FTX Collapse, feat Sam Bankman-Fraud

[touchingcloth]

I'm referring to the overgrown 15 year olds in here who keep saying everyone who dabbles in crypto is some sort of cretin, COZ IT A SCAM, you want to have a fun then great, hope you make something from it

Like Ferris alludes to, the environmental issues mean that there are external factors that ought to be considered rather than just the risk to your own finances.

Gambling has similar things to be considered. Are betting on the Premier League, the Qatar World Cup, horse races, horse steeplechases, and bullfighting all equivalent in terms of the types and amount of harm they might cause? There's a point where the "it's just a bit of fun" line of thinking starts to ring hollow (though I wouldn't use the word cretin personally).

[Ferris]

If it's anything like the UK then yes. Whenever I go to the Etihad, the boards surrounding the pitch are always advertising crypto. The same at the England Qatar match last night (though this could have be digitally altered for the UK market).

I guess the target audience is... blokes. Blokes maybe with a bit of spare dosh, like a flutter and had a couple of pints.

I made a few hundred quid in crypto before I got out because I was bored in lockdown, I don't think it's any different from any other speculative asset (albeit a lot more speculative than most).

I wasn't arguing the morals of it (though I think large financial institutions got carried away and say things like "safe" or "regulated" a bit more than they should when it's gambling and do all the punters who put significant savings into these exchanges know that?)

My point was about Larry David and why he was bothering to get involved.

[Terry Torpid]

At least when someone gambles, they know when the result is going to come in, and how much they will make or lose. When the match is over, it's over, and you cut your losses. Your horse fell at the first jump, you're done. At least there's closure when it gets shot in the head.

With crypto, it doesn't actually end, so people are left holding onto coins that have lost all value in the forlorn hope that it will pick up again. I think that's the cruel part. People don't know when they've lost.

[seepage]

Same as shares etc. (and foreign currency if your company has to pay overseas suppliers)

[Terry Torpid]

True. I think shares are a bit better because there's a real company involved, which makes real money, so it carries a bit more weight. Crypto is like shares in nothing but the very idea of shares themselves. Madness.

[Deskbound Cunt]

Like Ferris alludes to, the environmental issues mean that there are external factors that ought to be considered rather than just the risk to your own finances.

ETH addressed the problematic environmental issue earlier this year with its change to proof-of-stake.

[Ferris]

Like Ferris alludes to, the environmental issues mean that there are external factors that ought to be considered rather than just the risk to your own finances.

Gambling has similar things to be considered. Are betting on the Premier League, the Qatar World Cup, horse races, horse steeplechases, and bullfighting all equivalent in terms of the types and amount of harm they might cause? There's a point where the "it's just a bit of fun" line of thinking starts to ring hollow (though I wouldn't use the word cretin personally).

I think everyone here is on the same page and basically accepts investing in these things is essentially gambling due to the massively speculative value they have. Other ethical issues aside re: gambling and the environmental aspect of generating crypto in the first place, fine, I doubt I have anything new to add there. My problem is: if we accept this is basically gambling, you'd never find a financial institution making it easy for clients to stick money on the Grand National and refer to stakes as investment capital or your betting slips as "financial investment instruments" or whatever.

The Larry David crypto ad posted previously in the thread (which I'll use because it's the only ad I've seen for this stuff) gives a one sentence description of the service which uses the word "safe" (it's not, and never was by any conventional definition of the word "safe"), and also pitches it as a way to "get into" crypto (ie for consumers who are new to the crypto investing space).

Crypto investments expose a pretty existential failure of financial firms in general - post-2008, people don't trust them. In fact, post-trump any kind of authority can be safely ignored. Don't listen to The Man, man, especially around investments! In my own life, I've been told things by my bank that are out-and-out untruths but the agent on the phone wanted to make a sale and thought they could pull a fast one. When I told them my job title and the firm I worked at, they backed down sharpish and apologized ("oh perhaps I misspoke there" yeah ok mate) and did what I told them. Had to do the same for my partner too, who got the same run around, and you have to make lots of "scary" agreements and sign offs which would put off the majority of people. A lot of the time, big banks really are making shit up and trying to funnel you into whatever investment vehicles pay them the most. If you're a regular consumer, it's understandable you'd take any warnings they gave you about crypto with a pinch of salt.

[seepage]

Is that proof-of-space one that caused many models of HDD to disappear from online stores still going?

