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****Official Crypto Degen Thread****

Damn I just got scammed for real first time! Went on Twitter to complain about coinbase pro support and got a message from what looked like a legit coinbase support. Ended up sending $200 worth of eth from coinbase to coinbase wallet and lost it. The support person tried to get me to send me to send more, so I sent a dic pick.

But I screenshotted the eth transaction for which I was scammed. Don’t know if there is anything I can do about it now. Wow first time for everything. Not even mad. Glad I got the dic pick in.
 
Bonerfarts said:
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I got out two or three days before Russia invaded Ukraine. I will grab some popcorn for whatever this guy is fear mongering


 
I’ve been in cash position in my coinbase for forever. Have a friend who shorted crypto and walked away with a tidy profit. I’m just not technically savvy enough to short it myself. In fact I don’t think Us citizens have an avenue to short it…my friend setup his account overseas and uses a VPN to trade short positions.

I am more than happy if someone wants to correct me and point me in the direction to short crypto.
 
Bank of Hawk said:
I’ve been in cash position in my coinbase for forever. Have a friend who shorted crypto and walked away with a tidy profit. I’m just not technically savvy enough to short it myself. In fact I don’t think Us citizens have an avenue to short it…my friend setup his account overseas and uses a VPN to trade short positions.

I am more than happy if someone wants to correct me and point me in the direction to short crypto.
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I have a feeling that this could be the big one. I don't want any assets on any crypto exchange. Stable coin or actual cash.
 
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Bonerfarts said:
I have a feeling that this could be the big one. I don't want any assets on any crypto exchange. Stable coin or actual cash.
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Just tried to login to CB Pro and cannot even login. It’s just a $2,800 cash position, so not too worried yet. I actually only use it for online gambling through bovada.
 
luvmyhawks said:
Sooooooo........ at what point are you all buying??
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Haven’t stopped. At this moment I think I would give it at least a couple of days before making a big purchase. Apparently the FTX deal is not going to be a go so the market could go either way. **Disclaimer: I am not an expert and currently down a shit ton so take my opinion for what is worth.
 
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Submitted by QTR's Fringe Finance

Over the summer, I was stunned when a friend of mine sent me an interview with FTX CEO and crypto billionaire Sam Bankman-Fried that I had never seen before. In the interview, Sam, who I recently noted knows more about the inner bowels of the defi/crypto space than anybody, basically came out and admitted that crypto lending was one giant Ponzi scheme.

Of course, many of us knew that the space was a ponzi scheme already - as I have been adamantly outspoken about - but it was the sheer, unadulterated, matter-of-fact-style, bald-faced admissions by Bankman-Fried that caused my jaw to drop when I read it and listened to it this week.

Now, looking back on it after FTX's collapse this week, it's even more stunning that nobody saw it coming.

3 months before the collapse of crypto lending firms, it was literally just…out there…in the public, from the man who knows the space best, that such companies were, in essence, total Ponzi schemes. First, here's a video of SBF explaining how DeFi works like a ponzi scheme.

Then, there were Bankman-Fried’s comments on the Odd Lots podcast with Matt Levine.

Matt asked the same daring question that Peter Schiff asked of Celsius CEO Alex Mashinsky back in November 2021: where does the extra cash for yield farming actually come from?

While Mashinsky ducked the answer, at least Bankman-Fried tried to describe it, though he did so as a “black box” where new investor money pays back old investor money. Also known as a Ponzi scheme.

