Occasionally the rich get poorer
November 9, 2022 2:44 PM Subscribe
Tom Brady lost big on FTX. The Ontario Teachers' Pension Plan lost big on FTX. Everybody who owns cryptocurrency lost big on FTX. FTX is the second-largest cryptocurrency exchange, and it may be insolvent. The founder of FTX lost big on FTX, losing an estimate 94% of his wealth in a single day.
It's almost like financial markets were regulated after wild stock speculation led to the Great Depression and a subsequent world war. To prevent crashes and such. Huh.
posted by Abehammerb Lincoln at 2:55 PM on November 9, 2022 [74 favorites]
posted by Abehammerb Lincoln at 2:55 PM on November 9, 2022 [74 favorites]
It's sweet that FTX has crashed, because SBF is actually a genuinely clever thoughtful person who conducted a fucking huge heel turn and supported crypto at a vast scale - with his reputation and with the money he made early - and made billions from it.
Dude it doesn't matter what your thoughts on moral good are, you burned more fossil fuel than some countries. You can never make up for that.
Hey! Genuinely clever, thoughtful people: don't be heels.
posted by lalochezia at 2:56 PM on November 9, 2022 [32 favorites]
Dude it doesn't matter what your thoughts on moral good are, you burned more fossil fuel than some countries. You can never make up for that.
Hey! Genuinely clever, thoughtful people: don't be heels.
posted by lalochezia at 2:56 PM on November 9, 2022 [32 favorites]
Man who lost everything in crypto...
The one crypto buyer I felt bad for was an optimistic young guy who had just escaped the cult his parents had raised him in. He had been shunned by his family and everyone else in the cult, but he was making new friends, getting new jobs, learning about the world, learning about investing...
posted by clawsoon at 2:58 PM on November 9, 2022 [8 favorites]
The one crypto buyer I felt bad for was an optimistic young guy who had just escaped the cult his parents had raised him in. He had been shunned by his family and everyone else in the cult, but he was making new friends, getting new jobs, learning about the world, learning about investing...
posted by clawsoon at 2:58 PM on November 9, 2022 [8 favorites]
Here's cryptoscam explainer extraordinaire Coffeezilla with an 11 minute explainer that covers all this really well: FTX Collapsed...Here's Why
posted by hippybear at 3:03 PM on November 9, 2022 [11 favorites]
posted by hippybear at 3:03 PM on November 9, 2022 [11 favorites]
As long as my fortune cookies go back go normal, I'm cool with that.
posted by JoeZydeco at 3:08 PM on November 9, 2022 [2 favorites]
posted by JoeZydeco at 3:08 PM on November 9, 2022 [2 favorites]
Matt Levine is also predictably good on this
posted by chavenet at 3:09 PM on November 9, 2022 [6 favorites]
posted by chavenet at 3:09 PM on November 9, 2022 [6 favorites]
Just call it Bankruptcy-as-a-Service and get a wad of VC money, problem solved
posted by Dr. Twist at 3:16 PM on November 9, 2022 [17 favorites]
posted by Dr. Twist at 3:16 PM on November 9, 2022 [17 favorites]
The NYT's story on this has some direct language
SBF is actually a genuinely clever thoughtful person
Huh, all I know about him is he ran a Ponzi scheme and when asked about it was basically "well yeah when you put it like that it sounds mad, but why you gotta be hatin'?"
Bonus: archive link for today's Levine on FTX.
posted by Nelson at 3:17 PM on November 9, 2022 [25 favorites]
Mr. Bankman-Fried fell at the hands of Changpeng Zhao, the chief executive of Binance, the only crypto exchange bigger than FTX. After reports circulated that one of Mr. Bankman-Fried’s other businesses was on shaky financial footing, a Twitter post by Mr. Zhao, who is known online as CZ, essentially started a bank run that crippled FTXit's darkly hilarious that an unregulated Chinese cryptoscam might have manipulated the unregulated market to destroy an unregulated American cryptoscam.
SBF is actually a genuinely clever thoughtful person
Huh, all I know about him is he ran a Ponzi scheme and when asked about it was basically "well yeah when you put it like that it sounds mad, but why you gotta be hatin'?"
Bonus: archive link for today's Levine on FTX.
posted by Nelson at 3:17 PM on November 9, 2022 [25 favorites]
His name is Bankman-Fried and he started a bank?!
posted by JDHarper at 3:20 PM on November 9, 2022 [16 favorites]
posted by JDHarper at 3:20 PM on November 9, 2022 [16 favorites]
Just call it Bankruptcy-as-a-Service and get a wad of VC money, problem solved
*mounts TED Talk stage with a suspiciously high level of energy*
"I'm asking you one thing tonight. I'm asking you to imagine a world where you can bankrupt yourself with a single gesture on your smartphone."
posted by mandolin conspiracy at 3:21 PM on November 9, 2022 [41 favorites]
*mounts TED Talk stage with a suspiciously high level of energy*
"I'm asking you one thing tonight. I'm asking you to imagine a world where you can bankrupt yourself with a single gesture on your smartphone."
posted by mandolin conspiracy at 3:21 PM on November 9, 2022 [41 favorites]
I'm not sure I would class the Ontario Teacher's Pension Plan as the rich getting poorer. As you might surmise from the name, they run a pension plan. For teachers.
posted by jacquilynne at 3:26 PM on November 9, 2022 [50 favorites]
posted by jacquilynne at 3:26 PM on November 9, 2022 [50 favorites]
Here's cryptoscam explainer extraordinaire Coffeezilla with an 11 minute explainer that covers all this really well: FTX Collapsed...Here's Why
Follow-up to the video: Binance has decided to not buy FTX. Which fits nicely into the video's thesis that the two founders hate each other.
posted by clawsoon at 3:30 PM on November 9, 2022 [8 favorites]
Follow-up to the video: Binance has decided to not buy FTX. Which fits nicely into the video's thesis that the two founders hate each other.
posted by clawsoon at 3:30 PM on November 9, 2022 [8 favorites]
and at least for now CZ is among the billionaires who do not get poorer.
posted by chavenet at 3:34 PM on November 9, 2022 [1 favorite]
posted by chavenet at 3:34 PM on November 9, 2022 [1 favorite]
As you might surmise from the name, they run a pension plan. For teachers.
It's mind-boggling that anyone in charge of managing any part of a public pension portfolio was allowed to do make that "investment."
Similarly, Caisse de dépôt et placement du Québec (and, by extension, the members of the pensions it administers) took a bath on Celsius a while back.
posted by mandolin conspiracy at 3:35 PM on November 9, 2022 [45 favorites]
It's mind-boggling that anyone in charge of managing any part of a public pension portfolio was allowed to do make that "investment."
Similarly, Caisse de dépôt et placement du Québec (and, by extension, the members of the pensions it administers) took a bath on Celsius a while back.
posted by mandolin conspiracy at 3:35 PM on November 9, 2022 [45 favorites]
Yes, the fact that smaller and/or worthy investors are making big losses on crypto is a shame. I hate to think of someone losing their life savings on this. But I can't help but see crypto's difficulties as a net positive for the world.
posted by col_pogo at 3:39 PM on November 9, 2022 [14 favorites]
posted by col_pogo at 3:39 PM on November 9, 2022 [14 favorites]
It's mind-boggling that anyone in charge of managing any part of a public pension portfolio was allowed to do make that "investment."
This. Don't most countries have prudential rules on pension funds?
posted by Your Childhood Pet Rock at 3:44 PM on November 9, 2022 [16 favorites]
This. Don't most countries have prudential rules on pension funds?
posted by Your Childhood Pet Rock at 3:44 PM on November 9, 2022 [16 favorites]
Let's have a bake sale!
posted by y2karl
Tarts with pears?
posted by Splunge at 3:46 PM on November 9, 2022 [2 favorites]
posted by y2karl
Tarts with pears?
posted by Splunge at 3:46 PM on November 9, 2022 [2 favorites]
And to think I liquidated all of my pets.com stock to buy crypto.
posted by Ickster at 3:47 PM on November 9, 2022 [11 favorites]
posted by Ickster at 3:47 PM on November 9, 2022 [11 favorites]
It's mind-boggling...
Indeed. I'm not entirely clear on why pension funds have any active management at all; seems kinda like they should be obligated to invest in some kind of maximally-diversified set of indices and bonds or whatever and then just leave it at that.
posted by aramaic at 3:52 PM on November 9, 2022 [13 favorites]
Indeed. I'm not entirely clear on why pension funds have any active management at all; seems kinda like they should be obligated to invest in some kind of maximally-diversified set of indices and bonds or whatever and then just leave it at that.
posted by aramaic at 3:52 PM on November 9, 2022 [13 favorites]
WSJ: Binance Walks Away From Deal to Rescue FTX
Crypto exchange Binance reversed course on a rescue offer for FTX Wednesday, leaving the prominent digital firm with an uncertain future as it faces a shortfall of up to $8 billion, according to people familiar with the matter.posted by ChurchHatesTucker at 3:53 PM on November 9, 2022
Binance chose not to go ahead with the nonbinding offer following a review of the company’s finances, the exchange said. “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement.
"I'm asking you one thing tonight. I'm asking you to imagine a world where you can bankrupt yourself with a single gesture on your smartphone."
"Bust-out", the app.
posted by mikelieman at 3:56 PM on November 9, 2022 [3 favorites]
"Bust-out", the app.
posted by mikelieman at 3:56 PM on November 9, 2022 [3 favorites]
“In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement.
Reminds me of that throwaway line from "Commando":
Arnold: Remember Sully when I said I kill you last?
Sully: That's right man! You did!
Arnold: I lied.
posted by chavenet at 3:59 PM on November 9, 2022 [5 favorites]
Reminds me of that throwaway line from "Commando":
Arnold: Remember Sully when I said I kill you last?
Sully: That's right man! You did!
Arnold: I lied.
posted by chavenet at 3:59 PM on November 9, 2022 [5 favorites]
As an aside, "Binance" has a totally wrong mouthfeel. Saying it aloud makes me shudder.
"Bust-out", the app.
"Like Uber, but for sending guys in leather jackets and track pants to your place of business to help you test the limits of your available credit."
posted by mandolin conspiracy at 4:00 PM on November 9, 2022 [3 favorites]
"Bust-out", the app.
"Like Uber, but for sending guys in leather jackets and track pants to your place of business to help you test the limits of your available credit."
posted by mandolin conspiracy at 4:00 PM on November 9, 2022 [3 favorites]
Sam Bankman-Fried is now a millionaire!
posted by jeffburdges at 4:01 PM on November 9, 2022 [2 favorites]
posted by jeffburdges at 4:01 PM on November 9, 2022 [2 favorites]
Michael Saylor (MicroStrategy) Portfolio Tracker lol
posted by jeffburdges at 4:09 PM on November 9, 2022 [2 favorites]
posted by jeffburdges at 4:09 PM on November 9, 2022 [2 favorites]
Indeed. I'm not entirely clear on why pension funds have any active management at all; seems kinda like they should be obligated to invest in some kind of maximally-diversified set of indices and bonds or whatever and then just leave it at that.
I remember some pension fund manager - maybe for the Canada Pension Plan? - talking about investing in things like port facilities that aren't on the public markets but have the potential for steady long-term payback. My impression is that organizations with huge amounts of money get the opportunity to buy stuff privately for less money than the rest of us have to pay when that stuff goes public (if it ever does).
posted by clawsoon at 4:11 PM on November 9, 2022 [5 favorites]
I remember some pension fund manager - maybe for the Canada Pension Plan? - talking about investing in things like port facilities that aren't on the public markets but have the potential for steady long-term payback. My impression is that organizations with huge amounts of money get the opportunity to buy stuff privately for less money than the rest of us have to pay when that stuff goes public (if it ever does).
posted by clawsoon at 4:11 PM on November 9, 2022 [5 favorites]
I'm not sure I would class the Ontario Teacher's Pension Plan as the rich getting poorer. As you might surmise from the name, they run a pension plan. For teachers.
OTPP is a pretty big investor. They own the Eaton Centre and any other property owned by Cadillac-Fairview, and were majority owners of MLSE (Toronto Maple Leafs and Raptors) for a while. It doesn't sound like it was a significant loss on the OTPP side, the article mentioned the total investment was under some $200 million reporting threshold so we're looking at a loss of 0.1% vs a 30-year average annual return of close to 10%, but whoever spearheaded that idea hopefully isn't working there anymore.
My mom's a retired teacher, and my spouse is a teacher right now, so I pay a bit more attention whenever I hear about OTPP in the news.
And yeah clawsoon, pension plans do a lot of private equity investing because they control huge amounts of money.
posted by any portmanteau in a storm at 4:13 PM on November 9, 2022 [16 favorites]
OTPP is a pretty big investor. They own the Eaton Centre and any other property owned by Cadillac-Fairview, and were majority owners of MLSE (Toronto Maple Leafs and Raptors) for a while. It doesn't sound like it was a significant loss on the OTPP side, the article mentioned the total investment was under some $200 million reporting threshold so we're looking at a loss of 0.1% vs a 30-year average annual return of close to 10%, but whoever spearheaded that idea hopefully isn't working there anymore.