[touchingcloth]

ETH addressed the problematic environmental issue earlier this year with its change to proof-of-stake.

Yeah, and my impression is that some DeFi types aren't happy with that from an ideological perspective. But you're right that crypto isn't as necessarily coupled to PoW was it once was, though I'm not sure if any of the exchanges or tumblers offer ways to let you only invest in certain types of consensus mechanism if you want to invest across a spread of different tokens (I guess an analogue would be the way that certain traditional investment product allow for people to say that they don't want their investment to go in any way towards fossil fuel interests).

[jobotic]

As an aside, I looked at the financials for FTX when this happened a few weeks back and they are staggering. There's a line in there for about eight billion quid which just says "misfiled" or something: basically that means "we don't know where that's gone" which is not the preferred book keeping nomenclature.

They are also counting their own tokens as assets which is bonkers - you can't be the bank and the exchange because this is what happens. You give me $100 of actual money which I'll take and invest or pay myself, but don't worry: I'll secure it with these Ferris Dollars^TM that I've drawn on the back of a cigarette packet. If you ever want your money back, it's absolutely secured (assuming my Ferris Dollars^TM never lose all their value because they're, you know, without value). It's an "Itchy and Scratchyland money" level of cartoonish fraud.

Most egregious example I saw on their books - a few million in "donaldwin" tokens. What are they? They're gambling tokens, essentially, that pay out if trump won the 2020 election which if we all remember correctly; he didn't. So they have zero value so why are they an asset? Fair play they're listed as "illiquid" which is certainly one way of describing them. And that's just one row out of 60 or so from memory and I suspect every one of them stunk.

The hedge funds apparently waived their requirements to review the financials of the exchange prior to investing which is absolutely hilarious - I'd love to see who signed off on that because any exceptions have to be documented. Why did you give this weirdo hundreds of millions of investor money to run his unregistered uncollateralized magic-bean exchange for which he refused to show you the financials?

Won't keep banging on about this, but it is all very, very funny. It has layers.

And a teacher's pension fund had funds invested in this. Ffs

[QDRPHNC]

True. I think shares are a bit better because there's a real company involved, which makes real money, so it carries a bit more weight. Crypto is like shares in nothing but the very idea of shares themselves. Madness.

The stock market is a rigged system from top to bottom. Maybe that's overstating it. But the people with the money literally play by different rules than the guy buying a few thousand dollars of Amazon stock, to ensure they never have to lose.

And yeah, I ditched all my bitcoin because I didn't want to be encouraging a-hole bitcoin miners sucking up all the juice.

And a teacher's pension fund had funds invested in this. Ffs

But surely it wouldn't have been the teachers themselves, it would have been a company like Citadel entrusted with the pensions.

This is a good read: https://www.wsj.com/articles/who-killed-toys-r-us-hint-it-wasnt-only-amazon-1535034401

Obviously I don't really know what I'm talking about and am happy to be set straight be Ferris, but it seems a bit odd to dismiss the entirely of cryptocurrency as a scam when as far as I'm aware it hasn't yet fucked the world economy eight ways from Sunday and been bailed out at the expense of the taxpayer. It's a bit like Scientology being slagged off by Catholicism for murdering people.

[Ferris]

And a teacher's pension fund had funds invested in this. Ffs

And not to drone on but someone at OTPP fucked up massively, and more interestingly, that person would have had to document why that was for their internal compliance. It would have involved a ton of people being told to override risks/safety checks in their system: within the organization, they know exactly who approved the investment without basic due diligence, as well as the reason given.

The exceptional "no we don't need to see your financials" sign off is bonkers bordering on incompetent, and from the statement they gave, I'd guess it's someone senior enough at the organization to circle the wagons and defend it rather than get fired. I know a few people who work there actually as it's my old stomping ground/industry but frankly I don't want to know.

[Mortimer]

I think everyone here is on the same page and basically accepts investing in these things is essentially gambling due to the massively speculative value they have.

Some are on the same page but not everyone. This thread is at least a little more balanced than the similar one running on the MSE forum since 2020 (now up to 263 pages and several thousand posts) where it is one long pantomime argument. "It's a scam", "Oh no it isn't" ad nauseam. There's a handful on here who are similarly so sure of their position when the reality is that they just don't know. Yet. Neither do I.

BTW – my holdings and the profit therein are 90%+ Bitcoin and Ethereum. I acknowledge that there are plenty of scams and "shitcoins" out there, Terra Luna being a recent example. Due diligence is all.

