FTX

[blunderfull]

Where it all started. The Kimchi Premium days of SBF.

This puff piece from Adam Fisher has since been deleted by Sequoia on their site.

Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too

The founder of FTX lives his life by a calculus of altruistic impact. By Adam Fisher.

web.archive.org

Adam

 

[Olsonist]

Why Hasn’t Sam Bankman-Fried Been Arrested Yet?

Bernie Madoff was arrested in a matter of days after his fraud came to light, but SBF is still a free man. What gives?

nymag.com

Good answer from HN comments:

Putting aside the circumstances specific to SBF/FTX (being in the Bahamas, involving crypto, SBF's political connections, etc), there's not much reason to expect that SBF should have been arrested 5-6 weeks after FTX's collapse:​

​

- Enron blew up in Dec. 2001. It wasn't until mid-July 2004 that Jeffrey Skilling and Kenneth Lay were finally arrested.​

​

- The WSJ expose on Theranos was in 2015, Holmes wasn't indicted until 2018.​

​

- Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.​

​

Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.​

​

Whether SBF is getting exceptionally soft treatment will be easier to discern in retrospect, but it might be many months or even years before he's indicted.​

 

[blunderfull]

Why Hasn’t Sam Bankman-Fried Been Arrested Yet?

Bernie Madoff was arrested in a matter of days after his fraud came to light, but SBF is still a free man. What gives?

nymag.com

Good answer from HN comments:

Putting aside the circumstances specific to SBF/FTX (being in the Bahamas, involving crypto, SBF's political connections, etc), there's not much reason to expect that SBF should have been arrested 5-6 weeks after FTX's collapse:​

​

- Enron blew up in Dec. 2001. It wasn't until mid-July 2004 that Jeffrey Skilling and Kenneth Lay were finally arrested.​

​

- The WSJ expose on Theranos was in 2015, Holmes wasn't indicted until 2018.​

​

- Martin Shkreli's MSBM collapsed by 2012; he wasn't indicted until 2015.​

​

Bernie Madoff is a notable exception: he was arrested 3 days after his Ponzi was revealed. But it's not comparable at all to SBF's situation: Madoff was arrested after he confessed privately to his own family; his sons immediately went to the police.​

​

Whether SBF is getting exceptionally soft treatment will be easier to discern in retrospect, but it might be many months or even years before he's indicted.​

Banking collapse of 2008 - can’t remember anyone being indicted off that mess.

Do Kwon is doing Zoom meetings thrown up on YTube? The Shkreli quip ‘jail not so bad’ directed at Kwon?? Kwon, depending on who you talk to, is a click above ‘person of interest’ to several countries.

 

[Stingray~]

My finance guy said and then did thank god avoid anything Bitcoin but I know a couple friends who did get ‘bit.’ Always looked faked and driven by sentiment alone.

 

[hobie1616]

“What useful thing does it do?”

Blockchains, What Are They Good For?

A year ago Bitcoin and other cryptocurrencies were selling at record prices, with a combined market value of around $3 trillion; glossy ads featuring celebrities — most infamously Matt Damon’s “Fortune Favors the Brave” — filled the airwaves. Politicians, including, alas, the mayor of New York, raced to align themselves with what seemed to be the coming thing. Skeptics like yours truly were told that we just didn’t get it.

Since then the prices of crypto assets have plunged, while a growing number of crypto institutions have collapsed amid allegations of scandal. The implosion of FTX, which appears to have used depositors’ money in an attempt to prop up a related trading firm, has made the most headlines, but it’s only one entry on a growing list.

We are, many people say, going through a “crypto winter.” But that may understate the case. This is looking more and more like Fimbulwinter, the endless winter that, in Norse mythology, precedes the end of the world — in this case the crypto world, not just cryptocurrencies but the whole idea of organizing economic life around the famous “blockchain.”

And the real question, it seems to me, is why so many people — not just naïve small investors, but also major financial and business players — bought into the belief that this bad idea was the wave of the future.