My mom's a retired teacher, and my spouse is a teacher right now, so I pay a bit more attention whenever I hear about OTPP in the news.
And yeah clawsoon, pension plans do a lot of private equity investing because they control huge amounts of money.
posted by any portmanteau in a storm at 4:13 PM on November 9, 2022 [16 favorites]
"Bust-out", the app.
I'd go for Gortn, as per Hemingway...
"How did you go bankrupt?"
"Two ways. Gradually, then suddenly."
posted by chavenet at 4:20 PM on November 9, 2022 [5 favorites]
I'd go for Gortn, as per Hemingway...
"How did you go bankrupt?"
"Two ways. Gradually, then suddenly."
posted by chavenet at 4:20 PM on November 9, 2022 [5 favorites]
The founder of FTX lost big on FTX, losing an estimate 94% of his wealth in a single day.
"That leaves SBF’s net worth at about $1 billion, down from $15.6 billion heading into Tuesday. The 94% loss is the biggest one-day collapse ever among billionaires tracked by Bloomberg."
Poor guy. How will he make ends meet?
posted by The Tensor at 4:21 PM on November 9, 2022 [8 favorites]
"That leaves SBF’s net worth at about $1 billion, down from $15.6 billion heading into Tuesday. The 94% loss is the biggest one-day collapse ever among billionaires tracked by Bloomberg."
Poor guy. How will he make ends meet?
posted by The Tensor at 4:21 PM on November 9, 2022 [8 favorites]
I'm not sure I would class the Ontario Teacher's Pension Plan as the rich getting poorer. As you might surmise from the name, they run a pension plan. For teachers.
Pension funds have been godsends to shady Wall Street types every since they started getting in on the action in the 1980s. For years they were stolid, but through influence and corruption, started to become piggy banks for the worst kind of Wall Street players. That said, they've also done very well with some investments, and generally speaking the big pension funds are solid. It's not black and white, but in my past life I remember hearing colleagues talk openly about how much easier it was to (essentially defraud) work with the managers of those funds as opposed to the usual fund managers.
posted by chaz at 4:21 PM on November 9, 2022 [13 favorites]
Pension funds have been godsends to shady Wall Street types every since they started getting in on the action in the 1980s. For years they were stolid, but through influence and corruption, started to become piggy banks for the worst kind of Wall Street players. That said, they've also done very well with some investments, and generally speaking the big pension funds are solid. It's not black and white, but in my past life I remember hearing colleagues talk openly about how much easier it was to (essentially defraud) work with the managers of those funds as opposed to the usual fund managers.
posted by chaz at 4:21 PM on November 9, 2022 [13 favorites]
I remember some pension fund manager - maybe for the Canada Pension Plan? - talking about investing in things like port facilities that aren't on the public markets but have the potential for steady long-term payback. My impression is that organizations with huge amounts of money get the opportunity to buy stuff privately for less money than the rest of us have to pay when that stuff goes public.
Although private equity has outperformed S&P 500 over 2000-2020 time period, there are other time period comparisons that are less favorable. Allowing a pension fund manager to experiment seems like a high risk compared to forcing a substantial percentage of investments to be in a variety of indices.
posted by BrotherCaine at 4:22 PM on November 9, 2022 [2 favorites]
Although private equity has outperformed S&P 500 over 2000-2020 time period, there are other time period comparisons that are less favorable. Allowing a pension fund manager to experiment seems like a high risk compared to forcing a substantial percentage of investments to be in a variety of indices.
posted by BrotherCaine at 4:22 PM on November 9, 2022 [2 favorites]
This Sam Bankman-Fried guy has smelt like a scam artist for a long time. When I call people like him a scam artist some think that means he's like, running away to the Caymans with his millions in pilfered wealth. What I mean is that he's created the image of wealth out of thin air, used that image to bankroll a fake lifestyle where he is an "effective altruist" throwing hundreds of thousands of dollars towards luxury conferences where he and his buddies can talk about the existential threat of evil AIs instead of helping anyone here, now, today. And then the bubble bursts and a lot of people get hurt except him.
Anyway this entire defi experiment has felt kind of like a whole generation of doctors have rejected the germ theory of medicine and then boggled as they all died of preventable infections. We can prevent and mitigate bank runs, it's not a mystery.
posted by muddgirl at 4:24 PM on November 9, 2022 [41 favorites]
Anyway this entire defi experiment has felt kind of like a whole generation of doctors have rejected the germ theory of medicine and then boggled as they all died of preventable infections. We can prevent and mitigate bank runs, it's not a mystery.
posted by muddgirl at 4:24 PM on November 9, 2022 [41 favorites]
have the potential for steady long-term payback
Yeah, that's the thing about buying ports, utilities, or even sports teams. That potential is clearly there. Trade needs to move through ports for a fee, utilities need to provide water or whatever, and people want to buy tickets and merch from the sports franchise they support, and and so on. "How could this make money?" has a pretty clear-cut, easily-understood answer in these cases.
But when they're buying stuff that any random shithead like me can point at and say "That's obviously a scam," and be proven right over and over, then something's out of whack.
It's not like OTPP went wildly outside of its risk guardrails on the size of that investment relative to their total assets under management, it's just that as an individual investment it made no sense at all.
posted by mandolin conspiracy at 4:33 PM on November 9, 2022 [8 favorites]
Yeah, that's the thing about buying ports, utilities, or even sports teams. That potential is clearly there. Trade needs to move through ports for a fee, utilities need to provide water or whatever, and people want to buy tickets and merch from the sports franchise they support, and and so on. "How could this make money?" has a pretty clear-cut, easily-understood answer in these cases.
But when they're buying stuff that any random shithead like me can point at and say "That's obviously a scam," and be proven right over and over, then something's out of whack.
It's not like OTPP went wildly outside of its risk guardrails on the size of that investment relative to their total assets under management, it's just that as an individual investment it made no sense at all.
posted by mandolin conspiracy at 4:33 PM on November 9, 2022 [8 favorites]
Kicker of the newest Ed Zitron post (with a whole lot more before it):
To really hammer it home: this is an incredibly bad situation, because this industry desperately needed Sam Bankman-Fried to keep being the respectable gentleman of the cryptocurrency world. Having SBF attend events with Bloomberg and say smart things about the economy was useful, because it suggested that there were executives in this industry that could both legally visit America and not commit massive amounts of fraud.posted by General Malaise at 4:42 PM on November 9, 2022 [18 favorites]
It’s hard to say what the end times might look like for cryptocurrency because it’s very hard to kill something decentralized. BTC has dropped under $19,000 in the last hour, and it may drop more. There is every chance I publish this article and things get significantly worse, or change dramatically. That’s the problem with the news.
In any case, the industry is about to lose one of its largest pumpers, cheerleaders and figureheads. This was their respectable spokesman. This was their straight man.
And there’re signs he’s as crooked as the rest of them.
OTPP is a pretty big investor.
Fun fact: Big enough that an episode of Billions featured a fictionalized version of them. I nearly fell over when I heard “Ontario Educators Pension Fund”.
posted by eekernohan at 4:56 PM on November 9, 2022 [4 favorites]
Fun fact: Big enough that an episode of Billions featured a fictionalized version of them. I nearly fell over when I heard “Ontario Educators Pension Fund”.
posted by eekernohan at 4:56 PM on November 9, 2022 [4 favorites]
I'm still long flooz.
Beenz or GTFO.
posted by Halloween Jack at 5:10 PM on November 9, 2022 [9 favorites]
Beenz or GTFO.
posted by Halloween Jack at 5:10 PM on November 9, 2022 [9 favorites]
I'm going to have to insist on the inclusion of the "schadenfreude" tag, here.
posted by Dr. Wu at 5:40 PM on November 9, 2022 [2 favorites]
posted by Dr. Wu at 5:40 PM on November 9, 2022 [2 favorites]
> BTC has dropped under $19,000
It was below $16k earlier today
posted by WaylandSmith at 5:49 PM on November 9, 2022 [2 favorites]
It was below $16k earlier today
posted by WaylandSmith at 5:49 PM on November 9, 2022 [2 favorites]
The only part of this that's better than SBF losing 94% of his wealth is that CZ, in his rush to kneecap SBF, has seriously wounded bitcoin as a whole. The chaos he unleashed has pushed the value of bitcoin down nearly 25% in the past few days, and it's not yet clear where it's going to stabilize. Meanwhile Tether, the "stable"coin which has to date basically been a printing press keeping bitcoin prices up, is wobbling below its nominal $1 peg.
It would be the most delicious of schadenfreude if the thing that ended up toppling the crypto house of cards was petty spite.
posted by a faithful sock at 5:53 PM on November 9, 2022 [6 favorites]
It would be the most delicious of schadenfreude if the thing that ended up toppling the crypto house of cards was petty spite.
posted by a faithful sock at 5:53 PM on November 9, 2022 [6 favorites]
CZ, in his rush to kneecap SBF, has seriously wounded bitcoin as a whole
what happens when a pyramid scheme needs to be fed other pyramids to keep scheming
posted by They sucked his brains out! at 6:00 PM on November 9, 2022 [12 favorites]
what happens when a pyramid scheme needs to be fed other pyramids to keep scheming
posted by They sucked his brains out! at 6:00 PM on November 9, 2022 [12 favorites]
Tether may as well be called Aether because it's backed with hot air. No one believes the backing is really there, but they have to pay lip service to it otherwise everything is fucked. This is the thing I'm really watching to see when crypto as a sector going to detonate like a pile of ANFO.
posted by seanmpuckett at 6:01 PM on November 9, 2022 [6 favorites]
posted by seanmpuckett at 6:01 PM on November 9, 2022 [6 favorites]
Please tell me we're not going to re-litigate Beenz vs. Flooz in this thread
posted by phooky at 6:30 PM on November 9, 2022 [15 favorites]
posted by phooky at 6:30 PM on November 9, 2022 [15 favorites]
Fuck every one of these people. (Except the teachers.)
posted by wenestvedt at 6:35 PM on November 9, 2022 [6 favorites]
posted by wenestvedt at 6:35 PM on November 9, 2022 [6 favorites]
When you ain't got nothin',
you got nothin' to lose
posted by thecincinnatikid at 6:47 PM on November 9, 2022 [3 favorites]
you got nothin' to lose
posted by thecincinnatikid at 6:47 PM on November 9, 2022 [3 favorites]
Oh, but don't you see? The cryptocurrency was worthless all along!
posted by AlSweigart at 6:52 PM on November 9, 2022 [4 favorites]
posted by AlSweigart at 6:52 PM on November 9, 2022 [4 favorites]
Maybe the real cryptocurrency was the scams we fell for along the way!
posted by jclarkin at 6:59 PM on November 9, 2022 [31 favorites]
posted by jclarkin at 6:59 PM on November 9, 2022 [31 favorites]
Just pawns in ze scheme.
posted by mandolin conspiracy at 7:02 PM on November 9, 2022 [6 favorites]
posted by mandolin conspiracy at 7:02 PM on November 9, 2022 [6 favorites]
re: Tether, can anyone ELI5 it's significance to the crypto ecosystem?
posted by lovelyzoo at 9:27 PM on November 9, 2022
posted by lovelyzoo at 9:27 PM on November 9, 2022
Fuck every one of these people. (Except the teachers.)
Amen. I'm no more sorry for "worthy investors" taking a haircut on this than I am when it happens on oil stocks or arms company investments. If you're invested in crypto, you deserve to lose it all - it's a greedy, selfish move that throws the planet under a bus so you can make a quick buck, at best.
posted by Dysk at 9:40 PM on November 9, 2022 [8 favorites]
Amen. I'm no more sorry for "worthy investors" taking a haircut on this than I am when it happens on oil stocks or arms company investments. If you're invested in crypto, you deserve to lose it all - it's a greedy, selfish move that throws the planet under a bus so you can make a quick buck, at best.
posted by Dysk at 9:40 PM on November 9, 2022 [8 favorites]
Molly White: The Sam Bankman-Fried empire crumbled. What happened?
posted by cendawanita at 9:40 PM on November 9, 2022 [6 favorites]
posted by cendawanita at 9:40 PM on November 9, 2022 [6 favorites]
His name is Bankman-Fried and he started fried a bank?!
posted by They sucked his brains out! at 9:47 PM on November 9, 2022 [14 favorites]
posted by They sucked his brains out! at 9:47 PM on November 9, 2022 [14 favorites]
I wonder how many people have experienced the idea of a transformed financial system primarily via get-rich-quick fraudsters.
posted by clawsoon at 10:02 PM on November 9, 2022
posted by clawsoon at 10:02 PM on November 9, 2022
When you ain't got nothin',
you got nothin' to lose
Maybe the real cryptocurrency was the scams we fell for along the way!
