posts
Re: We will not pursue the potential acquisition of FTX
#132Ponzi doesnt want to buy failed Ponzi? How surprising.
Game recognizes game.
Re: We will not pursue the potential acquisition of FTX
#133From reports I've heard floating around, Alameda was making >$1M per day doing their good ol' prop trading. If that's true (and that's a big if) then all SBF had to do was simply stick to the playbook. Do you prop trading on the side, help customers transact crypto via FTX.
How do you even mess it up this badly?
Re: We will not pursue the potential acquisition of FTX
#134Earlier quoted context omitted.
I don't know about it, Binance has become a gold standard in crypto exchange business. Here on HN it was always about Coinbase likely because its an American company but for the rest of the world, it's all about Binance and the rest of the world is huge. How huge? About an order of magnitude to Coinbase. If Binance goes, crypto isn't coming back.
> Binance has become a gold standard in crypto exchange business This was FTX and Alameda like a week ago.
Not really, FTX was barely in the top 10 for spot, though better in futures. Plus there are DEX and AMM.
Re: We will not pursue the potential acquisition of FTX
#135Just a PSA for any FTX users out there: please make sure you get details of your balances, deposits, withdrawals and trade history whilst the site is still up.
You can download it as a CSV - I'd also take screenshots to be on the safe side.
Save yourself a potential headache when you come to do your taxes down the line.
Re: We will not pursue the potential acquisition of FTX
#136In the thick of it, illiquidity and insolvency blur. But not after the fact. As usual, Levine put it best: “the problem is not a timing mismatch, in which FTX’s customers asked for their cash back but FTX did not have enough ready cash because it had long-term but money-good loans out. The problem is that FTX took its customers’ money and traded it for a pile of magic beans, and now the beans are worthless and there’…
FTX going under due to magic beans reminds me so much of Lehman Brothers going under in 2008. That time the magic beans were "mortgage backed securities" that somehow took low-quality debt, mixed it up with some magic, and out came high-quality debt, only it didn't.
The problem with MBS was always the zero-sum nature of the alchemy. They took 100 low-quality loans in, and returned 10 high-quality loans, 30 ok-ish loans, and 60 dog-shit loans. No harm no foul, until the dog-shit tranches were marketed as ok-ish, and alchemists believed they we're really creating gold.
Re: We will not pursue the potential acquisition of FTX
#137Earlier quoted context omitted.
>The silly thing is that FTX was a money printing machine. There was no reason to start gambling with user funds, aside from greed, hubris, and stupidity. Where were their profits derived? Was it from taking their slice of every transaction? Or selling their freshly minted coins? If it was the latter, that only works for so long, just ask the Fed.
Trading fees on billions of dollars of volume.
In this case, where do the liabilities come from?
Edit: nvm I guess this thread is about FTX's original business model
Re: We will not pursue the potential acquisition of FTX
#138The funny thing is for six months I have been checking FTX for open developer positions. Thinking surely, the best place in crypto must be hiring good devs like me. And there have been no postings at all! And word on the street is their devs actually building the exchange made a middling salary with zero stock. I always found it odd, how could they not be hiring? even during the downturn? And now I know why, it was a…
They just hire people from other places, cheaper labor, I know at least 4 southamericans who worked for them in the past, 100% remote, same talent as an US dev, and 1/4 of the cost
Re: We will not pursue the potential acquisition of FTX
#139Earlier quoted context omitted.
> History is more on the side of it happening than not. Is this true? Of all the years that various countries have used traditional fiat currency, has debasement happened more years than it hasn't? I don't think so but I'm not certain. Obviously, nobody can predict the future here, and history tells us that all empires come to an end at some point. But we're watching crypto speed-run through all of the issues that th…
>Is this true? Of all the years that various countries have used traditional fiat currency, has debasement happened more years than it hasn't? I don't think so but I'm not certain. Do you know of any currency over the past 200 years that has suffered deflation throughout that period? I don't mean "occasionally has one year with deflation", I mean, the real value of 1 unit of that currency 200 years ago was less than…
Certainly major currencies have experienced periods of deflation (i.e. the Great Depression, the Great Recession, etc.). But deflation is a sign of weakening economy as well. There's an obsession with inflation, but the reality is that some inflation is inevitable in a growing economy as demand outpaces supply. Economists agree pretty consistently on that.
Re: We will not pursue the potential acquisition of FTX
#140The silly thing is that FTX was a money printing machine. There was no reason to start gambling with user funds, aside from greed, hubris, and stupidity. Similarly, Sam's fund Alameda was delta-neutral until some time in 2021, which is something that also could have profitably continued in perpetuity, but they got greedy and started making directional bets with leverage.
There’s a Bloomberg article that goes over why this is a bit more nuanced than “gambling with customers funds”. In short, it’s either one or both of poor risk management ( margin traders can’t post collateral and the collateral they had was FTT which went to zero ) and black swan bank runs ( Binance CEO tweets about risky FTT causing bank run causing further drops ). In fact “gambling with customer funds” was by desi…
The issue wasn't the bank run. FTX could just have halted withdrawals, CEX do it all the time. The issue was FTT collaterized loans or equivalent, because they gambled too hard. And I doubt their users were aware of the risks, sBF himself guaranteed on Twitter the day before.