A blockchain is a digital ledger associated with an asset, recording the history of transactions in that asset — who bought it from whom and so on. The asset could be a digital token like a Bitcoin, but it could also be a stock or even a physical thing like a shipping container. Ledgers, of course, are nothing new. What’s distinctive about blockchains is that the ledgers are supposed to be decentralized: They aren’t sitting on the computers of a single bank or other company; they’re in the public domain, sustained by protocols that induce many people to maintain records on many servers.

These protocols are, everyone tells me, extremely clever. I’ll take their word for it. The question I’ve never heard or seen satisfactorily answered, however, is, “What’s the point?” Why go to the trouble and expense of maintaining a ledger in many places, and basically carrying that ledger around every time a transaction takes place?

The original rationale for Bitcoin was that it would do away with the need for trust — you wouldn’t have to worry about banks making off with your money, or governments inflating away its value. In reality, however, banks rarely steal their customers’ assets, while crypto institutions more easily succumb to the temptation, and extreme inflation that destroys money’s value generally happens only amid political chaos.

Still, there was an alternative, more modest justification for using blockchain technology, if not necessarily for cryptocurrencies: It was supposed to offer a lower-cost, more secure way to keep track of transactions and stuff in general.

But that dream appears to be dying, too.

Amid all the sound and fury over FTX, I’m not sure how many people have noticed that the few institutions that seriously tried to make use of blockchains seem to be giving up.

Five years ago, it was supposed to be a big deal — a sign of mainstream acceptance — when Australia’s stock exchangeannounced that it was planning to use a blockchain platform to clear and settle trades. Two weeks ago, it quietly canceled the plan, writing off $168 million in losses.

Maersk, the shipping giant, has also announced that it is winding down its efforts to use a blockchain to manage supply chains.

A recent blog post by Tim Bray, who used to work for Amazon Web Services, tells us why Amazon chose not to implement a blockchain of its own: It couldn’t get a straight answer to the question, “What useful thing does it do?”

So how did this enterprise, which never stood up to scrutiny, become such a big deal?

It was probably a combination of factors. Political ideology played a role: Not all crypto enthusiasts were right wingers, but distrust of banks — we all know who runs them — and government-managed money provided a hard core of support.

The romance of high tech also played a role, with the very incomprehensibility of crypto discourse acting, for a while, as a selling point. And then, as prices soared, fear of missing out — plus large outlays on marketing and political influence-buying — brought many others into the bubble.

It’s an amazing story, and also a tragedy. It’s not just the small investors who have lost much if not all of their life savings. The crypto bubble has had huge costs to society as a whole. Bitcoin mining alone uses as much energy as many countries; I’ve been trying to estimate the value of the resources consumed in producing fundamentally worthless tokens, and it’s probably in the tens of billions of dollars, not counting the environmental damage.

Add in the costs associated with other tokens and the resources burned up in abortive efforts to apply a blockchain approach to everything, and we’re probably talking about waste on an epic scale.

No doubt I’ll hear from many people still insisting that I don’t get it. But it really looks as if there never was an it to get.

 

[ExOmo]

What could possibly go wrong?

 

[Olsonist]

Banking collapse of 2008 - can’t remember anyone being indicted off that mess.

There was one guy, Kareem Serageldin, but it still proves your point. He was kind of a token. He definitely crimed and definitely paid a price for it, prison, heavy fines and barred from the securities profession. But his crime was not central to the banking crisis.

Why Only One Top Banker Went to Jail for the Financial Crisis (Published 2014)

The economic catastrophe of 2008 was the largest of its kind since the Depression. Who’s taking the fall?

www.nytimes.com

 

[SloopJonB]

there never was an it to get.

It was simply a type of ponzi

 

[Olsonist]

Bitcoin and Decentralized Finance are very big with the Fakebertarian crowd.

Crypto Meltdown Exposes Hollowness of Its Libertarian Promise

Unable to displace the dollar, crypto became just another asset without traditional asset markets’ guardrails.

www.wsj.com

 

[Raz'r]

If figure old Warren Buffet’s advice is still good: if you don’t understand it, don’t invest in it.

As to blockchain tech, it does seem to have a few uses with inventory, etc, but good old ERP works too.

Blockchain as currency? It’s asset based, meaning its value is due to its scarcity. Somewhat like gold but gold has industrial and fanciful uses. Blockchain currencies not so much. It’s valuable because people think it will be valuable. As soon as folks realize the emporer has no clothes, well…

Will the coins survive this crash, probably. Will regulations be coming? Most definitely.