The cryptocurrency scam calls are coming from within the cryptocurrency!
posted by Thella at 10:59 PM on November 9, 2022 [3 favorites]
you got nothin' to lose
Maybe the real cryptocurrency was the scams we fell for along the way!
The cryptocurrency scam calls are coming from within the cryptocurrency!
posted by Thella at 10:59 PM on November 9, 2022 [3 favorites]
Kieran Healy:
AFAICT the rule in most English speaking countries is the "prudent person rule," which basically says run a diversified portfolio that looks reasonable to professional investors. Other countries often have more quantitative rules.
I think crypto is worthless, but clearly not everyone does, and I can't imagine putting a reasonable portion of your funds in a risky investment is going to violate the rule.
The article doesn't say how much they lost, but in relative terms it seems fortunately small: It is an undisclosed portion of a fund that contains 3% of the total pension's assets, so total exposure is at most a small fraction of that.
The most basic description and by the same token critique of the earliest "Internet currencies" (Who now remembers Flooz? Or Beanz?) was "They're like money, but not as good". This remains a very effective starting point for thinking about many alternatives to money.This. Don't most countries have prudential rules on pension funds?
AFAICT the rule in most English speaking countries is the "prudent person rule," which basically says run a diversified portfolio that looks reasonable to professional investors. Other countries often have more quantitative rules.
I think crypto is worthless, but clearly not everyone does, and I can't imagine putting a reasonable portion of your funds in a risky investment is going to violate the rule.
The article doesn't say how much they lost, but in relative terms it seems fortunately small: It is an undisclosed portion of a fund that contains 3% of the total pension's assets, so total exposure is at most a small fraction of that.
The pension plan housed the investment in its Teachers’ Innovation Platform, a portion of the portfolio dedicated to high-growth, yet high-risk, investments. As of June 30, the $8.2-billion portfolio represented just 3 per cent of Teachers’ $242.5-billion in assets.posted by mark k at 11:17 PM on November 9, 2022 [3 favorites]
One more nail in the coffin of this Ponzi funbucks nonsense hopefully.
posted by GallonOfAlan at 2:03 AM on November 10, 2022 [1 favorite]
posted by GallonOfAlan at 2:03 AM on November 10, 2022 [1 favorite]
re: Tether, can anyone ELI5 it's significance to the crypto ecosystem?
I'll give it a go! Tether is easily the biggest of the so-called 'stablecoins'. One problem with crypto is the real lack of liquidity in the system, both between crypto currencies, or transfer to a government-backed currency e.g. real money. If you use a crypto currency exchange to convert say, a significant sum of bitcoin to US dollars, that can (and often does) depress the value of bitcoin. There have been recent problems where currency exchanges were really limiting how much or even if they would allow people to get their crypto back they had stored there. This is one reason why the dollar value of bitcoin fluctuates a lot (the other reasons are investors are both greedy and flighty, and there is an eyewatering amount of fraud, ponzi schemes and hacking across the ecosystem). The main story is about a run on a large currency exchange, FTX, which has substantial knock on effects on multiple crypto currencies.
So you're an investor holding say, bitcoin. Nominally, it's worth a lot of $, but cashing out is hard. Enter the 'stablecoin'. Tether USDT is supposedly pegged to the $ (Tether has other currency backed coins in euros etc, but they are tiny compared to USDT). Someone gives Tether $1000, they mint 1000 USDT and give it to that customer, and they hold onto that $1000 as the backing of those USDT. Someone sells 500 USDT for $ on a trusted exchange, they get the $500 back and the 500 USDT is taken out of circulation. So USDT should always trade as worth ~$1, because there are $ reserves equal to the USDT in circulation. Instead of holding volatile bitcoin, you can exchange your bitcoins for USDT, and now you know your investment is 'safe'. You won't gain when say, bitcoin soars in value, but it won't collapse either, and you can swap your USDT in and out for other coins to try and take advantage of said fluctuations much more easily than swapping real dollars in and out.
Except - that only works if tether is telling the truth, and isn't e.g. minting USDT on the sly without real currency reserves or other shenanigans. And suprise! they've been caught lying in the past. The currency exchange that runs Tether - bitfinex - was caught out having embezzeled a ton of reserves for use by bitfinex (which has supposedly been paid back) and it's the same people running both, and a lot of their reserves turned out to be loans and metals instead of actual money. So Tether wobbled for a while (it dropped to $0.86 on exchanges at one point), but eventually settled down again, and it helps stabilise the value of big crypto currencies like bitcoin.
Everyone acts as if for the ~$50 billion of USDT in circulation, Tether has equivalent reserves of real money to pay out, but the big suspicion is they do not. And if that is ever tested - e.g. there's a run of people cashing out and they do run out of liquid reserves, the value of the stablecoin would collapse, and suddenly that 'safe' dollar-pegged investment collapses, and all that supposed value stored in Tether coins also vanishes like mist under a hot sun. And being by far the biggest stablecoin, that would cause absolutely huge crashes across the whole ecosystem as everyone panics.
posted by Absolutely No You-Know-What at 2:10 AM on November 10, 2022 [28 favorites]
I'll give it a go! Tether is easily the biggest of the so-called 'stablecoins'. One problem with crypto is the real lack of liquidity in the system, both between crypto currencies, or transfer to a government-backed currency e.g. real money. If you use a crypto currency exchange to convert say, a significant sum of bitcoin to US dollars, that can (and often does) depress the value of bitcoin. There have been recent problems where currency exchanges were really limiting how much or even if they would allow people to get their crypto back they had stored there. This is one reason why the dollar value of bitcoin fluctuates a lot (the other reasons are investors are both greedy and flighty, and there is an eyewatering amount of fraud, ponzi schemes and hacking across the ecosystem). The main story is about a run on a large currency exchange, FTX, which has substantial knock on effects on multiple crypto currencies.
So you're an investor holding say, bitcoin. Nominally, it's worth a lot of $, but cashing out is hard. Enter the 'stablecoin'. Tether USDT is supposedly pegged to the $ (Tether has other currency backed coins in euros etc, but they are tiny compared to USDT). Someone gives Tether $1000, they mint 1000 USDT and give it to that customer, and they hold onto that $1000 as the backing of those USDT. Someone sells 500 USDT for $ on a trusted exchange, they get the $500 back and the 500 USDT is taken out of circulation. So USDT should always trade as worth ~$1, because there are $ reserves equal to the USDT in circulation. Instead of holding volatile bitcoin, you can exchange your bitcoins for USDT, and now you know your investment is 'safe'. You won't gain when say, bitcoin soars in value, but it won't collapse either, and you can swap your USDT in and out for other coins to try and take advantage of said fluctuations much more easily than swapping real dollars in and out.
Except - that only works if tether is telling the truth, and isn't e.g. minting USDT on the sly without real currency reserves or other shenanigans. And suprise! they've been caught lying in the past. The currency exchange that runs Tether - bitfinex - was caught out having embezzeled a ton of reserves for use by bitfinex (which has supposedly been paid back) and it's the same people running both, and a lot of their reserves turned out to be loans and metals instead of actual money. So Tether wobbled for a while (it dropped to $0.86 on exchanges at one point), but eventually settled down again, and it helps stabilise the value of big crypto currencies like bitcoin.
Everyone acts as if for the ~$50 billion of USDT in circulation, Tether has equivalent reserves of real money to pay out, but the big suspicion is they do not. And if that is ever tested - e.g. there's a run of people cashing out and they do run out of liquid reserves, the value of the stablecoin would collapse, and suddenly that 'safe' dollar-pegged investment collapses, and all that supposed value stored in Tether coins also vanishes like mist under a hot sun. And being by far the biggest stablecoin, that would cause absolutely huge crashes across the whole ecosystem as everyone panics.
posted by Absolutely No You-Know-What at 2:10 AM on November 10, 2022 [28 favorites]
(sorry, typo, there's ~$70 billion USDT in circulation)
posted by Absolutely No You-Know-What at 2:19 AM on November 10, 2022
posted by Absolutely No You-Know-What at 2:19 AM on November 10, 2022
Now I'm waiting for Tom Brady to make a classic crypto guy post on Reddit: "hi guys i lost everything on ftx an now my wife is leaving me its all over the news what do i do have i been scammed?? sam seems like a good guy can we convince him to give us our money back?? i want to keep some custody of my kids ngl theyre super cute"
posted by clawsoon at 3:43 AM on November 10, 2022 [4 favorites]
posted by clawsoon at 3:43 AM on November 10, 2022 [4 favorites]
For anyone thinking there's actually one-on-one reserves for $70 billion USDT, I've got a good offer on a few bridges for you.
posted by DreamerFi at 4:24 AM on November 10, 2022 [5 favorites]
posted by DreamerFi at 4:24 AM on November 10, 2022 [5 favorites]
Money that isn't money that costs lots of money that is money to create, which measures its worth against the money that is money and is worth lots of money that is money until you actually try to cash out your money that isn't money for money that is money and find that some guy twiddled some bits and ran off to Ibiza with both kinds of money and now a different money that isn't money is the new hotness that will conquer the world of money that is money.
Also, somewhere in there some ugly cartoon apes say "hi."
posted by delfin at 4:45 AM on November 10, 2022 [30 favorites]
Also, somewhere in there some ugly cartoon apes say "hi."
posted by delfin at 4:45 AM on November 10, 2022 [30 favorites]
I’m happy that the first I heard of any of this was through reading Defector’s post on the train this morning. I mean, I’d like to think that a lifetime of growing up so skeptical of anything that you could offer me literal bars of gold for free and I’d probably turn you down would have inured me to this kind of thing, but, also, shit, the idea of actually having enough money to, say, pay bills and not worry about next month? That’s incredibly attractive.
posted by Ghidorah at 5:00 AM on November 10, 2022 [2 favorites]
posted by Ghidorah at 5:00 AM on November 10, 2022 [2 favorites]
SBF is a big supporter of long-termer and effective altruism bullshit. It is great that he will have fewer resources to support these dangerous ideas.
posted by rockindata at 5:08 AM on November 10, 2022 [5 favorites]
posted by rockindata at 5:08 AM on November 10, 2022 [5 favorites]
I was wondering about the framing of “SBF has lost most of his fortune”. If he has allegedly been sucking value out of FTX into Alameda, and Alameda is not currently doomed, isn’t it likely that he has a billion or three either in Alameda or secretly extracted from Alameda?
posted by moonmilk at 5:51 AM on November 10, 2022
posted by moonmilk at 5:51 AM on November 10, 2022
The other aspect of Tether that's important to the crypto economy is, it's a place to park "value" without paying taxes.
This isn't just relative to bitcoin; people put money into a pump-and-dump NFT project, fleece others, and need to get out while the going's good. Where are they going to put their ill-gotten gains? If they actually turn it into money, they end up with tax liability. So, they park it in USDT, with an intention of later rolling it into their next scam.
But, yeah, the big thing is that Tether props up bitcoin prices just by existing. When BTC was crashing down from its high at ~$68k, there weren't actually that many buyers on the market willing to pay fiat currency in exchange for BTC. But, Tether conveniently was there, in fact was conveniently minting new Tether the whole way down (supposedly based on cash influx from users and from their investments in government bonds or other horseshit), and then buying BTC with it, keeping the price from completely collapsing.
Crypto as a whole has a massive liquidity problem, and the only thing stopping a bank run on the whole thing is coins like Tether that let people exchange one set of casino chips for another supposedly "safe" set of casino chips without actually having to prove that there's real assets backing them up.
posted by a faithful sock at 5:58 AM on November 10, 2022 [5 favorites]
This isn't just relative to bitcoin; people put money into a pump-and-dump NFT project, fleece others, and need to get out while the going's good. Where are they going to put their ill-gotten gains? If they actually turn it into money, they end up with tax liability. So, they park it in USDT, with an intention of later rolling it into their next scam.
But, yeah, the big thing is that Tether props up bitcoin prices just by existing. When BTC was crashing down from its high at ~$68k, there weren't actually that many buyers on the market willing to pay fiat currency in exchange for BTC. But, Tether conveniently was there, in fact was conveniently minting new Tether the whole way down (supposedly based on cash influx from users and from their investments in government bonds or other horseshit), and then buying BTC with it, keeping the price from completely collapsing.
Crypto as a whole has a massive liquidity problem, and the only thing stopping a bank run on the whole thing is coins like Tether that let people exchange one set of casino chips for another supposedly "safe" set of casino chips without actually having to prove that there's real assets backing them up.
posted by a faithful sock at 5:58 AM on November 10, 2022 [5 favorites]
From experience on how these things tend to work, along with how much of Alameda’s balance sheet was tied up in FTT and SOL when this all started, I consider it certain that Alameda is deep underwater too.
As for whether he exfiltrated any significant wealth out of either/both companies, that’s a much less certain question. I suspect not. It is incredibly emotionally difficult to take money off the table from profitable businesses. Greed is a hell of a drug. And he’ll likely have to piss it all away on lawsuits.
