FTX to file for U.S. bankruptcy, CEO resigns • Hacker News Board

Re: FTX to file for U.S. bankruptcy, CEO resigns

#641

Post by Lonestar1440 » Fri, Nov 11, 2022, 7:39 PM UTC

everfree wrote: post #597

twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

I don't see why crypto is incompatible with regulation and institutions. Crypto is a unit of account, not some magical lawless thing that's doomed to never have a regulation written about it. In fact, places like New York already have pretty strict regulations requiring specific licenses for crypto-related businesses. Crypto crises like these are in general due to regulation not having caught up yet, not because comp…

Once you accept the necessity of middlemen, known counterparties, and regulators; what's the point of Crypto?

Re: FTX to file for U.S. bankruptcy, CEO resigns

#642

Post by fdgsdfogijq » Fri, Nov 11, 2022, 7:40 PM UTC

shorthistory wrote: post #423

Can anyone speculate what Bankman-Fried's exit plan was? Was this a fraud that got out of control, or premeditated? If it was premeditated, what was the exit plan? Did he expect to be able to gamble with customer funds indefinitely? Were the Effective Altruism intimations genuine? Why, if Alameda was a market maker, and they therefore presumably have some form of insight into the markets, did they then decide to take…

They were caught off guard by the risk asset sell off. They thought the bull run would go for longer

Re: FTX to file for U.S. bankruptcy, CEO resigns

#643

Post by hnews_account_1 » Fri, Nov 11, 2022, 7:40 PM UTC

tasubotadas wrote: post #555

twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

Why does this need to be regulated? We already have banks for that. And it's not like regulation saved them from being able to become insolvent.

Regulation saved the economy from the worst of it. But this is the kind of uninformed ignorance that is common in these parts. It has been consistently proven that regulation and central banking have prevented the worst of excesses. But live in your own world without reading anything. No one is stopping you.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#644

Post by a1369209993 » Fri, Nov 11, 2022, 7:40 PM UTC

rurp wrote: post #549

Animats wrote: post #389

"Voluntary Chapter 11" in Delaware. Figures. That gets them out from bankruptcy in the Bahamas, which is much tougher than US law. The Bahamas still has classic tough bankruptcy laws, where there's no debtor-in-possession reorganization. It's straight to liquidation, with a court-appointed receiver in charge. This should be, and may be, converted to a straight liquidation. Chapter 11 can be useful for restarting comp…

> We strongly advise against depositing Wait, withdrawls are completely frozen and the company is done for, but they are still accepting deposits?!

I'm not familiar with any of the listed currencies, but in a properly-designed cryptocurrency a deposit to a given public key is just any transaction[0] that includes a output to that public key. There's no such thing as accepting or not accepting deposits, at most they could actively refund them, which bankruptcy presumably prevents them from doing.

IOW, they're saying: "If you give us money, we will (/may) be forced to give it to our creditors rather than back to you, so don't do that.".

0: IE, a message published by Alice to the effect of "[Alice's public key] gives [Bob's public key] X [coin]s. [Alice's signature for this message]", published on the distributed ledger. Note that Alice can create and publish such a message without any input from Bob.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#645

Post by HDThoreaun » Fri, Nov 11, 2022, 7:41 PM UTC

Auracle wrote: post #608

sz4kerto wrote: post #309

Earlier quoted context omitted.

Even Coinbase?

I feel perfectly fine having my crypto stored on Coinbase’s end. As far as I know their business model makes perfect sense and they don’t take the weirdly big risks all of these falling dominoes have. Also, if Coinbase goes bankrupt and takes everyone’s crypto with them I feel everything will crash to essentially 0.

> their business model makes perfect sense

Well they can't make money because all the other exchanges offer better fees/lower spreads since they're loaning customer money out. They'll never be big enough to actually makea. profit while there are shady exchanges offering a better product(until it collapses).

Re: FTX to file for U.S. bankruptcy, CEO resigns

#646

Post by fwip » Fri, Nov 11, 2022, 7:41 PM UTC

vishnugupta wrote: post #628

shorthistory wrote: post #423

Can anyone speculate what Bankman-Fried's exit plan was? Was this a fraud that got out of control, or premeditated? If it was premeditated, what was the exit plan? Did he expect to be able to gamble with customer funds indefinitely? Were the Effective Altruism intimations genuine? Why, if Alameda was a market maker, and they therefore presumably have some form of insight into the markets, did they then decide to take…

There’s this incredulous passage from Sequoia article that’s been taken down since. Make of it what you will At this point, mid-2019, SBF decided to double down again—and scratch his own itch. He would bet Alameda’s multimillion-dollar trading profits on a new venture: a trading exchange called FTX. It would combine Coinbase’s stolid, regulation-loving approach with the kinds of derivatives being offered by Binance a…

Sounds like he forgot about the principle of diminishing returns.