 

[Olsonist]

If you don't understand it then it's just gambling. NFTs, my word was/is that stupid.

BTW, at least two major Silicon Valley VCs have major crypto losses.

A16Z was big into crypto. They created a fund for it. The did a crypto startup school for it. They spun off partner Katie Haun (former US Attorney who prosecuted Ross Ulbricht). They were huge into crypto. They fucking invested in Adam Neuman's crypto startup.

Sequoia invested heavily into FTX. They published and removed a gushing profile on SBF right before the collapse. Then they sent an open letter to their limited partners.

The comparison is SBF and Bernie Madoff. I think that's unfair. Madoff was singular and crypto is pervasive. But I don't think crypto survives regulation.

 

[Clove Hitch]

Don't let these events fill you with fear uncertainty and doubt (FUD). My boat's crypto currency - KEel Qoins and Knot Dollar$ ("they're not dollars, they're Knot Dollar$!" ) are stable and strong.

My crew gets paid in my crypto and they are happy with it.

But don't worry you don't have to crew on my boat to get in on the action. Send me a message and I will tell you how an entry level monthly subscription of $110 will guarantee you a 4% monthly increase in your Knot dollar$ balance. If you want to go to the Platinum level that's $195 a month but you are looking at a 5% return guaranteed.

 

[BeSafe]

These protocols are, everyone tells me, extremely clever. I’ll take their word for it. The question I’ve never heard or seen satisfactorily answered, however, is, “What’s the point?” Why go to the trouble and expense of maintaining a ledger in many places, and basically carrying that ledger around every time a transaction takes place?

The answer is resiliency to catastrophe, both intentional and accidental. Once the transaction is reported, its reported. Its very difficult to rewrite a blockchain ledger or delete the evidence. Its essentially democratizing a barter system.

As long as you trust centralized power and authority in perpetuity, there's absolutely no need for blockchain.

At the root of every scandal thus far from Mt. Gox to FTX has happened on exchanges - where people give authority over their blockchain transactions to a third party. They GIVE UP the democratized exchange to a central authority, and are then shocked which shit goes south and that centralized authority uses their tokens for its own ends.

 

[giegs]

FTX is just a rebranded TradFi scam being leveraged to push regulation that would help retain TradFi control points. The same type of scam exists in equity markets in the form of "securities owed, not yet purchased" and similar, but there's a lot more lipstick on that pig.

Most coins/tokens that get any press are speculative plays with emerging tech at best, outright scams for things like generating paper collateral at worst. There are some cool projects that use the tech for things like cross-platform interoperability, inventory, market making, order matching, etc. that have real applications - far removed from things like FTX.

Digital Rights Management is probably the most widespread practical implementation right now. Users don't really need to know or care that they're on a platform that uses blockchain in those cases and that's how it should be. Some of the recent developments with embedded royalties are worth getting excited about imo. Same with network transaction rates - VISA is slow as hell in comparison.

How financial institutions are using these technologies, especially foreign crypto exchanges, is worth looking into. There's a lot of exposure to unregulated markets and arguably inappropriate use of more traditional financial instruments in that space.

DeFi is just what you do to expectations. True decentralization is an impossible goal that goes against the history of money and finance. No normal person wants to be fully self-custodial. It's too risky and inconvenient.

 

[blunderfull]

 

[Raz'r]

The answer is resiliency to catastrophe, both intentional and accidental. Once the transaction is reported, its reported. Its very difficult to rewrite a blockchain ledger or delete the evidence. Its essentially democratizing a barter system.

As long as you trust centralized power and authority in perpetuity, there's absolutely no need for blockchain.

At the root of every scandal thus far from Mt. Gox to FTX has happened on exchanges - where people give authority over their blockchain transactions to a third party. They GIVE UP the democratized exchange to a central authority, and are then shocked which shit goes south and that centralized authority uses their tokens for its own ends.