Also, some of the people he owes money to are not the kind of nice people that file lawsuits to get their money back. They’re the kind of people who sail a boat in to Bermuda, send some nice big strong young men over to SBF’s famed penthouse flat, and escort him off to answer exciting questions like “where’s my money?”, or “does this hurt?”
posted by notoriety public at 5:59 AM on November 10, 2022 [2 favorites]
As for whether he exfiltrated any significant wealth out of either/both companies, that’s a much less certain question. I suspect not. It is incredibly emotionally difficult to take money off the table from profitable businesses. Greed is a hell of a drug. And he’ll likely have to piss it all away on lawsuits.
Also, some of the people he owes money to are not the kind of nice people that file lawsuits to get their money back. They’re the kind of people who sail a boat in to Bermuda, send some nice big strong young men over to SBF’s famed penthouse flat, and escort him off to answer exciting questions like “where’s my money?”, or “does this hurt?”
posted by notoriety public at 5:59 AM on November 10, 2022 [2 favorites]
For anyone thinking there's actually one-on-one reserves for $70 billion USDT, I've got a good offer on a few bridges for you.
You can't fool me, you scammer! Bridges aren't real!
posted by loquacious at 6:08 AM on November 10, 2022 [9 favorites]
You can't fool me, you scammer! Bridges aren't real!
posted by loquacious at 6:08 AM on November 10, 2022 [9 favorites]
I suspect it won't explode until next year because people are starting to get into holiday modes and not horsing around too much, so I think late January would be the perfect time when the bros are like "OK BACK TO BUSINESS" and then they eat each other. OR maybe I'm wrong, and the bros don't have holidays and would be bored while normal people are celebrating, and .... it'll be a Festivus Miracle after all!
posted by seanmpuckett at 6:25 AM on November 10, 2022
posted by seanmpuckett at 6:25 AM on November 10, 2022
PBS Nova just aired an explainer episode on crypto. Its outline on the original concept, early history and mathematical underpinning was interesting, but it seemed to downplay crypto's de facto reality as just a pseudo-asset, and the shenanigans around all that.
I believe that most smart people are wary of crypto as a concept; at the same time though, the thing is still so huge that there's a big, fast-moving "market" there, and a lot of smart people know (or think they know) how to play markets. I guess even pension funds can get FOMO.
Our own retirement money is in a diverse set of relatively safe investments (which means we're losing money at a slow and dignified pace, instead of overnight), but a teeny part of me wonders whether this is the actual end of BTC, or just the point to buy some, cos there's still another ride up possible.
That teeny part of me will be spoken to, firmly.
posted by Artful Codger at 6:26 AM on November 10, 2022 [3 favorites]
I believe that most smart people are wary of crypto as a concept; at the same time though, the thing is still so huge that there's a big, fast-moving "market" there, and a lot of smart people know (or think they know) how to play markets. I guess even pension funds can get FOMO.
Our own retirement money is in a diverse set of relatively safe investments (which means we're losing money at a slow and dignified pace, instead of overnight), but a teeny part of me wonders whether this is the actual end of BTC, or just the point to buy some, cos there's still another ride up possible.
That teeny part of me will be spoken to, firmly.
posted by Artful Codger at 6:26 AM on November 10, 2022 [3 favorites]
Crypto folks continuing to speed-run "why financial regulations exist", I see.
posted by rmd1023 at 6:33 AM on November 10, 2022 [5 favorites]
posted by rmd1023 at 6:33 AM on November 10, 2022 [5 favorites]
SBF, in charge of FTX: I'm sorry. That's the biggest thing. I fucked up, and should have done better. A Twitter thread in which the CEO of FTX explains how he lost billions of dollars of his customers money in the tone that your millennial roommate might use to apologize for using the last of the toilet paper. Only in this case it's things like "I thought we had no leverage but actually we were at 1.7x leverage.. my bad!" (a paraphrase).
posted by Nelson at 6:54 AM on November 10, 2022 [5 favorites]
posted by Nelson at 6:54 AM on November 10, 2022 [5 favorites]
Does FTX not have in-house legal counsel to say things like "maybe don't admit to possibly criminal fraud and negligence on Twitter?"
posted by tonycpsu at 7:04 AM on November 10, 2022 [13 favorites]
posted by tonycpsu at 7:04 AM on November 10, 2022 [13 favorites]
I just can't believe that a dude ended his competition by tweeting out, "Sure would be a shame if a bank run happened to my competitor."
posted by ob1quixote at 7:09 AM on November 10, 2022 [12 favorites]
posted by ob1quixote at 7:09 AM on November 10, 2022 [12 favorites]
Does FTX not have in-house legal counsel
Oh no, he addressed that
posted by Nelson at 7:34 AM on November 10, 2022 [22 favorites]
Oh no, he addressed that
I WAS NOT VERY CAREFUL WITH MY WORDS HERE, AND DO NOT MEAN ANY OF THEM IN A TECHNICAL OR LEGAL SENSEBecause it's in all caps it has the power of a magical incantation, we are bound to its meaning. Much like the warranty notice in the fine print of a cheap bit of imported electronics.
posted by Nelson at 7:34 AM on November 10, 2022 [22 favorites]
FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall
I wonder if he's already pulled a runner like Do Kwon?
posted by Nelson at 7:42 AM on November 10, 2022 [6 favorites]
FTX Chief Executive Sam Bankman-Fried told an investor this week that Alameda owes FTX about $10 billion. ... FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, according to the person. All in all, FTX had $16 billion in customer assets.I'm still waiting on what someone meant by "SBF is actually a genuinely clever thoughtful person". Sure sounds more like he's a common thief. I should be fair: an uncommon thief, given the scale of the thievery.
I wonder if he's already pulled a runner like Do Kwon?
posted by Nelson at 7:42 AM on November 10, 2022 [6 favorites]
>Allowing a pension fund manager to experiment seems like a high risk compared to forcing a substantial percentage of investments to be in a variety of indices.
Most people wouldn't do this, but most people don't have $242.5B in assets like the Canadian pension fund.
The FTX exposure represents a tiny pinch, a smidgen, a microscopic amount of the total value of the fund.
Like the pinch of cinnamon I mistakenly added to my eggnog instead of nutmeg, it will be absorbed by the whole and unnoticed. When kept to tiny percentages like these, risky investments by pension funds see their risks diluted, while the rewards can be considerable--in the rare cases when the investment lives up to its goals.
posted by Gordion Knott at 7:45 AM on November 10, 2022 [1 favorite]
Most people wouldn't do this, but most people don't have $242.5B in assets like the Canadian pension fund.
The FTX exposure represents a tiny pinch, a smidgen, a microscopic amount of the total value of the fund.
Like the pinch of cinnamon I mistakenly added to my eggnog instead of nutmeg, it will be absorbed by the whole and unnoticed. When kept to tiny percentages like these, risky investments by pension funds see their risks diluted, while the rewards can be considerable--in the rare cases when the investment lives up to its goals.
posted by Gordion Knott at 7:45 AM on November 10, 2022 [1 favorite]
I just sat through a conference where one of the speakers was the CEO of a company "in the NFT space" selling digital images of famous football (soccer) players, among other tat. I have never seen a more perfect real-life version of the "this is fine" dog.
posted by chavenet at 7:56 AM on November 10, 2022
:format(webp)/cdn.vox-cdn.com/uploads/chorus_asset/file/6438793/this-is-fine.jpg){kind=link}
posted by chavenet at 7:56 AM on November 10, 2022
So that leverage he was saying sorry for? That was him “lending” $10B of his customers’ assets to himself. “Oops, my bad, that was a bad judgement call, so sorry”. My ass.
posted by notoriety public at 8:18 AM on November 10, 2022 [6 favorites]
posted by notoriety public at 8:18 AM on November 10, 2022 [6 favorites]
Michael Frye:
Michael Lewis, author of The Big Short, was apparently in the process of writing a book about the success of FTX and SBF. He personally went to the Super Bowl with them and visited them in the Bahamas.posted by JoeZydeco at 8:26 AM on November 10, 2022 [17 favorites]
He just got his perfect ending. It's going to be a fantastic book.
FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall
They literally all do this and will always do this. The temptation is too great. People are just throwing money at you, and you're supposed to just sit on it? It's not even malice necessarily, it's just the pure seductive draw of all that money. Money makes more money, doesn't it? Why wouldn't you use it to make more money!!! Again and again the lesson of the 20s and 30s is relearned. You have to regulate these things, not just because there might be scammers, but because nothing that is banklike can resist the urge to take advantage of the fact that for the most part, customer deposits just sit there, staring at you, burning a hole in your metaphorical pocket, crying out: invest me! turn me into unfathomable riches! It's impossible to stop up your ears against the siren cry of incredible wealth. It's fantasy to think that every single institution in this space, binance to bitfinex to coinbase isn't doing the exact same thing, with no federal insurance backing, with no bailouts coming.
posted by dis_integration at 8:37 AM on November 10, 2022 [17 favorites]
They literally all do this and will always do this. The temptation is too great. People are just throwing money at you, and you're supposed to just sit on it? It's not even malice necessarily, it's just the pure seductive draw of all that money. Money makes more money, doesn't it? Why wouldn't you use it to make more money!!! Again and again the lesson of the 20s and 30s is relearned. You have to regulate these things, not just because there might be scammers, but because nothing that is banklike can resist the urge to take advantage of the fact that for the most part, customer deposits just sit there, staring at you, burning a hole in your metaphorical pocket, crying out: invest me! turn me into unfathomable riches! It's impossible to stop up your ears against the siren cry of incredible wealth. It's fantasy to think that every single institution in this space, binance to bitfinex to coinbase isn't doing the exact same thing, with no federal insurance backing, with no bailouts coming.
posted by dis_integration at 8:37 AM on November 10, 2022 [17 favorites]
I think crypto is worthless, but clearly not everyone does, and I can't imagine putting a reasonable portion of your funds in a risky investment is going to violate the rule.I think it will come down to diligence: did they recognize this as a high-risk investment or did they act as if the marketing claims were real? In the latter case, I’d be curious what details they checked and whether that means a fraud case is likely against SBF.
posted by adamsc at 8:54 AM on November 10, 2022
OTPP are colossal. Apart from the assets mentioned above, they own a large chunk of Bruce Nuclear, the operator of Canada's largest nuclear power station. They also have a vast portfolio abroad: for a while, they owned several of the large retail properties near my parents' home in Scotland. And I'm good that they are huge, and hopefully able to supply teachers with good retirement funds.
They also used to have a reputation for being very conservative about where they put their money. The word "stodgy" might have been thrown around when I was working closer to Bay St. For them to have put money in this very obvious scam makes me worried about the value of any investment. The 2008 banking crisis happened because shit was mixed in with the good, so everything turned to shit. How much cryptoshit is mixed in with respectable portfolios?
posted by scruss at 9:28 AM on November 10, 2022 [4 favorites]
They also used to have a reputation for being very conservative about where they put their money. The word "stodgy" might have been thrown around when I was working closer to Bay St. For them to have put money in this very obvious scam makes me worried about the value of any investment. The 2008 banking crisis happened because shit was mixed in with the good, so everything turned to shit. How much cryptoshit is mixed in with respectable portfolios?
posted by scruss at 9:28 AM on November 10, 2022 [4 favorites]
So, I was just kicking around the idea of making a lame popcorn joke about popcorn futures or something and, and, well, of course there's some stupid crypto token or coin called Popcorn because why wouldn't there be and when I searched "popcorn spot price" the whole first page was polluted with crypto spam.
posted by loquacious at 9:36 AM on November 10, 2022 [2 favorites]
posted by loquacious at 9:36 AM on November 10, 2022 [2 favorites]
Oh, man, that might be bad news for the local popcorn store.
posted by box at 10:30 AM on November 10, 2022
posted by box at 10:30 AM on November 10, 2022
Because it's in all caps it has the power of a magical incantation, we are bound to its meaning. Much like the warranty notice in the fine print of a cheap bit of imported electronics.
NO COPYWRITE INTENDED™
posted by The Tensor at 12:03 PM on November 10, 2022 [3 favorites]
NO COPYWRITE INTENDED™
posted by The Tensor at 12:03 PM on November 10, 2022 [3 favorites]
of course there's some stupid crypto token or coin called Popcorn because why wouldn't there be
A few months back, I had the idea to "mint" a "stablecoin" called "TulipCoin" (all fictional, on Twitter) which would be tied, not to the $ as Tether is, but to the historical price of tulips from 1633-1638, which surely would be more stable than some government fiat currency.
The idea was going to be to post the time-shifted price of tulips as though it were the price of TulipCoin for a while and then, as the Tulip bubble famously formed, crow about how much money I had made.
Unfortunately, sure enough.
posted by gauche at 12:11 PM on November 10, 2022 [4 favorites]
A few months back, I had the idea to "mint" a "stablecoin" called "TulipCoin" (all fictional, on Twitter) which would be tied, not to the $ as Tether is, but to the historical price of tulips from 1633-1638, which surely would be more stable than some government fiat currency.
The idea was going to be to post the time-shifted price of tulips as though it were the price of TulipCoin for a while and then, as the Tulip bubble famously formed, crow about how much money I had made.
