bit¢oin$

Crypto scams are what happens when you defund the police. Virtually everything in cryptocurrencies was unlawful, there just aren't enough cops to enforce the law.

— Matt Stoller (@matthewstoller) November 14, 2022

So not gonna happen

https://d1e00ek4ebabms.cloudfront.net/production/7c35a1c5-5ed7-48ab-9567-40008dca452d.jpg

can we buy an NFT of this crypto crash somewhere?

all fall down

Crypto Lender BlockFi Prepares for Potential Bankruptcy, Sources Say --WSJ

— *Walter Bloomberg (@DeItaone) November 15, 2022

ah well, nevertheless

good stuff from Matt Levine

Bloomberg

Binance bailout fund
Has there ever been a pure liquidity problem at a crypto firm? Like what I have in mind is this:

A crypto firm owes $100 (in crypto I guess) to somebody (customers, lenders) who can demand their money back on short notice.
The firm has $200 worth of stuff (crypto assets I guess).
The customers or lenders demand their $100 back all at once.
The firm’s $200 worth of stuff is not immediately accessible for some reason: It is in long-term crypto-denominated mortgages, say. Or it is in locked crypto tokens. Or it is in crypto tokens and there is, for some reason, a temporary lack of liquidity in the market for those tokens. Or it is a large quantity of some crypto token that could be sold for $200 over the course of a week or two, but if you sell it in an hour or two — to give people their money back all at once — that will crash the price.
The firm cannot raise $100 to pay back its customers or lenders, and implodes.
But it had $200 worth of stuff! Very unfair.
This, to be clear, is the standard story of bank runs in traditional banking. It is the Diamond-Dybvig model that won a Nobel Memorial Prize this year. The standard problem is “the assets are good but long-term, and the customers want their money now.” It is the problem that central banks are set up to solve. The solution is fairly straightforward: You have a central bank with lots of money (ideally, in modern central banking, the ability to print money). If a bank with good assets is facing a liquidity crunch, it can go to the central bank and say “we have $200 of assets but we can’t get $100 of cash, help,” and the central bank will help. It will help by “lending freely, against good collateral, at a penalty rate,” as Bagehot’s famous formula goes: The central bank will lend the bank $100 to pay its depositors, but first it will make sure that the bank really has $200 of good stuff. (And it will charge interest.) If a bank shows up at the Federal Reserve and says “hi we owe depositors $100 but don’t have it, we lost it all on roulette,” the Fed will not help.[1]

Meanwhile in crypto I just don’t hear a lot of stories like that? I am not saying it is impossible, or even that unlikely; I am just saying that I’ve never really heard of it happening. Oh I mean I have heard many many stories, in crypto, that have the same rough shape, “run on the bank” stories. But the ones I have heard are all subtly different. They go like this:

A crypto firm owes $100 to customers or lenders.
The firm’s balance sheet shows $200 worth of stuff.
Somebody notices that the $200 worth of stuff is just a piece of paper with the words “this is worth $200” scrawled on it in crayon, and points that out online.
The customers or lenders read this and, sensibly, demand their $100 back all at once.
The firm tries to shop its scrawled piece of paper to raise the $100, and gets bids for it of zero dollars.
The firm cannot raise $100 to pay back its customers or lenders, and implodes.
But it had $0 worth of stuff, so this seems like a pretty reasonable result, though of course bad for customers.
In other words, every crypto liquidity crisis story that I have heard is obviously a solvency crisis. The problem is not that the firm has good assets but cannot, for some reason, convert them quickly into ready money. The problem is that the firm has bad assets and people notice and demand their money back and the money isn’t there. The reasons the money isn’t there will vary. Sometimes the firm just lost money on risky trades. Sometimes the money all went into magic beans and the magic bean market collapsed. (This is the story of TerraUSD and Luna.) Sometimes the money was stolen by hackers, or by the firm’s executives, or both.

But the story is never “this crypto firm took demand deposits and used them to fund 30-year mortgages, and while those mortgages are still paying and are likely to be money-good, the firm doesn’t have the cash right now.” Because that is, uh, not really how crypto works? Compared to banks, crypto firms probably have a bit more carelessness and fraud, but they definitely have a lot more magic beans. Crypto firms tend to have assets that do not have cash flows, and that are highly correlated to confidence in crypto — often highly correlated to confidence in that firm itself — and so when they lose confidence they also tend to lose their assets.

at some point there wont be enough infrastructure to support games theyre playing with bitcoins price and it too will be all gone

i was just cruisin' the internet to see how many famous people are/were being paid by blockfi to try to con people into buying crypto

it's a lot

what is the levine footnote abt roulette, i feel that's what i need to process rn

yeah thats why i think crypto doesnt have another boom in it cause this cycle was the big push for retail investors and now theyre all out of suckers xp

once those superbowl ads aired you know it was only a matter of time

seems kind of obvious that a firm that deals with tokens whose only purpose is to function as a store of value might have this sort of problem

at some point there wont be enough infrastructure to support games theyre playing with bitcoins price and it too will be all gone

