BitConnect founder charged with orchestrating $2 billion Ponzi scheme

[johnarb]

Honestly, any company today that too advantage of the free money policies is almost a scam in my book. The ultra rich should have never been able to accumulate so much wealth, and without them, there wouldn't be unlimited VC funding to go around

CNBC talks about this all the time, publicly traded companies are manufacturing growth (i.e. AAPL) through stock buyback. Mark Yusko has a more colorful way of putting this into words in some of the Blockworks YouTube videos

To be fair, publicly traded bitcoin mining companies are now using this same technique and many of them are no longer selling the bitcoins they mine and instead purchasing more through issuance of debt

I like how Dylan describes our current cheap money policy, ZIRP/NIRP and how it has affected all markets by creating bubbles everywhere (i.e. real estate and tech/growth stocks, and cryptos)

"Speculative manias like DOGE are driven by Fed monetary policy, which has perverted risk tolerance across all assets" - Dylan Leclair

Totally true, but its scary to think how this will be managed by the governments.

We have a unique opportunity right now that defi is still fairly unregulated, but the opportunities may not last

 

[johnarb]

One obvious risk with crypto "savings" accounts is that they are not covered by the FDIC in the US (FSCS in the UK). If the company goes bust, you could lose everything.

Anything yielding 20% has got to be high risk because, in order to generate such a yield, they must be lending to borrowers where there is a significant risk of default. No-one would borrow at over 20% if they could get cheaper financing from a traditional lender. In other words, this has got to be sub-prime type lending.

Exactly. End whomever is borrowing, they have to try to make at least 30% to make it worthy to borrow. There is no high yield without high risk. That just doesn't exist.

exactly. But in crypto world of endless tokens non of the logic applies.

Only RedDuke understands it correctly

The ultra mega super duper high yields are paid out by the crypto project through newly-minted crypto tokens

It's a form of mining new coins through a process called yield farming. There are YT videos out there

You provide liquidity, by being an automated market maker by supplying 2 tokens in equal $ value to a decentralized exchange (i.e. Spookyswap or TraderJoe) and the LP tokens, you then deposit (stake) on the crypto project's platform (i.e. Solidex or Snowy Owl)

The more supporters, the more yield farmers, the lower the APR's. It's a game theory incentives mechanism. They are offering the high yields to the supporters to get them to support the project by providing liquidity

 

[Pekelo]

Only RedDuke understands it correctly

Oh I understand it correctly. It WILL end up BADLY. I don't give a hoot about their justification of yield farming and other made up process or word. If cryptos in general start to go down, even if just ever so slightly year over year, there is no fucking way they can generate 20%.

I don't think all of them start out as ponzis. They have a "new" financial idea that is unsound but they give it a try. Once they realize the idea doesn't work in real life under all market conditions, they start to dip into their funs to pay off withdrawals, then the never ending cycle starts and voila! they are running a ponzi...

 

[johnarb]

Oh I understand it correctly. It WILL end up BADLY. I don't give a hoot about their justification of yield farming and other made up process or word. If cryptos in general start to go down, even if just ever so slightly year over year, there is no fucking way they can generate 20%.

I don't think all of them start out as ponzis. They have a "new" financial idea that is unsound but they give it a try. Once they realize the idea doesn't work in real life under all market conditions, they start to dip into their funs to pay off withdrawals, then the never ending cycle starts and voila! they are running a ponzi...

This cryptos financial ecosystem is not for everyone. There are levels of risks. Not all defi projects pay that much, look at AAVE for more subdued APY's

The more you go out the risk curve, the higher the APY(/R)'s

One thing that is clear is that there are many cryptos people that have quit their jobs at Wall Street and have made multi-generational wealth (i.e. Sam Bankman-Fried and his team at FTX)

You should see some of the flex from Crypto Twitter people

Look at this picture and ask yourself if that amount of Total Value Locked is all from retail crypto people? newsflash, wall street money has been playing here we can see them throwing millions at obscure crypto defi projects

Look up Harry Yeh, billionaire HF manager, always on Bloomberg and his involvement in defi

But I get it, you and your friends have a more sexy enjoyable money making endeavor wanking off to green and red dildos on the chartz