Seems that YC have been investing in quite a few predatory companies in recent years.
Lambda School and Inflow are two that come to mind.
YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
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Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#62Earlier quoted context omitted.
I remember YC stating that they will "forfeit" (probably not the right legal term) their shares in companies that turn out to do unethical things. Now, let's see if they stick to their principles.
“Forfeiting” shares in a company that has raised a couple million and funding and lost $42M in user funds seems like a bit of an empty gesture from YC
Of course. But I bet they're still not going to do it...
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#63YC has made some questionable bets in the last few years. Quantity over quality?
I stopped following their investments in like 2015 after they funded a startup that makes vegan condoms, whatever that is.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#64Earlier quoted context omitted.
$42 million of real people’s money was lost. That’s a net negative to society whether or not it shows up on a balance sheet.
Sure but as long as they (the VC) are shielded from liability, it's not their problem. Society is something other folk can worry about. And if things get really bad, then a quick essay on lessons learnt, we should all move on, etc.
> Society is something other folk can worry about.
The main problem with capitalism in one handy sentence.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#65The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doing what YC does and don’t claim to, but the jig here was so transparent that the smallest drop of “street smart” should’ve been enough to set off some alarms. We’re approaching a point where being passed over for “culture fit” is a compliment. Hopefully the emb…
Probably not much else to invest on right at this moment, at least not at this level ("small" start-ups wanting to "change the world").
I was honestly believing that the web3 bullsh.t were just some young people who didn't know any better or some scam-artists (or both), I didn't actually think for a second that a "serious" VC like YC would put money into something like that. Looks like I was wrong.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#66The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doing what YC does and don’t claim to, but the jig here was so transparent that the smallest drop of “street smart” should’ve been enough to set off some alarms. We’re approaching a point where being passed over for “culture fit” is a compliment. Hopefully the emb…
There were funds that did due diligence and built out models of the Luna/Terra/Anchor ecosystem and realized it was unstable. You can talk to the people who built their models and they have lots of fun things to say about the ordeal.
Do you have any links / references regarding that? I'd like to read more
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#67I imagine (and hope) those 5k where mostly crypto bros who knew what they were getting into. Who else expects 15% returns from a "safe" investment?
I didn't invest because it was only 15% gains. Sad, but true. I actually read them their material & saw it was based on Anchor Protocol. When I saw that it was based on UST, and I couldn't figure how UST was backed by anything I understood, I opted out. One of the few times in crypto where I felt "do you won research" paid off for me.
What is old is new again: the UST algorithmic backing is basically https://en.wikipedia.org/wiki/Death_spiral_financing
A company that couldn't get financing any other way could get financing by issuing fixed price convertible bonds. "Fixed price convertible" means the bond can be converted into shares (of the company), but at a fixed price - aka, regardless of the value of each individual share, you are promised fixed a dollar amount of them.
This means if the share price drops, you will be "made whole" by getting issued enough shares to match the fixed price.
It's called death spiral bond, because if/when the price of such a company drops, these convertible bonds will trigger, causing the amount of shares to increase (as they issue new shares), which in turn causes the price of the existing shares to drop, ad-infinitum. Often the owners of the shares would end up with nothing as the shares' value drops to zero (or the company recovers, and they do make some money).
Swap bonds with UST, and shares with Luna, and you get the above scenario.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#68https://i.imgur.com/qz4EeQS.jpg - This is (was?) their ads
"15% interest. No surprises."
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#69The last few weeks (months, really) has highlighted an incredible lack of discernment in the VC-verse wrt the thing we call web3. Now. I have no experience doing what YC does and don’t claim to, but the jig here was so transparent that the smallest drop of “street smart” should’ve been enough to set off some alarms. We’re approaching a point where being passed over for “culture fit” is a compliment. Hopefully the emb…
> the thing we call web3
The thing some call web3.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#70YC invested in what was clearly an outright fraud? Or did they pivot do hard that nobody noticed?
A poor decision does not equal fraud.
It does when the poor decision is to run a ponzi scheme
e: ah, only acting as the middlemen between the end user and a ponzi scheme. Probably that'll give them and their VC backers enough plausible deniability to avoid being arrested.