Unfortunately, sure enough.
posted by gauche at 12:11 PM on November 10, 2022 [4 favorites]
I've a feeling that Rule 34 should be rewritten, with "crypto scheme" substituted for "porn"
posted by scruss at 12:32 PM on November 10, 2022 [5 favorites]
posted by scruss at 12:32 PM on November 10, 2022 [5 favorites]
When these crypto-bros took over the Staples Center (it'll always be the Staples Center to me, damnit) and re-named it the "Crypto.com Arena", I felt a drop in my stomach. How the folks behind the deal were able to ensure that weird unknown company could definitely pay all the costs associated with owning (is it ownership? renting, but with an ad banner? I don't know the particulars) still baffles me.
I know it has nothing to do with this particular deal / thread, but I'm just calling it now : there's gonna be some interesting Hulu / Netflix documentaries about that clusterfuck and what a shady company they were all along when they inevitably go tits-up in the next few years.
posted by revmitcz at 2:58 PM on November 10, 2022 [2 favorites]
I know it has nothing to do with this particular deal / thread, but I'm just calling it now : there's gonna be some interesting Hulu / Netflix documentaries about that clusterfuck and what a shady company they were all along when they inevitably go tits-up in the next few years.
posted by revmitcz at 2:58 PM on November 10, 2022 [2 favorites]
Does FTX not have in-house legal counsel...
Most of the legal team quit Tuesday night, apparently.
Good for them, because that tweet thread is the stuff of lawyers' nightmares.
Incidentally, same with most of Twitter's high-level compliance and legal folks, as a compliance report to the FTC requiring some kind of personal accountability is due today.
Fleets of lawyers simultaneously jumping ship is about the worst sign I can think of.
posted by lookoutbelow at 3:02 PM on November 10, 2022 [4 favorites]
Most of the legal team quit Tuesday night, apparently.
Good for them, because that tweet thread is the stuff of lawyers' nightmares.
Incidentally, same with most of Twitter's high-level compliance and legal folks, as a compliance report to the FTC requiring some kind of personal accountability is due today.
Fleets of lawyers simultaneously jumping ship is about the worst sign I can think of.
posted by lookoutbelow at 3:02 PM on November 10, 2022 [4 favorites]
Someone else will own the arena, they just sold the naming rights to first Staples and now Crypto.com. If the crypto people end up not being able to make future payments they'll just sell the naming rights to someone else.
posted by any portmanteau in a storm at 3:10 PM on November 10, 2022 [1 favorite]
posted by any portmanteau in a storm at 3:10 PM on November 10, 2022 [1 favorite]
> revmitcz: "When these crypto-bros took over the Staples Center (it'll always be the Staples Center to me, damnit) and re-named it the "Crypto.com Arena", I felt a drop in my stomach"
Cf. Enron Field, PSINet Stadium, CMGI Field, etc...
posted by mhum at 3:35 PM on November 10, 2022 [2 favorites]
Cf. Enron Field, PSINet Stadium, CMGI Field, etc...
posted by mhum at 3:35 PM on November 10, 2022 [2 favorites]
Isn't this "using customer money deposits" what fractional reserve is? They lend out some of the customers' money because of the extreme unlikeliness that everyone wants all their money at once. Only, I guess, banks invest it in loans and stuff that will get repaid with interest instead of gambling with it.
posted by ctmf at 7:22 PM on November 10, 2022
posted by ctmf at 7:22 PM on November 10, 2022
The difference is bank fractional reserve is highly regulated. Also insured.
posted by Nelson at 10:03 PM on November 10, 2022 [7 favorites]
posted by Nelson at 10:03 PM on November 10, 2022 [7 favorites]
Isn't this "using customer money deposits" what fractional reserve is?
But they weren't really using customer deposits, they were lending a significant portion of the money to the CEO's other business. It's not like a bank investing, it's more like if a bank just decided that it was fine to give the branch manager a several billion dollar personal loan because he swears he's got a winner at the track this weekend.
posted by Dysk at 10:17 PM on November 10, 2022 [7 favorites]
But they weren't really using customer deposits, they were lending a significant portion of the money to the CEO's other business. It's not like a bank investing, it's more like if a bank just decided that it was fine to give the branch manager a several billion dollar personal loan because he swears he's got a winner at the track this weekend.
posted by Dysk at 10:17 PM on November 10, 2022 [7 favorites]
Isn't this "using customer money deposits" what fractional reserve is? They lend out some of the customers' money because of the extreme unlikeliness that everyone wants all their money at once. Only, I guess, banks invest it in loans and stuff that will get repaid with interest instead of gambling with it.
The Matt Levine column goes through this in detail, but basically:
If a bank currently has $100 of deposits, keeps $20 in it's vault and has made makes $100 worth of good mortgage loans, then it's depositors want to take out $30, the bank is not liquid. It has more assets than it owes people; but doesn't have enough cash to pay everybody back right now. There are regulations and insurance around this situation, but also the bank is still worth something.
If the Fed doesn't do it, then Warren Buffett or whoever can front the bank the $10 to allow the rest of the withdrawals to take place, the bank to remain operating, and negotiate a sweetheart deal for their trouble. For instance, they could offer to buy the bank in exchange for a Snickers bar, which would be appealing because at least that way the banker gets a packed-with-peanuts treat and be able to go to work tomorrow; otherwise the bank will go under and be worth zero dollars tomorrow, and the banker will be out of a job and a snack.
But if a bank has $100 of deposits, $20 in it's vault, $50 in good mortgage loans and $50 in a terrible loan to fund the CEO's shiftiest brother-in-law's MLM scheme, and the depositors want to take out $30, they are not liquid, but they are also not solvent. No one will show up to buy them for zero dollars, because that is overpaying; the bank all told is worth negative $30 dollars, and nobody with enough money to bail out a bank gets that way by buying things with negative value.
In this case, it appears to partially be sketchy loans, but also investments/holdings in their FTT token, which is a cryptocurrency produced by FTX, which ultimately represents investor sentiment in FTX. If you have $100 of deposits, $20 cash on hand and $100 in FTT tokens, things are great. But as soon as people start worrying if you are liquid, two things will simultaneously happen -- they will want their money back (so you start paying out that $20 cash on hand) and they will want out of your crypto token so it will start to lose value, and your tokens will quickly be worth less than $80 and you have gone from illiquid (and savable) to insolvent (and dead meat).
This doesn't usually happen in real banking because there are rules and shit. (By shit, I mean a century of institutional knowledge.) Although part of the 2008 financial crisis involved a shitload of mortgages for houses in, say, Miami that sold for $500K in 2006, and by 2009 had $470K left in principal on the mortgage but the houses were worth $280K because everybody was trying to sell their houses at the same time.
posted by Superilla at 11:05 PM on November 10, 2022 [14 favorites]
The Matt Levine column goes through this in detail, but basically:
If a bank currently has $100 of deposits, keeps $20 in it's vault and has made makes $100 worth of good mortgage loans, then it's depositors want to take out $30, the bank is not liquid. It has more assets than it owes people; but doesn't have enough cash to pay everybody back right now. There are regulations and insurance around this situation, but also the bank is still worth something.
If the Fed doesn't do it, then Warren Buffett or whoever can front the bank the $10 to allow the rest of the withdrawals to take place, the bank to remain operating, and negotiate a sweetheart deal for their trouble. For instance, they could offer to buy the bank in exchange for a Snickers bar, which would be appealing because at least that way the banker gets a packed-with-peanuts treat and be able to go to work tomorrow; otherwise the bank will go under and be worth zero dollars tomorrow, and the banker will be out of a job and a snack.
But if a bank has $100 of deposits, $20 in it's vault, $50 in good mortgage loans and $50 in a terrible loan to fund the CEO's shiftiest brother-in-law's MLM scheme, and the depositors want to take out $30, they are not liquid, but they are also not solvent. No one will show up to buy them for zero dollars, because that is overpaying; the bank all told is worth negative $30 dollars, and nobody with enough money to bail out a bank gets that way by buying things with negative value.
In this case, it appears to partially be sketchy loans, but also investments/holdings in their FTT token, which is a cryptocurrency produced by FTX, which ultimately represents investor sentiment in FTX. If you have $100 of deposits, $20 cash on hand and $100 in FTT tokens, things are great. But as soon as people start worrying if you are liquid, two things will simultaneously happen -- they will want their money back (so you start paying out that $20 cash on hand) and they will want out of your crypto token so it will start to lose value, and your tokens will quickly be worth less than $80 and you have gone from illiquid (and savable) to insolvent (and dead meat).
This doesn't usually happen in real banking because there are rules and shit. (By shit, I mean a century of institutional knowledge.) Although part of the 2008 financial crisis involved a shitload of mortgages for houses in, say, Miami that sold for $500K in 2006, and by 2009 had $470K left in principal on the mortgage but the houses were worth $280K because everybody was trying to sell their houses at the same time.
posted by Superilla at 11:05 PM on November 10, 2022 [14 favorites]
His name is Bankman-Fried and he started a bank?!
Along with Trump, Truss, Johnson and Musk, I think we're just going to have to accept we've entered the world of peak nominative determinism. I fully expect to see politicians called things like Deville and Stench.
posted by Grangousier at 12:16 AM on November 11, 2022 [5 favorites]
Along with Trump, Truss, Johnson and Musk, I think we're just going to have to accept we've entered the world of peak nominative determinism. I fully expect to see politicians called things like Deville and Stench.
posted by Grangousier at 12:16 AM on November 11, 2022 [5 favorites]
FTX files for bankruptcy, Sam Bankman-Fried resigns.
posted by JoeZydeco at 9:21 AM on November 11, 2022 [2 favorites]
posted by JoeZydeco at 9:21 AM on November 11, 2022 [2 favorites]
Note the bankruptcy includes the US division, the one that Bankman-Fried yesterday said was fine
posted by Nelson at 9:55 AM on November 11, 2022 [2 favorites]
posted by Nelson at 9:55 AM on November 11, 2022 [2 favorites]
Bankruptcy also seems to include his trading firm alameda research. potentially dispels the theories that he was taking money out of FTX to hide there.
On the arena superheat the Sacramento King’s oldarena became PoweRBalence Pavillion for its last few years, named after this magic magnetic bracelets that do absolutely nothing. I think the company was sued into oblivion for making false medical claims, bush loosing $20 on a bracket is a lot better than losing you life savings in crypto
posted by CostcoCultist at 10:33 AM on November 11, 2022
On the arena superheat the Sacramento King’s oldarena became PoweRBalence Pavillion for its last few years, named after this magic magnetic bracelets that do absolutely nothing. I think the company was sued into oblivion for making false medical claims, bush loosing $20 on a bracket is a lot better than losing you life savings in crypto
posted by CostcoCultist at 10:33 AM on November 11, 2022
This profile of SBF (archived because the original has been taken down) is so fascinating I just want to quote the whole thing, but here are a few choice extracts:
The math couldn’t be clearer. To do the most good for the world, SBF needed to find a path on which he’d be a coin toss away from going totally bust.
Nope, no warning signs there, absolutely not.
in his mind, SBF needed extreme risk
Nope, still no warning signs.
A woman who helps run marketing for FTX (and who prefers to be anonymous), briefs me on the Crypto Bahamas event that took place the previous month. Tony Blair and Bill Clinton showed up
But of course!
“I’m very skeptical of books. I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that,” explains SBF. “I think, if you wrote a book, you fucked up, and it should have been a six-paragraph blog post.”
So many questions here!
One thing that will be particularly interesting to watch over the next few months is how this impacts on the Effective Altruism movement. Not only does SBF seem to have been using EA to justify his absurdly risky investment strategy (as in, 'if there's a 1% chance of saving the world and a 99% chance of blowing yourself up, you should totally do it'), he also seems to have been throwing money at EA and funding a lot of initiatives which will now presumably collapse.
posted by verstegan at 10:33 AM on November 11, 2022 [10 favorites]
The math couldn’t be clearer. To do the most good for the world, SBF needed to find a path on which he’d be a coin toss away from going totally bust.
Nope, no warning signs there, absolutely not.
in his mind, SBF needed extreme risk
Nope, still no warning signs.
A woman who helps run marketing for FTX (and who prefers to be anonymous), briefs me on the Crypto Bahamas event that took place the previous month. Tony Blair and Bill Clinton showed up
But of course!
“I’m very skeptical of books. I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that,” explains SBF. “I think, if you wrote a book, you fucked up, and it should have been a six-paragraph blog post.”
So many questions here!
