What? Nothing on the arrest of SBF? The silence is deafening!

volvoclearinghouse said:

The parents were whining somewhere I read that they were going to have to pay for his legal fees. Welp, I guess they'll have to sell that mansion in the Bahama ls he bought them. Shucks. 

 

Two Ivy League educated, current Stanford Professors = the new CEO of FTX is saying the dad gave the son legal advice, and was compensated for it - and parents will be roped into this....

The dad has been instrumental from a Professional standpoint on CA Tax law... and is considered one of the premier experts for start up tax implications - I know he did consulting work for us during covid - and bill was hefty... 

codrus (Forum Supporter) said:

Snowdoggie (Forum Supporter) said:

All that money had to go somewhere. Somebody has it. The kid and his family doesn't. It could be the Winklevoss Brothers, various Russian Oligarchs, Putin himself, Chinese businessmen, Central American druglords? Somebody out there was collecting real currency in exchange for bitnothings.

From what I have read at least one of the major frauds here came about because of Alameda Research.  Apparently he had two companies, FTX and AR.  FTX was sort of like a bank -- you deposit your crypto currency and they hold it for you.  AR was a trading fund, they tried to make money by investing/speculating in crypto assets, and they had a line of credit open with FTX.  In principle there's nothing wrong with those ideas, the problems came about because AR got special treatment from FTX and their line of credit was effectively unlimited.  So AR got deeper and deeper into debt and FTX kept letting them have more and more money, all of which came from investor funds until it collapsed.

I'm speculating here, but it seems to fit a familiar pattern -- it started out legit (well, as "legit" as crypto gets) but when the investment side starts losing money he decides to "borrow" a little bit from another pile, probably with the full intention of putting it back once he makes up the losses.  But that loses more so he needs to do it again and again, each time going riskier and riskier in order to try to make enough more to cover everything.

As for the exchange of real money for crypto, I suspect a lot of the losses here are "paper losses".  aAs with any economic exchange, the market value of a stock/bond/bitcoin/whatever is driven by the supply and demand for that security.  This is not a zero-sum game, if there are 1M instances of a particular security and the demand increases such that the price goes up by $1, then the total market value of all of those securities has increased by $1M, even without any injection of real money.  That can happen in the opposite direction as well, of course.

So where did the money go?  It disappeared into the market, spent on a lot of speculative trading that appears to be an honest transaction on the other side.  It's not much different from the guy who owns the bank taking his customers' money and going to Vegas with it.

 

Going to Vegas with the customer's money means the casino ends up with it. One of charges in this case is money laundering.

This is my question about bitcoins in general. When somebody goes to the exchange and changes real currency for bitcoins, where does the real currency go? How is it laundered? I know the guy gets bitcoins in exchange that are totally unregulated. They could go down or up in value. Somebody could steal them from his digital wallet. He could lose his password and never be able to access his bitcoins again. Who gets the real money when somebody buys bitcoins. Whoever owns the exchange? What does the owner of the exchange do with the real money? It's got to go somewhere.

The cash money came from the investors. It then went from FTX to Alameda Research. Are you telling me that money just disappeared into thin air?

Snowdoggie (Forum Supporter) said:

 

This is my question about bitcoins in general. When somebody goes to the exchange and changes real currency for bitcoins, where does the real currency go? How is it laundered? I know the guy gets bitcoins in exchange that are totally unregulated. They could go down or up in value. Somebody could steal them from his digital wallet. He could lose his password and never be able to access his bitcoins again. Who gets the real money when somebody buys bitcoins. Whoever owns the exchange? What does the owner of the exchange do with the real money? It's got to go somewhere.

The cash money came from the investors. It then went from FTX to Alameda Research. Are you telling me that money just disappeared into thin air?

 

https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured

mr2s2000elise said:

Snowdoggie (Forum Supporter) said:

 

This is my question about bitcoins in general. When somebody goes to the exchange and changes real currency for bitcoins, where does the real currency go? How is it laundered? I know the guy gets bitcoins in exchange that are totally unregulated. They could go down or up in value. Somebody could steal them from his digital wallet. He could lose his password and never be able to access his bitcoins again. Who gets the real money when somebody buys bitcoins. Whoever owns the exchange? What does the owner of the exchange do with the real money? It's got to go somewhere.

