FTX is bankrupt,with at least an$8 billion hole on their balance sheet. Customer funds gone, many people lost 6 and even 7 figure balances.
So… what were those odds on “FTX.com losses a substantial amount of user funds” again?
The more info that comes out, the more it looks like the entire thing was fraudulent from the beginning. They even have a software back-door that allows them to transfer funds without alerting auditors, which it looks like they used many times with FTX customer deposits.
Additionally...
Celsius: bankrupt.
BlockFi: bankrupt.
Voyager: bankrupt.
3 arrows capital: bankrupt.
Terra Luna: worthless.
Genesis: likely bankrupt.
Digital currency group: ???
Obviously this is hindsight, but you should STRONGLY update, because it looks like the counter-party risks were well over 10%. In fact, many were even calling SBF and FTX fraudulent well before it came to light and blew up, but people didn’t really listen.
We all need to strongly update on this. I know I have.
I’d also encourage you to consider what happens if/when the SEC decides to finally label every “crypto” except Bitcoin a security, and force them to file S1 disclosures. This process will likely be greatly accelerated by the FTX debacle. I suspect MANY of these “projects” will completely fall out of favor, being out competed by better securities like Google and Apple. Their current price merely reflects their regulatory arbitrage, which will end.
Why do you expect Bitcoin to be excepted from being labelled a security along with the rest? (Apologies if the answer is obvious to those who know more about the subject than me, am just genuinely curious)
No, it’s not obvious; it’s a perfectly legitimate question. Here’s the Howie test, the criteria established by the Supreme Court for security classification:
An investment of money
In a common enterprise
A reasonable expectation of profit
Derived from the efforts of others
Bitcoin’s biggest difference from other Crypto securities are #2 and #4. Bitcoin is common, but it’s not exactly an “enterprise.” There’s no organization or group working on it in an attempt to increase it’s value, the way, for example, the Ethereum foundation attempts to increase the economic value of ETH. There are the core devs, but the authority they have to actually change the software is much, much lower, requiring massive agreement across the board from miners and nodes.
And for #4, while it is the miners efforts that create security for the network, it’s not as direct as the members of other crypto projects actively working, for profit, on the software. The profit comes from Bitcoin’s increasing network of users who decide to store their economic value in it, not because it’s becoming a more and more useful piece of software as people improve it (like, say, what happens in a traditional equity like google or microsoft).
The main thing… Who exactly would be required to register Bitcoin with the SEC? Who would file the S1 disclosure with Bitcoin? Who would the SEC sue if “Bitcoin” was an unregistered security? There was no IPO (well, ICO I guess). There’s no foundation. There are no stakeholders; since Bitcoin is PoW.
So update as of November 23rd, 2022…
FTX is bankrupt, with at least an $8 billion hole on their balance sheet. Customer funds gone, many people lost 6 and even 7 figure balances.
So… what were those odds on “FTX.com losses a substantial amount of user funds” again?
The more info that comes out, the more it looks like the entire thing was fraudulent from the beginning. They even have a software back-door that allows them to transfer funds without alerting auditors, which it looks like they used many times with FTX customer deposits.
Additionally...
Celsius: bankrupt.
BlockFi: bankrupt.
Voyager: bankrupt.
3 arrows capital: bankrupt.
Terra Luna: worthless.
Genesis: likely bankrupt.
Digital currency group: ???
Obviously this is hindsight, but you should STRONGLY update, because it looks like the counter-party risks were well over 10%. In fact, many were even calling SBF and FTX fraudulent well before it came to light and blew up, but people didn’t really listen.
We all need to strongly update on this. I know I have.
I’d also encourage you to consider what happens if/when the SEC decides to finally label every “crypto” except Bitcoin a security, and force them to file S1 disclosures. This process will likely be greatly accelerated by the FTX debacle. I suspect MANY of these “projects” will completely fall out of favor, being out competed by better securities like Google and Apple. Their current price merely reflects their regulatory arbitrage, which will end.
Why do you expect Bitcoin to be excepted from being labelled a security along with the rest?
(Apologies if the answer is obvious to those who know more about the subject than me, am just genuinely curious)
No, it’s not obvious; it’s a perfectly legitimate question. Here’s the Howie test, the criteria established by the Supreme Court for security classification:
An investment of money
In a common enterprise
A reasonable expectation of profit
Derived from the efforts of others
Bitcoin’s biggest difference from other Crypto securities are #2 and #4. Bitcoin is common, but it’s not exactly an “enterprise.” There’s no organization or group working on it in an attempt to increase it’s value, the way, for example, the Ethereum foundation attempts to increase the economic value of ETH. There are the core devs, but the authority they have to actually change the software is much, much lower, requiring massive agreement across the board from miners and nodes.
And for #4, while it is the miners efforts that create security for the network, it’s not as direct as the members of other crypto projects actively working, for profit, on the software. The profit comes from Bitcoin’s increasing network of users who decide to store their economic value in it, not because it’s becoming a more and more useful piece of software as people improve it (like, say, what happens in a traditional equity like google or microsoft).
Even still, it’s certainly murky.
Gary Gensler has stated Bitcoin alone is a commodity a few times: https://www.coindesk.com/layer2/2022/06/28/secs-gensler-reiterates-bitcoin-alone-is-a-commodity-is-he-right/
The main thing… Who exactly would be required to register Bitcoin with the SEC? Who would file the S1 disclosure with Bitcoin? Who would the SEC sue if “Bitcoin” was an unregistered security? There was no IPO (well, ICO I guess). There’s no foundation. There are no stakeholders; since Bitcoin is PoW.