Binance-FTX deal now in doubt after revelations of huge black hole and investigations by the SEC and CFTC.
By Wolf Richter for WOLF STREET.
So here we go again. Bitcoin has plunged into the $15,000 zip code, from $21,000 a couple of days ago, and from $68,000 a year ago. The FTX token, the native token of the Bahamas-based crypto exchange FTX, founded by Sam Bankman-Fried, has collapsed by 90% in two days. Cryptos across the board are getting crushed.
FTX is in a solvency crisis. Users pulled out nearly all of the 20,000 Bitcoins (about $430 million at the time, now a lot less) of the Bahamas-based crypto exchange in just four days, according to Bloomberg, citing data from CryptoQuant. Yesterday, FTX has halted withdrawals of cryptos.
Bankman-Fried also founded crypto-trading firm Alameda Research, and the whole mess became public a few days ago when CoinDesk reported that a quarter of the holdings of Alameda Research may be made up of the FTX token, which entered free-fall, which triggered the solvency crisis. The website of Alameda Research (https://www.alameda-research.com) has now been taken down.
The SEC and CFTC are investigating FTX.
The SEC and CFTC (Commodity Futures Trading Commission) are investigating whether crypto-exchange FTX.com mishandled customer funds, following the disclosures of a solvency crisis, according to Bloomberg, citing three people familiar with the matter.
The SEC claims oversight over cryptos that it qualifies as securities. The CFTC, in terms of cryptos, can take enforcement action if it believes there’s fraud or manipulation in the market that underlies the derivatives, which it regulates. Both agencies oversee investment firms.
Turns out, the SEC has been investigating FTX US and its crypto-lending activities for months, according to Bloomberg, citing two of the three people.
They’re investigating the relationships of FTX.com has with its US counterpart FTX US and Alameda Research, according to Bloomberg, citing two sources. Bloomberg:
In recent days, the regulators have asked for details about the ownership structure of FTX US and FTX.com, which caters to non-American clients, according to two of the people. Regulators are interested in any overlap between management and board structures, and the financial relationship between the two entities. The agencies have also asked for details on whether customer accounts were properly segregated and the composition of the investor base at FTX.com, said one of the people.
Binance Deal now in doubt: investigations & black hole.
Revelations of the scope of the investigations into FTX and Alameda Research come at the nick of time for Binance, the largest crypto exchange in the world, which had made a nonbinding offer to buy FTX to “help cover the liquidity crunch” and prevent further contagion into the DeFi space.
But Binance offered to buy FTX at a price that would wipe out FTX investors including founder and CEO Sam Bankman-Fried, Softbank Vision Fund, Singapore wealth fund Temasek, and Ontario Teachers’ Pension Plan.
These investigations are throwing further doubts on Binance’s willingness to move forward with the deal.
During the first hours of due diligence, Binance executives found a huge shortfall between liabilities and assets at FTX, possibly more than $6 billion, according to Bloomberg, citing a source.
An immediate issue is the way FTX valued its own FTX token and whether it should have been marked at a lower price, the person told Bloomberg.
The FTX token has plunged 90% in two days, after Binance co-founder and CEO Changpeng Zhao said that Binance would be liquidating its own holdings of the FTX token, valued at the time at $530 million, after it emerged that a quarter of Alameda Research’s holdings were composed of the FTX token.
Binance owned $530 million of the native token of its competitor FTX, and after it found out that Bankman-Fried’s other company was also loaded with the FTX token, Binance gets cold feet?
Try to go to heaven together, end up going to heck together?
Turns out that the fundamental principal in Decentralized Finance (DeFi) is that every firm must be deeply interconnected with other firms, each holding the other’s token, and lending to the other, and bidding up each other’s tokens, so that if one firm goes to heaven, they all go to heaven together – which they did – and when one firm goes to heck, they all go to heck together – which they’re now doing. Makes for very smooth and efficient contagion.
This was tested successfully by Voyager Digital, a crypto platform, crypto lender, and crypto broker, which filed for bankruptcy on July 6, after crypto hedge fund Three Arrows Capital went to heck amid huge leverage when cryptos plunged. Voyager had lent 15,250 bitcoins and 350 million USD Coins to Three Arrows ($650 million at the time), and Three Arrows went to heck and defaulted on that loan, and Voyager went to heck, and whoever had fiat or crypto in an account at Voyager is now an unsecured creditor in a bankruptcy case.
Celsius Network, one of the largest crypto lenders, also went to heck in July because it traded other cryptos that it had borrowed from its users – similar to a bank but without any safeguards – and then the cryptos it had bought plunged after terraUSD and luna had gone to heck, and Celsius could no longer pay back the loans to its users, and Celsius went to heck, and its users are now unsecured creditors in the bankruptcy proceedings.
They all hold each other’s tokens, and they all bid up each other’s tokens to mind-boggling levels amid gobbledygook theories of the new financial world, called DeFi, but now they want to sell each other these tokens, and prices collapse and exchanges, trading firms, and lenders go to heck?
Binance is now unlikely to follow through on its takeover of FTX, according to Bloomberg, citing a person familiar with the matter. The non-binding letter of intent allows Binance to fully acquire FTX, buy parts of the assets, or walk away. The takeover doesn’t involve Alameda Research – which may have already gone to heck – and it doesn’t involve the separate US crypto exchange of FTX.
Binance co-founder and CEO Changpeng Zhao told employees in a memo that he has no “master plan” and that the collapse of FTX “is not good for anyone in the industry.” The players in DeFi wanted to go to heaven together, and now they’re going to heck together?
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Sounds like they already backed out.
How does binance liquidate their $530 million in FTX tokens now? Who in their right mind would buy them?
Binance probably liquidated the FTX token before it said it would liquidate. Binance sank its already listing competitor (FTX) with that announcement. And then it’s trying to pick up some pieces?
I would be more curious to hear about the sources and motives behind the CoinDesk article, Binance is only re-actively following to the news IMHO
I still don’t see $16000 value in Bitcoins.
Not even $1600.
So I can’t clearly see a logical floor for cryptos.
“I can’t clearly see a logical floor for cryptos”
Um, zero?
All the “crypto” currencies and their corresponding wallets were based on a false premise (that was known to be false when all this e-commerce nonsense started. It is all based on the assumption that the product of large primes is “hard” to factor (or mathematical problems isomorphic to that one). Well, hard for Joe Schmo is one thing, hard for the NSA and other governments “three letter” agencies is another.
Since then, numerous mathematical journal papers have appeared (and many censored) showing, e.g. explaining algorithms that can do fast factoring (or “problems isomorphic to that”). In any event, there is no mathematical proof showing the large prime factoring problem is intrinsically hard.
Further, the public/private key encryption methods, are NO HARDER than the product of large primes factoring problem. In the vast majority of cases they are, in fact, much easier. For any public/private key encryption the public is likely to be exposed to one does not actually have to solve for the actual “private key” given a known “public key”. One only has to find ANY “private key” that gives rise to the SAME public key. At that point it doesn’t make any difference, one gains all the access of the “genuine” “private key” holder. For the vast majority of public keys there are a great many “private keys” that will give rise to them, hence the probability of finding one is relatively high and a much easier problem to solve than the factoring one, which is not as “hard” as most people think.
