FTX in the spotlight. So what is the allure of Cryptos?

[countryBoy641]

Here's another take on the FTX collaplse, from a right leaning POV.

Counting the FTX 'Boy Wonder's' Dirty Money

Investing in crypto money, gold money, silver money, whatever. Any of this stuff should be:
1) solid as a rock
2) less important investment features ...

The guy at the center of this FTX scam was literally dripping with money, donating piles of cash to any politicians that caught his fancy.
By inference, this seems to mean (my guess) that he was diluting his "cryptocurrencies" as he needed. For the average NYSE company, that means a secondary offering, published by law at the SEC (I think), and then shown on the balance sheet and income statement.

Based on what I have read, SBF would just "churn" his own account higher, and use the "mark-to-market" algorithms to get more buying power (or SMA funds).
Of course, when he was finished with a session of churning, the value of his holdings had no relationship to reality.

Seems Cryptocurrencies don't monitor such details (float size). Or do they?
Is dilution of any particular crypto immediately known, or ever known?

I own a lot of AGs, since Aug, 2020.
But that's just me.
8 Billion people
The people will always need to eat.

Why do crypto investors buy Cryptos?
Any input from the Crypto folks?

 

[Baron]

Seems Cryptocurrencies don't monitor such details (float size). Or do they?
Is dilution of any particular crypto immediately known, or ever known?

Yes, all of that information is tracked and public knowledge, but the terms are different. So in the stock world, there's the number of shares that's available for the public to trade back and forth, and that's the float size. In the crypto world, the number of tokens that are available for the public to buy and sell is called "circulating supply".

If you take the float size of a stock and add to that the number of shares held by insiders, that's referred to as outstanding shares. If you take the circulating supply of a crypto token and to that the number of tokens held by insiders like developers, that referred to as the "total supply".

So it's basically the same setup just with different terms.

 

[countryBoy641]

OK great Baron.
Thanks for that.
But the point of leverage is critical.
How did this individual (Sam Friedman) at FTX get his hands on so much cash?
Enormous amounts of cash.
Was he selling his core holdings?
Or was he using buying power (leverage)
If he was using leverage, did that expand the "Circulating supply" of FTT?
Did the other holders of this token know that?
Seems the answer is no. And that's why it crashed.

 

[maxinger]

So what is the allure of cryptos?

It provides good trading opportunities.

It is the swing traders' dream;
uptrend - they earn tons of money.
downtrend- they also earn tons of money.

However, it is the investors' nightmare.

 

[Baron]

OK great Baron.
But the point of leverage is critical.
How did this individual (Sam Friedman) at FTX get his hands on so much cash?
Enormous amounts of cash.
Was he selling his core holdings?
Or was he using buying power (leverage)
If he was using leverage, did that expand the "Circulating supply" of FTT?
Did the other holders of this token know that?

Alameda created the FTT token out of thin air and then the Alameda insiders used their own FTX exchange to trade FTT amongst themselves to establish a bullshit public value for the token. After a value was established on the exchange for all to see, they created millions of more FTT tokens that they used to show as a huge asset worth billions on their balance sheet. Then they went out and borrowed billions from institutions using a massive treasure chest of these FTT tokens they created out of nothing for themselves as collateral for those loans. So much of the cash you are referring to came from loans they obtained from institutions based on the collateral of the FTT tokens.

 

[countryBoy641]

Goes without saying: "those loan officers were/are morons".

 

[maxinger]

Don't just blame FTX.

Blame those stupid lazy foolish gullible investors.
Do remember, it takes two hands to clap.

As usual, the traders from elitetrader.com are having their last laugh.

 

[The_Krakenite]

SBF/FTX did what Tether is believed to be doing now. Major catalyst on the downside just waiting for the run-on-Tether. It'll be the most painful liquidations for many once it starts.

 

[Overnight]

Goes without saying: "those loan officers were/are morons".

When I read that line, this instantly came up in my head, in pitch and timbre...

Teehee.

 

[The_Krakenite]