FTX faces potential hack, sees mysterious outflows totaling more than $600M(coindesk.com)
coindesk.com
FTX faces potential hack, sees mysterious outflows totaling more than $600M
https://www.coindesk.com/business/2022/11/12/ftx-crypto-wallets-see-mysterious-late-night-outflows-totalling-more-than-380m/
882 comments
The hacker has spent the last 11 hours slowky and incrementally converting all the various tokens they got to ETH. They've been using a variety of different defi exchange and have eaten large slippage fees, at least once over 5M lost in slippage.
We're not seeing any else, e.g. laundering through another exchange, splitting into different accounts, automating the liquidation of tokens to ETH, off loading ETH into a cold wallet etc.
The on chain activity makes this look like an individual who did not prepare extensively before doing this or doesn't have the skills to use automation/operational best practices
EDIT: first outflows from 0x59abf3837fa962d6853b4cc0a19513aa031fd32b have started, they still haven't liquidated all their PAXG, a stable coin pegged to gold, unclear if it's freezable.
They were able to liquidate all of their USDT except 4M on avalanche, and all of their usdc both of which can be frozen. Dai is a usd pegged stable coin that can't be frozen, they have nearly 1% of it. Note that Dai is heavily exposed to USDC so authorities could pressure USDC to destroy Dai
We're not seeing any else, e.g. laundering through another exchange, splitting into different accounts, automating the liquidation of tokens to ETH, off loading ETH into a cold wallet etc.
The on chain activity makes this look like an individual who did not prepare extensively before doing this or doesn't have the skills to use automation/operational best practices
EDIT: first outflows from 0x59abf3837fa962d6853b4cc0a19513aa031fd32b have started, they still haven't liquidated all their PAXG, a stable coin pegged to gold, unclear if it's freezable.
They were able to liquidate all of their USDT except 4M on avalanche, and all of their usdc both of which can be frozen. Dai is a usd pegged stable coin that can't be frozen, they have nearly 1% of it. Note that Dai is heavily exposed to USDC so authorities could pressure USDC to destroy Dai
I'm sure this is a total noob comment but I love how the account is named "FTX Accounts Drainer" on Etherscan:
https://etherscan.io/address/0x59abf3837fa962d6853b4cc0a1951...
[Edit: and also the Heist label is very useful!]
https://etherscan.io/address/0x59abf3837fa962d6853b4cc0a1951...
[Edit: and also the Heist label is very useful!]
common for etherscan to label malicious wallets
What are the chances that this is an insider and not an outsider? I ask because the timing of this "hack" is obviously a little suspicious.
the fact that it has been executed so poorly to me seems like it is an insider who woke up and thought they could get away with it because they hd access to the keys
When everyone's getting fired because the company went bankrupt, loot the office so you can get a nice chair as your final paycheck rather than letting that chair go to the creditors.
I can't wait to watch the Netflix series.
If you think about it, even his name seems to be a troll.
If you think about it, even his name seems to be a troll.
There are reports of SBF having used a backdoor to move funds. https://twitter.com/BTC_Archive/status/1591365581550551043?r...
It’s unclear if that’s a legit source though.
It’s unclear if that’s a legit source though.
I've heard this, but seen no real evidence. As of right now it's hearsay
More hearsay, but it seems to be increasing. https://www.tiktok.com/t/ZTRxcP6dx/
Mostly posting it for later, in case it turns out to be true.
There was also a tweet trying to pin it on a specific coworker.
Mostly posting it for later, in case it turns out to be true.
There was also a tweet trying to pin it on a specific coworker.
Announcement of an announcement that the hacker’s identity is theoretically about to be uncovered. https://news.ycombinator.com/item?id=33577311
Wouldn’t an insider be an expert on crypto markets? They literally ran one
No. Not all insiders would necessarily be professionals as covering their tracks post crypto hack. They could just be someone who knew they had access to the keys and said "screw it my life is already horrible lets try this".
Another option is honestly an insider who got screwed (a lot of employees had a TONNE of money on FTX) selling the keys they knew of to someone else.
Another option is honestly an insider who got screwed (a lot of employees had a TONNE of money on FTX) selling the keys they knew of to someone else.
Or they got screwed and thought about how to screw the higher ups even more. They never need to cash out the money to do this.
Nobody will ever not be suspicious of SBF and his inner circle again after this hack.
If it were just a big collapse and it went like an ordinary bankruptcy with the creditors getting a haircut, he'd just be considered an idiot. Money mysteriously vanished? Now he's malicious as well, and any court is going to ask SBF where it went, and even if he didn't know nobody would believe it.
Nobody will ever not be suspicious of SBF and his inner circle again after this hack.
If it were just a big collapse and it went like an ordinary bankruptcy with the creditors getting a haircut, he'd just be considered an idiot. Money mysteriously vanished? Now he's malicious as well, and any court is going to ask SBF where it went, and even if he didn't know nobody would believe it.
The latter immediately occured to me. It is a lot easier to claim ignorance if your key gets used by someone else to drain the vault, than it is to drain the vault yourself.
1) this is not the market. It’s just blockchain txns.
2) trust me when I say, no one in crypto except some very very select exchanges actually know how to make a market trading software. They think they can compete with NYSE which is large and employs such incredible talent that it still survives in a really tough industry. They’re likely closer to my grad school project, which even I can tell you, sucked absolute balls.
2) trust me when I say, no one in crypto except some very very select exchanges actually know how to make a market trading software. They think they can compete with NYSE which is large and employs such incredible talent that it still survives in a really tough industry. They’re likely closer to my grad school project, which even I can tell you, sucked absolute balls.
You're making a lot of assumptions about people you know nothing about.
You're also making an assumption emcumbants are where they are because of their current merits and not the mere fact they're standing where someone stood before them.
You're also making an assumption emcumbants are where they are because of their current merits and not the mere fact they're standing where someone stood before them.
They may not have been involved in the operations of how to run the software/make the trades/interface, who knows they could just be a physical security person that realized there was an opportunity in the chaos.
I haven't seen any public information that tells us who it might be, this is all guess work, but it really doesn't look like a professional operation like Lazarus Group
I haven't seen any public information that tells us who it might be, this is all guess work, but it really doesn't look like a professional operation like Lazarus Group
1. Not all the insiders are very skilled, as we can see from these things blowing up in expected ways.
2. Even if you ARE a skilled insider, you may have no experience with laundering coin.
3. The biggest/best coin launderer was killed (tornado?) recently, so you may have to learn everything again.
4. You may be an expert with a gun to your head in some basement in God knows where, and trying to not be shot.
2. Even if you ARE a skilled insider, you may have no experience with laundering coin.
3. The biggest/best coin launderer was killed (tornado?) recently, so you may have to learn everything again.
4. You may be an expert with a gun to your head in some basement in God knows where, and trying to not be shot.
Source on this tornado comment? This entire story is just so wild that it’s hard to keep up.
Not well!
Probably SBF himself. Even if he can’t use this funds directly he can use them as collateral with a more skilled group to fund his eventual escape from the authorities
I would be more inclined to think insider, but I suppose it could also be an external player. Maybe they have had access for awhile and been waiting for the right time, whenever that would have been. Either way, their hand would have been forced as of the last few days as they seem to be acting hastily.
almost surely an insider.
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> The on chain activity makes this look like an individual who did not prepare extensively before doing this or doesn't have the skills to use automation/operational best practices
This may be an understatement of their skill level. It seems the individual(s) also used a Kraken account to transfer funds and have been identified per their CSO.
https://twitter.com/c7five/status/1591434844760076290?s=61&t...
This may be an understatement of their skill level. It seems the individual(s) also used a Kraken account to transfer funds and have been identified per their CSO.
https://twitter.com/c7five/status/1591434844760076290?s=61&t...
I believe that is the white hat group. It helps to identify the exact txns & addresses they are referring to here.
what are the best practices for dumping a significant amount of illiquid shitcoins under time pressure?
The harmony bridge hack by Lazarus group (north korean actor) is a good example:
The first address used is 0x0d043128146654c7683fbf30ac98d7b2285ded00
It's a bit harder to trace using public tools because they immediately start splitting off the various coins to other addresses, but looking at just the USDC:
They split it off into a single purpose address that is just responsible for converting it to ETH. They do this via private transactions utilizing uniswap v3 and a set amount just about every minute (they settled on ~2M). If you scan through them their slippage is very good here. If you wait a bit of time you let the arbitrage bots move funds from wherever is available so your slippage isn't so bad.
account responsible for USDC conversion: https://debank.com/profile/0x58f4baccb411acef70a5f6dd174af78...
This account was also responsible for a number of liquidations: https://debank.com/profile/0x9e91ae672e7f7330fc6b9bab9c259bd...
They again show good slippage and also show that they use 3 different exchanges
After they've converted everything to ETH with good slippage they then fan out to multiple accounts that then do a series of deposits into tornado cash at 100 ETH each.
They were done with the liquidation within 2 hours. This attacker is still liquidating as far as I can tell
The first address used is 0x0d043128146654c7683fbf30ac98d7b2285ded00
It's a bit harder to trace using public tools because they immediately start splitting off the various coins to other addresses, but looking at just the USDC:
They split it off into a single purpose address that is just responsible for converting it to ETH. They do this via private transactions utilizing uniswap v3 and a set amount just about every minute (they settled on ~2M). If you scan through them their slippage is very good here. If you wait a bit of time you let the arbitrage bots move funds from wherever is available so your slippage isn't so bad.
account responsible for USDC conversion: https://debank.com/profile/0x58f4baccb411acef70a5f6dd174af78...
This account was also responsible for a number of liquidations: https://debank.com/profile/0x9e91ae672e7f7330fc6b9bab9c259bd...
They again show good slippage and also show that they use 3 different exchanges
After they've converted everything to ETH with good slippage they then fan out to multiple accounts that then do a series of deposits into tornado cash at 100 ETH each.
They were done with the liquidation within 2 hours. This attacker is still liquidating as far as I can tell
What's "slippage"?
In every market, a certain number of people are willing to buy at the bid and sell at the ask. When you are trying to get rid of more than the market is able to absorb, you will wipe out multiple levels of bids. Slippage then refers to the price difference between (say) the mid price of the bid and ask and the price that you finally got filled at.
Say I want to sell 100 pokemons as fast as possible. I will take whatever the market wants to pay me. This is a market order.
Before my order goes in, people are willing to buy 10 pokemons at $50 and willing to sell 10 at $52. The midpoint is 51.
I put in my order.
10 of my pokemons get sold at $50. My slippage is $1x10.
The next level down is $48 where people are willing to buy 25 pokemons. So I will get filled now at $48. My slippage is $3x25=($51-48)x25.
Etc
Say I want to sell 100 pokemons as fast as possible. I will take whatever the market wants to pay me. This is a market order.
Before my order goes in, people are willing to buy 10 pokemons at $50 and willing to sell 10 at $52. The midpoint is 51.
I put in my order.
10 of my pokemons get sold at $50. My slippage is $1x10.
The next level down is $48 where people are willing to buy 25 pokemons. So I will get filled now at $48. My slippage is $3x25=($51-48)x25.
Etc
Bulk bridge swap service IMO. Avalanche or Fantom would be your best bet right now.
Could you or someone else explain why DeFi is integral to these hacks? The article mentions the decentralized exchange 1inch and you are mentioning Avalanche and Fantom. Is just that that DEX and P2P create levels of indirection that make it much harder to track the movements of the stolen assets?
Do bear in mind that I was answering a question about how to swap coins given such a low amount of time that this hacker (likely insider; opinion) had. I named decentralized exchanges because they don't give up the ownerships of their crypto AND they offer bridges/swapping services from one coin to another - which makes it not only harder to track the assets when you're trying to do this sort of process, but it also offers a more streamlined approach for doing the process in the first place - which is swapping a bunch of coins.
For sake of lucidity, I want to say that this doesn't necessarily make DeFi integral to these hacks, but it does make the process of liquidating from these hacks easier.
For sake of lucidity, I want to say that this doesn't necessarily make DeFi integral to these hacks, but it does make the process of liquidating from these hacks easier.
>"For sake of lucidity, I want to say that this doesn't necessarily make DeFi integral to these hacks, but it does make the process of liquidating from these hacks easier."
Yes sorry I didn't articulate that very well in my post. This is what in fact I was asking - why it was significant in the "process of liquidating from these hacks."
Could you explain what you mean by "they don't "give up the ownerships of their crypto"? This sounds like an important point but I'm unsure what you mean. Do they anonymize the transaction or something else?
Yes sorry I didn't articulate that very well in my post. This is what in fact I was asking - why it was significant in the "process of liquidating from these hacks."
Could you explain what you mean by "they don't "give up the ownerships of their crypto"? This sounds like an important point but I'm unsure what you mean. Do they anonymize the transaction or something else?
Asking for a friend? :)
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Looks like he sent the money to a kraken account under his real name lol. https://cryptoslate.com/ftx-hacker-identity-discovered-by-kr...
What if its a frame job?
Or identity theft occured for the malicious KYC process?
> The on chain activity makes this look like an individual who did not prepare extensively before doing this or doesn't have the skills to use automation/operational best practices
How common is the knowledge of these best practices?
How common is the knowledge of these best practices?
A hacker who got in from the outside would probably be sophisticated enough to at least
1. automate transfers
2. launder through monero or a tumbler or something
This looks like someone who barely understands crypto because all of the transfers can be traced, and since they're apparently working manually and slowly, the audit-surface is huge.
This looks like someone who barely understands crypto because all of the transfers can be traced, and since they're apparently working manually and slowly, the audit-surface is huge.
Weird. Why ETH and not Monero? ETH can be traced.
They're largely ERC-20 tokens, which can be swapped for ETH on DEXes. Monero is a whole separate blockchain, and cross-chain swaps are still in their infancy and don't have markets to convert ERC-20 tokens to Monero, or definitely not with any sort of volume.
The ETH will probably eventually be laundered and some of the cleaned coins sent places they could eventually be traded for XMR and eventually cashed out, but there's no way to do that quickly, and this needs to be done quickly.
The ETH will probably eventually be laundered and some of the cleaned coins sent places they could eventually be traded for XMR and eventually cashed out, but there's no way to do that quickly, and this needs to be done quickly.
"still in their infancy" implies they will eventually mature. Non-zero chance we're watching the final implosion of blockchain based cryptocurrency.
Although FTX was a crypto exchange the crimes committed were not dependent on blockchain technology. FTX is a company and was holding money and assets for its clients. It's somewhat similar to what Bernie Madoff did to his clients, before crypto was relevant.
Blockchain based cryptocurrency isn't going anywhere anytime soon. This will remind people to take self custody of their crypto and not leave it on an exchange.
Blockchain based cryptocurrency isn't going anywhere anytime soon. This will remind people to take self custody of their crypto and not leave it on an exchange.
Just like cash is a crime magnet, so is Crypto at rest, and for the same reason.
If anything, Crypto is easier to track and stop the looting, compared to if someone left a key to a warehouse containing a billion dollars in cash in it with no security cameras, which is what FTX seems to have managed to do.
If anything, Crypto is easier to track and stop the looting, compared to if someone left a key to a warehouse containing a billion dollars in cash in it with no security cameras, which is what FTX seems to have managed to do.
I don't think we'll ever see the end of cryptocurrency. Too good of a grift.
I wonder if we will reach a point where "crypto" will revert to not meaning "cryptocurrency" though.
I wonder if we will reach a point where "crypto" will revert to not meaning "cryptocurrency" though.
I don't know if I'd consider this a fair evaluation.
From my observation, the overwhelming majority of failures, collapses, and hacks have had a fairly limited exposure to the Ethereum-style/Solidity-based networks. This even includes the exchange collapses like FTX.
By and large Monero, Litecoin, Bitcoin, Algorand, Cardano, and the other networks that are reasonably isolated from the ETH/Solidity space have been largely unaffected by the majority of the "cataclysm" that the space has seen over the last year or two. I don't see any of these projects closing up shop in the near future and I don't see their communities giving up on them either (maybe with the exception of Bitcoin's refusal to move away from PoW or to introduce more programmability).
Odds are the cryptocurrency space is going to recede for at least a few years once the ash settles but IMHO there are too many projects that have yet to suffer serious thefts (as in actual loss not numbers go up/down) in their communities. Likewise these projects tend to also be the ones with shops that are holding sufficient operating funds in stable assets (i.e. US dollar equivalents & bonds) to continue development for the next 5+ years.
TLDR: The failures, hacks, collapses, etc have had limited effect on a lot of projects outside of the popular/flashy part of the the cryptocurrency space. Those projects still have a more or less assured lease on life for the next half a decade.
From my observation, the overwhelming majority of failures, collapses, and hacks have had a fairly limited exposure to the Ethereum-style/Solidity-based networks. This even includes the exchange collapses like FTX.
By and large Monero, Litecoin, Bitcoin, Algorand, Cardano, and the other networks that are reasonably isolated from the ETH/Solidity space have been largely unaffected by the majority of the "cataclysm" that the space has seen over the last year or two. I don't see any of these projects closing up shop in the near future and I don't see their communities giving up on them either (maybe with the exception of Bitcoin's refusal to move away from PoW or to introduce more programmability).
Odds are the cryptocurrency space is going to recede for at least a few years once the ash settles but IMHO there are too many projects that have yet to suffer serious thefts (as in actual loss not numbers go up/down) in their communities. Likewise these projects tend to also be the ones with shops that are holding sufficient operating funds in stable assets (i.e. US dollar equivalents & bonds) to continue development for the next 5+ years.
TLDR: The failures, hacks, collapses, etc have had limited effect on a lot of projects outside of the popular/flashy part of the the cryptocurrency space. Those projects still have a more or less assured lease on life for the next half a decade.
no hurry. it's not like he needs the money now
There is some hurry. Miners and nodes could theoretically update and refuse transactions that come from these wallets.
There would have to be enough of them doing this to prevent the transactions from getting through, which is far from guaranteed, but this is of the sort of scale that it could gain the required support.
There would have to be enough of them doing this to prevent the transactions from getting through, which is far from guaranteed, but this is of the sort of scale that it could gain the required support.
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Is it a coincidence that the founder of FTX seems to be fleeing to Argentina?
Of course one would assume he or his conspirators would do a better job, but maybe not if this busting out was initiated under time pressure.
Once again almost everything in cryptocurrency proves to be a scam.
Of course one would assume he or his conspirators would do a better job, but maybe not if this busting out was initiated under time pressure.
Once again almost everything in cryptocurrency proves to be a scam.
> Once again almost everything in cryptocurrency proves to be a scam.
Once again people on HN hate on cryptocurrencies for no good reason.
This isn't a cryptocurrency problem, it's a fractional reserve banking problem. These centralized exchanges are unregulated banks in disguise. It's no surprise to anyone that they exhibit all of the problems of unregulated banks. Problems such as "we used customer deposits to gamble, lost everything and are now insolvent".
To think one of the reasons cryptocurrency was invented was to end the need for such things...
Once again people on HN hate on cryptocurrencies for no good reason.
This isn't a cryptocurrency problem, it's a fractional reserve banking problem. These centralized exchanges are unregulated banks in disguise. It's no surprise to anyone that they exhibit all of the problems of unregulated banks. Problems such as "we used customer deposits to gamble, lost everything and are now insolvent".
To think one of the reasons cryptocurrency was invented was to end the need for such things...
That’s kind of my point. The things being done with cryptocurrency are mostly scams and failed schemes. Cryptocurrency can be used in this peer to peer way like you describe but virtually nobody does that. It’s too technical for 99% of users and meanwhile you have all these scams that have advertising budgets. Decentralization will never have a Super Bowl ad.
Well, if this was what cryptocurrency was created to prevent, then whether or not it's a scam, it's pretty well clear to me that it's useless.
>people on HN hate on cryptocurrencies for no good reason.
Traditional bankers have spent an incredible amount of time and taken huge political risks to gain hold over the US money supply. They and people in the wall street sphere have a very good reason to hate on crypto, they just dont have any convincing arguments for people like us who dont want them controlling the money supply.
Traditional bankers have spent an incredible amount of time and taken huge political risks to gain hold over the US money supply. They and people in the wall street sphere have a very good reason to hate on crypto, they just dont have any convincing arguments for people like us who dont want them controlling the money supply.
Crypto doesn't need Wall Street types to give it a bad name. It does that just fine on its own...
> In the summer of 2013, Bankman-Fried began working at Jane Street Capital, a proprietary trading firm,[2] trading international ETFs.
Somehow Satoshi and Andreessen managed to not start a ponzi scheme and this guy did.
Still waiting for your argument on why the big 7 wall street banks should be involved in the money supply instead of democratically elected leaders, which was my primary point.
Somehow Satoshi and Andreessen managed to not start a ponzi scheme and this guy did.
Still waiting for your argument on why the big 7 wall street banks should be involved in the money supply instead of democratically elected leaders, which was my primary point.
Satoshi didn’t start a literal Ponzi scheme. It’s known as a greater fool scam.
> Still waiting for your argument on why the big 7 wall street banks should be involved in the money supply instead of democratically elected leaders, which was my primary point.
Are you replying to the right post? I don't see any mention of that
Are you replying to the right post? I don't see any mention of that
> seems to be fleeing to Argentina?
That could only work before 1997.[1]
[1] https://www.congress.gov/treaty-document/105th-congress/18/d...
That could only work before 1997.[1]
[1] https://www.congress.gov/treaty-document/105th-congress/18/d...
"Once again almost everything in cryptocurrency proves to be a scam."
This is like saying "once again almost everything in US dollars proves to be a scam" after Lehman fell.
The sentence makes no sense at all to me.
This is like saying "once again almost everything in US dollars proves to be a scam" after Lehman fell.
The sentence makes no sense at all to me.
How can USDC or USDT be frozen?
Both are centrally managed and are semi-regularly frozen at the request of authorities.
The smart contract has an array of frozen addresses that will not be permitted to move funds, which can be edited by Centre and Tether respectively.
The smart contacts have a blacklist that the companies can add to, that would disable transfers.
Why would the attacker move the funds to any remotely censorable coin like DAI?
I think he tries any avenue available. Even if 50% is lost it's still a good trade.
I guess I'm really ignorant of the whole DeFi ecosystem and how it works and so maybe this isn't feasible, but I would think keeping 100% of Bitcoin and Monero (even if their prices crash a further 80%) would be better than going into these very easily controlled stablecoin.
Dai cannot be censored by
> heavily exposed to USDC
this is not the same as protocol level censorship
If authorities wanted to freeze a subset of DAI, could they do so by directing USDC to refuse to back those tokens?
There aren't USDC backing the DAI for any given DAI. If I have 5 DAI, you can't point to 3-4 USDC backing it (I think ETH backs it too).
Even if Circle did freeze some of DAI's USDC, the Dai contract does not contain the ability to freeze user funds, and I believe is also not upgradeable
Even if Circle did freeze some of DAI's USDC, the Dai contract does not contain the ability to freeze user funds, and I believe is also not upgradeable
Nope they'd have to freeze the entire collateral that Dai has (~33% of all collateral they have rn), Dai could not freeze individual addresses and almost assuredly wouldn't even if asked.
Ok, so, "blacklist these particular addresses or we will seize your entire collateral"?
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Corporate theft is not a hacking.
When you say "corporate theft" are you referring to theft from corporations or theft by corporations? I'm not sure it's clear which is relevant here.
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> Investigating abnormalities with wallet movements related to consolidation of ftx balances across exchanges - unclear facts as other movements not clear. Will share more info as soon as we have it.
From FTX's general counsel[1], retweeted by FTX_Official. So that indicates it's not being sold off legitimately under some sort of liquidation proceedings. It could be insiders or it could be hackers.
[1] https://twitter.com/_Ryne_Miller/status/1591281729125613570
Rumors on Twitter[2] are there was also an update just pushed to the FTX app. Concerns are the update may contain malware. It makes sense to uninstall the FTX app if you have it.
[2] https://twitter.com/zachxbt/status/1591295039946493952
From FTX's general counsel[1], retweeted by FTX_Official. So that indicates it's not being sold off legitimately under some sort of liquidation proceedings. It could be insiders or it could be hackers.
[1] https://twitter.com/_Ryne_Miller/status/1591281729125613570
Rumors on Twitter[2] are there was also an update just pushed to the FTX app. Concerns are the update may contain malware. It makes sense to uninstall the FTX app if you have it.
[2] https://twitter.com/zachxbt/status/1591295039946493952
> Reports on crypto Twitter are that this is a hack
Is that based on some evidence, or is it speculation?
Is that based on some evidence, or is it speculation?
I reworded things to separate the first hand information (FTX_Official indicating they don't know what's going on) from speculation (app hacker rumors).
Some call this a "hack", others who are brighter noticed that the recent FTX limited account unfreeze before they declared bankruptcy was to mask their own personal outflows as they siphoned money from a sinking ship
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I saw an update on coindesk that they confirmed it was a hack on their official telegram channel?
What a dumpster fire. But let's be honest, I think retail investors weren't getting anything back anyways. Probably only impacts creditors
What a dumpster fire. But let's be honest, I think retail investors weren't getting anything back anyways. Probably only impacts creditors
Lol, a 'hack.' An unfortunately extremely convenient one that I'll almost guarantee specifically took customer funds, you know, after the bros already took their first cut.
It happens on Wall St as well but more "subtle". Retail investors and tax payers have always been the bag holders.
Do banks get hacked very often? They seem to have their security in order. Probably because they would have to reimburse their customers if something went wrong.
I have direct knowledge of several bank hacks. Most of the time they don’t publish it.
Isn't the difference that banks have insurance for those hacks?
Yes banks have fidelity bonds called bankers blanket bonds (BBB) which cover losses from fraud, theft, etc. The FDIC doesn’t ensure against robbery, identity theft(banking fraud), etc. so this is an important protection for banks to provide.
I imagine they do their best to run a tight ship yes, but I also imagine the fact that banks still run a lot of legacy pipelines and audits means it's also a little harder to find bugs in the apps and websites, that would actually let you achieve much.
When the banks get bankrupt (i.e due overleverage, stealing/using customer's money etc) their customers get nothing back. A such example is
MF Global. I'm not going into the whole story why banks and centralised/opaque finance is bad.
Now the whole point of crypto was the tech behind it which was supposed to replace banks, exchanges and missuse of your OWN money. It's supposed to be an alternative to the trash financial tools we already use. The fact that people are using entities such FTX, Binance makes them deserve to be punished for their betrayal. Regardless if they use FTX or JP Morgan they pretty much deserve to experiment the shortfalls of centralised finance. I think it's part of the hello world example of what DeFi is trying to solve.
One more thing: If FTX was hacked I bet it has almost nothing to do with the crypto technology.
https://en.m.wikipedia.org/wiki/MF_Global
Now the whole point of crypto was the tech behind it which was supposed to replace banks, exchanges and missuse of your OWN money. It's supposed to be an alternative to the trash financial tools we already use. The fact that people are using entities such FTX, Binance makes them deserve to be punished for their betrayal. Regardless if they use FTX or JP Morgan they pretty much deserve to experiment the shortfalls of centralised finance. I think it's part of the hello world example of what DeFi is trying to solve.
One more thing: If FTX was hacked I bet it has almost nothing to do with the crypto technology.
https://en.m.wikipedia.org/wiki/MF_Global
You wrote: <<their customers get nothing back>>
Another comment already noted that MF Global was not a (commercial/retail) bank. One part of it was a broker-dealer.
Also, in the United States customers of MF Global brokerage were covered by the Securities Investor Protection Corporation (SIPC) which (to quote Wiki): <<can pay the customer (via its trustee) up to $500,000 for missing equity, including up to $250,000 for missing cash>>. Please read more here: https://en.wikipedia.org/wiki/Securities_Investor_Protection...
Even with all of the bad behaviour during MF Global's last days (to quote Wiki again): <<In January 2013, a judge approved a settlement that would return 93 percent of customers' investments, with the prospect of additional payouts from the company's general estate.>>
Impressive, considering the extent of fraud at MF Global! Can any collapsed crypto exchange claim the same recovery rate? I doubt it.
Another comment already noted that MF Global was not a (commercial/retail) bank. One part of it was a broker-dealer.
Also, in the United States customers of MF Global brokerage were covered by the Securities Investor Protection Corporation (SIPC) which (to quote Wiki): <<can pay the customer (via its trustee) up to $500,000 for missing equity, including up to $250,000 for missing cash>>. Please read more here: https://en.wikipedia.org/wiki/Securities_Investor_Protection...
Even with all of the bad behaviour during MF Global's last days (to quote Wiki again): <<In January 2013, a judge approved a settlement that would return 93 percent of customers' investments, with the prospect of additional payouts from the company's general estate.>>
Impressive, considering the extent of fraud at MF Global! Can any collapsed crypto exchange claim the same recovery rate? I doubt it.
MF Global wasn’t a bank.
“Nothing to do with the crypto technology” is an empty and meaningless statement.
IF, and that’s a very big if, they got hacked, the fact that $600m could be moved and disappeared so quickly is 100% to do with the “crypto technology”. In the real financial system it is exponentially harder to make money disappear, transfers are logged on three sides of the transaction, you have to hack multiple autonomous and different tech stacks, and you have to wait as the transfers get transmitted, validated and passed in.
“Nothing to do with the crypto technology” is an empty and meaningless statement.
IF, and that’s a very big if, they got hacked, the fact that $600m could be moved and disappeared so quickly is 100% to do with the “crypto technology”. In the real financial system it is exponentially harder to make money disappear, transfers are logged on three sides of the transaction, you have to hack multiple autonomous and different tech stacks, and you have to wait as the transfers get transmitted, validated and passed in.
“In January 2013, a judge approved a settlement that would return 93 percent of customers' investments”
A great deal larger than nothing.
A great deal larger than nothing.
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Wall Street doesn't rug pull people. It sells them bad bets and takes the opposite side of those bets. There is a massive difference.
It’s not a massive difference just a rug pull at a higher conceptual level (informational) because the obvious financial rug pull was done a hundred years ago and has since been regulated.
They always give you the information, too. People just don't always like to read it. Some people don't care, and others just jump on whatever bandwagon they can find.
Almost everyone who has lost their shirt in financial derivatives in the past 50 years could have learned about the risks they were taking from some text in a prospectus somewhere, but chose not to.
Almost everyone who has lost their shirt in financial derivatives in the past 50 years could have learned about the risks they were taking from some text in a prospectus somewhere, but chose not to.
That's exactly the same for crypto too though, all the warning signs are constantly there.
It's not that Wall Street gives you warning signs. They literally tell you "this is a probably a bad bet, and you should not take it" in the descriptions of most products. Very few people actually read those descriptions, despite the fact that they really should if they are buying weird financial products. The banks tell you to read them. And yes, a mortgage is a weird financial product.
For example, people who lost a lot of money holding XIV (a leveraged inverse-VIX ETN) had the warning about not holding the thing overnight in bold red text in the prospectus. People holding leveraged CDOs and every kind of CDS had all kinds of warnings in big bold text in their prospectus. The good old "liar's loans" of the early 2000's had big bold text saying "it will be bad for you if you lie about your income."
Pretty much the only financial products that don't come with big bold text saying "you are an idiot for buying this" are single stocks and the most boring of ETFs/mutual funds (eg SPY).
Contrast that with the warning signs from crypto projects, which are a lot more oblique than big bold text in a document that they tell you to read. Wall Street screws you, but they generally do it slowly and they tell you how. Crypto projects just straight up steal your money one day out of the blue and run to Dubai.
For example, people who lost a lot of money holding XIV (a leveraged inverse-VIX ETN) had the warning about not holding the thing overnight in bold red text in the prospectus. People holding leveraged CDOs and every kind of CDS had all kinds of warnings in big bold text in their prospectus. The good old "liar's loans" of the early 2000's had big bold text saying "it will be bad for you if you lie about your income."
Pretty much the only financial products that don't come with big bold text saying "you are an idiot for buying this" are single stocks and the most boring of ETFs/mutual funds (eg SPY).
Contrast that with the warning signs from crypto projects, which are a lot more oblique than big bold text in a document that they tell you to read. Wall Street screws you, but they generally do it slowly and they tell you how. Crypto projects just straight up steal your money one day out of the blue and run to Dubai.
CDO2s backed by worthless subprime loans were put into AAA rated bonds. I'd call that an outright scam. For that matter all versions were far more risk than they claimed they were, given that they were worthless, even if there was some fine print somewhere.
Retail investors are creditors right? Though I guess you mean only the larger creditors. I think the bigger difference is that bankruptcy proceedings take a long time and to a retail investor ‘you might get some money back in N years’ isn’t so different from ‘you get nothing’.
> bankruptcy proceedings take a long time and to a retail investor ‘you might get some money back in N years’ isn’t so different from ‘you get nothing’.
Does anyone actually remember MtGox? It wasn't actually that long ago!
Does anyone actually remember MtGox? It wasn't actually that long ago!
Karpelès never went to jail. He was convicted of poor recording keeping, not of embezzlement, and given a suspended sentence.
If - hypothetically - someone else wanted to take a similar path, the odds of jail time are actually pretty low.
If - hypothetically - someone else wanted to take a similar path, the odds of jail time are actually pretty low.