This stuff, back in the late 1970’s and early 1980’s was normally in University Graduate Level Mathematics courses in “Abstract Algebra” and “Number Theory”. It also was frequently covered in Graduate Engineering courses in “Signal Analysis and Communications Systems”.
Digital currencies, wallets, etc. were all a fraud from the get go. Modern cheap powerful computers now allow any mathematically knowledgeable organization or even just a single person to “print” as much of it as they like.
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FTTs ain’t that liquid.
to CZ, FTTs are monopoly money / his cost base was very low.
he took out FTX, a competitor in less than a week by creating a run on FTX’s own currency.
said binance may buy it; then it won’t – little chance for other rescues to come in.
a masterpiece; can’t make this stuff up in movie scripts.
The take-out artists (rolling up competitors) are finding themselves taken out at what must be a harrowing pace. “Taken out and shot.”
It has a revolutionary air alright. Lenin: “The appropriators will be appropriated.” Thoughts of The Terror and Robespierre, the guillotine, surface, too.
Litigation heaven. But for those retail folks who slipped around US laws to trade with a firm like Binance (offshore), try going to court to chase after that. FTX likewise was positioned offshore so its offshore trades (which could be done the sneaky way from the USA using a VPN) leave the “clever””investor” in a tough spot, in a situation like this. It was all designed a bit too clever for its own good (and especially, for its end users’ good).
A lot of “disruptors” are being disrupted, tripping up on the very things that they touted as escaping the dumb old world of boring, legacy regulation and risk management. Well, folks hopped in the deep end of the risk pool themselves, form teh convenience of their own digital devices.
As Charlie Munger said, crypto’s a turd. Turns out it is run by a bunch of Ponzi turd herders, who hype, suck in apparently dumb VC’s, pension funds and other masters of the universe along with the small gamblers and punters. Let’s see…an imaginary currency, with a manipulated market, no regulation or oversight, cause you’re sticking it to the man..what could go wrong, except, everything! Crypto goes to zero, more pain to come, sorry snowflakes, no bailouts coming.
All this brain & computing power and now…..
… Matt Damon is hiding under his bed covers ?
You guys just don’t understand crypto. Or Tesla for that matter. Tesla is AI company, not a car maker. Elon Mask should buy FTX (and its tokens) for $44 Billion and fix it.
What if Elon is secretly using Teslas to mine Bitcoin?
Whoa. Teslacoin. Mind blown.
Fanboys will eat it up.
I propose a lottery. Put up five FTT tokens, first prize is Musk and five of his kids. Second prize is Musk and all of his kids and Twitter too, and Bankman-Fried, a.k.a. bank man fried.
Last phrase HILARIOUS.Why I keep coming to this site
That would be a ‘bailout’, right. Good luck with that. The coin has no intrinsic value other than being a currency laundromat. That’s all it’s ever been. The promoters are just trying to complete the ‘con’ and cash out in a real fiat currency, the dollar. DeFi? Yeah De Fi in my bank account. In dollars, not gambling tokens.
I hope Andy was being cuttingly sarcastic
AI companies are in a worse position than car companies at the moment imo, given that the many manufacturers are giving up on automated cars.
Heard people say that defi and block chain are the web of 2000 and is the future. Those who work in tech and finance what is your view on this statement?
I know I know the crypto are going kaput… but wanted to take a view of others on this technology.
It’s DeFi that’s going kaput, for the reasons spelled out in the article — inter-connectedness and leverage. It’s been happening right in front of us for months, we’re watching it go kaput before our eyes because, as I also said in July, “Leverage & Interconnectedness Are Blowing Up Crypto & DeFi”
https://wolfstreet.com/2022/07/09/leverage-interconnectedness-are-blowing-up-crypto-defi/
DeFi is not only not going kaput, it will be stronger than ever for the bad trash in its way going kaput.
The Binance CEO just tweeted out the magic recipe:1) Don’t use your own token as collateral 2) Don’t take on debt; don’t use your capital ‘efficiently’. Have a health reserve.
Crypto is not going kaput either, anymore than the internet went kaput in 2000.
I’ll just sit here and watch :-]
Delusions die hard.
QT in action
DeFi companies made a lot of promises of 8% to 25% interest while treasuries were at ZIRP. What is too good to be true is usually too good to be true.
How could any of those DeFi companies actually offer more than 2% unless they leveraged. Now we know what leveraging does in reverse.
Have you heard the story of “The Emperor’s New Clothes”
False equivalency. M
Ever since ‘09 whenever that histrionic little dude with the adenoids on RT would pump Bitcoin as a panacea to the dreaded fiat, I could smell the BS wafting past.
Nicholas Weaver did a pretty thorough takedown years ago, and I agree with his final analysis. Great for buying contraband; otherwise, a curio for true believers.
Yes, I agree that those high-interest rates sound ridiculous. For some coins, though, I think it depends on whether or not you are functioning as a validator for a blockchain and getting a portion of the fees charged to others from transactions for doing so, which you would receive regardless of the coin’s price fluctuations. For Level 1 coins, you are staking to provide security and efficiency to the blockchain. Ideally, we’re talking about non-custodial staking, meaning the coins remain in your wallet. Most staking, however, requires your coins to be locked up (meaning you can’t trade them) for a specific time, which is a definite downside if the coin is tanking.
Cytotoxic
Sounds like you’re getting eviscerated ……
Kathumped for sure …..
This isn’t DeFi, its CeFi.
It’s also just fraud. An exchange, who is not supposed to be leveraging, trading, or doing anything at all with customer funds somehow managed to create an $8B hole. You can’t do that without making risky bets with other people’s money and lying.
Humans are Human: MF Global experienced a meltdown of its financial condition, caused by improper transfers of over $891 million from customer accounts to a MF broker-dealer account to cover losses created by trading losses.
from Wiki: “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. MF could not repay these monies with its own funds. Improper co-mingling, or mixing, of company and client funds took place for days before the illicit transfer and loans, and perhaps for many other days earlier in the year. According to the New York Times, “MF Global dipped again and again into customer funds to meet the demands”, perhaps beginning as early as August 2011.[2]”
Exactly. This guy took customer funds and did something with them. Where did the $8 Billion go? There is no financial lifeline for a fraudster like this.
This wasn’t fractional reserve banking, it was customer funds on the exchange. That’s why Binance took one look and said “are you kidding me?”
This Sam Bankman-Fried character, if he did what it looks like he did, needs to go to prison for a very, very, very long time.
Da55id said: “MF Global experienced a meltdown of its financial condition, caused by improper transfers of over $891 million from customer accounts to a MF broker-dealer account to cover losses created by trading losses.”
———————————————————-
Correct me if I am wrong. but no one from MF Global, including Jon Corzine – the ex governor and ex Goldman CEO, went to jail or was even charged.
