Crypto trading firm Alameda Research might be insolvent • Hacker News Board

Re: Crypto trading firm Alameda Research might be insolvent

#61

Post by zby » Fri, Nov 04, 2022, 2:03 PM UTC

cryptoanon wrote: post #8

I 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…

> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender!

What does that mean? How collateralization changes Alameda risk?

It reduces the lender risk a bit - but it does not touch the borrower risk at all:

https://www.investopedia.com/terms/c/collateral.asp

"In the event that the borrower does default, the lender can seize the collateral and sell it, applying the money it gets to the unpaid portion of the loan. The lender can choose to pursue legal action against the borrower to recoup any balance remaining."

Re: Crypto trading firm Alameda Research might be insolvent

#62

Post by NotYourLawyer » Fri, Nov 04, 2022, 2:03 PM UTC

aljungberg wrote: post #7

If 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.

Are no-recourse loans typical in this space? Seems insane.

Re: Crypto trading firm Alameda Research might be insolvent

#63

Post by Mistletoe » Fri, Nov 04, 2022, 2:03 PM UTC

phphphphp wrote: post #58

cryptoanon wrote: post #40

Earlier quoted context omitted.

3AC had been packed to the gills with uncollateralized loans. Since then, most lenders have recalled loans and cleaned up their toxic balance sheet.

3AC was a prop trading firm flush with cash… until the curtain was lifted and it turns out it was just a big fraud. Alameda is a prop firm flush with cash… Why do you assume that Alameda isn’t “packed to the gills” with financial gremlins? If you asked anybody in the space about 3AC or Alameda 12 months ago, you’d have heard the same thing about them: prop trading firms that have been hugely successful investing thei…

Alameda is helmed by quants from Jane Street etc., they are supposed to do better with regard to risk management, forecasting, bet sizing. Their whole M.O. is that they are smarter and actually do math and that is the source of their success.

https://www.alameda-research.com/our-team

Whether that is true or not, I don’t know. But from their tweets and podcasts it does seem they approach things very differently and in a way that makes sense.

Re: Crypto trading firm Alameda Research might be insolvent

#64

Post by ikeboy » Fri, Nov 04, 2022, 2:04 PM UTC

cryptoanon wrote: post #8

I 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…

ZachXBT has repeatedly accused people with little to no evidence, he's a step up from most of the anon FUD accounts but by no means perfect.

Re: Crypto trading firm Alameda Research might be insolvent

#65

Post by josu » Fri, Nov 04, 2022, 2:05 PM UTC

aljungberg wrote: post #7

If 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.

Unless their liabilities are also in FTT.

Re: Crypto trading firm Alameda Research might be insolvent

#66

Post by cryptoanon » Fri, Nov 04, 2022, 2:05 PM UTC

phphphphp wrote: post #58

cryptoanon wrote: post #40

Earlier quoted context omitted.

3AC had been packed to the gills with uncollateralized loans. Since then, most lenders have recalled loans and cleaned up their toxic balance sheet.

3AC was a prop trading firm flush with cash… until the curtain was lifted and it turns out it was just a big fraud. Alameda is a prop firm flush with cash… Why do you assume that Alameda isn’t “packed to the gills” with financial gremlins? If you asked anybody in the space about 3AC or Alameda 12 months ago, you’d have heard the same thing about them: prop trading firms that have been hugely successful investing thei…

I’m not saying alameda is not insolvent. Im saying that the burden of proof is on the author to prove that they are insolvent.

Re: Crypto trading firm Alameda Research might be insolvent

#67

Post by cryptoanon » Fri, Nov 04, 2022, 2:06 PM UTC

ikeboy wrote: post #64

cryptoanon wrote: post #8

I 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…

ZachXBT has repeatedly accused people with little to no evidence, he's a step up from most of the anon FUD accounts but by no means perfect.

You’re right. I edited that in later but I’m going to take it out. He’s made some pretty damning accusations based on circumstantial evidence.

Re: Crypto trading firm Alameda Research might be insolvent

#68

Post by jevgeni » Fri, Nov 04, 2022, 2:06 PM UTC

aljungberg wrote: post #7

If 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.

that kind of a dynamic is not unique to crypto.

Re: Crypto trading firm Alameda Research might be insolvent

#69

Post by kayamon » Fri, Nov 04, 2022, 2:07 PM UTC

rufusroflpunch wrote: post #56

stephc_int13 wrote: post #55

Being an avid HN reader, I've been loosely following the crypto/NFT market with various sentiments oscillating between disbelief and facepalm. The real question would be: is there anything that is not a scam in this market?

Owning and holding Bitcoin is not a scam. That's about it.

Not your keys not your coins.

If you put your money in someone else's bank then they'll loan that money out against your will.

Re: Crypto trading firm Alameda Research might be insolvent

#70

Post by x1ph0z » Fri, Nov 04, 2022, 2:07 PM UTC

phphphphp wrote: post #11

pixelpoet wrote: post #6

I'm continually surprised by how many "major" crypto firms I've never heard of before (being familiar with the space) suddenly are regarded as big names when they go under. Wake me up when it's Kraken or something, i.e. a company someone may actually have heard of.

I'm not sure if this is sarcasm or not, but just in case it's sincere: Alameda are considered a lynch-pin of the crypto industry, they're holding up pretty much everything... and by extension, FTX is far more important than Kraken. If Alameda implode, it'll be far worse than 3AC's implosion. I don't think it's possible to kill the crypto industry, but Alameda's implosion would be the most likely event to cause it.

The whole point of crypto was to be decentralized. For one company to go down and cause the industry to implode means the industry is on the wrong path and needs to be reset.