COINBASE for Crypto has come

padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
I think FTX should have its own thread, which I might make later if no one else does

it fascinates me in a way none of the long list of previous crypto hacks and outright scams have

I think in large part bc while so many of those were simple Ponzi schemes and/or, like OneCoin, basic grifts a Depression-era conman would have no problem understanding, FTX strongly echoes like every major traditional financial scandal of the last quarter century - the hubris of Long-Term Capital Management, the shady accounting and reality denial of Enron, the lack of regulation and disastrous intermingling (via mortgages) of retail and investment banking in 2008, the messianism and fraud of Theranos - all wrapped up into one incredible package

the idea that the exact same people could be simultaneously running a trading exchange doubling as a custodial bank (already a terrible idea) AND an investment firm at the same time, with zero questions asked, is mindboggling. It's exactly the kind of thing Glass-Steagall was designed to prevent and repealing Glass-Steagall was so disastrous that it wound up almost collapsing the world economy, and required even more stringent new legislation to set it right.

(nb: before anyone says it, yes I'm aware neither FTX nor Alameda are U.S.-based so U.S. laws and regulation wouldn't apply even if they did exist, the point is that commercial and investment sides should be separated for this exact reason)
 
Last edited:
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
it's no surprise to get (more) confirmation that crypto is basically a Ponzi scheme and/or simple gambling

what's shocking, like Theranos, is the level of institutional investors taken in by the grift

I guess that shouldn't be surprising given all the previous examples noted

it's just so obvious that this was always a house of cards
 
Clinamenic

Clinamenic

Binary & Tweed
Yeah crypto as financial sector is largely flashy and aggressive marketing propping up (mostly) vacuous investment opportunities, all built upon a technology that does have very far-reaching implications - but not in ways that can substantiate such lofty speculation indefinitely.

I’ve made the mistake of this confusion as well. Thinking about legit technical projects like chainlink, which aren’t just financial products/services, and assuming that far-reaching application equals speculative upside, irrespective of how much those assets have already appreciated (IE by orders of magnitude already).
 
Clinamenic

Clinamenic

Binary & Tweed
In certain respects, crypto, as a financial sector, is the most annoying part of blockchain. The things that interest me most about the technology would still work, even if the technology had no speculative appeal at all.
 
sufi

sufi

lala
padraig (u.s.) said:
it's no surprise to get (more) confirmation that crypto is basically a Ponzi scheme and/or simple gambling

what's shocking, like Theranos, is the level of institutional investors taken in by the grift

I guess that shouldn't be surprising given all the previous examples noted

it's just so obvious that this was always a house of cards
Click to expand...
you can make a ton of $$$ off a ponzi scheme &/or gambling tho innit
 
W

wild greens

Well-known member
Its amazing that the main fella is still talking tbh

You'd think his lawyers would have just gagged the knobhead and hidden him away but hes doing interviews, tweeting

Very little social awareness these lads.
 
Clinamenic

Clinamenic

Binary & Tweed
padraig (u.s.) said:
I think FTX should have its own thread, which I might make later if no one else does

it fascinates me in a way none of the long list of previous crypto hacks and outright scams have

I think in large part bc while so many of those were simple Ponzi schemes and/or, like OneCoin, basic grifts a Depression-era conman would have no problem understanding, FTX strongly echoes like every major traditional financial scandal of the last quarter century - the hubris of Long-Term Capital Management, the shady accounting and reality denial of Enron, the lack of regulation and disastrous intermingling (via mortgages) of retail and investment banking in 2008, the messianism and fraud of Theranos - all wrapped up into one incredible package

the idea that the exact same people could be simultaneously running a trading exchange doubling as a custodial bank (already a terrible idea) AND an investment firm at the same time, with zero questions asked, is mindboggling. It's exactly the kind of thing Glass-Steagall was designed to prevent and repealing Glass-Steagall was so disastrous that it wound up almost collapsing the world economy, and required even more stringent new legislation to set it right.

(nb: before anyone says it, yes I'm aware neither FTX nor Alameda are U.S.-based so U.S. laws and regulation wouldn't apply even if they did exist, the point is that commercial and investment sides should be separated for this exact reason)
Click to expand...
Most of the big competitors had a similar model - so as to warrant the term “custodial exchange.”

Celsius went under, BlockFi just started pausing withdrawals (which isn’t necessarily a sign of irretrievable failure but, given the current circumstances, may indicate such), hearing similar things about Gemini, and I think Voyager was acquired by FTX so that can’t bode well.

The main one I use is Nexo, which so far has ostensibly been safe from all this, which isn’t implausible. Regardless, I’ve been gradually moving my assets to non-custodial wallets.
 