I just had that realization that I'm sure so many have already had.. In a bankruptcy, we really are creditors.. but we're not Creditors, and won't get our money back until big C's have had all they want.
There’s such a thing as seniority of claims and it may often be the case that the mass of ordinary people don’t have the most senior claims but it isn’t about the size – investors (who, in some sense, have the most junior claims) will likely get hosed even though they’re big.
I think there are two ways to think about this:
1. If you’re a company and you have N classes of debt then probably ‘ordinary people’ will all be in the same class (this can vary, eg if you’re a big retail store then wages owed will likely be a different more senior class of debt than anything you owe customers). So the more senior claims are more likely to be big companies as are the more junior claims, and it is unlikely that the ‘ordinary people’ class of debt will be the most senior. For FTX I expect the hedge funds and retail customers to have the same seniority.
2. Hedge funds, etc, will be able to retain lawyers and seek representation in the bankruptcy process in a way that is unaffordable to ordinary people. So they might end up with favourable timelines/restructurings or better accounting of what they’re owed but those arrangements can’t be that the big members of the class get a higher proportion of their money back than the smaller members.
I think there are two ways to think about this:
1. If you’re a company and you have N classes of debt then probably ‘ordinary people’ will all be in the same class (this can vary, eg if you’re a big retail store then wages owed will likely be a different more senior class of debt than anything you owe customers). So the more senior claims are more likely to be big companies as are the more junior claims, and it is unlikely that the ‘ordinary people’ class of debt will be the most senior. For FTX I expect the hedge funds and retail customers to have the same seniority.
2. Hedge funds, etc, will be able to retain lawyers and seek representation in the bankruptcy process in a way that is unaffordable to ordinary people. So they might end up with favourable timelines/restructurings or better accounting of what they’re owed but those arrangements can’t be that the big members of the class get a higher proportion of their money back than the smaller members.
In my country the first creditor that gets their money in case of a bankruptcy is the tax man.
And a lot of bankrupt companies owe the government a lot of money in due taxes...
And a lot of bankrupt companies owe the government a lot of money in due taxes...
Greed drives all of us to do things we normally wouldn’t. Given the nature of crypto, unless there’s a good reason to have the FTX app (say as opposed to using their website), then uninstalling it seems like very sound advice.
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It’s unfortunate that what started out with altruistic motives, a method for decentralized anonymous asset exchange, is being derailed by opportunists. There was a time where a 51% attack was the biggest concern.
All that said, I’m not surprised at where we are today.
All that said, I’m not surprised at where we are today.
> It’s unfortunate that what started out with altruistic motives
Are you actually buying into SBF’s pathetic ideologies? Or are you more referring to Satoshi’s white paper when you refer to “altruistic motives”.
I can’t understand how anyone would take SBF seriously. He’s a smug charlatan who converted funny money to real money so that he could dump it into politics for his own aims, all while calling his actions “altruism”. Biggest false virtue signaler of all time.
Are you actually buying into SBF’s pathetic ideologies? Or are you more referring to Satoshi’s white paper when you refer to “altruistic motives”.
I can’t understand how anyone would take SBF seriously. He’s a smug charlatan who converted funny money to real money so that he could dump it into politics for his own aims, all while calling his actions “altruism”. Biggest false virtue signaler of all time.
> Or are you more referring to Satoshi’s white paper when you refer to “altruistic motives”.
There's little altruistic about an emission that allocates half of all supply (first four years) going to early miners including Satoshi himself, and leaves only crumbs for later generations.
There's little altruistic about an emission that allocates half of all supply (first four years) going to early miners including Satoshi himself, and leaves only crumbs for later generations.
This was my biggest “a-ha” realization around crypto, that the distribution model is utterly and irreparably broken for the most popular currencies. Whenever I bring this up with BTC/crypto maximalists their counterpoint is that fiat is also unevenly distributed and that it’s not a novel problem. The disconnect is truly puzzling.
It's not a novel problem, but nearly all cryptocurrencies exacerbate it by concentrating the majority of emission on the first few years. Non-pow coins even start with the creators holding 100% of supply.
When they could instead minimize the problem (or limit it to the pre-existing fiat inequality) with a pure linear emission, i.e. fixed block subsidy.
The resulting high supply inflation rate (1/n after n years) would have the side benefit of deterring speculation, and keeping prices (and hence environmental impact) low.
When they could instead minimize the problem (or limit it to the pre-existing fiat inequality) with a pure linear emission, i.e. fixed block subsidy.
The resulting high supply inflation rate (1/n after n years) would have the side benefit of deterring speculation, and keeping prices (and hence environmental impact) low.
It's not so puzzling when you realize most people are perfectly fine about something if they get paid by it, or think they might one day get paid by it.
Less fine if they won't and someone else will.
Less fine if they won't and someone else will.
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Satoshi picked that model probably because it's easy to divide by 2 (x >> 2). He didn't want to prematurely optimize or overthink anything because it was a simple experiment and nobody could have predicted that Bitcoin will become the mammoth it is now.
Shifting by two is dividing by four. Not so easy, after all!
Parent mentions decentralized anonymous asset exchange being the goal and 51% attacks being the biggest concern. That tells me he's talking about Satoshi. Those topics don't apply to SBF.
Agreed. IN particular, William MacAskill[1] is worth particular interest. Closer to abstract low tier cult than serious philosophy. The fact he changed his name (his real name is William Crouch) to sound more like a marketable philosopher should be indicative enough to anyone with an ounce of sense that one should be guarded engaging with this supposed philosophy.
That so many people at FTX called themselves "EAers" or "subscribe to the philosophy of EA" screams charlatanism to me. That it became entwined with the Crypto community is no surprise to me.
It reminds me of the many many "churches" in Africa that tell people great fortune will come their way if they are loyal to this particular preacher or whatnot. [2] It is obvious to me those are a scam. Perhaps more akin to Scientology - creation of a VIP club - the less sense it makes the better?
I've tried to read about Effective Altruism and my conclusions are that it is immature gibberish and these proponents are not fully formed emotionally intelligent adults. [3]
> SBF ended up hanging out a lot with his younger brother Gabe, who was living in an EA commune on nearby Stuart Street.
Communes - but it isn't a cult right?
[1] https://en.wikipedia.org/wiki/William_MacAskill
[2] https://www.nytimes.com/2002/03/13/world/africans-fill-churc...
[3] https://web.archive.org/web/20221027180943/https://www.sequo...
That so many people at FTX called themselves "EAers" or "subscribe to the philosophy of EA" screams charlatanism to me. That it became entwined with the Crypto community is no surprise to me.
It reminds me of the many many "churches" in Africa that tell people great fortune will come their way if they are loyal to this particular preacher or whatnot. [2] It is obvious to me those are a scam. Perhaps more akin to Scientology - creation of a VIP club - the less sense it makes the better?
I've tried to read about Effective Altruism and my conclusions are that it is immature gibberish and these proponents are not fully formed emotionally intelligent adults. [3]
> SBF ended up hanging out a lot with his younger brother Gabe, who was living in an EA commune on nearby Stuart Street.
Communes - but it isn't a cult right?
[1] https://en.wikipedia.org/wiki/William_MacAskill
[2] https://www.nytimes.com/2002/03/13/world/africans-fill-churc...
[3] https://web.archive.org/web/20221027180943/https://www.sequo...
I hear a lot of critiques around effective altruism that boil down to attacks on people who practice it as being immature, naive, or cult like.
At its core, EA asks what the most effective way to contribute to humanity is. Some of the thinkers are mature and have produced amazing projects, givewell being an obvious example.
There are definitely some weirdos affiliated with the movement, but I don't think that that discredits its approach or philosophy.
At its core, EA asks what the most effective way to contribute to humanity is. Some of the thinkers are mature and have produced amazing projects, givewell being an obvious example.
There are definitely some weirdos affiliated with the movement, but I don't think that that discredits its approach or philosophy.
It's performative in exactly the same way I grew up among with evangelical extremists. You can't reduce moral decisions and ethics to some sort of karmic account balance. Functionally EA allows its promotors to rebrand self interest as actually altruism. It becomes an all purpose end to justify any means. A thought ending cliche to avoid engaging with the actual complexity.
And yet no one ever seems to be able to actually define a better moral decision making process or describe what the argument defeating "complexity" actually is. Just a longer way of saying "I disagree."
What is the evidence that we actually truly know what is most effective in a lot of situations? If "effectiveness" is just a hypothesis then the whole thing becomes quite shaky in terms of resource allocation.
I think the OP is being unfair to Will and EA, but your statement is pretty outrageous. No one's ever come up with a moral or political philosophy other than utilitarianism - are you serious?
Didn’t he change his name when he was first married (to some more distant family name) instead of only one spouse changing name?
Most of the rules of civilization are centered around preventing the 20% predators from devouring the 80% normal people.
And here I sit, thinking those rules were so that the 1% could take all the value the 99% produced.
Heh. The 1% are mostly the very successful predators and their heirs.
They buy/make a lot of rules, but there's still (currently) a ton more to constrain predation.
(The more money you have, of course, the easier it is to game a more complex system...)
They buy/make a lot of rules, but there's still (currently) a ton more to constrain predation.
(The more money you have, of course, the easier it is to game a more complex system...)
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Most? That's an understatement.
The rules that aren't are so few they may as well be rounding errors lost in noise.
The rules that aren't are so few they may as well be rounding errors lost in noise.
There's a line describing this in a failed US version of the cop drama Prime Suspect... I forget the exact wording but it's some grizzled cop talking about how their job is to protect the herd from the carnivorous sheep in it.
most are about 10% of predators trying to devour the other 10% of predators while preventing being devoured by the 80% of normal people
In times like this I often find comfort in the expression "The Purpose of a System is What It Does"
https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
Doesn't this make all forms of bureaucracy (and hence, civilization) parasitic ? (Or are you just supposed to regularly "drain the swamp" ?)
No. Seems like a non sequitur to me.
=
"The bureaucracy is expanding to meet the needs of the expanding bureaucracy." from (supposedly) Oscar Wilde
+
Survival of the fittest to survive, from Charles Darwin
?
(This is a serious question, I have been pondering it for years now...)
"The bureaucracy is expanding to meet the needs of the expanding bureaucracy." from (supposedly) Oscar Wilde
+
Survival of the fittest to survive, from Charles Darwin
?
(This is a serious question, I have been pondering it for years now...)
> what started out with altruistic motives, [...] is being derailed by opportunists.
See: all human history.
The essential trust anchor will always be transparency that directly affects a person in society. Anonymous money and anonymous power will be exploited.
See: all human history.
The essential trust anchor will always be transparency that directly affects a person in society. Anonymous money and anonymous power will be exploited.
> Reports on crypto Twitter are that this is a hack
It's really unfortunate to get "hacked" with such bad timing. You steal customer money and file for bankruptcy but now the bad hackers, probably from the Bahamas as well, take whatever is left and cash out. Oh no! /s
But it's alright, SBF said he's sorry.
It's really unfortunate to get "hacked" with such bad timing. You steal customer money and file for bankruptcy but now the bad hackers, probably from the Bahamas as well, take whatever is left and cash out. Oh no! /s
But it's alright, SBF said he's sorry.
honestly, the vulnerability was probably already there and there was a symbiosis with the person. Rules for rulers, there are various keyholders in your empire. This company wasn't following any best practices, so no reason to think they have crypto security best practices internally.
this person absolutely knows that they can kick leadership when they're down and that all blame will go to the leadership
it doesn't require being an "apologist" for leadership to see this vulnerability. Council and compliance all resigned, the ceo resigned. Any semblance of checks are gone and any rogue developer can use their keys on anything, rumor now is that an app update went out turning them into malware.
its equally as plausible as just a cringeworthy vendetta of spiraling founders, dumber things have happened in crypto. smart things have too, I’m leaving towards a smart thing
this person absolutely knows that they can kick leadership when they're down and that all blame will go to the leadership
it doesn't require being an "apologist" for leadership to see this vulnerability. Council and compliance all resigned, the ceo resigned. Any semblance of checks are gone and any rogue developer can use their keys on anything, rumor now is that an app update went out turning them into malware.
its equally as plausible as just a cringeworthy vendetta of spiraling founders, dumber things have happened in crypto. smart things have too, I’m leaving towards a smart thing
SBF takes "full responsibility".
Don't worry tweet that "he's sorry" and it will be all right.
Perhaps he will take some time to clear his head. Is there a monastery in South America where he can repent? Preferably one with no extradition treaty?
All the countries in South America have extradition treaties with the United States. If he's looking for a monastery, he should head to a Buddhist monastery in Vietnam.
List of countries with extradition treaties with the USA: https://2009-2017.state.gov/documents/organization/71600.pdf
List of countries with extradition treaties with the USA: https://2009-2017.state.gov/documents/organization/71600.pdf
Taking full responsibility would be liquidating his assets to make all customers as whole as possible, even if it leaves him destitute. Lack of responsibility/consequences for the capitalist class is the root cause for many of the social problems we have today.
It's not OK that we hugely reward taking risks to capital and then largely isolate the "risk"-taker from the consequences of failure when they materialize.
It's not OK that we hugely reward taking risks to capital and then largely isolate the "risk"-taker from the consequences of failure when they materialize.
100%
i volonteer to take some "responsibility" as well
In unrelated news SBF just found he had a bunch of crypto in his personal wallet. Totally not at all the pile of crypto that was last seen in the FTX wallet.
Yes, 1-2 billion in Sam’s personal wallets:
“Reuters is reporting that at least $1 billion in customer funds at the exchange disappeared last weekend, citing two former senior employees briefed on the company's finances.”
https://www.reuters.com/markets/currencies/exclusive-least-1...
“Reuters is reporting that at least $1 billion in customer funds at the exchange disappeared last weekend, citing two former senior employees briefed on the company's finances.”
https://www.reuters.com/markets/currencies/exclusive-least-1...
A minor problem with the blockchain is that the blockchain is actually an authenticated record of all transactions, so it’s pretty hard to hide where the crypto went unless you never actually exchange it or use it to buy something.
Swap to Monero then slowly trickle swap back to your coin of choice as you need the funds. 'Problem Solved'
There is a reason US regulated exchanged with KYC don't deal in XMR.
There is a reason US regulated exchanged with KYC don't deal in XMR.
Huh? Kraken deals in XMR in the US. You can literally upload a US passport and they will sell/buy you XMR. They've been doing it for years.
His keys his coins
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FTX CTO Gary Wang as well has a lot of recent GitHub commit activity in last 2 days and now suddenly the site is hacked https://github.com/garywang
I'm as sceptical as the next person but I don't think "coder writes code" is anything.
The CTO writing and committing code for a (formerly) $16 billion dollar company does seem slightly off imo.
I think it’s quite normal (at least at some companies) for a CTO to spend some time writing code as part of setting technical direction. In that case there might be other executives who do the other parts of the CTO role you imagine (eg having lots of reports).
How do you know it's him and not somebody else with the same name? I don't see any crypto projects.
> I don't see any crypto projects.
How do you know that? It says explicitly: "52 contributions in private repositories" between November 1 and November 11.
How do you know that? It says explicitly: "52 contributions in private repositories" between November 1 and November 11.
Obviously nobody knows what the private repos are. I was talking about public projects. "Gary Wang" is not an uncommon name. For example, here is another one with a Wikipedia page https://en.wikipedia.org/wiki/Gary_Wang
That's a good point. For whatever reason, I missed the first part of your comment. I did indeed operate under the assumption, incorrectly, that it was his profile.
What's interesting is that a lot of the FTX people on the about page (https://about.ftx.com/), including Gary Wang and Dan Friedberg have deleted their LinkedIn accounts, whereas they were available earlier. If they're deleting something so harmless, then who knows what else they are deleting and covering up.
What's interesting is that a lot of the FTX people on the about page (https://about.ftx.com/), including Gary Wang and Dan Friedberg have deleted their LinkedIn accounts, whereas they were available earlier. If they're deleting something so harmless, then who knows what else they are deleting and covering up.
I don't think this means anything. They might just not want any publicity, or to be harassed by malcontented FTX depositors. In the context of the FTX implosion, their LinkedIn profiles are far from harmless.
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Yeah and I’m sure the Apple App Store review process won’t catch the steal_private_keys_and_upload_to_china() method they inserted. Not that iPhone apps can’t do this in the first place. A lot of FUD right now to create even more chaos.
Patrick Boyle breaks down the situation with his usual eloquence and dry humor. Video is worth watching just for the chart of the corporate structure.
https://youtu.be/zTFhnpf-IE0
Over 130 companies referenced in the bankruptcy filing, and 'around 77 companies' in that organizational chart! The first thought is that's an optimal structure for a money laundering outfit, as if those companies are constantly transferring funds from one to the other, dirty money can be fed in to that system and then get lost in the mix, coming out as fairly clean on the other end. See Nick Kochan, "The Washing Machine":
https://www.goodreads.com/en/book/show/21230193-the-washing-...
https://www.goodreads.com/en/book/show/21230193-the-washing-...
Thanks for the link! Very good video indeed and I'll have to look into some more of his videos. Very funny and well presented.
That video is amazing. Thanks for sharing!
It gets worse: somebody has pushed what appears to be a malicious update to the FTX app, and the official FTX telegram channel is warning people not to even browse to the website!
https://twitter.com/zachxbt/status/1591293813519253504
https://twitter.com/zachxbt/status/1591293813519253504
I’ve been trying to figure out the technicalities there. Neither the ios nor android apps have updates since the crash.
The update box is clearly based on their pre existing popup used for things like 2FA.
Could this popup have been modified with new text and linked to a new malicious site without an app update on ios or android?
Or, could the popup only function if it was already coded into the app waiting to be activated? Meaning premeditated
The update box is clearly based on their pre existing popup used for things like 2FA.
Could this popup have been modified with new text and linked to a new malicious site without an app update on ios or android?
Or, could the popup only function if it was already coded into the app waiting to be activated? Meaning premeditated
It’s pretty common for apps to load some external content from a server to show to the user. This is useful in part because it allows you to update the content without going through the slow app review process. Potentially, if your backend got hacked, the hackers could change this content.
Sure, but your onboarding flow popup buttons? I don’t think app review allows those to be loaded from a website
You can definitely serve content like that from your server and have the app render it (no website required). The review process would not block that.
You could also serve a change like this with an OTA update, again no app store review required, which ios and android allow (as long as you don't fundamentally change the app, and even then they could only catch that retroactively.
Not sure if they'd care if you load it in a webview as long as the UX wasn't substantially different. I seem to recall getting bounced to web auth flows pretty often.
You could also serve a change like this with an OTA update, again no app store review required, which ios and android allow (as long as you don't fundamentally change the app, and even then they could only catch that retroactively.
Not sure if they'd care if you load it in a webview as long as the UX wasn't substantially different. I seem to recall getting bounced to web auth flows pretty often.
Lots of apps these days are merely shells for web content that is hosted elsewhere.
A couple quick searches for “ftx app react native” makes me believe at least part of their app, if not the entire thing, is react native (it’s possible to have a hybrid native/react native app). It’s totally possible and quite common to be able to load the JavaScript bundle from a remote server. Microsoft has a service to do exactly that called Codepush. Expo also has a service and it’s not very complex to roll your own.
How a react native app works is all the native code is compiled into a “shell” of an app and then a JavaScript bundle is loaded (it can be shipped in the binary or loaded from a server) and that’s where all the layout and logic lives. Not only is it possible to make small changes, you could conceivably ship an entirely new app this way as long as you don’t need to add any new native dependencies. Of course the App Store/Play Store don’t allow “major” changes, but they have no real way of knowing.
In Apple’s case, you need to provide them with a login for them to review the app (not sure about the play store, but possibly them too). It would be trivially to load one bundle for Apple and another for everyone else. If you had control of the backend you could even target specific accounts and load a compromised bundle with no one else the wiser.
It’s fairly easy to strip out the JS bundle to examen, so I’d say targeted attacks would be the smart way to do it. It would give you a lot of time before people caught on vs compromising everyone. I’m sure there’s folks out there already tearing into the js bundle looking for shenanigans.
This last week has been a rollercoaster. I've been in crypto since a long time ago and have seen quite a bit, but this FTX implosion takes the crown. And to be honest, I don't think its over.
Another interesting thought I keep going back to is .... since crypto is really zero sum, who the hell was on the other side of these horrible trades that has billions now?
I suppose in this case it's probably a negative sum game. The assets in question are the FTT token that Alameda mined and gave to FTX as collateral, in return for real customer assets from FTX that Alameda used to gamb... er trade with. But FTT then went to zero, tanked the whole market, and the customer assets Alameda holds lost value too. Everybody loses.
At this point it wouldn't surprise me if they siphoned off the money by being on the other side of those trades via different entities...
Supposedly from what I'm hearing from /r/buttcoin rumors, Alameda was very bad at trading, so the billions have gone to the people doing the opposite trades from Alameda, which were being funded by FTX to try to gamble back the amounts lost.
A rollercoaster or a skydive without a parachute?
What is the difference between this, terraluna earlier this year or MTGox?
Luna was quite bad, but it was pretty straight-forward path to death that everyone saw from a mile away. Not many people predicted that FTX and SBF will fall from grace within a timespan of 48hrs. The whole thing is also so full of scandals, theft and corruption we will be reading about this in the news for weeks to come.
mtGox was so early in crypto, there wasn't any institutional capital or major players, mostly retail/regular folks experimenting with shiny new tech. FTX is an intermingled web of retail, institutions and big name investors as well as having their own investments, huge donations to politicians, lobbying arm, etc. The fallout from this will set us back for years.
mtGox was so early in crypto, there wasn't any institutional capital or major players, mostly retail/regular folks experimenting with shiny new tech. FTX is an intermingled web of retail, institutions and big name investors as well as having their own investments, huge donations to politicians, lobbying arm, etc. The fallout from this will set us back for years.
I suspect this will be the catalyst for “regulation clarity”.
It sure is interesting how they extended their tentacles into as many other companies and projects as possible (SBF even approached Elon about financing the Twitter acquisition) while knowing they were financing these deals with customer deposits, before blowing it up in the most spectacular way possible…
I can’t imagine a series of actions that would be more destructive to the industry. The actions don’t make sense unless they were taken to maximize the potential fallout.
The deep regulatory and political connections are also interesting…
I can’t imagine a series of actions that would be more destructive to the industry. The actions don’t make sense unless they were taken to maximize the potential fallout.
The deep regulatory and political connections are also interesting…
The idea that this is some kind of "op" is undermined by the fact that SBF was broadcasting his own lack of trustworthiness for a long time. Remember that exchange with Matt Levine where SBF all but admits to running a Ponzi scheme[1]? That was half a year ago.
I think the idea that this is some kind of 4D chess move by regulators is a convenient way for the gullible idiots who believed in this stuff to put the blame on something other than their own credulousness. The guy basically admitted to running a Ponzi scheme. Why did you continue to trust him???
[1] https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
I think the idea that this is some kind of 4D chess move by regulators is a convenient way for the gullible idiots who believed in this stuff to put the blame on something other than their own credulousness. The guy basically admitted to running a Ponzi scheme. Why did you continue to trust him???
[1] https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
At no point did he admit to investing customer deposits in defi or similar schemes without their consent in that interview. FTX’s terms even state that they would never do that.
His actions since Alameda blew up were not rational, even if we assume that he was operating a Ponzi scheme the entire time.
He bailed out as many failed projects as he could and attempted to make investments with funds he did not have after the collapse of his ponzi started.
A ponzi operator who sees their house of cards collapsing is going to look for ways to get more money into the ponzi unencumbered with the hope that they can make back the losses before anyone notices.
They are not going to allocate what precious little capital they still have to investments that do not contribute more capital to the ponzi.
Yet this is exactly what SBF did.
It doesn’t make any sense.
Yet the regulation authorities are considering (that SBF literally authored) does very little to address the root causes of centralized exchange collapse, and is more or less designed to give power to regulators first and protect investors as a distant second.
What is needed are proof of reserves that include both assets and liabilities for centralized exchanges.
Centralized exchanges shouldn’t be able to lock up 100mm USD worth in customer Ethereum deposits for staking, when their exchange allows someone to buy that 100mm USD in ETH and withdraw it from the exchange before they can unlock the ETH and use it to fund the withdrawal without delay. If the exchange is going to allow customers to stake ETH on their exchange, the actual customers' ETH must be staked, and shouldn't be accounted for separately than the staked ETH deposit.
That is the core of the issue with centralized exchanges that play shell games with customer funds. They create financial risk if customer deposits are not backed 1:1 and mirroring the financial decisions of the depositor. Anything less is a ponzi, no matter how much window dressing is applied.
It's worth noting that banks are ponzi schemes, but they can borrow funds at the discount rate at will, and must meet capital requirements, so the damage their ponzi schemes can cause is limited. There is no lender of last resort in crypto. Centralized exchanges cannot behave like banks!
His actions since Alameda blew up were not rational, even if we assume that he was operating a Ponzi scheme the entire time.
He bailed out as many failed projects as he could and attempted to make investments with funds he did not have after the collapse of his ponzi started.
A ponzi operator who sees their house of cards collapsing is going to look for ways to get more money into the ponzi unencumbered with the hope that they can make back the losses before anyone notices.
They are not going to allocate what precious little capital they still have to investments that do not contribute more capital to the ponzi.
Yet this is exactly what SBF did.
It doesn’t make any sense.
Yet the regulation authorities are considering (that SBF literally authored) does very little to address the root causes of centralized exchange collapse, and is more or less designed to give power to regulators first and protect investors as a distant second.
What is needed are proof of reserves that include both assets and liabilities for centralized exchanges.
Centralized exchanges shouldn’t be able to lock up 100mm USD worth in customer Ethereum deposits for staking, when their exchange allows someone to buy that 100mm USD in ETH and withdraw it from the exchange before they can unlock the ETH and use it to fund the withdrawal without delay. If the exchange is going to allow customers to stake ETH on their exchange, the actual customers' ETH must be staked, and shouldn't be accounted for separately than the staked ETH deposit.
That is the core of the issue with centralized exchanges that play shell games with customer funds. They create financial risk if customer deposits are not backed 1:1 and mirroring the financial decisions of the depositor. Anything less is a ponzi, no matter how much window dressing is applied.
It's worth noting that banks are ponzi schemes, but they can borrow funds at the discount rate at will, and must meet capital requirements, so the damage their ponzi schemes can cause is limited. There is no lender of last resort in crypto. Centralized exchanges cannot behave like banks!
SBF was hailed as a crypto savior just a few weeks ago after the Luna fallout. He was viewed as Warren Buffett during the financial crisis. Perhaps Coinbase will be the ultimate winner here if crypto somehow survives. I imagine more than 75-80% of the assets tied to crypto will liquidate in coming weeks. I don’t think this will be “just another” crypto blow up. It’s end game time.
I trust Coinbase as a public company, but not more than I'd be willing to lose on a trip to Vegas.
I think MTGox was actually worse just due to the small size of the market then and how much of a joke their security was. FTX just seems like a fleecing job that tons of crypto exchanges and businesses have pulled off. MTGox was sheer incompetence.
I would consider the moral failure of SBF to be worse than the incompetence of Karpeles.
Also, SBF was a billionaire hobnobbing with politicians and celebrated by Forbes. Karpeles was some confused dev on his computer who loved his cat and wanted to build a coffee shop.
SBF's failure is going to have larger consequences outside the crypto sphere.
Also, SBF was a billionaire hobnobbing with politicians and celebrated by Forbes. Karpeles was some confused dev on his computer who loved his cat and wanted to build a coffee shop.
SBF's failure is going to have larger consequences outside the crypto sphere.
Jeffrey Epstein funneled hundreds of million of dollars (and 16-yr-old girls) through politicians and business celebrities, and there were trivial consequences outside his family.
SBF just stumbled into money and spread it around, like the Oculus guy.
SBF just stumbled into money and spread it around, like the Oculus guy.
Is there anything happen to Karpeles for what he did with mtgox?
He was in a custody for about a year, he was later sentenced to a suspended year in prison. He still lives in Tokyo, no idea what he does for work now though.
If you believe there is more to come and this isn’t over, are you still holding crypto?
I've been in cryptocurrencies/blockchain since 2012. I "missed" the BTC boat and got into ETH early. I'm of the thought that CeFi services like Ftx, Nexo, Coinbase and similar are stupid. The only thing that should exist is simple Exchanges between Fiat and cryptocurrency. But everything else is just a scam IMHO. Why would you do a CeFi in crypto , when theres more TAM in doing it normal FIAT? Because you want to Avoid regulation and scrutiny.
Anyways, through all this saga, I see ETH is still at $1200, which has held pretty well. I think the right price is around $600, how it was on Nov 2020, before all speculation. The rest of the price is just people playing around. But that's not what ETH is for, and these high prices are hurting it's real goal.
I'm definitely still holding crypto. Mostly ETH, because I believe in the core technology. I've done some smart contracts and have a couple ideas for the future.
But man, I surely hope all cryptos crash and burn this time, so that speculators stop polluting the technology.
Anyways, through all this saga, I see ETH is still at $1200, which has held pretty well. I think the right price is around $600, how it was on Nov 2020, before all speculation. The rest of the price is just people playing around. But that's not what ETH is for, and these high prices are hurting it's real goal.
I'm definitely still holding crypto. Mostly ETH, because I believe in the core technology. I've done some smart contracts and have a couple ideas for the future.
But man, I surely hope all cryptos crash and burn this time, so that speculators stop polluting the technology.
But again, despite lots of people "believing in the core technology", nearly everyone who holds crypto is doing so for speculation - they want to get rich by greater fool theory.
Even people/groups using it for putatively useful purposes, those purposes often tend to be 10x more complicated or risky than standard financial mechanisms (or, they are using crypto specifically for various forms of money laundering).
Even people/groups using it for putatively useful purposes, those purposes often tend to be 10x more complicated or risky than standard financial mechanisms (or, they are using crypto specifically for various forms of money laundering).
I think this is my biggest problem with cryptocurrency. I thought it was cool technology with potential usecases back when I heard about it in 2013 or so; but it's become clear 99.99% of people involved with crypto only see it as a speculative asset.
Almost nobody cares about optimizing for real world use, just optimizing for "price goes up".
Almost nobody cares about optimizing for real world use, just optimizing for "price goes up".
We now have a litmus test for this: If you are truly in it for the technology and not to get rich then obviously you would only use/develop stablecoins because they have the benefits of crypto without that pesky volatility. Virtually no one fits this description.
I can see a future where payments happens over lightning, BTC is savings, and apps/games/entertainment are built on ETH.
However I’ve grown less confident in ETHs longevity following the move to PoS. I’m concerned about the centralization of control and influence (eg transactions being dropped, tornado cash), lack of ability to withdrawal staked ETH, and general lack of trust created by the extreme number of scams. How do you view ETH long term, particularly wrt the proximity it has to these seemingly endless scams?
However I’ve grown less confident in ETHs longevity following the move to PoS. I’m concerned about the centralization of control and influence (eg transactions being dropped, tornado cash), lack of ability to withdrawal staked ETH, and general lack of trust created by the extreme number of scams. How do you view ETH long term, particularly wrt the proximity it has to these seemingly endless scams?
> I think the right price is around $600,
Why $600 and not $351, $17, or $15,000?
What fundamental reason is there for any specific price?
Why $600 and not $351, $17, or $15,000?
What fundamental reason is there for any specific price?
Because it's not too high, and not too low.
Can you point me in the direction of how to reliably setup a cold wallet for ETH? Apparently much harder to find a guide for than BTC. A wallet generator I can run on a tails USB would be ideal.
An ETH wallet is just a private/publik keypair. You only have to generate a compatible pair [1] and write it in a piece if paper. What makes it "cold" is that you dont place your keys sonwhere online (myetherwallet, exodus,etc) so it cant be hacked.
[1] https://www.arthurkoziel.com/generating-ethereum-addresses-i...
[1] https://www.arthurkoziel.com/generating-ethereum-addresses-i...
Personally I liquidated all remaining crypto. I think these are the end of days for crypto and before the end of this year anyone still holding crypto assets will find them significantly less valued. There is no path to increasing value.
Losing faith just because a CEX goes down means you were never interested in it beyond speculation to begin with it.
All of crypto is speculation. Nobody pays for anything with crypto and most of the time the price movement of Bitcoin seems pretty close to the movement of NASDAQ.
ETH provides value but it’s moved to an unproven model.
The who crypto ecosystem is filled with charlatans and crooks who want to rob you and your only other alternative is to be your own bank and store in a cold wallet. Not something normal people are interested in.
ETH provides value but it’s moved to an unproven model.
The who crypto ecosystem is filled with charlatans and crooks who want to rob you and your only other alternative is to be your own bank and store in a cold wallet. Not something normal people are interested in.
I’ve routinely bought my morning bacon and avocado sandwich with coffee using various crypto at a local cafe in Oxford, when I lived there.
Yeah because you're a user on HackerNews.
That process is not at all streamlined for the layperson, and the structure of crypto has only existed to make it harder, and to further divorce from what could otherwise be a straightforward process for 99% of folks.
That process is not at all streamlined for the layperson, and the structure of crypto has only existed to make it harder, and to further divorce from what could otherwise be a straightforward process for 99% of folks.
Some guy bought a Dominos Pizza for 500 bitcoins way back before it was popular.
