[themagician]

I have faith that we can top S&L. We have the technology. We have the talent. There are six banks with over a trillion in assets in the US. I have faith that one of them has been doing some wild book cooking. I'd place a bet on Citibank, followed by Wells Fargo. There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on… shame on you. Fool me… you can't get fooled again.

I'm just hoping this time it's something absolutely outrageous just for the lulz of it all. Like, let's get some FTX-style absurdity. All the absurdity happens in crypto right now but I still have faith in regular banking. Some people still like the challenge of regulated markets.

[bboygravity]

JP Morgan is the biggest one. It can do ANYTHING it wants and get away with it.

It can make 10 billion USD spoofing gold prices for a decade and get away with a 1 billion USD fine (and keep doing it) for example.

The CEO can go on trips with Jeffrey Epstein, be friends with him and do business with him and get away with it.

It made tons of money off of the Madoff ponzi by providing Madoff with a bank account and not reporting the (from their perspective) extemely obvious ponzi that was going on for 15 years. Nobody went to jail and JP Morgan's fine was probably lower than what they made from the ponzi.

There are 100's of other examples of quite outrageous FTX-style crime. This is just what I happened to read about and remember. And that's only the publicly known stuff.

Let's turn it around: why would JP Morgan (and other big banks) NOT be engaged in extreme levels of crime that could be described as "financial terrorism"? If JP Morgan blows up it would be the end of the US and they know it and the US govt knows it. I repeat: they can get away with ANYTHING.

I think you will get your lulz.

[themagician]

I want something GOOD like FTX running on Quickbooks. That's what people need to aspire to these days. That's why I like Wells Fargo. Create fake accounts… so absurdly brilliant.

JP Morgan might be the biggest, but I just don't have faith in them like I do Wells and Citibank or even HSBC. Some lame overly complex scheme isn't want I want. I want a decimal in the wrong place that everyone just ignores despite nothing ever adding up. I want vaults full of gold on the books that don't even exist… said to be held in countries that don't exist anymore. I want Superman 3 salami slicing, but maybe one that's been running perpetually since 1980… and it turns out that's actually the inspiration for the scam in the movie. I want Snopes to have to change something from "Legend" to "TRUE".

The world needs to be reminded that the USA is #1 and always will be.

[usefulcat]

> FTX running on Quickbooks

Quickbooks? I thought they were using post-it notes. Maybe I underestimated them..

[themagician]

Post-It note was for the login.

Username: [e-mail]

Password: hunter2

[johnvanommen]

There was a hedge fund manager / college professor from Irvine CA who figured out Madoff's scam in the 90s, and nobody paid attention to him whatsoever.

[blowfish721]

There’s a good podcast (American Scandals) covering that. https://podcasts.apple.com/se/podcast/american-scandal/id143...

[themagician]

I never liked Madoff. Not inventive. Never found him aspirational. He also stole from seniors which I'm not a fan of. He deserved his fate.

[bboygravity]

You might find Kenneth C. Griffin is more your cup of tea in that case.

Bonus: he hasn't been caught yet. His crimes are still on-going.

Same principal crime model as Madoff though: own a market making business + a hedge fund, sell stocks (naked), take the money, give nothing in return.

There's some other petty stuff like front running household investors through PFOF and instructing the broker you buy order flow from to shut down the buy button for retail investors when the price moves against you. But that's just the petty crime.

[RC_ITR]

> There are 100's of other examples of quite outrageous FTX-style crime.

Woah woah woah. FTX (in the most generous telling) didn’t even have its own bank account.

Let’s not conflate that with not proactively reaching out to snitch on a customer (as if they are some regulatory agency).

[seviu]

Add to the mix that despite all its flaws (which are many) crypto is way more transparent than a classical financial institution due to the fact that one can track all movements. Even for entities like FTX, we can guess what their wallets at and how many funds they hold. Part of the FTX debacle was due to depositors figuring out that it didn’t have enough money to cover their debts.

