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Crypto Crash. 11/8/22

edited November 8 in Other Investing
Crypto Crash, 11/8/22

BIG news today, 11/8/22 was another crypto crash. The #3 exchange FTX (non-US ops; run by flamboyant SBF) went bust and was acquired for $1 + liabilities (and subject to DD) by its rival #1 Binance (non-US ops; run by cool sharpie CZ). Remember that SBF was the guy running around and rescuing other crypto firms in an earlier crypto crash, and some called him the new generation "Buffett", and now this happens to him. Also, due to stricter crypto regulations (some say, lagging/lacking), these firms had separate US and non-US operations; and this drama relates to their non-US operations.

#2 Exchange is Coinbase/COIN and it retains a US focus. It wan't involved in the Binance-FTX intrigue but it price was down as well.

And hey, this is YBB.

https://i.ibb.co/RH3hmWD/Screenshot-2022-11-08-16-21-29.png
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Comments

  • a pox on all crypto. subversive and unethical.
  • "There's a sucker born every minute"
    P.T. Barnum
  • I always thought SBF was playing games when it surfaced that he likely was using his Alamedia Research to 'fund' FTX;s needs. Sooner or later, the bill comes due and the music stops playing. Not looked too deeply into it yet, but it sounds like he was engaging in some Madoff-esque 'accounting' techniques.

    No sympathy for him.
  • Hearing SBF lost 90+% of his worth today, that is a difficult day when you are only left with $1 billion.
  • It is surprising that in this day and age, what happened could happen. Binance and FTX had a spat. CZ/Binance attacked SBF/FTX, threatened to liquidate holdings of FTX token FTT, caused a crisis of confidence in FTX and sort of a run on FTX. Then Binance rescued FTX for a song ($1 + liabilities) with the contingency of due diligence - who knows if that turns out to be a Musk-ian trap to try to wiggle out of the deal later.

    Coinbase/COIN CEO Bryan Armstrong had a long tweet explaining why its operations are different from those of Binance or FTX.

    https://twitter.com/brian_armstrong/status/1590088673726717952

    But then, those who relied on what SBF/FTX and CZ/Binance said just a few days ago got burned.
  • For my part, I have never understood crypto. A friend of mine made enough dough on it a few years ago to buy his daughter a house, saying to me, “It’s just a currency.” However, to read the above contributions I had to resort to Google to translate the acronyms/initials into everyday lingo. Must be my age.
  • edited November 9
    Crypto as a currency is mostly nonsense. Crypto as a means to power blockchain has some legs.

    The simplest way to think of crypto is that it is a protocol to power a decentralized web (aka web3) Whether a decentralized web will take off is unknown, so my comment here is technical not investment related.

    Protocols such as TCP, HTTP, etc.. that power the current internet as we know it yielded no financial benefit for the protocol creators but other firms made obscene money (Google, Amazon, FB, etc..). With crypto a basic idea is that the investors in the protocol should also make dough. Lot more to it of course, I am keeping it simple here.

  • Binance walked away from FTX. Situation was hopeless after due diligence - customer funds were mishandled; the regulators looking into FTX.

    Former billionaire (just a couple of days ago) SBF is reportedly bankrupt.
  • edited November 10
    Former billionaire (just a couple of days ago) SBF is reportedly bankrupt
    Ha, and I thought my portfolio was down.

    Whatever we think of Crypto now, and I agree it seems to be like playing Russian roulette in the wild west, some form of this technology will evolve as the future of currency. It is at it's infancy and a winning venture will probably need US government backing. Maybe the best and safest way to play a blockchain/cloud investment now is where @stayCalm suggests, company's like Amazon and Google.

  • MikeM said:

    Former billionaire (just a couple of days ago) SBF is reportedly bankrupt
    Ha, and I thought my portfolio was down.

    Whatever we think of Crypto now, and I agree it seems to be like playing Russian roulette in the wild west, some form of this technology will evolve as the future of currency. It is at it's infancy and a winning venture will probably need US government backing. Maybe the best and safest way to play a blockchain/cloud investment now is where @stayCalm suggests, company's like Amazon and Google.

    In this case it's sounding more and more like one company/owner disagreed with another's political views on crypto regulation so he set out to attack, and likely bankrupt, a competitor. IMO this takes the idea of 'short-and-distort' and corporate raiding to a new level of deviousness, imo -- and it's happening far quickly than it does in the 'real' world of tradfi, too. It doesn't bode well for the crypto industry sans any serious regulation. (and fwiw saying, I really only trust Gemini as a crypto broker these days.)

    I got out of crypto-anything this spring (mostly crypt-lending at 8% and some miners) and used that 'fun fund' to pay for 2 fairly expensive bathroom renovations, which I think is an investment far more profitable and safer over the long term. Even better, the few thousand i received in crypto interest earned in the 6 months beforehand paid for the change orders I needed for more drywall and some plumbing updates. As a result, I didn't have to touch any 'serious' long-term investment funds for that 8-week major home project. So I can definitely SWAN.:)
  • FWIW, I think Ethereum is the "safe" bet on crypto because Ethereum is setting itself up to be the equivalent of http.

    ** This is not investment advice, buyer beware.
  • WSJ just now:

    "Crypto exchange FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter said.