It's not a CEX. It's quite a lot of CEXs, one after the other.
crypto is famous only because of speculation, speculators drive all the value
Did you just call GP a paper hands?
Because any profitable trader will tell you just how stupid that logic is.
Because any profitable trader will tell you just how stupid that logic is.
That is 100% accurate.
I'm all in fiat right now, and will stay like that until things calm down a bit.
It's shorting time!
It's been stated that FTX can access the wallets of their customers [1], I wonder if employees or other bad actors knowing the ship is sinking have decided to - forgive me for the quip - plunder any remaining assets.
1: https://www.coindesk.com/policy/2022/11/10/ftx-violated-its-...
1: https://www.coindesk.com/policy/2022/11/10/ftx-violated-its-...
That was my first thought. Not FTX related, but I just got another email from Coinbase reassuring me that they’re not gonna use customer funds without permission. I have in the past moved my shit out of Coinbase wallets because of doubts about that. Honestly though I just want to GTFO of crypto at this point…
Get out, man. Learn investment theory. All you need is a couple of index funds and bonds. Investing isn't supposed to be exciting or make you rich quick.
And even there you can get access to options trading for quicker - and riskier - ways to make money using the traditional stock market. At least if you lose the money is not because somebody in the Bahamas decided it was time to retire earlier with your assets.
> All you need is a couple of index funds and bonds.
Ah, spoken like a true middle class Boglehead.
VTI/VOO will not change your life, even after 30 years. Broad market ETFs are not worth the risk.
You’re better off doing bonds (little to no risk) or crypto (high risk, more likely for life-changing generational wealth compared, even compared to FAANG SWE TC).
Ah, spoken like a true middle class Boglehead.
VTI/VOO will not change your life, even after 30 years. Broad market ETFs are not worth the risk.
You’re better off doing bonds (little to no risk) or crypto (high risk, more likely for life-changing generational wealth compared, even compared to FAANG SWE TC).
> life-changing generational wealth
By that measure, the people who had their life savings in FTX (and Celsius and Luna before that) have certainly succeeded.
Investing in total-market index funds is the single best strategy for the average investor. (In fact it's so good there's a proof! [1]) If you invested $10000 in the total US market in 1992 (30 years ago) and never touched it again, your inflation-adjusted balance today would be $72452 [2]. That's an insane 7x of real growth that requires absolutely no effort on your part. Even if you did a more conservative mix of 60% stock and 40% bond (VBMFX) you would have 4.5x real growth.
[1] https://web.stanford.edu/~wfsharpe/art/active/active.htm
[2] https://www.portfoliovisualizer.com/backtest-portfolio
By that measure, the people who had their life savings in FTX (and Celsius and Luna before that) have certainly succeeded.
Investing in total-market index funds is the single best strategy for the average investor. (In fact it's so good there's a proof! [1]) If you invested $10000 in the total US market in 1992 (30 years ago) and never touched it again, your inflation-adjusted balance today would be $72452 [2]. That's an insane 7x of real growth that requires absolutely no effort on your part. Even if you did a more conservative mix of 60% stock and 40% bond (VBMFX) you would have 4.5x real growth.
[1] https://web.stanford.edu/~wfsharpe/art/active/active.htm
[2] https://www.portfoliovisualizer.com/backtest-portfolio
Crypto isn't actually an investment in anything. It's just speculation.
With crypto you're not investing in anything that will produce a positive cash flow. Bonds and the stock market actually produce cash flow.
With crypto you're not investing in anything that will produce a positive cash flow. Bonds and the stock market actually produce cash flow.
Crypto is life-changing in the sense that you will probably lose all your money as (1) a complete speculation or (2) in a hack or (3) due to fraud.
Why not just bet it all on red and get your life-changing generational wealth without all the drama?
"at some point, you are the greater fool"
"If you look around the table and can't see the chump, you are the chump"
"If you look around the table and can't see the chump, you are the chump"
> Coinbase reassuring me that they’re not gonna use customer funds without permission
"Not gonna" is wildly different from "cannot". So are you sure they physically cannot use your funds? If that's not the case, their promise is worth just the price of sending that email to you.
"Not gonna" is wildly different from "cannot". So are you sure they physically cannot use your funds? If that's not the case, their promise is worth just the price of sending that email to you.
Not to argue, but just to point out, banks can also do this. It's called "bailing-in".
Banks in the US can do it, but only with the excess of accounts containing more than $250k.
Banks in the US can do it, but only with the excess of accounts containing more than $250k.
Here is a view of the assets on-chain for anyone that's interested:
https://debank.com/profile/0x59abf3837fa962d6853b4cc0a19513a...
Currently at ~$390M. It looks like they're trying to swap most of the tokens they received into ETH on-chain.
https://debank.com/profile/0x59abf3837fa962d6853b4cc0a19513a...
Currently at ~$390M. It looks like they're trying to swap most of the tokens they received into ETH on-chain.
[deleted]
FTX is just an exchange right? Any sensible person only puts funds into an exchange that they want to trade. Not your keys, not your crypto.
“Not your keys, not your crypto” is one of the most out of touch axioms in the crypto space (and that’s really saying something).
See: the vast majority of the population (even within crypto) that can’t figure out how to setup a wallet in the first place. Then, if you get that far, you can join the hordes of people that lose access to it, dig through garbage dumps for a laptop, have malware that inspects the clipboard and replaces addresses, make a wrong click in Metamask and get cleaned out, etc, etc, etc.
See: the vast majority of the population (even within crypto) that can’t figure out how to setup a wallet in the first place. Then, if you get that far, you can join the hordes of people that lose access to it, dig through garbage dumps for a laptop, have malware that inspects the clipboard and replaces addresses, make a wrong click in Metamask and get cleaned out, etc, etc, etc.
If you lose your passphrase or get your coins stolen - should have done security better or used an exchange.
If an exchange goes bust, not your keys, not your coins.
There is always an answer as to why it it is your fault, which is why it will never really catch on.
If an exchange goes bust, not your keys, not your coins.
There is always an answer as to why it it is your fault, which is why it will never really catch on.
smart contract wallets allow users to recover funds in the event they lose their private key - https://www.argent.xyz/learn/what-is-a-smart-contract-wallet...
I'm aware of that[0].
1) With chains that support them...
2) They're ridiculously complicated and convoluted. The fact they're suggested by the crypto community only further demonstrates my point about the crypto ecosystem being completely disconnected from reality.
3) They don't do anything to address the other issues I raised.
[0] - https://vitalik.ca/general/2021/01/11/recovery.html
1) With chains that support them...
2) They're ridiculously complicated and convoluted. The fact they're suggested by the crypto community only further demonstrates my point about the crypto ecosystem being completely disconnected from reality.
3) They don't do anything to address the other issues I raised.
[0] - https://vitalik.ca/general/2021/01/11/recovery.html
“Any sensible person”.
I think this is an unfair characterization of people that keep large sums on exchanges. It’s not unreasonable to trust a company worth billions to hold your funds. Some might even argue an exchange is safer than a hardware wallet in the sense that if you physically lose the wallet, or completely forget the password, you’re SOL.
No one expects a multi-billion dollar exchange to vaporize over night. All that has changed this week. However, I don’t think it will have much impact on people storing their crypto off exchange. What I do expect is that reputable exchanges will start being more open about customer funds, and audits of those funds.
I think this is an unfair characterization of people that keep large sums on exchanges. It’s not unreasonable to trust a company worth billions to hold your funds. Some might even argue an exchange is safer than a hardware wallet in the sense that if you physically lose the wallet, or completely forget the password, you’re SOL.
No one expects a multi-billion dollar exchange to vaporize over night. All that has changed this week. However, I don’t think it will have much impact on people storing their crypto off exchange. What I do expect is that reputable exchanges will start being more open about customer funds, and audits of those funds.
> No one expects a multi-billion dollar exchange to vaporize over night.
Except for everyone who has?
We don't expect banks to vaporize because they're FDIC-insured with extreme regulations on their lending/investing, highly regulated.
But crypto exchanges are the wild west. Totally vulnerable to both hacking and ponzi scheme fraud. Essentially zero regulation or customer insurance. And "vaporizing over night" is how it always goes -- to quote the famous phrase, you go bankrupt slowly and then all at once.
So it's actually incredibly unreasonable to trust a company with essentially zero oversight to hold your funds.
And sure, there can be a movement towards more openness about funds/audits. But now customers have to decide... which auditors can be trusted to review the numbers, when it's the exchange selecting and paying the auditors? How can you even know? And do the auditors provide any defense against hacking?
Except for everyone who has?
We don't expect banks to vaporize because they're FDIC-insured with extreme regulations on their lending/investing, highly regulated.
But crypto exchanges are the wild west. Totally vulnerable to both hacking and ponzi scheme fraud. Essentially zero regulation or customer insurance. And "vaporizing over night" is how it always goes -- to quote the famous phrase, you go bankrupt slowly and then all at once.
So it's actually incredibly unreasonable to trust a company with essentially zero oversight to hold your funds.
And sure, there can be a movement towards more openness about funds/audits. But now customers have to decide... which auditors can be trusted to review the numbers, when it's the exchange selecting and paying the auditors? How can you even know? And do the auditors provide any defense against hacking?
I should have said most people, not no one.
The reality is most people outside of the HN bubble trust billion dollar companies. Crypto or otherwise. And when I say trust, I don’t mean in the sense that they think the company is doing any moral good, but that they expect a product or service in return for payment.
You don’t question that the gas you purchase at a gas station is in fact gas, and not water. Why would a sensible person expect a billion dollar exchange to suddenly halt withdrawals?
The point of my comment was that most sensible people would expect a billion dollar company to hold up some aspect of the bargain.
The reality is most people outside of the HN bubble trust billion dollar companies. Crypto or otherwise. And when I say trust, I don’t mean in the sense that they think the company is doing any moral good, but that they expect a product or service in return for payment.
You don’t question that the gas you purchase at a gas station is in fact gas, and not water. Why would a sensible person expect a billion dollar exchange to suddenly halt withdrawals?
The point of my comment was that most sensible people would expect a billion dollar company to hold up some aspect of the bargain.
> You don’t question that the gas you purchase at a gas station is in fact gas, and not water.
Ooh, I have an analogy! If I park my car at the airport while I go on vacation, I expect it to still be there when I get back. I don’t expect to return from my trip and discover that the airport let the car rental company use it while I was away and now it’s gone because someone crashed it.
On the other hand, someone in this thread pointed out the yield that was offered to customers with FTX accounts. [0] I would be more suspicious of a parking lot that said, “Hey, you can park here for free. In fact, do you have any other cars? If you park them all in our parking lot, we’ll pay you $x per day!”
[0] https://news.ycombinator.com/item?id=33571873
Ooh, I have an analogy! If I park my car at the airport while I go on vacation, I expect it to still be there when I get back. I don’t expect to return from my trip and discover that the airport let the car rental company use it while I was away and now it’s gone because someone crashed it.
On the other hand, someone in this thread pointed out the yield that was offered to customers with FTX accounts. [0] I would be more suspicious of a parking lot that said, “Hey, you can park here for free. In fact, do you have any other cars? If you park them all in our parking lot, we’ll pay you $x per day!”
[0] https://news.ycombinator.com/item?id=33571873
You are describing Turo.com
The difference to FTX is that FTX hides the crime in a foreign country in a way that a car thief cannot.
The difference to FTX is that FTX hides the crime in a foreign country in a way that a car thief cannot.
> The reality is most people outside of the HN bubble trust billion dollar companies. Crypto or otherwise.
I’m not sure about this. Most people I know outside of tech and finance do not trust crypto at all. They inherently mistrust the concept.
“How is it worth anything at all?” is a common question. “It’s just little things on a computer. It’s not real money.” These people would not trust a company that takes your real dollars and gives you bitcoin.
I would be willing to guess that a large portion of the country shares this attitude, especially older people and less technical people.
I’m not sure about this. Most people I know outside of tech and finance do not trust crypto at all. They inherently mistrust the concept.
“How is it worth anything at all?” is a common question. “It’s just little things on a computer. It’s not real money.” These people would not trust a company that takes your real dollars and gives you bitcoin.
I would be willing to guess that a large portion of the country shares this attitude, especially older people and less technical people.
Crypto marks mostly "video gamers" and "get rich quick" poor folks. Techies are on the scammer side, building the tools and skimming transactions.
But it's not a big deal if you show up to the gas station and they're out of gas. We trust these huge companies, but if your local McDonald's is closed today you're not losing your savings.
Entrusting a company with your savings is an entirely different matter. The only reason people trust banks is because of government regulation and insurance. And sensible people are well aware of FDIC insurance, and of how losing all your money was not an uncommon thing back in the days when there were runs on banks. Sensible people are also aware of Enron and Lehman Bros and Bernie Madoff. These aren't obscure references -- they're household names.
So no, I disagree completely -- sensible people absolutely do not hold large quantities of money on unregulated, uninsured crypto exchanges. Entrusting your savings to an unregulated, uninsured company only 3 years old is a level of risk eons beyond trusting a gas station to fill up your car.
Entrusting a company with your savings is an entirely different matter. The only reason people trust banks is because of government regulation and insurance. And sensible people are well aware of FDIC insurance, and of how losing all your money was not an uncommon thing back in the days when there were runs on banks. Sensible people are also aware of Enron and Lehman Bros and Bernie Madoff. These aren't obscure references -- they're household names.
So no, I disagree completely -- sensible people absolutely do not hold large quantities of money on unregulated, uninsured crypto exchanges. Entrusting your savings to an unregulated, uninsured company only 3 years old is a level of risk eons beyond trusting a gas station to fill up your car.
"Sensible people" gave billions of dollars to Bernie Madoff with no justification.
There isn't zero regulation. An online businesses is subject to the laws of its customers' countries. And the laws may not be up to date enough for some new scams, but they aren't completely naive. For example ponzi schemes are illegal. If they were doing that the govt will go after them (sooner or later...). A quick google search will net you plenty of stories about prosecutions.
"No one expects a multi-billion dollar exchange to vaporize over night."
Actually that is exactly what us 'crypto sceptics' have been saying the whole time. All of crypto is an accidental or intentional Ponzi scheme sitting on top of a vague promise of "democratizing finance"
Actually that is exactly what us 'crypto sceptics' have been saying the whole time. All of crypto is an accidental or intentional Ponzi scheme sitting on top of a vague promise of "democratizing finance"
I think that they said they would pay 8% interest on your funds. Which I guess makes it quite attractive. A discord server I was on in the spring had people offering advice on how to get this... I just assumed it was a scam, perhaps other people weren't so cautious.
I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right?
> I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right?
That wouldn't be obvious at all to me; the lowest-risk investment in my country (federal government bonds) is currently offering over 13% interest (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm).
That wouldn't be obvious at all to me; the lowest-risk investment in my country (federal government bonds) is currently offering over 13% interest (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm).
The classic ‘risk free’ asset is US Treasurys, the US has never defaulted on its debt. Any yield above the risk free rate has implied risk, Brazilian bonds yield 13% because Brazil has defaulted on its debt several times. Brazilian bonds are at least an order of magnitude riskier than US Treasurys, and probably more than that.
FTX was paying well above the risk free rate (currently 3.25-3.5%, it’s been climbing since January 2022), implying they were taking risk to earn the yield they were paying.
FTX was paying well above the risk free rate (currently 3.25-3.5%, it’s been climbing since January 2022), implying they were taking risk to earn the yield they were paying.
That's for bond purchase and payback in Brazilian Reais with a bona fide government (with Lula back).
To guarantee an 8% payback in crypto is a completely different game, and there's a significant downside for someone taking the deal. The expected return rate is always going to be negative on a proposition like that.
To guarantee an 8% payback in crypto is a completely different game, and there's a significant downside for someone taking the deal. The expected return rate is always going to be negative on a proposition like that.
Lula might be a good guy, but that doesn't mean he has immediately restabilized the country.
Not always, I bonds were offering more earlier this year
I Bonds are an exception since everyone is capped at $10K and the rate changes quarterly based on inflation. BlockFi and other DeFi platforms were offering 8%, but had a minimum balance needed ($100K in most cases).
I bonds are subsidized by the US Treasury (this is why there’s a purchase limit), which has never defaulted on its debt.
Technically speaking, yes, though the USA is not invulnerable : for instance the dollar has lost a third of its value in the decade after the Nixon shock...
The government is losing money on I bonds
I think you can say “not your keys…” to people like you and I who understand why. The problem us bulk of retail investors in crypto have no clue and probably couldn’t care less (until they lose their money).
People are used to banks and treat CEX as such.
People can be sensible and misinformed at the same time. Personally I don't feel that the flashy tv ads put out by exchanges are targeted at the crypto savvy. For Example https://www.youtube.com/watch?v=noekVG8XLQI & https://www.youtube.com/watch?v=eVdTjxkM1TY
A cousin of mine, just a week ago proudly showed me his balance on FTX. He had earned close to 1 BTC through the various crypto consulting jobs he’d done this month. This was a huge deal for him as he’d been unemployed/underemployed for many years. And now this crap takes place. I’ve been unable to reach him since leading me to suspect that he has probably lost his money. I sincerely hope that is not the case but this entire fiasco breaks my heart. I hope SBF and his accomplices suffer and rot.
Regardless of whether you are pro- or anti- crypto, the collapse of FTX, SBF's bubble bursting in a rather extreme fashion, and now this hack are more nails in the coffin for mainstream support.
I am no fan of crypto myself, but it's interesting to think what would have to happen for crypto to burnish its image.
Would key people have to voluntarily form some sort of coordinating council and self-regulate? Would they have to invite governments to regulate them better? Whatever the solution is, I'd be highly surprised if it could be done algorithmically and reassure anyone.
I am no fan of crypto myself, but it's interesting to think what would have to happen for crypto to burnish its image.
Would key people have to voluntarily form some sort of coordinating council and self-regulate? Would they have to invite governments to regulate them better? Whatever the solution is, I'd be highly surprised if it could be done algorithmically and reassure anyone.
1. Crypto and web3 is so tarnished in consumer minds, it cannot recover. The next big thing in this space needs stay away from those terms like the plague.
2. Energy has become so valuable these days and Crypto tech has become so WASTEFULLY, UNNECESSARILY energy intensive, that the next iteration needs to be as cost efficient and effective as software. Transaction costs need to begin and remain extremely low to none. Only a process that is always cheap to run will be able to take over micro transactions worldwide and unlock true financial freedom for the world.
3. Last but not least, any transaction tech that cannot cash you out cheaply and immediately and easily should be considered a ponzi scheme. Marketing your coin and not allowing people to liquidate it due to natural or artificial constraints, makes you immediately not a store of value but a scam and dangerous to the entire ecosystem of trust.
The current financial system took a LOT of guardrails to keep people from tanking the trust in it for their own self gain. When you lose trust in the system, people pool their money out of it and go buy oil, or bricks, or stocks, or whatever else is actually worth something. If you want to dominate with a tech-based system. Trust should be completely unbreakable - as in identity needs to be absolute and bad actors banished from the system forever or some severe term that works as deterrence.
2. Energy has become so valuable these days and Crypto tech has become so WASTEFULLY, UNNECESSARILY energy intensive, that the next iteration needs to be as cost efficient and effective as software. Transaction costs need to begin and remain extremely low to none. Only a process that is always cheap to run will be able to take over micro transactions worldwide and unlock true financial freedom for the world.
3. Last but not least, any transaction tech that cannot cash you out cheaply and immediately and easily should be considered a ponzi scheme. Marketing your coin and not allowing people to liquidate it due to natural or artificial constraints, makes you immediately not a store of value but a scam and dangerous to the entire ecosystem of trust.
The current financial system took a LOT of guardrails to keep people from tanking the trust in it for their own self gain. When you lose trust in the system, people pool their money out of it and go buy oil, or bricks, or stocks, or whatever else is actually worth something. If you want to dominate with a tech-based system. Trust should be completely unbreakable - as in identity needs to be absolute and bad actors banished from the system forever or some severe term that works as deterrence.
Trust is oil that makes economic engines fast and abundant, while distrust is sand - even a few specks cause damage. Trust between actors is key here, not just trust that the system won’t malfunction. The next iteration has to make every participant as safe as can be (without raising the threshold for entry).
I would approach the next iteration as software with a very robust test suite - there is a rich portfolio of financial scams out there and your system needs to help deter, detect, prevent, etc, as much of that as possible automatically. All human systems devolve down to policing rule compliance with time.
Draw them in with ease of use that beats current financial tools (transaction fees for commercial transactions for example) and keep them in with trust (any bad actor has only one identity and loses it or is prohibited from using it for a time, - forcing them to use non-digital payment processing with much higher transaction costs.
I would approach the next iteration as software with a very robust test suite - there is a rich portfolio of financial scams out there and your system needs to help deter, detect, prevent, etc, as much of that as possible automatically. All human systems devolve down to policing rule compliance with time.
Draw them in with ease of use that beats current financial tools (transaction fees for commercial transactions for example) and keep them in with trust (any bad actor has only one identity and loses it or is prohibited from using it for a time, - forcing them to use non-digital payment processing with much higher transaction costs.
"Web3" was never mainstream, despite the obvious manipulations to try to make it so.
It was headline on Singapore FinTech Festival in 2021. I hope the organisers have warm ears now.
All reasonable points, and potentially insurmountable challenges. Also whatever it is, needs to have incremental utility, otherwise there's no road from the present to the future for it.
Also to repeat a minor rant of mine, anyone designing a would be successor to Etherium should think very deeply about programming language theory and consult/engage with experts in that community. Much pain could be avoided by finding types and semantics appropriate to automated contracts.
Also to repeat a minor rant of mine, anyone designing a would be successor to Etherium should think very deeply about programming language theory and consult/engage with experts in that community. Much pain could be avoided by finding types and semantics appropriate to automated contracts.
You can build whatever language features you want, though it still should deploy into the EVM. Vyper is an existing alternative to Solidity.
I would like to see more alternatives, so stop ranting and start building.
https://www.quicknode.com/guides/smart-contract-development/...
I would like to see more alternatives, so stop ranting and start building.
https://www.quicknode.com/guides/smart-contract-development/...
Observing that you can implement any semantics atop a turing complete mechanism isn't interesting. You're also ignoring the very interesting possibility of using a total language.
I am perfectly fine expressing a criticism without trying to become the next ETH developer. That's a pointless and rude behavior. If you find my criticism uninteresting you are free to simply scroll on.
I am perfectly fine expressing a criticism without trying to become the next ETH developer. That's a pointless and rude behavior. If you find my criticism uninteresting you are free to simply scroll on.
I pointed out that Vyper is an alternative to Solidity which already is available, and that any language can be created to run in the EVM. I would even like to see a subset of COBOL ported to the EVM with an eye toward simple security constructs.
Am curious what specific shortcomings you found in Vyper.
About #1 I think you are wrong. History has shown us that all they need to forget it is a few days of green numbers again. The siren song of a few days of up only.
I think the bigger damage is done to the institutional investors. They might have been able to ignore historic collapses of exchanges as the sort of thing that happens when a promising new asset class is dominated by amateurs that originally wanting to trade playing cards, not sophisticated professionals like them. But SBF was supposed to be the adult in the room, an ex-Jane Street trader focused on providing liquidity who wanted the market to be better regulated...
1. Remember ICOs? Web3, NFTs, and DAOs are going to be this cycles ICOs. The word crypto isn’t going away, but everything else might.
2. Crypto’s (as an industry) energy consumption is negligible when looking at other similar sized industries. POW is still the best method of mining.
3. 100% agree.
> The current financial system took a LOT of guardrails to keep people from tanking the trust in it for their own self gain.
The current financial system took decades to be rigged properly. It rewards politicians and elites. There’s no denying that. The everyday man is left holding the bag 9 times out of 10. This was the very reason Bitcoin was created. Thinking the government is going to save you is an insane idea.
2. Crypto’s (as an industry) energy consumption is negligible when looking at other similar sized industries. POW is still the best method of mining.
3. 100% agree.
> The current financial system took a LOT of guardrails to keep people from tanking the trust in it for their own self gain.
The current financial system took decades to be rigged properly. It rewards politicians and elites. There’s no denying that. The everyday man is left holding the bag 9 times out of 10. This was the very reason Bitcoin was created. Thinking the government is going to save you is an insane idea.
I have never understood what problems crypto/Blockchain/web3 is actually supposed to solve. I know it gained traction during the Libertarian/Austrian economics zeitgeist following the 2008 financial collapse. There was fear that the traditional fiat system was irreparably broken and couldn't be relied on. In reality regulators and central bankers did a pretty solid job (not perfect but they eventually got it right). DeFi was basically saying regulation is impossible to do without corruption so let's make transactions possible and regulation impossible. Not a great idea and now a fully failed experiment. Crypto as an asset class for profit was only ever an emergent property fueled by speculators. Crypto as actual currency is still valuable (mostly for criminals) so it may stay for a while but it's not going to make anyone rich ever again.
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One important feature for me is that nobody can take my coins from my wallet. Putting coins into an exchange or JPMorgan is not what I mean.
1) To recover, a crypto will probably need to include specs about how the exchange should run.
Exchanges have failed 3-4 times, and it seems they’re part of a currency since people keep coming back to them. So there needs to be a system where I keep having control over my coins while they’re in an exchange: ability to withdraw from the exchange, ability to approve a transaction.
Exchanges have failed 3-4 times, and it seems they’re part of a currency since people keep coming back to them. So there needs to be a system where I keep having control over my coins while they’re in an exchange: ability to withdraw from the exchange, ability to approve a transaction.
So, the only service you really need is something like Tether, not an exchange (as you can use decentralized exchanges). The service Tether operates--and I'm not claiming they aren't also some horrible scam, but I'm using them as the example because they are seemingly the minimal thing you need--is to act as the connection between fiat banks and decentralized chains, by supporting wire/ACH on one side and issuing a token on the other side (which they will later accept back for money). You don't need crazy complicated exchanges with their massive attack surface: you just need Tether. Now, is it possible to have a transparent Tether that you reasonably trust to be legitimate? I don't know. Maybe that's Circle--the people who do USDC, and which have been managing to compete with Tether for the most used stablecoin as of this year--as they do regular SEC filings and have fancy accounting reports? Alternatively, maybe if some large existing bank--such as Bank of America--were willing to issue a stablecoin, we'd all be willing to trust it to not be corrupt? But you really, honestly, don't need a full-blown centralized exchange for crypto to work: you just need a working stablecoin with enough easy-to-access liquidity that you can quickly buy in and out with a ton of money.
Like a normal exchange, audited and run by professionals not crypto bros. A walled depository, like a normal exchange. Running within a reputable regulatory framework. Nothing new here.
All of this is a solved problem in equity exchanges world. Escrows, SPIC etc. No need to reinvent a wheel that was invented after learning from so much of pain.
So regulators either come down heavily on these exchanges or they will let retailers continue to get conned.
So regulators either come down heavily on these exchanges or they will let retailers continue to get conned.
Its a solved problem in crypto too. Shapeshift allowed for swapping of funds while always having control of the keys, but it was given hell by regulators. If it were allowed to grow maybe things like ftx wouldnt have gotten so big
A less-discussed effect here is that crypto sketchiness crowds out legitimate applications. If someone has a problem that crypto is actually a good fit for -- an application that would legitimately deliver value for customers, insuring medical tourism perhaps -- a lot of people will dismiss it just because they assume crypto=scam.
As crypto gets scammier by the year, this crowding-out effect means that the dream of early adopters 10+ years ago, of a world economy running on cryptocurrency, becomes more and more distant.
Combine with rising interest rates, I wouldn't be shocked to see BTC drop below $10K and never recover. Past crypto bubbles have reinflated by exposing crypto to larger and larger segments of the investing public, but I think we may be running out of greater fools. For example, last I checked the number of Americans who own crypto is pretty similar to the number who have an old-fashioned brokerage account.
As crypto gets scammier by the year, this crowding-out effect means that the dream of early adopters 10+ years ago, of a world economy running on cryptocurrency, becomes more and more distant.
Combine with rising interest rates, I wouldn't be shocked to see BTC drop below $10K and never recover. Past crypto bubbles have reinflated by exposing crypto to larger and larger segments of the investing public, but I think we may be running out of greater fools. For example, last I checked the number of Americans who own crypto is pretty similar to the number who have an old-fashioned brokerage account.
> If someone has a problem that crypto is actually a good fit for -- an application that would legitimately deliver value for customers, insuring medical tourism perhaps -- a lot of people will dismiss it just because they assume crypto=scam.
If there's a great application that solves an important problem using crypto then I imagine most people would focus on the problem and not the fact that crypto is used to solve it; they'd probably even gloss over how the application works.
If there's a great application that solves an important problem using crypto then I imagine most people would focus on the problem and not the fact that crypto is used to solve it; they'd probably even gloss over how the application works.
Fair point, however I think the argument ultimately still holds. If customers or regulators learn that the application is crypto-powered under the hood, they'll be turned off. And it might be that the crypto part can't be stuffed under the hood.
It's a frustrating situation for someone like me who enjoys geeking out about designs for alternative institutions. I see many ways our institutions could be better-designed -- better aligned incentives making higher ed way cheaper & more effective, stuff like that -- and simultaneously there was so much momentum around crypto, including e.g. El Salvador adopting bitcoin. But somehow they never met in the middle. It sucks that people put their faith in tech geeks like me, and they got let down. Somehow crypto's "solution in search of a problem" never collided with the many institutional problems that desperately need solving.
It's a frustrating situation for someone like me who enjoys geeking out about designs for alternative institutions. I see many ways our institutions could be better-designed -- better aligned incentives making higher ed way cheaper & more effective, stuff like that -- and simultaneously there was so much momentum around crypto, including e.g. El Salvador adopting bitcoin. But somehow they never met in the middle. It sucks that people put their faith in tech geeks like me, and they got let down. Somehow crypto's "solution in search of a problem" never collided with the many institutional problems that desperately need solving.
> It sucks that people put their faith in tech geeks like me, and they got let down.
Well, not like you since you’re genuinely trying to solve real-world problems.
I had that feeling a lot during the dotcom era because you had a similar, although less pronounced, dynamic where some companies were focused on selling their technology as some kind of magic cure for every problem (this was also the era where you’d see startup founders proudly showing off millions of dollars worth of Sun servers running Oracle to process 100 orders a day). We’d get calls from our clients who’d get these shiny presentations but couldn’t understand how something made sense for their business, and we’d walk through it with them and confirm that it didn’t.
Most of those “it’s new and shiny! Buy now!” companies either folded or were acquired at more accurate valuations when bubble money dried up. I remember a couple of sales guys asking about jobs and it was like “you didn’t care what your prospects needed when money was easy, who can afford you now?”
My advice would always be to focus on what real thing you’re making better. If you can’t find one, either leave or have a fallback plan for things suddenly grinding to a halt. Lower-level staff are usually the ones left holding the bag unless your job is very clearly linked to revenue.
Well, not like you since you’re genuinely trying to solve real-world problems.
I had that feeling a lot during the dotcom era because you had a similar, although less pronounced, dynamic where some companies were focused on selling their technology as some kind of magic cure for every problem (this was also the era where you’d see startup founders proudly showing off millions of dollars worth of Sun servers running Oracle to process 100 orders a day). We’d get calls from our clients who’d get these shiny presentations but couldn’t understand how something made sense for their business, and we’d walk through it with them and confirm that it didn’t.
Most of those “it’s new and shiny! Buy now!” companies either folded or were acquired at more accurate valuations when bubble money dried up. I remember a couple of sales guys asking about jobs and it was like “you didn’t care what your prospects needed when money was easy, who can afford you now?”
My advice would always be to focus on what real thing you’re making better. If you can’t find one, either leave or have a fallback plan for things suddenly grinding to a halt. Lower-level staff are usually the ones left holding the bag unless your job is very clearly linked to revenue.
>Well, not like you since you’re genuinely trying to solve real-world problems.
Clarification: I'm not actively trying to help people, I just enjoy thinking about institutions in my spare time. Here are some relevant HN comments of mine to give a sense:
* fixing gerrymandering https://news.ycombinator.com/item?id=33517757
* settling antarctica as the planet warms https://news.ycombinator.com/item?id=33483424
* depolarizing social media https://news.ycombinator.com/item?id=33483177
* fixing america's constitutional amendment process https://news.ycombinator.com/item?id=33355325
* getting hedge funds to actually be useful https://news.ycombinator.com/item?id=33274789
* combining the best aspects of both capitalism and socialism https://news.ycombinator.com/item?id=32972790 -- more details here https://news.ycombinator.com/item?id=32974503
I don't have much formal training in this stuff so you should take all these proposals with a grain of salt.
Clarification: I'm not actively trying to help people, I just enjoy thinking about institutions in my spare time. Here are some relevant HN comments of mine to give a sense:
* fixing gerrymandering https://news.ycombinator.com/item?id=33517757
* settling antarctica as the planet warms https://news.ycombinator.com/item?id=33483424
* depolarizing social media https://news.ycombinator.com/item?id=33483177
* fixing america's constitutional amendment process https://news.ycombinator.com/item?id=33355325
* getting hedge funds to actually be useful https://news.ycombinator.com/item?id=33274789
* combining the best aspects of both capitalism and socialism https://news.ycombinator.com/item?id=32972790 -- more details here https://news.ycombinator.com/item?id=32974503
I don't have much formal training in this stuff so you should take all these proposals with a grain of salt.
