Bankman-Fried survived the slump and still expanded | Hacker News Reader

Bankman-Fried survived the slump and still expanded

cnbc.com

23 pointslxm34 comments

According to this[1] when you dig into these deals the "savior of crypto" thing is mostly spin.

This submission seems like a PR piece for SBF / FTX.

1. https://protos.com/heres-why-sam-bankman-fried-is-not-the-jp...

Of course he did do it for profit, but still saved those companies and life of lots of people. Giving credit lines and improving risk management was crucial and Celsius leadership prefered destroying many peoples life over giving up control.

For sure. If I was an investor in a ponzi scheme, I would prefer a ponzi scheme that accepted a bailout from SBF rather than a ponzi scheme that continued paying executives millions of dollars of my money while those executives temporarily remain outside of prison and the company is in bankruptcy.

Grave misunderstanding. It was not because of "hoarding control" that celsius collapsed. No amount of giving up control can change the fact that it was a late stage ponzi running on borrowed time. You could extend that time but it would only cause further suffering by dragging even more people into that black hole

I don’t think it’s that simple. I got a loan against my Bitcoin at Blockfi last year, added more Bitcoins as collateral as price went down, and paying 13% interest rate. Another person can loan USD for 5-10% interest rate and Blockfi can manage payment timelines and put away money, just like a non-fractional bank would (for example the Norwegian thin bank).

The problem usually comes from the company loaning out my collateral. I would much prefer using a company that doesn’t loan out my BTC (but keeps it in a multisig wallet), but the best company that does this is US only.

Why would they pay interest on it if they are using it in a totally unproductive way?

In the case I described they pay interest on the USD and loan it out in exchange for BTC as collateral. It’s different from the scammy product that gives interest for BTC. The problem that makes the company scammy is not separating these 2 businesses (one is a valid business, the other is a ponzi sceme).

Makes sense! I misread your comment, sorry.

My take: they were reckless, careless, and incompetent. Basically executing a traditional dodgy-growth-fintech playbook. Executives not caring about long-term risk or ethics may or may not be influencing factors to that.

I'm just waiting for crypto.com to similarly blow up in the next big mess, whatever it is.

I remember talking with SBF, telling him it was insane to start an exchange with %-based fees, I thought "who would take such a hit on their risk:reward ratio!"

Crypto traders are something else though, lol.

Aren't the fees of all crypto exchanges based on % of notional? As are most tradfi exchanges?

They are. IIRC the fees at FTX were higher than Bitmex though, which had the lowest fees. I figured it would be hard to convince people to swap exchanges with higher fees but I was obviously way off.

> "who would take such a hit on their risk:reward ratio!"

What does this mean?

IMO, it means that _most_ crypto trading is impossible (on less than 1D time frames at least)... or rather the edge you need to be successful is astronomical.

If you have to pay $100 to place a $100,000 bet, you're going to burn through so much cash just to break even. Making a profit becomes exceptionally difficult.

Now, on an exchange like BitMex, its a bit more feasible because you get a rebate on some trades. So you can make back a portion of what you pay in fees. This is just a general overview though. There are more complexities to it.

You can have -1bps/1.5bps maker/taker fees at FTX. It seems pretty tough to achieve fees similar to this at BitMex, but you start out with the maker rebate and have to work only to get the taker fees down. With the maximum shitcoin-buying and volume, you'll be at -1bps/2.1bps, but it's not clear how much the unreleased shitcoin will cost yet. With only dollar volume you'll get -1bps/2.5bps, which is similar to the 0bps/1.5bps you can get at FTX by opening an FTT long/short (though the daily cost of this long/short has recently been higher that your fee savings if your daily turnover is anywhere near $2mm)

>You can have -1bps/1.5bps maker/taker fees at FTX

Ahhh

I wasn't aware they offered rebates. I would say if you're a serious trader, that is a better deal.

FTX has similar fees to other crypto exchanges. lit venues in US equities also charge percentage-based fees.

Sure, but looking at the fee schedule...

https://help.ftx.us/hc/en-us/articles/360043579273-Fees

Starting out, you're still looking at paying a ton of money in fees just to put on bets. I could do the calculations but I'm on mobile... essentially though, you would have to just do exceptionally well, for an exceptionally long time to make any sort of profit without some "unethical edge" which I just see as not being worthwhile.

