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Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

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Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#81

Post by AlexandrB »

chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

It's interesting to watch Tether's market cap decrease in this downturn - presumably as more and more Tether is redeemed by major holders. The question is: how much liquidity does Tether have to fund these redemptions? Is it 20B? 50B? Maybe it is fully-backed?

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#82

Post by vorpalhex »

CapmCrackaWaka wrote: post #78
shuntress wrote: post #69

Is this mostly caused by people coming to grips with the fact that "crypto" is entirely speculative with no actual value? "TradFi" at least has a real floor because "real" money (as in: currency that can be exchanged for goods and services) and "real" investments (as in: shares of companies that provide goods/services) do actually exist. Even if significant portions of the market are driven by speculation. Are we rea…

The physicality of an underlying asset isn’t what makes people trade stocks, commodities, options or anything else. If you’re day trading soybean futures, it’s not the ideal of soybeans that wakes you up in the morning. It’s the money you could make. Bitcoin is a unique speculative asset because it’s value is based entirely on human interest, nothing else. I think crypto is here to stay as a speculative asset class.…

The physicality of the underlying asset does matter though. Soybeans in and of themselves have some fundamental value (food, feed) the same way oil does (fuel, plastics, etc).

There is no underlying value in having answers to a random cryptographic problem attested to you.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#83

Post by lizknope »

logicchains wrote: post #28
charles_kaw wrote: post #22

Earlier quoted context omitted.

Unfortunately, large defi institutions have been advertising to retail investors. Many of whom have not just had a haircut, but their whole head shaved. Government regulation of retail finance is a feature, not a bug.

>Government regulation of retail finance is a feature, not a bug. It's not a bug unless you believe adults should be treated like children and not be able to take the risks they desire or face the consequences of those risks. Anyone investing in DeFi should absolutely have known the risks; it doesn't justify giving the government even more power over people's finances.

Go on reddit and you will see a lot of people who invested thousands or even hundreds of thousands of dollars in terra/luna, celsius, and various other crypto companies. There have been suicide help lines posted at the top of many of these forums.

Are these people adults? Yeah. Should they know better? Yeah.

The question is should we do anything about it? The Super Bowl is the most watched television event every year and there were lots of crypto ads this year. Do people need to be protected from themselves?

We have regulate the traditional financial industry. We put warnings labels on cigarettes. My view is that we need even more regulation of the traditional finance industry and apply those same regulations to crypto.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#84

Post by FabHK »

HWR_14 wrote: post #51
airza wrote: post #26

Earlier quoted context omitted.

Individual investors tend to get liquidated, but for hedge funds larger investors the story is more complex. See https://www.bloomberg.com/opinion/articles/2021-07-29/archeg... >: > In the traditional financial system, very few things work like this. One thing that mostly does is a margin account at a retail stock brokerage: If your stock declines, you will get a margin call, and if you don’t post margin within a def…

Credit Suisse may thought it was rude, may have been thinking about maintaining the relationship long term or may have suspected liquidating the assets would net it less than what was owed with no recourse for the other part.

In the meantime, Goldman went ahead and liquidated Archego's position.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#85

Post by TuringNYC »

chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

>> TradFi normally solves this by having a firm have oversite on everyones positions and have everyone pay money into a pot to help bail out failed counterparties so they don't spill over to other firms.

I'm curious -- in traditional finance, there are often daily collateral settlements which force both parties to change collateral based on valuations shifts by way of the exchange. is there such a concept in crypto? Wouldnt this resolve a lot of the issues you're speaking about?

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#86

Post by optimalsolver »

0xcde4c3db wrote: post #4
carrja99 wrote: post #3

"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

In case the relevance isn't clear, this is a headline that was inserted into the Bitcoin origin block, presumably to prove that it hadn't been mined before that date. However, the specific headline chosen is often interpreted as an implicit jab at conventional finance by Satoshi Nakamoto.

I wonder what Satoshi would think of Tether, or crypto-firms like Blockstream.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#87

Post by yata69420 »

shuntress wrote: post #74
clpm4j wrote: post #70

Earlier quoted context omitted.

As long as people have a way to potentially get rich with little to no 'real work', they won't stop.

Sure. Speculation certainly will continue and real money will continue to change hands. But are we at least done pretending that crypto currency (at least, as it exists now) will ever have any practical purpose beyond being a fungible entity upon which gamblers speculate?

> But are we at least done pretending that crypto currency (at least, as it exists now) will ever have any practical purpose beyond being a fungible entity upon which gamblers speculate?

No, I don't think that's happened yet. I still know tons of people excited to build for "web3".

I don't think we need "rich" websites with javascript, "smart" phones in everyone's pocket, or "social media" at all.

But those all happened, and it seems to be a lot of the same vibe for "web3" builders right now.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#88

Post by lizknope »

sgt101 wrote: post #79
lizknope wrote: post #76

Earlier quoted context omitted.

Your link is to an attestation, not an audit, and it was performed by a company in the Cayman Islands that changed its name and is still under investigation by the United Kingdom government https://www.coindesk.com/markets/2022/01/26/tethers-new-acco...

Hopefully you can link to Tether's audit? ???

There is no audit. That's why they produced that bullshit attestation.

Tether has been saying they would produce an audit since July 2021, that's a year ago!

https://www.cnbc.com/2022/05/17/tether-usdt-redemptions-fuel...

This is long but fascinating. Tether is a scam, it just hasn't fallen apart yet.

https://crypto-anonymous-2021.medium.com/the-bit-short-insid...

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#89

Post by TuringNYC »

dcolkitt wrote: post #18
chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

> Crypto has tried to solve this by strict liquidation rules that tend to make things worse by turning firms into forced sellers This is literally how traditional finance works as well. If you have a leveraged position at a futures or options exchange, you absolutely will be liquidated as soon as your position gets close to being in the red. I 100% guarantee you that the CME or Goldman will not let you "ride things o…

>> I 100% guarantee you that the CME or Goldman will not let you "ride things out".

That is indeed generally the case. There are, however, monthly collateral agreements in some cases where you can ride it out for a month before getting margin called. Also, there are sometimes credit-rating based collateral calls. The most famous would be AIG's -- they eventually had margin calls of over $100B when their credit rating fell and the housing market also fell and liquidity dried up.

Funny thing in such cases -- when the borrower owes banks those sums of money, it ceases to be the borrower's issue and becomes the bank's issue

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#90

Post by CapmCrackaWaka »

vorpalhex wrote: post #82
CapmCrackaWaka wrote: post #78

Earlier quoted context omitted.

The physicality of an underlying asset isn’t what makes people trade stocks, commodities, options or anything else. If you’re day trading soybean futures, it’s not the ideal of soybeans that wakes you up in the morning. It’s the money you could make. Bitcoin is a unique speculative asset because it’s value is based entirely on human interest, nothing else. I think crypto is here to stay as a speculative asset class.…

The physicality of the underlying asset does matter though. Soybeans in and of themselves have some fundamental value (food, feed) the same way oil does (fuel, plastics, etc). There is no underlying value in having answers to a random cryptographic problem attested to you.

Soybeans (and most other assets) have inherent value which gives them a price minimum, but not necessarily a price maximum. Crypto has no price minimum (0 I guess, at which point returns are incalculable) and no price maximum because it has no inherent value.

My entire point is that crypto is a unique asset class, so I think it’s here to stay as long as there are people willing to speculate.

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