RAI works exactly as promised. The problem is that it is not a ponzi scheme. RAI is a cryptocurrency that basically implemented Milton Friedman's idea of replacing the federal reserve with a computer.
Past crypto bubbles reinflated primarily because everyone had too much cash and interest rates were falling for decades. Even smart money had nowhere to go.
We may not see an environment like that for the rest of our lives.
We may not see an environment like that for the rest of our lives.
This isn't a crypto failure. Crypto works.
This is a human failure. FTX didn't collapse because of the technology. It collapsed because of human error.
The fix is rather simple. If an organization looks like a bank and quacks like a bank; it should be regulated like a bank.
This is a human failure. FTX didn't collapse because of the technology. It collapsed because of human error.
The fix is rather simple. If an organization looks like a bank and quacks like a bank; it should be regulated like a bank.
People keep saying this, but I don't follow. FTT was a token manufactured out of thin air. Crypto works as a concept, I suppose, but people saying crypto works is like the people that say Agile works. How long do we have to wait to see crypto working? Where are the success stories of crypto? There's a long laundry list of hacks, scams, company failures, "tokenomics", NFTs, <x> on blockchain, etc. Saying crypto works as a technology base is not enough. Currencies and tradeable "assets" are a social thing. It isn't just a technology.
This is what the entire cryptosphere always seems to miss - society. People have pitched cryptocurrency/blockchain/NFTs for all sorts of things, and every one is a pure tech solution that misses the social aspect.
I had someone try to tell me blockchain voting would fix Russian democracy, because it would ensure transparent, accountable elections. OK, so how are you getting it in there? Just going to stroll into the Kremlin and make the current leadership implement it? You’ll be laughed at shortly before your arrest. No, fixing Russian politics is primarily a social issue. Transparent, accountable voting could be part of a possible future effort at reform, but first you need to somehow gain the power to implement reform at all.
Coming up with a software solution alone does nothing. And this is what is often missed.
“I can imagine a better future in which my amazing software solution plays a pivotal role, therefore if I create that software, things are sure to turn out that way”
I had someone try to tell me blockchain voting would fix Russian democracy, because it would ensure transparent, accountable elections. OK, so how are you getting it in there? Just going to stroll into the Kremlin and make the current leadership implement it? You’ll be laughed at shortly before your arrest. No, fixing Russian politics is primarily a social issue. Transparent, accountable voting could be part of a possible future effort at reform, but first you need to somehow gain the power to implement reform at all.
Coming up with a software solution alone does nothing. And this is what is often missed.
“I can imagine a better future in which my amazing software solution plays a pivotal role, therefore if I create that software, things are sure to turn out that way”
FTX is a centralized (not DeFi) exchange that used their own coin as collateral and obfuscated their liquidity. This wouldn’t be possible in open decentralized exchanges that many in web3/crypto were advocating for. However SBF made it his mission to lobby regulation on DeFi and a blind eye to CeFi exchanges like his own.
https://www.politico.com/newsletters/morning-money/2022/10/2...
https://www.politico.com/newsletters/morning-money/2022/10/2...
You just get a different set of tradeoff on a decentralized exchange. E.g. many users don't have the basic opsec required to protect their private key without losing it.
For a cryptocurrency owner taken at random, I think it's likelier that they make a mistake with their private key than they lose tokens held in a Coinbase (or another CEX among the less dodgy, regulated, etc.) account.
For a cryptocurrency owner taken at random, I think it's likelier that they make a mistake with their private key than they lose tokens held in a Coinbase (or another CEX among the less dodgy, regulated, etc.) account.
>basic opsec required to protect their private key without losing it.
Exactly. I've long wondered if there's any way to overcome this without essentially going back to a 'trusted broker/custodian' model
Exactly. I've long wondered if there's any way to overcome this without essentially going back to a 'trusted broker/custodian' model
> many in web3/crypto were advocating for.
If many people in this space are advocating for decentralized exchanges, how come everyone uses centralized ones?
If there's ever a time and place for voting with your wallet, this seems to be it, and the wallets are speaking loudly and clearly.
If many people in this space are advocating for decentralized exchanges, how come everyone uses centralized ones?
If there's ever a time and place for voting with your wallet, this seems to be it, and the wallets are speaking loudly and clearly.
The wallets are speaking clearly, DeFi volume is through the roof right now.
https://defillama.com/dexs
A lot of people put money on CEX because they are ignorant, or willing to take on some risk for slightly cheaper and faster trades. Those people probably regret their decision now. If they used Uniswap and Aave they could not have withdrawals paused because of one company’s insolvency.
https://defillama.com/dexs
A lot of people put money on CEX because they are ignorant, or willing to take on some risk for slightly cheaper and faster trades. Those people probably regret their decision now. If they used Uniswap and Aave they could not have withdrawals paused because of one company’s insolvency.
"If many people in this space are advocating for decentralized exchanges, how come everyone uses centralized ones?"
Convenience.
Convenience.
DeFi doesn't interface with fiat.
Its really a viewpoint common to tech workers. They see and solve the technological aspects of a problem while remaining blind to the larger more complex social aspects that remain unsolved, but think the problem is solved.
Here are other examples:
- promising self driving cars (driving is more than a technical activity, it's a social activity. AI is nowhere close to driving the easier technical aspects, much less the more complex social aspects)
- AI is already better than or will replace doctors. As of all doctors do is look at symptoms and up with diagnosis. The social part of medicine is the larger job by far, not diagnosis.
- algorithms can't biased. My AI predicts some function that has some real life impact. That the input data is biased, and therefore the output data is just as biased or even more biased. Well that's not my problem. I only build models, and lines of codes are not biased. But the result of your work is being used in the society to perpetuate bias. It's not okay to remain wilfully oblivious to that.
Here are other examples:
- promising self driving cars (driving is more than a technical activity, it's a social activity. AI is nowhere close to driving the easier technical aspects, much less the more complex social aspects)
- AI is already better than or will replace doctors. As of all doctors do is look at symptoms and up with diagnosis. The social part of medicine is the larger job by far, not diagnosis.
- algorithms can't biased. My AI predicts some function that has some real life impact. That the input data is biased, and therefore the output data is just as biased or even more biased. Well that's not my problem. I only build models, and lines of codes are not biased. But the result of your work is being used in the society to perpetuate bias. It's not okay to remain wilfully oblivious to that.
Lumping diagonally opposed things (centralized coins like FTT or decentralized coins like BTC) under the same category (crypto) is quite misleading.
> How long do we have to wait to see crypto working?
BTC (on chain) is still working as intended, after all these years.
> How long do we have to wait to see crypto working?
BTC (on chain) is still working as intended, after all these years.
> BTC (on chain) is still working as intended, after all these years.
It's certainly working on destroying the planet with its obscene energy requirements.
It's certainly working on destroying the planet with its obscene energy requirements.
Energy which was paid for. If there is a problem with that then price it accordingly.
Energy which is used to mindlessly calculate dumb hashes, trillions of which are discarded every second for the winning 'hash'. Proof of Work is basically lottery, but which consumes energy instead of tickets.
Not a miner. I do use a computer to calculate dumb stuff all the time for entertainment purposes.
I mean… Cyberpunk 2077 could run acceptably on an integrated 65W APU but instead I chose to crank everything on max with ray tracing through a 4090 just to see some dumb frames on a screen that are discarded at a hundred per second.
And I don’t ever remember having to ask permission to use the kW h I’m paying for.
I mean… Cyberpunk 2077 could run acceptably on an integrated 65W APU but instead I chose to crank everything on max with ray tracing through a 4090 just to see some dumb frames on a screen that are discarded at a hundred per second.
And I don’t ever remember having to ask permission to use the kW h I’m paying for.
I'm not sure gamers have over-specced their gaming machines to the extent they're using more electricity than a medium-sized European country...
Are you suggesting the combined power usage of gamers specing their machines above average recommended system requirements is less than the power used by mining industry? I’m skeptical about that.
And its beside the point because again its none of your business.
And its beside the point because again its none of your business.
> Are you suggesting the combined power usage of gamers specing their machines above average recommended system requirements is less than the power used by mining industry? I’m skeptical about that.
Yes, of course, I am absolutely suggesting that overspecced gaming PCs played by a minority of gamers in their spare time don't use more electricity than a medium sized developed country (or indeed the 24/7 running of industrial scale server farms deploying chips designed because even the most powerful gaming chips weren't anywhere near energy intensive enough to win the energy-burning competition). Why would you possibly consider the small number of people using high spec gaming PCs a few hours a day use more electricity than a developed world country?
Yes, of course, I am absolutely suggesting that overspecced gaming PCs played by a minority of gamers in their spare time don't use more electricity than a medium sized developed country (or indeed the 24/7 running of industrial scale server farms deploying chips designed because even the most powerful gaming chips weren't anywhere near energy intensive enough to win the energy-burning competition). Why would you possibly consider the small number of people using high spec gaming PCs a few hours a day use more electricity than a developed world country?
Still skeptical and like I said I would not care if they do because it’s none of my business how they use the energy they pay for.
Why don’t you go for power companies instead and demand clean energy investments? Might be a better use of your activism instead of just going for people using their own stuff in a way you don’t like. It’s not going to end well. I’m pretty sure the insane degrowth narrative will target gaming or other power intensive recreative uses sooner or later but that’s another discussion.
Why don’t you go for power companies instead and demand clean energy investments? Might be a better use of your activism instead of just going for people using their own stuff in a way you don’t like. It’s not going to end well. I’m pretty sure the insane degrowth narrative will target gaming or other power intensive recreative uses sooner or later but that’s another discussion.
> just to see some dumb frames on a screen that are discarded at a hundred per second.
If these frames were really discarded (that is, not shown on your screen), then yes, it would be a waste. But my understanding of your example is that these frames were displayed, and their light reached your eyeballs.
If these frames were really discarded (that is, not shown on your screen), then yes, it would be a waste. But my understanding of your example is that these frames were displayed, and their light reached your eyeballs.
Calculating hashes in a loop is dumb, cyberpunk is a pretty complex piece of code which also utilises GPU aspects like ray tracing,
Nobody has the power to unilaterally “set the price” of energy, it’s set by the market.
Free markets are great for a lot of things, but pricing in externalities isn’t one of them.
Free markets are great for a lot of things, but pricing in externalities isn’t one of them.
Agreed but I think people should be looking at power companies and how they generate energy for accountability instead of going for industry A and B. Wiping PoW from the face of the earth won’t make those coal plants in China go away.
No, but it will reduce the demand for what they produce. This isn’t hypothetical, even in the US there are examples of coal/natural gas plants getting brought back online for bitcoin mining (finger lakes NY; Hardin, MT)
[deleted]
Well, maybe I should raise the example of ETH instead. It is still working as intended, decentralized, and consuming little energy.
Given ETH only switched to proof-of-stake this year, I think perhaps it's a bit early to call it out as a long-standing energy efficiency success.
I am not a fan of "destroying the planet" arguments mainly because anything goes, super ambiguious and not very precise. Buy our razors because cartridge razors are destroying the planet! https://bandisposablerazors.org/
Destroying the planet = Can't question it, can't argue about it, it is the end all of all arguments. How could you ever oppose something that destroys the planet?
They all sound the same: https://en.wikipedia.org/wiki/Greenwashing
Destroying the planet = Can't question it, can't argue about it, it is the end all of all arguments. How could you ever oppose something that destroys the planet?
They all sound the same: https://en.wikipedia.org/wiki/Greenwashing
On top of being hard to argue against, it just isn't true. It's a net positive for the environment, at least it will be in a couple of years: https://batcoinz.com/50-landfills-mining-bitcoin-a-zero-emis...
This is wrong and green washing.
We could also use this energy for better things than Bitcoin.
And while BTC doesn't make any value besides moving money from one person to another, it also produces hardware garbage like ASIC chips and power supply.
It also steals demand from others too.
There is only downside for most of us than benefit of allowing Bitcoin mining independent of it's source.
We could also use this energy for better things than Bitcoin.
And while BTC doesn't make any value besides moving money from one person to another, it also produces hardware garbage like ASIC chips and power supply.
It also steals demand from others too.
There is only downside for most of us than benefit of allowing Bitcoin mining independent of it's source.
No, this is not wrong. You can't magically just "use it for something else". That's not how this works. You need to generate electricity where it is needed (or transport it, which costs money).
If there are landfills out there that are just spewing methane gas (20x worse than CO2, btw) into the atmosphere, why not make sure that is burned and used more efficiently? Please show me a realistic plan to do this. Bitcoin does it without forcing anyone and without taxes directed towards it.
If there are landfills out there that are just spewing methane gas (20x worse than CO2, btw) into the atmosphere, why not make sure that is burned and used more efficiently? Please show me a realistic plan to do this. Bitcoin does it without forcing anyone and without taxes directed towards it.
Aren't landfills close to civilization usually, so it would not be hard to transfer the electricity some miles to charge Teslas, heat homes or power etc.
Where are landfills too remote to transport electricity away from?
Where are landfills too remote to transport electricity away from?
I'm sure that's the case for some of the landfills, but definitely not all of them.
In the US 70% of the methane from landfills is vented, rather than flared. That means that for some reason, either it's too expensive to do or something else is blocking this. And that's just the US.
You can also imagine that landfills in the developing world are better targets. Infrastructure is not as good there as it is in the US or in Europe.
In the US 70% of the methane from landfills is vented, rather than flared. That means that for some reason, either it's too expensive to do or something else is blocking this. And that's just the US.
You can also imagine that landfills in the developing world are better targets. Infrastructure is not as good there as it is in the US or in Europe.
The profit is too small.
Easy to solve with laws. Shouldn't be allowed anyway to just pick the good things from a gas field...
Easy to solve with laws. Shouldn't be allowed anyway to just pick the good things from a gas field...
Generally though, conceptually the argument goes like this "You can't do X because it destroys the planet. Since we cannot destroy the planet, there is no other option but to accept banning of X". But, there is no limits or guards to this. You can easily go down the slippery slope and say X is the city of Chicago that needs to be destroyed for the collective good. It consumes too many resources.
Riddled with subjectivism. You cannot do less since there are no objective limits to what is "acceptable levels of destruction of the planet" means. It has a different subjective weight to different entities arguing the position. In the limit, this would mean we erase humanity all together and leave the planet alone.
You can bully a lot of things your way before any one can speak up against it. There is a level of insidious moral superiority built into it which makes it prime for exploitation. Corporations are doing exactly that.
Riddled with subjectivism. You cannot do less since there are no objective limits to what is "acceptable levels of destruction of the planet" means. It has a different subjective weight to different entities arguing the position. In the limit, this would mean we erase humanity all together and leave the planet alone.
You can bully a lot of things your way before any one can speak up against it. There is a level of insidious moral superiority built into it which makes it prime for exploitation. Corporations are doing exactly that.
is this paper saying that Bitcoin _will_ all be mined using methane, or that it _could_? because those are two vastly different conclusions.
I don't believe it's saying either. It's saying that the trend is towards net zero emission and that this will happen by the end of 2024. After that I would assume we go into the negatives and improve the current situation.
"Based on the estimated average growth rate of bitcoin mining operators using vented methane of 6.9 MW/month, the Bitcoin network will become Carbon Negative in Dec ’24."
"Based on the estimated average growth rate of bitcoin mining operators using vented methane of 6.9 MW/month, the Bitcoin network will become Carbon Negative in Dec ’24."
So… we will solve global warming by running a network of computers with custom ASICs at 100% utilization, cooling them as necessary, performing useless computation, so a cabal of technobros can move imaginary internet money around 10 times per second?
Oh and increasing the power usage of this fire pile will, as you say, “improve the current situation”?
Your point is that the only way we can avoid burning methane is to use that to power bitcoin mining rigs???
Oh and increasing the power usage of this fire pile will, as you say, “improve the current situation”?
Your point is that the only way we can avoid burning methane is to use that to power bitcoin mining rigs???
No, I've never claimed that. Regardless of what you think about Bitcoin, if it's useless or not, don't you agree that net negative is better than zero?
Burning methane (flaring) is most definitely an improvement over not doing it. That's just a fact. It accounts for about 20% of global emissions and is 25 times as potent as CO2. https://www.epa.gov/gmi/importance-methane
You would use Bitcoin mining as a monetary incentive to flare methane. You could do other things but it requires more infrastructure investment and might not even be possible in certain locations that are far from where the electricity would be used.
Burning methane (flaring) is most definitely an improvement over not doing it. That's just a fact. It accounts for about 20% of global emissions and is 25 times as potent as CO2. https://www.epa.gov/gmi/importance-methane
You would use Bitcoin mining as a monetary incentive to flare methane. You could do other things but it requires more infrastructure investment and might not even be possible in certain locations that are far from where the electricity would be used.
I would agree that not performing useless computations is better than performing useless computations. If monetary incentives are all we need, then just use tax incentives to do so. That seems much easier than shipping mining rigs and the corresponding cooling to locations apparently too far from civilization to produce energy for anything useful.
It's an interesting level of abstraction question. On a fine-grained level, yes, BTC works algorithmically as you have pointed out, and FFT is not the exact same thing as BTC. The question the is whether either of these things work socially / for society.
Whether it's accurate or not, I imagine non-experts would regard the difference between BTC and FFT as pretty negligible, perhaps akin to the difference between "social media" and IG vs. Reddit.
Whether it's accurate or not, I imagine non-experts would regard the difference between BTC and FFT as pretty negligible, perhaps akin to the difference between "social media" and IG vs. Reddit.
The creation, distribution and governance are completely different. The public may not care but in the long run we mow see it matters.
To support my point:
https://mobile.twitter.com/whale_alert/status/15916165982801...
This doesn’t happen with BTC because it wasn’t created out of thin air.
https://mobile.twitter.com/whale_alert/status/15916165982801...
This doesn’t happen with BTC because it wasn’t created out of thin air.
> Lumping diagonally opposed things (centralized coins like FTT or decentralized coins like BTC) under the same category (crypto) is quite misleading.
Crypto generally means digital currency, does it not? I think leaving them out would be actually misleading.
> BTC (on chain) is still working as intended, after all these years.
Working in what sense?
Crypto generally means digital currency, does it not? I think leaving them out would be actually misleading.
> BTC (on chain) is still working as intended, after all these years.
Working in what sense?
> Working in what sense?
That you can securely and cheaply transact value without a third party being involved?
That governments can’t directly block your account the way Trudeau blocked protestors bank accounts?
Probably a few other ways as well ...
That you can securely and cheaply transact value without a third party being involved?
That governments can’t directly block your account the way Trudeau blocked protestors bank accounts?
Probably a few other ways as well ...
Bitcoin fees are often not cheap at all.
Just a week ago someone got cought and the fbi took his 3 billion dollar worth of BTC.
Sending crypto to someone in Iran or Russia is against the law independent of how you do it.
And just because you can send BTC to Iran someone in Iran also needs to exchange it to something real again.
While banking is more restrictive, when you go to your bank with your passport, you actually can recover your account. I know someone who lost 10k because he lost his key.
For most people it's saver and easier and they are not affected and don't care about all those BTC/crypto benefits at all
Just a week ago someone got cought and the fbi took his 3 billion dollar worth of BTC.
Sending crypto to someone in Iran or Russia is against the law independent of how you do it.
And just because you can send BTC to Iran someone in Iran also needs to exchange it to something real again.
While banking is more restrictive, when you go to your bank with your passport, you actually can recover your account. I know someone who lost 10k because he lost his key.
For most people it's saver and easier and they are not affected and don't care about all those BTC/crypto benefits at all
You need to start backing up your statements with facts. Please show us that bitcoin fees are "often not" cheap at all.
Here's some actual data you can look at: https://mempool.space/graphs/mining/block-fee-rates#all
Look at the "Min" fee rate; regularly very close to 1. That's $0.02 at current prices.
Here's some actual data you can look at: https://mempool.space/graphs/mining/block-fee-rates#all
Look at the "Min" fee rate; regularly very close to 1. That's $0.02 at current prices.
Sources? I was buying and transferring bitcoins over 8 years as I bought weed through it.
Of course you can even pay 0 but you know it's not the normal someone would wait days for the transaction going through.
You clearly did not use Bitcoin often enough otherwise you could just looked the spikes up yourself. That first corona year was even worse with the fees.
Of course you can even pay 0 but you know it's not the normal someone would wait days for the transaction going through.
You clearly did not use Bitcoin often enough otherwise you could just looked the spikes up yourself. That first corona year was even worse with the fees.
That's not a source.
I literally posted a source showing you it's very cheap. The minimum fee is the lowest fee you'll pay to get into the next block.
I used Bitcoin way back in 2010. Though I don't understand why that makes a difference since you can look up the prices in hindsight.
I literally posted a source showing you it's very cheap. The minimum fee is the lowest fee you'll pay to get into the next block.
I used Bitcoin way back in 2010. Though I don't understand why that makes a difference since you can look up the prices in hindsight.
> Sending crypto to someone in Iran or Russia is against the law independent of how you do it.
One thing to keep in mind: laws are not always just.
I believe it's okay to sometimes not follow the law, if the law is unjust. One example: in WW2 Germany there were many laws against minorities that were unjust [0]. Most law obedient people would follow these laws regardless.
Perhaps a person want to support his family in Iran or Russia that's going through difficult times. And perhaps crypto is the only way to help. In such cases I think it's okay to oppose the law.
---
[0]: https://encyclopedia.ushmm.org/content/en/article/the-nuremb...
One thing to keep in mind: laws are not always just.
I believe it's okay to sometimes not follow the law, if the law is unjust. One example: in WW2 Germany there were many laws against minorities that were unjust [0]. Most law obedient people would follow these laws regardless.
Perhaps a person want to support his family in Iran or Russia that's going through difficult times. And perhaps crypto is the only way to help. In such cases I think it's okay to oppose the law.
---
[0]: https://encyclopedia.ushmm.org/content/en/article/the-nuremb...
Crypto works for what use case exactly? Crypto payments take much longer time than traditional credit card ones , are barely supported by most websites and in many cases cost more in transaction fees than credit cards.
And with a lot of people storing their money in these major crypto banks , what we now have is a fairly centralised structure which kind of defeats the purpose of crypto. Worse, these banks also hold each other’s tokens similar to what your normal banks do. And if that’s not enough some of them even do fractional reserves and use the real money they get for investing.
And with a lot of people storing their money in these major crypto banks , what we now have is a fairly centralised structure which kind of defeats the purpose of crypto. Worse, these banks also hold each other’s tokens similar to what your normal banks do. And if that’s not enough some of them even do fractional reserves and use the real money they get for investing.
Perhaps for the use case of the underbanked, which is the majority of the world. That I need to wait for confirmation on the blockchain for a crypto payment is orders of magnitude faster than my other option, which is wait for someone to manually bring in foreign currencies by train. My country is not on SWIFT. My passport will not allow me to get a bank account in any country that would let me process credit cards. I am not allowed to use Paypal.
This kind of comment is the epitome of the Western privilege -- your governments cut off entire countries from the banking system, deny their own citizens access to banks because of their political beliefs, and then tout the alleged superiority of your credit cards, which are now denied to truckers and Kanye West by the same companies that were happy to do business with Pornhub when they were knowingly facilitating the monetization of child sex slaves.
Credit cards and United States dollars are the tools of thieves, thugs, rapists, and warmongers. Bitcoin works for the use case of not staining your hands with the blood and tears of their victims, at the very least.
This kind of comment is the epitome of the Western privilege -- your governments cut off entire countries from the banking system, deny their own citizens access to banks because of their political beliefs, and then tout the alleged superiority of your credit cards, which are now denied to truckers and Kanye West by the same companies that were happy to do business with Pornhub when they were knowingly facilitating the monetization of child sex slaves.
Credit cards and United States dollars are the tools of thieves, thugs, rapists, and warmongers. Bitcoin works for the use case of not staining your hands with the blood and tears of their victims, at the very least.
I'm from India, one of the most populous countries in the world. And we have instant online transfers with no transaction fee and it's called UPI.
That's not what we were discussing. Here's your quote:
> Crypto payments take much longer time than traditional credit card ones
Everyone in India can process an American credit card? Indians are magically immune from political censorship on the basis of the payment card associations?
> Crypto payments take much longer time than traditional credit card ones
Everyone in India can process an American credit card? Indians are magically immune from political censorship on the basis of the payment card associations?
Is everyone in India banked? How do you transfer money outside of the India? Can you do that insta fly with UPI as well?
There are more countries than India, I’d suggest maybe taking a look at South America, Africa and Asia.
There are more countries than India, I’d suggest maybe taking a look at South America, Africa and Asia.
This argument always intrigued me. Once you point out cryptocurrencies don’t actually solve the unbanked problem for poor people, then the use case immediately shifts to “well have you tried to move seven figures between countries”?
By the way many African countries have a robust mobile phone based banking infrastructure. Nothing to do with cryptocurrency. See https://qz.com/africa/2161960/gsma-70-percent-of-the-worlds-... for example.
By the way many African countries have a robust mobile phone based banking infrastructure. Nothing to do with cryptocurrency. See https://qz.com/africa/2161960/gsma-70-percent-of-the-worlds-... for example.
> This is a human failure
Is there any crypto out there without humans ?
Is there an undo button to reverse the transaction?
All financial systems involve humans
Is there any crypto out there without humans ?
Is there an undo button to reverse the transaction?
All financial systems involve humans
Spot on. Money is a social construct after all and thus subject to human fallacy.
There is the same undo button that exists for every other financial institution that commits fraud: lawsuits.
And if you can't find the person to sue because the person is an anoymous hacker? With fiat the court will tell the banks to reverse the transactions.
That isn’t the case here. Anyway, people get defrauded through banks all the time with advance fee fraud, 419, and other scams and banks don’t reverse those.
>That isn’t the case here.
What do you mean? Are you saying FTX wasn't hacked by an anonymous hacker?
Banks reverse transactions sometimes. It sounds like in many cases the reason they can't be reversed is because the money got converted into cryptocurrency.
>Wire Fraud Recovery is Difficult, but Possible[1]
>When the stolen funds arrive in the fraudster’s bank account, they engage a network of money launderers who immediately withdraw funds in cash, wire the money to a number of different accounts and/or convert it to cryptocurrency.[1]
>A full recovery of lost funds was only possible in 29% of cases. In 40% of the cases, less than 10% of the funds were recovered.[2]
That means that 60% of the time at least 10% of the money is recovered.
>Cyber perpetrators are moving stolen funds between bank accounts and cryptocurrency wallets at a rapid rate.[2]
[1] https://www.certifid.com/article/how-to-recover-from-wire-fr...
[2] https://blog.alta.org/2021/04/survey-title-professionals-tar...
What do you mean? Are you saying FTX wasn't hacked by an anonymous hacker?
Banks reverse transactions sometimes. It sounds like in many cases the reason they can't be reversed is because the money got converted into cryptocurrency.
>Wire Fraud Recovery is Difficult, but Possible[1]
>When the stolen funds arrive in the fraudster’s bank account, they engage a network of money launderers who immediately withdraw funds in cash, wire the money to a number of different accounts and/or convert it to cryptocurrency.[1]
>A full recovery of lost funds was only possible in 29% of cases. In 40% of the cases, less than 10% of the funds were recovered.[2]
That means that 60% of the time at least 10% of the money is recovered.
>Cyber perpetrators are moving stolen funds between bank accounts and cryptocurrency wallets at a rapid rate.[2]
[1] https://www.certifid.com/article/how-to-recover-from-wire-fr...
[2] https://blog.alta.org/2021/04/survey-title-professionals-tar...
If someone sends physical cash to a person across the world, is there an undo button?
* People rarely deal with large amounts physical cash. They deal with abstractions built upon cash (checks, credit cards, ACH, other electronic transfers).
* I think it's the same for banks. I think banks also mainly operate on abstractions built upon cash.
* An attacker who wants to steal physical cash needs to be physically present. That means there's a more limited set of people who could attempt the attack. With hacking, people across the entire world can attempt the attack. With physical attacks, you're at risk of being physically apprehended and caught through physical investigations. With hacking you can be behind proxies and avoid getting caught. Additional, with hacking you can do the hack from a jurisdiction that won't care, so even if the victim and the victim's government know you did it, you won't face any consequences. You might even be on your own government's payroll.
* I think it's the same for banks. I think banks also mainly operate on abstractions built upon cash.
* An attacker who wants to steal physical cash needs to be physically present. That means there's a more limited set of people who could attempt the attack. With hacking, people across the entire world can attempt the attack. With physical attacks, you're at risk of being physically apprehended and caught through physical investigations. With hacking you can be behind proxies and avoid getting caught. Additional, with hacking you can do the hack from a jurisdiction that won't care, so even if the victim and the victim's government know you did it, you won't face any consequences. You might even be on your own government's payroll.
> Is there any crypto out there without humans ?
What OP is referring to is that you don't need to trust people if the dex is on-chain and verifiable. FTX was a non-transparent and insolvent centralized exchange which wouldn't be possible if it was on-chain because anyone can see the funds that are available and the protocol would not allow leverage backed by non-existing collateral.
> Is there an undo button to reverse the transaction?
No there isn't. This is a double edge sword.
> All financial systems involve humans
To a degree, but centralized exchanges have more knobs controlled by humans while an on-chain dex and just be deployed once and require no human intervention. A dex can be audited fully on-chain and anyone can see if the contract has any master holder keys. The FTX fiasco is because they own all your crypto because they have the master keys. The future of finance is people being in charge of their own money and where no unexpected entity can arbitrarily inflate the supply, which is only possible with crypto.
What OP is referring to is that you don't need to trust people if the dex is on-chain and verifiable. FTX was a non-transparent and insolvent centralized exchange which wouldn't be possible if it was on-chain because anyone can see the funds that are available and the protocol would not allow leverage backed by non-existing collateral.
> Is there an undo button to reverse the transaction?
No there isn't. This is a double edge sword.
> All financial systems involve humans
To a degree, but centralized exchanges have more knobs controlled by humans while an on-chain dex and just be deployed once and require no human intervention. A dex can be audited fully on-chain and anyone can see if the contract has any master holder keys. The FTX fiasco is because they own all your crypto because they have the master keys. The future of finance is people being in charge of their own money and where no unexpected entity can arbitrarily inflate the supply, which is only possible with crypto.
What foogazi was perhaps suggesting is that no financial system can work if it doesn't account for fundamental human behavior - we make mistakes and we are greedy if not held accountable "off chain".
The blockchain is perfect when everyone acts in good faith and makes no mistakes.
In the real world, that's not the case. Unfortunately, you need centralized institutions to regulate financial transactions, control the supply of money and enforce laws when they're broken, reverse mistakes when they happen.
> The future of finance is people being in charge of their own money and where no unexpected entity can arbitrarily inflate the supply, which is only possible with crypto.
This is not the future, and it'll almost certainly never happen with crypto.
The blockchain is perfect when everyone acts in good faith and makes no mistakes.
In the real world, that's not the case. Unfortunately, you need centralized institutions to regulate financial transactions, control the supply of money and enforce laws when they're broken, reverse mistakes when they happen.
> The future of finance is people being in charge of their own money and where no unexpected entity can arbitrarily inflate the supply, which is only possible with crypto.
This is not the future, and it'll almost certainly never happen with crypto.
Then what is the future? Certainly not the government going haywire with the printer. It’s impossible to trustlessly verify the exact number of US dollars in circulation, but it’s trivial to do with cryptocurrencies.
Removing the possibility for human intervention doesn't make things more resilient quite the contrary. Removing human control of public policies, such as those involving the management of public resources, is downright anti-democratic and dumb. If you people intend to build a monetary system, you need to educate yourselves about monetary systems. The money supply must be managed (i.e. inflated and deflated in your unconventional parlance) in order to keep prices stable. An currency in which prices are not stable will never be used as currency by businesses because it would put them in danger of going out business due to price swings. Restricting the issuance of currency doesn't make the supply of such currency fixed. Look up how money is created by the banking system. Only a small part of the money supply is money created by central banks.
The money supply managed by an on-chain protocol where it’s fully open, trustless, and predictable is 100% times better then a small group of people at the treasury deciding to print money and inflate peoples savings always.
> is 100% times better
I think this says it all.
I think this says it all.
I agree that the algorithms powering crypto are sophisticated pieces of technology. Just look at the zero-knowledge proofs.
The thing is that "not being regulated like a bank" is exactly what many people like / liked about it. (Yield farming, using DeFi for mortgages, etc.)
What I'm saying is that Crypto seems to be headed to being taught alongside, if not the Therac-25, then the Mars Climate Orbiter (which was lost to some people working in metric vs standard.)
The thing is that "not being regulated like a bank" is exactly what many people like / liked about it. (Yield farming, using DeFi for mortgages, etc.)
What I'm saying is that Crypto seems to be headed to being taught alongside, if not the Therac-25, then the Mars Climate Orbiter (which was lost to some people working in metric vs standard.)
If there were a clear and well-regulated equivalent of Tether, with obvious and transparent dollar-backing, I suspect it would find a lot of usage.
Might cost $1.15 to mint a new USD-coin redeemable for $1.00, but I suspect there would be an appetite.
