FTX collapse prompts other cryptocurrency firms to suspend withdrawals On Friday, cryptocurrency exchange FTX Trading and 134 affiliated firms filed for bankruptcy protection, and CEO Sam Bankman-Fried resigned as CEO, turning over control to John Ray III, who also oversaw the liquidation of Enron Corp. The collapse of FTX, which according to optimistic math was worth $32 billion in January, has …
Well, yes, crypto is worth less in so-called “actual money.” But who needs actual money once you’ve got crypto internet money?
Just buy stuff in crypto, come on! Free yourself of that unnecessary burden of Fiat money. As soon as everyone is spending crypto doge or whatever, we’ll all be burning the worthless Fiat money in the burning barrel or fireplace or incinerator.
> But who needs actual money once you’ve got crypto internet money?
So provided FTX can give the owners back their crypto currency deposits (obviously lminus their fees...), nothing has been lost...
As a shareholder, I'm used to the value of my holding going up-and-down, yet the number of shares I hold remain the same...
They, the actual people involved in crypto, themselves turned it into a con when they started "investing" and trading in it as the equivalent of an asset, rather than strictly using it a token of known value to be used to enable trades (that is, as an actual currency).
You [almost] never invest in a currency in hopes that said currency increases its value. Why? Because on a fundamental level, it never will. Buying £1 today and storing it gets you...£1 tomorrow. Actually, in buying power thanks to real-world inflation, your £1 will be worth less in time.
But crypto traders think that the world doesn't work that way. They "invest" in 1 Bitcoin and expect it to be worth...more, later. Just because. Currency doesn't inflate in value over time, it needs to maintain overall stability in order to be USED as an actual currency - see: Weirmar Republic and Venezula. A non-stable "currency" is anything BUT usable currency.
So, therefore, in order for crypto enthusiasts to see the gains that their fairy-tale dreams made up...they built a scam around it. That is actually WOULD be worth more, if only you joined into the pyramid scheme of the thing. If we keep up demand, people will continue to pay increasing sums in order to play.
It's all made up. The idea of crypto "currency" died with the idea of crypto "investment" - you can't have both in the Real World.
"Ikigai" is a Japanese word meaning "the value/reason of life" or literally translated "life value/reason". They can change that now to "Shinigai" - literally "death value/reason".
It's worth looking at the Mumbo Jumbo on the web page of "Ikigai Asset Management" - looks like a self help (ourselves to your money) quasi religion.
The more staid venture capital arm of the Ontario Teachers’ Pension Plan, which put $95 million into FTX, said in a statement, “Not all of the investments in this early-stage asset class perform to expectations.”
The WSJ said "This week’s investor run on the FTX crypto-currency exchange marks round two of the great crypto crackup, and so far the victims are consenting adults." But that's not really always true, e.g. when investors are using peoples pension funds.
According the NYT: "FTX’s list of investors spans powerful and well-known investment firms: NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield, Insight Partners, Sequoia Capital, SoftBank, Lightspeed Venture Partners, Ribbit Capital, Temasek Holdings, BlackRock and Thoma Bravo."
But what were these investment companies investing in?
With banks it's generally loans, property, development, stocks etc. which, although some would argue the stock market is a gambling den, mostly investment is tangible.
With crypto, where do they even pretend to invest funds to go to make investors capital gains? If money is promised and made simply on the back of new investment that is, by definition, a Ponzi scheme and illegal so it must be more that that ... surely?
Can't help thinking any investors deserve what they get ... unfortunately, as always, those like "pension scheme managers" will be quite happy to take their trading fees, even when they are making massive losses for their clients who generally have no control over those trades.
Crypto isn't a ponzi scheme, or a scam. Neither is it an 'investment'.
It is an alternative way of tracking ownership.
NFTs track ownership of digital assets - which is an interesting idea closely allied to copyright. They have boomed and busted, but will return, and when they do they will mature into real ownership of things that would otherwise rely exclusively, or mostly on copyright.
Crypto currencies are just that, currencies. Why is a $/£/euro etc worth something? Because we all agree it is, no real other reason. It is either a bit of paper (or increasingly plastic), which is no use other than currency, or perhaps cavity wall insulation, or it is a digital record in a database.
Why do we trust it? Because a Government tells us it can be trusted. You know, those people you see on the TV every day demonstrating their trustworthiness.
But currencies work, mostly.