The cash money came from the investors. It then went from FTX to Alameda Research. Are you telling me that money just disappeared into thin air?

 

https://help.coinbase.com/en/coinbase/other-topics/legal-policies/how-is-coinbase-insured

 

 

Not really a legal contract. They use the words "may" a lot as in we may keep it here or we may keep it there. It pretty much says you are responsible for anything stolen by hackers. "your funds may still be lost"?

I'm not touching this one with a ten foot pole. I wonder if FTX has something similar on their site?

Duke said:

mtn said:

Then from the banking/risk/fraud side of everything, it baffles me that people could believe anything about crypto being legitimate.

What's hilarious is that all of my hardcore libertarian acquaintances like crypto because it's supposed to be outside of liberal Big Government control, while all my hardcore left wing acquaintances like crypto because it's supposed to be outside of the Koch Brothers / Trilateral Commission / Illuminati right wing control.

 

In reply to Pete. (l33t FS) :

I love Bob Dobbs and the Church of the Subgenius.

Snowdoggie (Forum Supporter) said:

pinchvalve (Forum Supporter) said:

I admit I don't really understand the crypto market, but it seemed like some kid in his 20s and his girlfriend, who had zero qualifications, started a business and convinced people to give them billions of dollars and they lost it. Unlike banking and other financial entities, there was apparently no oversight or rules for these kids, and celebrities helped promote their obviously sketchy product, and the money is just gone and no one seems to know where it went. 

I think the kid might have been the putz laundering the money. The people sitting on the money took everything and then they threw him under the bus to go to prison. I would be more interested in where the money went. He may not be as smart as he thinks he is.

We watched part of an interview with him.  He seems very not extraordinarily brilliant.  

I dont think this is an indictment of crypto as a whole. Its like any other new asset or industry that gets super hot. Early people make money, late people get caught. Lots of scams and fraud. Government steps in a tries to close loopholes and exploits. Big bust and the solid companies/services eventually come out on the other side, followed by wide adoption and it becomes just a part of life.

Think .com bubble and stock market crash/great depression.

Ive been following crypto since the beginnings of bitcoin, and ive done pretty good on crypto, but when it became the hot commodity and money was just pouring in like crazy, I pulled back quite a bit. I think the real risk in crypto right now is the tax implications. I think it was last year there was a court case trying to decide when mined crypto is taxable. Is it taxable when its mined? No because its treated like an asset and prices can fluctuated wildly, so its unrealized gains, but its literally a currency. I realized its probably best to wait for the courts and IRS to decide how they want to track and tax this stuff so I dont upset the tax man. He's not an enemy I want.

I think the interesting part is the ties to politicians. After the Maxwell case and according to the courts she was trafficking people to.....no one, I have my doubts that we will really every see the true extent of how widespread this was and who was involved. There is some speculation that a bunch of these crypto guys are getting suicided. I read about one who was an early vocal critic of FTX, he did the McAfee thing, people are after me, Im not suicidal, and the next day he washes up on shore, fully clothed with everything in his pockets. Explanation was he drowned, because he probably went for a swim and got caught in the undertoe. Case closed, move along.

93EXCivic said:

I was wondering why they were arresting a small block Ford.

I was wondering if we had to make a bail fund for SyntheticBlinkerFluid

In reply to Snowdoggie (Forum Supporter) :

CNN and an actor 'splaining Crypto to us on YouTube. Time would be better spent watching cat videos.

Here is an educated person who researched the subject in depth providing detailed analysis of crypto and NFTs: https://youtu.be/YQ_xWvX1n9g

The possibilities that Crypto might succeed is more terrifying than the probability that it is likely to fail.

AAZCD-Jon (Forum Supporter) said:

In reply to Snowdoggie (Forum Supporter) :

CNN and an actor 'splaining Crypto to us on YouTube. Time would be better spent watching cat videos.

He does have a degree in Economics, so it's not like he is "just" an actor.

I can see from the comments here that we are going to get a whole new round of this Ponzi game coming up soon.