Wolf, Crypto is like the sovereign debt problem. Our governments are overleveraged. We will never default because we all can print money (like crypto fiat – “mining thin air”). At some point, the dollar will collapse because folks will not want our treasury bills. What happens to TLT, ZROZ, to all the pension fund, bond debt holders when the dollar declines. Our taxes will not cover the interest expense at some point? Sorry if I’m being dumb. I know you hate dumb questions and well just drink the 3rd beer! LOL
The dollar won’t “collapse.” It is losing purchasing power at a rate of about 8% a year now. Crypto can lose purchasing power at a rate of 90% in two days, as we see here. So which is going to collapse sooner? Let me answer this for you: Crypto has already collapsed in 12 months.
People will always want to buy Treasury securities if the yield is high enough. Yield solves all demand problems. The problem now is that yields are still way too low because there is still way too much demand for Treasuries despite the low yield.
Wolf said: “The problem now is that yields are still way too low because there is still way too much demand for Treasuries despite the low yield.”
——————————————————–
and the reason for the Treasury demand is because of the huge supply of dollars the bastards created
You need to separate the concept of a Blockchain (distributed, immutable, transaction processing via a ledger) from all of the nonsense around various crypto-currencies and NFT’s.
Blockchain Technology is a very powerful and legitimate technological concept… how things are implemented around it can get to be the wild, wild west. Therefore, regulation is in order and perhaps this will be the beginning of that!
All of this being said, I still have a level of faith in (and hold) Etherum for Smart Contracts & ChainLink as an Oracle of ‘data truth’ to support those implementations.
My 2 cents!
But the whole purpose of blockchain etc was to avoid regulation …
anyway, read any of the ‘white papers’ and mission statements (including the original Ethereum one), and Wolf’s use of the term ‘gobbledygook’ is not incorrect.
“But the whole purpose of blockchain etc was to avoid regulation”. Not true. The purpose of crypto is to avoid regulations. Blockchain is a legitimate database/data structure technology that is currently being used in many applications that have nothing to do with cryptos or NFTs.
Blockchain only has an illusion of avoiding regulation, because governments — of course — do not want and will not allow a parallel universe that they cannot control — and will indeed regulate it to heck.
ETH move to Proof-of-Stake arguably makes it more controllable over Proof-of-Work by those with power. Therefore, ETH has morphed into a more controllable Crypto by Oligarchs, Governments, and others with agendas.
But, how does one “avoid regulation” when one is 1) trading and transferring value, 2) especially using other peoples’ money, (all of which is subjec to regulation under existing laws, whatever the technology) and 3) especially on public blockchains that make permanent digitally available records of every last transaction to a fine grain of detail? It takes monumental wishful thinking, staggering ignorance (and what the Brits call “cheek”), to think this is a formula to successfully evade regulation and enforcement.
“Blockchain Technology is a very powerful”
That’s what the current meme says, but I wonder if people just say that following the meme or if they actually understand any of the technology behind it.
Oh, I understand it… I built ChainLink test nodes in my basement on my home VMware lab, using Helm charts in K8’s to play around with Solidity Smart Contracts… yeah, I’m THAT type of guy.
What Don said!
Blockchain is powerful for confiscation check silk road .,anything created on a computer can be HACKED by said computer .COMMON SENSE
Because… marketing? Any worldwide (8 billion people?) technology that can only handle seven transactions per second doesn’t sound like much of a technolgy.
Sorry, seven transaction per second for Bitcoin, and 10 transactions per second for Ethereum. My bad. Until the transaction settles on the worldwide blockchain database, it’s not on the blockchain, in spite of plenty of marketing to the contrary.
In my limited experience, for payment networks, cost per transaction is as big an issue as speed.
Block Chain technology is susceptible to simple corruption as so obviously is displayed by the collapse of the block chains, duh!
True thaty! Blockchain is the crypto defiant technology behind the creation of blockchain.
Governments that don’t want private citizens to have technology that they can’t crack do not like it. It is a freedom loving technology that will be around for a long time and a real breakthrough
@Implicit, you do realize that bitcoin transactions are traceable and visible to everyone.
I do not get how that is freedom. But I guess it gives better freedom than cash :)
Agreed. Crypto is a very interesting technology and we’re just beginning to understand what can be done with it. Some people go crazy and somehow think that fundamental laws of economics don’t apply (hint: they do) and others are just abusive/fraudsters.
I haven’t dabbled in the DeFi world because I don’t think there is yet enough protection to trust any of it long-term but I’m happy to be long on bitcoin and ethereum and staked-ethereum (that I don’t borrow against). I even run my own lightning node.
It is about privacy probabilities. Forget about cryptocurrencies and tracking rules, and think about private conversations using unbreakable code that doesn’t have a historical ledger. It just disappears. Policer states would say It is not needed unless your trying to hide something. However, the right to have a private communication, if you choose to, is perfectly normal.
With a VPN and good blockchain encryption your chances of being “tracked” becomes a lot less.
As Desi used to say to Lucy “you got some ‘splaining to do!”
If, as you say, Blockchain is so distributed, immutable, transaction processing via a ledger, why is it so easy to work around and stealing hundreds of millions of crypto?
Your Blockchain silver bullet is obviously the wrong solution for “Hey! Somebody stole my distributed, immutable crypto!”
Blockchain on crypto is like having 747 aircraft disc brakes on your 3 year-old kid’s tricycle: what ever problem you claim to be solving simply doesn’t exist on a tricycle.
Block chain offers that immutable ledger that can be useful in some applications. But it is not going to make you a billionaire overnight. The whole “store of value” is like a fart in a bottle. I have been working in tech since 1995 and still don’t see what the fuss is all about. All bitcoin does is help people hide and transfer money around. Something that a shady business needs. Like it or not, government oversight is needed in currency. Otherwise I can take my stack of toilet paper, write some gibberish on it and make a new currency called shitcards. The whole bitcoin utopia that was sold to the marks calls it world currency. The US dollar (like it or not) has the reserve currency status, and is the currency of our country, which owns a sizable portion of a continent, has huge amounts of physical and intellectual capital and that’s why it enjoys the power it has. So how would one bitcoin in my pocket be equal to a bitcoin in the pocket of someone from a 3rd world country with rampant corruption, no innovation, minuscule GDP and a near non existent infrastructure?
The ledger is a basic tool of accounting;
traceable by design and function.
The obfuscation of the transactions that form the basis of the ledger, defeats it’s purpose.
IMO, block chain accounting is, per se, criminal in it’s intent to deceive.
