BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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In summary: I don't know if this actually happened, but...?In summary, the website of major bitcoin exchange MtGox was offline Tuesday amid reports it suffered a debilitating theft. Around midmorning in the U.S., the company released a statement saying it had closed off transactions "to protect the site and our users." It offered no further details.
  • #316
BWV said:
Seriously, think the death spiral for crypto started today
Honestly, it's hard to say. I've heard that on every dip already: in 2011, 2013.04, 2013.12, 2014, 2017, 2019, 2021.04, 2021.12 ...

The top of the first one was around $22 :doh:

It's kind of classical series of bubble-like exponential runaways. I see no way to predict if this one was the last.

What's actually exactly the point: this 'asset' is fit only for speculation (the gambling type) and nothing else.

Ps.: honestly, the movement so far looks rather corrective than terminal, and that would imply further peaks ahead. But: no way to know. Fortunately, I don't have to 'know' o0)
 
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  • #318
Office_Shredder said:
This is just how diversified returns work?
Actually no.

If I have half my money in stocks and half in bonds, I have diversified.
If I have 99% of my money in stocks and 1% in bonds, I have not.

If he has ~100 different asset classes, 1% level allocations make sense. But if he has 100 different asset classes, I would question what strategy could possibly require that many.
 
  • #319
russ_watters said:
Huh? BTC's peak was $64,000. Did you mean to say 3.03?
No.

He has $100. He then keeps $99 and buys his 1% in Bitcoun. That dollar goes up to $4. Now he has $103.
Alternative strategy: Put $100 into Treasuries. Now he has $103.
Same reward, for less risk.
 
  • #320
Vanadium 50 said:
He has $100. He then keeps $99 and buys his 1% in Bitcoun. That dollar goes up to $4. Now he has $103.
Alternative strategy: Put $100 into Treasuries. Now he has $103.
Same reward, for less risk.
See my response to Drakkith; you're low on the predicted potential upside of Bitcoin by around a factor of 15. If it goes from $20k to $1m the final portfolio value is $149 (if there's no return on the $99).
 
  • #321
Vanadium 50 said:
Actually no.

If I have half my money in stocks and half in bonds, I have diversified.
If I have 99% of my money in stocks and 1% in bonds, I have not.

If he has ~100 different asset classes, 1% level allocations make sense. But if he has 100 different asset classes, I would question what strategy could possibly require that many.
If you are 100% invested in bonds, then moving 1% to stock diversifies your portfolio. Going to 1% is clearly better than staying at 0% for most people.

I'm not saying everyone should invest in bitcoin, but claiming there's no point because you're only doing 1% is wrong. The first 1% is the best 1%.
 
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  • #322
russ_watters said:
Video says that's a year ago. If I were him I'd stay in the Bahamas or find a warm non-extradition country.

[waves to the fbi agents who just started following me after I googled that]

The video was last year but he was one of the top policymaker advisers until the crash this week.
https://www.politico.com/news/2022/11/10/crypto-megadonor-sam-bankman-fried-00066062
Crypto critics are urging lawmakers to tread lightly with industry power brokers.

“This is what happens when instead of doing robust public interest policy, you hitch your wagon to charismatic founder types who make a lot of promises they can’t ultimately deliver on,” said Americans for Financial Reform senior policy analyst Mark Hays. “Sam may be one of the biggest and clearest example of that kind of hubristic figure, but there have been many before him and will likely be many after him.”
 
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  • #323
Astronuc said:
was thinking of investing gambling losing/burning up to 1% of portfolio in BTC. :oldbiggrin:https://finance.yahoo.com/news/hostaged-ftx-funds-sold-pennies-195751906.html :))

:rolleyes:

Meanwhile - (Bloomberg) -- "Amazon.com Inc. is the world’s first public company to lose a trillion dollars in market value as a combination of rising inflation, tightening monetary policies and disappointing earnings updates triggered a historic selloff in the stock this year."
https://finance.yahoo.com/news/amazon-becomes-world-first-public-191725519.html

So it was overvalued? :olduhh:
I thought $AMZN was overvalued when it was in the $3,600 range (pre-split). I think it deserved its haircut.

