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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

#211

Post by iKlsR »

twblalock wrote: post #183

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 credibilit…

What tweet was that? Just seeing the news and trying to back track and get the context and leadup.

Re: We will not pursue the potential acquisition of FTX

#212

Post by twblalock »

skippyboxedhero wrote: post #174
squidbeak wrote: post #116

Earlier quoted context omitted.

Concealing from users they were gambling with their funds - and not a scam?

I would read the rest of what I said. Is NYSE a scam? Is Euronext a scam? The exchange was a legit business that was profitable...outside of fixed costs, it isn't possible to lose money with an exchange. But they were doing other stuff (broking) that did lose them money. These are two completely distinct operations though (in real finance, they are largely distinct).

As Matt Levine mentioned in his article today, no responsible bank would allow you to borrow money and give them shares of their own stock as collateral. In some cases it's illegal to do so, but even when it's legal, banks would not want the risk.

FTX, on the other hand, pretty much did just that.

Does that make FTX a scam? No. But when they told their customers they don't gamble with customer deposits, that was at least incomplete and misleading, and may have crossed the line into being intentionally deceptive.

Of course, even if people knew about this, they probably would have used FTX anyway because people do crazy things in a bubble market.

Re: We will not pursue the potential acquisition of FTX

#213

Post by TheOtherHobbes »

mrtksn wrote: post #200
melenaboija wrote: post #190

Earlier quoted context omitted.

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?

That's just the label, nothing decentralised is left. See, as it turns out, to trade you need to find people and people are found in central locations. Okay, there are still many exchanges but this is mostly incidental and it makes sense to end up with single exchange eventually.

I'm enjoying the irony that practical crypto could not possibly be less like an decentralised peer-to-peer system for exchanging value if it tried to be.

As you soon as someone creates an exchange - and especially as soon as they start packaging funds into absolutely any kind of financial instrument/service - they've effectively reinvented deregulated banking with no deposit protection and extra risk.

Re: We will not pursue the potential acquisition of FTX

#214

Post by miohtama »

naveen99 wrote: post #127
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.

mtgox was bigger too. There are other reasons for a crypto winter like high interest rates and a newly credible us central bank. Rest of the world is not bigger when it comes to non residential real estate: private equity, venture, tech, finance.

MtGox had over 80% of volume during its peak.

However there wasn’t really any competition. Bitstamp and handful of crap exchanges. Coinbase was an OTC frontend.

Re: We will not pursue the potential acquisition of FTX

#215

Post by miohtama »

_23sd wrote: post #189
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.

BUSD is issued not by Binance, but by Paxos that is regulated in the state of New York under BitLicense.

It is one of the toughest licenses to get in the world, so I would be surprised if BUSD somehow collapses.

Re: We will not pursue the potential acquisition of FTX

#216

Post by dragonwriter »

skippyboxedhero wrote: post #174
squidbeak wrote: post #116

Earlier quoted context omitted.

Concealing from users they were gambling with their funds - and not a scam?

I would read the rest of what I said. Is NYSE a scam? Is Euronext a scam? The exchange was a legit business that was profitable...outside of fixed costs, it isn't possible to lose money with an exchange. But they were doing other stuff (broking) that did lose them money. These are two completely distinct operations though (in real finance, they are largely distinct).

> outside of fixed costs, it isn't possible to lose money with an exchange

It is, e.g., if the fees on the average transaction are lower than your variable costs. It is just extremely improbable for that to occur accidentally.

Re: We will not pursue the potential acquisition of FTX

#217

Post by miohtama »

shmatt wrote: post #32

CZ knew about the bad leverage to begin with, which is why he tweeted about selling all of the FTT What are the chances he never intended to buy FTX, just to destroy it after their public back and forth? It's almost like a reverse Musk - he sent a purchase offer with an option to back out no matter what CZ knew from day 1 all he needed to do was crash FTT just enough, and the rest would happen organically

Probably the gap in FTX balances, $10B, was much more than anyone estimated. Maybe even FTX themselves did not know.

Re: We will not pursue the potential acquisition of FTX

#218

Post by miohtama »

eddsh1994 wrote: post #45
shmatt wrote: post #32

CZ knew about the bad leverage to begin with, which is why he tweeted about selling all of the FTT What are the chances he never intended to buy FTX, just to destroy it after their public back and forth? It's almost like a reverse Musk - he sent a purchase offer with an option to back out no matter what CZ knew from day 1 all he needed to do was crash FTT just enough, and the rest would happen organically

I called it and saw many others call it too. Cause a run on FTX, get due diligence and say it’s F**ed, and get their user-base for free. My concern is how much funding FTX and SBF in particular were giving to EA/AGI Safety research labs and charities. There’s going to be some significant knock on effects there when the money is no longer available.

This would not have happened unless Sam had gambled with customer deposits. Hard to blame CZ here.

Re: We will not pursue the potential acquisition of FTX

#219

Post by miohtama »

skippyboxedhero wrote: post #97
fdgsdfogijq wrote: post #64

The 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…

It wasn't. They just ran with significantly less staff (iirc, less than 30). If they wanted you, they got in touch. FTX wasn't a scam either. Their business was a licence to print money but, as so often happens in finance, managed to spin shit from gold.

FTX had staff of 300 earlier, so it has grown.

Re: We will not pursue the potential acquisition of FTX

#220

Post by miohtama »

kristjansson wrote: post #170

It seems clearer that FTX (and Alameda) ran off the cliff following the SOL/Anchor/Celsius debacle, and this (and Binance's involvement) is really only the splat of them hitting the ground.

A lot of key personnel quit during the last few months. They likely knew about the gap.
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