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Comment by roenxi | Hacker News Reader

The issue with linking to Twitter, is I have no idea:

1. What does Genesis do (a crypto exchange?)?

2. Is it in any way important?

3. Is this an unusual level level of bankruptcies happening in Crypto?

As far as I can tell this is just a crypto company going bankrupt. The US (the world!) is in an unprecedented post-COVID-shutdown amount of turmoil. The economy is roiling. NASDAQ is down 23% over 12 months. There is even war on the border of the world's largest nuclear power and everyone is still escalating it even after 12 months.

Unless we're drawing a pattern that bankruptcies in crypto are unusually high (which this twitter thread does not seem to be), it doesn't make sense to focus on Genesis. There are bigger issues out there.

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I’ll probably write in more detail this coming week, but Genesis was the largest prime broker in crypto. It provided liquidity, credit, and important financial infrastructure to other members of the DGC group, including they Greyscale Bitcoin Trust. This made it one of the most systemically important institutions in crypto.

If you do not care about crypto, obviously, not terribly relevant. If one does, the degree of rot and malfeasance in systemically important institutions, and the many billions of dollars lost, and the likelihood that not mere fecklessness but actual crimes underlie many of the losses, are fairly important. (FTX was a large scale misappropriation of customer funds. Genesis, among many other crypto lenders, is currently under investigation for unregistered securities offerings, essentially on the theory that they sold a product which masqueraded as a bank deposit but was actually a structured product which blew up in a fairly predictable way. We have laws which prohibit doing that.)

> the degree of rot and malfeasance in systemically important institutions

These "systemically important institutions", as you label them, are peopled by feckless children. My small-town sanitation department presents itself with greater systemic institutional integrity.

The older I get, the more I respect sanitation departments, local DOTs, sewer/water authorities, and generally the quiet people who make modern life possible. They deserve a LOT more than these crypto scammers.

"systemically important institutions" is an oxymoron that should be eliminated from quality crypto dialogue and associated with scams.

You could use that argument to dismiss about 99% of the stories that are submitted to HN. It’s fine if that’s what you want, but HN doesn’t claim to have only the biggest, most important news items at any given moment. It is just for reading interesting stuff that may or may not be tech related and may or may not be recent.

In the case of Gemini this is one of the latest big dominos to fall in the crypto industry, and since there are a few other entities linked to it one way or another it could signal a new set of bankruptcies are coming, if not a collapse in crypto altogether.

1. Genesis is/was one of the bigger "yield farming" (read: unsustainable Ponzi) companies out there. They're also one of the larger units of DCG, a crypto conglomerate with its fingers in all sorts of pies, so Genesis collapsing does not bode well for the rest of that group.

2. They're primarily notable for running the Earn program for Gemini, one of the larger and (by crypto standards) more reputable exchanges out there, run by the Winklevoss twins of Facebook fame. Lawsuits and regulatory investigations are already coming in thick.

3. 2022 saw the crypto boom rapidly turn to bust and the dust has nowhere near settled yet.

1. Genesis was not a yield-farming company, but a centralized lender. "Yield farming" refers the use of smartcontracts that generate yield [A].

Furthermore, yield farming is not inherently Ponzi. For example, there are overcollateralized lending protocols like Compound and Aave that allow you to put crypto in a smartcontract in return for a yield, usually < 3%. The returns come from a cut of the loan interest, where the loans are liquidated if the collateralization ratio gets too high.

I know, everyone rolls their eyes about the distinction, since they're all "Ponzis" (a term itself used imprecisely), but if you're going to make a comment specifically intended to fill in vital context, you should be more careful with the facts than a general opinion post.

[A] https://decrypt.co/resources/what-is-yield-farming-beginners...

This is such a strange complaint. I don't know half the things on HN, so I just ignore them and read the articles on topics I do know and care about.

If you don't know what Genesis is, you could have simply ignored the 20 odd pixels of vertical space this headline occupies, and moved on.

Apologies if I'm being brusque.

This link will make you less informed, because it is adding narrative (crypto firms teetering!) to a bland story (the economic damage from the COVID response is serious). I think someone needs to be proactive and point out that this is useless. If this was Crypto News then sure.

This may as well be a Tweet telling us that Powered Brands went bankrupt. Whoever they are, I just searched for "bankruptcies 2023". If this one matters, then someone will have to write a blog post explaining why and we can all read that instead and learn something.