Let’s say, for instance, you think asset based currency is the thing you want. Like gold, someone has to hold it. They don’t mint bitcoins and send them in the mail. So you can’t hold it yourself. It has to exist “somewhere”. That somewhere is where you deposit your “coins” and like any unregulated bank before 1929, a bank run is gonna be a problem. Maybe the depositories need to buy depositor insurance? No? Then don’t be surprised when there’s a run on the bank. It’s happened forever….

 

[kent_island_sailor]

I never for one second understood how ANYONE with a brain could have thought cryptocurrency was ever anything but tulip bulb mania.

 

[BeSafe]

Let’s say, for instance, you think asset based currency is the thing you want. Like gold, someone has to hold it. They don’t mint bitcoins and send them in the mail. So you can’t hold it yourself. It has to exist “somewhere”. That somewhere is where you deposit your “coins” and like any unregulated bank before 1929, a bank run is gonna be a problem. Maybe the depositories need to buy depositor insurance? No? Then don’t be surprised when there’s a run on the bank. It’s happened forever….

Sure.

As I've said before, to me, Bitcoin as a surrogate for money is the least interesting idea that crypto has going for it. The reason the exchanges are the source of abuse is because they're the touch point between the incumbent monetary system and the crypto currency itself. They are concentrations of power. In this case, the exchanges act as casinos in the literal sense. You SHOULD go in, buy your tokens, and get out. The exchanges WANT you to stay in and play all the fun games - staking, DeFI, blah blah. As long as your incumbent money or its token equvalent remains on their servers, its THEIR MONEY and they're not your friends, no many how many nice things they buy their mom.

As it exists today, Crypto is much closer to a dark stock exchange - the tokens represent investments into projects, some very cool sounding, except there's very limited disclosure and few metrics. We haven't democratized money yet - we've democratized venture capital! No wonder it goes bad.

The 'average person' shouldn't be dicking around with anything OTHER than bitcoin itself - and only that because it had time to evolve in the wild. At least its a 'thing' and has enough of a network effect to push it past the idea phase.

To me, the only 'asset backed money' of any interest are goldbacks - those could be hybridized into a ledger and become a thing. I can at least see a pathway there. There's some interesting possibilities for crypto in documenting property - as Giegs alluded.

Liberty is lost by thousands of little cuts made by folks with the best of intentions. It has to be won back in the same way.

 

[Raz'r]

Sure.

As I've said before, to me, Bitcoin as a surrogate for money is the least interesting idea that crypto has going for it. The reason the exchanges are the source of abuse is because they're the touch point between the incumbent monetary system and the crypto currency itself. They are concentrations of power. In this case, the exchanges act as casinos in the literal sense. You SHOULD go in, buy your tokens, and get out. The exchanges WANT you to stay in and play all the fun games - staking, DeFI, blah blah. As long as your incumbent money or its token equvalent remains on their servers, its THEIR MONEY and they're not your friends, no many how many nice things they buy their mom.

As it exists today, Crypto is much closer to a dark stock exchange - the tokens represent investments into projects, some very cool sounding, except there's very limited disclosure and few metrics. We haven't democratized money yet - we've democratized venture capital! No wonder it goes bad.

The 'average person' shouldn't be dicking around with anything OTHER than bitcoin itself - and only that because it had time to evolve in the wild. At least its a 'thing' and has enough of a network effect to push it past the idea phase.

To me, the only 'asset backed money' of any interest are goldbacks - those could be hybridized into a ledger and become a thing. I can at least see a pathway there. There's some interesting possibilities for crypto in documenting property - as Giegs alluded.

Liberty is lost by thousands of little cuts made by folks with the best of intentions. It has to be won back in the same way.

Yes, an open source ledger system for tracking say trade across the supply chain could be useful.

If bitcoin isn’t fungible to hard currency, what’s the point? Until I can pay my taxes with it, it’s not what could be considered money in any sense. And asset based money has this little problem of massive inflation/deflation unless the govt pegs a value for, you guessed it, paying taxes.

 

[kent_island_sailor]

Money is a medium for transactions and a store of value. Crypto fails utterly on both counts.
Anything that worked as money would not be an investment, wild swings in value either way do NOT make for good money, never mind the ephemeral and faddish nature of crypto.
* besides for all that, the real purpose always seemed like a way for dope dealers and hit men to get paid