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Old_Joe said:See, this tulip that I'm holding is actually also a token... and one of the best tokens at that. And just look out there at my great big field, just full of tokens... and look at all the pretty colors!You can have some of these... just fill out this form to transfer funds from your bank. With everybody wanting more and more of these they are increasing in value every day! And they can make you rich too, just like me!
See, this tulip that I'm holding is actually also a token... and one of the best tokens at that. And just look out there at my great big field, just full of tokens... and look at all the pretty colors!You can have some of these... just fill out this form to transfer funds from your bank. With everybody wanting more and more of these they are increasing in value every day! And they can make you rich too, just like me!
Old_Joe said:@rforno- Since you had steak for dinner it would seem to suggest that you didn't have a lot of money "invested" in this silliness.
@rforno- Since you had steak for dinner it would seem to suggest that you didn't have a lot of money "invested" in this silliness.
Uncle Josh speaks truth.
No amount of due diligence in the financial services industry can prevent a person or organization from going rogue. You can vet the leadership, you can analyze the balance sheet, you can background-check, you can ask for references, you can obtain signed pieces of paper, you can demand third-party custody, you can vigilantly check in on the website and analyze activity logs, you can do all of these things – but if someone decides to commit a crime, the end result is going to be the same until that crime is revealed. No matter what regulations are in place, we are always – all of us – subject to this risk.
© 2015 Mutual Fund Observer. All rights reserved.
- I'm glad my 'traditional' investing horse-sense/experience kept me safe and skeptical, meaning I did the necessary due diligence on investments, (counterparty) risks, & exchanges.
- I'm glad I went w/an exchange that is regulated as much as possible, not the one w/the flashiest ads, bonuses, or stadium naming rights.
- I'm glad I got all-out in mid-Spring before things turned for the worse. Used that 'fun' $$ to help pay for condo renovations that just wrapped up last week.
IMO the 'crypto winter' has become an MF Global-reckoning for the crypto industry. Regulation is needed!
I just read an article that states FTX "invented" a token (FTT) to ease trading on its platform.
What the heck does that mean or work?
Tokens are like prepaid store cards or chips on cruises/casinos. There are hundreds of unregulated crypto exchanges and most have their own tokens. That is what FTT was for the crypto exchange FTX (and its related market-maker Alameda). One uses some cryptos to buy exchange tokens (FTT in case of FTX). To promote their tokens, crypto exchanges offer great deals, discounts, favors.
But at some point, one wants to get off the train and change the tokens back into cryptos or dollars. But what happens if there is a crisis of confidence and tokens become almost worthless? You cannot trade them, and the "house" won't/cannot honor them. The trigger here was (Mr) CZ of Binance who was an early investor in FTX and received lots of FTTs for his stake in FTX. He got upset by something that (Mr) SBF of FTX did or said and CZ threatened to sell $500+ million in FTTs that he had. Well, that crashed FTT, FTX, Alameda, BlockFi (that FTX was in the process of acquiring), and a few others that we haven't heard about it yet (this situation is still unfolding).
Amazing that in something touted as DeFi (decentralized finance), 2 guys that most haven't heard of before could cause so much damage.
At the time of Enron collapse, my wife asked why did it matter to her or general public? She worked at a national store chain. I tried to explain that imagine 100s of stores like hers just vanishing overnight - buildings, stuff, inventory. And that kind of loss can impact EVERYBODY and it did.
Here too, whether one is in crypto or not, disappearance $125+ billions (industrywide loss est) will have an impact on EVERYBODY. For perspective, in a decent IPO year, startups raise $50+ billion in a year and that leads to good markets (a great year like 2021 has $142.4 billion IPOs, a terrible year like 2022 YTD only $7.6 billion). This crypto crash is going in reverse by draining money - industrywide, $125 billion gone!
However if there was a rumor that Starbucks was going to go bankrupt soon, the value of the Starbucks rewards would plummet pretty much to zero.