How about the blockchain of tomorrow where the immutable ledger is a derivative for individuals of a certain group that want privacy, or a single individual. The number of keys in a block chain code make it a task not worth trying to code break because their is no currency per se except for intellectual exchange, and it would be too hard to break, unless the future of quantum computers is controlled by the government. Quantum crypt might be billions of coded integers, numbers, symbols etc…
I’ve been consulting in tech: data and cloud since they respectively became the thing, and after quarter century and hundreds of projects, I’ve seen it all. Six-seven years ago “the crew” I work with (international consulting group) hired some dude with some block-chain ideas, so I was there to understand the technical feasibility of those. He was unceremonially fired within six months, even if el-presidente hired him personally. In the end, there was not a single business use case that could feasibly bring non-speculative value to our blue-chip clients – (smart contracts were already basically free by then). If one is in the business of making money, regurgitating ideas from the ’70s a.k.a. “distributed write-once data repository” and calling it a block-chain, well it’s just not going to do it for the smart money. Off course, magic trick on proles and pension funds (gov-proles) can be pulled with the given props.
Giant hustle. Solution in search of a problem. Everyone involved seriously is shady as f. A melting pot of the desperate, the devious, and the dejected who no longer trust and have every reason not to after 2009.
What happens whrn institutions crumble with nothing but a Libertarian Utopia to take its place.
From Coindesk:
A spokesperson for the crypto exchange [Binance] said FTX’s issues “are beyond our control or ability to help.”
From FTX:
“FTX is currently unable to process withdrawals. We strongly advise against depositing”
OK …
That’s when it is exactly the best time to deposit.
Lol!
I remember when the pundits declared that Bitcoin was a hedge against inflation when it was around US$65,000.
I believe that there is a day of reckoning for insider trading and spreading false news to get bag holders.
I read on forums that working dads and moms took payday loans to buy Bitcoin and dog coins at their peak.
“I read on forums that working dads and moms took payday loans to buy Bitcoin and dog coins at their peak.”
About the same as if they had done this to play the lottery, with the same result.
At least lottery players get a few free tickets now and then.
Buying Bitcoin at payday loan interest is like throwing away a lot of money.
A loan of C$50,000 using a payday loan in Canada, amortizes at three or four times that when compounded monthly by the limitations of the interest law.
There was a time when people were taking a payday loan of a few hundred dollars and within a year it was in the tens of thousands of dollars due to interest and fees.
It’s even worse if the exchanges freeze the accounts because they can’t afford to pay the CEOs their hefty salaries.
Listen punk. To me, you’re nothing but dog coin, you understand? And a lot of things can happen to dog coin. It can be scraped up with a shovel off the ground. It can dry up and blow away in the wind, or it can be stepped on and squashed.
At least actual crap has utility, it fertilizes plants. This is not even air, which also has utility. Likewise empty space has utility: things can happen there. The “investor” or “trader’ of THIS stuff winds up with a bucket of shame. Bupkis: plenty of nothing. Bragging rights of being a sucker.
Bitcoin a hedge against inflation? That’s crazy!
Everyone know gold is the hedge against inflation. Just look at how much gold has increased compared to the US dollar this past year.
Oh, dear…
Maybe this is just wishful thinking on my part, but now that cryptos are showing their weakness as an inflation hedge, I wonder if the cryptopocalypse could be very bullish for gold.
A new sucker is exposed every minute, in the land of the free. Yes, free to be taken, free to fail, that is inherent to freedom, seriously.
This more than anything else, after the era of vapor-money, is the era of suckerdom exposed.
Any purely financial hedge is only as good as the psychology that holds it aloft. And we are progressively seeing a run on that psychology and those “assets.” And on the firms that played with them.
“Everyone know gold is the hedge against inflation…”
Apple,
I have only one word for you;
June 5th, 1933
Read Bankman-Fried was recently worth $26B and is now worth?
He isn’t the first and won’t be anywhere near the last and by this comment, I’m not referring to anything crypto related. I’m referring to the purported 735 billionaires from 2021.
By the time this mania has completely crashed, most of their fake wealth is going to be wiped out.
I just read that Bankman-Fried is now worth only $991M. Poor guy.
Crime does pay but not as much as he expected.
He lost his Billionaire title in one day
Well, unless he sells his cryptos and goes into an asset like cash or treasuries, that $991 will keep dropping.
why is the wealth being measured in dollars? If these fart knockers are so pro bitcoin, their worth should measured in bitcoin. In which case he’s not even a millionaire.
Or more obviously Gold and/ or Silver
I doubt he’s even got that much. I was just reading an article where the majority of his wealth is now in Robinhood. Boy, that’s solid.
I wonder how much he’s been squirreling away offshore. We’ll never know. That $8B went somewhere.
These investigations may result in some fancy legal fees and perhaps, I can’t speculate, jail clothes.
Bankman-Fried just screwed thousands maybe tens of thousands of criminal enterprises. None will avail themselves to the US Judicial System for justice. Under the rules of Russian criminal enterprises, Bankman-Fried most likely will fall out of a window soon.
$26B was $1 Biliion more than Bernie Maddof stole. Now it’s probably enough for the lawers, barely.
Something like this makes you wonder how many companies out there might be leveraged by a collapse of this scale ($15B in assets as of June)?
Elon comes to mind!
If I remember correctly he ditched his bitcoin holdings citing environmental concerns as there was a lot of public noise about the large energy cost involved in “farming”, it turns out he sold at nearly the peak of the bubble. I don’t know if he’s that clever or that lucky.
Sounds like the genius at Microsoft who sold a majority of his shares at the peak in November last year and cashed out on a massive capital gains in the millions if not tens of millions of dollars.
The American middle and working class are the bag holders to get the rich more richer.
The Tesla genius and the Microsoft genius grotesquely overpaid for Twitter and Activision respectively.
If there is one word I would encourage people to never use it is “genius”.
I think Elon Musk might have had a remote controlled car as a kid and was bright enough not to take it to a gas station.
There are so many other ways to compliment successful people.
No not smarter or luckier and just that he has the information among the billionaires who have decided to increase or sell together the shares they hold. A very childish game that brings the rich ever richer and the poor poorer and poorer.
You can’t really tell whether they’re richer or poorer until you find out what they did with the sale proceeds. Those guys generally don’t sit on mountains of cash.
If they went full Bankman-Fried and put their capital gains into any of Wolf’s Imploded Stocks, those billionaires may wish they hadn’t sold their MSFT or TSLA or BTC or whatever.
If they merely put the money into the S&P500 for diversification, they’re only down what, 20% from peak MSFT?
Is Bankman -Fried a real name or a description of the incident?
Hahaha, good one!
The Crypto sites & Twatter are now pronouncing his name as, “Bancrupt-Fraud.”
Have you ever wondered what it felt like in Holland at the height of the Dutch Tulip Bubble just before it popped? How a whole generation of the youth of Europe felt in 1913 just prior to getting eliminated by WWI? How the, “flappers,” (and their businessmen boyfriends) felt at the height of the concentration of the wealth, political power, along with the human and natural resources of our nation in late 1929? How the midwestern farmers felt as the Dust Bowl expanded around them in the early ’30s?
Sound familiar? Echos of human history?