One thing that will be particularly interesting to watch over the next few months is how this impacts on the Effective Altruism movement. Not only does SBF seem to have been using EA to justify his absurdly risky investment strategy (as in, 'if there's a 1% chance of saving the world and a 99% chance of blowing yourself up, you should totally do it'), he also seems to have been throwing money at EA and funding a lot of initiatives which will now presumably collapse.
posted by verstegan at 10:33 AM on November 11, 2022 [10 favorites]
crypto-bros took over the Staples Center (it'll always be the Staples Center to me, damnit) and re-named it the "Crypto.com Arena
This is my favorite thing, the intersection of sports bros and tech bros is complete!
posted by evilDoug at 10:59 AM on November 11, 2022
This is my favorite thing, the intersection of sports bros and tech bros is complete!
posted by evilDoug at 10:59 AM on November 11, 2022
Matt Stoller writing at his BIG newsletter: Why Didn't the Government Stop the Crypto Scam?
posted by General Malaise at 4:45 PM on November 11, 2022 [1 favorite]
posted by General Malaise at 4:45 PM on November 11, 2022 [1 favorite]
Why Didn't the Government Stop the Crypto Scam?
I think that piece undersells the whole "(heavy sigh) ya know what, fine, go ahead and find out you fucking simpleton" angle.
...ever since the Tea Party idiots, I've sensed a certain weird resignation in the officials with whom I've interacted. I would not be at all surprised to find "they've" decided if a thing hurts you, and you've been told not to do it, but you do it anyway, then now it's on you. Like, not gonna deal with all the fucking hassle of trying to save people from themselves, don't wanna deal with the death threats and weirdos stalking their kids, just gonna focus on innocent victims, leave the shitheads to their fate sort of thing. He points in that direction a number of times, but I still think he undersells it.
Which is not a criticism, just an observation.
posted by aramaic at 5:07 PM on November 11, 2022 [6 favorites]
I think that piece undersells the whole "(heavy sigh) ya know what, fine, go ahead and find out you fucking simpleton" angle.
...ever since the Tea Party idiots, I've sensed a certain weird resignation in the officials with whom I've interacted. I would not be at all surprised to find "they've" decided if a thing hurts you, and you've been told not to do it, but you do it anyway, then now it's on you. Like, not gonna deal with all the fucking hassle of trying to save people from themselves, don't wanna deal with the death threats and weirdos stalking their kids, just gonna focus on innocent victims, leave the shitheads to their fate sort of thing. He points in that direction a number of times, but I still think he undersells it.
Which is not a criticism, just an observation.
posted by aramaic at 5:07 PM on November 11, 2022 [6 favorites]
The more I learn, the more the number of journalists/pundits who seem to have bought into SBF as a special kind of billionaire still surprises me. Proof people are susceptible to affinity scams, I guess: "I too am a smart guy who wants nice things but I don't just care about money. Let's chat about stuff we both vaguely remember from Philosophy 101! Also, I mostly read blog posts, not books, too."
In good news, the exposure of Teachers Pension Fund seems to be about $95 million according to this WaPo article. Total assets are close to $250 billion, so that puts their losses at under 0.05%.
I saw another analyst comment online that estimated their investment at "a couple hundred million." I suspect this is just wrong, as it was earlier and not sourced directly to the fund. Even so, it's a relatively minor loss at that level (maybe 0.1%) so not a big hit or proof of reckless management.
The funny thing to me is that both estimates could be right, which would mean they had invested more but had cashed out. That would mean they made a profit. Not bad management or even suspect judgment; just the correct way to make a profit in something you know is a bubble: invest on the way up, but keep selling to book your profits. The more obvious "sell short" is actually difficult, as you have no idea when the bubble will pop.
posted by mark k at 5:10 PM on November 11, 2022
In good news, the exposure of Teachers Pension Fund seems to be about $95 million according to this WaPo article. Total assets are close to $250 billion, so that puts their losses at under 0.05%.
I saw another analyst comment online that estimated their investment at "a couple hundred million." I suspect this is just wrong, as it was earlier and not sourced directly to the fund. Even so, it's a relatively minor loss at that level (maybe 0.1%) so not a big hit or proof of reckless management.
The funny thing to me is that both estimates could be right, which would mean they had invested more but had cashed out. That would mean they made a profit. Not bad management or even suspect judgment; just the correct way to make a profit in something you know is a bubble: invest on the way up, but keep selling to book your profits. The more obvious "sell short" is actually difficult, as you have no idea when the bubble will pop.
posted by mark k at 5:10 PM on November 11, 2022
I've sensed a certain weird resignation in the officials with whom I've interacted.
As a civil service person who reviews plans and oversees work ensuring regulatory compliance, can confirm. In the planning stage I am a lot quicker to stop fighting the plan and say, you know what? I'm not going to argue with you. I'm telling you it's a bad idea, you have not convinced me I'm wrong. (Also, guess who the inspector is once you start work? Yep, me)
It's not bad when you work with the same people routinely. They start to learn if you are or aren't a "cry wolf" kind of person, and one or two "I told you so" episodes tends to make them seek your advice instead of see you as an obstacle to be overcome or bullshitted. New people are always going to learn it the hard way though. It's one of the things you can tell someone until you're blue in the face but they won't believe it until they've experienced the "find out" part of FAFO. So I've learned to quit trying sooner, document my advice, and let nature take it's course.
posted by ctmf at 6:00 PM on November 11, 2022 [5 favorites]
As a civil service person who reviews plans and oversees work ensuring regulatory compliance, can confirm. In the planning stage I am a lot quicker to stop fighting the plan and say, you know what? I'm not going to argue with you. I'm telling you it's a bad idea, you have not convinced me I'm wrong. (Also, guess who the inspector is once you start work? Yep, me)
It's not bad when you work with the same people routinely. They start to learn if you are or aren't a "cry wolf" kind of person, and one or two "I told you so" episodes tends to make them seek your advice instead of see you as an obstacle to be overcome or bullshitted. New people are always going to learn it the hard way though. It's one of the things you can tell someone until you're blue in the face but they won't believe it until they've experienced the "find out" part of FAFO. So I've learned to quit trying sooner, document my advice, and let nature take it's course.
posted by ctmf at 6:00 PM on November 11, 2022 [5 favorites]
verstegan: This profile of SBF (archived because the original has been taken down) is so fascinating I just want to quote the whole thing
It's a beautifully written piece. The naivety of the author - toward SBF, toward the Effective Altruism movement as a whole - adds to the beauty, though it ironically reduces the measured-in-utils utility of the writing.
posted by clawsoon at 6:23 PM on November 11, 2022 [2 favorites]
It's a beautifully written piece. The naivety of the author - toward SBF, toward the Effective Altruism movement as a whole - adds to the beauty, though it ironically reduces the measured-in-utils utility of the writing.
posted by clawsoon at 6:23 PM on November 11, 2022 [2 favorites]
The entire team behind the FTX Future Fund, the Sam Bankman-Fried philanthropy, has resigned.
William McAskill reflects: This is a thread of my thoughts and feelings about the actions that led to FTX’s bankruptcy, and the enormous harm that was caused as a result, involving the likely loss of many thousands of innocent people’s savings.
posted by lalochezia at 8:17 PM on November 11, 2022 [1 favorite]
In all of the Effective Altruism calculations reported in the article that verstegan posted, it seems to have never occurred to Bankman-Fried to calculate the likelihood that his actions would have a negative impact. I'm not just thinking of this failure; he doesn't seem to have thought about the negative impact of his success, either.
posted by clawsoon at 9:24 PM on November 11, 2022
posted by clawsoon at 9:24 PM on November 11, 2022
Along with Trump, Truss, Johnson and Musk, I think we're just going to have to accept we've entered the world of peak nominative determinism. I fully expect to see politicians called things like Deville and Stench.
Considering that Bankman-Fried failed to start a bank, Truss failed to carry a load, and Trump failed to become better when put into play, I'm guessing that the nominatively determinative leaders we need to look for will come from the opposite direction and have names like Badman McFailureface.
posted by clawsoon at 9:27 PM on November 11, 2022 [3 favorites]
Considering that Bankman-Fried failed to start a bank, Truss failed to carry a load, and Trump failed to become better when put into play, I'm guessing that the nominatively determinative leaders we need to look for will come from the opposite direction and have names like Badman McFailureface.
posted by clawsoon at 9:27 PM on November 11, 2022 [3 favorites]
William McAskill reflects: This is a thread of my thoughts and feelings about the actions that led to FTX’s bankruptcy, and the enormous harm that was caused as a result, involving the likely loss of many thousands of innocent people’s savings.
posted by clawsoon at 9:45 PM on November 11, 2022
and some of that goodwill was the result of association with ideas I have spent my career promoting.Heh. I guess some goodwill comes from minimizing the importance of climate change and encouraging people to give their money to AI think-tanks, though I'm not sure it's as much as McAskill supposes.
posted by clawsoon at 9:45 PM on November 11, 2022
BREAKING: FTX_Official & FTX US’s wallets appear to be hacked, with over $600 million leaving the exchange, per CoinDesk.
FTX has stated in its official Telegram channel that it had been hacked, instructing users not to install any new upgrades & to delete all FTX apps.
posted by ctmf at 9:59 PM on November 11, 2022 [3 favorites]
FTX has stated in its official Telegram channel that it had been hacked, instructing users not to install any new upgrades & to delete all FTX apps.
posted by ctmf at 9:59 PM on November 11, 2022 [3 favorites]
This thread (from Twitter user foobar) tracks the money being sucked out of FTC in near real-time.
It's a little piece of the 21st century we were promised that made it through to us.
posted by thatwhichfalls at 10:19 PM on November 11, 2022 [3 favorites]
It's a little piece of the 21st century we were promised that made it through to us.
posted by thatwhichfalls at 10:19 PM on November 11, 2022 [3 favorites]
my schadenfreude pie filling overfloweth into the oven and BURNETH
posted by away for regrooving at 11:33 PM on November 11, 2022 [4 favorites]
posted by away for regrooving at 11:33 PM on November 11, 2022 [4 favorites]
"Sam Bankman-Fried created a secret back door in FTX’s system so that he could secretly steal money from the company. Nobody knows where it went. When asked about it SBF said, and I quote, “???”"
So he's going to jail, right? Right?
posted by Pyry at 11:42 PM on November 11, 2022 [3 favorites]
So he's going to jail, right? Right?
posted by Pyry at 11:42 PM on November 11, 2022 [3 favorites]
It's a beautifully written piece. The naivety of the author
Which is to say: It's a love poem, written in the first flush of infatuation.
posted by clawsoon at 3:51 AM on November 12, 2022
Which is to say: It's a love poem, written in the first flush of infatuation.
posted by clawsoon at 3:51 AM on November 12, 2022
Rumors so far:
He's flying to Argentina
There's an auto-update to the FTX app being pushed right now. The app and the FTX website are both delivering malware.
The wallet address included ‘fucksbf’ and a note reading “rug pull all”.
posted by clawsoon at 4:15 AM on November 12, 2022 [3 favorites]
He's flying to Argentina
There's an auto-update to the FTX app being pushed right now. The app and the FTX website are both delivering malware.
The wallet address included ‘fucksbf’ and a note reading “rug pull all”.
posted by clawsoon at 4:15 AM on November 12, 2022 [3 favorites]
ha ha ha ha haaaaa
posted by Tom Hanks Cannot Be Trusted at 4:29 AM on November 12, 2022
posted by Tom Hanks Cannot Be Trusted at 4:29 AM on November 12, 2022
can someone who's an expert about this stuff let me know whether or not this makes tom brady even sadder
posted by Tom Hanks Cannot Be Trusted at 4:30 AM on November 12, 2022 [2 favorites]
posted by Tom Hanks Cannot Be Trusted at 4:30 AM on November 12, 2022 [2 favorites]
FTX COLLAPSE: Key executive was Credit Suisse ‘risk manager’: "She left [Credit Suisse] because she wasn’t enjoying compliance training."
posted by clawsoon at 5:07 AM on November 12, 2022 [4 favorites]
posted by clawsoon at 5:07 AM on November 12, 2022 [4 favorites]
He's flying to Argentina
This one might not be true: "While SBF escaping from Bahamas is a plausible story, one possibility is that the aircraft owned by Emes Air may have been carrying passengers related to its controlling company, Grupo Emes."
posted by clawsoon at 5:37 AM on November 12, 2022 [1 favorite]
This one might not be true: "While SBF escaping from Bahamas is a plausible story, one possibility is that the aircraft owned by Emes Air may have been carrying passengers related to its controlling company, Grupo Emes."
posted by clawsoon at 5:37 AM on November 12, 2022 [1 favorite]
The final insult: Sam Bankman-Fried is not very good at League of Legends
posted by clawsoon at 6:25 AM on November 12, 2022 [1 favorite]
The past couple of decades (yes, Facebook is old enough to rent a car, you’re old, get over it) has burdened us all with the much-analysed cult of the founder.This reminds me of a recent thread talking about how bad venture capitalists are at figuring out who will actually be good at running a company.
We’re not going to run through the whole thing here, but the gist is likely familiar: whip-smart tech person sets up company and promises to revolutionise X area/product. Sometimes it works, sometimes it doesn’t.
Society has fetishised the nerd who doesn’t fit the mould of the typical boss, hence Mark Zuckerberg’s hoodies and SBF’s shorts.