You can have some of these... just fill out this form to transfer funds from your bank. With everybody wanting more and more of these they are increasing in value every day! And they can make you rich too, just like me!
it seems SBF used customers assets in the non-US subsidiary as margin for shaky investments in FTT etc, and then CZ pulled the plug on FTT but dumping his entire position. CZ may not have known that FTX and Alameda was so heavily margined against customer's assets, but found out when SBF came begging for rescue.
US security laws and regulations prevent brokerages from using customer's assets for their own purposes, so it is unlikely without a non-US subsidiary, this would have blown up so spectacularly.
I had a friend whose son had "a couple of million dollars worth " in Bitcoin on a thumb drive locked in a safe deposit box when Bitcoin was $15000 in 2018. He said the kid was sure it would soon hit $200,000 a "coin" and they could buy a nice yacht.
I never heard if the kid sold it.
Blockfi may be next....?
If the money cannot verifiably exist in a bank account as attested to by the bank, it does not exist, period.
More dominos falling. This one is BIG BIG BIG .... they're the prime lender for most crypto-lending platforms that generate huge yields to various 'sophisticated' investors. I used them with Gemin Earn to get 8% on 'deposits' lent out as crypto but got out completely in the Spring b/c I was getting queasy not knowing their full counterparty risk exposure -- just before the crypto-winter started.
 I took 'sophisticated' institutional investors to mean banks, brokerages, and other crypto speculators, which the more I dug, the less comfortable I became. Glad I was so prescient!
Gemini is also pausing some withdrawals, https://finance.yahoo.com/news/ftx-latest-regulators-discuss-questioning-221901739.html
Gemini also tweeted, https://twitter.com/Gemini/status/1592873279232278532
I wonder how this is going to work out ?!!
"Sam Bankman-Fried and his fellow FTX executives followed the well-established lobbying playbook of spreading money around Washington — at least $70 million on 2022 campaigns, with three sources saying there was much more in “dark money” — to make friends with whoever ended up in power, regardless of the outcome of the elections.
Sam Bankman-Fried is a Democrat, and he spent at least $40 million supporting the party."
Grayscale's application to convert GBTC to ETF has been rejected by the SEC several times and a revision is pending.
Edit: late Friday night...
"Cryptocurrency investment product provider Grayscale Investments has refused to provide on-chain proof of reserves or wallet addresses to show the underlying assets of its digital currency products citing “security concerns.”
Something smells fishy here, but I had steak for dinner...
Bottom line, I took away a modest amount in profits/intrerest for that initial forray into crypto, but the money was far better spent on home improvements -- plus that 'fun' fund (money i could 'afford' to lose speculating, not my life's savings) and some extra $$ coming in from work meant I didn't need to dip into other investments to pay for it, so double-win. It's the same approach I used years ago when I closed my active futures trading account and used the proceeds to pay cash for a new German car.
As to getting in/out of crypto lending: the lessons of the GFC about doing deep due diligence about counterparty risk controls, transparency, and listening to my risk-aware gut feelings paid off for me in several ways. I knew it was risky going in ..... but a lot of people drank the kool-aid, bought into the hype, threw caution to the wind, had TONS of money in these types of products across many often less-risk-oriented ompanies (3AC, Voyager, Celsius, and now FTX), only saw profits but never considered the risks, both obvious and quite possible --- and in the end either lost it all, only retrieved some of it, or are waiting for the outcome of investigations/litigation to be made semi-whole again if even possible.
 I viewed crypto-lending's risk profile akin to junk bonds -- it was an either/or outcome about getting my money back on that speculatative position in my portfolio.
My neighbor whom I mentioned earlier in this thread who works in the crypto universe stated last night that he believes crypto.com could be the next to fall.
He thinks Gemini and Kraken are legit and that Coinbase should be okay.
He also whole-heartedly states that people should keep their crypto holdings in a cold wallet.
Can't say I'm surprised --- Genesis always struck me as the Countrywide of Crypto despite saying the crypto on their yield products were only lent out to 'sophisticated' or institutional investors. (Like 3AC and FTX.)
Next domino may be Genesis, may be even DCG.