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FTX held less than $1B in liquid assets against $9B in liabilities

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Re: FTX held less than $1B in liquid assets against $9B in liabilities

#181

Post by grey-area »

JonathanBeuys wrote: post #180
grey-area wrote: post #179

Earlier quoted context omitted.

I just said risk; depends on your definition of counterparty risk I suppose, but it’s a much greater risk than those you discuss if you’re attempting to store value in cryptocurrencies. Stated another way: if you can’t find a counterparty, does the risk you’re talking about matter?

No matter which asset you use to store value, the bet is that there will be demand for this asset in the future. That is pretty much the definition of value. How to avoid counterparty risk is a topic for every asset. For self-custodial crypto, it is about how to handle private keys. Asset picking which you bring up is a different topic. But hey, we can go there if you like. You make a bold claim: That in crypto, dema…

The demand for crypto was zero 15 years ago. It has since proven spectacularly unsuitable for storing value, transactions or really any purpose at all because of fundamental design flaws and misconceptions. Re ‘historically…nobody faced lower demand’ see the 2017 crash and the 2022 crash.

The bold claim is that it has any value at all.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#182

Post by aeternum »

jcliff wrote: post #104
drexlspivey wrote: post #87

Earlier quoted context omitted.

Stock brokerages also offer margin accounts. You send them $5k and you buy stock worth $20k. How do you suppose this happens?

brokerages need to have cash on hand to loan. they can partner with a bank, or it can come from their own balance sheet or investors, but it's not printed out of thin air.

In practice, aren't almost all of them either a bank themselves or partner one or more banks and auto-sweep customer deposits into these 'program banks'?

Sure it might be slightly more convoluted, but at the end of the day isn't this still customer deposits funding margin/loans?

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#183

Post by aeternum »

VagueMag wrote: post #13
aeternum wrote: post #11

"Currently, all U.S. banks are subject to a balance sheet leverage ratio, which requires them to maintain a ratio of tier 1 capital to balance sheet assets at a minimum level of 4%. In order to be well-capitalized, banks must achieve a 5% minimum leverage ratio" So FTX had an 11% leverage ratio, pretty good.

FTX was not an FDIC-insured bank with the ability to borrow funds at the Fed discount window, and it did not tell its customers it would be lending out their funds.

Yeah this is a key point, and not only did they not tell customers, their TOS was quite explicit about not loaning customer funds:

"You control the Digital Assets held in your Account," says Section 8.2 of the terms. "Title to your Digital Assets shall at all times remain with you and shall not transfer to FTX Trading."

The terms continue: "None of the Digital Assets in your Account are the property of, or shall or may be loaned to, FTX Trading; FTX Trading does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading."

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#184

Post by SparkyMcUnicorn »

JonathanBeuys wrote: post #174
SparkyMcUnicorn wrote: post #170

Earlier quoted context omitted.

It's open source and you can deploy everything yourself. You don't even need to use their hosted website if you don't trust it. What more could you ask for? https://github.com/safe-global/

Open Source does not help here. You cannot read all that code you downloaded with all its dependencies and understand it. Its much too complex.

1. Hard disagree on open source not helping.

2. Audited[0]

3. Have you read the core contracts source? It's really not that complex.

4. If you don't trust the honesty from this project/team, then you probably don't trust any crypto at all, which is fine. To each their own.

It's used by Aave, 1Inch, Sushi, Balancer, and many more.

[0] https://github.com/safe-global/safe-contracts/blob/186a21a74...

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#185

Post by smeej »

JonathanBeuys wrote: post #176
smeej wrote: post #148

Earlier quoted context omitted.

It's open-source. Read the code. You don't have to trust anybody.

Nobody can read all the code of Electrum and all its dependencies and be sure it is secure. It is much too complex.

By that logic, nothing can ever be secure for any reason. We should all abandon the internet and go home.

From the string of your comments throughout this conversation, you seem to be making some weird, "I can't do it, so nobody can do it," false equivalency.