In reply to Beer Baron :

There are aspects that can make sense but for it to succeed in it's current structure as a true currency is not going to happen. I currently work on one of the top 5 globally fintech engines you have never heard of. We process in the 100s of millions of credit card transactions weekly and send an average of 1.25 correspondences to every American every month. 

For crypto to truly succeed as a replacement to current fiat currency, 3 things need to happen that go directly against the ethos of all of the coins out there today.

1. Transaction speeds need to increase significantly. Ethereum 2.0 upgrade gets closer to the speed needed but still is not where we need to be to replace a national currency. 

2. Transaction costs need to drop significantly. If you think the current cost for credit card transactions are high, they are much lower than the cost of a crypto transaction today. 

3. It has to be heavily regulated. For Joe 6 pack to move to crypto there will have to be so many safeguards in place. The kind not even close to being in place today.

Luddites will not vote for this and the mass conversion costs would have to be absorbed by someone. Who is going to provide all of that investment? This doesn't even include the technical sides like large scale transaction engine development, global availability of internet connectivity, and the conversion of all of the monetary processing engines out there.   

There is another conversation not happening and that is the effect of quantum computing on the security side of things. Quantum computers can crack 256 bit AES in minutes. Its a big concern in my industry that doesn't even expect to have 256 bit as a universal standard by 2030. 

I see the blockchain having utility not as a currency but as a backbone for ownership record especially for things like event tickets, art certifications, real estate, and cars. 

IMHO of all of them, the Ethereum 2.0 is the only one I see with a future. Bitcoin is a dinosaur that is waiting for it's astroid event. 

Patrick said:

93EXCivic said:

I was wondering why they were arresting a small block Ford.

I was wondering if we had to make a bail fund for SyntheticBlinkerFluid

I am going to start selling synthetic blinker fluid online in exchange for bitcoins.

bmw88rider said:

In reply to Beer Baron :

There are aspects that can make sense but for it to succeed in it's current structure as a true currency is not going to happen.

I agree with you effectively on all points. I certainly hope that is the path things go down, and generally think that it will.

Cryptocurrencies certainly aren't a product or service with an inherent value. People can say they have value as a currency, but offer someone a job that pays in Etherium instead of USD, Euros, or even Yuan, and see how that flies.

I mean that, I see Cryptocurrencies being pushed by people who don't realize the Cyberpunk genre is supposed to be a dystopian warning. I legitimately believe Elon Musk would love to pay all of his employees in Cryptocurrency that he controls and make them wage slaves in his Megacorp if he could get away with it.

The possibility of people like Musk or Bezos acquiring the power and clout to do that is genuinely frightening in a way that an overnight meltdown of all crypto markets would not be.

In reply to Beer Baron :

Sixteen Tons was written in 1947 so the tactic has been with us for a long time but now its "improved" with electrons...

You load 16 tons, what do you get?
Another day older and deeper in debt
St. Peter, don't you call me 'cause I can't go
I owe my soul to the company store

bmw88rider said:

I see the blockchain having utility not as a currency but as a backbone for ownership record especially for things like event tickets, art certifications, real estate, and cars. 

IMHO of all of them, the Ethereum 2.0 is the only one I see with a future. Bitcoin is a dinosaur that is waiting for it's astroid event. 

Being used as a notary system is the only sensible application of blockchain technology IMO....but proof-of-work and proof-of-space blockchains are some of the worst inventions in the history of computing so far.

Some people seem to want cryptocurrencies to survive this, but there's no good reason for cryptocurrencies to exist. The fact that they were allowed to take off was a massive regulatory failure. First-world governments, especially the US government, had aggressively squashed all previous methods of storing or transferring value outside of the traditional banking system with extreme prejudice, primarily due to anti-money-laundering regulations, but for some reason this didn't happen with cryptocurrencies. Yes PayPal and WU suck, but the alternative is this, a disaster-prone rolling clusterberkeley that opens a cash pipeline to North Korea and turns ransomware from a rare curio into the cybercrime world's bread n' butter. It can't come to an end quickly enough IMO.

GameboyRMH said:

bmw88rider said:

I see the blockchain having utility not as a currency but as a backbone for ownership record especially for things like event tickets, art certifications, real estate, and cars. 