Massive volatility and the occasional collapse of a crypto-bank are probably hindering the appetite of many people for anything in the crypto market. That population probably would dwarf any yield-farmers.
Might cost $1.15 to mint a new USD-coin redeemable for $1.00, but I suspect there would be an appetite.
Massive volatility and the occasional collapse of a crypto-bank are probably hindering the appetite of many people for anything in the crypto market. That population probably would dwarf any yield-farmers.
Right now stablecoins are a pretty profitable business because of interest rates.
An attestation report available 24/7 should be generated easily if you’re doing things properly, as well as frictionless burning and minting.
Note: I work for Glo, a non-profit stablecoin, so have a vested interest in this space. I do not and am not speaking on behalf of our group.
An attestation report available 24/7 should be generated easily if you’re doing things properly, as well as frictionless burning and minting.
Note: I work for Glo, a non-profit stablecoin, so have a vested interest in this space. I do not and am not speaking on behalf of our group.
> If there were a clear and well-regulated equivalent of Tether, with obvious and transparent dollar-backing
There are several. I compiled a list of them a few months ago.
https://news.ycombinator.com/item?id=31381864
There are several. I compiled a list of them a few months ago.
https://news.ycombinator.com/item?id=31381864
A CEX is "like a bank" because it's a human that takes custody of assets, not because it does trades and loans. Smart Contracts, however, can't be regulated the same way that human custodians can, but they are also designed not to be able to do unexpected things.
There have been plenty of examples of Smart Contracts doing unexpected things because all of the myriad of edge cases were not anticipated for.
It's one of the reasons the classic financial system works so well because it has the flexibility of manual fail-safes in cases where mistakes have been made. Smart Contracts will never really work unless it has the same.
It's one of the reasons the classic financial system works so well because it has the flexibility of manual fail-safes in cases where mistakes have been made. Smart Contracts will never really work unless it has the same.
I don't really have a dog in either kennel, but something about the idea that a human absolutely must be in the control loop for a currency to work feels... not wrong, but maybe "not wrong so far".
We've managed to get computers to do some really batshit stuff. Drive cars, make art, algorithmically trade to a level of success a human could never dream of, etc. I don't know if a solution to the problem of managing the stability of a currency is around the corner, but I'm fairly sure somewhere in the future it exists.
And then, I can't help but think of how just about every disaster we've had in the financial system was a result of the humans with their hands on the economic knobs being knobs themselves. The solutions we provide when in crisis wouldn't be necessary if we didn't have such a strong tendency to drive ourselves off cliffs - not to mention that our current financial system has gotten so complicated I'm not sure there's anyone out there who truly, thoroughly, groks it without being reductive.
We've managed to get computers to do some really batshit stuff. Drive cars, make art, algorithmically trade to a level of success a human could never dream of, etc. I don't know if a solution to the problem of managing the stability of a currency is around the corner, but I'm fairly sure somewhere in the future it exists.
And then, I can't help but think of how just about every disaster we've had in the financial system was a result of the humans with their hands on the economic knobs being knobs themselves. The solutions we provide when in crisis wouldn't be necessary if we didn't have such a strong tendency to drive ourselves off cliffs - not to mention that our current financial system has gotten so complicated I'm not sure there's anyone out there who truly, thoroughly, groks it without being reductive.
Indeed. Beyond the failure of human greed in the crypto Ponzi schemes, FTX is also a massive regulatory failure. These firms have been allowed to play with people’s money for too long.
It's probably no accident that SBF made substantial donations to one of the major US political parties. And by substantial, I mean that party's second biggest donor in the '20-21 cycle.
I think the new laws and regulations are coming out as we speak. Since it's such a new area they have been slow. The SEC just hired a bunch of new people. They have been busy prosecuting people too.
I also think FTX has been violating plenty of them already from the sounds of it. They probably thought they were being clever, but wouldn't pass the "duck test".
I also think FTX has been violating plenty of them already from the sounds of it. They probably thought they were being clever, but wouldn't pass the "duck test".
> This isn't a crypto failure. Crypto works. This is a human failure.
"Guns don't kill people, people kill people."
"Guns don't kill people, people kill people."
> it should be regulated like a bank
And how would they implement KYC/AML regulations which are fundamental to banking ?
And how would they implement KYC/AML regulations which are fundamental to banking ?
By force, if necessary.
No technically. There are seemingly endless ways to move funds anonymously.
There's endless ways to move cash.
If/when the movement of cash/crypto is peer-to-peer or interacting with a machine only (a machine that gives quarters for dollar bills or a DEX, for example) KYC is entirely unnecessary.
If/when the movement of cash/crypto is peer-to-peer or interacting with a machine only (a machine that gives quarters for dollar bills or a DEX, for example) KYC is entirely unnecessary.
Dealing with large volumes of cash is very difficult.
It's physically large so you can't move it between countries with drawing attention from customs and security. You can't exchange it between currencies easily since brokers are required to implement KYC/AML. Banks have automatic triggers on their internal systems to notify regulators if you deposit/withdraw large sums.
And if it's being tracked then washing it requires you having to go through exotic means like poker machines since all simpler options have been locked down over the decades.
It's one of the reasons crypto is so popular with states like North Korea, Iran etc because it's scalable enough to allow them to move billions.
It's physically large so you can't move it between countries with drawing attention from customs and security. You can't exchange it between currencies easily since brokers are required to implement KYC/AML. Banks have automatic triggers on their internal systems to notify regulators if you deposit/withdraw large sums.
And if it's being tracked then washing it requires you having to go through exotic means like poker machines since all simpler options have been locked down over the decades.
It's one of the reasons crypto is so popular with states like North Korea, Iran etc because it's scalable enough to allow them to move billions.
Bad user interfaces have caused catastrophes (see for example Three Miles Island or the Mont Saint Odile Airbus crash) that have also been labeled "human error", but those catastrophes wouldn't have happened without the bad UI.
The fraud going on in there was not human error. Reuters wrote about a backdoor sbf used to make transactions with ftx assets off the books, without alerting controls. If this is true, it’s oceans eleven stuff.
This seems like a simplification. Crypto, like any currency, needs to be able to be easily converted to and from other currencies. I can walk up to thousands of money changers and exchange USD for Euros, Pounds, and plenty of small countries' currencies. Meanwhile it may be technically possible to do the same with crypto, virtually nobody is, and the places that do offer a conversion, like BTC ATMs, charge enormous fees.
as SBF himself allowed in the Bloomberg interview, this system only works if humans, driven by FOMO and greed, bid up the tokens. that, more than the technology underpinning the system, is a necessary condition for defi or centralized crypto to "work."
defi is rife with hacks theft and rug pulls. but a form of fraud that is built into the entire ecosystem are tokenomics that carve out allocations of tokens to early holders, so they front run every one else.
this cannot be escaped - there is no refuge from the grift built in to the entire ecosystem. decentralized is a lie propagated to support a scam on everyone who got in later than early holders.
defi is rife with hacks theft and rug pulls. but a form of fraud that is built into the entire ecosystem are tokenomics that carve out allocations of tokens to early holders, so they front run every one else.
this cannot be escaped - there is no refuge from the grift built in to the entire ecosystem. decentralized is a lie propagated to support a scam on everyone who got in later than early holders.
If a bank gets hacked, generally the transactions get reversed. If a cryptocurrency exchange gets hacked, that generally can't be reversed.
Regulation can make things more secure, but I don't think it can realistically stop all attacks. Regulation is slower than attackers. The ability to reverse transactions is what's really needed to prevent attackers from getting away with money.
Regulation can make things more secure, but I don't think it can realistically stop all attacks. Regulation is slower than attackers. The ability to reverse transactions is what's really needed to prevent attackers from getting away with money.
Who will be in charge of deciding which transactions need to be reversed and when? It seems to me that the ability to have reversible transactions is at odds with the descentralised nature of blockchains.
I agree with you. There doesn't seem to be a good way to allow transactions to be reversed while keeping decentralization.
My point is that this decentralization is bringing in a risk that traditional banks don't have. So saying "regulating it like a bank will make it as secure as a bank" is incorrect.
My point is that this decentralization is bringing in a risk that traditional banks don't have. So saying "regulating it like a bank will make it as secure as a bank" is incorrect.
Tell that to the folks who forked Ethereum.
All crypto currencies are a ponzi scheme. Change my mind.
In a ponzi scheme, there is a fictitious business model that's purported to be turning a profit, and its lack of profit is hidden by secretly using new inflows to pay off old investors.
In crypto, none of that is hidden. It's widely known that dollars cashed out by earlier investors come from the coffers of later investors. Since e.g. Bitcoin doesn't deceive people about being a profitable company, it's by definition not a ponzi scheme. It's important to use this terminology correctly.
In crypto, none of that is hidden. It's widely known that dollars cashed out by earlier investors come from the coffers of later investors. Since e.g. Bitcoin doesn't deceive people about being a profitable company, it's by definition not a ponzi scheme. It's important to use this terminology correctly.
"It can't be a Ponzi because they're honest about it being a scam right up front"
That's how the definition works, yes.
By the way, who is the "they" that your sentence refers to?
By the way, who is the "they" that your sentence refers to?
Saying it’s not a Ponzi doesn’t mean everfree is defending it, it’s just useful to have precise definitions about these things.
well you have to draw a line somewhere. Call it something else if you want to criticize it. Like a bunch of fools racing towards a cliff.
But if they're honest about something being a scam how can it be a scam? Seems like a paradox.
But if they're honest about something being a scam how can it be a scam? Seems like a paradox.
Literally only a paradox in places like Hacker News by people who are motivated to question calling crypto a Ponzi.
I've got bad news. It is still a Ponzi if people are "honest" about it being a Ponzi, it is still a Ponzi if it started out as an investment idea and it went Ponzi as losses added up. Arguing that clear Ponzis aren't really Ponzis due to some kind of semantic rules is a gigantic display of "copium".
The only real difference is the distributed and decentralized nature of the scams. And the CEO of JPMorgan has described crypto coins exactly as a "distributed Ponzi scheme" before Congress.
If you wind up paying out redemptions with new deposits as fast as you can, right before you fail hard, then it was a Ponzi all along. That's it. That's the definition.
I've got bad news. It is still a Ponzi if people are "honest" about it being a Ponzi, it is still a Ponzi if it started out as an investment idea and it went Ponzi as losses added up. Arguing that clear Ponzis aren't really Ponzis due to some kind of semantic rules is a gigantic display of "copium".
The only real difference is the distributed and decentralized nature of the scams. And the CEO of JPMorgan has described crypto coins exactly as a "distributed Ponzi scheme" before Congress.
If you wind up paying out redemptions with new deposits as fast as you can, right before you fail hard, then it was a Ponzi all along. That's it. That's the definition.
> It is still a Ponzi if people are "honest" about it being a Ponzi
It literally isn't. Please go back to the definition, which requires a specific type of deception. If you wished, perhaps you could call crypto some kind of gamble, confidence game, or other category of scam.
> Arguing that clear Ponzis aren't really Ponzis due to some kind of semantic rules is a gigantic display of "copium".
From your tone it seems like you think I'm trying to defend crypto in this thread. I'm not. I'm trying to defend the meaning of a precise and descriptive term so that it doesn't get watered down to the point of being synonymous with "scam". Because if that were to happen, we would lose a useful phrase in the English language.
It really ticks me off when people knowingly use terminology incorrectly like this out of anger. Just call crypto a scam or a con if you want. There's no need to let your anger leave a mark on the English language itself.
> And the CEO of JPMorgan has described crypto coins exactly as a "distributed Ponzi scheme" before Congress.
Well he was using the term "ponzi scheme" incorrectly then, and should have used a more general term like "scam". Really, this isn't hard. Just read the definition.
It's also worth noting that JPMorgan executed their first trade on a public ("crypto coin") blockchain last week, so maybe he ended up changing his mind? Or maybe there's some internal consistency with JPMorgan investing effort in things they believe to be ponzi schemes - I'm not one to try to make that distinction.
> If you wind up paying out redemptions with new deposits as fast as you can, right before you fail hard, then it was a Ponzi all along. That's it. That's the definition.
That's not even how cryptocurrency works. Not even beanie babies or tulips worked like that.
It literally isn't. Please go back to the definition, which requires a specific type of deception. If you wished, perhaps you could call crypto some kind of gamble, confidence game, or other category of scam.
> Arguing that clear Ponzis aren't really Ponzis due to some kind of semantic rules is a gigantic display of "copium".
From your tone it seems like you think I'm trying to defend crypto in this thread. I'm not. I'm trying to defend the meaning of a precise and descriptive term so that it doesn't get watered down to the point of being synonymous with "scam". Because if that were to happen, we would lose a useful phrase in the English language.
It really ticks me off when people knowingly use terminology incorrectly like this out of anger. Just call crypto a scam or a con if you want. There's no need to let your anger leave a mark on the English language itself.
> And the CEO of JPMorgan has described crypto coins exactly as a "distributed Ponzi scheme" before Congress.
Well he was using the term "ponzi scheme" incorrectly then, and should have used a more general term like "scam". Really, this isn't hard. Just read the definition.
It's also worth noting that JPMorgan executed their first trade on a public ("crypto coin") blockchain last week, so maybe he ended up changing his mind? Or maybe there's some internal consistency with JPMorgan investing effort in things they believe to be ponzi schemes - I'm not one to try to make that distinction.
> If you wind up paying out redemptions with new deposits as fast as you can, right before you fail hard, then it was a Ponzi all along. That's it. That's the definition.
That's not even how cryptocurrency works. Not even beanie babies or tulips worked like that.
Cite that definition.
And that is how cryptocurrencies work. There's net inflows of currency, and net outflows of currency and there is a systemic bank balance at any one time of currency. If outflows exceed inflows for long enough then the balance is drained to zero and the music stops. That is a Ponzi. Madoff's Ponzi worked up until the 2008 recession hit him with redemptions and outflows and his bank balance got drained.
And that is how cryptocurrencies work. There's net inflows of currency, and net outflows of currency and there is a systemic bank balance at any one time of currency. If outflows exceed inflows for long enough then the balance is drained to zero and the music stops. That is a Ponzi. Madoff's Ponzi worked up until the 2008 recession hit him with redemptions and outflows and his bank balance got drained.
> A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are coming from legitimate business activity (e.g., product sales or successful investments), and they remain unaware that other investors are the source of funds.
Key phrases:
* the scheme leads victims to believe that profits are coming from legitimate business activity
AND
* they remain unaware that other investors are the source of funds.
Neither of those apply to cryptocurrencies. Nobody believes that Bitcoin conducts business activity, and everyone is transparently aware that other investors are the source of cash-out funds.
> There's net inflows of currency, and net outflows of currency
Commodities (fungible property of market value, like cryptocurrencies) don't have net inflows or outflows. Commodity prices are determined by order books which are in turn determined by supply and demand, not by capital flow. When a buyer and seller meet and exchange money for a piece of property (like a bitcoin), there is no "inflow" or "outflow", property just changes hands.
> there is a systemic bank balance at any one time of currency.
There is no "systemic bank balance at any one time of currency". That's not how cryptocurrency works. Where is Bitcoin's bank account, and what is Bitcoin's bank account balance?
> If outflows exceed inflows for long enough then the balance is drained to zero and the music stops.
Cryptocurrencies have no such inflows, outflows, or "balance". They aren't like investment funds or companies - they behave like physical objects, like beanie babies if you will. The beanie baby crash wasn't caused by any kind of beanie baby "balance" being drained to zero, it was caused by people collectively deciding that beanie babies were no longer worth a premium price.
> Madoff's Ponzi worked up until the 2008 recession hit him with redemptions and outflows and his bank balance got drained.
Bitcoin does not have redemptions, outflows, or a bank account. It's a series of rocks that people trade between themselves, sometimes at a higher price, sometimes at a lower price.
You seem to be confused about the definition of cryptocurrency. Should we go over that next?
Key phrases:
* the scheme leads victims to believe that profits are coming from legitimate business activity
AND
* they remain unaware that other investors are the source of funds.
Neither of those apply to cryptocurrencies. Nobody believes that Bitcoin conducts business activity, and everyone is transparently aware that other investors are the source of cash-out funds.
> There's net inflows of currency, and net outflows of currency
Commodities (fungible property of market value, like cryptocurrencies) don't have net inflows or outflows. Commodity prices are determined by order books which are in turn determined by supply and demand, not by capital flow. When a buyer and seller meet and exchange money for a piece of property (like a bitcoin), there is no "inflow" or "outflow", property just changes hands.
> there is a systemic bank balance at any one time of currency.
There is no "systemic bank balance at any one time of currency". That's not how cryptocurrency works. Where is Bitcoin's bank account, and what is Bitcoin's bank account balance?
> If outflows exceed inflows for long enough then the balance is drained to zero and the music stops.
Cryptocurrencies have no such inflows, outflows, or "balance". They aren't like investment funds or companies - they behave like physical objects, like beanie babies if you will. The beanie baby crash wasn't caused by any kind of beanie baby "balance" being drained to zero, it was caused by people collectively deciding that beanie babies were no longer worth a premium price.
> Madoff's Ponzi worked up until the 2008 recession hit him with redemptions and outflows and his bank balance got drained.
Bitcoin does not have redemptions, outflows, or a bank account. It's a series of rocks that people trade between themselves, sometimes at a higher price, sometimes at a lower price.
You seem to be confused about the definition of cryptocurrency. Should we go over that next?
> From your tone it seems like you think I'm trying to defend crypto in this thread.
Yes I got ranted at for suggesting "fools racing towards a cliff" as a better description. These threads appear to have attracted a lot of people looking for a fight and will jump on any nuanced post as a "pro" side.
Yes I got ranted at for suggesting "fools racing towards a cliff" as a better description. These threads appear to have attracted a lot of people looking for a fight and will jump on any nuanced post as a "pro" side.
I've noticed this phenomenon a lot, and I'm not exactly sure what causes it. If you correct someone's understanding of the software, half the time they'll try to pick a fight with you over being a supporter of it. I haven't experienced that while discussing any other type of software project.
Perhaps it results from the human tendency to try to separate "good guys" from "bad guys". Whatever it is, I find it really gets in the way of productive discussion.
Perhaps it results from the human tendency to try to separate "good guys" from "bad guys". Whatever it is, I find it really gets in the way of productive discussion.
Do you consider social security, or for that matter all government tax and welfare systems which depend on growth via immigration to be ponzi schemes too?
Why do you believe it is bad news to me? It's just semantics.
Why do you believe it is bad news to me? It's just semantics.
Ponzi schemes by definition use opaque ledgers. Ponzi schemes are custodial. Ponzi schemes guarantee returns.
There exist Ponzi schemes which have disguised themselves as cryptocurrencies, but the idea that all cryptocurrencies are Ponzi schemes demonstrates a complete ignorance of what a Ponzi scheme is.
There exist Ponzi schemes which have disguised themselves as cryptocurrencies, but the idea that all cryptocurrencies are Ponzi schemes demonstrates a complete ignorance of what a Ponzi scheme is.
> Ponzi schemes by definition use opaque ledgers.
Why? To me a ponzi scheme is where the earlier "investors" get paid out with the money of later "investors". That's it. By that definition it's quite the "decentralized", somewhat stochastic ponzi.
Why? To me a ponzi scheme is where the earlier "investors" get paid out with the money of later "investors". That's it. By that definition it's quite the "decentralized", somewhat stochastic ponzi.
Ponzi victims are told on paper that their "investments" are increasing in value, and that they can withdraw at any time, when in reality, the assets don't actually exist. Also a key aspect is that their balance only ever goes up.
Your definition covers every investable asset.
your definition includes stocks. I suppose you might be right that stocks are a ponzi
they weren't back when the reason people bought them were dividends, now the only real exit is if the company goes bankrupt or is purchased. The intervening time is hard to describe as anything other than pure speculation and piling dupes on top of each other
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Take a look at RAI.
Do you know what a Ponzi scheme is?
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So bank regulation worked in 2008, is was just a human failure?
Communism works, it's just human failures?
The measure of whether something works is whether it prevents human failure.
Communism works, it's just human failures?
The measure of whether something works is whether it prevents human failure.
We had gotten rid of bank regulation, which caused 2008.
https://www.federalreservehistory.org/essays/glass-steagall-....
https://www.federalreservehistory.org/essays/glass-steagall-....
Pretty US centric view.
Banks in other countries were affected too, despite regulations.
Banks in other countries were affected too, despite regulations.
You forgot:
Regulation works but it was just human failure:
https://en.wikipedia.org/wiki/MF_Global
Regulation works but it was just human failure:
https://en.wikipedia.org/wiki/MF_Global
Socialism to some extent has been successful in some countries. Sweden is a good example.
No it isn't. Pretty sure that they have a lot of private entities owning the means of production in a free(ish) market, and not mostly the government ?
I agree with your statement, perhaps with a very loose sense of “socialism to some extent”.
However, socialism is not communism, which is what the GP comment mentioned.
However, socialism is not communism, which is what the GP comment mentioned.
The problem is the crypto community’s skepticism of proven financial safeguards. Large financial systems are centralized for a reason and they seem intent on finding out why by hitting every bump in the road at full speed.
Pretty much everyone in the crypto community would be fine and happy if exchanges were forced to prove they own the users funds. Crypto people generally don't want crypto regulation. But exchanges are not crypto. They are a third party holding your crypto.
The problem is that regulators "confuse" that (or pretend to) and any regulation that comes out hurts the users, and the DeFi space, instead of focusing on centralized business like FTX that are outright stealing users funds.
Also what FTX did is without a doubt already illegal, it's not like it's some kind of loophole or legal thing they did.
The problem is that regulators "confuse" that (or pretend to) and any regulation that comes out hurts the users, and the DeFi space, instead of focusing on centralized business like FTX that are outright stealing users funds.
Also what FTX did is without a doubt already illegal, it's not like it's some kind of loophole or legal thing they did.
Agree. You don’t need extra special “crypto” regulation to know that customer’s assets should not be stolen.
Arguably, fractional reserve banks “steal” customer deposits to invest and pay interest in exchange. They have a very particular license from the government and are monitored (and insured) and rightly so - they are very dangerous.
Arguably, fractional reserve banks “steal” customer deposits to invest and pay interest in exchange. They have a very particular license from the government and are monitored (and insured) and rightly so - they are very dangerous.
Indeed. In a way it reminds me of how easy it is to be utopian if you ignore incentives.
What's amusing about your comment is that exchanges are the one centralized part of crypto due to the interfce with fiat and they also tend to be where all of the fraud occurs.
> due to the interfce with fiat and they also tend to be where all of the fraud occurs.
Yes, because that's where the actual value is at the end of the day. Regardless of how much people want to pump crypto, when push comes to shove, the recognized value of crypto for the vast majority of people is it's conversation rate to fiat currencies.
Yes, because that's where the actual value is at the end of the day. Regardless of how much people want to pump crypto, when push comes to shove, the recognized value of crypto for the vast majority of people is it's conversation rate to fiat currencies.
I use my airline miles before dollars when buying plane tickets. This does not mean I value airline miles over dollars.
> where all of the fraud occurs
Might want to look into the rug-pulling with shitcoins, NFTs etc.
That is far more insidious since it is targeted at young adults/children by influencers such as Jake Paul, Lil Uzi, David Dobrik etc.
Might want to look into the rug-pulling with shitcoins, NFTs etc.
That is far more insidious since it is targeted at young adults/children by influencers such as Jake Paul, Lil Uzi, David Dobrik etc.
Yes, smart contracts can be programmed to allow terrible human behavior. Banks also have this feature.
But... they can also be programmed NOT to allow terrible human behavior. Banks do not have this feature.
But... they can also be programmed NOT to allow terrible human behavior. Banks do not have this feature.
Banks interact with the legal system at every level.
So yes there maybe terrible human behaviour at times but very quickly it results in either (a) people being fined or going to jail or (b) laws improving to prevent it e.g. KYC/AML.
Also as someone who works at a bank there is a lot of code which governs what people can and can't do.
So yes there maybe terrible human behaviour at times but very quickly it results in either (a) people being fined or going to jail or (b) laws improving to prevent it e.g. KYC/AML.
Also as someone who works at a bank there is a lot of code which governs what people can and can't do.
Are you suggesting that KYC/AML protects consumers from the bank?
> But... they can also be programmed NOT to allow terrible human behavior.
Maybe, if you are a god tier programmer. On a long enough timescale the probability of your crypto project ending up on the rekt.news leaderboard is 1.
Maybe, if you are a god tier programmer. On a long enough timescale the probability of your crypto project ending up on the rekt.news leaderboard is 1.
Banks actually do have terrible behavior if you think fractional reserve banking is a scam. If banks were not backed by the government printing press they would all collapse.
What's also interesting is that decision-making power is very rarely fully centralized in large financial companies. Boards of directors, fiduciary duties, third-party audits, attorneys, and so on, all structurally serve to decentralize decision making. There is, of course, individual variability, and such structures are not always successful.... E.g. I've read that the board of FTX wasn't an independent board in any meaningful sense.
> exchanges are the one centralized part of crypto
Crypto is immensely more centralised than the American banking system. That’s what makes it resilient. Every wallet’s state is always globally known. Compare that with the series of subpoenas one must serve to learn what’s in whose bank account.
Crypto is immensely more centralised than the American banking system. That’s what makes it resilient. Every wallet’s state is always globally known. Compare that with the series of subpoenas one must serve to learn what’s in whose bank account.
I believe 'centralization' here refers to centralized control. The ledger is distributed anyhow, so not very central.
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This is a Wall Street corruption story.
https://twitter.com/wallstreetpro/status/1591167190996504576
Sam, Caroline, and everyone at the top of FTX and Alameda have very close family ties to key power brokers on Wall Street, which is how they were able to run this scam. FTX has also lobbied extensively for harsh regulations on DeFi, which is a key reason that he was hated by people in the cryptocurrency space, and adored by Wall Street.
The only reason FTX got caught is because of evidence they left on-chain. Any other investment fund might have been able to sweep it all under the rug, but since the massive payout from FTX to Alameda was visible for the world to see, the corruption was obvious, and the whole thing collapsed.
https://twitter.com/wallstreetpro/status/1591167190996504576
Sam, Caroline, and everyone at the top of FTX and Alameda have very close family ties to key power brokers on Wall Street, which is how they were able to run this scam. FTX has also lobbied extensively for harsh regulations on DeFi, which is a key reason that he was hated by people in the cryptocurrency space, and adored by Wall Street.
The only reason FTX got caught is because of evidence they left on-chain. Any other investment fund might have been able to sweep it all under the rug, but since the massive payout from FTX to Alameda was visible for the world to see, the corruption was obvious, and the whole thing collapsed.
> This is a Wall Street corruption story.
No, stop trying to spin this. It's a stereotypical crypto story.
> Sam, Caroline, and everyone at the top of FTX and Alameda have very close family ties to key power brokers on Wall Street, which is how they were able to run this scam.
Who was Do Kwon's wall street family tie?
> FTX has also lobbied extensively for harsh regulations on DeFi, which is a key reason that he was hated by people in the cryptocurrency space, and adored by Wall Street.
Centralized exchange lobbies against decentralized exchange, isn't that just business?
> The only reason FTX got caught is because of evidence they left on-chain.
Really? Source? From what I know it was just good old balance sheet (probably an Excel file, even) that got leaked.
> Any other investment fund might have been able to sweep it all under the rug, but since the massive payout from FTX to Alameda was visible for the world to see, the corruption was obvious, and the whole thing collapsed
Utter bull. FTX paid Alameda a long time ago. No one knew this story until 2 days ago because none of this works the way you are talking about.
No, stop trying to spin this. It's a stereotypical crypto story.
> Sam, Caroline, and everyone at the top of FTX and Alameda have very close family ties to key power brokers on Wall Street, which is how they were able to run this scam.
Who was Do Kwon's wall street family tie?
> FTX has also lobbied extensively for harsh regulations on DeFi, which is a key reason that he was hated by people in the cryptocurrency space, and adored by Wall Street.
Centralized exchange lobbies against decentralized exchange, isn't that just business?
> The only reason FTX got caught is because of evidence they left on-chain.
Really? Source? From what I know it was just good old balance sheet (probably an Excel file, even) that got leaked.
> Any other investment fund might have been able to sweep it all under the rug, but since the massive payout from FTX to Alameda was visible for the world to see, the corruption was obvious, and the whole thing collapsed
Utter bull. FTX paid Alameda a long time ago. No one knew this story until 2 days ago because none of this works the way you are talking about.
(We should remember to be careful in the thread to stay substantive; dismissing your opponents claims as “Utter bull” may feel good to write, but the sentence after that is the valuable one for readers. Only you can prevent forest fires^W^Wflame wars.)
> > This is a Wall Street corruption story.
>No, stop trying to spin this. It's a stereotypical crypto story.
It’s worth considering that these things are not mutually exclusive. Why can’t it be both?
>No, stop trying to spin this. It's a stereotypical crypto story.
It’s worth considering that these things are not mutually exclusive. Why can’t it be both?
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Wiki was quiet about Caroline Ellison's family but a random post on the internet just happened by and the claim is her father is Glenn Ellison.
https://economics.mit.edu/people/faculty/glenn-ellison
but p.s. the whole comment is worth a paste:
SEC Chair Gary Gensler’s old boss at MIT was Glenn Ellison. His daughter Caroline Ellison is the CEO of FTX sister-company Alameda Research (and Sam Bankman-Fried’s lover apparently).
The GC of FTX used to be lead counsel to Gary Gensler when he was CFTC Chair.
Sam Bankman-Fried’s mother was Hilary Clinton’s lawyer.
Gabe Bankman-Fried, brother to Sam (also a former Jane Street trader), is founder of “Guarding Against Pandemics”. He was a Legislative Correspondent for the US House of Representatives and an advisor to large political donors in the Democrat party.
The family Aunt Linda Fried is a WEF member on the Global Agenda Council on Aging.
The father, Joseph Bankman, is a Stanford professor who has lobbied on behalf of Hedge Fund managers before Congress before (film records exist).
FTX Head of Ventures & Commercial at FTX Ventures, Amy Wu, started with the Clinton Foundation years ago.
Nishad Singh FTX Director of Engineering has spent over 8 million for Dem candidates.
Obama's Commodity Futures Trading Commissioner, Mark Wetjen, was the head of FTX Policy & Regulation.
Chief regulatory officer of FTX is Dan Friedberg was previously a lawyer at Ultimate bet (a site where they basically cheated against players).
Stuart Hoegner General Counselor at Bitfinex/Tether was previously Director of Compliance at Excapsa which was responsible for the Ultimate bet poker software.
https://economics.mit.edu/people/faculty/glenn-ellison
but p.s. the whole comment is worth a paste:
SEC Chair Gary Gensler’s old boss at MIT was Glenn Ellison. His daughter Caroline Ellison is the CEO of FTX sister-company Alameda Research (and Sam Bankman-Fried’s lover apparently).
The GC of FTX used to be lead counsel to Gary Gensler when he was CFTC Chair.
Sam Bankman-Fried’s mother was Hilary Clinton’s lawyer.
Gabe Bankman-Fried, brother to Sam (also a former Jane Street trader), is founder of “Guarding Against Pandemics”. He was a Legislative Correspondent for the US House of Representatives and an advisor to large political donors in the Democrat party.
The family Aunt Linda Fried is a WEF member on the Global Agenda Council on Aging.
The father, Joseph Bankman, is a Stanford professor who has lobbied on behalf of Hedge Fund managers before Congress before (film records exist).
FTX Head of Ventures & Commercial at FTX Ventures, Amy Wu, started with the Clinton Foundation years ago.
Nishad Singh FTX Director of Engineering has spent over 8 million for Dem candidates.
Obama's Commodity Futures Trading Commissioner, Mark Wetjen, was the head of FTX Policy & Regulation.
Chief regulatory officer of FTX is Dan Friedberg was previously a lawyer at Ultimate bet (a site where they basically cheated against players).
Stuart Hoegner General Counselor at Bitfinex/Tether was previously Director of Compliance at Excapsa which was responsible for the Ultimate bet poker software.
Ellison was not GG's boss. GG taught in the B School; GE is in HASS.
Sbf gon get epsteined
Very interesting take.
How would another investment fund transfer customer funds to Alameda while being able to sweep it under the rug?
I think the transfer wasn’t the problem. It was illegal, yes. But the empire fell because Alameda lost the money.
Alameda’s CEO: “I use very little math. Being comfortable with risk is important. We tend not to have things like stop losses.” https://www.tiktok.com/t/ZTRxWbctK/
How would another investment fund transfer customer funds to Alameda while being able to sweep it under the rug?
I think the transfer wasn’t the problem. It was illegal, yes. But the empire fell because Alameda lost the money.
Alameda’s CEO: “I use very little math. Being comfortable with risk is important. We tend not to have things like stop losses.” https://www.tiktok.com/t/ZTRxWbctK/
From what I've gathered, Alameda lost the money during the Luna collapse back in the spring. Sam extended a loan from FTX (using customer funds) to Alameda (which he owned 90% of) to prevent Alameda from collapsing with everything else (Three Arrows Capital etc). When called out, he claimed on Twitter that he was just shuffling around some cold wallets. The balance sheet leak from last week handed observers a smoking gun showing that it was actually being loaned out to Alameda, triggering Binance to begin their exit, which kicked off the cascade of events.