If you have $1B to your name, it's stupid to put it all on red, even if your expected return is positive.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#647

Post by everfree » Fri, Nov 11, 2022, 7:41 PM UTC

bwestergard wrote: post #606

everfree wrote: post #597

Earlier quoted context omitted.

I don't see why crypto is incompatible with regulation and institutions. Crypto is a unit of account, not some magical lawless thing that's doomed to never have a regulation written about it. In fact, places like New York already have pretty strict regulations requiring specific licenses for crypto-related businesses. Crypto crises like these are in general due to regulation not having caught up yet, not because comp…

Why bother with proof of work or proof of stake mechanisms if you want political regulation? In that case, you might as well empower a state's central bank to develop a payment mechanism, and task them with ensuring fairness and enforcing laws around taxes, illegal activity, etc.

You're right in that if all we wanted was a domestic payment network, blockchain consensus mechanisms would be overkill and introduce unneeded overhead. Personally, I'm excited about the FedNow payment service coming online in the USA next year. Perhaps I'll finally be able to easily send money from bank to bank without involving third party fintechs like PayPal and Venmo, and without waiting a day or two for ACH.

However, crypto is useful because it standardizes behavior across regulatory boundaries, and because it creates a stateless unit of account.

Standardizing behavior across regulatory boundaries means that crypto "just works" to send value from one country to another, without needing cross-border intermediary companies that support your specific country pair to convert things between currencies/systems.

The stateless unit of account part is perhaps more interesting to me, though. Before crypto, there were no digital representations of value independent from state. No country has the power to hyperinflate crypto, and there doesn't seem to be a clear path to be able to accomplish a unit of account like that through traditional political means. The closest thing we have to that is the Euro, but it doesn't tick all the boxes.

Is a stateless unit of account good, or better than traditional government currencies? I'm honestly not sure. It does have some drawbacks in terms of the ability to use monetary policy to loosen and tighten markets. But it's an interesting enough concept that I would say it's worth it to "bother" with blockchain consensus technology.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#648

Post by Lonestar1440 » Fri, Nov 11, 2022, 7:41 PM UTC

shorthistory wrote: post #423

Can anyone speculate what Bankman-Fried's exit plan was? Was this a fraud that got out of control, or premeditated? If it was premeditated, what was the exit plan? Did he expect to be able to gamble with customer funds indefinitely? Were the Effective Altruism intimations genuine? Why, if Alameda was a market maker, and they therefore presumably have some form of insight into the markets, did they then decide to take…

They expected the gambles to pay off, and faster than customers started withdrawing en masse. Reminds me a lot of AIG's sketchy Securities Lending back before 2008.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#649

Post by thewataccount » Fri, Nov 11, 2022, 7:41 PM UTC

lazide wrote: post #611

everfree wrote: post #597

Earlier quoted context omitted.

I don't see why crypto is incompatible with regulation and institutions. Crypto is a unit of account, not some magical lawless thing that's doomed to never have a regulation written about it. In fact, places like New York already have pretty strict regulations requiring specific licenses for crypto-related businesses. Crypto crises like these are in general due to regulation not having caught up yet, not because comp…

Crypto is incompatible with regulation and institutions because it was designed to be, and is consistently a part of the ethos espoused by pretty much all crypto players? Literally, the first sentence in the Bitcoin whitepaper (which arguably kicked off 'crypto' as a thing) is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going thro…

The network was designed not to be regulatable. Businesses however are regulatable.

The US has shown they can effectively enforce AML/KYC requirements across the vast majority of exchanges and businesses. Any exchange the average person tries to use to buy crypto will request your ID to do any meaningful transaction.

Granted, there are exchanges you can use a VPN and access without KYC, and while it is difficult to manage billions of dollars in the dark, it's certainly possible. But they can regulate the vast majority that any regular user will find, and have shown they're willing to OFAC others.

It is not going to be long before regulations are increased, and some exchanges/services will be known to be subject to them - and will likely lean on that as a selling point. The others will only be accessible to those going out of their way to use them.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#650

Post by danaris » Fri, Nov 11, 2022, 7:41 PM UTC

bwestergard wrote: post #606

everfree wrote: post #597

Earlier quoted context omitted.

I don't see why crypto is incompatible with regulation and institutions. Crypto is a unit of account, not some magical lawless thing that's doomed to never have a regulation written about it. In fact, places like New York already have pretty strict regulations requiring specific licenses for crypto-related businesses. Crypto crises like these are in general due to regulation not having caught up yet, not because comp…

Why bother with proof of work or proof of stake mechanisms if you want political regulation? In that case, you might as well empower a state's central bank to develop a payment mechanism, and task them with ensuring fairness and enforcing laws around taxes, illegal activity, etc.

Well, I mean...that's the thing. There really isn't much point to crypto once it's regulated the same way as traditional finance...and there's no world where that wasn't eventually going to be the case.