    FTX Chief Executive Sam Bankman-Fried told an investor this week that Alameda owes FTX about $10 billion, the person said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, according to the person."

    src: https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732

    This is like MF Global, redux....
  • FYI, Nova on PBS had an episode on cryptocurrency this week. I haven’t watched it yet but to view it on streaming. One of my core financial practices is to stay away from investments I don’t understand and I’m clueless about crypto.
  • Howdy folks,

    I think there is a lot more blood in store for investors. I think it's a snake oil product. Mostly, is it just me, or does SBF look like he hasn't bathed in about a year? I don't want to be in the same room with a dirtball like this. Oh, and just for the record, I don't want anyone managing my money who obviously hasn't figured out how to manage personal hygiene.

    and so it goes,

    peace,

    rono
  • edited November 11
    I wouldn't think twice about crypto but for the fact that the participants are keeping coal-fired power plants running to feed their ridiculous energy-hog games. One in my state was in the first stage of shutdown, but the void boyz bought it and keep it running, spewing CO2 like there's no tomorrow, so they can play at crypto-crap.
  • I heard his net worth went from 35 billion to zero in last month

    And it looks like poor little Tom Brady got hit too. That's what he gets for dumping Giselle. Imagine telling your wife and the mother of (some) of your children like that "I would rather play football"?

    I wonder if Bridget Monahan is laughing?
  • edited November 11
    Glad I stay away from investment that I don’t understand.

    The environmental impact as @AndyJ mentioned is just horrible for the future generations.
  • "Investment" ??? By what definition?
  • Odd that we haven't heard much from Edmond lately. He is very big on "Crypto".
  • Roy
    edited November 12
    Read in the WSJ that only a month ago SBF stated at the Journal's Tech Live conference he was interested in buying "something" that would get more "mom and pop" traders on board. Guess he was seeing he needed to expand the pool of victims to keep his Ponzi scheme afloat.
  • @ Rono. What in the world are you talking about ? You find something off putting about SBF’s appearance? Like what? And what does it have to do with anything? Such a 45 thing to do.
  • Now the WSJ is reporting that FTX is looking into a potential hack and more than $400 million worth of crypto funds appear to be missing. And the beat goes on in crypto land. Makes one think not a single honest person is involved in the business, only looking to separate people from their money.
  • CRYPTO Intrigue and Crash. It started with a Twitter spat between Sam Bankman-Fried “SBF”/FTX and Changpeng Zhao “CZ”/Binance. There were prior frictions from SBF’s closeness to the DC lawmakers, his push for a crypto legislation that was disliked by the crypto industry, his flamboyance, and his MIT connections. Someone leaked Alameda Research balance sheet that held lots of FTX token FTT and had other issues involving self-dealings between FTX and Alameda. CZ threatened to sell Binance’s entire FTT holding (about a half-billion dollars, a lot but not really that much), and a run on FTT and FTX (international) began. Ironically, SBF asked CZ for a rescue, and initially CZ agreed to do that for a song ($1 + FTX liabilities), but then withdrew a day later upon due diligence (some say that CZ was never serious about the rescue and was really going for the final kill). Then, SBF tried to patch up a $8-10 billion hole by raising new funds from his investors/supporters, but by now, SBF, FTX and Alameda were damaged goods (especially after CZ pulled out of the rescue saying that situation was hopeless and beyond what he/Binance could do). So, SBF filed for bankruptcy for FTX and 130 related entities, and surprising, that also including FTX-US (it was previously thought that the problem was with FTX-International only). The $32 billion empire of 30-yr old SBF (and his personal net worth of $16 billion) collapsed within a week (literally, within hours) causing $125 billion in estimated losses in the crypto industry. Regulators all over the globe moved in to freeze FTX assets. In the US, the SEC, CFTC, WH and Congress are looking at this fiasco. The full extent of this crypto contagion is yet to be determined/felt. The US-listed Coinbase/COIN was not involved in this mess, but its stock also suffered. (News on Saturday morning is that SBF may have fled from Bahamas to Argentina)
    https://www.barrons.com/articles/ftx-binance-sam-bankman-fried-crypto-bitcoin-solana-price-crash-51668135110?mod=past_editions
    https://ybbpersonalfinance.proboards.com/thread/362/barron-november-14-2022-2
  • edited November 12
    Striking that every era has a tulip bulb story.

    Greed does not change, no matter the resources of the internet.
  • Maybe SBF gave someone a master key to steal some funds for him while he was planning his escape to Argentina?
  • @rono: FWIIW, Changpeng Zhou, the other dude in this crypto war, has a completely shaved head. Frankly, he does not appear any more palatable to me, but my judgement has been poor in other instances.
  • rono may be right- I searched for Sam Bankman-Fried and "bath", and got no returns, so maybe he's never taken one. I love the internet! :)
  • SBF is/was very good at exploiting connections, real/imagined/implied. His parents are lawyers and/or political fund raisers (one CNBC regular fell for just that). His educational connections are also intriguing - the same place where the SEC Chair taught cryptos in a department headed by a parent of Alameda CEO (alleged to be a girl friend of SBF). The crypto legislation going through Congress should be looked at more closely for possible conflicts and manipulations and shouldn't be rushed citing the current chaos/crisis.

    All seems like movie stuff except it wasn't for those caught in the mess.
  • edited November 13
    A GOP controlled House will make hay (as they should) investigating the buyouts of Dem pols.
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