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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

#181

Post by pseudosavant »

oliwary wrote: post #176
dragontamer wrote: post #146

Earlier quoted context omitted.

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 g…

I am fascinated by the number of layers of abstractions built on top of each other in these financial products... Bankers seem to rival programmers in their ability to stack abstractions on top of each other until it is impossible to understand how the underlying system relates to the top layer.

You could say that MBS/CDOs were 'leaky abstractions', and that there were equivalents to 'code smells' to suggest they weren't the golden debt they masqueraded as. I can't think of other professions that develop the same level of abstractions that programmers and bankers create. Layers and layers of inputs and outputs.

Re: We will not pursue the potential acquisition of FTX

#182

Post by MacsHeadroom »

nfw2 wrote: post #71

Potentially dumb question here; I am no expert on crypto or finance. Isn't the collapse of FTX in some ways evidence in favor of decentralized currency rather than against it? As evidenced by 2008, firms gambling with other people's money doesn't seem to be specific to DeFi. If coin exchanges had some legal obligation to just be wallet and marketplace services instead of investment engines, could that help prevent th…

Absolutely, this was a failure of TradFi/CeFi.

DeFi had no problems throughout these past few days. No Dex ever had withdrawals/transactions take longer than seconds, as always. No Dex ever used user funds secretly (impossible on a public ledger), etc.

The lesson here is that TradFi is not safe. Not your keys, not your coins.

Re: We will not pursue the potential acquisition of FTX

#183

Post by twblalock »

It's amazing how all of this was based on personal credibility, and a single Tweet caused the death spiral to start.

Wells Fargo isn't going to go out of business if the CEO of Bank of America insults it on Twitter. But even if it did, there is FDIC insurance for deposits, and nobody whose balances were under the insurance limits will lose a penny.

FTX succeeded solely based on the reputation and personal credibility of its founder. One tweet from the CEO of a rival exchange and the whole thing came crashing down, taking a significant bite out of the value of many cryptocurrencies. So, even people who didn't have accounts at FTX are hurt by their assets losing value.

Re: We will not pursue the potential acquisition of FTX

#184

Post by kwere »

jeffreyrogers wrote: post #141
oldgradstudent wrote: post #76

Earlier quoted context omitted.

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…

legends say they could have been saved by Warren Buffet, who was interested to buy them at a certain price, but the deal never went on bcs he was in vacation where satellite phone wasnt working.

wikipedia says he turned it down due to risks involved

Re: We will not pursue the potential acquisition of FTX

#186

Post by mrtksn »

melenaboija wrote: post #178
mrtksn wrote: post #92

Earlier 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.

> If Binance goes, crypto isn't coming back Interesting statement for a decentralized asset

What decentralised asset?

Re: We will not pursue the potential acquisition of FTX

#187

Post by rippercushions »

twblalock wrote: post #169
pavlov wrote: post #70

Why does anyone trust Binance either? They’re notoriously shady about where they operate and what assets they actually hold, to the point that they’re officially not headquartered anywhere. If you have $100k at Binance, is there any reason to believe you could withdraw it tomorrow? Any contract you may have with Binance is made with a local shell company that could just as well be a hot dog stand. Any money you’ve se…

Why did anyone trust FTX either? The trust was really based on the credibility of the person running it, and the fact they had bailed out some other failing exchanges. But there were no hard facts. In fact it seemed like all it took was a public quarrel with the founder of another exchange to start the ball rolling toward total collapse -- again, because it was all based on personal credibility.

It's almost as if crypto tokens are intrinsically worthless!

Re: We will not pursue the potential acquisition of FTX

#188

Post by wslh »

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’…

https://archive.is/Id0Pk

Re: We will not pursue the potential acquisition of FTX

#189

Post by _23sd »

TheAlchemist wrote: post #53

What's even more funny is that Binance make it look like they are a stable financial institution, and it's thanks to their high standards that they won't acquire FTX. Binance is most probably much more of a fraud than FTX. Binance doesn't even have physical headquarters in any country in this world - and the reason is that they are being actively investigated or banned almost everywhere.

The question in my mind with Binance is how reliant they are on BTC. The non-BNB part of their SAFU (a pair of wallets they call an emergency insurance fund) is roughly half BTC, the other half being BUSD which I wouldn't 100% trust if Binance was in trouble. Could they survive a FTX-style panic if BTC had dropped below $10k? I hope so, at least.

Re: We will not pursue the potential acquisition of FTX

#190

Post by melenaboija »

mrtksn wrote: post #186
melenaboija wrote: post #178

Earlier quoted context omitted.

> If Binance goes, crypto isn't coming back Interesting statement for a decentralized asset

What decentralised asset?

Sorry, crypto.

I don’t know much about the topic and sometimes I get confused with the concepts crypto, currency, non fungible, token and I call it asset asset to generalize. So, what makes a crypto to be a crypto?

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