Unfortunately for USD backed currencies we still don’t have any idea where or who holds the backing assets. They might as well be non existent…

[aftbit]

Alas, the biggest scams in crypto are more opaque than that. How many dollars does Tether hold, and in what forms? Where is all of this "commercial paper"? The biggest crypto falls are still to come.

[yieldcrv]

If you like absurdity, FTX has recovered 7.3 billion out of the 8.6 billion hole and plans on relaunching the exchange to make the last billions back in fees

Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain, and under no new laws being passed

[themagician]

It's not about the money, it's about the message. It's about running a global financial institution on Quickbooks. It's about not having a bank account. It's about not having stop losses. It's about wiping out losses by making your own money. It's about TOM BRADY. It's about the Larry David ad that ends, "Ehhhhh, I don't think so. And I'm never wrong about this stuff. Never."

FTX really elevated fraud to an art. I'm not even joking. It's beautiful. It's so insane when I think about it that I don't even think it should be illegal. He should through his entire defense behind the 1st Amendment, say it was all part of an elaborate roleplaying game, and somehow walk.

[yieldcrv]

for me its more about how much this mismanaged business shook confidence in "crypto", instead of just this mismanaged business - the way we would judge any other sector. while the crypto aspect is helping resolve this far faster than other insolvent schemes of similar size and magnitude.

and Sam Bankman Fried is not involved in that.

yes, Sam did that elaborate thing, the people recovering and the bankruptcy court are not Sam.

[themagician]

It really didn’t though. Crypto is the never ending, infinite ponzi. It’s unshakable, unsinkable. The hype is real.

What Sam did was elevate things. Anyone can run a crypto scam. Literal kids do it. But to create art is something else. Something more human. Something timeless. SBF is perhaps the ultimate use case for crypto.

I had about $100 in FTX. Worth it. Totally worth it.

I’m stoked for the Coinbase collapse. My body is ready. Jesus, take the wheel!

[Nition]

The Tether collapse is where it's really going to get exciting IMO.

By the way I love your writing style here, reminds me of James Mickens.

[yieldcrv]

okay I can play along

I just want my Coachella 2022 NFT, wen bankruptcy judge do something

[smcl]

I'm not sure we can treat crypto like any other sector - there are no others which are afflicted by a rapid succession of high profile scams, scandals and collapses. Confidence is shaken because there's no other rational response to this situation.

[yieldcrv]

oil exploration, energy, banking, construction...

its really a choice to consider mismanaged companies as the sector itself, at least the construction industry started putting X days since incident as an effort to differentiate each site since nobody was hearing about sites that were operating fine. confidence isn't shaken for everyone in the crypto space, and there might be a need for services to point out how many days since incident they've gone, since nobody currently indexes that or reports on that while the majority of activity occurs within services that operate smoothly and as expected

[smcl]

I dunno, you're asking crypto to be compared with sectors that actually provide services people need who between them have had a few high-profile flameouts over the course of history. Whereas crypto has had a fairly quick boom-and-bust and the biggest players frequently either go bust or are heavily exposed to those who already have (and are desperate to convince everyone they're not and are actually fine).

I'm not sold on crypto and you'd have a hard time persuading me to change my mind, I'm afraid.

[Aaronstotle]

I thought this was because BTC is up 50% from November?

[yieldcrv]

partially, it would be at $6.2bn based on November 2022 crypto prices.

https://www.reuters.com/technology/bankrupt-crypto-exchange-...

[RC_ITR]

> Most noteworthy is that this quick 8 month turnaround is partially thanks to the blockchain

What are the specific examples of this that are intrinsic to crypto and not any digital transaction?

[Mistletoe]

Are you sure about that $7.3 billion? Last I checked, SBF was counting illiquid nonsense like Serum and MAPS tokens in that number.

[yieldcrv]

SBF is not involved, its the new management and the bankruptcy court

https://www.reuters.com/technology/bankrupt-crypto-exchange-...

[Mistletoe]

I’d like to see a list of those assets because this one consisted of a bunch of garbage tokens largely worth nothing.

https://cryptoslate.com/breakdown-of-current-ftx-assets-show...