“Can you give me an intuitive understanding of farming? I mean, like to me, farming is like you sell some structured puts and collect premium, but perhaps there's a more sophisticated understanding than that,” Levine asks Bankman-Fried, per a Bloomberg transcript of the interview.
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Bankman-Fried responds:
“You start with a company that builds a box and in practice this box, they probably dress it up to look like a life-changing, you know, world-altering protocol that's gonna replace all the big banks in 38 days or whatever. Maybe for now actually ignore what it does or pretend it does literally nothing. It's just a box. So what this protocol is, it's called ‘Protocol X,’ it's a box, and you take a token. You can take ethereum, you can put it in the box and you take it out of the box. Alright so, you put it into the box and you get like, you know, an IOU for having put it in the box and then you can redeem that IOU back out for the token.”
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Later in the interview, when pressed on where the actual generated value comes from to pay the yields by Levine, Bankman-Fried expounds on his statements:

“Describe it this way, you might think, for instance, that in like five minutes with an internet connection, you could create such a box and such a token, and that it should reflect like, you know, it should be worth like $180 or something market cap for like that, you know, that effort that you put into it.”
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He continues:

“In the world that we're in, if you do this, everyone's gonna be like, ‘Ooh, box token. Maybe it's cool. If you buy in box token,’ you know, that's gonna appear on Twitter and it’ll have a $20 million market cap. And of course, one thing that you could do is you could like make the float very low and whatever, you know, maybe there haven't been $20 million dollars that have flowed into it yet.
“Maybe that's sort of like, is it, you know, mark to market fully diluted valuation or something, but I acknowledge that it's not totally clear that this thing should have market cap, but empirically I claim it would have market cap.”
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One host responds cynically:
“It shouldn't have any market cap in theory, but it practice, they always do. Okay.”
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Bankman-Fried confirms this and continues, calling the box “magic” and explaining further:

“That's right. So, and obviously already we're sort of hiding some of the magic impact, right? Like some of the magic is in like, how do you get that market cap to start with, but, you know, whatever we're gonna move on from that for a second.
So, you know, X tokens [are] being given out each day, all these like sophisticated firms are like, huh, that's interesting. Like if the total amount of money in the box is a hundred million dollars, then it's going to yield $16 million this year in X tokens being given out for it. That's a 16% return. That's pretty good. We'll put a little bit more in, right?
And maybe that happens until there are $200 million dollars in the box. So, you know, sophisticated traders and/or people on Crypto Twitter, or other sort of similar parties, go and put $200 million in the box collectively and they start getting these X tokens for it.
And now all of a sudden everyone's like, wow, people just decide to put $200 million in the box. This is a pretty cool box, right? Like this is a valuable box as demonstrated by all the money that people have apparently decided should be in the box. And who are we to say that they're wrong about that? Like, you know, this is, I mean boxes can be great. Look, I love boxes as much as the next guy. And so what happens now?
All of a sudden people are kind of recalibrating like, well, $20 million, that's it? Like that market cap for this box? And it's been like 48 hours and it already is $200 million, including from like sophisticated players in it. They're like, come on, that's too low. And they look at these ratios, TVL, total value locked in the box, you know, as a ratio to market cap of the box’s token.
And they’re like ‘10X’ that's insane. 1X is the norm.’ And so then, you know, X token price goes way up. And now it's $130 million market cap token because of, you know, the bullishness of people's usage of the box. And now all of a sudden of course, the smart money's like, oh, wow, this thing's now yielding like 60% a year in X tokens.
Of course I'll take my 60% yield, right? So they go and pour another $300 million in the box and you get a psych and then it goes to infinity. And then everyone makes money.”
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Bloomberg’s Matt Levine then sums it up at the end of Bankman-Fried’s comments:

“I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good.”
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Over the summer, I wrote about how these statements reaffirmed my belief that there are more blowups taking place behind the scenes than we knew about in crypto, as I pointed out in a piece. Today, in November, it still remains a harbinger of bad news for the space, in my opinion.
 
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THE_DEVIL said:
Haven’t stopped. At this moment I think I would give it at least a couple of days before making a big purchase. Apparently the FTX deal is not going to be a go so the market could go either way. **Disclaimer: I am not an expert and currently down a shit ton so take my opinion for what is worth.
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I have a buddy that has done well with crypto. He says bitcoin is going to drop below 12k before it starts going back up. He has told me this for pretty much the entire year. He said between december and march will be time to get back in. He has been spot on with his predictions for crypto for quite some time now. He pulled almost all of his money out of it like last December or something like that.
 