The Sequoia LeagueZoom fits neatly within this paradigm: the visionary articulates his grand vision while seeming like he doesn’t care at all. It’s the absent-minded professor trope and its near-relative, brilliant-but-lazy, which in combination sums up what a VC expects of an effortless tech genius.
But here’s the thing: Sam Bankman-Fried is almost certainly really bad at League of Legends, and was probably not playing very well.
posted by clawsoon at 6:25 AM on November 12, 2022 [1 favorite]
It's a love poem, written in the first flush of infatuation.
Yep, to call it fawning would be an understatement. Also couldn't help but notice that the author was staying in FTX-provided accomodations and eating FTX-provided food while writing the profile. Note, however, that he doesn't call himself a journalist, but a "private historian who specializes in documenting the lives and careers of technical and engineering types who have made a world of difference."
posted by ultraviolet catastrophe at 6:27 AM on November 12, 2022 [3 favorites]
Yep, to call it fawning would be an understatement. Also couldn't help but notice that the author was staying in FTX-provided accomodations and eating FTX-provided food while writing the profile. Note, however, that he doesn't call himself a journalist, but a "private historian who specializes in documenting the lives and careers of technical and engineering types who have made a world of difference."
posted by ultraviolet catastrophe at 6:27 AM on November 12, 2022 [3 favorites]
David Gerard for Foreign Policy on the debâcle so far.
posted by LanTao at 6:38 AM on November 12, 2022 [1 favorite]
posted by LanTao at 6:38 AM on November 12, 2022 [1 favorite]
Wow that article about Bankman-Fried's LoL career is a remarkably deep dive. If the paywall stops you, the gist of it is his best rank is Bronze 2. That's something like bottom 20% of players. They have a link to a recent Korean account of his; unranked, but it shows the last game on that account was played on September 9.
posted by Nelson at 7:30 AM on November 12, 2022 [1 favorite]
posted by Nelson at 7:30 AM on November 12, 2022 [1 favorite]
Here's some morning-after roundup reporting on the FTX hack: Coindesk, NYTimes. It sounds like the exchange website and mobile app were hacked and lots of money drained; a different scam than this week's collapse of FTX as a business to what sure looks like a simple embezzlement scheme. Or maybe it's the same scam, if the supposed hack was an inside job. ???
There's been some wild claims made about Bankman-Fried's political donations, like "he gave $1.5B to Democrats". It's not nearly that much and he seems to be a both-sidser, so Republicans too. This Oct 2022 article has details.
posted by Nelson at 7:48 AM on November 12, 2022
There's been some wild claims made about Bankman-Fried's political donations, like "he gave $1.5B to Democrats". It's not nearly that much and he seems to be a both-sidser, so Republicans too. This Oct 2022 article has details.
posted by Nelson at 7:48 AM on November 12, 2022
This is why no one should ever trust a gamer polycule
posted by Tom Hanks Cannot Be Trusted at 8:01 AM on November 12, 2022
posted by Tom Hanks Cannot Be Trusted at 8:01 AM on November 12, 2022
Nelson: There's been some wild claims made about Bankman-Fried's political donations, like "he gave $1.5B to Democrats". It's not nearly that much and he seems to be a both-sidser, so Republicans too. This Oct 2022 article has details.
Apparently his mother is co-founder of "secretive" Democratic donor network Mind the Gap, and a scroll through Twitter shows some people on the right freaking out about that.
posted by clawsoon at 8:09 AM on November 12, 2022
Apparently his mother is co-founder of "secretive" Democratic donor network Mind the Gap, and a scroll through Twitter shows some people on the right freaking out about that.
posted by clawsoon at 8:09 AM on November 12, 2022
Hedge fund admits half its capital stuck on FTX exchange. Kevin Zhou's Galois Capital, $100M now locked away and/or stolen.
posted by Nelson at 8:16 AM on November 12, 2022 [2 favorites]
posted by Nelson at 8:16 AM on November 12, 2022 [2 favorites]
There's been some wild claims made about Bankman-Fried's political donations, like "he gave $1.5B to Democrats". It's not nearly that much and he seems to be a both-sidser, so Republicans too. This Oct 2022 article has details.You can see him at #6 on the 2022 election cycle. That definitely dried up in the spring, and while this is not a trivial amount of money I’m skeptical that it’s going to get leniency for his crimes.
posted by adamsc at 8:37 AM on November 12, 2022 [2 favorites]
Elon Musk claims that Bankman-Fried set off his bullshit detector back in April when Musk was looking for Twitter investors.
Hard to tell if Musk is bullshitting about his bullshit detector being set off, of course. It's an easy thing to say now that bullshit has been revealed.
posted by clawsoon at 8:41 AM on November 12, 2022 [1 favorite]
Hard to tell if Musk is bullshitting about his bullshit detector being set off, of course. It's an easy thing to say now that bullshit has been revealed.
posted by clawsoon at 8:41 AM on November 12, 2022 [1 favorite]
I have no problem believing it, although I don't think it redounds to Musk's credit in the way he probably imagines. "Never shit a shitter," as they say.
posted by Not A Thing at 9:44 AM on November 12, 2022
posted by Not A Thing at 9:44 AM on November 12, 2022
Ain't just #6 there, adamsc. SBF was the #2 highest donor to Democrats. Almost 12% (resp 10%) of the Democrats take from their top 10 (resp 20) largest donors. Almost nothing going to Republicans.
I too doubt his altruism was too effective here, as political friends can only do so much when you fuck up this badly. I suspect this takes down the whole Mind the Gap network too, but the election being over means they're replaceable.
It'll be really funny when we find out how his political friends helped make FTX possible of course. :)
posted by jeffburdges at 2:17 PM on November 12, 2022
I too doubt his altruism was too effective here, as political friends can only do so much when you fuck up this badly. I suspect this takes down the whole Mind the Gap network too, but the election being over means they're replaceable.
It'll be really funny when we find out how his political friends helped make FTX possible of course. :)
posted by jeffburdges at 2:17 PM on November 12, 2022
"A lotta yall still dont get it. Bag holders can use multiple rug pulls on a single Ponzi. So if you have 1 fallen Ponzi and 3 rug pulls you can create 3 new Ponzis." -- Chris Knight (via)
posted by jeffburdges at 2:23 PM on November 12, 2022
posted by jeffburdges at 2:23 PM on November 12, 2022
What I don't understand about the two Canadian pension funds investing in this is, what did they think they were investing in? It's clear that blockchain as described here is a planet-killing technology which, should it unexpectedly prove successful in the long run, will have the side effect of destroying the financial system as we know it.
Which seems weird for a company managing CA$264bn in that very same financial system. Asking for a friend, are they looking to invest into infrastructure, like, say, bridges without clear title?
posted by LanTao at 2:41 PM on November 12, 2022
Which seems weird for a company managing CA$264bn in that very same financial system. Asking for a friend, are they looking to invest into infrastructure, like, say, bridges without clear title?
posted by LanTao at 2:41 PM on November 12, 2022
SBF’s disgrace could make things awkward for Gary Gensler and the Democrats
To be fair, Gensler was not the only one suckered by SBF. Nearly everyone else—myself included—fell for the narrative that SBF, with his cute afro and aw-shucks demeanor, was exactly the savior crypto needed to shake off its dodgy reputation and emerge as part of the mainstream financial system. The problem is that cop-on-the-beat Gensler not only failed to spot the crime—he appeared set to go along with a legislative strategy that would have given SBF a regulatory moat and made him king of the U.S. crypto market.posted by clawsoon at 2:47 PM on November 12, 2022 [1 favorite]
Ryan D. Salame to Co-CEO of FTX was a Republican mega donor. It is going to be swept under the rug because both parties look bad.
posted by interogative mood at 4:30 PM on November 12, 2022 [1 favorite]
posted by interogative mood at 4:30 PM on November 12, 2022 [1 favorite]
So much for effective altruism - the whole idea is to put money where it will do the most good. $2000 to save a life by giving to malaria eradication groups, they say. Leaving the validity of that calculation aside, what 50 lives does he think he's saving by giving a hundred grand to the Alabama Conservatives Fund, a PAC which "supports candidates who will bring true Christian conservative Alabama values to Washington, such as: defending the unborn, protecting our Second Amendment rights, supporting our military and veterans, fighting for our farmers, working to create rural Alabama jobs, securing our border, restoring integrity to our elections, fighting the socialists who want to change our country, and always supporting our police."
Just as full of shit and self-serving as the rest of them. Effective altruism my arse.
posted by Dysk at 4:39 PM on November 12, 2022 [4 favorites]
Just as full of shit and self-serving as the rest of them. Effective altruism my arse.
posted by Dysk at 4:39 PM on November 12, 2022 [4 favorites]
Call the 'donations' what they really are: Bribes.
Bribes to look the other way while they rug pulled pre-mined unregistered securities and over leveraged themselves.
posted by neonamber at 5:51 PM on November 12, 2022
Bribes to look the other way while they rug pulled pre-mined unregistered securities and over leveraged themselves.
posted by neonamber at 5:51 PM on November 12, 2022
“Alpha-Male Crypto ‘Bloodsport’ Sows a Catastrophe at FTX,” Michael P. Regan and Vildana Hajric, Bloomberg, 12 November 2022
posted by ob1quixote at 6:50 AM on November 13, 2022 [1 favorite]
posted by ob1quixote at 6:50 AM on November 13, 2022 [1 favorite]
"When Softbank's Vision Fund invests into something it is a sure sign that its value will soon sink."
posted by jeffburdges at 9:05 AM on November 13, 2022 [1 favorite]
posted by jeffburdges at 9:05 AM on November 13, 2022 [1 favorite]
omg, that Sequoia Capital article that they took down is really something:
After my interview with SBF, I was convinced: I was talking to a future trillionaire. Whatever mojo he worked on the partners at Sequoia—who fell for him after one Zoom—had worked on me, too. For me, it was simply a gut feeling. I’ve been talking to founders and doing deep dives into technology companies for decades. It’s been my entire professional life as a writer. And because of that experience, there must be a pattern-matching algorithm churning away somewhere in my subconscious. I don’t know how I know, I just do. SBF is a winner.posted by gwint at 9:48 AM on November 13, 2022 [2 favorites]
But that wasn’t even the main thing. There was something else I felt: something in my heart, not just my gut. After sitting ten feet from him for most of the week, studying him in the human musk of the startup grind and chatting in between beanbag naps, I couldn’t shake the feeling that this guy is actually as selfless as he claims to be.
Musk continues gloating. FTX sold lots of wrapped BTC. And web3isgoinggreat.com linked yet more contagion. lol
posted by jeffburdges at 1:54 AM on November 14, 2022
posted by jeffburdges at 1:54 AM on November 14, 2022
Indeed. I'm not entirely clear on why pension funds have any active management at all; seems kinda like they should be obligated to invest in some kind of maximally-diversified set of indices and bonds or whatever and then just leave it at that.
This is partially the consequence of decades of ultra-cheap money. That has driven the returns of bonds and blue chip stocks way down and forced pension funds into risker investments like this.
I've actually helped OTPP (and CDPQ) buy infrastructure assets like wind farms and water treatment plants so I was also a little surprised to see them putting money into things like this but I guess it's a different fund than my client.
The wallet address included ‘fucksbf’ and a note reading “rug pull all”.
When we pull rug, we pull all.
posted by atrazine at 6:14 AM on November 14, 2022 [1 favorite]
This is partially the consequence of decades of ultra-cheap money. That has driven the returns of bonds and blue chip stocks way down and forced pension funds into risker investments like this.
I've actually helped OTPP (and CDPQ) buy infrastructure assets like wind farms and water treatment plants so I was also a little surprised to see them putting money into things like this but I guess it's a different fund than my client.
The wallet address included ‘fucksbf’ and a note reading “rug pull all”.
When we pull rug, we pull all.
posted by atrazine at 6:14 AM on November 14, 2022 [1 favorite]
Amusing meme replies to SBF. Tumblr blog of Caroline Ellison. 20% of all Crypto.com ‘reserves’ are in SHIB. It's time Sam. lol
I'm shocked by how many bitcoiners post on r/Buttcoin, like shouldn't they be mocking bitcoin there too?
posted by jeffburdges at 10:07 AM on November 14, 2022
I'm shocked by how many bitcoiners post on r/Buttcoin, like shouldn't they be mocking bitcoin there too?
posted by jeffburdges at 10:07 AM on November 14, 2022
Matt Levine's newsletter today explains the leaked FTX balance sheet:
posted by ectabo at 11:09 AM on November 14, 2022 [1 favorite]
[T]here is a range of possible badness, even in bankruptcy, and the balance sheet that Sam Bankman-Fried’s failed crypto exchange FTX.com sent to potential investors last week before filing for bankruptcy on Friday is very bad. It’s an Excel file full of the howling of ghosts and the shrieking of tortured souls. If you look too long at that spreadsheet, you will go insane.Highlights include: $7mn of something called “TRUMPLOSE”, $2.2bn of Serum tokens (a token with a market cap of $88mn), and a cell with a negative $8bn entry labeled “hidden, poorly internally labled ‘fiat@’ account”.
posted by ectabo at 11:09 AM on November 14, 2022 [1 favorite]
Archive link for Levine. He is a treasure.