I'm not trying to convince anyone that crypto is the future, I'm just relaying my own experience to date.

I got into crypto for two reasons: buying dRgZ and for a bit of nerdy fun. I'm really into the maths of it and how it could become a future of finance.

Boom. Someone on the same page as me. "Could".

[Famous Mortimer]

I'm referring to the overgrown 15 year olds in here who keep saying everyone who dabbles in crypto is some sort of cretin, COZ IT A SCAM, you want to have a fun then great, hope you make something from it

Didn't say anyone was a cretin, but I am saying that crypto is a scam. If you're having fun, it means someone else got scammed harder than you, that's all.

[Mr_Simnock]

quick question, if I make $10,000 profit from crypto and walk away how have I been scammed?

[bgmnts]

I was under the impression crypto was pretty much a Ponzi scheme, is it not?

[Famous Mortimer]

quick question, if I make $10,000 profit from crypto and walk away how have I been scammed?

Quick answer, from the post directly above yours:

If you're having fun, it means someone else got scammed harder than you, that's all.

[Ferris]

quick question, if I make $10,000 profit from crypto short-selling wheat futures and walk away how have I been scammed?

[Ferris]

quick question, if I make $10,000 profit from 3 card monte while the police are watching and walk away how have I been scammed?

[Ferris]

quick question, if I make $10,000 profit from being in the 8% of pyramid scheme workers who profit and walk away how have I been scammed?

[Ferris]

Short answer: yeah great point it's a mystery mate.

[Ferris]

My point is the same as a few others: "well I threw my hoop over the clown at the carnival so I'm up one whole cuddly teddy bear" isn't a good argument that the game overall seems fair.

Again: I got in, made money, and got out and I don't think it is purely a scam at all - there's probably something to it. It's a speculative asset and up to other people to speculate on the underlying value.

What I will say is that the "value" is very poorly understood (at best) and if someone makes money or not is a terrible way to determine whether the whole thing is feasible. Somebody becoming a millionaire on the lottery doesn't mean it's a great idea to spend your life savings on scratch cards.

[MojoJojo]

I'd say the problem with crypto is that all the supposed benefits disappear if you use an exchange. The exchanges are just banks with less regulation. And everyone uses an exchange because it's impractical to do anything else.

[touchingcloth]

I'd say the problem with crypto is that all the supposed benefits disappear if you use an exchange. The exchanges are just banks with less regulation. And everyone uses an exchange because it's impractical to do anything else.

Also the bolded bit varies quite a lot. Since crypto bled over into NFTs, I suspect your "modern" (invested within the past 5 years rather than closer to the launch of Bitcoin there's been a definite swing towards people seeing crypto as a way to get rich quick rather than the libertarian ideologues who comprised a significant proportion of early investors.

[JamesTC]

Sounds like Binance might have similar insolvency problems and are having issues with their audit. If they fail, surely that is the end of crypto in the mainstream?

[Deskbound Cunt]

I'd say the problem with crypto is that all the supposed benefits disappear if you use an exchange. The exchanges are just banks with less regulation. And everyone uses an exchange because it's impractical to do anything else.

Nope. Never keep your crypto on an exchange. Set up a private wallet that only you have the password/ seed codes to.

Buy from an exchange, sure, then immediately transfer it to your wallet.

Oh, and if you're buying dodgy substances by transferring crypto directly from an exchange to a dark market not only is that terrible opsec but it's a quick way to get banned.

[Mortimer]

I'd say the problem with crypto is that all the supposed benefits disappear if you use an exchange. The exchanges are just banks with less regulation. And everyone uses an exchange because it's impractical to do anything else.

Exchanges should be used to exchange. Not as storage facilities. Those that have lost because of exchange collapses have lost because they failed to understand that.

When it comes to how/where to hold your tokens then it's very practicable to keep them off of the exchanges.

[Gurke and Hare]

SBF arrested in the Bahamas at the request of the US who want him extradited

[Keebleman]

Odd it took so long.  Madoff, the Enron guys: they were arrested immediately the news broke.  I suppose him being abroad complicated things.

[Dog Botherer]

Odd it took so long.  Madoff, the Enron guys: they were arrested immediately the news broke.  I suppose him being abroad complicated things.

he also gave millions to both Democrats and Republicans, which helps.

not enough millions though clearly.