Crypto currencies are the disintermediation of Governments from money. Crypto 'exchanges' are simply a way of converting Government (fiat) money into the token of your choice, or between tokens, or back. And as all humans do, we've turned it into a gambling den of iniquity and great profit. And now loss.
Woopdido, it blew up, and fraud has been discovered. EVERY BLOODY TIME something new arrives it booms, it busts, fraud arises, lots of people lose their shirts, and what arises from the ashes is v2.0 with more appropriate protection in place.
There are probably 10k tokens out there, and probably space for 20ish general purpose ones, and an arbitrarily large number of special use tokens. They'll be used to track loyalty cards, or holiday time, or processing nodes, or who knows what, the applications are many and varied, but not (I believe) for general use, and you should only find general use tokens on an exchange. Imagine my starbuck coin, which has earned me a free coffee. How much is that worth on Binance? A coffee. Any other value is irrational. Many tokens don't have a valid use case for a free float.
Crypto2 will be as big as tech has been since the tech crash of 2000-2003. Jan 2000 - Amazon $84 per share. Mar2003 Amazon $4 per share, 95% collapse, it's all a bust, and a con. End of the world. By the end of 2021, $2500 (approx) per share. Rather less now of course, but still a lot more than $4 or even $84. History never repeats itself, but it's a bit like Hollywood, Good stories get recycled a LOT.
I don't think it's a scam either, but I'm also yet to see a convincing argument for the use case of it vs a centralised relational database.
Your Starbucks coin example, current loyalty apps/accounts will store their users' points on a database, what is the problem with this that needs the solution of defi? Especially PoW vs PoS based which wastes massive amounts of energy vs a database.
"...yet to see a convincing argument for the use case of it vs a centralised relational database"
Not necessarily a valid case for all or even most tokens, but the main use case of blockchain vs centralised is exactly that of no central control. Eg Bitcoin can only be mined at a very specific and ever-diminishing rate, and there's a hard limit on issue total vs the central bank that controls any fiat currency can issue as many as they want whenever they want, which dilutes everyone else's holding (which is the textbook definition of inflation ie inflating the currency base).
One of the main reasons prices are rising fast everywhere in the past months, and will continue to do so, isn't just supply chain issues caused by Covid and the Russian invasion of Ukraine. A huge part of the price rises is due to the giant inflationary pressure that governments worldwide induced during covid by 'printing' shitloads of their respective fiat currencies.
A huge part of the price rises is due to the giant inflationary pressure that governments worldwide induced during covid by 'printing' shitloads of their respective fiat currencies.
jmch,
This is true. Central banks weren't fast enough to destroy more of the money generated with QE. There's a possibility that they couldn't have been without invoking a market collapse - if you remember the "taper tantrum" from back in 2013 - when the Fed started to reverse QE and then had to slow down because of adverse market reaction.
I believe a lot of the theoritcal work on QE was based on Japan using it successfully in the 1930s depression. It worked well, but they didn't provide a good example of how to reverse it - because a lot of effects of the 1930s depression were ended by the biggest economic stimulus effort in history. World War II.
However to criticise central banks for this, one needs to remember that they saved us from a global depression in 2007. And while it's necessary to remember the dangers of inflation, most people aren't aware of the far worse risk of deflation. When that sets in, you get decades long depressions, that are incredibly hard to recover from.
Whereas a lot of the people who designed Crypto built deflation into the design. Because they were either too ignorant to realise the risk, or it didn't matter because crypto wasn't supposed to be about running an economy, but a technical experiement. Or a way of avoiding paying taxes or law enforcement stopping you from trading in drugs...
So yet again the crypto fans get to watch yet another of their exchanges explode. With massive knock-on effects on other crypto companies. But apparently their answer is still that having regulation and central banks who can stop this kind of thing from happening, or dampen the effects when it does, are bad m'kay. Government bad. Regulation bad. Random internet thieves good, because they talk clever! Ooh look, they stole all our money again! Oh noes! But at least our money isn't being devalued by inflation...
Which is why wages are (checks notes...) lower in real terms than they were in 2007 in the UK, right? Because the BofE and our government did such a fine job of stimulating the economy with austerity, which incidentally is one of the defining features of neoliberal economic policy that caused the crash in the first place. Other central banks / governments, such as the ECB had similar policies with similar effects. Those effects, mainly, being transfer of wealth from the poor to the rich (in the case of the ECB, from poor countries such as Greece to rich ones such as Germany).