I don't know you from anybody, but I'm reasonably confident you're not more intelligent than all the highly incentivized people who have been, on the one hand, solving these problems against adversaries on the other hand who are every bit as incentivized to unsolve them.

None of the points I've made have been in any way groundbreaking or insightful. They're basic "I spent my free time for a year going down the bitcoin rabbit hole" stuff. You're throwing out incredibly basic objections as though they somehow mean the whole system is an unreliable fraud, but all it's really showing is that you haven't done even a cursory overview of the topic.

I'm really not trying to be rude here. People can understand code, even lots of it. People do understand it. They even understand the high-level cryptography these systems are built on. You might not, but that doesn't mean nobody does, much less that nobody can.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#186

Post by onphonenow »

cplusplusfellow wrote: post #157
onphonenow wrote: post #145

Earlier quoted context omitted.

I’m slightly curious if Sam had a personal relationship with someone at alameda? He took a pretty straightforward way to make money (charge fees running an exchange) and then looks to have dumped money into an absolute black whole of illiquidity and stupidity at alameda which was run by Caroline ? Even if alameda was making smart seed round investments- the liquidity horizons make no sense for an exchange to be part…

He lived with the CEO of Alameda and is said to be in a polyamorous relationship with her. He’s also co-CEO.

Yowk! Well - that might explain some of the craziness!

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#187

Post by JonathanBeuys »

smeej wrote: post #185
JonathanBeuys wrote: post #176

Earlier quoted context omitted.

Nobody can read all the code of Electrum and all its dependencies and be sure it is secure. It is much too complex.

By that logic, nothing can ever be secure for any reason. We should all abandon the internet and go home. From the string of your comments throughout this conversation, you seem to be making some weird, "I can't do it, so nobody can do it," false equivalency. I don't know you from anybody, but I'm reasonably confident you're not more intelligent than all the highly incentivized people who have been, on the one hand,…

Nothing can ever be completely secure, but one can increase the security.

The aspect of security I talked about is reducing counterparty risk. What one can do to reduce counterparty risk is to have multiple systems, make them as independent as possible, and compare the output they create.

Example:

1: An air gapped Dell laptop with Electrum on Linux

2: Another air gapped laptop. From Lenovo with Specter on Windows.

Create your seed phrase offline with dice and put them into both.

Every address you create, every transaction you sign - do it on both systems and compare the output.

Now, both systems would have to be faulty/malicious in the same way to harm you.

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#188

Post by JonathanBeuys »

SparkyMcUnicorn wrote: post #184
JonathanBeuys wrote: post #174

Earlier quoted context omitted.

Open Source does not help here. You cannot read all that code you downloaded with all its dependencies and understand it. Its much too complex.

1. Hard disagree on open source not helping. 2. Audited[0] 3. Have you read the core contracts source? It's really not that complex. 4. If you don't trust the honesty from this project/team, then you probably don't trust any crypto at all, which is fine. To each their own. It's used by Aave, 1Inch, Sushi, Balancer, and many more. [0] https://github.com/safe-global/safe-contracts/blob/186a21a74...

When you say "read the core contracts", do you mean this?

https://github.com/safe-global/safe-contracts/blob/main/cont...

Re: FTX held less than $1B in liquid assets against $9B in liabilities

#189

Post by SparkyMcUnicorn »

JonathanBeuys wrote: post #188
SparkyMcUnicorn wrote: post #184

Earlier quoted context omitted.

1. Hard disagree on open source not helping. 2. Audited[0] 3. Have you read the core contracts source? It's really not that complex. 4. If you don't trust the honesty from this project/team, then you probably don't trust any crypto at all, which is fine. To each their own. It's used by Aave, 1Inch, Sushi, Balancer, and many more. [0] https://github.com/safe-global/safe-contracts/blob/186a21a74...

When you say "read the core contracts", do you mean this? https://github.com/safe-global/safe-contracts/blob/main/cont...

Along with its dependencies, yes.
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