Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

BlockFi files for bankruptcy as FTX fallout spreads

cnbc.com

Post reply on HN
Print view View original

341–350 of 544 posts

Re: BlockFi files for bankruptcy as FTX fallout spreads

#341

Post by webinvest »

christiangenco wrote: post #235

My wife and I had about 10% of our life savings in BlockFi. This is a pretty big blow for us, especially while gearing up to start a family. It's easily in the top 5 worst things to happen to me in my life. Is there any hope of individual creditors getting any of their money back? I'm unfamiliar with how bankruptcy works.

Creditors in Voyager’s bankruptcy were looking at about a 60 cents on the dollar return without a buyout and about 75 cents on the dollar return if FTX could have followed through on their business and accounts buyout, IIRC.

Voyager had only 3 creditors so they weren’t well diversified. When one of their creditors eventually went belly-up, they predictably lost about a third of their holdings.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#342

Post by christiangenco »

notch656a wrote: post #330
itake wrote: post #323

Earlier quoted context omitted.

The blockfi terms said the money was always the client's money and that wallet funds are not lent out. My not-a-lawyer interpretation is I didn't 'give' the money to Blockfi and thus Blockfi doesn't owe me any money. Am I understanding this wrong?

If someone has 10% of their money on a cex they are either 1) Farming it for interest 2) Collateral for trading / other asset 3) Maybe some other corner case I can't think of here -or- 4) Morons. My guess above was (1) since it was both a large amount and the losses were unexpected. I do not think it would be 'yours' except in the 4th case which would be morons storing unvested deposits on cex for any purpose but sho…

OP here! #1 was my motivation, though at the moment I'm definitely feeling like #4 played a role.

My rationale was that crypto just sitting in cold storage could only gain value if the underlying asset appreciated which is effectively currency speculation. By storing it in a crypto "bank" my money could be working to generate actual value via. liquidity and loans akin to a real bank.

If the money was earning a modest amount of interest it didn't feel like as wild of a risk. Even if the exchange rate to USD is unstable I can still see the amount of crypto going up each month.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#343

Post by christiangenco »

throwaway_4ever wrote: post #279
christiangenco wrote: post #235

My wife and I had about 10% of our life savings in BlockFi. This is a pretty big blow for us, especially while gearing up to start a family. It's easily in the top 5 worst things to happen to me in my life. Is there any hope of individual creditors getting any of their money back? I'm unfamiliar with how bankruptcy works.

Let this serve as a reminder to always stick with investments in $VTI and $BND in the future. It'll be a positive.

As long as Vanguard doesn't file for bankruptcy!

Re: BlockFi files for bankruptcy as FTX fallout spreads

#344

Post by williamcotton »

Yizahi wrote: post #318
andirk wrote: post #256

Earlier quoted context omitted.

NFTs are collectors items. It's as stupid as collecting anything, including fine art, photography, baseball cards, rocks. I'll admit it seems more strange because it's uninteresting, but claiming collecting is idiotic is pretty short-sighted. No, I don't collect that crap :)

There is one "small" problem - NFTs are NOT in any way related to the items/files someone is collecting. And collecting NFTs is about as interesting as "collecting" numbers from the random number generator.

NFTs are probably the most interesting and legitimate use of these kinds of computer systems. For example, I could see a lot of value in specialized Yu-Gi-Oh projection card tables installed at game stores that only worked with officially issued NFT virtual cards. Players could rent out their virtual cards to other players and turn their purchases into assets. There are already companies in the MTGO space that rent out virtual cards but the whole trading system is (poorly) managed by Wizards of the Coast and lacks programmability.

I think the biggest problem with crypto is that it was way overhyped for anything outside of having fun online.

It's like meme stocks. It's fun to waste $50 playing some silly online game! It's not fun to waste $50k gambling on something that you think will change the global financial systems.

I also think there's plenty of room for fungible tokens that represent ownership over digital content, eg, buying 4% of the rights to the future profits from the monetization of a digital video, as opposed to the patronage system of platforms like Twitch or Patreon. If we truly are reliving the existing financial system shouldn't we expect to reinvent a marketplace for intellectual property?

Re: BlockFi files for bankruptcy as FTX fallout spreads

#345

Post by christiangenco »

webinvest wrote: post #341
christiangenco wrote: post #235

My wife and I had about 10% of our life savings in BlockFi. This is a pretty big blow for us, especially while gearing up to start a family. It's easily in the top 5 worst things to happen to me in my life. Is there any hope of individual creditors getting any of their money back? I'm unfamiliar with how bankruptcy works.