Last edited:
Clinamenic

Clinamenic

Binary & Tweed
sufi said:
you can make a ton of $$$ off a ponzi scheme &/or gambling tho innit
Click to expand...
Especially when 99% of the retail investor base has no understanding whatsoever of what they’re investing in.

Makes it really easy for aggressive marketing to fill the vacuum and paint very attractive pictures. Sometimes that’s literally all it takes: attractive graphic design, and a bunch of bots in a telegram thread to give the appearance of popularity.
 
Clinamenic

Clinamenic

Binary & Tweed
It really can’t be overstated how little the vast majority of people understand about this technology, regulators and legislators included. We’ve been seeing an increase in technical literacy - such as noting the difference between decentralized and centralized finance in crypto. Centralized (IE custodial) comes with many of the same risks as traditional financial (“TradFi”) institutions, whereas decentralized comes with some novel risks, like all those multi-hundred million dollar hacks you may have heard of.
 
Clinamenic

Clinamenic

Binary & Tweed
The biggest lesson I’ve learned from this is to not necessarily equate a broad field of technically arcane applications with speculative promise. That, plus my inability to contextualize and assess the fair market value of a given asset at a given time, and how far it may be from what could be called sound price discovery.

That is, this technology (distributed ledgers, more than cryptocurrency) has a very broad field of applications, seeing as it is highly generic and pluripotent by design - but that doesn’t necessarily mean that this potential will translate to sound price discovery and indefinite appreciation. This was my introduction to participating in financial markets.

As an aside, finishing up Progress & Poverty now, so my opinions about speculation are currently pretty far-removed from where they were when I first started investing.
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
Clinamenic said:
all built upon a technology that does have very far-reaching implications
Click to expand...
I don't disagree with that at all. I thought about putting a disclaimer in my post separating blockchain and other blockchain-derived technologies from the fantasy world/outright grifting of crypto.

Crypto is like a gold rush where all the gold is fool's gold, and the real value is in the pickaxes and sifting pans and whatever other x mining equipment
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
sufi said:
you can make a ton of $$$ off a ponzi scheme &/or gambling tho innit
Click to expand...
Certainly. You can lose a ton too. That's the point.

If it was just crypto bros gambling I'd say who cares but a ton of retail investors lose significant chunks of their net worth every time, either thru direct investment or via pension funds etc. It fucking sucks.

And that's before you even get to the victims of out and out con artists, of which there are many
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
Sidenote: the particular American fascination with, and in a way/up to a point tacit approval of, colorful grifters is a cultural sickness. P.T. Barnum et al.
 
D

DannyL

Wild Horses
padraig (u.s.) said:
Sidenote: the particular American fascination with, and in a way/up to a point tacit approval of, colorful grifters is a cultural sickness. P.T. Barnum et al.
Click to expand...
This is part of what's driving the story I think. The weird detail as you say. Hubris, nemesis etc

I didn't know that pension funds were investing in crypto. I thought they'd have more sense. What worries me about this is the potential for cross-contamination with the rest of the economy as in the '08 crash. The impression I have is it's relatively siloed off but I know very little about the topic.
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
I'm totally unsurprised that 99+% of retail investors have/had little to zero idea of what they're getting into. Most people barely understand stocks and bonds, let alone the abstruse nonsense of crypto. Not surprised about legislators and regulators either. They're mostly old and not technical, or in the case of regulators not technical in the right way to understand crypto.

I'm more surprised by the seemingly complete inability of institutional investors - nominally smart $ - to distinguish between good and bad investments, but then again smart $ proved completely unable to make that distinction about MBS and credit swaps etc in the leadup to 2008 so perhaps it shouldn't be surprising.
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
DannyL said:
I didn't know that pension funds were investing in crypto. I thought they'd have more sense. What worries me about this is the potential for cross-contamination with the rest of the economy as in the '08 crash. The impression I have is it's relatively siloed off but I know very little about the topic.
Click to expand...
I didn't know either til I saw a list of major FTX investors but wasn't surprising

From the little I've read about FTX contamination, yes it seems like there's significantly less exposure outside finance than 2008, which is probably yet another point in favor of viewing crypto as largely a self-perpetuating fantasy world
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
And yeah the details are the least important thing but always what drives the story

No one makes a movie about Apple. They make it about Steve Jobs.
 
padraig (u.s.)

padraig (u.s.)

a monkey that will go ape
Clinamenic said:
Centralized (IE custodial) comes with many of the same risks as traditional financial (“TradFi”) institutions
Click to expand...
Plus additional risks. A "TradFi" institution can't steal customer deposits to cover its trading losses, it has to maintain fractional reserves, etc. All those things designed to protect consumers and prevent bank runs.

Tbc I'd certainly never argue that banks and traditional finance are awesome but if we're going to have them they'd better goddamn well be regulated to try to prevent exactly this kind of nonsense.
 
You must log in or register to reply here.
Top