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Bank of Hawk said:
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And then goes on...

I also should have been communicating more very recently.
Transparently--my hands were tied during the duration of the possible Binance deal; I wasn't particularly allowed to say much publicly. But of course it's on me that we ended up there in the first place.
So here's an update on where things are.
[THIS IS ALL ABOUT FTX INTERNATIONAL, THE NON-US EXCHANGE. FTX US USERS ARE FINE!]
[TREAT ALL OF THESE NUMBERS AS ROUGH. THERE ARE APPROXIMATIONS HERE.]
FTX International currently has a total market value of assets/collateral higher than client deposits (moves with prices!).
But that's different from liquidity for delivery--as you can tell from the state of withdrawals. The liquidity varies widely, from very to very little.
The full story here is one I'm still fleshing out every detail of, but as a very high level, I ****ed up twice.
The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower.
My sense before:
  • Leverage: 0x
  • USD liquidity ready to deliver: 24x average daily withdrawals
Actual:
  • Leverage: 1.7x
  • Liquidity: 0.8x Sunday's withdrawals
Because, of course, when it rains, it pours. We saw roughly $5b of withdrawals on Sunday--the largest by a huge margin.
And so I was off twice.
Which tells me a lot of things, both specifically and generally, that I was shit at.
And a third time, in not communicating enough. I should have said more. I'm sorry--I was slammed with things to do and didn't give updates to you all.
And so we are where we are. Which sucks, and that's on me.
I'm sorry.
Anyway: right now, my #1 priority--by far--is doing right by users.
And I'm going to do everything I can to do that. To take responsibility, and do what I can.
So, right now, we're spending the week doing everything we can to raise liquidity.
I can't make any promises about that. But I'm going to try. And give anything I have to if that will make it work.
There are a number of players who we are in talks with, LOIs, term sheets, etc.
We'll see how that ends up.
Every penny of that--and of the existing collateral--will go straight to users, unless or until we've done right by them.
After that, investors--old and new--and employees who have fought for what's right for their career, and who weren't responsible for any of the **** ups.
Because at the end of the day, I was CEO, which means that *I* was responsible for making sure that things went well. *I*, ultimately, should have been on top of everything.
I clearly failed in that. I'm sorry.
So, what does this mean going forward?
I'm not sure--that depends on what happens over the next week.
But here are some things I know.
First, one way or another, Alameda Research is winding down trading.
They aren't doing any of the weird things that I see on Twitter--and nothing large at all. And one way or another, soon they won't be trading on FTX anymore.
Second, in any scenario in which FTX continues operating, its first priority will be radical transparency--transparency it probably always should have been giving.
Giving as close to on-chain transparency as it can: so that people know *exactly* what is happening on it.
All of the stakeholders would have a hard look at FTX governance. I will not be around if I'm not wanted.
All of the stakeholders--investors, regulators, users--would have a large part to play in how it would be run.
Solely trust.
But all of that isn't what matters right now--what matters right now is trying to do right by customers. That's it.
A few other assorted comments:
This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow.
It's 100% liquid. Every user could fully withdraw (modulo gas fees etc).
Updates on its future coming.
At some point I might have more to say about a particular sparring partner, so to speak.
But you know, glass houses. So for now, all I'll say is:
well played; you won.
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NOT ADVICE, OF ANY KIND, IN ANY WAY
I WAS NOT VERY CAREFUL WITH MY WORDS HERE, AND DO NOT MEAN ANY OF THEM IN A TECHNICAL OR LEGAL SENSE; I MAY WELL HAVE NOT DESCRIBED THINGS RIGHT though I'm trying to be transparent. I'M NOT A GOOD DEV AND PROBABLY MISDESCRIBED SOMETHING.
And, finally:
I sincerely apologize.
We'll keep sharing updates as we have them.
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