Anyone following the crypto meltdown?

[dixonge]

Also, the fact that FTX could simply create a new token such as FTT and it then magically acquires some value in terms of fiat currency, and subsquently CZ could drive down the value of FTT simply by announcing that he would sell these tokens is a perfect of example of why a lot of people think crypto is just a house of cards.

I think this describes almost every token out there, excluding Bitcoin and Dogecoin. Most are just crypto versions of pump-and-dump surrounding their 'ICO' which is an imitation IPO.

 

[Exchme]

A good article from an interesting writer discussing the FTX collapse is at:

https://www.stephendiehl.com/blog/ftx.html

I can't do his writing justice, so I'll pull one sentence to give a taste:

Did anyone ever ask why hordes of mum-and-pop retail investors were wiring money to a shady entity called ‘West Realm Shires Services Ltd’ just so that they could become an unsecured creditor to a Bahamanian shell company to purchase derivatives of completely abstract financial assets whose only demand is driven by popular sentiment about a meme of a talking dog?

He understands crypto better than I ever care to and agrees with all the negatives about it expressed in this thread plus adds many more thoughts on the subject. For instance, he draws a parallel to the wildcat banking era, where banks would issue their own private currency, get rich off customer deposits and eventually have bank runs and collapses, where unsophisticated depositors lost their money.

 

[frayne]

Don't buy into something you don't understand and I like my currencies to be backed by something other than faith in a blockchain.

 

[aja8888]

The media talks about the founder of FTX creating 130 companies which are mentioned in the bankruptcy filing. What/where are these companies, and what do they do?

Financial Times has a chart showing the structure of these companies.

Some "unsophisticated" 30 year old handling billions ($$$$$$$) of investors(?) money set up this scam of 130 companies? WOW!

Just imagine what's going on with the other "handlers" of people's coins (electronic digits).

Even Bernie Madoff couldn't pull off something like these con artists are doing in plain sight.

My Mom used to tell me a fool and his money are soon parted (I don't know where that proverb came from originally).

There will be books written about the monumental crash of these electronic digits someday.

 

[Car-Guy]

I've read a lot (well some anyway) about "crypto currency" but honestly I never really understood how it caught on as well as it did. Anyway, I didn't put any money into it.

With that said, I "think" I understand Fiat currency pretty well, and that scares the heck out of me. But what choice do I have but to play in that game.

 

[W2R]

The media talks about the founder of FTX creating 130 companies which are mentioned in the bankruptcy filing. What/where are these companies, and what do they do?

Financial Times has a chart showing the structure of these companies.

Holy cow! I had no idea.

If this guy isn't a scammer, he sure knows how to set off the "scammer alarm bells" for someone like me. What a complicated set of interactions between LLC's and/or (possible?) shell companies.

I heard that he fled to the Bahamas and is vehemently denying that he is now in Argentina.

 

[captain3d]

Criminal behavior brought down FTX. Contagion has pulled down crypto prices in general.

FTT, the token created by FTX, has more in common with other fiat currencies (and other crypto) than it does with Bitcoin.

I am pretty confident there is more downside from here as this develops. Many investment firms that have digital assets used FTX as a trading platform. They will have to mark that balance to zero. This could lead to selling other none digital assets to cover.

 

[NW-Bound]

Some more info from Financial Times:

Sam Bankman-Fried’s main international FTX exchange held just $900mn in easily sellable assets against $9bn of liabilities the day before it collapsed into bankruptcy, according to investment materials seen by the Financial Times.

The largest portion of those liquid assets listed on a FTX international balance sheet dated Thursday was $470mn of Robinhood shares owned by a Bankman-Fried vehicle not listed in Friday’s bankruptcy filing, which included 134 corporate entities...

Friday’s bankruptcy filing provided few details on the group’s financial health but said both assets and liabilities range between $10bn-$50bn, and that the number of creditors exceeds 100,000.

Not listed in bankruptcy filing? SBF still trying to hide some real assets? The FT article added that he was trying to sell these Robinhood shares under the table for 20c on the dollar compared to market price. Quick conversion to cash to hide?

Friday’s bankruptcy filing provided few details on the group’s financial health but said both assets and liabilities range between $10bn-$50bn, and that the number of creditors exceeds 100,000.

See: https://www.ft.com/content/f05fe9f8-ca0a-48d5-8ef2-7a4d813af558

 

[Markola]

Criminal behavior brought down FTX. Contagion has pulled down crypto prices in general.

FTT, the token created by FTX, has more in common with other fiat currencies (and other crypto) than it does with Bitcoin.

I am pretty confident there is more downside from here as this develops. Many investment firms that have digital assets used FTX as a trading platform. They will have to mark that balance to zero. This could lead to selling other none digital assets to cover.

+1. A lot more wreckage is coming, including on Wall Street, which true to form levered up all kinds of crypto fluff garbage. Good riddance and the house cleaning will be fun to watch. I think this “teachable moment” will ultimately be good for Bitcoin.[emoji897]

 

[JoeWras]

Who would ever suspect that Snake Bit Friend would show up in the crypto world?

 

[Lsbcal]

I just hope that there is not collateral damage in my assets, the non-crypto world. Don't know how that might happen. I am reminded of the run up in TIPS yields (prices down) in 2008 when good assets had to be sold to cover losses in speculative assets.

 

[NW-Bound]

I just hope that there is not collateral damage in my assets, the non-crypto world. Don't know how that might happen. I am reminded of the run up in TIPS yields (prices down) in 2008 when good assets had to be sold to cover losses in speculative assets.

It should have no effects on people who have nothing to do with FTX or holdings in any crypto product.

However, "good assets had to be sold to cover losses in speculative assets", and this applies to hedge funds who lost money with FTX.

I am down to 50% stock AA via option call assignments lately, and I usually like 70-80% stock. Time to sell puts with my cash hoard to buy back my shares cheaper than what I sold them at. Heh heh heh...

I may still lose money, but if I lose less than doing nothing, I call it a win. It's the same as people earning 6% on fixed income while inflation runs 9%, and that's 3% loss instead of 9% loss with cash.

Whoever loses less wins. That's the name of the game.

 

[Markola]

Much of the ire for the coming fallout should be directed at Gary Gensler and his SEC, who have been asleep at the switch, not giving guidance to how exchanges and other projects could operate legally in the US, and simply complaining that cryptocurrencies are “unregulated securities” without doing anything. So, unregulated exchanges have set up shop offshore to serve burgeoning customer demand to buy garbage. Coinbase is an exception, which is US-based, publicly-traded, discloses required information and embraces regulation, which has so far been non-existent. Gensler can expect to spend a lot of time before Congress, if he even gets reappointed as chairman.

 

[mpeirce]

Yep, tulip bulbs were priced in fiat currency as well.

Back in the 17th century the Dutch guilder was backed by silver, so not fiat currency.

 

[Spock]

.... I just find this fascinating that so much money can move so quickly.
.....

Thats one aspect of technology that the public hasn't adapted to... the digital bank run. It's no longer the line outside the bank of depositors wanting to get their money out. It's mouse clicks from laptops.
During the 2007/2008 Lehman/GFC/subprime "event", there was a congressman describing on TV about how something like $650M moved out of money market funds in seconds and caused one fund to 'break the buck'.

 

[braumeister]

It appears that we are still unable to discuss crypto without getting ugly. Several political posts were removed and the topic is back on the "off limits" list.

Thanks for the interesting discussion.