Now, it looks reasonable. Sure, the retail side is mostly mature and arguably has peaked already (although, the third-party seller unit is actually growing very rapidly for them), but AWS and the ad biz segments are awesome. The real problem is macro/recessionary times. They can't help that AWS' growth went from 40%+ to just 20%-range. Lots of tech companies are laying people off right now (so data center/cloud growth won't be so strong for the moment). Once we get out of this recessionary period, they'll likely see growth accelerate again in their key growth drivers.

Plus, they just completed a HUGE capex cycle, so free cash flow takes a hit during those times. Historically, they take a stock hit after a huge capex investment, but then see the stock rebound fast and furious (without the capex spend and seeing some of the investments pay off immediately). THIS TIME, we're practically in or headed for a recession right after their capex spend late last year and early this year. So the timing was arguably unlucky.

I've been picking up some Amazon (my position is small, b/c I like other companies better).
 
  • #324
Rive said:
Honestly, it's hard to say. I've heard that on every dip already: in 2011, 2013.04, 2013.12, 2014, 2017, 2019, 2021.04, 2021.12 ...

The top of the first one was around $22 :doh:

It's kind of classical series of bubble-like exponential runaways. I see no way to predict if this one was the last.

What's actually exactly the point: this 'asset' is fit only for speculation (the gambling type) and nothing else.

Ps.: honestly, the movement so far looks rather corrective than terminal, and that would imply further peaks ahead. But: no way to know. Fortunately, I don't have to 'know' o0)
The scheme ends when it runs out of new money, we saw the death of leverage as a source of new funds this year and FTX is likely the end of institutional capital. Joe weisenthal summed it up nicely:
The primary purpose of crypto is "number go up." When "number go down," it's not doing its job. So naturally, any interest in the space is going to wane during times when there's a lot of red on the screen.

But this is true of stocks as well. Everyone wants in during the boom. Everyone loses interest during the bust. Wash, rinse, repeat, etc.

All that being said, there's another dynamic with crypto specifically that I think will make the SBF disaster painful and damaging for a long time to come. One of the big trends in recent years has been the rush of "institutional money" into the space. "The institutions are coming" has been a major bull narrative.

But institutions have faced an obvious dilemma. Crypto might be a big scam, and there's a lot of reputational risk associated with it. Like do you really want to be the allocator at a big endowment or something that placed a big bet on Beanie Babies? On the other hand, crypto might be the future of finance and the Web. And so do you really want to be the allocator that missed this ongoing revolution? There's plenty of opportunities to be humiliated in both directions!

But investors found a solution: Invest in blue chip entities that have good reputations that are also in crypto. So for example, VC firms that have gotten into this space are in the sweet spot here, where the allocator can have "crypto exposure" while also investing in a vehicle associated with a reputable brand that long precedes the industry.

It's pretty obvious that SBF came to occupy this space, allowing investors to have exposure to the industry, with minimal reputational risk. Now the empire is in tatters of course. But who else is there now? Who are you going to trust if your job is to invest on behalf of some big fund or corporation or endowment?So yes obviously, the massive plunge in the value of the coins will naturally ice the interest in the space. But now beyond that there are fewer entities that can solve the embarrassment problem that make people feel comfortable investing in the first place.

Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart

 
  • #325
Office_Shredder said:
The first 1% is the best 1%.
This is the very same argument I tell myself that lifting a bottle of beer is weightlifting.
 
  • #326
Wall Street Journal reports "FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall".

That sounds dodgy. Was that legal?
 
  • #327
Astronuc said:
Wall Street Journal reports "FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall".

That sounds dodgy. Was that legal?

There isn't really enough information here. Crypto exchange customer agreements are pretty weak, basically you sign your property over to them for them to do with as you want.
 
  • #328
Astronuc said:
Was that legal?
Does anybody care? Part of the point of crypto is taht it can be used to pay for things that aren't legal. You can't have that and the kind of banking regulation we are used to in the First World.
 
  • #329
Vanadium 50 said:
Does anybody care? Part of the point of crypto is taht it can be used to pay for things that aren't legal. You can't have that and the kind of banking regulation we are used to in the First World.
The users and holders of Bitcoin are different groups. To the holders, yeah, it matters a lot.
 
