What a lot of people don't understand is that the last cycle isn't over until idiotic enterprises like this self-destruct.
Crypto trading firm Alameda Research might be insolvent
31–40 of 216 posts
Re: Crypto trading firm Alameda Research might be insolvent
#32I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are…
> 4. Recently they have cropped up a set of anonymous people who purport themselves to be insiders only to reveal complete ignorance about the topic at hand (otteroo on Twitter, for instance). Can you clarify this? By “they” do you mean this Substack? I didn’t see anything about “otteroo” or Twitter insiders in a quick search of the Substack, but I didn’t exhaustively search the entire backlog.
I mean this guy as well as a bunch of people on Twitter who have been clout chasing ambulance chasers, running over the truth to chase a story.
The formula is this: 1. Create an helpful explainer thread to explain some crisis (ex-post)
2. Start to make vague predictions about relatively easy to predict things (like that Celsius is going to go down, a couple days before it technically goes down).
3. Refer your readers back to your foresightedness
4. Get extremely excited as you receive DMs from people to check out x or y.
5. Lock your eyes on a juicy new company and start to make unfounded claims about said company, referring to a sole rando as a “source” (eg Nexo is insolvent!)
6. Create an expose on your new target, run shoddy analysis based on no actual data, and throw it into a larger conspiratorial framework that starts to implicate other actors.
7. All the while, build a captive audience who doesn’t know the better and eventually use that audience to run ads or to pay for your newsletter.
8. They can run this affinity scam because 1. What they say is not falsifiable, 2. you have an infinite timescale for which to be correct about any one company going bankrupt, 3. there are people out there who are earnestly trying to learn about the market and don’t know who to turn to, and 4. if you’re wrong, you’re not accountable to your actions because there was never any actual money on the line.
There are serious issues in the industry, do not get me wrong. It’s kind of messed up that people who have no connections have to look into the void and decide whether they’re going to trust an internet rando or nobody at all. Disclosures need to be better. But the people writing these sensationalist pieces are part of the problem and not the solution.
Re: Crypto trading firm Alameda Research might be insolvent
#33What the argument misses / why FTT is different than Terra
1) Alameda Research owns FTX, one of the largest and arguably most important crypto exchanges.
2) FTX offers fee discounts to FTT-stakers and additional discounts if you pay in FTT. [0]
3) Trading volume on FTX thus creates an organic demand cycle for FTT. The large firms will buy, stake, and then continuously refresh their supply.
4) The vast majority of the volume at FTT will be in margined accounts at FTX. I am uncertain if the volume analysis would capture FTT movements in (3).
Now, there's clearly financial alchemy going (giving away real economic value to boost an asset that you can then get leverage on) but that'd be better for Matt Levine or someone to flesh out.
[0] https://help.ftx.com/hc/en-us/articles/360024479432-Fees
Re: Crypto trading firm Alameda Research might be insolvent
#34If those loans are no-recourse loans with this FTT token as collateral, then should the token crash the liability just "disappears". The collateral will be sold to cover the loan. If the collateral is now worthless that was the risk the lender agreed to take on when issuing a no-recourse loan. If they are Defi loans for example, they're pretty much automatically no-recourse loans.
Exactly. It seems like the author has very limited insight in the space. It makes you curious how they could come to such a headline/conclusion, when they spend the entire article, talking about the assets instead of the liabilities!
>It seems like the author has very limited insight in the space.
lol. Lmao, even.
Re: Crypto trading firm Alameda Research might be insolvent
#35Might be. Since when do we allow such posts with bold claims only?
Re: Crypto trading firm Alameda Research might be insolvent
#36Earlier quoted context omitted.
> 4. Recently they have cropped up a set of anonymous people who purport themselves to be insiders only to reveal complete ignorance about the topic at hand (otteroo on Twitter, for instance). Can you clarify this? By “they” do you mean this Substack? I didn’t see anything about “otteroo” or Twitter insiders in a quick search of the Substack, but I didn’t exhaustively search the entire backlog.