These types of events, events that are typically spread over significant spans of time, even across generations, are all coming together at present with a military-like precision marching towards a (near?) simultanous expression…
As much as things change technologically, it appears our base motivations remain consistent, driving us to similiar outcomes during very different times and technological levels. Technology appears to only expand the magnitude and range of destruction of our corrupt motivations, when they enivetiably asset-strip and break the economic, political, social and environmental systems they have captured.
How you feeling?
Which is why the 2nd amendment must be protected at all costs. Human traits of lust, greed, jealousy, envy, hatred that give rise to dictators or dictatorial regimes that existed 500 years ago, still exist. The masses put up with the craziness and when they reach the breaking point they need something other than sticks and stones to tear it all down. The masses are truly the last line of defense.
Very true
Yeah, that’ll work. Like every other thing frail humans repose faith in. Complexity gets the last laugh.
SS,
Consider that the current paradigm, our culture, is being destroyed by Utopians. What could possibly go wrong?
Ss-even as the masses are driven by ‘…lust, greed, jealousy, envy and hatred…’. Just because all sides are armed won’t guarantee the result one envisions-as always, especially if you’ve never been at the point of the spear, mind what you wish for and how to genuinely achieve it…
May we all find a better day.
“it appears our base motivations remain consistent”
I think that is a statement worthy of being examined in greater detail through a comprehensive review of the historical evidence, which is the only data set that we can even begin to plumb to verify such an overarching proclamation.
Move over Aristotle and Plato, the two students of Socrates.
The conversation here is almost celebratory about the incipient collapse of the games created by an excess of liquidity, foolishly supplied, in abundance, by the very institution tasked with the prevention of such a situation.
Well, there is a considerable amount of collateral damage to fine people when a bubble pops. If we were to check the data set, we may see the experience of the “Great Depression” as a worst case scenario, but possible.
My parents grew up during the GD and made sure I knew what it was and how hard it was.
Plato invented Socrates as a teaching technique and Aristotle was a student ay Plato’s Academy….at least that’s how I read it.
“When the tide goes out … ”
Gold and silver are the assets to have for what’s coming.
The settlement of last resort. The central banks, banks, investment banks, and governments tell you it’s a barbaric relic so it must be good – they’re buying it hand over fist and have been for quite a while now.
If you think objectively, Gold has no value other than other people willing to pay. Same thing for BTC.
The actual utility of Gold is not a lot. It has utility but not worth the $$ it commands.
Gold may be desirable as jewels and other things but so is BTC.
Gold has a 5,000 year history of holding value.
PEOPLE WANT IT!
Good luck bitcoin owners!
Cheers,
B
Wizards of old used alchemy to transform lead into gold. Can’t just anybody do that…..
Jon,
Without gold, your cellphone would probably not work. Same for all computers as nobody seems to have invented board connectors plated with BTC yet. I have also not heard of any colloidal BTC nanoparticles being used in cancer treatments. Yes, there are plenty of industrial uses for gold, otherwise how is it that while mining pulls more gold out of the ground each year, the available supply (which includes investment holdings) is dropping?
BTC is good for hiding transactions until it is regulated or quantum computing scales up to real machines.
Gold’s properties are so unique that it’s irreplaceable.
Crypto is nothing and in a mania that is over, a much bigger one than gold ever had.
Gold is relatively historically overpriced but not even close to being in a mania. That was 1980.
Nonsense
Gold has historically been a store of value based on it’s rarity, it’s non-corrosive nature, and it’s transitivity as a medium of monetary exchange. Whether it still fulfills the monetary exchange function is anybodies guess.
Dang
Here’s 2 experiments for you:
1) Try buying groceries at your local market with physical gold
2) Try buying groceries at your local market with duly notarized certificates saying you own a bunch of gold stored somewhere miles & miles away
Please let me know how it goes.
Absolutely John Physical only
Good, love seeing the plunge in Crypto price…hopefully tons of home flippers, investors with 2nd or 3rd house that were betting on their crypto gain going to the moon and use/leverage the paper gain to take on additional houses will now be compel to release some housing inventory soon enough..
Not to mention it would give me much satisfaction to see these Tik Tok, YT pump and dumpers falling flat on their face now if they didn’t already cash out..
and then you have Saynor, perhaps another statement coming out soon and tell his simps HODL, going back up to $60k in no time…
Get rich quick schemes always fail! Buyer beware! If it sounds too good to be true it probably is! Believe nothing you hear and only half of what you see! Avoid snakeoil salesmen with the name bankrun-fraud!
one interesting fact about mr bankman-fried is he gave over $50,000,000 dollars to democratic candidates in the congressional election – one report had it as $68,000,000 – in either case it was a LOT of money – begging two questions – 1- whose money did he give to candidates his or his clients – 2. what was he expecting in return
If Bankman-Fried doesn’t get prosecuted for his scheme and wind up in federal prison then you have your answer as to what he bought.
That only works when the party he bought is in charge. Looks like SBF may be left twisting in the wind based upon early results.
Well, it was his money.
one followup I am going to be very curious to see if crypto is a going to effect the stock market – we have been told they are not connected – something tells me they are – its good to be old and easily entertained
Me thinks the most speculative dominoes fall first.
There might be margin based buying in one or both directions.
If not, both are still “risk assets” which have been trending in the same direction (down) all year.
As “risk off” continues, no reason to believe it won’t continue.
The world of crypto is small and dark. I seriously doubt that reputable companies would have a position in crypto large enough that it would put the enterprise at risk.
Never underestimate the power of other people’s greed …
They’re connected now. Lots of companies are connected to cryptos: crypto exchanges, crypto miners, companies that hold cryptos, chip makers (Nvidia, etc.) that make chips for mining rigs, etc.
This sounds like the conversation in early 2008: where is possible contagion? We can’t see how many critical parts are held by some some private player(s) too deeply invested in some collapsing piece, who must go to a fire sale. The crypto world is falling fast-domino style into fire sales and liquidations. There is definitely a dust-up happening, but itis not clear how far and fast it goes. But more names will be exposed in the near future, I am sure.
Bankman-Fried was until a matter of a few days ago, the great billionaire, the “white hat” supposed saving crypto for its end users. Now he is essentially broke and under multiple investigations. If even an outfit like Binance won’t touch you, this is radioactive. Crypto winter has vaporized what, a trillion dollars so far?
@ phleep –
You have shared many good thoughts in this thread.
I would offer that Crypto winter has not vaporized even one dollar. But it has certainly transferred a lot of dollars to new owners.
“During the first hours of due diligence, Binance executives found a huge shortfall between liabilities and assets at FTX, possibly more than $6 billion, according to Bloomberg, citing a source.”
Smells a little FRAUDy, huh? My guess is that this Sam Bankman-Fried is another Bernie Madoff type, swindling everybody for his own personal greed.
Sad day for crypto community.
There were tons of speculators in crypto and they get what they risk so don’t feel that bad for them!
BUT there is lots of people who have similar ideas around the irresponsible government financials, as many of the wolf street readers do, that dove into Bitcoin in particular as a solution.
Not your keys not your crypto!
As someone who believed Bitcoin in particular could make money fair and would help people. This is a major road block for regulation and therefore adoption.