Creditors in Voyager’s bankruptcy were looking at about a 60 cents on the dollar return without a buyout and about 75 cents on the dollar return if FTX could have followed through on their business and accounts buyout, IIRC. Voyager had only 3 creditors so they weren’t well diversified. When one of their creditors eventually went belly-up, they predictably lost about a third of their holdings.

Are Voyager's individual creditors getting 60% of their money back or does bankruptcy only pay out to the largest creditors?

Re: BlockFi files for bankruptcy as FTX fallout spreads

#346

Post by [deleted] »

solotronics wrote: post #47

Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions explicitly you don't need any trusted third party. A whole lot of people think they can make money outsmarting the original concepts of Bitcoin and they get scammed in new ways each cycle. https://nakamotoinstitute.org/trusted-third-parties/

[deleted]

Re: BlockFi files for bankruptcy as FTX fallout spreads

#347

Post by fdgsdfogijq »

treeman79 wrote: post #275
fdgsdfogijq wrote: post #50

Earlier quoted context omitted.

I talked to an employee that left last spring. She said they had literally no idea what they were doing. The founders are just ivy educated 30 year olds. So they decided to just start hiring everyone they could from paypal, to move into "blockchain payments". They paid huge sums. The directors there had no experience ever managing huge teams of people. It was a giant mess of unqualified people funded by cheap capital…

Implemented the “facade” for a services company a dozen years ago. Request comes in and sales agents manually find a good local in the area. Got it the point where we were ready to scale nation wide. Leadership decided it was useful to have as something to prove we knew had great tech. But really wanted to do manual sales of other services. They were only looking at next quarter profits. Not seizing the industry. Fin…

I think part of it is non technical people not trusting their technical people/not willing to give them the keys to the business. They can "see" the manual parts and control it.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#348

Post by qdog »

solotronics wrote: post #47

Bitcoiners have been saying this whole time not to keep your crypto with a 3rd party and this is exactly why. Satoshis original message about Bitcoin mentions explicitly you don't need any trusted third party. A whole lot of people think they can make money outsmarting the original concepts of Bitcoin and they get scammed in new ways each cycle. https://nakamotoinstitute.org/trusted-third-parties/

The people "investing" in FTX weren't doing it because they wanted cryptocurrency, they wanted a 15% guaranteed return.

Without the exchanges, the USD->cryptocurrency onramp/offramp is a lot more difficult to do, I don't think most people want to only shop at places that do actual on-chain settlement.

I predict we will continue to see large numbers of scams involving cryptocurrency as long as there are essentially unregulated banks and investment firms. Expecting lots of people to be sufficiently interested and educated enough to only use 'cold wallets' or use good secops on their systems is a bit too hopeful. Even after reading about it for years, the overhead of using cryptocurrency vs a debit or credit card just doesn't seem worth it to me, and I have a tech background.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#349

Post by christiangenco »

woodruffw wrote: post #240
christiangenco wrote: post #235

My wife and I had about 10% of our life savings in BlockFi. This is a pretty big blow for us, especially while gearing up to start a family. It's easily in the top 5 worst things to happen to me in my life. Is there any hope of individual creditors getting any of their money back? I'm unfamiliar with how bankruptcy works.

I'm sorry for your hardship. My understanding (which is not a professional or legal opinion) is that individual creditors probably come near last in these kinds of bankruptcy proceedings. It's possible that after a prolonged settlement process you may receive some of your money back, but that's not an outcome that I would place substantial faith in. I say this without an ounce of judgement, explicit or implied: can y…

> can you speak to some of your motivations for putting your life savings into these kinds of vehicles?

For sure. My rationale was that keeping crypto in cold storage was effectively currency speculation and didn't really do anything to add value to the world. By instead keeping it in an interest-earning account it could be earning interest independent of the exchange rate with USD and providing some value to the world in the form of liquidity and loans.

It's the same rationale I use to justify keeping money in VTSAX instead of under my mattress.

Re: BlockFi files for bankruptcy as FTX fallout spreads

#350

Post by JohnFen »

HashBasher wrote: post #231
postalrat wrote: post #20

Earlier quoted context omitted.

Then the end game would be to be something useful that people use in their daily lives. I think that's what was meant when calling it digital currency. But now it's heading down a different path.

Having a savings account is not useful in daily life?

Cryptocurrencies look to be a particularly bad substitute for a savings account to me. Or even just keeping cash in a shoebox under your bed.
Post reply on HN