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We will not pursue the potential acquisition of FTX

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Re: We will not pursue the potential acquisition of FTX

#141

Post by jeffreyrogers »

oldgradstudent wrote: post #76
jti107 wrote: post #38

Earlier quoted context omitted.

reminds me of LTCM...they were making bank until the Asian bank crisis and Russia defaulting on their debt https://www.dailymotion.com/video/x225si7

Very different. LTCM was making massive, very risky bets while pretending they were safe. They were making insanely leveraged bets on real assets. FTX seems to me to much closer to Madoff. They were printing their own Monopoly money and pretending it was worth billions.

LTCM actually was doing a lot of the risk management people later said they should do. Their problem was the trades they were doing were more crowded than the realized and they couldn't unwind them cheaply because everyone else was doing the same thing. Plus once people realized they were struggling other market participants started betting against them. There have been other similar situations since then. In August 2007 most of the big quant funds lost double digit percentages in a few days when someone had to unwind a portfolio and statarb strategies stopped working.

Re: We will not pursue the potential acquisition of FTX

#142

Post by zomglings »

churchill wrote: post #133

From 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?

By getting greedy and treating FTX user funds as capital to deploy in the prop trading firm.

Re: We will not pursue the potential acquisition of FTX

#143

Post by ArtWomb »

simonjgreen wrote: post #99
sgt101 wrote: post #41

Earlier quoted context omitted.

We've been here a long time ago : https://en.wikipedia.org/wiki/Beenz.com

Wow I had forgotten all about that. I remember a lot of hype in the dot-com era around that

The NFTs of 1997: "etoy shares compel people to think about the elusive and amorphous nature of Internet art. One of the many controversies about Net art is that there is no original copy; an artist can’t exactly “sell” a home page to a collector. The “shares” play with the idea of ownership and the Net, as well as spoof absurdly overvalued Net stock" ;)

https://www.villagevoice.com/1999/11/30/e-toy-story/

Re: We will not pursue the potential acquisition of FTX

#144

Post by btown »

JumpCrisscross wrote: post #13

In 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’…

Archive link to the Levine column linked above: https://archive.ph/CxJqM

Re: We will not pursue the potential acquisition of FTX

#145

Post by chasd00 »

grey-area wrote: post #72

It would be amusing if this deliberate attack by Binance also caused other frauds like Tether and eventually Binance to collapse too. People will simply lose faith in crypto entirely and avoid the whole market.

I certainly have no faith in crypto. The returns look nice but I know i'm not informed enough to get out while the getting's good so I'll have to pass.

Re: We will not pursue the potential acquisition of FTX

#146

Post by dragontamer »

kristjansson wrote: post #136
pseudosavant wrote: post #111

Earlier quoted context omitted.

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.

CDOs weren't the problem. You see, mixing together dog-shit __ONCE__ isn't that big of a deal.

CDO-squared (CDOs of CDOs) were a problem. If you took those 60 dog-shit loans, mixed them together, and created 10 high quality loans out of them, problems began to occur.

Even then, it wasn't the CDO-squared that collapsed the whole thing. It was the CDS: the "insurance" (so to speak) on the CDO-squared that made things go haywire.

Re: We will not pursue the potential acquisition of FTX

#147

Post by ethbr0 »

kristjansson wrote: post #136
pseudosavant wrote: post #111

Earlier quoted context omitted.

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.

The central MBS problem seemed to be ratings-based-regulation + free-market-unregulated-ratings-agencies.

In hindsight, it should have been structured like government insurance servicers: subject to random and regular audits, with $$$ fines if they turn up anything fishy.

If you don't want corruption, engineer a system where not being corrupt is more profitable...

Re: We will not pursue the potential acquisition of FTX

#148

Post by kortilla »

sytelus wrote: post #68
matai_kolila wrote: post #55

Earlier quoted context omitted.

Yeah but like, the US is a lot more likely to be around in 20 years, so this argument doesn't really make any sense. Honestly I'm sick of hearing it; yes we know, all money is made up, that's not an interesting point anymore. Society is okay with that, but it doesn't mean you can just make up another currency, that's not how it works.

That's exactly how it works. When you issue IOU, you issue your own currency. When a company issues stock, they are in fact issuing their own currency. All contracts are in fact a currency that can be sold, bought, invested and transacted. World debt is far far larger than actually currency in circulation. How does that happen? Because we make up "currency" all the time.

No, contracts are not currencies. The whole point of distinguishing between currencies and other securities/debt is that a currency has the property of being a widely used medium of exchange.

The contract I have with my plumber to plumb my toilet is not something you can use to buy lunch.

Re: We will not pursue the potential acquisition of FTX

#150

Post by scottiebarnes »

_jal wrote: post #48
scottiebarnes wrote: post #25

Earlier quoted context omitted.

The Bitcoin protocol and network continues to operate exactly as expected. Here, people trusted a "bank" (an exchange acting like a bank), and got burned when the bank gambled and lost.

> continues to operate exactly as expected Yep: as a set of primitives on which to build sorting mechanisms for fools and money.

Tell me more about the rock solidness of the housing market, or government bonds.
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