  • #330
Binance now lists its addresses on some of its tokens' blockchains : https://www.binance.com/en/assets-proof. So we can know their reserves in real time, for many coins. (Strangely they did not list their Monero reserves, which they are accusated to have almost none, and keep the price artificially low for XMR... Binance CEO dismissed highly rated reddit questions about.this, in a reddit AMA apparently). CZ says he's all for transparency, but I would say not entirely.
 
  • #331
Astronuc said:
Wall Street Journal reports "FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall".

That sounds dodgy. Was that legal?
It was just a "poor judgement call".

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.
"He’s also vegan and drives a Toyota, so all is forgiven!"
 
  • #332
1668132270132.png
 
  • #333
Be careful where you put your bitcoin/cryptocurrency and/or money.

Tracy Wang
Thu, November 10, 2022, 5:00 PM

"Shocking" is a word that aptly describes the rapid fall of Sam Bankman-Fried’s cryptocurrency empire. To a surprising degree, it’s a sentiment that pours out from people who worked for him, people who you’d think would’ve had a clue.

How can that be? It may have something to do with a luxury penthouse in the Bahamas. That’s where 30-year-old Bankman-Fried is roommates with the inner circle who ran his now-struggling crypto exchange FTX and trading giant Alameda Research.
https://www.yahoo.com/finance/news/bankman-fried-cabal-roommates-bahamas-220000971.html

Many are former co-workers from quantitative trading firm Jane Street, others he met at the Massachusetts Institute of Technology, his alma mater. All 10 are, or used to be, paired up in romantic relationships with each other. That includes Alameda CEO Caroline Ellison, whose firm played a central role in the company's collapse – and who, at times, has dated Bankman-Fried, according to people familiar with the matter.
Conflicts of interest? Negligence?

According to FTX staff: "It’s a place full of conflicts of interest, nepotism and lack of oversight."

FTX and Alameda employees CoinDesk interviewed say they have been kept in the dark about the events of the past week, adding that only CEO Bankman-Fried’s inner circle may have had knowledge that the exchange, as reported by the Wall Street Journal, siphoned customer funds into corporate sibling Alameda.

FTX apparently needs some independent outside oversight.
Among his nine housemates are FTX co-founder and Chief Technology Officer Gary Wang, FTX Director of Engineering Nishad Singh and Ellison of Alameda, Bankman-Fried’s trading business that’s at the center of the current chaos and on which the Wall Street Journal reported got $10 billion of FTX customer money.
. . . .
“Gary, Nishad and Sam control the code, the exchange's matching engine and funds,” the first person familiar with the matter said. “If they moved them around or input their own numbers, I'm not sure who would notice."
It seems that FTX did not disclose the appropriation of customers' funds with which they 'gambled'.

“Some employees kept their life savings on FTX”!Bloomberg reports Bankman-Fried’s Assets Plummet From $16 Billion to Zero in Days
https://finance.yahoo.com/news/bankman-fried-assets-plummet-16-080320755.html

At the opening of US markets 0930.
ymbolLast PriceChange% Change
Bitcoin USD16,598.27-945.34-5.39%
Ethereum USD1,214.45-80.58-6.22%
Tether USD0.9985+0.0022+0.2233%
BNB USD281.48-18.29-6.10%
 
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  • #335
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  • #336
Office_Shredder said:
991 million dollars is approximately a billionaire. He's fine
Two days later:
https://www.wsj.com/livecoverage/st...ried-s-net-worth-at-zero-byL97Xf4UJhiK7vCNmtD

Bloomberg Estimates Sam Bankman-Fried’s Net Worth at Zero​


https://www.bloomberg.com/news/arti...go-from-16-billion-to-zero-after-ftx-collapse
The downfall of his crypto empire -- which filed for bankruptcy on Friday along with his resignation -- means assets owned by the mogul once likened to John Pierpont Morgan have become worthless. At the peak, the 30-year-old was worth $26 billion, and he was still worth almost $16 billion at the start of the week.

The Bloomberg Billionaires Index now values FTX’s US business -- of which Bankman-Fried owns about 70% -- at $1 because of a potential trading halt, from $8 billion in a January fundraising round. Bankman-Fried’s stake in Robinhood Markets Inc. valued at more than $500 million was also removed from his wealth calculation after Reuters reported it was held through his trading house, Alameda Research, and may have been used as collateral for loans. FTX.US and Alameda were also part of the bankruptcy filing.