> I’d highly surprised if it could be done algorithmically
Except this exists since the beginning?
I feel people are missing the point. A decade ago a guy created some system that allows users to digitally self custody funds without a third party. That’s self regulation to you.
MtGox was not that. Celsius was not that and finally FTX was not that. Binance is not that. Those companies and their tokens conjured out of thin air are glorified digital cassinos folks.
Government regulation? Will it make a difference? The stuff they did is already ilegal in pretty much any country isn’t? By the way wasn’t SBF trying to push regulations to hurt his competitors? Didn’t he funded D and R candidates? Do you really think you can trust anything that can come out of regulation to be effective and not exploitable?
FFS doesn’t FTX US division have a NY bitlicense? That’s probably the most strict license in finance.
As for crypto reputation I see this as a big W for the core principles of self custody. Bitcoin “toximaxis” being right all along. Even here people often reply me they feel more comfortable using a third party. It’s all good but perhaps you should instead trade stocks or idk commodities or wathever?
Except this exists since the beginning?
I feel people are missing the point. A decade ago a guy created some system that allows users to digitally self custody funds without a third party. That’s self regulation to you.
MtGox was not that. Celsius was not that and finally FTX was not that. Binance is not that. Those companies and their tokens conjured out of thin air are glorified digital cassinos folks.
Government regulation? Will it make a difference? The stuff they did is already ilegal in pretty much any country isn’t? By the way wasn’t SBF trying to push regulations to hurt his competitors? Didn’t he funded D and R candidates? Do you really think you can trust anything that can come out of regulation to be effective and not exploitable?
FFS doesn’t FTX US division have a NY bitlicense? That’s probably the most strict license in finance.
As for crypto reputation I see this as a big W for the core principles of self custody. Bitcoin “toximaxis” being right all along. Even here people often reply me they feel more comfortable using a third party. It’s all good but perhaps you should instead trade stocks or idk commodities or wathever?
> nails in the coffin for mainstream support
People have short memories, further, people get caught up the hype. If Bitcoin's price starts to bounce, and especially if it manages to approach a new all time high, plenty of people will be on board, in fact even moreso, because the tagline will be that Bitcoin is resilient, it always comes back, it can overcome any crisis.
Furthermore, although it seems like a lot of people are talking about FTX, probably 90% of the people who know of Bitcoin are entirely unaware of this story. I own some crypto assets, and I had never heard of "SBF" and the only thing I ever knew about FTX was that it made an awful television commercial. Never thought about them ever since.
People have short memories, further, people get caught up the hype. If Bitcoin's price starts to bounce, and especially if it manages to approach a new all time high, plenty of people will be on board, in fact even moreso, because the tagline will be that Bitcoin is resilient, it always comes back, it can overcome any crisis.
Furthermore, although it seems like a lot of people are talking about FTX, probably 90% of the people who know of Bitcoin are entirely unaware of this story. I own some crypto assets, and I had never heard of "SBF" and the only thing I ever knew about FTX was that it made an awful television commercial. Never thought about them ever since.
One of the biggest issues with Bitcoin as others have pointed out is the catch-22 of self custody. Another huge issue is offshore unregulated exchanges like FTX. The resolution is actually regulation that allows financial institutions like Banks to hold Bitcoin. Services like this already exist with companies such as Casa (keys[dot]casa) where you have a multi-signature wallet where one of the keys is held by them. The problem with Casa is that they cannot be FDIC insured. A 3 of 5 signature wallet can create a sliding scale of security vs ownership with the most security and most insurance being offered by the Bank where they hold 3 of the 5 keys. This may be attractive for people who want to own a little bit but not take on the risk. Banks may even do the purchase for you as well (for a fee of course). For those who say this is just the current system with different steps, the difference is the possibility of taking on 100% of the risk/ownership yourself. Just the possibility of that shifts the power dynamic in the clients favor. Additionally, once institutions get legal clarity, they can also start running their own lightning nodes which generate revenue in the form of fees. Since they will hold large amount of BTC reserves, they can compete for more traffic. More traffic equals more fees. And no, I am not saying lightning is in a place right now where this would happen; but what is today isn't what will be tomorrow. This is just conjecture obviously. Once such things are in the hands of such institutions (as well as an approved spot ETF in the US) then the narrative on MSM will shift (dear public, it is safe to play in this space now). IMO I believe that is is the actual reason as to why there has not been any regulatory clarity on BTC.
This isn't crypto. This is a centralized exchange with a centralized website, with centralized databases, that is run and controlled by humans. In fact, if you use a centralized exchange there is no use of blockchain for the most part.
There's a literal saying, "Not your keys, not your coins". Only if people would listen.
There's a literal saying, "Not your keys, not your coins". Only if people would listen.
> There's a literal saying, "Not your keys, not your coins".
Doesn't that also legitimatize a hack then? If someone hacks or steals your keys, you can't then turn around and say "but wait, those aren't your keys".
Doesn't that also legitimatize a hack then? If someone hacks or steals your keys, you can't then turn around and say "but wait, those aren't your keys".
Yes, it does, but some of us actually consider this to be a feature.
The issue with reversibility is that it’s not just reversibility - it’s also the power for the authorities to take your assets from you.
The question isn’t “do you want to be able to get your money back after it was stolen”, it’s really, “do you want the powers that be to be able to decide whose money it is.” We’ve been lucky to live in a world where “yes” is a reasonable answer. But there’s no guarantee that it’ll stay that way. And crypto is insurance against that possible change.
The issue with reversibility is that it’s not just reversibility - it’s also the power for the authorities to take your assets from you.
The question isn’t “do you want to be able to get your money back after it was stolen”, it’s really, “do you want the powers that be to be able to decide whose money it is.” We’ve been lucky to live in a world where “yes” is a reasonable answer. But there’s no guarantee that it’ll stay that way. And crypto is insurance against that possible change.
In what way is crypto an insurance there? Typically, ruthless regimes are good at separating you from your assets. I don't see any of the typical methods not working with crypto.
It's really only an insurance against marginally bad situations and there lots of other things work equally well.
To be clear, "crypto" is just a book that says these individuals own however many tokens. It doesn't guarantee that anyone will abide by what the books says. It doesn't guarantee that nobody will take your real wealth from you by force.
Crypto obviously has its disadvantages, hacks being one. There could be major UX improvements to crypto that would aid in reducing hacks and increasing security.
But either way, it's a tradeoff and that's fine. TradFi is reversible and centralized, crypto is not. Sometimes you want one thing, sometimes you want the other.
I like having part of my assets in a way that can't be frozen, like the people that protested in Canada whose banks accounts were frozen.
But either way, it's a tradeoff and that's fine. TradFi is reversible and centralized, crypto is not. Sometimes you want one thing, sometimes you want the other.
I like having part of my assets in a way that can't be frozen, like the people that protested in Canada whose banks accounts were frozen.
The exchange is a component of crypto, as an industry. Imagine defending social media but shitting on Facebook. To use your words to try and make your argument:
This isn't social media. This is Facebook with a centralized website, with centralized databases, that is run and controlled by humans. In fact, if you use a Facebook there is no use of social media for the most part.
There's a literal saying, "not paying for it, you're the proruct". Only if people would listen.
This isn't social media. This is Facebook with a centralized website, with centralized databases, that is run and controlled by humans. In fact, if you use a Facebook there is no use of social media for the most part.
There's a literal saying, "not paying for it, you're the proruct". Only if people would listen.
> Imagine defending social media but shitting on Facebook.
I see no contradiction on shitting on facebook while defending say Mastodon. In fact people were doing this with twitter just a few days ago before $current_thing happened.
I see no contradiction on shitting on facebook while defending say Mastodon. In fact people were doing this with twitter just a few days ago before $current_thing happened.
Mastodon isn't an argument that social media isn't terrible.
The same argument can't be made for crypto exchanges and the industry they occupy also being terrible.
The same argument can't be made for crypto exchanges and the industry they occupy also being terrible.
You're right that a lot of the risks are due to holding in a central website. But cryptocurrency in a central website is more risky than fiat in a central website, because if a central website gets hacked and the hackers steal fiat, generally those transactions will be reversed, whereas if the hackers steal cryptocurrency, generally those can't be reversed.
What do you mean by stealing fiat currency from a central website? How would a website custody fiat?
I do an electronic transfer from bank A to bank B. I have a balance in bank B. Bank B then gets hacked.
Paypal?
Is it?
Maybe this is part of the hardening of these systems? Part of the evolution which grows a thicker skin?
What about all the trials of traditional currencies we all know and love?
Not really a crypto fanboy, but I'm not sure this means the end of anything.
Maybe this is part of the hardening of these systems? Part of the evolution which grows a thicker skin?
What about all the trials of traditional currencies we all know and love?
Not really a crypto fanboy, but I'm not sure this means the end of anything.
From the guy that did "FTX bankruptcy explained!" :
"John Law - The First Financial Engineer - A History of Paper Money and The Mississippi Bubble" :
https://youtu.be/H5uKPUPQSyQ
"John Law - The First Financial Engineer - A History of Paper Money and The Mississippi Bubble" :
https://youtu.be/H5uKPUPQSyQ
Blockchain tech should distance itself from finance and cryptocurrency. The most interesting and promising thing about blockchains is decentralized coordination of group decision making.
Based on your comment and the rest of HN, many people think blockchain = finance with cryptocurrency and NFTs. That’s what FTX was. Boring. DeFi is only slightly more interesting.
Blockchains like ethereum do run on a cryptocurrency, but the currency is not the most interesting part, it’s just lubrication for interesting applications.
Based on your comment and the rest of HN, many people think blockchain = finance with cryptocurrency and NFTs. That’s what FTX was. Boring. DeFi is only slightly more interesting.
Blockchains like ethereum do run on a cryptocurrency, but the currency is not the most interesting part, it’s just lubrication for interesting applications.
This stuff seems pretty crazy, but it's no worse than what happened in early 1900's Wall St. If crypto is ever going to be used as a real payments system, and something you would put in a 401k, it will need regulation similar to stocks. Not sure if it really works, though, because it would remove the anonymity and decentralization that are pitched as the entire advantage of the system.
I'd be curious to read anyone's thoughts on what would have to happen for crypto to improve its image at this point. Would being regulated exactly like traditional banking / finance be enough? More regulation? Would it be regulation + lower rates of fraud, hacks, collapse, and abuse? Or something else I'm not thinking of?
Transparency. Crypto has almost everything needed to be fully transparent with a public ledger but exchanges (CEXes) still operate behind closed doors.
It would need a legal, non-speculation use-case that isn’t much better solved by extant centralised systems
Depositor Insurance probably... But still, every single promise has been burnt in the crypto world.
Ooh, that's a good one. Who on earth would underwrite such a thing?
I think this is the end of fully centralised exchanges. All exchanges will have to build their own Validium and customers will self custody their non fiat funds on that Validium and the centralised exchange merely runs the order book logic and fiat onramp.
I don't see banks losing mainstream support when they have caused massive crisis with derivative products and shit. We rescue them so new generations will be swimming in debt and nothing happens.
It's not about crypto, it's about human nature and avarice.
It's not about crypto, it's about human nature and avarice.
In the short term – yes. More broadly though, large-scale frauds like this one will only result in increasing government scrutiny and regulation, which can actually be good for the crypto investment ecosystem.
Hmm, tbh, that's a point I hadn't fully considered. To flip your point around, what hypothetical scenario would be bad for the crypto ecosystem long term?
- Bugs or some fundamental/unfixable exploits in bitcoin algorithms
- Successful or semi-successful 51% attack (maybe state sponsored)
- Global energy crisis/crackdown on mining
- Global economic crisis of the scale where people desperately need cash/commodities and can't waste their money in speculation
- Successful or semi-successful 51% attack (maybe state sponsored)
- Global energy crisis/crackdown on mining
- Global economic crisis of the scale where people desperately need cash/commodities and can't waste their money in speculation
While I agree that those things would harm the popular perception of crypto, continued fraud, theft, and greed are also doing so too.
It is “just” another hack/collapse. That has been happening since mtgox and earlier and it hasn’t put people off using it l.
[deleted]
Not everything that calls itself "crypto" is decentralized, peer to peer, or a crypto-currency.
https://www.corbettreport.com/bitcoinpsyop/
https://www.corbettreport.com/bitcoinpsyop/
Shame poorly run companies and stop using them. Mainstream’s insistence on conflating this with crypto masks the proper shaming of mismanaged companies.
I actually see this as an opportunity for the established financial companies to insert themselves into the ecosystem, using their established reputation, processes, and adherence to traditional bank regulation as a 'trust' base that's been both lacking permanently and (whatever was there) eroded over the last 12 months.
Both exchanges and coins / tokens are going at what looks like very cheap right now.
Both exchanges and coins / tokens are going at what looks like very cheap right now.
>Their established reputation
The reason trustless decentralized crypto currencies were invented: So we don't have to rely on banking corporation's glowing reputations.
The reason trustless decentralized crypto currencies were invented: So we don't have to rely on banking corporation's glowing reputations.
My point is that, amongst the majority populace, traditional banking establishments have immeasurably higher reputations than any entity associated with cryptocurrencies.
Rightly or wrongly.
The logic you're describing isn't incorrect, but I don't believe (and may well be wrong) it makes any difference to the point I made above.
It's still early. Still in the "first they laugh at you" stage, just read HN comments.
Rightly or wrongly.
The logic you're describing isn't incorrect, but I don't believe (and may well be wrong) it makes any difference to the point I made above.
It's still early. Still in the "first they laugh at you" stage, just read HN comments.
We are past the "first they laugh at you" stage, and well into "then they fight you".
Been watching this for over a decade, and didn't notice any major censorship until they understood their gig was up; Then, on very short notice, chats and forums flooded with FUD, censorship, all involved search terms got replaced heavily propagandized search results, and any alternative forums floodrd with disinfo. Then they went directly after individuals, with the media and courts; They seemed to never charge them for the stuff they smeared them with, but used anything that would stick, and anything that could actually be used as defense was not allowed. Even jury selection was messed with: If you knew anything about crypto, (if you could actually be consideted a peer) you were rejected.
They smear crypto as drug money, while still shipping dollars to drug lords by MAC Flight.
It is easy to see what they are doing, if you pay attention.
Crypto that doesn’t suffer from these kinds of failures is boring. It looks like traditional banking with a different API. Exciting maybe for banking nerds, but not so much for anyone else. Ultimately though blockchain ledgers will probably only be long term useful for record keeping between small closed groups of independent entities like banks settling overnight balances between themselves. It’s never going to be entirely algorithmic as there is always the chance of mistake or failure which needs human judgement to correct.
> blockchain ledgers will probably only be long term useful for record keeping between small closed groups of independent entities like banks settling overnight balances between themselves
It’s never going to be useful for that, though. It doesn’t solve any of the problems that small, closed groups who know each other and have legal recourse have.
It’s never going to be useful for that, though. It doesn’t solve any of the problems that small, closed groups who know each other and have legal recourse have.
I think most people would say that they want banking to be boring.
And that’s why most people don’t own any crypto
I'm pro-crypto. This is just a repeat of Mt Gox from 2014. Same scam. Gamblers and get-rich-quick idiots get wiped, as they should. Those people don't want regulation; they see that as an obstacle to becoming billionaires. In a few years, you'll see them gambling their money again.
The real reason there'll be regulation isn't because the community wants to be reassured; it's because governments are afraid, and want control over the entire financial system since they believe they can tame "systemic risks" (while using bullshit value-at-risk models; I guess everyone in this story's an idiot). And in the new bull market, when the abysmal idiots want to get rich quick again, you and I might bail them out.
The real reason there'll be regulation isn't because the community wants to be reassured; it's because governments are afraid, and want control over the entire financial system since they believe they can tame "systemic risks" (while using bullshit value-at-risk models; I guess everyone in this story's an idiot). And in the new bull market, when the abysmal idiots want to get rich quick again, you and I might bail them out.
This is additionally a reminder that crypto currently holds a fairly irreconcilable catch-22.
"Freezeable" tokens completely defeat the purpose of a decentralized currency. Why create nodes/verifiers etc if a wallet can be unilaterally frozen, either under pressure from gov't, community, or another entity.
However NOT allowing freezeability allows for massive hacks, either by insiders, poor security, or sloppiness.
Seems the solve is somewhere in the middle, a pool of trusted intermediaries.
"Freezeable" tokens completely defeat the purpose of a decentralized currency. Why create nodes/verifiers etc if a wallet can be unilaterally frozen, either under pressure from gov't, community, or another entity.
However NOT allowing freezeability allows for massive hacks, either by insiders, poor security, or sloppiness.
Seems the solve is somewhere in the middle, a pool of trusted intermediaries.
It seems to me that validators aren't taking their sovereignty seriously. They are either following the exact suggested rules of the blockchain, or they are following the laws, but I have not seen the idealized consensus scenario where each node is soft-forking their rule-set to align with their own values. This was explicitly suggested in early discussions of bitcoin. There are three basic scenarios where a block participant may make a values judgement:
1. Including a transaction into a block
2. Block acceptance and propagation
3. Chain acceptance by the client
Everything else is cryptographically locked, as in, a full-chain audit would reveal discrepancies, but these choices maintain internal consistency. You may hate this idea, but it is coming, and the default rule set will come from the jurisdictions. However, they will only have the power of transaction censorship by unanimous consent, total power of block censorship, and almost no control over chain censorship.
I just had a half-baked idea: a chain that has the ability to hard-fork only in small differences, but essentially allows an infinite number of forks and merges in such a way that each transaction is valid if not explicitly invalid. In other words, a transaction fork does not invalidate the proof of an unrelated transaction that descends from the forked root hash. This would have to be a very different kind of hash/proof. Such a chain would greatly reduce the risk of rule modifications such as censoring transactions from an attacker, while also supporting the choice to use a chain without censorship, and enable reconciliation between the two.
1. Including a transaction into a block
2. Block acceptance and propagation
3. Chain acceptance by the client
Everything else is cryptographically locked, as in, a full-chain audit would reveal discrepancies, but these choices maintain internal consistency. You may hate this idea, but it is coming, and the default rule set will come from the jurisdictions. However, they will only have the power of transaction censorship by unanimous consent, total power of block censorship, and almost no control over chain censorship.
I just had a half-baked idea: a chain that has the ability to hard-fork only in small differences, but essentially allows an infinite number of forks and merges in such a way that each transaction is valid if not explicitly invalid. In other words, a transaction fork does not invalidate the proof of an unrelated transaction that descends from the forked root hash. This would have to be a very different kind of hash/proof. Such a chain would greatly reduce the risk of rule modifications such as censoring transactions from an attacker, while also supporting the choice to use a chain without censorship, and enable reconciliation between the two.
51% vote to freeze (by validators) is decentralized.
This 51% number is not really relevant in blockchain consensus. There is Byzantine consensus, which derives from a specific set of assumptions, but those don't really apply. In reality, consensus is not at all a vote. Coinbase and Circle can accept a chain with only 1% validator support, and that will probably be the canonical chain. Apologies to the many blockchain economists and computer pseudo-scientists that spent the last decade on this, but Consensus is mostly an irrelevant concept. The good news is that new cryptographic primitives are there to fill the same role, and we're just getting started with that.
Surely it's not a coincidence that on the day FTX announces bankruptcy, this gigantic hack occurs?
Some folks in this thread are speculating this might've been an inside job.
I suspect, it's likelier that hackers had been aware of a vulnerability for some time, had a plan to drain these funds, but decided to hasten the timeline on the basis of the news FTX was going under.
Some folks in this thread are speculating this might've been an inside job.
I suspect, it's likelier that hackers had been aware of a vulnerability for some time, had a plan to drain these funds, but decided to hasten the timeline on the basis of the news FTX was going under.
> I suspect, it's likelier that hackers had been aware of a vulnerability for some time, had a plan to drain these funds, but decided to hasten the timeline on the basis of the news FTX was going under.
This make no sense to me. Thieves in the crypto currency world seize the opportunities before other thieves do: what more do "hackers" need than 600m? 700m? 900m?
Why let a vulnerability unexploited, risking someone else to exploit it before you? Because 600m wouldn't be enough? (and before the price crash it was probably worth way more than 600m).
I don't buy it.
Insider job 100%. Especially seen that it's a know fact it was run by scammers.
It's not as if we were talking about honest people playing it fair. We're talking about a scam.
A more than shady company, ran by scammers.
I call insider job unless proven otherwise.
This make no sense to me. Thieves in the crypto currency world seize the opportunities before other thieves do: what more do "hackers" need than 600m? 700m? 900m?
Why let a vulnerability unexploited, risking someone else to exploit it before you? Because 600m wouldn't be enough? (and before the price crash it was probably worth way more than 600m).
I don't buy it.
Insider job 100%. Especially seen that it's a know fact it was run by scammers.
It's not as if we were talking about honest people playing it fair. We're talking about a scam.
A more than shady company, ran by scammers.
I call insider job unless proven otherwise.
They might've been in the process of transferring crypto silently for months and only now had to rush overtly enough to be spotted.
A lot of the crypto "mega-hacks" we have seen in the past have involved insiders: either insiders getting phished or insiders doing the theft themselves.
7-8 digit hacks are often legitimate hacking, but suspiciously-timed 9 digit hacks have been inside jobs in the past.
I'm giving more than even odds to the theory that a top executive of FTX wanted a retirement fund. Let's see if one of them disappears.
7-8 digit hacks are often legitimate hacking, but suspiciously-timed 9 digit hacks have been inside jobs in the past.
I'm giving more than even odds to the theory that a top executive of FTX wanted a retirement fund. Let's see if one of them disappears.
From a technical standpoint, how difficult it is to hack your own company?
What would you do, if you spent years building a Crypto/Ponzi scam and that you were the first to know that it was going to crumble?
Let it go and face the consequences? Or try to save a few bucks knowing that you don't have much more to lose if it fails?
What would you do, if you spent years building a Crypto/Ponzi scam and that you were the first to know that it was going to crumble?
Let it go and face the consequences? Or try to save a few bucks knowing that you don't have much more to lose if it fails?
> From a technical standpoint, how difficult it is to hack your own company?
It would be easy. If you're the founder might have special access to the keys, in fact you probably need to for emergency purposes. Whether that's a "hack" I don't know, it seems to just be theft.
The real question is what do you do with the fact that you have the keys? If you are tempted to nick all the money, you might end up in a bad place.
It would be easy. If you're the founder might have special access to the keys, in fact you probably need to for emergency purposes. Whether that's a "hack" I don't know, it seems to just be theft.
The real question is what do you do with the fact that you have the keys? If you are tempted to nick all the money, you might end up in a bad place.
Some more infos, it seems:
https://twitter.com/gurgavin/status/1591434645295730689
https://twitter.com/gurgavin/status/1591434645295730689
What if you already are in a bad place?
If you use non-privacy chains, which are the common ones, you can get found out as soon as you try to do anything meaningful with it. Eg you move to some country, you want to buy a place, you find a seller willing to take crypto, ding-ding-ding, authorities will ask them where they got the coins from and there you are in your pool.
So, what you're saying is that some hackers are siphoning all the "funds" for no reason at all?
Or maybe, if they are hackers they can use/launder those in some way or another, but if this is SBF behind a mask then he can't?
I am far from an expert about money laundering techniques, but I find it hard to believe that it is impossible to launder, given the context.
Or maybe, if they are hackers they can use/launder those in some way or another, but if this is SBF behind a mask then he can't?
I am far from an expert about money laundering techniques, but I find it hard to believe that it is impossible to launder, given the context.
There's probably something these guys know that ordinary HN people don't know about how to extract the money.
Perhaps there's a jurisdiction where it's made a lot easier.
Perhaps there's a jurisdiction where it's made a lot easier.
You can use your many millions to move the market in small-caps and take your profits only from the other side.
They don't even have to know much. They will be approached by people who does.
Money laundering can be lossy and even very lossy, the result will always be better than zero.
Money laundering can be lossy and even very lossy, the result will always be better than zero.
There’s as much evidence for your theory as there is for GP’s
I mean, the "inside job" theory seems to have more evidence, because as was pointed out hackers don't normally wait months to execute their attacks. And are more likely to use automation.
Sure.
But what would you do, in this context?
But what would you do, in this context?
if the coins are stolen or lost in some way, they cant be liquidated and thus shouldnt devalue the coin right? could reducing the availability actually be a way of preserving the market?
Drain the funds before the creditors get to them.
[deleted]
So, let’s assume that this hack is not meant to preserve money, but to destroy evidence. If you spread a lot of s** around and overwrite all this stuff with malware, does it create plausible deniability?
"I was initially a crypto skeptic, but after studying some of the more interesting crypto projects, I have come to believe that crypto can enable the formation of useful businesses and technologies that heretofore could not be created."
The telephone, the internet, and crypto share one thing in common. Each technology improves on the next in terms of its ability to facilitate fraud.
As such, I was initially a crypto skeptic, but after studying some of the more interesting crypto projects, I have come to - Bill Ackman (@BillAckman) November 20,
The telephone, the internet, and crypto share one thing in common. Each technology improves on the next in terms of its ability to facilitate fraud.
As such, I was initially a crypto skeptic, but after studying some of the more interesting crypto projects, I have come to - Bill Ackman (@BillAckman) November 20,
Fraud. This is why banking regulation is important, almost all banking laws on the books exists because someone got screwed.
[deleted]
Because someone screwed over too many other people
More like because the wrong people got screwed over.
[deleted]
FTX General Counsel confirmed unauthorized transactions: https://twitter.com/_ryne_miller/status/1591326796305530880?...
> FTX US and FTX [dot] com initiated precautionary steps to move all digital assets to cold storage
What assets?
What assets?
This is absolutely wild and unprecedented. Imagine being a victim of Madoff's ponzi and - after already being traumatized by the unveiling of the fraud - discovering that the rest of the money had been stolen.
Madoff's ponzi was larger, but the recovery rate was 88%. It looks like customers who didn't withdraw in time will end up with 0%.
Madoff's ponzi was larger, but the recovery rate was 88%. It looks like customers who didn't withdraw in time will end up with 0%.
Can confirm. Lost 100% of my mtgox holdings in 2013. Theoretically my account balance is 7.73 BTC. I can still log in and see it. Maybe by the time I retire I’ll have recovered like 0.7 BTC. Which amusingly would be the sum of my original $11k investment.
A lot of this is just gambling. People need to go into it with the mindset that the money will be gone tomorrow, and then be pleasantly surprised if it doesn’t.
See this millionaire who is now worth $10k due to FTX: https://www.tiktok.com/t/ZTRxWq77B/
A lot of this is just gambling. People need to go into it with the mindset that the money will be gone tomorrow, and then be pleasantly surprised if it doesn’t.
See this millionaire who is now worth $10k due to FTX: https://www.tiktok.com/t/ZTRxWq77B/
If you've been keeping up with your claim filings you should get around 1.1 to 1.25 BTC (estimate from https://blog.wizsec.jp/2021/02/mtgox-claim-calculator.html?m...)
Thank you for the claim calculator! I spent like an hour trying to understand the calculations manually, but the ~7 pages of dense legalese was hard to decipher.
(I’ll believe it when the coin is in my wallet though. Till then, I mentally moved on a long time ago. It felt like the end of the world at the time, since it was my father’s savings that he’d worked for a decade to save up for his kid one day. Wiping it out over night wasn’t a good feeling, to say the least. But, life goes on, and I was fortunate it was only $11k. An expensive lesson, but one I needed to learn.)
(I’ll believe it when the coin is in my wallet though. Till then, I mentally moved on a long time ago. It felt like the end of the world at the time, since it was my father’s savings that he’d worked for a decade to save up for his kid one day. Wiping it out over night wasn’t a good feeling, to say the least. But, life goes on, and I was fortunate it was only $11k. An expensive lesson, but one I needed to learn.)
> I can still log in and see it.
Who operates the site?
Who operates the site?
The Japanese government is handling this pretty well. They assigned a … I’m not sure the term. Manager? Basically some Japanese firm is handling everything related to Gox.
The process has been slow (we’re almost at the one-decade mark) but it does seem to be progressing.
Whereas it’s hard to imagine FTX creditors having any hope whatsoever after this.
The process has been slow (we’re almost at the one-decade mark) but it does seem to be progressing.
Whereas it’s hard to imagine FTX creditors having any hope whatsoever after this.
[deleted]
There's no way this is a coincidence. This is undoubtedly people who work(ed) at the company and were trusted with private keys trying to get away with some money while they can.
Agreed. It's by far the simplest answer. They already have the keys and have the code.
I don't think it was insider job. If insiders wanted to steal people's assets why do it in such a public manner? If they have the keys they can just move funds discretely from the larger pooled assets without draining individual accounts. A malicious app update draws way too much undue attention.
If I were an insider, I'd want to steal the funds out in the open and add decoys such as the app update to make it look like a hack.
What's weird is, why wasn't the system turned off? They've totally collapsed, filing bankruptcy, and supposedly aren't allowing withdrawals, so what was the point of leaving the system up and vulnerable?
They don't have the power to pause non-FTT blockchain systems. What you're suggesting isn't really possible. Someone has to hold the keys -- and I doubt they used sufficient multi-sig -- and anyone who has the keys can always move the funds.
But aren't they themselves (FTX) custodians of these funds? In that case, why not turn their services off to protect the keys from being hacked? What you say makes sense once a hack takes place, but how did the hackers get the keys? Or do they use external custodians?
> how did the hackers get the keys?
It's most likely an inside job, either by disgruntled employees or SBF himself:
"In a subsequent examination, FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a "backdoor" in FTX's book-keeping system, which was built using bespoke software.
They said the "backdoor" allowed Bankman-Fried to execute commands that could alter the company's financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said." [1]
[1] https://archive.ph/YImJS
It's most likely an inside job, either by disgruntled employees or SBF himself:
"In a subsequent examination, FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a "backdoor" in FTX's book-keeping system, which was built using bespoke software.
They said the "backdoor" allowed Bankman-Fried to execute commands that could alter the company's financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said." [1]
[1] https://archive.ph/YImJS
That is truly astonishing. How did he think he could get away with it?
I kept wondering how someone who seemed smart, wanted to help others, and admitted that crypto is a Ponzi scheme could end up in crypto. It broke my brain.
Now I see he was a brazen criminal all along and the world makes sense again.
I kept wondering how someone who seemed smart, wanted to help others, and admitted that crypto is a Ponzi scheme could end up in crypto. It broke my brain.
Now I see he was a brazen criminal all along and the world makes sense again.
What I don't get (well I do, lobbying and inside deals), is why these guys have run so long (especially Tether). Just because crypto is a 'decentralised' wild west opposed to government shouldn't mean they sit outside of the laws around fraud, laundering and deception, especially if they're registered companies.
The lack of legal focus, given the obvious illegitimacy of it all is disgraceful and I can't even imagine the size of the wealth transfer happening through all this.
The lack of legal focus, given the obvious illegitimacy of it all is disgraceful and I can't even imagine the size of the wealth transfer happening through all this.
FTX was able to fleece Wall Street investors specifically because of their deep Wall Street connections. This is a corrupt Wall Street story. The only reason they were exposed is because they left evidence on-chain, and people started asking questions. There are very few people who have been in the cryptocurrency space for more than 5 years that had any sort of trust in FTX.
https://twitter.com/concodanomics/status/1591232063906217984
https://twitter.com/concodanomics/status/1591232063906217984
> Just because crypto is a 'decentralised' wild west opposed to government shouldn't mean they sit outside of the laws around fraud, laundering and deception, especially if they're registered companies.
Entirely speculation, but something fun I've heard repeated occasionally:
If this was "just tech", it could find itself regulated easily. (Though this isn't necessarily the case.)
If it's a geopolitical weapon or spy tool of any consequence, then there may be other stakeholders pushing back against weakening it.
Plausible, borderline conspiratorial, but fun to think about.
Entirely speculation, but something fun I've heard repeated occasionally:
If this was "just tech", it could find itself regulated easily. (Though this isn't necessarily the case.)
If it's a geopolitical weapon or spy tool of any consequence, then there may be other stakeholders pushing back against weakening it.
Plausible, borderline conspiratorial, but fun to think about.
'Testbed for CBDCs' and 'black budget money laundering' seem like compelling explanations for the stunning regulatory forbearance (so far) to me. I've also seen speculation that FTX/SBF were intentionally allowed to create Ponzi bubbles of epic proportions in order to discredit decentralized digital currency and make it radioactive in most of the public's mind.
Or just the usual story of near senile legislators being decades behind actual developments and just not getting it, and therefore not moving quickly enough.
Alternatively, governments knew FTX was a fraud and let it happen to weaken peoples’ faith in crypto.
Scientology, herbalife, and other obvious scams have persisted. I think crypto people love getting defrauded, and as long as they enjoy it there won't be much pressure to prosecute.
I Dunn if it is fair to include Scientology in that.
Other than the amounts of money involved, it clearly is a religion.
Other than the amounts of money involved, it clearly is a religion.
And in general religions are in business of extracting money from people and using it for their own means. Scientology is not any different from any other. Including the mainstream Christian cults...