Crypto is literally nothing. Aside from central bank digital currencies which are no different than existing current fiat currency, no government is going to back it.
Privately issues crypto is far too volatile to ever serve as a real functioning currency. There is also no motive to hold “stable coins” since it’s just another proxy for fiat currency but without the speculation component.
Why would it be adopted for anything?
“Why would it be adopted for anything?”
For the same reason people take a piece of plastic and swipe it at a convenience store.
Does anyone hold physical cash anymore? I haven’t had dollars in my wallet for over a year!
Righhhht!! Talk about deflection….you should mortgage your kidneys and buy more crypto
“Does anyone hold physical cash anymore? I haven’t had dollars in my wallet for over a year!”
What do you take to the Titty Bar?
Yes lots of people still use cash especially outside the US You should be happy CBDCs are coming so your every transaction will be monitored by the gubmint
“Does anyone hold physical cash anymore? I haven’t had dollars in my wallet for over a year!”
Absolutely. I pay everything I can in cash, and have been making a concerted effort to stop patronizing businesses who won’t accept it. I asked a checker at the grocery store about 6 months ago, while paying cash, if I was a rarity. She said “no, we still get lots of cash.” So there goes that. Cash is going nowhere, buddy.
Well, as cash goes away, perhaps crypto will fill the void. Just spitballing here.
What is the fundamental attribute of crypto that would make it equal in value, or more, valuable as a currency in competition with the US dollar. Obviously it fails the 2nd, 3rd, and 4th requirements of a reserve currency.
Only the 1st, as a medium of exchange, seems to be enough to convince people to risk losing the kind of losses they are currently experiencing.
I always hold physical cash. And will as long as it’s legal. And even then…And I pay in cash whenever possible. And I can feel the relative pain of everything I purchase. There is no trace. Feels more like freedom
All forms of currency fiat,Bitcoin,gold silver are only viable with a strong military .Happy Veterans Day
Apparently China doesn’t. The CCP wants total control.
Also, just read an article by Ken Rogoff in Foreign Affairs. He complains that the existence of cash impedes central banks from implementing negative interest rates.
“FTX Bankruptcy Likely Without Cash Injection, Says CEO SBF: Report”
And just like that – POOF, it’s gone!
Cash used around the world for sure!
Argentina Russia Egypt when I lived in all three continuously was exchanging usd cash and bank deposits into local currency for daily spending and sometimes usd direct to stores. I was getting paid in dollars usually. In my opinion DEFI has no place in a modern society where we enjoy the benefits of personal ownership public utilities delivery of food and services such as medical (have a family that survives childbirth) clean water electrical grid and fossil fuels. Sorry but I believe a single currency had a place in modern society and I don’t know how DEFI could represent a legitimate replacement.
Can we get an updated quote from crypto-pumper Larry Summers! “Is there […] a long-standing human desire to hold an asset that feels separate and apart from the day-to-day workings of government? I think the answer to that question, history shows, is yes. I think gold has been the primary asset of that kind for a long time.”
He went on to explain that current investors were following a similar path by injecting funds into cryptocurrencies. The former World Bank economist projected that many people would continue getting into these digital assets.
That citation is chilling, considering that fact that Larry Summers is considered a statesman rather than the economist he is. Economist is synonymous with an auld english word, quack.
I feel comfortable with saying that economists, for the past 50 years or so, have been trotted out to explain the rationality of each step that led us to the current distemper we are facing.
He’s stating a use case for it. He is not touting it. There is a vast difference.
BitCON $100 by Saturday?
Yeah… It’s always overvalued. Why should Saturday be any different?
I hope these Crypto losers might consider getting real jobs, but I doubt it. The next scam is just around the corner…… perhaps trading real estate on Mars or outsourcing the outsourced ( easy to sell getting screwed twice):
Time shares on Mars!!
I believe the crypto bubble will go down in history right next to the 17th century tulip mania and 18th century south sea bubble.
I always wonder what tulip mania would look like if there were social media and digital media around to hype it up to infinity
You’d have Matt Damon in Facebook ads saying “fortune favors the floral.”
Tom Brady was touting Bankman-Fried’s US exchange. All the legends are being popped this week. It is on youtube, Brady FTX ads. Embarrassing.
But the real scandals will follow. It’s in the air.
Tulipmania and the South Sea Bubble were both limited to a single country.
Crypto isn’t even the biggest part of this mania (it’s debt) but the scale dwarfs both, by a moonshot.
If there is anyone honest enough left, centuries from now, financial and economic historians will document what a raging mania we’ve been in for the entire 21st century.
It’s easy enough to say it for crypto but only a very low percentage either recognize or will admit it applies to all major asset classes.
Yes to that!
Those historians will have the hindsight benefit of being able to juxtapose the real bottom-line (sequential collapses to come that will be due to the relentless nature of non-renewable resource depletion and the complexity we’re no longer able to maintain) with paper-thin patches of debt, leveraged in particular, that give many a sense of continuity, if not security. The obvious absurdities will probably fit on one chart and hopefully they’ll teach it in grade school.
“Makes for very smooth and efficient contagion”.
Great line.
That line jumped out at me, too!
Wowsors!
I never understood the “real” purpose of all these exchanges having their own tokens, aside from providing another token to trade. Oh, and a small beak in fees if you use it as a trading pair – ok, whatever.
Now that the curtain has been yanked, I’m flabbergasted. Fkn-A Wolf! As simple as it seems NOW, I would have never guessed they were all in the hot tub together.
What a racket! Even better – what a rug-pull by Coinbase. I can see the argument for buying COIN now. I will happily watch as others do so.
Still no mention of Tether…yet. Tick-tock.
Ricky said: “Even better – what a rug-pull by Coinbase. I can see the argument for buying COIN now.”
—————————————————–
What is the role of Coinbase in this? rug-pull?
I just cannot believe the mental gymnastics otherwise smart people do to rationalize cryptocurrencies (and NFTs etc) as anything other than straight-up Ponzi schemes. There’s a certain percentage of people who are the victims who got suckered into the schemes and another percentage that knows it’s a Ponzi and they are knowingly trying to keep it going.
What doesn’t get talked about very much is how the SEC and FTC (in the USA, at least) have utterly looked the other way at such blatant Ponzi activity. But hey — the banks got away with everything during/after GFC too. It just seems like these enforcement institutions are just…nonexistent anymore. (At least whenever Big Money is involved.) Sure, there are stories about “active investigations” regarding FTX, etc. HAH, sure, A LITTLE LATE.
Perhaps I shouldn’t admit this, but I feel bad for the regulators. Crypto is a case where the speed of technology has vastly outpaced the speed of regulation. I watched a webinar last week where the panelists were from the regulatory agencies and they kept coming back to a central question: What is “it”? Are cryptos currency, securities, commodities, pixie dust? (Ok, they didn’t say the latter.). It is hard to regulate something when it isn’t even clear what regulatory regime “it” falls into.