Whilst I'm a firm advocate of the EU, I'll be the first to admit that not all of its institutions are perfect, and the ECB stands out like a sore thumb to me. Ironically, in leaving, we became more like the bad bits, and less like the good bits. How's that for "taking back control"?
Yeah, the ECB is effectively the 'make Germany richer' bank :) The EU has issues and some of the 'take back control' made some tiny bit of sense (none of which they have done such as overhauling the 2 tier immigration system) but I voted remain as the status quo is generally better option for politics.
QE and austerity are drugs that are very hard to come off. The very low rates (ECB rates were negative?) for such a long time have been an issue. Even just raising them a bit would have been less painful but so many people over-stretched including big business and govts.
"QE and austerity are drugs that are very hard to come off. The very low rates (ECB rates were negative?) for such a long time have been an issue. Even just raising them a bit would have been less painful but so many people over-stretched including big business and govts."
Decades of low interest rates have been a nightmare for savers. But the latest cost of living "crisis" demonstrates that most people are not savers, they are borrowers. Inflation is crippling for them because they have no savings and are mortgaged up to the hilt. Making borrowing so easy at such low rates has been a slow ticking time bomb for many years now. Many younger people are terrified of interest rates going into double figures because they've NEVER SEEN interest rates higher than about 4-5% and have no idea what do about it. Those of us a bit older, who took on mortgages back when interest rates were already around 15% were worried enough to not take out mortgages that would bankrupt us if they went higher. Luckily, we were quids in as rates then dropped to historic lows and stayed there, but we planned for worse, not better.
It's really all very sad, and I do feel for those led to believe that things would stay the same or even get better and so they kept on taking out the biggest mortgages they could afford and went on overseas holidays on the credit cards. The multiple whammies of COVID, QE, Climate change fuel costs, Chinas zero COVID policy and yes, the war in Ukraine would probably have broken most economies, in fact have broken most economies. But some seem to be weathering the storm better than others.
"the far worse risk of deflation"
The risk of deflation as far as consumerist economies go, is that it incentivises prudence, savings, and only buying necessary stuff (since your money might be worth more in the future than it does now), while inflation incentivises borrow-and-spend, i.e. people spending money they don't have on shit they don't need (since money loses value and so does debt). But a gigantic part of modern western consumerism is exactly based on people spending money they don't have on shit they can't afford, THAT's why 'modern economic theory' dislikes deflation.
Frankly it would work much better if central banks stopped dicking about with the money supply and simply adjusted it gradually to follow the natural expansion or contraction of the economy, resulting in neutral (or very minor either way) inflation/deflation. But governments would never do that because they're addicts to the Keynsian crack of spend now and either inflate our debt away or let future generations sort out the catastrophuck they're left with.
Specifically Bitcoin isn't deflationary, it has a limited supply (ie it is anti-inflationary). I guess you could say that it's in practice deflationary since by the nature of the beast, some coins will be irretrievably lost over time. But the peril of deflation is that your *medium of exchange* gains value, not your store of value. Bitcoin is to be seen in this light (or at least that's how it's viewed as a majority of holders), as a long-term store of value and not as a unit of exchange (for which it is highly unsuitable given long transaction times and high transaction fees)
NFTs track ownership of digital assets
Do they, though? The sense of "ownership" is very limited when it doesn't relate to anything physical or tangible, beyond "rights" to, for example, a jpeg of a cartoon monkey.
The NFT on a blockchain doesn't actually do anything to prevent copying, theft, or destruction of that data, it is purely an entry in a ledger.
Such ledgers may have their uses, but the value is probably vastly overinflated.
"If the strength of crypto is its freedom from government intervention...
And, one day, people will realize that government intervention - i.e., LAWS - are created after an event in hopes of preventing a recurrence.
Humans can NOT see the future and therefore we do not pass laws in hope of regulating something that doesn't even exist yet. We do not have laws on the books regulating flying cars because...we do not yet have flying cars. We do not have regulations regarding your exodus to the Mars colony.
We did NOT have regulations regarding crypto because it didn't exist until recently.
And what does that mean? It means stop believing that "no regulation" means "better life", because every single time you give an opportunity to manipulate a system to someone's advantage...someone for *sure* will be there to take that advantage for themselves. The libertarians and the ultra-right, strange bedfellows in this belief, both think that removing oversight allows more "freedom" - yes, more freedom to steal.