And their means both as determined by their doctrine and expressed by their history vary greatly. In the US religions have been legally defined (a subject of much debate historically) as they are given tax and regulatory exemptions and often public funding. Here’s a good read on the topic from 1969:
https://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=3...
I’m curious, are there specific ones your referring to, or do you consider all mainstream denominations of Christianity cults?
https://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=3...
I’m curious, are there specific ones your referring to, or do you consider all mainstream denominations of Christianity cults?
Wait is the government a religion?
I don't understand the modding down. Does someone want to explain why Scientology is different than, say, the major Christian religions? Or Islam?
Here’s my understanding:
In Christianity, god extorts adherence through the revelation that there’s eternal life after death and the threat of eternal damnation as punishment for insubordination. The requirements to enter Heaven are acknowledgment and acceptance of Jesus’ crucifixion as atonement for your transgressions (and possibly repentance).
In Islam, god extorts adherence through the revelation that there’s eternal life after death and the threat of eternal damnation as punishment for insubordination. The requirements to enter Paradise are not explicitly defined (aside possibly through dying in a Jihad) so strict adherence is arguable more crucial than in Christianity.
In Scientology, god extorts adherence by eliciting confessions of past transgressions on videotaped counseling sessions and threatening public exposure for insubordination, among other tactics.
In Christianity, god extorts adherence through the revelation that there’s eternal life after death and the threat of eternal damnation as punishment for insubordination. The requirements to enter Heaven are acknowledgment and acceptance of Jesus’ crucifixion as atonement for your transgressions (and possibly repentance).
In Islam, god extorts adherence through the revelation that there’s eternal life after death and the threat of eternal damnation as punishment for insubordination. The requirements to enter Paradise are not explicitly defined (aside possibly through dying in a Jihad) so strict adherence is arguable more crucial than in Christianity.
In Scientology, god extorts adherence by eliciting confessions of past transgressions on videotaped counseling sessions and threatening public exposure for insubordination, among other tactics.
At least Islam and Christianity funded art, architecture and to some extent science and literacy.
Disclosure: I'm agnostic asymptotically approaching atheist
Disclosure: I'm agnostic asymptotically approaching atheist
Popular appeal?
All sorts of scams, from dietary supplements to homeopathy pyramid schemes are permitted to carry on because fighting them is too unpopular.
Edit: take a look at Twitter. Crypto folks are busy worried that the Us gov will overreact and regulate crypto over this.
All sorts of scams, from dietary supplements to homeopathy pyramid schemes are permitted to carry on because fighting them is too unpopular.
Edit: take a look at Twitter. Crypto folks are busy worried that the Us gov will overreact and regulate crypto over this.
New speedrun world-best?
I realize this doesn’t add much by way of substance but this has been an incredible watch.
I hope someone is keeping an eye on SBF.
I realize this doesn’t add much by way of substance but this has been an incredible watch.
I hope someone is keeping an eye on SBF.
How is $ftt still at $2? What will happen to it in bankruptcy proceedings? $2 is still higher than it was in 2019.
The fact that it’s not 0 is kind of amazing. Demonstrates the vast ignorance of most in the crypto space
> Others speculated that the outflows could be coordinated by a member of Bankman-Fried’s inner circle
They announced the hack and told users not to log in so insiders could get their funds out first, right?
They announced the hack and told users not to log in so insiders could get their funds out first, right?
Am I the only one who is worried about the potential identity theft that could emerge from the hack? Ftx would have documentation used for KYC checks for thousands of customers / users. Passports, social security etc. If the attacker is interested in more than siphoning out assets to secret wallets, this could get them more ugly.
I have an Ftx account.
Every time one of these cryptoscams matures I curse my rotten, stupid, brain.
If I was smart, I too would be ripping off all of the cryptobros.
Instead I dumb and do honest work.
If I was smart, I too would be ripping off all of the cryptobros.
Instead I dumb and do honest work.
A) few people can make money off of a ponsi scheme
B) The unregulated crooks are making it so crypto either will be outlawed or regulated (e.g. central exchanges regulated), so you won't be able to scam for very much longer
C) it's not just crypto bros, many people made the speculative investment who are relatively uninterested in it, you are mote likely to defraud your standard investor looking to trade stocks with e.g. Robinhood than any major players.
So don't feel bad or think you have missed out. If you want to defraud someone go sell NFTs, those are literally nonsense sold to idiots...
B) The unregulated crooks are making it so crypto either will be outlawed or regulated (e.g. central exchanges regulated), so you won't be able to scam for very much longer
C) it's not just crypto bros, many people made the speculative investment who are relatively uninterested in it, you are mote likely to defraud your standard investor looking to trade stocks with e.g. Robinhood than any major players.
So don't feel bad or think you have missed out. If you want to defraud someone go sell NFTs, those are literally nonsense sold to idiots...
Create products, real value and make money.
At least that’s how I think of it, speculation creates nothing new. Instead it depletes resources that could have otherwise been used on something more meaningful.
At least that’s how I think of it, speculation creates nothing new. Instead it depletes resources that could have otherwise been used on something more meaningful.
People will be going to jail for this. Do not take the short term view.
Let's keep out eyes on this. It is a super lurid scenario (to use a word introduced by @dang on this posting).
By "this" I don't mean the earlier bits of the FTX debacle, but specifically this draining event. The statement that "FTX apps are malware" is weird in that it implies they became malware a while back. I could see either hackers penetrating due to inadequate security, or insiders setting up for an opportune time. Until the crypto is tumbled, it will be possible to trace its movements. Perhaps it'll just get frozen somewhere to keep it inaccessible by FTX interests. Let's see how long it takes to determine and locate any suspects for this. I have no guess aa to that, but watching with interest.
Who says the Binance app won't turn into a threat at some point?
By "this" I don't mean the earlier bits of the FTX debacle, but specifically this draining event. The statement that "FTX apps are malware" is weird in that it implies they became malware a while back. I could see either hackers penetrating due to inadequate security, or insiders setting up for an opportune time. Until the crypto is tumbled, it will be possible to trace its movements. Perhaps it'll just get frozen somewhere to keep it inaccessible by FTX interests. Let's see how long it takes to determine and locate any suspects for this. I have no guess aa to that, but watching with interest.
Who says the Binance app won't turn into a threat at some point?
To be clear, even the FTX bankruptcy and the way it happened, not even taking this outflow/hack here into account, is jail worthy. The question is whether it falls under US jurisdiction and whether the defense lawyers can be paid enough to somehow avoid this, or postpone for a decade or so.
Oh yes. Some are asking whether this is Lehman or Enron (forgetting Worldcom) I expect this is a love child that we'll call "FTX".
Be glad your mind doesn't tempt you with this crap. You'll pay for it one way or another, and in the end, money doesn't matter beyond a very low point.
Related to seeing mysterious outflows on ETH.
I built a little tool that tracks the transaction networks of several top tokens.
If anything: Highly entertaining, I see a LOT of weird stuff.
It's called Pudding (because that's where the proof is) at https://alexisrondeau.me/pudding/
I built a little tool that tracks the transaction networks of several top tokens.
If anything: Highly entertaining, I see a LOT of weird stuff.
It's called Pudding (because that's where the proof is) at https://alexisrondeau.me/pudding/
This whole saga has done irreparable damage to crypto. It will take a lot of time for it to come out of this hole. When there is money involved, and that too this much, there will be conspiracy theories flying around and the regular retail investor will be tough to win back. It will be very interesting to see what happens from here on out. Crypto doesn’t have any uses to begin with, if it’s purely used as pump and dump schemes why bother?
All it takes is a business case: how will this business make money? Where will its cash flow come from? Where's the value-add? How easy is it to be out-competed? Who are the existing market players? How do they make money? What are you offering customers that will attract them to your business? What is the horizon for profitability?
You know, absolutely fundamental questions that have never been asked or answered of crypto. Questions that were "presumed answered" by made-up market capitalisations, and the flood of teenagers and young-adults into the schemes.
"This time" is never different. The route to making a sustainable profit never changes.
You know, absolutely fundamental questions that have never been asked or answered of crypto. Questions that were "presumed answered" by made-up market capitalisations, and the flood of teenagers and young-adults into the schemes.
"This time" is never different. The route to making a sustainable profit never changes.
I don’t know what you’re suggesting here really but in general running an exchange seems like a reasonable looking business – you match someone who wants to buy with someone who wants to sell and collect a tiny fee – and FTX appeared to be well run and profitable. The risks would mostly be getting hacked, massively (unintentionally) screwing up the accounting or being outcompeted. I don’t think one could have easily predicted this from first principles and if you’d told me a year or 5 months ago that one of the big N exchanges would blow up before 2023, I wouldn’t have guessed FTX.
Not sure about that. I didn't even knew FTX existed. Alt coins the drama surrounding them are too high volume low impact. But I always thought of crypto as gambling with extra steps. I think that most people in crypto know the ropes by now.
I'm curious about when you thought it was anything else?
I don't think this will affect its reputation noticeably.
Which demographic is going to be turned off by this?
The regular public won't hear about this. the FIRE investor people basically seem to use a percentage as a lottery ticket. Wall Street I would hope already saw the consistent story.
Is it hard core blockchain people, who knew of all the other crashed parties, but thought surely that's all behind us for the big players, having grown up now? But then nothing seems to faze them.
Maybe the whales who don't actually care about blockchain, but were sold angel investor status? Yeah, possibly.
I don't think this will affect its reputation noticeably.
Which demographic is going to be turned off by this?
The regular public won't hear about this. the FIRE investor people basically seem to use a percentage as a lottery ticket. Wall Street I would hope already saw the consistent story.
Is it hard core blockchain people, who knew of all the other crashed parties, but thought surely that's all behind us for the big players, having grown up now? But then nothing seems to faze them.
Maybe the whales who don't actually care about blockchain, but were sold angel investor status? Yeah, possibly.
Regular public were shown multiple FTX TV adverts featuring A-list celebrities. The collapse of FTX is being featured on major news outlets. I'm pretty sure ordinary people will hear about it.
> The regular public won't hear about this.
From what I am reading, quite a few people had money in FTX so this may not be entirely true. The word will spread about people who lost it all in the FTX bankruptcy.
> This whole saga has done irreparable damage to crypto.
There were so many similar sagas in crypto, that this is not surprising at all by now.
There were so many similar sagas in crypto, that this is not surprising at all by now.
Honest question. How is it that the traditional banks stay comparatively secure from hacks and the crypto scene is an endlessly reporting the next big breach?
Maybe the crypto exchanges should hire some bank security experts or at least adopt their best practices
I'd wager that it's because banks are able to reverse transactions, so even though there must be hackable banks out there (on account there being thousands of them), it must be incredibly difficult to monetize.
Additionally, if you hack a crypto exchange it isn't clear that law enforcement will be all that interested. If you steal from a bank, or from the people who've made deposits at that bank, it's a different story.
Lastly there's an infrastructure of coin laundries to facilitate crypto heists that's accessible to everyone, but in "tradfi" that infrastructure either doesn't exist or isn't generally available.
Additionally, if you hack a crypto exchange it isn't clear that law enforcement will be all that interested. If you steal from a bank, or from the people who've made deposits at that bank, it's a different story.
Lastly there's an infrastructure of coin laundries to facilitate crypto heists that's accessible to everyone, but in "tradfi" that infrastructure either doesn't exist or isn't generally available.
I forget who, but some human described crypto as speedrunning the past century or two of financial history, which seems apt. I think the traditional banks and regulators learned similarly hard lessons too, it was just mostly before I was born.
Well, you should consider what exactly would be hacked. Banks don't really hold huge amounts of gold or physical cash anymore, most of what they have is 'credit' and debt.
Cryptographic currencies are not credit, they are the gold. They are what gold would be if it were easily divisible and could be transferred anywhere, instantly, for only several cents worth of transaction fees.
Despite how quickly you can transfer cryptocurrencies, you could secure it as well as you physically secure gold if you really wanted to. The problem is that there are a bunch of businesses who are holding peoples' gold for them in such a way that bidirectional channels exist between front-end machines and back-end machines that have the private keys on them, and there is no regulation instructing these wannabe banks to perform cryptographic signatures on airgapped machines. It is as if Fort Knox were just leaving all of its entrances open.
Cryptographic currencies are not credit, they are the gold. They are what gold would be if it were easily divisible and could be transferred anywhere, instantly, for only several cents worth of transaction fees.
Despite how quickly you can transfer cryptocurrencies, you could secure it as well as you physically secure gold if you really wanted to. The problem is that there are a bunch of businesses who are holding peoples' gold for them in such a way that bidirectional channels exist between front-end machines and back-end machines that have the private keys on them, and there is no regulation instructing these wannabe banks to perform cryptographic signatures on airgapped machines. It is as if Fort Knox were just leaving all of its entrances open.
[deleted]
Because the crypto firms are a handful of 20 something kids with 0 security background
[deleted]
And the giant scam that is crypto marches on. I feel like such a schmuck for not working on ICOs when that’s as all going on. Was sure that this was all fraudulent, but you can walk off with a billion dollars now and nothing will happen.
Or get on early on some of this junk. But I back then didn't believe it would go up and still don't believe it to stay up or go up more...
Some many opportunities from pre-mined shit coins to ICOs and so on.
Some many opportunities from pre-mined shit coins to ICOs and so on.
Even by crypto standards this is looking gnarly
Absolutely bullshit. Fried's parents are helping him build a defense against jail time for breach of fiduciary duty and embezzlement while his team coincidentally gets "hacked". Hacks are quickly becoming strategic fail-safes against corporate incompetence and useful as backroom data sales.
The promise of cryptographic currency was that we have the power. These exchanges by design sap that power for a promise that now seems illusionary at best and a massive liability at worst.
FINRA and the SEC need to charge Fried and his executive team immediately and begin the process of tearing apart that exchange.
The promise of cryptographic currency was that we have the power. These exchanges by design sap that power for a promise that now seems illusionary at best and a massive liability at worst.
FINRA and the SEC need to charge Fried and his executive team immediately and begin the process of tearing apart that exchange.
> The promise of cryptographic currency was that we have the power.
As usual, we don’t. The question is, do you want the power to be in a condo in the Bahamas or in a building with the company’s logo on it, within walking distance of the SEC and SDNY?
As usual, we don’t. The question is, do you want the power to be in a condo in the Bahamas or in a building with the company’s logo on it, within walking distance of the SEC and SDNY?
Well, if you take the exchanges away nobody has access to convenient liquidity. It's unlikely that mainstream cryptocurrency will have a future after we've seen so many failures at such a large scale.
This reminds me of `OSHA laws being written in blood`. The same has been true for everything in life and the stock market. And human nature didn't change with Crypto, so it WILL be the same.
Thanks to via: Contact hacker wise @ g mail com. They were quite attentive to my circumstance and got me my money back. Excellent service. I have no hesitation in commending them to anyone else who has been scammed. A grateful client. If you have been through the same issue and know you got scammed, I strongly recommend their services.
Would issues like this even arise if it was all open-source and on-chain? I don't mean a DEX run by a DAO, I mean a Delaware C-corp with managers that simply makes every git commit public, maybe even their email servers. You could claim that this would be a competitive disadvantage but it might actually be a novel way to build a moat in this industry.
Tether is just as if not more shady than anything coming out of this whole FTX saga. It wouldn't surprise me if people behind the scenes are working on it right now to try and bring it down and be first to claim that scalp.
For comparison - a regulated traditional finance entity:
On October 31, 2011, MF Global executives admitted that transfer of $700 million from customer accounts to the broker-dealer and a loan of $175 million in customer funds to MF Global's U.K. subsidiary to cover (or mask) liquidity shortfalls at the company occurred on October 28, 2011.
https://en.wikipedia.org/wiki/MF_Global
On October 31, 2011, MF Global executives admitted that transfer of $700 million from customer accounts to the broker-dealer and a loan of $175 million in customer funds to MF Global's U.K. subsidiary to cover (or mask) liquidity shortfalls at the company occurred on October 28, 2011.
https://en.wikipedia.org/wiki/MF_Global
One key difference is the following:
> In January 2013, a judge approved a settlement that would return 93 percent of customers' investments, with the prospect of additional payouts from the company's general estate.
> In January 2013, a judge approved a settlement that would return 93 percent of customers' investments, with the prospect of additional payouts from the company's general estate.
Is this "whataboutism"? And if so, what's your point precisely?
I don't think anyone has ever claimed that financial malfeasance is impossible in traditional banking entities.
I don't think anyone has ever claimed that financial malfeasance is impossible in traditional banking entities.
I’m not seeing anything about a hack
Isn’t this just people that live in the Bahamas draining their own accounts (which is still allowed)?
Plus, obviously, people who can find a random Bahamas native to KYC their account for them.
Plus, obviously, people who can find a random Bahamas native to KYC their account for them.
I imagine a large chunk of FTX users in the Bahamas are FTX employees, and others associated with the company.
At the very least they would know someone there who is a citizen and could withdraw their funds for them. A loophole was utilized where a Bahamanian FTX user would create an NFT on FTX's NFT marketplace, and the locked user would buy it with the price equal to all of their funds. Then the Bahamanian would withdraw to fiat and take their cut. People probably made dozens of millions in a day taking 50% cuts while laundering people's money out.
Where are the regulators and enforcers when we actually need them? How is any high up in this institution not arrested yet? What the hell are they doing?
Like is this a psyop to destroy crypto? Is this preferential treatment of SBF due to his donations/regulatory capture? Imagine if there was a mass shooter in a crowd of people and they just let him continue firing until he ran out of ammo, that's analogous to what's happening right now. Absolutely insane.
Like is this a psyop to destroy crypto? Is this preferential treatment of SBF due to his donations/regulatory capture? Imagine if there was a mass shooter in a crowd of people and they just let him continue firing until he ran out of ammo, that's analogous to what's happening right now. Absolutely insane.
I would remind you that classifying crypto to be securities would very easily make all of this illegal. Yet the crypto sphere fought tooth and nail against this.
> Like is this a psyop to destroy crypto
Why would the government get their hands dirty when crypto can self-implode on its own.
Why would the government get their hands dirty when crypto can self-implode on its own.
Regulators are like the fire trucking coming after the home burned down. Regulators seem to do a poor at at stopping people from being scammed. Scammers keep coming up with new types of scams that evade regulators, and people keep falling for them.
interesting hypothetical with the mass shooter. crypto regulations being what they are, you would need some equivalent of a "good guy with a gun" to take out the bad one.
It's wild. The place is brazenly being robbed in public eyes. Is it under the Bahamas laws? What can anyone do?
Bahamas has an extradition treaty with the US. If SBF doesn’t flee he will definitely get indicted in US court
I don’t think SBF would be dumb enough to steal $400m right now when the whole world is watching his every move.
Well he was dumb enough to post a bunch of lies and nonsense to Twitter the last couple days…
Maybe I'm more cynical than most but those tweets to me feel like they will be used as evidence in the future to argue that he didn't really have the full picture what was going at FTX and that it was really the Alameda people or the devs etc behind everything.
> Alameda people or the devs etc behind everything.
SBF used to have intercourse with the Alameda CEO, and if I'm not mistaken they were all in this together (FTX + Alameda, that is). Article on the intercourse thing [1]. The admins of this forum can complain about "the level of discussion getting low" as much as they want, but this is the reality, this is how billions of dollars have been stolen.
[1] https://www.coindesk.com/business/2022/11/10/bankman-frieds-...
SBF used to have intercourse with the Alameda CEO, and if I'm not mistaken they were all in this together (FTX + Alameda, that is). Article on the intercourse thing [1]. The admins of this forum can complain about "the level of discussion getting low" as much as they want, but this is the reality, this is how billions of dollars have been stolen.
[1] https://www.coindesk.com/business/2022/11/10/bankman-frieds-...
He's going to prison anyway, his reputation is tarnished, maybe he figured: Why not make a run for it?
This could be pretty interesting leverage.
"I hold the private key to refund 80% of my victims losses, reduce my sentence or it dies with me."
"I hold the private key to refund 80% of my victims losses, reduce my sentence or it dies with me."
> reduce my sentence or it dies with me
He would go to jail. This isn’t even a tough one.
He would go to jail. This isn’t even a tough one.
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Why not? Lying got him this far!
The article states:
>According to on-chain data, various Ethereum tokens as well as Solana and Binance Smart Chain tokens exited FTX's official wallets and moved to decentralized exchanges like 1inch. Both FTX and FTX US appear to be affected."
Can someone say what the significance of moving these tokens to a decentralized exchange is? I'm guessing there's a strategic reason for doing so. Can someone explain what that it is if so?
>According to on-chain data, various Ethereum tokens as well as Solana and Binance Smart Chain tokens exited FTX's official wallets and moved to decentralized exchanges like 1inch. Both FTX and FTX US appear to be affected."
Can someone say what the significance of moving these tokens to a decentralized exchange is? I'm guessing there's a strategic reason for doing so. Can someone explain what that it is if so?
Knowing little about how ftx works... Is the article talking about customer accounts at FTX being drained? Or accounts belonging to FTX being drained?
FTX is a centralized entity, just like PayPal is. There is no such difference. As a centralized company, they are supposed to hold all customer funds in their own bank/wallet/whatever account(s).
iait may be centralized but there's no comparison to PayPal. PayPal does not commingle funds
Paypal keeps separate bank accounts for each customer?
The claim is that PayPal keeps user funds separately from the funds that PayPal e.g. uses to pay for operating expenses.
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to what extent can my pc/phone be compromised simply by going to a website? how would i know if malicious software is downloaded/active?
iirc someone on hn said the going rate for zero-days is just $1-2 million. there were at least 3 RCE on chrome just this year: https://www.theregister.com/2022/04/15/google-third-fix-chro...
the math works out for someone to spend it here given the amount of panicky crypto whales trying to get their money out of ftx. (OTOH, the math also suggest that these exchanges should've been hacked long long ago if these cheap zero days exist, so idk)
the math works out for someone to spend it here given the amount of panicky crypto whales trying to get their money out of ftx. (OTOH, the math also suggest that these exchanges should've been hacked long long ago if these cheap zero days exist, so idk)
Could be as simple as the defenders walked off the job at FTX.
My thoughts also... can this be bigger than FTX?
Can iOS/Android apps be updated without 3rd party approval?
Can iOS/Android apps be updated without 3rd party approval?
There is no evidence that a bypass occurred related to iOS or Android app review
An analysis of the app update showed it disabling user features like account transfers. That makes sense for their bankruptcy steps.
An analysis of the app update showed it disabling user features like account transfers. That makes sense for their bankruptcy steps.
Verrry skeptical. They get hacked the same week that they go under and face regulators?
For apps to be compromised, that means a dev was involved, either knowingly or unknowingly. And as a dev, that unknowing part would be very hard, way more difficult when dealing with an app that handles so-called financial transactions. If something got in unaudited, that's also on the devs.
For apps to be compromised, that means a dev was involved, either knowingly or unknowingly. And as a dev, that unknowing part would be very hard, way more difficult when dealing with an app that handles so-called financial transactions. If something got in unaudited, that's also on the devs.
Can someone deeper in the space explain the series of transactions from
"letssavecrypto.eth" to the FTX Drainer address?
Seen here: https://etherscan.io/address/0xaa16547cdc32268542145d3401120...
My guess is its a way to communicate a message via txn data.
"letssavecrypto.eth" to the FTX Drainer address?
Seen here: https://etherscan.io/address/0xaa16547cdc32268542145d3401120...
My guess is its a way to communicate a message via txn data.
Nevermind, looks like its an on-chain add for another crypto service. Haven't seen that before
https://etherscan.io/tx/0x6bdd6c7d90c7f67223f7971745d5bc1f7b...
Text in utf-8:
Check out Fringe Finance, fully decentralised/non custodial platform. It's very very important to support projects like Fringe if we don't want events like FTX to repeat. Do check :- https://www.coingecko.com/en/coins/fringe-finance Problem won't solve just by creating Fck FTX Token. We need to support Fully Decentralised and Non Custodial platform Fringe at any cost. Lend/Borrow/Stake/LP/Stable Coin/Collaterals etc etc Team has been burning midnight oil, putting their blood and sweat into this. Check website, Read mediums. This project can end centralised scams for ever. Let's save crypto and pledge no one ever gets burnt again. Support Decentralisation, Support Hardwork, Support Fringe Finance.
https://etherscan.io/tx/0x6bdd6c7d90c7f67223f7971745d5bc1f7b...
Text in utf-8:
Check out Fringe Finance, fully decentralised/non custodial platform. It's very very important to support projects like Fringe if we don't want events like FTX to repeat. Do check :- https://www.coingecko.com/en/coins/fringe-finance Problem won't solve just by creating Fck FTX Token. We need to support Fully Decentralised and Non Custodial platform Fringe at any cost. Lend/Borrow/Stake/LP/Stable Coin/Collaterals etc etc Team has been burning midnight oil, putting their blood and sweat into this. Check website, Read mediums. This project can end centralised scams for ever. Let's save crypto and pledge no one ever gets burnt again. Support Decentralisation, Support Hardwork, Support Fringe Finance.
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It’s interesting that we aren’t seeing a bigger crash in overall crypto prices - generally it’s holding up ok
Hopeful thinking: people realize that FTX is a CEX and the true value of crypto is in DeFi and DEXes.
Reality: contagion will spread next week and everything will probably crash, even if DeFi remains unaffected.
Reality: contagion will spread next week and everything will probably crash, even if DeFi remains unaffected.
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Elon posted about this on twitter: https://twitter.com/elonmusk/status/1591313397362352130
He must be happy not to take the call with Sam Bankman-Fried to invest money https://twitter.com/TechEmails/status/1591107918816247808
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11/11 was an inside job
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Does anyone know what the state of fintech is now? Haven’t heard much about them. There are a lot of companies like chime that received investments but not sure how much they can survive in a downturn
This guy SBF has close links to China. Who knows maybe the Wang chap on his board is a CPC guy. It’s time to consider state involvement in this fiasco. Why ignore that possibility?
Why has this to be hack? Wouldn't it be much easier an inside job?
If something, this really smells like inside job. They are just draining everything out of the connected wallets. This is fucking shame.
It's pretty astounding that there was essentially no volatility in crypto markets along with this. To the point of being fishy.
It shouldn’t be astounding. The entire crypto market is controlled by a handful of powerful entities. It goes up when they want it to, and it goes down when they want it to.
It crashes when they lose control, as they did earlier in the year. But at this point I don’t believe there’s enough riding on FTX that they’ve lost control again.
FTX is a story of retail and normies getting rinsed. But that’s zero sum. Who do you think ended up on the other side of the equation? Those people are in a decent position.
It crashes when they lose control, as they did earlier in the year. But at this point I don’t believe there’s enough riding on FTX that they’ve lost control again.
FTX is a story of retail and normies getting rinsed. But that’s zero sum. Who do you think ended up on the other side of the equation? Those people are in a decent position.
Yeah, somehow, I don't think a yearlong 80-90% down is the choice of a cabal of all powerful overlords.
I did forget to wrap my doorknobs in tinfoil today so maybe I'm just not thinking straight
I did forget to wrap my doorknobs in tinfoil today so maybe I'm just not thinking straight
Is it in the US government's interest to see FTX thrive, or to see it disappear? What about crypto currency in general?
A private plane departed from the Bahamas yesterday with an unknown destination. Ultimately it landed in Argentina.
Do you have a link with more information?
Yes, we’ve tracked him here:
https://flightaware.com/live/flight/LVKEB/history/20220525/1...
They’re gonna get this fucker.
They’re gonna get this fucker.
This did not turn out to be SBF’s jet.
Is this like the people in Lebanon who have taken to robbing their banks to get their own money out?
It's gonna be the guy that fixes the printer & its his first forray into crypto world
From what I understand, SBF described the product as a Ponzi scheme in so many words 6 months ago, yet somehow attracted more money than Enron. Now he's fled to Argentina, and people are are missing billions.
Apparently he even had a custom client built that wouldn't trigger auditing.
It never ceases to amaze that this story happens again and again.
Apparently he even had a custom client built that wouldn't trigger auditing.
It never ceases to amaze that this story happens again and again.
This is not true. You should edit it. Reuters has it that SBF is still in Nassau.
> Now he's fled to Argentina
What is it about inflationary and socialist Argentina that would attract a cryptocurrency capitalist con artist? Do they have no extradition treaty?
What is it about inflationary and socialist Argentina that would attract a cryptocurrency capitalist con artist? Do they have no extradition treaty?
Yes, the US and Argentina have an extradition treaty.[1]
[1] https://www.state.gov/wp-content/uploads/2019/02/12866-Argen...
[1] https://www.state.gov/wp-content/uploads/2019/02/12866-Argen...
Corporate theft is not a hack.
this twitter post has more info: https://news.ycombinator.com/item?id=33571261
It has got to be an insider's improvised "plan B."
I would like this to be a rogue white-hat. Anybody have a theory?
man, everyone including major investment banks – everyone was talking about him (bankman-fried) like he's walking on water and has a zillion dollars.
So it's turned into a rug pull?
Likely insiders withdrawing funds
this is mt gox all over again, one would think people will learn something over the years
between this and twitter I'm smiling ear to ear, you love to see it
Not your keys, not your crypto. Never leave funds on exchanges. When will people learn?
There have been so many hacks over the past 3 years. What happens to this money and the people behind it? Does it get mixed or stay dormant in the wallets forever? Few arrests, AFIK despite so much $ stolen. Except Bifinex 2016 hacker and Silk Road 2012 hacker.
Orders of magnitude more compared to 2008. Only one person went to prison after that farce. At least with crypto there's some form of public ledger.
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1. Who is transferring the funds?
a. Bankman-Fried and associates
b. insiders (disgruntled)
c. outsiders (hackers)
2. Is it plausible that the transferred funds be laundered?
3. Can this altruism get any more effective?
This story is utterly fascinating. It keeps getting better and better. I remember thinking Mt. Gox was wild. This fraud is second only to Ponzi.
a. Bankman-Fried and associates
b. insiders (disgruntled)
c. outsiders (hackers)
2. Is it plausible that the transferred funds be laundered?
3. Can this altruism get any more effective?
This story is utterly fascinating. It keeps getting better and better. I remember thinking Mt. Gox was wild. This fraud is second only to Ponzi.
The simplest explanation I have (occam’s razor) is a tie between 1.a and 1.b
I’ve also heard rumors that inside bad actors pushed out a forced FTX app update to gain access to accounts. So the advisory is to uninstall FTX and not go anywhere near that website. Any money one has is unfortunately gone, wait for the bankruptcy proceedings to recoup it, if at all.
I’ve also heard rumors that inside bad actors pushed out a forced FTX app update to gain access to accounts. So the advisory is to uninstall FTX and not go anywhere near that website. Any money one has is unfortunately gone, wait for the bankruptcy proceedings to recoup it, if at all.
> I’ve also heard rumors that inside bad actors pushed out a forced FTX app update to gain access to accounts.
If it's an inside job with this capability you'd likely already have such access?
Only way is that somebody has access to push this, doesn't have access to the keys, and rewrites the app to send them assets or something. But the mass withdrawals imply the keys are compromised, and pushing the app would very unquestionably imply you?
It's quite strange that a bad update was pushed at all since it implies that the bad actor doesn't have key access, but everything else they do does.
If it's an inside job with this capability you'd likely already have such access?
Only way is that somebody has access to push this, doesn't have access to the keys, and rewrites the app to send them assets or something. But the mass withdrawals imply the keys are compromised, and pushing the app would very unquestionably imply you?
It's quite strange that a bad update was pushed at all since it implies that the bad actor doesn't have key access, but everything else they do does.
Do you think it’s at all likely they were able to exfiltrate the keys or escalate privileges by pushing the malicious update? It’s not an iOS or android update from my understanding, just an update to the backend/content server.
The content server probably wouldn't be useful for getting the keys, unless they have some insane wallet manager.
My best guess is simple key exfiltration?
My best guess is simple key exfiltration?
It's wild to me that he hasn't simply had a heart attack and died from the insanity of his actions and the consequences of it all.
Imagine throwing a life like that and he's barely turned 30. Hubris and foolishness can lead to one's own grave.
edit: I'm not wishing for his death. That's not what my comment was about. More on the psychological impact of deception at this magnitude and could any person cope with that.
Imagine throwing a life like that and he's barely turned 30. Hubris and foolishness can lead to one's own grave.
edit: I'm not wishing for his death. That's not what my comment was about. More on the psychological impact of deception at this magnitude and could any person cope with that.
Fancifully entertaining someone's death is definitely over the line in HN comments. Please don't post like that.
https://news.ycombinator.com/newsguidelines.html
Edit: I'm surprised at how many people are eager to go there:
https://news.ycombinator.com/item?id=33570385
https://news.ycombinator.com/item?id=33570266
https://news.ycombinator.com/item?id=33570205
That is not what HN is for, so please don't.
https://news.ycombinator.com/newsguidelines.html
Edit: I'm surprised at how many people are eager to go there:
https://news.ycombinator.com/item?id=33570385
https://news.ycombinator.com/item?id=33570266
https://news.ycombinator.com/item?id=33570205
That is not what HN is for, so please don't.
Apologies if my comment sounded like wishing for someone's death. I promise that was not my intent.
I'm aghast at the magnitude of his disastrous actions and wondering how could someone cope with the situation he put himself in, from a psychological point of view.