I run a trading firm and even at the best crypto fee tiers, those fees will absolutely destroy your risk to reward because you start the position down significantly if your targets are less than 1%. If you're a "swing trader" the fees aren't all too bad I guess... but at the end of the day, for equities, most brokers you're looking at only around $30-50 to trade $2 million, regardless of your targets or entry. $2 million even at the highest tier you're paying multiples of that. It's the taker fees that are brutal.

> Starting out, you're still looking at paying a ton of money in fees just to put on bets. I could do the calculations but I'm on mobile... essentially though, you would have to just do exceptionally well, for an exceptionally long time to make any sort of profit without some "unethical edge" which I just see as not being worthwhile.

These markets are pretty inefficient. I don't think participants are really concerned with 1.5bps taker fees. Notably these fees are smaller than the fees at the largest venue: https://www.binance.com/en/fee/futureFee

In general I agree that the initial fee rates of e.g. 60bps at Coinbase or 20bps at FTX US are exploitative and would wipe out any reasonable edge.

To some extent, venues could capture more volume by lowering fees, but price-insensitive spenders-on-fees would not make any more trades than they do now, and FTX in particular seems to be constantly running up against the technological limits of having written their risk checks and matching engine in Python and apparently not even using an in-memory cache or anything to allow this Python used for risk checks to access the state it needs faster some of the time, so attempting to allow people to place more orders just won't work out for them right now.

I also run a trading firm. We trade about 25 million dollars per day at FTX and collect maker rebates on almost all of this. We'll get these numbers up though :)

Edit: Actually, for the sort of trading you seem to be talking about, where a bunch of human traders make a moderate to large number of trading decisions throughout each day based on some combination of price information, news, and their own analysis, it seems nearly impossible to have any edge in US equities and decently likely to have an edge that is much larger than fees in cipher tokens. So from my perspective it seems like such shops should avoid trying to trade US equities.

Fair enough!

I've been out of crypto for quite some time. Partly due to the fees. Again tho, that was back when I would try to get into a few positions a day and be lucky to see any good targets around 1%.

I might get back into it though.

To trade on FTX (non-US) are you able to do that through an off-shore business or is even that frowned upon?

Tradfi has % based fees too tho?

Do these journalists do exhaustive forensic accounting of all these guys holdings? It's one thing to talk about how rich you are when you like founded Google and still own Google and there's some consensus on what Google is worth.

But these kind of guys I feel like whatever numbers they're throwing around could be off by several orders of magnitude and it's not clear really how any of the people talking about it would be able to tell the difference.

Well you see I created poopcoin, issued 100 coins. I own 10 and I sold 1 to my mum for $1000. (Then paid my mum 999$ back ssh) so I’m worth 10k.

It’s pretty easy to show tax forms from transactions for an exchange like this.

FTX recently raised at a 32bn valuation

“Billionaire” & “survived” together is apparently our current state of media & wealth worship.

He's not just some get rich crypto lambo dude...

https://www.vox.com/future-perfect/2022/8/8/23150496/effecti...

https://fortune.com/2022/06/01/crypto-billionaire-sam-bankma...

I agree with this sentence, but I wasn't thinking of whatever philanthropy he may be up to.

From what I read, the reason Bankman-Fried is not an ordinary crypto dude is because he's a quant educated in cutthroat conventional finance who sees crypto as a huge green-field opportunity without being hypnotized by it.

Bankman-Fried should team up with Milton Friedman's grandson, Patri Friedman, and start the "Bankman-Fried Friedman Bank".

These are definitely PR pieces (there’s even disclaimers), and SBF’s “Effective Altruism” is a limited scope sham aimed at lobbying his own interests. I don’t see any real charitable actions, just lots of influence-purchasing.

Are his donations so far to pandemic-related causes and his future fund shams? https://decrypt.co/94045/ftx-1-billion-philanthropic-future-...

The article you linked and my further research suggests it’s really vague where the money is actually going.

I mean, he’s spending 1B$ on crypto lobbying - https://www.latimes.com/politics/story/2022-08-12/sam-bankma...

Here's a list of almost every single grant that the Future Fund has made: https://ftxfuturefund.org/our-grants/

Doesn't seem terribly vague to me.

...

They're talking about his crypto company FTX, not the the literal human being called Bankman-Fried. And owning x% of a crypto company isn't a very solid hedge against a crypto slump, so not sure what him being a billionaire has to do with it.

I can see FTX growing to challenge the dominance of Binance. They definitely have the resources to do so, although Binance have been very innovative in expanding their business.

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