There's an upvote feature on HN exactly for burying stories that are irrelevant. If enough people have voted this to the front page, it simply means that enough people find it relevant. If it's not relevant to you, you can just ignore it.

1) There is no downvote for stories AFAIK.

2) I refuse to downvote anything except comments that include "I'm going to get downvoted for this...". The signal is too noisy to figure out what a downvote means.

If I do not like something, I write a comment.

Crypto failing because of covid response? That's a new one..

Genesis's collapse is (a) nothing to do with covid and (b) systemically important to the wider crypto ecosystem.

GP is not unhappy about topics appearing on hn that he knows little about, it's specifically about using Twitter for something like that.

Conventional media would usually come with a short introduction for those completely new to the topic. The kind that tends to lead to considerable hilarity in those who don't need it. More traditional publications sometimes even seem to aim that short introduction at a knowledge level so low that it could only make sense to future generations finding a centuries old document or to some time traveler who skipped the last decades.

Hn, with its original source policy, will tend to avoid those without even trying. Even if I think that guideline is more about avoiding derivative journalistism than about avoiding journalism. At some point going deeper to some original source becomes a trade-off and Twitter links make that conveniently graspable.

Mostly schadenfreude; people are enjoying the widespread fraud in crypto and its promise of absurd returns from simply emitting vast quantities of CO2 gradually collapsing.

This article isn't even evidence of that.

I've been waiting patiently for Bitcoin to collapse after watching what I assumed was the all time high in 2018. We've nearly dropped back to that now, still persistently above that price. I think I've made a profit in Monero.

In a jaw dropping set of peg defences, Tether still exists. You can buy and sell it for about $1 USD. The ecosystem has proven much more resilient against major players going bankrupt than the traditional financial system. Nobody has been bailed out by a government as far as I know.

I suspect the crypto market is less volatile than has historically been the case.

It might happen, but so far there are no signs that the crypto market is going to collapse. If anything, it looks quite healthy to me. I wish traditional stock markets were allowed to fall like this without the authorities stepping in to prop things up. Genesis going bankrupt is a non event until a good reason is found to believe otherwise.

> "The ecosystem has proven much more resilient against major players going bankrupt than the traditional financial system. Nobody has been bailed out by a government as far as I know."

That's because crypto, unlike the traditional financial system, doesn't interact at all with the real world of companies, cash flows, employees, their mortgages, etc.

There's no need for the government to step in to save a bunch of crypto traders who got into trouble for inventing tokens that leverage tokens that represent tokens, and so on.

This also explains why the crypto system looks resilient at this point. Retail crypto investors have mostly taken their losses and gone home. The remaining players can manipulate the market to make it look like what they want; it's a shadow play with very little real money left.

Even Peter Thiel sold all his Bitcoin in March 2022 while at the same time making conference appearances where he claimed its price is going to increase by 100x:

https://www.ft.com/content/0a1d5597-7145-4035-987b-ff033bba3...

Again, pointing at one person doing something is profoundly weak evidence. Even a big player. The UK sold most of its gold reserves in 2000 and in hindsight looks rather silly.

One person is not the market, is certainly not a signal that the market is doing anything in particular. Figuring out the big picture by examining random stories is emotionally satisfying and not very clever. This is a good topic to argue about using aggregates and statistics. Not Twitter threads about ... things that really are predictable from the macroeconomic state of things. There are going to be bankruptcies or spectacles this year based on interest rates alone.

> I wish traditional stock markets were allowed to fall like this

The 3AC failure is basically showing us how contagion would have worked had the bailouts not happened. There were a bunch of outfits offering magic "X% return!" by taking your money and investing all of it in an even riskier outfit offering X+1% return, until the final one turned out to be a ponzi scheme.

I agree with not bailing out investment banking, but retail investors need to be covered and have a functional system. Which is why people like FTX need to be prosecuted for offering them fraudulent products.

https://davidgerard.co.uk/blockchain/2023/01/13/sec-sues-gen... has some background from a week ago.

> There is even war on the border of the world's largest nuclear power and everyone is still escalating it even after 12 months.

Wow this is some next level Russian propaganda.

Maybe you meant to say "The world's (supposedly) largest nuclear power invaded their neighbour in an all out war and are continuing to attempt to destroy them 12 months later".

The only one who escalated anything was Russia when they crossed that border. And they can deescalate by simply going back to their own country.

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