I mean this guy as well as a bunch of people on Twitter who have been clout chasing ambulance chasers, running over the truth to chase a story. The formula is this: 1. Create an helpful explainer thread to explain some crisis (ex-post) 2. Start to make vague predictions about relatively easy to predict things (like that Celsius is going to go down, a couple days before it technically goes down). 3. Refer your readers…
> if you’re wrong, you’re not accountable to your actions because there was never any actual money on the line.
I mean, that's the risk you run right?
Either you're a regulated system where you can avoid this kind of thing, or you're an unregulated system where you go 'screw the man', but you don't get the protections that are associated with the traditional financial system.
There's some deep irony about complaining about it; isn't the 'good' thing about crypto?
That's what people keep telling me anyway.
Re: Crypto trading firm Alameda Research might be insolvent
#37EDIT:
Should preface all of this by being very, very, clear that we don’t know what the liabilities are so can’t judge too much. It’s fun to assume their liabilities are cash, but if they’ve borrowed 2.5bn of “unspecified crypto” as in the report and still have the same “unspecified crypto” borrow is healthy whether or not the price changes. I this it’s extremely unlikely all their liabilities are cash.
Surprise surprise, who would have guessed that the trading firm running an exchange might have some special relationship?
It’s possible that the FTT is also a liability, loaned from FTX. The book still isn’t great but is much healthier in that case.
It’s also possible that many of the unspecified crypto collateral is directly borrowed, instead of bought with borrowed cash.
It still leaves a few questions:
* Are they taking delta risks with borrowing funds or not? Borrowing to send into defi/basis has a very different risk profile than taking bets on price.
* is tether cash, or “unspecified crypto held”? Is USDC/BUSD crypto held? Is DAI?
* What lender would bother with the whole FTT song-and-dance instead of just admitting they’re giving out effectively uncollateralized loans
* Are lenders in a situation where they know the collateral is no good, but they also know that calling the loans/selling will force the worst case, so they hold on hoping for a way out?
* I doubt any lenders are taking significant maps/oxy/fida collateral. Mega shitcoins from day1
* Is this an arrangement that “made more sense” back in the bull market and now lenders want to call loans and avoid pissing off sbf?
* is sbf so interested in rescuing underwater lenders since he doesn’t want them to potentially liquidate giant ftt holdings?
It’s hard to come to any serious conclusions here without knowing the nature of their liabilities and the assets backing those (if any).
But then again what’s the risk? If you made the coin and basically get to chose the price, why not transmute that into cash? Lending to someone is an implicit OTC bid, and alameda surely gets a better deal in the lending markets than they would selling on exchange. You don’t even get the price impact unless the lenders try to liquidate.
Re: Crypto trading firm Alameda Research might be insolvent
#38I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are…
The loans are outstanding loans given to Alameda. This article is assessing the balance sheet, so assets (various junk coins) and liabilities (loans)
Re: Crypto trading firm Alameda Research might be insolvent
#39The title is contradicted by the article itself: if 88% of the firms equity were suddenly worthless (the worst car scenario), that would mean 12% remained. So they're not insolvent...
Re: Crypto trading firm Alameda Research might be insolvent
#40I really do not like this article and the discourse here for several reasons: 1. The entire Coindesk article lacks meaningful substance. For instance, we have zero idea about what those $7.4 billion of “loans” are. It’s really irresponsible to say that they’re insolvent. If you believe, so, you are applying no more rigor to your understanding of the space than the idiots who say HODL YOLO HFSP. If the liabilities are…
Alameda's story has many parallels with Celcius (and 3AC): if something happens that proves Alameda is insolvent, will you return to this analysis and hold the same viewpoint, that it's unhelpful to consider that their solvency may well hinge on value of illiquid nonsense assets? The problem Celcius had was not that they were lending to retail, it's that their entire investment thesis was based on insane bets with ca…
3AC had been packed to the gills with uncollateralized loans. Since then, most lenders have recalled loans and cleaned up their toxic balance sheet.