I don’t follow crypto, or it’s space, but this seems like a bad habit or norm to downvote pieces that criticize EA’s questionable relationship to crypto.
Cryptocurrency doesn’t actually work, and only is there for scams and fraud. Not surprising that FTX collapsed.
I think you may be getting a lot of disagree-votes because I don’t think crypto was the issue here. People who just have USD sitting in FTX right now lost their money too.
FTX shouldn’t have been risky. It wasn’t a DAO, or based entirely off some token or chain, it was an exchange. It should have just been connecting people who wanted to buy crypto with people who wanted to sell crypto, and taking a fee for doing this. The exchange itself shouldn’t be taking any risk.
The reason as to how looks at least in part to do with leveraged transactions, allowing customers to buy more crypto by supplementing their purchase with a loan. But we’ve let leveraged transactions happen with stock for a hundred years. This looks a lot more like garden-variety financial crime than some problem with crypto.
Here’s a quote from former US Treasury Secretary Larry Summers in a recent Bloomberg interview that backs up some of the claims in this comment:
A lot of people have compared this to Lehman. I would compare it to Enron—the smartest guys in the room, not just financial error, but certainly from the reports, whiffs of fraud. Stadium namings very early in a company’s history. Vast explosion of wealth that nobody quite understands where it comes from.
[...] I think this is probably less about the complexities of the nuances of the rules of crypto regulation and more about some very basic financial principles that go back to financial scandals that took place in ancient Rome.
The relation to crypto is that the bulk of crypto is poorly regulated. Some of that is solvable—well regulated exchanges should be possible. The extreme volatility also increases the temptation toward fraud. So the fraud risk is higher than in a well-regulated industry.
I’d submit that a well-regulated and managed exchange is going to find it much harder to achieve a stratospheric valuation, and other parts of crypto are harder to regulate well. So some skepticism toward huge crypto-linked donors is warranted.
More crypto regulation is coming, and many crypto protocols have worked hard already to be regulatory-compliant. But regulation won’t be uniform across jurisdictions; there will always be loopholes that allow regulatory arbitrage.
Some exchanges, such as Coinbase and Kraken, are based and regulated within the US, and are subject to much stricter oversight than FTX—which seems to have been deliberated based in Hong Kong and then the Bahamas precisely in order to avoid US regulatory oversight. (Arguably, this should have been a red flag in terms of EA’s relationship with FTX).
The US, UK, or EU can regulate all they want, but crypto finance is a global business, and there are plenty of less-regulated havens willing to host crypto businesses.
Hopefully crypto investors, traders, and users will become savvier about checking where businesses are operating, and what regulatory scrutiny they’re subject to.
Agreed on that. My point was that it would be a lot harder for an individual to get super-rich quick in a regulated market. No sane regulator is going to allow a regulated party to risk customer assets for the party’s benefit, and few will allow crazy leverage. And the whole thing will require significantly more of a buffer in fiat currency, again limiting any single person’s ability to get megarich.
In short, I think there are few ways for a well-regulated exchange to be stratospherically profitable. So people should not expect the rise of new crypto megadonors who hail from regulated backgrounds.
I would agree with this. Separate from the object-level causes of the current crisis, crypto as an industry has accepted and normalized a lack of accountability that other industries haven’t. And I agree that lack of regulation and high volatility make fraud more likely.
I would want to avoid purely focusing on crypto, because I think the meta-lesson I might take away is less “crypto bad” and more “make sure donors and influential community members are accountable,” whether that be to regulators, independent audits, or otherwise. (And accountable in a real due diligence sense, because it’s easy for that word to just be an applause light.) But yes, skepticism of crypto-linked donors would be justified under this framework.
I have no idea why this comment is no longer endorsed by its author because it’s entirely correct. Not only is crypto a great way to scam people because transactions can’t be reversed & there’s virtually no regulation for most of the space, the fact that it’s so hard to make money in crypto across an entire cycle means that entities have a huge incentive to resort to scamming.
False, it works just fine. It’s a token that can’t be duplicated and people can send to each other without any centralized authority.
and only is there for scams and fraud.
There are indeed a lot of those, but scams and fraud were very clearly not the intention of its creators. Realistically they were cryptography nerds who wanted to make something cool, or libertarians with overly-idealistic visions of the future.
Not surprising that FTX collapsed.
Clear hindsight bias. This person should have made some money betting against FTX before it collapsed and then I’d take them more seriously.
Basically, the comment is just your standard “cryptocurrency bad” take, without any attempt at justifying their claims or even saying much of anything other than expressing in an inflammatory way that they don’t like cryptocurrency.
“This person should have made some money betting against FTX before it collapsed and then I’d take them more seriously.”
this is naive EMH fundamentalism
not everything can be shorted, not everything can be shorted easily, not everything should be shorted, markets can be manipulated. Especially the crypto market. It both can be the case that people 100% think X is a fraud, and X collapses, and shorting X would have been a losing trade over most timeframes. “Never short” is an oversimplification but honestly not a bad one.