Somehow, in their minds, nobody steals if you don't regulate them; nobody ever seems to act badly in their future-perfect deregulated world. It is Paradise Unleashed, once you remove all societal mores of behaviour! Yes! Everyone will hold hands and sing the praises of deregulation!
Just keep a strong watch on your wallet, lest that newly-unregulated pickpocket decides his day in the sun has finally arrived.
"And, one day, people will realize that government intervention - i.e., LAWS - are created after an event in hopes of preventing a recurrence."
There's two basic types of legal systems. Those where everything is legal unless there's a law making it illegal and those where everything is illegal unless there are laws making it legal.
"We did NOT have regulations regarding crypto because it didn't exist until recently."
While I mostly agree with you, I don't think this part is really accurate. If crytopcurrencies are actually currency, then there are already laws regulating currency and they would be covered by those. If they're not really currency and are instead tradeable assets, then there are already laws regulating assets and the trading of such and they would be covered by those. Despite all the sound and fury, there's nothing particularly new or interesting about cryptocurrency. It might be easier for people using them to avoid following the rules, but that doesn't mean the existing rules don't apply.
"NFTs track ownership of digital assets" - Right there I quite reading your rant, the word "ownership" is completely wrong.
NFTs are nothing but a record of a pointer. NFTs have nothing to own other than the pointer. They are very definition of a "making money from nothing" as you cannot, do not and never will own the artwork being pointed at so you pay money to be allowed to point at something you don't own.
This is ultimately why all NFTs have failed and crashed by 99% in the last 9 months.
I will concede that blockchain is an interesting technology but that's where it ends, nothing after that is worth a single iota and it's all been turned into one giant scam. One day the tech may be useful but I'll long dead in my box by the time that ever happens.
If you put your entire pension into "high risk" units such as crypto investments, then you are asking for a fall. Most contributory pensions allow you to pick the funds you put your savings into, and if you're not stupid, you will spread them out over "safe" investments that aren't expected to move much, standard ones which might make or lose a bit, and one or two risky ones, if you're young (or desperate) enough to afford that risk.
Fund managers who just dump the entire investment pot into one high-risk investment are almost criminally stupid.
Umm just to let you know, that tulip bulbs can be poisonous to cats, dogs and people:
https://plantura.garden/uk/flowers-perennials/tulips/are-tulips-poisonous
"Tulips (Tulipa) can be toxic to animals and humans in several ways. The toxin tulipalin contained in the plant can because damage both internally and externally. Smaller animals such as dogs, cats or rodents are more susceptible to oral ingestion of tulipalin because they usually ingest larger amounts and also carry a smaller body weight. In horses, the increased intake often leads to stomach cramps."
Yeah, don't eat tulips, or pretty much any bulb that isn't a species of onion or garlic*. Daffodils are similarly toxic, as are hyacinths and those big attractive amaryllis bulbs you see in the shops around this time of year
*edit - includes leeks and shallots
To be fair, all alliums, which include onions, garlic, shallots and leeks, contain quite a lot of sulphur*-containing compounds which make for the same digestive effects. Incidentally, ornamental alliums are one of the few flowering bulbs which are edible, although it's kind of missing the point of them.
*I refuse to use the IUPAC spelling, deal with it.
Well, of course, he was on vacation !
BTW, the name itself should have been a hint to every investor ...
"The FTX Trading Ltd. bankruptcy filing [PDF] lists between assets of between $10 billion and $50 billion in assets and the same range of liabilities. "
And years, ago, I lost sleep about 140 E of unexplained check on a non-profit organization I was in charge !
Turned out my partner picked up the wrong checker for the shopping (same bank) !
If it was dozens of billions, I'd have exploded. Those people have a lot of stress resistance.
True... when I was a project manager, it was clear that projects that only cost a few grand were nodded through, but also projects over a few million. Projects that cost the same order as a house... those, people knew how much money that was and they got discussed all afternoon.
He's a con man, and he's now on the run.
He'll be fine. Not sure if he's on the run either, or he's detained in the Bahamas. SBF was the 2nd largest Dem donor this election, donating around $40m. Still aways behind dear'ol Soros. Where he may need to run faster is this-
https://www.coindesk.com/policy/2022/03/14/ukraine-partners-with-ftx-everstake-to-launch-new-crypto-donation-website/
“Aid for Ukraine,” which has the backing of crypto exchange FTX, staking platform Everstake and Ukraine’s Kuna exchange, will route donated crypto to the National Bank of Ukraine, Everstake’s Head of Growth Vlad Likhuta told CoinDesk. Ukraine’s crypto-savvy Ministry of Digital Transformation is also involved.
