We will not pursue the potential acquisition of FTX • Hacker News Board

Re: We will not pursue the potential acquisition of FTX

#241

Post by nullc » Thu, Nov 10, 2022, 12:42 AM UTC

markisus wrote: post #235

nullc wrote: post #166

Earlier quoted context omitted.

How is that particularly relevant? Data isn't knowledge. Just because some assets have public records doesn't really tell you anything about liabilities or underlying ownership. Exchanges could practice provable solvency ( https://eprint.iacr.org/2015/1008.pdf ), but they aggressively do not-- in part because they don't want to bring customers attention to the potential issue (and they rightfully reason that once cus…

How can the provable solvency scheme possible prove solvency for fiat holdings? For example, I deposit $100 into the exchange. How can the exchange prove to me that it hasn't gone and gambled that $100? I think this could only be handled with human auditors going in and checking the actual amounts held in the exchange's bank accounts.

Can't, except as you note. Best trade your fiat for something actually auditable through cryptographic means ASAP. :)

(for a less quippy answer: they could show their fiat liabilities through these means and have a third party bank attest to their fiat account assets (or an encryption of their fiat assets). At least then you'd be trusting some established bank and not just some sketchy cryptocurrency industry company)

Re: We will not pursue the potential acquisition of FTX

#242

Post by vgatherps » Thu, Nov 10, 2022, 12:47 AM UTC

Sbf could have printed money if he didn’t get so greedy.

Maybe ftx would have been a top 10 exchange, instead of the third largest.

Maybe alameda would have been a standard successful prop shop (though they were really struggling as trading got more competitive).

He would have just been worth a few billion.

But here we are now.

I have a lot of friends on the inside and nobody knew at all. These friends knowingly kept money there confident the rumors weren’t true. I don’t know how much all of alameda knew but I don’t think the rank and-file knew the full story.

And how do you even lose 8bn? Did alameda become a shop making leveraged long crypto bets? Using a shitcoin as collateral? I know they’re smarter than that, so what happened????

Re: We will not pursue the potential acquisition of FTX

#243

Post by skippyboxedhero » Thu, Nov 10, 2022, 12:48 AM UTC

MichaelDickens wrote: post #195

skippyboxedhero wrote: post #171

Earlier quoted context omitted.

> Zero real finance people Debate old as time. I agree with you but this happens every cycle. RenTech doesn't have "real finance people" either. Maybe the problem was that they just had the wrong people, not their level of realness. And Alameda seemed to be mainly people from Jane Street? There is a difference between trading firms with good tech (Jane Street) and firms taking prop risk (DE Shaw)...just based on what…

> There is a difference between trading firms with good tech (Jane Street) and firms taking prop risk (DE Shaw) What do you mean by this? What is DE Shaw doing that Jane Street isn't?

DE Shaw takes directional risk. They have a lot of conventional strategies iirc (distressed debt, credit, etc.). Jane Street does a lot of ETF AP and other strategies that optimize for technology (afaik).

Re: We will not pursue the potential acquisition of FTX

#244

Post by polygamous_bat » Thu, Nov 10, 2022, 12:51 AM UTC

miohtama wrote: post #215

_23sd wrote: post #189

Earlier quoted context omitted.

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.

Ah, if only that were true! Your claim smelled funny, so I looked it up:

https://paxos.com/2022/04/07/busd-issued-by-paxos-on-ethereu...

Tl;Dr: Paxos issues something called BUSD on Ethereum, which is regulated. Binance issues something that's kinda sorta related but not really, that's fully unregulated, only usable in their private chain, ALSO called BUSD, that is just monopoly money. They happen to have the same name, but hey, you fell for it!

Re: We will not pursue the potential acquisition of FTX

#245

Post by eddsh1994 » Thu, Nov 10, 2022, 12:52 AM UTC

miohtama wrote: post #218

eddsh1994 wrote: post #45

Earlier quoted context omitted.

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.

I'm not blaming CZ! I'm thinking about knock-on effects from this due to SBF's donations being cut off

Re: We will not pursue the potential acquisition of FTX

#246

Post by skippyboxedhero » Thu, Nov 10, 2022, 12:54 AM UTC

twblalock wrote: post #212

skippyboxedhero wrote: post #174

Earlier quoted context omitted.

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 l…

Right, but irresponsible banks have done that before and, at the very least, that is self-liquidating on the way down (the same with companies issuing stock to employees).

And whether they are gambling with your money or not, they were a mix of a bank and an exchange...so the comparison with a bank isn't complete. They were booking derivatives trades so your money is 100% at-risk, irregardless of what they do with customer deposits. This is what prime brokers do (as Levine says in that article).

The reason you don't lend against your own shares is because you won't be able to get financing and are exposed to runs. It is unrelated to the point about customers who were already at risk because they were trading derivatives issued by FTX.

Re: We will not pursue the potential acquisition of FTX

#247

Post by skippyboxedhero » Thu, Nov 10, 2022, 12:55 AM UTC

dragonwriter wrote: post #216

skippyboxedhero wrote: post #174

Earlier quoted context omitted.

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.

So what is that? The milliseconds of CPU time cost?

Only on HN.

Re: We will not pursue the potential acquisition of FTX

#248

Post by [deleted] » Thu, Nov 10, 2022, 12:55 AM UTC

iKlsR wrote: post #211

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.

[deleted]

Re: We will not pursue the potential acquisition of FTX

#249

Post by bitxbitxbitcoin » Thu, Nov 10, 2022, 12:57 AM UTC

mrtksn wrote: post #92

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.

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, cryptocurrency is certainly coming back.

Also, cryptography isn’t going anywhere.

Re: We will not pursue the potential acquisition of FTX

#250

Post by vba616 » Thu, Nov 10, 2022, 12:58 AM UTC

paulpauper wrote: post #113

If I had a $1 for everyone who "called it" or "knew it"...

There is a transcript out there where Levine was talking to "SBF":

"Matt: (27:13) I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good."

https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...

Plenty of people read/listened to that. Perhaps nobody called it, but a lot of people aren't shocked.

I think more people have "called" the collapse of Tether, but you know, eventually maybe they will be right?