the only thing that is intrinsically different or connected to crypto tech is the cloud of misunderatsnding that obscures simple bad managament and greedy liars on FTX/ALameda - the assumption that finance will work differently becos blockchain is a lucrative fallacy for grifters, or am i oversimplifying?Especially when 99% of the retail investor base has no understanding whatsoever of what they’re investing in.
Makes it really easy for aggressive marketing to fill the vacuum and paint very attractive pictures. Sometimes that’s literally all it takes: attractive graphic design, and a bunch of bots in a telegram thread to give the appearance of popularity.
and FTX didnt have a bank account for investors to deposit in, so Alameda recived the deposits, and never transferred them over to FTX - they double counted and then used one to back the other,I'm totally unsurprised that 99+% of retail investors have/had little to zero idea of what they're getting into. Most people barely understand stocks and bonds, let alone the abstruse nonsense of crypto. Not surprised about legislators and regulators either. They're mostly old and not technical, or in the case of regulators not technical in the right way to understand crypto.
I'm more surprised by the seemingly complete inability of institutional investors - nominally smart $ - to distinguish between good and bad investments, but then again smart $ proved completely unable to make that distinction about MBS and credit swaps etc in the leadup to 2008 so perhaps it shouldn't be surprising.
That assumption applies more to DeFi, but yeah it’s still naive. For investors/depositors who don’t understand the difference between centralized and decentralized crypto finance, yeah the argument of blockchain transparency can instill a false confidence in a centralized platform like FTX.the only thing that is intrinsically different or connected to crypto tech is the cloud of misunderatsnding that obscures simple bad managament and greedy liars on FTX/ALameda - the assumption that finance will work differently becos blockchain is a lucrative fallacy for grifters, or am i oversimplifying?
i suppose one distinctive factor could be the speed of the rise and fall - how would that compare to, say, tulips in 1637?
I’m not certain, but I’d suspect that the FTX insolvency is ultimately more of a consequence of the larger market downturn, more than vice versa. I say this because I think one of the main factors for FTX was that they were going about loans using their FTT token, which depreciated along with virtually every other crypto asset and compromised their solvency. Not sure if they were actually giving out loans in FTT, or if they were taking out loans against FTT, or both.It pains me to share it, but there's an argument that FTX malfeasance explains why NFTs exploded in the same timeframe
The widespread lack of understanding is what enables the tulip mania phenomenon
I'm going to have to read this now, aren't I?one of my favorite things in the Sequoia profile - and there are so many, it is a truly amazing document - is its description of FTX's Bahamas office, which sounds like Jonestown for crypto nerds, and its living space at a resort called Albany, which sounds your typical fortified ultramodern luxury housing development crossed with the kind of outlandish Spenglerian building projects you see in the oil emirates
both of the Forbes pieces are solid, as well as the piece @luka posted about the extremely shady relationships between FTX, Celsius, and Tether
the fawning in-house Sequoia Capital piece linked in the Ellison profile is a fascinating look into SBF/FTX at their zenith/the moment before its total collapse, a bizarre and tonally jarring mix of unabashed hero worship (the tone is very "is SBF a genius, or is he the greatest genius who's ever lived?") and a perhaps unintentionally surreal litany of details about the intersection of crypto startup culture, the cult of effective altruism, and lifestyles of the rich and famous ca. 2022
Not long before interning at Jane Street, SBF had a meeting with Will MacAskill, a young Oxford-educated philosopher who was then just completing his PhD. Over lunch at the Au Bon Pain outside Harvard Square, MacAskill laid out the principles of effective altruism (EA). The math, MacAskill argued, means that if one’s goal is to optimize one’s life for doing good, often most good can be done by choosing to make the most money possible—in order to give it all away. “Earn to give,” urged MacAskill.