FTX Token, FTT down by more than 80% in less than 24 hours

by max_ • 4 years ago

66 111 4 years ago

That’s worse, than few days ago among crypto-whales it was already common knowledge, and they were pulling out. It’s common people who ended up losing on this.

So much about decentralization and unregulated market

datalopers• 4 years ago

It’s due to astroturfers like this guy [1] here on HN manipulating the narrative with intentional misinformation and HN taking the bait and upvoting like crazy because it sounds intelligent and authoritative.

Don’t trust anyone, they’re all scum.

[1] https://news.ycombinator.com/item?id=33467429

bhouston2• 4 years ago

Also cryptoanon was spreading disinformation as well:

https://news.ycombinator.com/item?id=33466306

jovial_cavalier2• 4 years ago

They may be insolvent now due to FTT dip, but at the time this comment was written, he was right. They were almost certainly not insolvent. I think this all started with a tiny bit of FUD about Alameda and FTX being naughty with user deposits. CZ saw that and did a supreme job of taking advantage, but probably this would have all blown over otherwise.

Easy to look at someone's post in hindsight and see that they were mistaken. Probably

paxys3• 4 years ago

There are no "common people" in this scenario. Just different groups of gamblers with different levels of knowledge and foresight. Hard to feel sympathy for anyone who loses money in crypto at this point.

nscalf2• 4 years ago

Polls have shown >20% of people have traded or used cryptocurrencies [1]. Clearly there are common people in the space.

[1] https://www.cnbc.com/2022/03/31/cryptocurrency-news-21percen...

tsol• 4 years ago

But some gamblers have a larger share of the total market(lets call them whales), and are therefor incentivized to coordinate their actions with other whales. They also have more resources to acquire information on the market that may give a competitive advantage. Whereas commoners tend to discuss in common areas, and they don't have enough of a share of the market to move the price through coordinated action.

pessimizer• 4 years ago

Common people gamble all the time.

TimJRobinson• 4 years ago

FTX is centralized, regulated, and audited.

This is the problem - people think more regulation would solve this problem and it fails time and time again.

Decentralization is the solution. A decentralized exchange like Uniswap, Balancer or GMX will never suddenly go bankrupt and lock up your money because everything is public and transparent.

Eventually with ZK Proofs we'll be able to have privacy and open source transparent protocols. Which will be a massive upgrade for finance.

fasthands92• 4 years ago

I personally find SBF smart and interesting but nonetheless very happy to see this very silly ecosystem collapse.

Perhaps bitcoin or a couple other tokens will have longterm staying power still, but remains mysterious to me why there should be so much surplus value to extract around it. Current banks and financial institutions (which are not even that efficient) manage to move around a magnitude more in investments and do not end up taking up the same level of surplus value, somehow.

prologger3• 4 years ago

So what's gonna happen to the effective altruists? Wasn't he the one bankrolling the movement?

sct202• 4 years ago

It will still go on. He wasn't the only one, but he definitely supercharged funding as of late.

I think all the longtermism stuff that has come to prominence recently is a side-effect of too much money in EA trying to make up new causes that are magically more effective than philanthropy that currently exists.

hprotagonist• 4 years ago

with luck they’ll get their hands dirty, in a good way.

vasco3• 4 years ago

I can't understand the effective altruist movement in a world of Modern Monetary Theory. When money means nothing and central banks can print infinite money, the only reasonable way to effect change is by donating directly to an extended hand on the street or actually physically helping, imo, but I'm open to changing my mind.

ggreer2• 4 years ago

The effective altruism movement has been around for over a decade. SBF's financing has been very beneficial, but EA isn't dependent on one financier or organization. At this point it's like moneyball: a concept that can be used by anyone.

joyfylbanana• 4 years ago

It was not very smart to gamble with customer money.

time_to_smile• 4 years ago

What's wild is just a few weeks ago SBF was strongly insinuating to the WSJ that FTX was planning to acquire COIN. Not surprisingly COIN has taken a noticeable drop since this news.

I won't even buy puts on crypto companies since the space is completely insane, even if you know the whole thing is a fraud it's still got some clever ways to bite you if you go near it.

fasthands92• 4 years ago

I do not get involved with shorting companies either - but with interest rates higher it does strike me as magnitude more difficult to keep some of these companies (or schemes) floating.

electic2• 4 years ago

I am going to go out on a limb here and say you have not moved any significant amount of money around, especially internationally. Trying moving $250,000, between the paperwork, back and forth, fees, it is a nightmare.

aketchum2• 4 years ago

If you want to legally move the money you still need to do paperwork and pay fees, as well as the additional slippage from introducing a third currency.

timmg• 4 years ago

I did it last year. Was not that hard.

wiremonger2• 4 years ago

We regularly wire our overseas suppliers > $100k. Costs $40 per transaction. Zero paperwork. Takes several hours for them to receive.

paulpauper3• 4 years ago

like Elizabeth Holmes

It's a public persona

The media props these people up and then dumps them. I'm not saying it is a fraud but it's a recurring pattern.