I'm aghast at the magnitude of his disastrous actions and wondering how could someone cope with the situation he put himself in, from a psychological point of view.
I 100% believe you. But just imagine if you were reading comments like those about yourself, and imagine there were a ton of them. We don't want HN to be a generator for that kind of thing. We all tend to underestimate the impact of our comments by a good 10x.
Noted. And I agree with you 100%.
Well, that's one way to look at it. The other way to look at it is that he's still insanely rich even though he's lost the vast majority of his fortune, and he probably has it locked away in a place that the Feds can't get it... so as long as he gets to a non-extradition country, he will probably be better off than 99.99999% of the people currently residing on this planet. I'd rather not travel because authorities are out to get me than not travel because I'm too broke to do so.
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He said the whole thing was a calculated risk. He only spent five years on crypto so he has plenty of time to try again. He probably wasn't counting on prison time though.
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To all the people replying that crypto isn't regulated: that's a myth. Exchanges are regulated and keep KYC info of their customers.
If the FTX hack is true, then all that KYC info will be sold in the black market.
Regulation didn't prevent the hack (or rug-pull?). Self-custody with DeFi does prevent it.
It's shocking how some people are for tinkering hardware/software and self-hosting services like Nextcloud, but it comes to money they would rather leave their life savings with a third party (a bank or a custodial exchange) and renounce to all financial privacy.
If the FTX hack is true, then all that KYC info will be sold in the black market.
Regulation didn't prevent the hack (or rug-pull?). Self-custody with DeFi does prevent it.
It's shocking how some people are for tinkering hardware/software and self-hosting services like Nextcloud, but it comes to money they would rather leave their life savings with a third party (a bank or a custodial exchange) and renounce to all financial privacy.
The difference is that when a bank gets robbed, I can still go get my money back via the legal system.
When a crypto exchange or a crypto wallet gets robbed, you have nowhere to go to get your money back.
There are good reasons why we don't keep large amounts of cash in our pockets or in our mattresses.
When a crypto exchange or a crypto wallet gets robbed, you have nowhere to go to get your money back.
There are good reasons why we don't keep large amounts of cash in our pockets or in our mattresses.
Good luck getting your money through the legal system when the bank collapsed!
FDIC. Everyone else pays for your shitty banking choices via inflation instead.
To me the crypto version is better TBH, which would force either private insurance or none at all. Believe it or not you can buy private insurance for crypto, which would achieve something like FDIC.
To me the crypto version is better TBH, which would force either private insurance or none at all. Believe it or not you can buy private insurance for crypto, which would achieve something like FDIC.
FDIC covers only up to 200k USD. Many people have lost life savings when banks collapse. Also, not everybody lives in the US or in countries with a semi decent banking system.
> Many people have lost life savings when banks collapse.
Do you have some data for this statement? (in the US, post FDIC deposit era)
Because even when a bank fails, there is usually more than enough to cover depositors, and what the FDIC does is arrange for the bank to be taken over by a healthy bank, with the deposits migrated (but equity and bondholders can take a bath). E.g. no depositor lost a penny in the financial crisis of 2008 -- which was the biggest financial crisis since the Great Depression -- even if they had money in excess of the limits. However it's quite unusual to have money in excess of the limit -- if you have that much, you wont keep it as a deposit, you'll hold some government guaranteed bonds like agencies or treasuries. It is extremely poor cash management for an individual to have more than 200K in a demand deposit account when they can be earning more with government guaranteed bonds that are just as liquid as cash. You can even open an account with Treasury Direct.
Do you have some data for this statement? (in the US, post FDIC deposit era)
Because even when a bank fails, there is usually more than enough to cover depositors, and what the FDIC does is arrange for the bank to be taken over by a healthy bank, with the deposits migrated (but equity and bondholders can take a bath). E.g. no depositor lost a penny in the financial crisis of 2008 -- which was the biggest financial crisis since the Great Depression -- even if they had money in excess of the limits. However it's quite unusual to have money in excess of the limit -- if you have that much, you wont keep it as a deposit, you'll hold some government guaranteed bonds like agencies or treasuries. It is extremely poor cash management for an individual to have more than 200K in a demand deposit account when they can be earning more with government guaranteed bonds that are just as liquid as cash. You can even open an account with Treasury Direct.
> E.g. no depositor lost a penny in the financial crisis of 2008
No depositor has lost a penny in an FDIC insured account (even with total balances above the insurance limit) ever since the FDIC has existed.
No depositor has lost a penny in an FDIC insured account (even with total balances above the insurance limit) ever since the FDIC has existed.
Do you have an example of a depositor losing money they stored in excess of this?
Even a single example would do.
Even a single example would do.
No, I’m saying even with excess balances, no one has lost money in accounts subject to FDIC insurance; there are no examples, it hasn't happened.
Sorry, I misunderstood -- thanks!
It has happened in other countries, like Cyprus. Accounts were also insured up to 200k EUR (or I think it was only 100k at the time).
FDIC rescuing a bank doesn’t involve money printing. Since the bank still closes and can’t offer new loans, it’s slightly deflationary.
The events of the bank closing may be deflationary.
The giving of now-gone money to the depositors is inflationary.
The fallacy of your above statement is you're considering the system of 'fail, then FDIC pays out depositors' when in fact the alternative is 'fail, depositors eat losses'. The former is inflationary relative to the latter, and in fact punitive to those who chose banks that didn't fail. The net difference between the two is the discussed inflationary event 'FDIC pays out depositors.'
The giving of now-gone money to the depositors is inflationary.
The fallacy of your above statement is you're considering the system of 'fail, then FDIC pays out depositors' when in fact the alternative is 'fail, depositors eat losses'. The former is inflationary relative to the latter, and in fact punitive to those who chose banks that didn't fail. The net difference between the two is the discussed inflationary event 'FDIC pays out depositors.'
No, it doesn't increase the money supply because the FDIC has a pre-existing fund for it. They're not funded by the Treasury and when they are they pay it back.
Though the US could've used more inflation at any point up to 2021 considering our inability to ever get unemployment low enough. (since they're theoretically more or less directly related)
Though the US could've used more inflation at any point up to 2021 considering our inability to ever get unemployment low enough. (since they're theoretically more or less directly related)
Pre-existing Funds that are just sitting waiting around to be put into depositor accounts once a bank fails have low to no velocity. Giving them to money-spending depositors is inflationary by virtue of increasing the velocity of that money that was previously just sitting on the sideline. Even in the scenario you present is inflationary.
Eh, if it was sitting in a bank before and now it’s sitting in a different bank that’s not a difference. The depositors never got an unexpected increase in spending power, they just avoided an unexpected decrease.
What matters is where the old funds went. The bank might’ve been spending it out the back, but in that case the inflationary actions already happened.
What matters is where the old funds went. The bank might’ve been spending it out the back, but in that case the inflationary actions already happened.
Whatever info FTX had, sure. Looks like your private documents were stored with Stripe, a much better steward of your data:
> FTX partners with Stripe to ensure a secure identity verification process. Please note data will be stored and may be used according to the Stripe and FTX privacy policies.
https://help.ftx.com/hc/en-us/articles/360027668192-Individu...
> FTX partners with Stripe to ensure a secure identity verification process. Please note data will be stored and may be used according to the Stripe and FTX privacy policies.
https://help.ftx.com/hc/en-us/articles/360027668192-Individu...
I wouldn't be surprised if FTX has a copy of all documents and PII. I don't think regulators would accept "Stripe suddenly went under" as a valid excuse for not having KYC data.
You going to bet your tech skills vs a hacker when it comes to guarding your money?
The reason people are comfortable tinkering with hardware and software is that it involves little to no risk. The stakes are extremely low.
The reason people are comfortable tinkering with hardware and software is that it involves little to no risk. The stakes are extremely low.
You mean a hacker that would need to enter your house, look for your hardware wallet, beat the mnemonic out of you and quickly enough steal the coins for you to not be able to transfer them yourself before he manages to find a computer with internet access that is sufficiently hidden to not be traced back?
Selfhosted services are typically entirely self-contained. You access them with clients controlled by you, with devices on your network, and apart from updates from trusted sources of your choice, not exchange with untrusted parties at all. I'm all for decentralised financials but the topic is orders of magnitude harder.
You can self-host your Bitcoin node, the Uniswap front-end, etc. You can be your own bank.
> keep KYC info of their customers
This is AML. It has nothing to do with protecting client funds.
Though knowing FTX, they might have advertised compliance with "Employees must wash hands" as "We are a fully reglulated exchange complying with all applicable local and national laws"
This is AML. It has nothing to do with protecting client funds.
Though knowing FTX, they might have advertised compliance with "Employees must wash hands" as "We are a fully reglulated exchange complying with all applicable local and national laws"
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If this is real, most likely an inside job. I mean FTX staff probably had a lot of their own crypto on the exchange, so now that it appears Bankman stole it from them, why not steal it back.
I am skeptical because if insiders have access to the keys, they would not do it in such a obvious manner. They would instead drain crypto accounts that are pooled or reserved, not associated with the app directly. They would have drained these pooled assets discretely instead of a malicious app update , which draws too much attention. Of course, it's possible that said insiders had access to the app update but not the keys.
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This sounds like a great insider action to cover the fraud and mismanagement: leak the keys to the kingdom in a dark web forum, so that in the resulting commotion you can blame the hackers who had access all along and obviously made your platform fail. Something, anything that your lawyers can grasp at.
I doubt that Bankman would have sanctioned that though, since he’s already admitted to malfeasance. An insider could leak the keys and arrange for a cut of the proceeds, was my line of thinking.
Bankman would have not sanctioned it because he's got much more to lose the greater the hole is. Someone around Bankman though, that has no substantial stake in FTX and suddenly realizes he was an accessory to financial fraud, has strong incentives to burn the house down.
From a secure and audited system where only a handful of people had access and the actions of each are recorded (if we dismiss Bankman's "backdoor" for a moment), all of a sudden we have a system that was wide open to the world and raided exactly after the financial collapse. As it's easy to see, your Honor, the hackers were in the system all along, forging the so called audit trail allegedly incriminating my client; when the game was up, they pounced.
From a secure and audited system where only a handful of people had access and the actions of each are recorded (if we dismiss Bankman's "backdoor" for a moment), all of a sudden we have a system that was wide open to the world and raided exactly after the financial collapse. As it's easy to see, your Honor, the hackers were in the system all along, forging the so called audit trail allegedly incriminating my client; when the game was up, they pounced.
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Larry David was right: https://youtu.be/Ut3m9OK1c7Y?t=46
So ironic. the latest comments on the official FTX one are funny https://www.youtube.com/watch?v=BH5-rSxilxo
I wonder how much Larry got paid for this? Very approximately he has a net worth of $500M and makes $50M/yr on Seinfeld royalties alone. How much do you have to pay someone like that to do a commercial for you?
this is some kind of rare triple word score double-reverse irony. I love it.
Cryptocurrencies are speedrunning the history of the financial system and why it is the way it is.
A real good takeaway here is how even a single gap in compliance controls can lead to unbounded failures, here I think largely access controls and tracking.
If an exec can just go and cook the books, or like sbf did, "secretly transfer 4bn to alameda", it doesn't matter if you have strict auditors. It doesn't matter if you have compliance and control rules around comingling. This will literally never be visible to anyone in your exchange since their data source is fundamentally wrong.
Nothing they did was proper or legal in the first place! It's already quite regulated in that regard. But they were able to do so in the first place since the required compliance frameworks weren't completely in place.
If an exec can just go and cook the books, or like sbf did, "secretly transfer 4bn to alameda", it doesn't matter if you have strict auditors. It doesn't matter if you have compliance and control rules around comingling. This will literally never be visible to anyone in your exchange since their data source is fundamentally wrong.
Nothing they did was proper or legal in the first place! It's already quite regulated in that regard. But they were able to do so in the first place since the required compliance frameworks weren't completely in place.
After 10 billion USD goes missing you can bet it won't stay unregulated for long.
But yeah it became apparent a while back that some very bad actors, speculators, had become involved in crypto, so I became inactive.
But yeah it became apparent a while back that some very bad actors, speculators, had become involved in crypto, so I became inactive.
10B didn't go missing, it was stolen and they know stole it and where he put it.
One to two billion is missing and probably stolen.
One to two billion is missing and probably stolen.
Are you sure? The numbers I saw that were a draft of the balance sheet showed ~$1 billion in liquid assets, and ~$9 billion in very illiquid, mostly very low volume crypto assets, such that it would likely be hard to even get an additional $1 billion out of that "$9 billion".
Source: https://twitter.com/minigrogu/status/1591104167455510529
Source: https://twitter.com/minigrogu/status/1591104167455510529
Cryptocurrencies are working just fine. FTX users didn't actually own any crypto. This is people giving away their money to a criminal business. The whole point of cryptocurrencies is that you don't need to trust a third party.
"Not your keys, not your coins"
"Not your keys, not your coins"
This is just criminal behavior. There's plenty of fraudsters in the financial system.
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The FTX App has allegedly been hacked as well. This reeks of an inside job/coordinated attack.
Edit: It is rumored that SBF is en-route to Argentina
Second Edit: This is a Twitter rumor, with no verification, could be fake news. I was going to paste the Tweet, but the Tweet has been removed because it was seen as unlikely.
Edit: It is rumored that SBF is en-route to Argentina
Second Edit: This is a Twitter rumor, with no verification, could be fake news. I was going to paste the Tweet, but the Tweet has been removed because it was seen as unlikely.
App not updated in app store. Could popup box be edited in app to be malicious of would such a feature need to already be coded in like Epic’s non app store payments thing?
Argentina has an extradition treaty with the US though?
... and extremely porous borders. Doubt anybody would be dumb enough to actually fly directly to their target country.
Also worth noting, due to a quirk in the way Argentina citizenship laws are written once he is in the country he can file immediately for citizenship and he won't be deportable (although he will be extraditable). I'm not an attorney but that may help him in case his passport is revoked.
Also worth noting, due to a quirk in the way Argentina citizenship laws are written once he is in the country he can file immediately for citizenship and he won't be deportable (although he will be extraditable). I'm not an attorney but that may help him in case his passport is revoked.
Yeah, I will post the link to the plane that is rumored to be his.
What is the source of rumor please?
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They’re making Madoff look good. He semi-voluntarily* turned himself in when the jig was up, and the govt eventually recovered about 2/3rd of the money
FTX seems like it’s still trying to steal funds
*Madoff confessed to his family, said he would turn himself in, and asked for 24 hours to get affairs in order. Family refused, called FBI immediately
FTX seems like it’s still trying to steal funds
*Madoff confessed to his family, said he would turn himself in, and asked for 24 hours to get affairs in order. Family refused, called FBI immediately
Madoff recovery is 88.35%. See: https://www.justice.gov/opa/pr/justice-department-announces-....
Many of Madoff's victims exaggerated their loses. If they invested $1MM at a claimed return of 15% for 6 years, they would claim they lost $2MM, not the $1MM principal.
(I just hope our Government doesn't try to bail out crypto speculators!)
Many of Madoff's victims exaggerated their loses. If they invested $1MM at a claimed return of 15% for 6 years, they would claim they lost $2MM, not the $1MM principal.
(I just hope our Government doesn't try to bail out crypto speculators!)
Thanks! Wow even better than I recalled
To be fair there’s something to that idea. Market returns about 7% on average. Over six years that would be an opportunity cost of 50%.
But, as you say there’s got to be some loss for choosing to put one’s money with a con artist
I doubt there will be a crypto bailout as it seemingly didn’t get big enough to blow up anything outside itself. It also had an anti public relations campaign for years
To be fair there’s something to that idea. Market returns about 7% on average. Over six years that would be an opportunity cost of 50%.
But, as you say there’s got to be some loss for choosing to put one’s money with a con artist
I doubt there will be a crypto bailout as it seemingly didn’t get big enough to blow up anything outside itself. It also had an anti public relations campaign for years
>I doubt there will be a crypto bailout as it seemingly didn’t get big enough to blow up anything outside itself
If politicians wanted to make crypto bros whole, I would lose my mind. I doubt I am the only one, and I would hope that would be scene as a political death sentence to endorse such a proposition.
If politicians wanted to make crypto bros whole, I would lose my mind. I doubt I am the only one, and I would hope that would be scene as a political death sentence to endorse such a proposition.
Some California congresspeople wanted to bail out dot-com speculators during the 2000 crash, at least of their tax oblications:
https://www.bizjournals.com/sanjose/stories/2001/07/30/daily...
(I was opposed to this. I purposely didn't exercise stock options that I couldn't or wouldn't sell immediately because I knew about the tax liability. I don't believe the defense that someone who wants to speculate in stock options just didn't know about the taxes. People who wish to speculate with complicated forms of investors should be prepared to take all the risk.)
https://www.bizjournals.com/sanjose/stories/2001/07/30/daily...
(I was opposed to this. I purposely didn't exercise stock options that I couldn't or wouldn't sell immediately because I knew about the tax liability. I don't believe the defense that someone who wants to speculate in stock options just didn't know about the taxes. People who wish to speculate with complicated forms of investors should be prepared to take all the risk.)
I've been around the block a few times, and I've had people over the years tell me about an "investment" or a fund, or their brother-in-law who could get me 15% or more on my money. And every time I've been smart enough to say "no thanks."
I must admit, I don't have a lot of sympathy for Madoff's victims. Especially the charities! If I donate money to a charity, I'd expect the money to go to help people or to further their cause -- not to be invested in a high-risk ponzi scheme.
I must admit, I don't have a lot of sympathy for Madoff's victims. Especially the charities! If I donate money to a charity, I'd expect the money to go to help people or to further their cause -- not to be invested in a high-risk ponzi scheme.
There was a constant drumbeat of high interest promises by these crypto companies, even the supposedly “safe” ones. And so many people thought it was a no lose proposition. E.g. 8% APR at FTX.us: https://mobile.twitter.com/ftx_app/status/141749746557453927...
Lol at the first comment from over a year ago: “ Make it so I can withdraw like a normal wallet and I'm in”
The irony!
> In 1992, Bernard Madoff explained his purported strategy to The Wall Street Journal. He said his returns were really nothing special, given that the Standard & Poors 500-stock index generated an average annual return of 16.3% between November 1982 and November 1992. "I would be surprised if anybody thought that matching the S&P over 10 years was anything outstanding." The majority of money managers actually trailed the S&P 500 during the 1980s.
From https://en.m.wikipedia.org/wiki/Madoff_investment_scandal
> In 1992, Bernard Madoff explained his purported strategy to The Wall Street Journal. He said his returns were really nothing special, given that the Standard & Poors 500-stock index generated an average annual return of 16.3% between November 1982 and November 1992. "I would be surprised if anybody thought that matching the S&P over 10 years was anything outstanding." The majority of money managers actually trailed the S&P 500 during the 1980s.
From https://en.m.wikipedia.org/wiki/Madoff_investment_scandal
I honestly don't understand why any speculators get bailed out ever. They're in it for above-market profits, how is it that they don't have to accept the risk?
Madoff's victims weren't bailed out with Government money, they recovered assets from Madoff. (It was with Government effort though, including "clawing back" money from other Madoff customers who had actual gains!)
Then it's not a bailout, it's asset recovery. That's fine with me - somebody rips you off, take them to court like everybody else has to.
They also recovered money by clawing back returns that investors made in the years leading up to the scandal finale.
Heck, they are making Mark Karpelès look good.
https://twitter.com/MagicalTux/status/1591295272621314049
https://twitter.com/MagicalTux/status/1591295272621314049
I’m getting my mtgox claim paid out, finally. Never would have picked that for my 2022 bingo card.
Crypto's performance is worse than even banking/housing stocks in 2008. No end in sight to the selling. People are blaming FTX, when it more likely crypto was going to keep falling anyway as the fad/bubble bursts. FTX is just more salt on the wound. BTC was already down 70% YOY when FTX failed. S&P 500 and Nasdaq up huge this week. I dunno why anyone would waste their time with crypto anyway when far superior investments exist.
price of bitcoin since 2009 doing fine
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According to the latest reports, SBF is potentially on the run on a private jet [0] from the Bahamas to (probably) Argentina. He hasn't been confirmed to be on that plane, but it seems likely. This stuff is straight out of movie.
[0] https://www.flightradar24.com/LVKEB/2e2e7cfd
[0] https://www.flightradar24.com/LVKEB/2e2e7cfd
If he is in fact on the run... Does this dude really think the CIA and FBI won't find him? He's likely not safe anywhere but Russia, China, North Korea or Israel.... maybe Pakistan.
No, not safe in Russia. From https://mobile.twitter.com/kamilkazani/status/15791389474472...
"In contrast, Russian cryptobros that I know tend to act very, very lowkey. The fewer people know about your activities, the better. Posting about dealing with crypto in social media is absolutely unthinkable. Why? Because that makes you too easy and lucrative prey"
That thread describes how a basement was found, in the house of an official in the Russian prison system, which appears to have been specifically designed for the capture and torture of crypto owners to give up their coins. It had its own crematorium for disposing of the remains.
If these guys think that they can take some coins and live a nice life in a place without strong rule of law, they have a nasty surprise waiting for them
"In contrast, Russian cryptobros that I know tend to act very, very lowkey. The fewer people know about your activities, the better. Posting about dealing with crypto in social media is absolutely unthinkable. Why? Because that makes you too easy and lucrative prey"
That thread describes how a basement was found, in the house of an official in the Russian prison system, which appears to have been specifically designed for the capture and torture of crypto owners to give up their coins. It had its own crematorium for disposing of the remains.
If these guys think that they can take some coins and live a nice life in a place without strong rule of law, they have a nasty surprise waiting for them
How do we know the crypto owners were held there?
> 5. That may explain why Russian army and the military equipment are so archaic btw. In order to create something new, e.g. drones you normally need non-violent entrepreneurs who would actually create stuff. In Russia they're being wiped out by the violent ones. Hence, no drones
Iran has drones. Does that mean Iran is an example of "an artificial, abnormal environment which selected out the violent entrepreneurs, allowing the non-violent ones to flourish"?
> 5. That may explain why Russian army and the military equipment are so archaic btw. In order to create something new, e.g. drones you normally need non-violent entrepreneurs who would actually create stuff. In Russia they're being wiped out by the violent ones. Hence, no drones
Iran has drones. Does that mean Iran is an example of "an artificial, abnormal environment which selected out the violent entrepreneurs, allowing the non-violent ones to flourish"?
The evidence is circumstantial, which is why I said "appears to be designed for" not "we know crypto owners were held there".
The more well attested point is that crypto owners in Russia don't advertise the fact, for fear of something like this.
The more well attested point is that crypto owners in Russia don't advertise the fact, for fear of something like this.
What makes it appear designed specifically for crypto owners and not other people?
See my other reply in this thread
That post has zero evidence the fake prison is "specifically designed for the capture and torture of crypto owners."
For all we know it was used to torture political enemies with maybe the odd crypto bro on the side.
For all we know it was used to torture political enemies with maybe the odd crypto bro on the side.
The design elements are:
1) it is designed to look exactly like a prison, so the occupant thinks he will get out. Thus, it is designed for extortion.
2) a crematorium is provided, anticipating the requirement to be used many times in a similar way.
This doesn't fit the profile of political enemies very well. 1) political enemies commit political acts, which can be extorted but not normally after you are dead. Crypto still works after you are dead 2) each political enemy would stand in a slightly different relation or context to you, which suggests a bespoke approach not a system. Crypto owners can all be processed in the same way
This doesn't fit the profile of political enemies very well. 1) political enemies commit political acts, which can be extorted but not normally after you are dead. Crypto still works after you are dead 2) each political enemy would stand in a slightly different relation or context to you, which suggests a bespoke approach not a system. Crypto owners can all be processed in the same way
Well then, he's only got 3 to 4 other options. I'm particularly displeased by this situation. I got Gox'd thrice over. It hasn't happened in 8 years, so I'm not effected in this instance. However, I am just rather unhappy that it is still happening to folks.
Why would the CIA and FBI care? It's not like they are going to send Navy SEALs after him. This is a DoJ matter, and the most they will do is file extradition requests. If the country he is in decides to ignore them, well that's about it.
They wouldn't care. At this point crypto is simply a form of gambling.
And the people being hurt are more than educated about the risks they take.
And the people being hurt are more than educated about the risks they take.
He stole from rich people. Madoff made the same mistake. Parallel construction is how the CIA would be involved helping the FBI or foreign police to nab him. I'm just pointing out that his threat model has now increased by several orders of magnitude. He'll never get away from this unless he does an Epstein.
Why Israel? I’d assume they’d hand him over given their close background no?
There is a history of people committing crimes or being suspected of doing so in US and running away to Israel and avoiding extradition due to their laws.[1] I can gather more examples to illustrate a pattern or at least proclivity but it's late and I'm off to bed.
[1]https://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?...
[1]https://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?...
> There is a history of people committing crimes or being suspected of doing so in US and running away to Israel and avoiding extradition due to their laws.
Did you maybe forgot to mention that those people were Israeli citizens?
Did you maybe forgot to mention that those people were Israeli citizens?
can SBF apply for citizenship once he lands there?
He is jewish, I'm wondering if the law of return would apply.
https://en.wikipedia.org/wiki/Law_of_Return
https://en.wikipedia.org/wiki/Law_of_Return
He could apply. It would be denied, of course.
Sometimes yes, but historically in general they haven't extradited their citizens for financial crimes against foreigners. I believe it changed a few years ago, at least on paper?
Interestingly enough, the plane seems to be headed for Buenos Aires, and there is LABITCONF (https://en.labitconf.com/), a crypto conference, going on there right now. Who knows if it’s actually his plane. Seems a bit weird that it would be given the plane is registered in Argentina.
But was he really in the Bahamas before? Or somewhere in the US
Argentina is an... interesting choice, and I'm sure he'll adapt just fine to the place and the bureaucracy and also there's no guarantee that's a safe haven in any way.
Edit: flight is showing as n.1 being tracked worldwide
Argentina is an... interesting choice, and I'm sure he'll adapt just fine to the place and the bureaucracy and also there's no guarantee that's a safe haven in any way.
Edit: flight is showing as n.1 being tracked worldwide
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Not disagreeing, but what's the basis for thinking that's a plane owned by/affiliated with SBF?
[deleted]
[deleted](1)
SBF and Caroline (and probably Trabucco) probably already on their way to non-extradition countries and taking what little cash remains with them. They'll end up in prison if they don't.
Who (which government agency etc.) would be expected to track their whereabouts in this scenario?
The problem with countries that don't extradite to the U.S. is that assassinations tend to be woefully easy.
And extraordinary rendition.
TBH if you look at the data the US doesn't extradite that liberally. Even the Liberian torturer son of Charles Taylor or whatever was safe in the Caribbean despite being extraditable; as long as you didn't commit murder or do something big on the public radar or make political enemies or steal too much money I get the impression the US government doesn't try too hard. But they will definitely try to extradite this fella.
TBH if you look at the data the US doesn't extradite that liberally. Even the Liberian torturer son of Charles Taylor or whatever was safe in the Caribbean despite being extraditable; as long as you didn't commit murder or do something big on the public radar or make political enemies or steal too much money I get the impression the US government doesn't try too hard. But they will definitely try to extradite this fella.
This is an unreal speedrun nightmare timeline. At this rate I am half expecting to wake up to news tomorrow that SBF is dead.
He'll probably play a Leauge of Legends match before though.
Please keep this sort of nastiness off HN. We're trying for something else here, as you'll see if you review https://news.ycombinator.com/newsguidelines.html.
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xqcgrek2(1)
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Guys, don't worry: Sam has said he's sorry
Please don't post unsubstantive comments. We're trying for something else here.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
dang wants everyone to be thoughtful and curious with our comments.
It’s absurd that anyone is still giving crypto anything but derision.
It’s like someone posted a flat earth website and dang is like “hey let’s hear them out”.
Forget about it.
It’s absurd that anyone is still giving crypto anything but derision.
It’s like someone posted a flat earth website and dang is like “hey let’s hear them out”.
Forget about it.
I emphasize with what you're saying but... then just don't comment, and optionally flag the submission?
“crypto” includes all possible electronic money? Your sentiment is vapid and tiresome.
Crypto is a ponzy scheme and always has been. The FTX disaster is just another sign of this.
Restating my comment from Celsius unwinding one month ago:
Three clear and obvious outcomes of this unwinding:
1. The crypto mantra "not your keys, not your coins" rings true.
2. Entrusting your personal financial data with a private company is sure to end in disaster, either by hack or court order. Privacy should be a basic and legally protected feature of blockchains.
3. Centralized Finance or CeFi is mostly a sham and deserves to be heavily regulated. Not to be confused with on-chain and transparent Decentralized Finance or DeFi platforms like Aave that have behaved predictably through this downturn, and have never required KYC.
https://news.ycombinator.com/item?id=33153865
We haven’t seen privacy and KYC be an issue yet with FTX but data breach could be next after the money goes.
Three clear and obvious outcomes of this unwinding:
1. The crypto mantra "not your keys, not your coins" rings true.
2. Entrusting your personal financial data with a private company is sure to end in disaster, either by hack or court order. Privacy should be a basic and legally protected feature of blockchains.
3. Centralized Finance or CeFi is mostly a sham and deserves to be heavily regulated. Not to be confused with on-chain and transparent Decentralized Finance or DeFi platforms like Aave that have behaved predictably through this downturn, and have never required KYC.
https://news.ycombinator.com/item?id=33153865
We haven’t seen privacy and KYC be an issue yet with FTX but data breach could be next after the money goes.
> The crypto mantra "not your keys, not your coins" rings true.
Until crypto has a workable solution to this that doesn't rely on me keeping paper copies of my master key in a safe, it's not really viable for the masses without exchanges like coinbase and co.
> Entrusting your personal financial data with a private company is sure to end in disaster, either by hack or court order
Hard disagree here. In all my years of interacting with private companies they have always protected my money, even when it was taken from me fraudulently.
> Centralized Finance or CeFi is mostly a sham and deserves to be heavily regulated.
I dunno, cefi works pretty well for me.
Of course the difference is that the cefi institutes and private companies are regulated traditional banks.
> Privacy should be a basic and legally protected feature of blockchains.
For a decentralised system that touts it's benefits as not being tamperable, a legal protection is worthless. If we require legal protections for blockchains what value does that prove over a centralised regulated system? Also, as it's decentralised and privacy focused there's nothing stopping someone in a country with a different interpretation of "legal protection" being involved.
>We haven’t seen privacy and KYC be an issue yet
We absolutely have, with AML checks. Try cashing out 100k of crypto and using it as a deposit for a mortgage with a bank or lender, and see how open to it they are. This has been the case for at least 3-4 years here in the UK.
Until crypto has a workable solution to this that doesn't rely on me keeping paper copies of my master key in a safe, it's not really viable for the masses without exchanges like coinbase and co.
> Entrusting your personal financial data with a private company is sure to end in disaster, either by hack or court order
Hard disagree here. In all my years of interacting with private companies they have always protected my money, even when it was taken from me fraudulently.
> Centralized Finance or CeFi is mostly a sham and deserves to be heavily regulated.
I dunno, cefi works pretty well for me.
Of course the difference is that the cefi institutes and private companies are regulated traditional banks.
> Privacy should be a basic and legally protected feature of blockchains.
For a decentralised system that touts it's benefits as not being tamperable, a legal protection is worthless. If we require legal protections for blockchains what value does that prove over a centralised regulated system? Also, as it's decentralised and privacy focused there's nothing stopping someone in a country with a different interpretation of "legal protection" being involved.
>We haven’t seen privacy and KYC be an issue yet
We absolutely have, with AML checks. Try cashing out 100k of crypto and using it as a deposit for a mortgage with a bank or lender, and see how open to it they are. This has been the case for at least 3-4 years here in the UK.
See social recovery wallets, paper wallet isn’t only solution. Masses might prefer a custody on exchange but with that comes risk like in Celsius, FTX. Regulation needed to curb this risk so that those services feel just like the other “safe” CeFi services you are used to.
> In all my years of interacting with private companies they have always protected my money, even when it was taken from me fraudulently.
I was talking about data. On a long enough timeline, all financial services holding user data will be vulnerable to a breach. Money maybe also vulnerable but less so if regulated, I guess you are lucky to be interacting with regulated exchanges.
> If we require legal protections for blockchains what value does that prove over a centralised regulated system?
Regulate the companies, like Celsius and FTX. Users can use these on and off ramps into blockchain with more regulatory oversight and assurances their assets won’t be leveraged without their consent.
Your last point seems like misunderstanding. I say we haven’t yet seen FTX user data and privacy be breached.
> In all my years of interacting with private companies they have always protected my money, even when it was taken from me fraudulently.
I was talking about data. On a long enough timeline, all financial services holding user data will be vulnerable to a breach. Money maybe also vulnerable but less so if regulated, I guess you are lucky to be interacting with regulated exchanges.
> If we require legal protections for blockchains what value does that prove over a centralised regulated system?
Regulate the companies, like Celsius and FTX. Users can use these on and off ramps into blockchain with more regulatory oversight and assurances their assets won’t be leveraged without their consent.
Your last point seems like misunderstanding. I say we haven’t yet seen FTX user data and privacy be breached.
https://news.ycombinator.com/newsguidelines.html