Well, it’s sort of like Doctor Simpsons Sympathetic Swamp Root Syrup. Without the bottle.
This stuff is so stupid we don’t need regulators, the morons who bought into it are reaping the natural result.
Not sure what the heck you are imagining. I was working with the “technology” 20 years ago. It just took this long to weaponize it.
Agreed, Dang. I was working with PKI infrastructure back in the 1990s. The technology I’m referring to is not PKI or blockchain, but rather the usage of that technology to create crypto, and then for crypto to move out of the realm of small “play” usages into something that normal people are investing in. It is that latter step that has grown so quickly that regulators haven’t had a chance to figure it out yet. Yes, in hindsight it is easy to say they missed the opportunity to start investigating it sooner, but imagine the size of the regulatory bodies if they were tasked with investigating everything being developed that _might_ take off 10-15 years in the future.
Exactly. Hey, look, all the cattle just ran out of the barn. We need to do an investigation and see if we need to lock the barn door so no more cattle escape!
Never buy something when the seller tells you are too dumb to understand to product.
I’ve made lots of hamburgers, so I’ll buy McDonalds stock; I’ve flown to plenty of places, so I’m good for Delta. But I’ve never figured out how to own money that doesn’t exist, so I’ve skipped bitcoin, and seem to have done it right.
Well, there goes 95% of the college/university system! At least the empty dorm space should help resolve the houselessed problem.
Commenters,
Crypto is real. It has value. Just the other day, I purchased a couple acres in the Metaverse with it. I found a nice place on the banks of the river where my ship came in.
Now we want to hear about your Metaverse Maiden that you encountered on the banks of said river.
haha Brünnhilde!
I virtualized that part of life long ago.
And when he/she/it wakes up, probably should check the waterbed to see if it’s leaking across the floor…you know, that thing that hits you in the face at the end of a freefall.
You have to read “Ready Player One” or play any online game to understand how courting in the MetaVerse will work. “Ready Player One” is an awesome prescient book if Meta has its way. It is always impressive if your avatar can vanquish a dragon.
Since we are already in the Matrix, what is real anyway?
I like Ben Graham’s book and Warren Buffet’s annual letters. You really just need that foundation, an 8th grade understanding of math, patience and an average IQ to do ok as an investor.
I like Buffet’s idea that most things can not be estimated in value so just move on to something that can. A human thing is most of us like the entertainment of gambling and it can be detrimental to your returns.
Buffet loves to collect dividends but never pays them, while he buys back shares using the treasury (i.e. your, if you own shares) money.
But you do get a free ice cream while he eats a bit of humble pie if you pay to get to the annual meeting.
The Master.
He doesn’t pay dividends because it is tax inefficient for those that don’t need them. He says if you need income stream sell 4% of your shares per year and you will never run out of money.
I’m a bit concerned about contagion spilling over into the broader market.
1. The people who own large quantities of crypto tend to own much larger quanties of other things. Margin call = sell whatever is available. Pretty sure part of the selloff today is related. I heard on the news today about somebody who had hundreds of millions sitting in FTX’s exchange, that is now inaccessible. Even if it isn’t a 100% loss, they’ve lost 20% in the price declines today.
2. Lots of “traditional” hedge funds have investments or swaps with FTX and related parties. If they’re highly leveraged, it won’t take huge losses to trigger a broader mess.
3. As a resident of Ontario (albeit not a teacher), I’m deeply offended that the Ontario Teachers Pension Plan was investing in that garbage. This isn’t the first time they’ve bought stupid things and got burned. Nothing learned, I guess. I think the amount in this case is relatively small – but there’s likely a host of other pension plans that were in the funds of the VCs who were burned by this. There’s likely going to be fallout here. FTX’s total VC investment was not small.
Just checked Bloomberg…
That shortfall at FTX?
It was under $6b yesterday.
Around $6b this morning.
Right now they’re reporting $8b.
Was this an *actual* Ponzi? Not just in the figurative sense?
In their defense, a pension fund needs to be diversified. The Ontario Teachers Pension Fund should probably have invested the small amount in crypto that they did.
They invested in FTX stock, not in the actual crypto.
Per a Canadian news site (Financial Post), Canada’s real estate lender Romspen Investment Corp. has suspended redemptions in its biggest fund due to defaults in borrowers’ mortgage payments.
Wish I had that 400 million in my account
Four questions for crypto experts
1. How can crypto be used as a store of value when it so volatile
2. How can crypto be used for transactions when it is so volatile .
3. Do any of you have over 250,000$ in a bank account . Is there any deposit insurance for crypto coins .
4. What is to prevent someone from hacking the key to your Bitcoin wallet.
Well, starting with 1, that is a personal question that can only be answered by the person that holds the asset. There is no agency that monitors or tracks the purported value of the asset. The value is determined by the “free” market.
2 is self evident.
3 is a no.
4 is more complex. It is a question that goes to the very heart of whether crypto is a safe place to store wealth like treasury bonds or rely on the promises of the crypto salesman.
Now we just need Tether to be exposed.
Does “trustless” mean untrustworthy?
Thanks!!
The bad news is that crypto holders have lost $2 trillion in face value in the last year. The good news is, they can only lose another trillion.
Does anybody want to buy a boatload of used GPUs?
The tulips are wilting.
Green shoots!!!
I get the humorous reference, but not so green:
“MAY 4, 2022 – The Texas grid operator ERCOT estimates that crypto miners may increase energy demand by up to 6 gigawatts by mid-2023, roughly the equivalent of adding another Houston to the grid.”
Thanks for posting this. All this waste to find the answers to questions that, by design and definition, are irrelevant to anything.
Crypto is such a bad comedy. The sooner it ends the better.
There will always be a greater fool…
Maybe I am getting on in years, but I think this whole ZIRP strategy, has caused a lot of Damage, to many folks, and most of them are young and just starting out… How many Folks, have followed this path, since their savings, were worth nothing for so long. I am surprised there is not more outrage, from all of us. Think about the Regulators, paid, well, and watching young people ” Preyed upon ” with another goofy scheme.
What is the SEC for, if not to protect, and challenge these unregulated markets of garbage. There is a culpability aspect to those in Governance, when the Super Bowl is used to legitimize this nonsense.
How many New Landlords, will lose out, as they tried to do anything, to earn a return. House’s at least offer some long term options, even when their value is inflated, using Monetary Policy. It is one thing to implement emergency measures, in emergencies, another to allow them to saturate a Market…for a decade. 2.0 Trillion and no fallout… that is around the corner… Sadly on the march.
SOL down nearly 23 percent this AM.
hahaha
“Bitcoin has plunged into the $15,000 zip code”
Still $15,000 more than it’s worth…
“Forwarded to dead letter office.” Postal inspector cannot find anyone named Kringle at North Pole.
Blackrock an investor in FTX. The CEO was supporting investment withdrawals from fossil fuel energy companies and voting shares of the shareholders for his agenda (I think ) all of which is contributing the increase in inflation. As Wolf says the two finance worlds are mixed as Blackrock is a public company and I think the largest holder of equity and maybe even bond assets through their ETF platforms.