IMHO of all of them, the Ethereum 2.0 is the only one I see with a future. Bitcoin is a dinosaur that is waiting for it's astroid event. 

Being used as a notary system is the only sensible application of blockchain technology IMO....

Is it though? What problems with our current system of recording ownership does this solve?

For large items that matter like real estate, investment shares, and vehicle titles blockchain presents major exploitable flaws. For smaller items that extant registries would be too cumbersome for... would you actually benefit from being able to record ownership on a blockchain?

Beer Baron said:

Is it though? What problems with our current system of recording ownership does this solve?

For large items that matter like real estate, investment shares, and vehicle titles blockchain presents major exploitable flaws. For smaller items that extant registries would be too cumbersome for... would you actually benefit from being able to record ownership on a blockchain?

Arguably none, because there was actually a simple blockchain notary service in operation long before cryptocurrencies that published a hash every week in one of the big stuffy newspapers since the '90s IIRC...but the main advantage over non-blockchain systems is that immutability of the record is ensured mathematically rather than through physical security. It also makes it easier to set up a distributed replication system - if your accounting firm has 3 locations, each one can run a node and a person can verify transactions at each location. If someone wants to pull a fast one with the record, they'd need to collude with the other 2 locations first, and if one building burns down the system wouldn't skip a beat.

Edit: The company was Surety Technologies, they used something like a simple blockchain in all but name.

Beer Baron said:

For large items that matter like real estate, investment shares, and vehicle titles blockchain presents major exploitable flaws. For smaller items that extant registries would be too cumbersome for... would you actually benefit from being able to record ownership on a blockchain?

Fundamentally a blockchain is a distributed record that cannot be forged (or at least is extremely difficult).  It doesn't do anything you can't do more easily with a centralized registry, assuming you are willing/able to trust whatever authority is given that centralized position.

The appeal of cryptocurrencies paired with a blockchain is that it creates a type of money that is immune from the effects of government inflation (because the government cannot simply print more money whenever it wants to) while simultaneously retaining the convenience of not having to deal with large quantities of some physical value store (like gold).  Obviously there are a bunch of other downsides to the current versions of cryptocurrencies, and it remains to be seen if those can be solved without losing the distributed nature.

Implementing an ownership registry with a blockchain seems less useful to me.  I mean, sure, in a libertarian/anarchist fantasy world it's a way to do that sort of thing without needing to have a government involved, but in the real world we don't have systemic problems with government-run ownership registries the way that we do with inflation.

In reply to codrus (Forum Supporter) :

Crypto has massive DEflation which is megabad.

Imagine you bought a house worth $100k, but got a mortgate payable in bitcoin when it was worth a dollar each.  At current rates that is 1.7 billion dollars.  I don't think property values anywhere have appreciated that fast 

GameboyRMH said:

Arguably none, because there was actually a simple blockchain notary service in operation long before cryptocurrencies that published a hash every week in one of the big stuffy newspapers since the '90s IIRC...but the main advantage over non-blockchain systems is that immutability of the record is ensured mathematically rather than through physical security. It also makes it easier to set up a distributed replication system - if your accounting firm has 3 locations, each one can run a node and a person can verify transactions at each location. If someone wants to pull a fast one with the record, they'd need to collude with the other 2 locations first, and if one building burns down the system wouldn't skip a beat.

My understanding of blockchain is that it is literally the OPPOSITE of what you're describing. You seem to just be describing a multi-node networked registry.

One of the major issues with blockchain is its tendency to fork and the inability to claw-back mistakes.

A blockchain node does not have to check with any other nodes before re-writing what is on the chain and sending it out. It changes its code, then sends it back out to update everyone else as soon as it's able. 

One of the features of blockchain is that you can only *add* to the chain. You can not delete from it. Once it's on there, it's there. Sure, the other nodes could look and say, "That's not right..." but the new entry still can not be deleted.

This is also where blockchain is actually *more* susceptable to fraud and theft. Digital money fraud isn't usually a man-in-the-middle attack. It's someone getting your personal information and illegally using your credit card number of making a transfer out of your bank account.

With current systems, when someone rings up $1000 in Amazon gift cards using your Visa, they call you up right away, verify that wasn't you, and reverse the charges. With blockchain you literally can not reverse any charges.