Where donated crypto may have been disappeared. Apparently something like $200m was pledged, and not much of that turned into spendable fiat. And just after the implosion, 'hackers' cleared out FTX's remaining funds. I did read that SBF's private jet was seen heading from the Bahamas to non-extradition Argentina though.
It does seem to demonstrate that 'effective altruism' follows the traditional model, ie charity begins at home. Also that the markets may not have learned from a great Vanity Fair article explaining the Icelandic banking crisis. I have a cat, you have a cat, we each value them at $10bn and trade them to each other. Now we each have $10bn in assets to trade with. In this case, the cat was FTT, and it was worth whatever SBF and suckers thought it was worth.
Now, who wants to buy my CryptoEel? It's the future of money!
Any donations should be capped. I'd suggest $10k. Buying elections is scummy.
Of the top 10 donors, 7 were Republican, 3 Democrat, and it's just immoral. Much of it special interest or specific candidates. Trying to buy your own brand of politics is a fascist dick move, irrespective of the party you're donating for.
While I'm no fan of election spending, and I'm pretty dubious about Citizens United (I understand the SCOTUS argument, but I think it's a stretch), capping election donations is tricky. If it's a per-race cap, you spread your money around. If it's a per-donor cap, you spend through proxies. Tightening a law to forbid both of those will almost certainly fail Constitutionality tests and have adverse effects if it's not stayed quickly.
And then there's peripheral spending, such as the "issue ads" which are so beloved of PACs. You don't mention the candidates, just advocate for a position on some hot-button issue, which the candidate of your choice, coincidentally, happens to agree with you on.
And the more you restrict legal spending, the more will turn into under-the-table and quid-pro-quo spending, which is harder to track, so we lose transparency; and there's less of a gap between simple expression and dirty tricks, because you've made expression (past a certain point) illegal. That reduces incremental risk of employing dirty tricks.
Probably the most effective way to reduce spending on elections is a cultural movement, in much the same way that the US reduced tobacco use. The problem there is that most people are happy to see their opponents' spending reduced, but not so much that of their chosen candidates.
On LinkedIn, there are still plenty who support cryptocurrency as being worthy.
When the second biggest exchange(??) collapses in a heap, you'd expect people to run for the hills.........
The fact they haven't tells me these people are in a position where they can longer get out because they are already holding an ever-emptying bag where they cannot find a greater fool. That's because the greater fools had an epiphany and have already climbed the hill to safety.
Yes, there are supporters (and their number is still growing...), because:
1) not everyone is clueless; there's some actual science behind it
2) lots of hopefuls that want to make money fast - shame these are clueless *and* just dumb enough to fall for any scam...
In the end, only decentralized coins with honest an humble beginnings (bitcoin, litecoin) will be left standing.
All the 20,000+ others are just securities and their leaders will take a hit once governments start digging into them
That isn’t the point of crypto assets. “Customers” pay the money into the exchange and in return they get their virtual asset on the blockchain, visible to everyone who understands how to access it.
NOW they want to trade in the virtual asset back for real money all of a sudden?
See that’s suddenly a problem, because all that original money got spent already.
In fact it would be really great if all the original customers could go ahead and buy another round of crypto assets again, please. And soon, monthly obligations are coming due imminently!!
The crypto wunderkind Bankman-Fried is now out on his arse, just 12 months ago the world and his dog was kissing his arse as a financial genius. The guy did 3 years as a junior trader and then less than 2 years later he's convinced people to let him manage $16bn AUM.
Sadly that scuzzbag conman still has $900m in the bank even after losing it all, strip him, give him $100 and tell him to f**k off and get a real job!
> FTX secretly transferred, or loaned, as much as $10 billion in customer funds to Alameda Research
Coincidentally, earlier today I came across a report, confirmed by Elon Musk himself, that he attempted to join the Twitter takeover alongside Musk, offering up to $10B (which now we know were not his) + "blockchain".
Here's the report + confirmation:
https://nitter.net/elonmusk/status/1591224814597189633
Bitcoin is like a piece of paper with some writing on it: “As the owner of this piece of paper, you have the right to sell it to anyone who wants to but it, for any price they are willing to pay. Nobody has any obligation to give you anything for it”.
The paper is made in a very special, very expensive process that makes it hard to forge. That’s it. So why would anyone pay for your paper?
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