323• 4 years ago

FTT has no purpose to exist now, it will be replaced by Binance token, BNB.

dibt3• 4 years ago

I don’t know how likely it is, but if binance does complete the acquisition, maybe it can be converted to BNB?

paulpauper3• 4 years ago

FTT will be worthless and Binance will inherit the accounts

bhouston2• 4 years ago

Alameda bankrupt as well?

dibt3• 4 years ago

Nobody knows. Lots of rumors. Few facts.

laluser• 4 years ago

What goes up fast, comes down even faster sometimes.

djbusby• 4 years ago

See also https://news.ycombinator.com/item?id=33520624 -- Binance acquire FTX

And another https://news.ycombinator.com/item?id=33520585

dang• 4 years ago

Thanks! We've merged those:

Binance to acquire FTX - https://news.ycombinator.com/item?id=33520585 - Nov 2022 (283 comments)

FTX Agreement with Binance - https://news.ycombinator.com/item?id=33520547 - Nov 2022 (37 comments)

FTX Appears to Have Stopped Processing Withdrawals, On-Chain Data Show - https://news.ycombinator.com/item?id=33518961 - Nov 2022 (119 comments)

Crypto trading firm Alameda Research might be insolvent - https://news.ycombinator.com/item?id=33464494 - Nov 2022 (197 comments)

paulpauper3• 4 years ago

As BTC likely goes back to 3k, more exchanges will fail. I'll stick with boring index funds. People are always looking for lifehacks or shortcuts to get rich. Almost never works unless you're early. Odds are you are not.

agleason• 4 years ago

Until someone comes up with a better solution for cross border payments ($150T market), I don't think bitcoin/crypto will go away

jboy55• 4 years ago

Aren't the vast majority of that 150T market in cross border payments already done outside of crypto?

lovich2• 4 years ago

Cross border payments are 50% bigger than the total planets gdp?

adaml_623• 4 years ago

The current fiat/fx cross border payment mechanisms are better than crypto. Faster, cheaper and more secure.

it_citizen• 4 years ago

I don't know much about crypto or cross-border payments.

Is there current crypto solutions that work better than something like transferwise if i wanted to transfer USD to EUR for instance? (cheaper?, faster?, simpler?, reliable?)

aketchum2• 4 years ago

you still have currency risk and exchange rate slippage, but even worse because you are introducing a third currency. Any "innovation" crypto does in cross border payments is skirting regulation which clearly will not scale well. Regulators will just crack down when the market is sufficiently large for their attention.

knorker4• 4 years ago

How are the standard solutions for cross border payments worse than bitcoin/cryptocurrency?

I regularly ship 5-6 digits between countries. It's not even hard.

And I do it without gas fees (there's paying the spread, but if I'd use cryptocurrency then I'd have to pay the spread twice).

And I can do it without the fear of a mistake, or a hack (of me or the bank), taking away the deposit on my house.

The proposed cure is worse than the disease.

spaceman_20203• 4 years ago

It works. You just don't have to hold forever.

kjreact• 4 years ago

So did tulips. But yeah, holding those forever would have been a bad idea…

Kathula• 4 years ago

And where does the "likely" part come from?

JumpCrisscross• 4 years ago

where does the "likely" part come from?

It’s a zero-yield risk asset in a world of rising rates and economic uncertainty.

lavventura2• 4 years ago

People still can get rich when BTC drops, if they shorted the market.

JamesBarney4• 4 years ago

Depending on your counterparty risk.

wollsmoth2• 4 years ago

you can lose a lot of money trying to time options trades like that.

paxys3• 4 years ago

Good luck collecting from the exchange that is now out of business.

vasco3• 4 years ago

boring index funds

Ah yes the FIRE lifehack that absolutely cannot go wrong and will allow everyone to sip margaritas by the beach at 45. Still way safer than any crypto, but I hope you see how that's just another cult at this point.

chowchowchow2• 4 years ago

If there are going to be media/influencers pushing tips to achieve a FIRE lifestyle, I can’t imagine what I’d prefer they encourage besides low cost broad market index funds. Don’t really see the problem there: investing like that really is most likely the best use of excess capital in the long term.

arcticbull2• 4 years ago

The S&P 500 has yielded like a 9% return for almost 65 years - since your grandpappy was knee-high to a grasshopper. The nice thing about index funds is they track indices that are curated. Only the 500 best companies (according to a metric) are included and the companies are rotated in and out as that changes. It's not really a cult, what matters is your time horizon.

yourapostasy• 4 years ago

Still way safer than any crypto, but I hope you see how that's just another cult at this point.