In announcing it was filing for Chapter 11 bankruptcy, FTX said Friday in a statement that Bankman-Fried has resigned as chief executive officer and will be succeeded by John J. Ray III. Employees are expected to continue with the company and “assist Mr. Ray and independent professionals” during bankruptcy.
 
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  • #337
nsaspook said:
Best headline so far about this:
Where did you find that?

nsaspook said:
Trusting Charlatans with their Money
Keep your regulation off my crypto!
 
  • #338
Vanadium 50 said:
Where did you find that?
A reddit group.
 
  • #342
russ_watters said:
Madoff?
Maybe too much to hope for, given small investors largely got made whole by the trustee.

A basic legal principle of ponzi schemes is that fake gains can be clawed back in the bankruptcy - so if FTX gets treated like the scam it was, anyone who ever made a dime off the company could be a target
 
  • #343
I think we should fix Sam Bankman-Fried up with Elizabeth Holmes. Think of the children!
 
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  • #344
Larry David wasn't wrong afterall:

 
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  • #345

Cryptocurrency exchange FTX files for bankruptcy​



GURA: Yeah. So about a week after the first signs of trouble, FTX - which has been a huge player in the world of crypto, really one of the largest crypto exchanges, with a big international presence - filed for bankruptcy protection in Delaware, along with 130 affiliated companies.

I also heard thousands, or hundred thousand investors. I haven't found the statement in writing.

https://www.npr.org/2022/11/11/1136...lars-low-and-under-doj-scrutiny-seeks-bankrup
 
  • #346
Did the Sam Bankman Fried guy take some personal profits before FTX crashed, such that he's still wealthy? Or, was like all his money tied into that one endeavor and he's not completely broke?
 
  • #347
kyphysics said:
Did the Sam Bankman Fried guy take some personal profits before FTX crashed, such that he's still wealthy? Or, was like all his money tied into that one endeavor and he's not completely broke?

The post above makes it sound like all his wealth was pumped back into it. He owned a huge chunk of Robinhood that would have left him set for life, but apparently that got lost in the fire.
russ_watters said:
Larry David wasn't wrong afterall:



They only ran that commercial because SBF's brother wanted their dad to be in a commercial with Larry David. In hindsight that was probably the beginning of the end.
 
  • #348
kyphysics said:
and he's not completely broke?
should have read "now" . . .
 
  • #349
I was waiting for this part of the thread title to happen in the FTX saga.

1668268000561.png

FTX Is Investigating a Potential Hack Amid Bankruptcy Filing​

Bankrupt cryptocurrency exchange FTX is probing a potential hack and asked customers to stay off the FTX website, the company said. More than $400 million worth of crypto funds appears to be missing, according to crypto analytics firm Elliptic Enterprises Ltd.

https://decrypt.co/114269/hundreds-...-from-ftx-overnight-in-unauthorized-transfers
Several wallets allegedly belonging to FTX were drained of hundreds of millions of dollars in coins late on Friday night, with much of the funds transferred from Tether (USDT) into stablecoin DAI, and from staked Ethereum (stETH) into Ethereum (ETH).

It was the same day that FTX filed for Chapter 11 bankruptcy, and it looked too soon, too late at night, and too sophisticated for the actions to be attributed to liquidators.The exodus, all visible on blockchain tracker Etherscan, totaled around $650 million according to pseudonymous blockchain sleuth ZachXBT, widely trusted by the DeFi community.

https://www.reuters.com/markets/cur...ng-failed-crypto-firm-ftx-sources-2022-11-12/

At least $1 billion of client funds missing at FTX​

 
  • #350
We, the public, give the tin-can-banging Pied Pipers power when we humor their empty ideologies as anything but absurdities. SBF was openly running an offshore casino out of an incestuous frat house of twenty-somethings who were skimming billions off the public through rigged market making, and this was all a matter of public knowledge. And yet institutions like the New York Times run full-page stories declaring him as some secular saint who will herald in a new future that will reshape human civilization, and our elected leaders line up to kiss the ring. While technology may change, human nature does not; these self-professed messiahs prophesizing salvation through technology are far less enlightened than they would have you believe. They only want to pick your pocket; they just now have a better story to distract you while they do.

https://www.stephendiehl.com/blog/ftx.html
 
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