You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.posted by Nelson at 11:22 AM on November 14, 2022 [3 favorites]
"The real friends are the ones we rug-pulled along the way." -- Some r/Buttcoiner
posted by jeffburdges at 12:46 PM on November 14, 2022
posted by jeffburdges at 12:46 PM on November 14, 2022
“Alpha-Male Crypto ‘Bloodsport’ Sows a Catastrophe at FTX,”
Honestly, if a few tweets can bring you down, you've got bigger problems than "crypto bloodsport". I'm sure that every traditional area of finance is just filled with people who are so dedicated to fair competition and not ruining any competitors, it's totally not that traditional financial institutions just can't be taken out with a few tweets, is definitely that bankers are too honest to every try to screw each other over. Whereas the only thing holding bitcoin back is there Twitter bloodsport bullshit. Yes.
posted by Dysk at 1:36 PM on November 14, 2022 [2 favorites]
Honestly, if a few tweets can bring you down, you've got bigger problems than "crypto bloodsport". I'm sure that every traditional area of finance is just filled with people who are so dedicated to fair competition and not ruining any competitors, it's totally not that traditional financial institutions just can't be taken out with a few tweets, is definitely that bankers are too honest to every try to screw each other over. Whereas the only thing holding bitcoin back is there Twitter bloodsport bullshit. Yes.
posted by Dysk at 1:36 PM on November 14, 2022 [2 favorites]
More from the Levine article:
"If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” "
posted by gingerbeer at 5:08 PM on November 14, 2022 [1 favorite]
"If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” "
posted by gingerbeer at 5:08 PM on November 14, 2022 [1 favorite]
Newest issue of Ed Zitron's newsletter is a good read.
posted by General Malaise at 4:40 PM on November 15, 2022
posted by General Malaise at 4:40 PM on November 15, 2022
FTX collapse: Tom Brady, Stephen Curry, Shohei Ohtani among sports figures named in class-action lawsuit
Much more jaw dropping though is Sam Bankman-Fried tries to explain himself. "The fallen crypto CEO on what went wrong, why he did what he did, and what lies he told along the way." Screenshots from a Twitter DM interview.
posted by Nelson at 3:12 PM on November 16, 2022 [4 favorites]
Much more jaw dropping though is Sam Bankman-Fried tries to explain himself. "The fallen crypto CEO on what went wrong, why he did what he did, and what lies he told along the way." Screenshots from a Twitter DM interview.
oh fuck it looks like people wired $8b to Alameda and oh god we basically forgot about the stub account that corresponded to that and so it was never delivered to FTXLe oops!
posted by Nelson at 3:12 PM on November 16, 2022 [4 favorites]
That DM interview is... I have no words.
posted by away for regrooving at 6:19 PM on November 16, 2022
posted by away for regrooving at 6:19 PM on November 16, 2022
Bankman-Fried has some words
posted by Nelson at 6:34 AM on November 17, 2022 [3 favorites]
25) Last night I talked to a friend of mine.Look, my guy... she's not into you.
They published my messages. Those were not intended to be public, but I guess they are now.
posted by Nelson at 6:34 AM on November 17, 2022 [3 favorites]
Apparently the new CEO of FTX has some words (twitter thread of the letter which has the downloadable copy whose link I can't extract cleanly).
posted by cendawanita at 6:56 AM on November 17, 2022
posted by cendawanita at 6:56 AM on November 17, 2022
@Atrios: Longtermism was a bunch of rich guys claiming being immoral pricks made them the good guys. Amazing con
@solargroovy: It's a prosperity gospel for agnostics
posted by tonycpsu at 9:14 AM on November 17, 2022 [1 favorite]
@solargroovy: It's a prosperity gospel for agnostics
posted by tonycpsu at 9:14 AM on November 17, 2022 [1 favorite]
David Dayen, The American Prospect: We Already Have Laws to Stop Crypto Fraud
If the government puts together a regulatory regime for a fraud scheme, the “too big to fail” conundrum can take hold, where they might feel obligated to bail out the crypto industry to protect investors. But law enforcement, and handcuffs, can perform that task of investor protection much more efficiently. Maybe if digital assets were serving some vital purpose, we would need to tailor some regime to allow it to blossom. But as Dean Baker explains, that does not really exist with crypto.posted by tonycpsu at 9:18 AM on November 17, 2022 [1 favorite]
Arguments to ban digital assets fall along the lines of arguments to ban casinos, cigarettes, or alcohol. They usually are pretty unpopular. People are free to gamble, for example, though local governments offer services for gambling addiction. This is somewhat incongruous but consistent with the recognition that outright bans don’t work politically.
That said, the government doesn’t have to go in the opposite direction and devote resources to making crypto thrive. They could just toss anyone using crypto to defraud people in jail. Casinos are regulated at the state and federal level—they are defined as financial institutions under the Bank Secrecy Act—but the real forcing mechanism for compliance is the possibility of criminal indictment.
People are free to gamble, for example, though local governments offer services for gambling addiction.
This omits so much as to be misleading if not wrong. People can gambler, but they are not free to - it is heavily regulated and controlled in most places. You don't have the kind of unregulated free for all that exists in the crypto space, and that the quoted sentence implies.
posted by Dysk at 9:28 AM on November 17, 2022
This omits so much as to be misleading if not wrong. People can gambler, but they are not free to - it is heavily regulated and controlled in most places. You don't have the kind of unregulated free for all that exists in the crypto space, and that the quoted sentence implies.
posted by Dysk at 9:28 AM on November 17, 2022
FTX used corporate funds to purchase employee homes, new filing shows.
the penthouse apartment of founder Sam Bankman-Fried was listed for nearly $40 million. ... Corporate housing arrangements are not unusual, especially in high-cost areas, but Ray’s filing noted that “certain real estate was recorded in the personal name of these employees and advisors,” a nontypical arrangement.posted by Nelson at 10:38 AM on November 17, 2022
We do have regulations that cover crypto-currencies though, Dysk, but the SEC, CFTC, etc. apply them slowly.
In particular, these exchange issued tokens like FTT, BNB, USDC, USDT, etc. really do fit existing legal definitions, ala unregulated securities. If you sell to US persons, then you definitely already fall under SEC and CFTC jurisdiction, but you can fall under various agencies jurisdictions in diverse other ways.
Gold age and Liberty reserve survived 7 years each. Binance is 5 years old, but under investigation by both the US and UK. FTX played US politics really aggressively, but surely broke a staggering number of laws.
Aside: "In 2022, [CZ] invested $500 million through Binance to finance the acquisition of Twitter by Elon Musk."
posted by jeffburdges at 12:34 PM on November 17, 2022
In particular, these exchange issued tokens like FTT, BNB, USDC, USDT, etc. really do fit existing legal definitions, ala unregulated securities. If you sell to US persons, then you definitely already fall under SEC and CFTC jurisdiction, but you can fall under various agencies jurisdictions in diverse other ways.
Gold age and Liberty reserve survived 7 years each. Binance is 5 years old, but under investigation by both the US and UK. FTX played US politics really aggressively, but surely broke a staggering number of laws.
Aside: "In 2022, [CZ] invested $500 million through Binance to finance the acquisition of Twitter by Elon Musk."
posted by jeffburdges at 12:34 PM on November 17, 2022
We do have regulations that cover crypto-currencies though, Dysk, but the SEC, CFTC, etc. apply them slowly.
Not all "we"s do, though - a lot of regulators around the world certainly don't see cryptocurrency as part of their remit even if you could argue that they should. And even then, regulations that aren't applied might as well not exist. Things that are naked pyramid schemes that would have been shut down and criminal charges brought in any other context have been allowed to run their course. Like, I'm glad that some US regulators are getting involved to some degree, but US regulators are also light touch and glacial at the best of times.
posted by Dysk at 3:45 PM on November 17, 2022
Not all "we"s do, though - a lot of regulators around the world certainly don't see cryptocurrency as part of their remit even if you could argue that they should. And even then, regulations that aren't applied might as well not exist. Things that are naked pyramid schemes that would have been shut down and criminal charges brought in any other context have been allowed to run their course. Like, I'm glad that some US regulators are getting involved to some degree, but US regulators are also light touch and glacial at the best of times.
posted by Dysk at 3:45 PM on November 17, 2022
There are good reasons complex prosecutions take time, but Binance is surely going to die, maybe not till 2025, but they'll go down. Ain't too important that they're based abroad, as were Gold Age and Liberty reserve, because their growth imperative requires they pursue US customers too.
Bitfinex (iFinex Inc) is 10 years old. Tether (iFinex Inc) is 8 years old (and so far paid $60 M in fines). Although less illegal, these are a much worse problem than retail frauds like FTX or Binance, because Tether provides fractional reserve USD banking that supports the BTC price, and thus its proof-of-work. Afaik, these survive by being more like regular financial institutions, aka really shady deals just among rich people, like Tether only permits withdrawals by specific partner institutions, like exchanges.
How do we stop financial institutions, either establish ones or upstarts, from funding crimes against humanity, like proof-of-work and fossil fuel exploration? An answer should actually be ecology focused, like wealth taxes of 2% of more on unnecessarily ecologically destructive assets, aka ownership of meat companies, fossil fuel companies, or proof-of-work coins like BTC. We do not even need the US to pass this law, maybe just Germany doing so would break Tether and Bitfinex.
Anyways, retail fraud is a side show, but ending proof-of-work is the main event, and hopefully doing so can pave a legislative road to curbing fossil fuel use.
posted by jeffburdges at 4:29 PM on November 17, 2022
Bitfinex (iFinex Inc) is 10 years old. Tether (iFinex Inc) is 8 years old (and so far paid $60 M in fines). Although less illegal, these are a much worse problem than retail frauds like FTX or Binance, because Tether provides fractional reserve USD banking that supports the BTC price, and thus its proof-of-work. Afaik, these survive by being more like regular financial institutions, aka really shady deals just among rich people, like Tether only permits withdrawals by specific partner institutions, like exchanges.
How do we stop financial institutions, either establish ones or upstarts, from funding crimes against humanity, like proof-of-work and fossil fuel exploration? An answer should actually be ecology focused, like wealth taxes of 2% of more on unnecessarily ecologically destructive assets, aka ownership of meat companies, fossil fuel companies, or proof-of-work coins like BTC. We do not even need the US to pass this law, maybe just Germany doing so would break Tether and Bitfinex.
Anyways, retail fraud is a side show, but ending proof-of-work is the main event, and hopefully doing so can pave a legislative road to curbing fossil fuel use.
posted by jeffburdges at 4:29 PM on November 17, 2022
Ain't too important that they're based abroad, as were Gold Age and Liberty reserve, because their growth imperative requires they pursue US customers too.
There are exchanges and crypto schemes that don't allow US customers for exactly that reason though, and those of us who are based "abroad" deserve regulation as well.
posted by Dysk at 2:41 AM on November 18, 2022
There are exchanges and crypto schemes that don't allow US customers for exactly that reason though, and those of us who are based "abroad" deserve regulation as well.
posted by Dysk at 2:41 AM on November 18, 2022
FTX’s Sam Bankman-Fried Cashed Out $300 Million During Funding Spree
When FTX raised $420 million from an array of big-name investors in October last year, the cryptocurrency exchange said the money would help grow the business, improve user experience and allow it to engage more with regulators.posted by Nelson at 2:11 PM on November 18, 2022 [1 favorite]
Left unmentioned was that nearly three-quarters of the money, $300 million, went instead to FTX founder Sam Bankman-Fried, who sold some of his personal stake in the company ...
Bankman-Fried Apologizes to FTX Employees, Details Amount of Leverage in Internal Letter. Screenshots of letter here.
It's a weird combination of lies of omission, evidence for the inevitable criminal trial, and whiny "no one loves me anymore" subtext.
Meanwhile his parents are implicated now too: SBF’s Parents Joined FTX $121M Bahamas Property Splurge: Reuters.
posted by Nelson at 4:53 PM on November 22, 2022 [1 favorite]
It's a weird combination of lies of omission, evidence for the inevitable criminal trial, and whiny "no one loves me anymore" subtext.
Meanwhile his parents are implicated now too: SBF’s Parents Joined FTX $121M Bahamas Property Splurge: Reuters.
posted by Nelson at 4:53 PM on November 22, 2022 [1 favorite]
Molley White's FTX contagion chart
posted by jeffburdges at 4:18 AM on November 23, 2022 [1 favorite]
posted by jeffburdges at 4:18 AM on November 23, 2022 [1 favorite]
It lists Silvergate's exposure as < $1.2 B (< 10%) but no idea what that means. Is Tether dependent upon Silvergate? I think no, probably USDC or someone else.
posted by jeffburdges at 6:50 AM on November 23, 2022
posted by jeffburdges at 6:50 AM on November 23, 2022
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posted by chavenet at 2:47 PM on November 9, 2022 [21 favorites]