― lag∞n, Tuesday, November 15, 2022 1:09 PM (five minutes ago) bookmarkflaglink

if it drops far enough people will start using real money to buy it but then itll prob crash again as whales try to get anything they can for their worthless computer tokens

lol yeah as soon as it became clear they were gonna run Super Bowl ads every smart person I know who follows this stuff said "pull your money out now"

"A monk-like aesthetic extends from his clothes...to his personal life. He shares a penthouse with about 10 roommates and cooks for himself." pic.twitter.com/Cx7QE86Bif

— Eric Levitz (@EricLevitz) November 14, 2022

yeah thats why i think crypto doesnt have another boom in it cause this cycle was the big push for retail investors and now theyre all out of suckers xp

yeah but the new marks are born every day. isn't crypto especially appealing to younger people?

https://i.imgur.com/PoX1Hwa.png
https://www.pewresearch.org/fact-tank/2021/11/11/16-of-americans-say-they-have-ever-invested-in-traded-or-used-cryptocurrency/

i just deleted a bunch of misanthropic speculative bullshit but i think we can all think of reasons why

idk at some point the reputation is just too bad

i do think crypto will survive to fulfill its one true use: crime, but it doesnt need to be worth a lot for that, just needs to be worth something

having learned about the hawala system from the excellent Joseph Gordon-Levitt vehicle PREMIUM RUSH (2012), I think cryptocurrency is an unnecessary complication

for crimes

hawala is better its true but not everyone has access to it, crypto all u need is a computer baby

still be some speculators around the edges too prob but this thing where vcs are pumping cash into the ecosystem, superbowl ads and so forth, thinking its over

tho there are still the whales to contend with they want their cyber coins to be worth something not nothing, will be interesting i guess to see what they get up to, still they do need suckers, and if the suckers run out, maybe they can keep the scheme rolling on a smaller scale

The FTX exploiter, who has been dumping all other drained assets for ETH, is now one of the largest holders in the world, with 228,523 ETH ($284.82m) currently in their wallet.

Everyone should keep an extremely close eye on what happens next... pic.twitter.com/SAP3UkyVaa

— Dylan LeClair 🟠 (@DylanLeClair_) November 15, 2022

is this good?

its hardcore crypto

Everyone should keep an extremely close eye on what happens next...

Some more crypto bullshit prob

The Levine footnote is sadly not about roulette, it's just pointing out that the Fed won't help, but the Federal Deposit Insurance Corp will - but it'll help depositors not the bank.

Yeah I didn’t post the rest of that newsletter just to avoid a wall of text but it’s all good. It’s free to subscribe!

rip winklevii

*CRYPTO BROKER GENESIS SUSPENDS WITHDRAWALS, ORIGINATIONS IN LENDING BUSINESS pic.twitter.com/1O5mPdfrsW

— Investing.com (@Investingcom) November 16, 2022

https://pbs.twimg.com/media/FhsOI4CWAAI3UeU?format=jpg&name=medium

post trunkless legs of stone

idk why that always reminds of ethan canin's "palace thief" a moment before it reminds of shelley

ethan canin another notable stanford person, btw

Are all Stanford grads psychos and grifters

i mean, i certainly am. but i only know a small fraction of the 10k ppl they graduate every year

sometimes life creeps up on you

So @kelseytuoc has been DMing with SBF and … just … my Godhttps://t.co/NbvlomnQhC pic.twitter.com/Ra4Xq5ZeHq

— dylan matthews (@dylanmatt) November 16, 2022

having a hard time figuring out what to make of bankman f he is very odd

Got gifted kid issues, had a job at Jane Street but the highs weren’t high enough, HFT is just ordinary market making now, he wanted to do crazy trades with other people’s money

Possibly doesn’t have a lawyer

seemingly has some sociopathic qualities, the disconnectedness just looking at the world as problem to figure out, but not full on sociopath doesnt seem to have the cruelty

ah yeah lol

https://pbs.twimg.com/media/Fhtr12aXkAMDglE?format=jpg&name=medium

he is the son of two lawyers, should have a lawyer xp

whaaa, is that last text exchange real? it's an irl scooby-doo unmasked villain explaining the whole game scenario

its real lol, see linked vox article in previous tweet

I wonder if this was his attitude the whole time or if "hey man regulations are bullshit and there is no such thing as ethical behavior" is all post-hoc

i would guess that if he ever cared about other people, it was early on and then he faced an "ethical dilemma" and chose the path with all the money

I just want someone to assure me that my bored ape is still worth $1.5M

lol, is he literally admitting that the whole effective altruism thing was a charade?

Ethics = being woke, YEP

i think he still prob agreed with the core of effective altruism that him getting all the money was good