I don’t follow crypto, or it’s space, but this seems like a bad habit or norm to downvote pieces that criticize EA’s questionable relationship to crypto.
Cryptocurrency doesn’t actually work, and only is there for scams and fraud. Not surprising that FTX collapsed.
I think you may be getting a lot of disagree-votes because I don’t think crypto was the issue here. People who just have USD sitting in FTX right now lost their money too.
FTX shouldn’t have been risky. It wasn’t a DAO, or based entirely off some token or chain, it was an exchange. It should have just been connecting people who wanted to buy crypto with people who wanted to sell crypto, and taking a fee for doing this. The exchange itself shouldn’t be taking any risk.
The reason as to how looks at least in part to do with leveraged transactions, allowing customers to buy more crypto by supplementing their purchase with a loan. But we’ve let leveraged transactions happen with stock for a hundred years. This looks a lot more like garden-variety financial crime than some problem with crypto.
Here’s a quote from former US Treasury Secretary Larry Summers in a recent Bloomberg interview that backs up some of the claims in this comment:
Sorry for misfiring here, I’ll retract my comment.
The relation to crypto is that the bulk of crypto is poorly regulated. Some of that is solvable—well regulated exchanges should be possible. The extreme volatility also increases the temptation toward fraud. So the fraud risk is higher than in a well-regulated industry.
I’d submit that a well-regulated and managed exchange is going to find it much harder to achieve a stratospheric valuation, and other parts of crypto are harder to regulate well. So some skepticism toward huge crypto-linked donors is warranted.
More crypto regulation is coming, and many crypto protocols have worked hard already to be regulatory-compliant. But regulation won’t be uniform across jurisdictions; there will always be loopholes that allow regulatory arbitrage.
Some exchanges, such as Coinbase and Kraken, are based and regulated within the US, and are subject to much stricter oversight than FTX—which seems to have been deliberated based in Hong Kong and then the Bahamas precisely in order to avoid US regulatory oversight. (Arguably, this should have been a red flag in terms of EA’s relationship with FTX).
The US, UK, or EU can regulate all they want, but crypto finance is a global business, and there are plenty of less-regulated havens willing to host crypto businesses.
Hopefully crypto investors, traders, and users will become savvier about checking where businesses are operating, and what regulatory scrutiny they’re subject to.
Agreed on that. My point was that it would be a lot harder for an individual to get super-rich quick in a regulated market. No sane regulator is going to allow a regulated party to risk customer assets for the party’s benefit, and few will allow crazy leverage. And the whole thing will require significantly more of a buffer in fiat currency, again limiting any single person’s ability to get megarich.
In short, I think there are few ways for a well-regulated exchange to be stratospherically profitable. So people should not expect the rise of new crypto megadonors who hail from regulated backgrounds.
I would agree with this. Separate from the object-level causes of the current crisis, crypto as an industry has accepted and normalized a lack of accountability that other industries haven’t. And I agree that lack of regulation and high volatility make fraud more likely.
I would want to avoid purely focusing on crypto, because I think the meta-lesson I might take away is less “crypto bad” and more “make sure donors and influential community members are accountable,” whether that be to regulators, independent audits, or otherwise. (And accountable in a real due diligence sense, because it’s easy for that word to just be an applause light.) But yes, skepticism of crypto-linked donors would be justified under this framework.
I have no idea why this comment is no longer endorsed by its author because it’s entirely correct. Not only is crypto a great way to scam people because transactions can’t be reversed & there’s virtually no regulation for most of the space, the fact that it’s so hard to make money in crypto across an entire cycle means that entities have a huge incentive to resort to scamming.
I can tell you why I downvoted it.
False, it works just fine. It’s a token that can’t be duplicated and people can send to each other without any centralized authority.
There are indeed a lot of those, but scams and fraud were very clearly not the intention of its creators. Realistically they were cryptography nerds who wanted to make something cool, or libertarians with overly-idealistic visions of the future.
Clear hindsight bias. This person should have made some money betting against FTX before it collapsed and then I’d take them more seriously.
Basically, the comment is just your standard “cryptocurrency bad” take, without any attempt at justifying their claims or even saying much of anything other than expressing in an inflammatory way that they don’t like cryptocurrency.
“This person should have made some money betting against FTX before it collapsed and then I’d take them more seriously.”
this is naive EMH fundamentalism
not everything can be shorted, not everything can be shorted easily, not everything should be shorted, markets can be manipulated. Especially the crypto market. It both can be the case that people 100% think X is a fraud, and X collapses, and shorting X would have been a losing trade over most timeframes. “Never short” is an oversimplification but honestly not a bad one.