Three guys standing around, two normal guys and a crypto investor. The first says “boy that sure looks like crap.” The second goes “wooo smells like crap.” And the crypto buyer is now saying “yeah and it tastes like crap.”
That was a great Cheech and Chong ditty. I think one of the guy’s name in the ditty was “Yorktov.” It was OK to make fun of people of Eastern European ethnicity back in 1973.
“” It was OK to make fun of people of Eastern European ethnicity back in 1973.”
…Still is.
A Ukranian, a Pole, and Vlad Putin walk into a bar….
No one has addressed the most critical and important issue.
Does this mean FTX won’t pay “real money” to have its Logo prominently displayed onHome Plate Umpire’s uniforms during Major League Baseball games in 2023? 🤪
NASDAQ goes nuts and Crypto markets follow suite… moral of the story? How Tech goes, so goes Crypto.
The majority of the trading volume (2/3 or so) is algo-based. Next largest is passive buying. Active trading is the smallest amount of volume. Hence they all spiked right on the dot at 8:30 AM ET after CPI. And of course when you try to buy as an active trader your quote spikes as the HFTs see what you’re doing and trying to get a slice as well…lol.
Plus gamblers playing the Options + Gamma game.
It’s just a shitshow.
I mentioned here months ago that there is a veritable “wall of money” just waiting for even the slightest hint of a FED “pivot” to run the stock indices back up to all time highs and beyond. Today is just more proof of that. A horrible CPI number is celebrated as if Jerome Powell has just announced to speculators “I got your back, let’s party, QE is coming.” It’s a joke. They printed way too much money, and the mania is still going.
Thank you DC. I have been hinting as well that there’s an ocean of money out there, and boy is today proof of that or what?!
ZIRP has been a problem, but it’s not the core cause of today’s inflation. Injecting trillions of monetized debt into the money supply so quickly and handing a lot of it out was the cause. Hiking interest rates isn’t going to address the cause of our inflation problem, nor is it going to solve our asset price problem. We got hit by a truck full of money and the Fed is treating our blunt-force trauma with chemo-therapy. It won’t work. Money needs to be removed, lots of it. If it doesn’t find its way into CPI, it’ll go into assets. The Fed WILL NOT remove it fast enough to fix the mess that they created. They refuse to and will continue to refuse to do it.
End game: The Fed will jawbone and act like they’re playing hard-ball with interest rates, but they we eventually pause. They will not be able to continue removing liquidity for years to come. We will eventually inflate our way out of this. Just like we did after WWII. Just like we did throughout the 70s. Money supply growth will resume, just like it always has. It doesn’t matter what sensible Americans want. The dollar is worth less than 1/10th of what it was when my father was born. And when my kid is my age, I can only hope the dollar is still worth at least a 10th of what it was when I was born.
The Fed hasn’t changed. Paper tigers don’t change their stripes.
The true underground of DEFI purists are LOVING THIS collapse.
NONE of these groups highlighted in this article were DEFI at all…..it serves them right for sucking up to the old world structures and trying to fit into them as quickly as possible to make fast money on the back of the vision actual DEFI purists established long before these kids showed up.
If you want to follow someone who remains super clear about all of this….follow Erik Voorhess.
The reason that bitcoin is failing and will fail is that there is no…. digital Fed Reserve Board to be the lender of last resort. There is no…Deposit insurance . There are no regulations or a police force that will insure your dollar is ..your dollar.
This was a ponzi scheme in the alpha and omega.
At least with tulips or Aug , you can use them for decorative purposes.
“During the first hours of due diligence, Binance executives found a huge shortfall between liabilities and assets at FTX, possibly more than $6 billion, according to Bloomberg, citing a source.”
So how is it possible that the SEC, who had been investigating them for months, could not spot that $6 billion shortfall that took Binance only one afternoon to find?
They probably did. However, they were not going to publicize it until an indictment is dropped. There is something called the Privacy Act which protects American’s information stored by the US govt.
It was Trump who opened his big mouth re the FBI raid on Margo Lago
What a wreckingball and embarrassing question? +10
the anwer is, pathetically, obvious and pathetically, will never be officially answered.
but great question.
@ Wolf who said: “Bankman-Fried also founded crypto-trading firm Alameda Research”
——————————————–
Wasn’t Alameda Research a hedge Fund?
Isn’t the FTX token called FTT?
Absolutely nothing has changed with the FTX story, in fact the news is getting worse, yet these “cryptos” are having a moonshot day. And that includes FTX, which just more than doubled from yesterday’s price.
The WSJ is reporting that fraud boy admitted that he took over half of all customer funds and transferred them to his Alameda company to use for crypto speculation and gawd knows what else. That’s grand larceny.
Let’s not forget the fact that Tom Brady and Gisele were pimping this stuff through commercials, and had an ownership stake in FTX. What do they know? The timing of their divorce now looks a little suspect. Could they have been fighting about this fraud that they were part of? Lots of questions, few answers. And yet it’s BTFD, MAN!
@ Depth Charge
@ Wolf
How much different is what FTX and Bankman-Fried did than what
MF Global and Jon Corzine, ex governor and ex Goldman CEO, did?
Corzine is a free man.
shouldn’t there be a full court press on Corzine?
ah, but to be a Goldman alumnus
Bankman-Fried is a free man too.
There should be a full court press on Bankman-Fried.
Bitcoin up bigly today. It may go to zero but not today!
Since the only thing cryptos are really used for is money laundering and the financing of shady stuff, i guess there are a lot of interesting meetings taking place with all sorts of interesting characters attending right now.
Isn’t it funny – all this talk od Sam Bankman-Fried and no mention of the other FTX founder, Gary Wang. Bet you can’t find a picture of him.
‘Cryptos Plunge’ another day another result….
Yes, they’re plunging right now again :-]
It appears that FTX/Alameda Research had no compliance/risk management at all.
SBF is probably a really smart nerd who, like almost all embezzlers, believed he could repay the funds he “borrowed” before everything fell apart.
Did he have any actual business experience prior to starting FTX?
Crypto has been an ungainly ménage-a-trios between millennial stupidity/greed, the tooth fairy and money laundering crooks. As per usual, millennials are the designated virgins in this melodrama.
FULL DISCLOSURE: yea, yea, yea; over the last 10-15 years, crypto has spread well beyond just millennials.
From a distance, greed is truly glorious, like an expensive rocket blowing up on the pad, as more stupid/greedy investors pile into the greed-scrum.
Everybody in this clusterf**k knows this is fabulously risky, but nobody knows who else is involved or how risk is distributed/tolerated in crypto-world at any given moment.
However, each & everyone of the players is absolutely convinced they are much smarter than all other players (combined), and if/when things start to go wrong, they will be able to get out first…and with a profit.
Mind you ALL OF THIS TAKES PLACE ON TOP OF SERIOUS CRIMINAL ACTIVITY (guys with guns) TO LAUNDER MONEY.