Putting some numbers on the narrative will help the discussion. Jack Bogle asserted that index funds could "easily" account for 50% of the market and still not cause problems for index investors [1]. At 100%, he readily acknowledged it would be catastrophic; he also notes that the probability of 0% or 100% of the market accounted by index funds are zero.

As of 2017 about 35% of the market is accounted for by index funds [2]. It took 10 years to reach that level from 15%, or on a simple-minded straight-line extrapolation about 2% per year. So if that trend held we're probably around 45% now.

The closest Bogle has ever come to throwing out a maximum percentage accounting for the market is 75% but he backtracked on that [3]. So somewhere between 50-75% might exist a kind of tipping point.

Contrast this with Michael Burry's thesis that passive indexing has already grossly distorted the market [4]. Those index funds which have stopped deploying more than say 80% of AUM into a distribution of daily dollar value traded among the securities within the indexes they mimic do indeed create the risk he talks about, IMHO. I'd like to hear someone refute that thesis, as well as explain how to independently identify how much of VTSAX's AUM are actually invested into the actual equities in their index. There are plenty of "index funds" that mimic price action instead of truly indexing, but I'm specifically interested in the old standbys that really do put a huge chunk of their AUM directly into the individual equities that make up the index.

[1] https://www.yahoo.com/news/jack-bogle-envisions-chaos-catast...

[2] https://www.columbiapacificwm.com/blog/insights/dimensional-...

[3] https://www.marketwatch.com/story/buffetts-hero-john-bogle-e...

[4] https://www.newtraderu.com/2022/11/06/michael-burrys-warning...

paxys3• 4 years ago

Investing in index funds doesn't have anything specifically to do with financial independence or an early retirement, so not sure what your point is.

b800h• 4 years ago

Why did it suddenly climb prior to crashing?

mrits2• 4 years ago

The conclusion I've come to in crypto over the last decade is that it is interesting. I love the idea of small purchases at food trucks with it as an alternative to credit card fees for small business.

On the other hand I don't see why crypto needs to go up in value or how that actually helps anyone except people that got in early.

popcalc• 4 years ago

India has a great fiat mobile payments system that doesn't require those credit card fees. The real solution is to ditch ACH.

On the other hand I don't see why crypto needs to go up in value or how that actually helps anyone except people that got in early.

The price rises when someone buys into it. Because no one would sell for less than they just bought, their ask price is slightly higher in general. This makes the quote price rise - same with stocks.

mrits2• 4 years ago

To be clear, I don't see why it needs to fluctuate in value like a stock to be valuable tech. And I'd prefer it not.

tock• 4 years ago

The main problem it solves is trust. I don't see the need for it in a system/govt you trust which is the case in most stable/developed countries like the US or Europe or India. But a fully backed stablecoin available in unstable countries do have a use case.

purpleblue• 4 years ago

This feels like an extinction-level event for crypto. If they survive, I guess Coinbase will be the King because they are very conservative so they really won't run into any of these liquidity issues that these other companies are finding themselves in.

The biggest thing is that they no longer need to worry about competing on price because people know they will get their money back from Coinbase, I imagine.

renewiltord• 4 years ago

Binance.us has volume in the range of Coinbase. Binance.com dwarfs it.

tootie• 4 years ago

Called it: https://news.ycombinator.com/item?id=31935844#31937338

Well, not with full confidence, but kinda.

janmo• 4 years ago

Please don't post a link to FTX. Withdrawals on FTX are suspended, probably for ever.

easytiger• 4 years ago

I'm confused, were they leveraging people's stowed crypto? How can you have a liquidity crisis where you aren't leveraging up? Or is it more than an exchange? Another scam where the billionaire luminary ran away with the cash? Apologies, don't follow crypto

kypro2• 4 years ago

One could see this and other notable cypto blow-ups as an argument against a deregulated financial system.

randiantech• 4 years ago

I have seen a disproportionally bigger number of blowups of highly regulated industries, so does not seem like a strong argument IMO.

polygamous_bat2• 4 years ago

I have seen a disproportionally bigger number of blowups of highly regulated industries

Source for your claim? Sounds incredibly outlandish to me, but perhaps we are thinking of different industries.

FTX Token, FTT down by more than 80% in less than 24 hours

Related Stories