The top token in that list, Serum, listed as worth $1.9 billion, had a trading volume of only $2 million yesterday on Binance. -2% depth is $60,000 lol.

https://coinmarketcap.com/currencies/serum/markets/

[yieldcrv]

we can debate liquidity and depth of the market for those assets, but they're also just using the same standard as what was lost as well, so does it really matter?

unless we’re going to start with “they didn't lose $8.6bn and an independent valuation put all lost assets at $2bn so now everyone’s solvent what an amazing turnaround”

[Mistletoe]

One huge difference is that the $8.6 billion number probably included all the BTC and ETH that they were supposed to have and that was deposited with them. Those were actually liquid and worth a lot. When FTX failed they didn’t have the BTC and ETH people had deposited with them. The theory is that FTX/Alameda used it all to pump tokens they owned, buy real estate and make deals, and of course losing trades. No one in crypto values this new list at 7.3 billion. It’s actually a source of much ridicule and hilarity if it is similar to that list I posted.

[lottin]

How is any of this partially thanks to the blockchain?

[yieldcrv]

because the clawbacks are easier to track through multiple hops, even when the initial recipient had already done other things with the funds

[RC_ITR]

What does that have to do with decentralized consensus?

You know, the core differentiating feature of cryptocurrency.

[yieldcrv]

it doesn’t and that wasn't the premise of why we can acknowledge that using that payment network saved everyone time in the clawbacks, despite the shaken confidence that the exact same event caused into that payment network

the main distinction involved here is that not knowing who to subpeona for records slows down everything, whereas with the blockchains used most of the participants consolidate funds into KYC’d exchanges and we know which ones they went to, speeding up requests for records and subsequent action

[ricardobeat]

In other words, blockchains make it easier to track what we are doing with our money, without the justice system being involved, and that’s somehow good.

[RC_ITR]

Wait, we recovered almost all of Madoff's money too?

Traditional finance has plenty of clawback mechanisms.

You're completely straw-manning a world in which traditional finance isn't also mostly done on KYC'ed exchanges.

[lottin]

What do you mean clawbacks? Blockchain transactions are irreversible, right?

[lesuorac]

Sure but a court can order you to do a future transaction that effectively reverses the original. (Akin to how almost every single reversed transaction _actually_ works).

And if you refuse, they can order your local (or not so local) PD to jail you until you comply.

Blockchain still exists in the real world with its very real rules.

[lottin]

Well, of course... but if they're relying on court orders how is exactly blockchain technology helping in this process?

[senectus1]

wth?

you got a good link for this? I stopped paying attention a while ago

[yieldcrv]

reuters good enough?

https://www.reuters.com/technology/bankrupt-crypto-exchange-...

[senectus1]

its kinda lite on details, but i guess "Cash and liquid crypto assets" says enough.

I think the claim they have "recovered 7.3 billion" is an overstatement... but time will tell.

[Technotroll]

Honestly, I've long since made peace with not ever getting back those assets. In that way I accept the risk I took when making the trades in the first place. But what really irks me with the FTX bankruptcy is how my assets were suddenly impounded, effectively stolen from me, and I wasn't allowed to trade it anymore even to avoid further losses. Yes, contracts, articles, and so on, but I'm a simple man: I pay. I own. So, if I am to ask compensation for anything, it must be 1. to get my crypto back, and 2. to be paid damages for the inability to trade during a period of free fall. As it's now, however I guess I can count myself lucky if I even get back parts of my own crypto, if anything. So, I've decided to not spend energy on it.

[yieldcrv]

we can debate liquidity and depth of the market for those assets, but they're also just using the same standard as what was lost as well as reporting where thats just asset price appreciation

[RoddaWallPro]

Fool me... you can't get fooled again.

George W gaffes have become so hilarious to me, now that they're 15+ years in the past. I laughed out loud reading this one.

[edrxty]

This may be my favorite all time HN comment.

I totally buy it too.