1) FTX and Genesis lowered steth collat ratio from near 100% to 0% on the same day in May, while themselves shorting steth
2) FTX and Genesis bought unlocking Solana together in huge size pre-cliff, Genesis promising loans
3) FTX bribed Genesis desk traders with seed allocations on coins like Serum, in return for receiving a better LTV on Serum collateral
4) Genesis traders routinely shared client info with FTX traders, and vice versa. Many of these became rich (for now) and tried to start funds
Jan 3, 2023 • 5 tweets • 1 min read
Here's rough summary of dcg situation
1) they conspired w FTX to attack Luna and steth and made a fair bit doing so
2) they took substantial losses in the summer from our bankruptcy as well as Babel, and other firms involved in gbtc
3) they could've calmly restructured then
4) instead they fabricated a left pocket right pocket callable promissory note that magically filled the hole. This is like a kid losing at poker and saying "I am fine, my dad will pay you, let me keep playing," but if your dad is actually yourself
Dec 30, 2022 • 4 tweets • 1 min read
Have a lot of respect for the tiny homes movement but key issues seem to be
1) reliant on power grid and water, greywater + waste mgmt. This raises costs and limits locations
2) lack of resale liquidity
W that said these structures are airbnbing well in many areas, and are ez
Earthships otoh are fully offgrid, carbon negative, and sell for much higher than construction costs
Issue is they take much more effort and expertise to build and deploy, and the type of ppl who know how to don't care about money
Dec 27, 2022 • 5 tweets • 2 min read
Thoughts:
FTX claims will settle ~45c
Disbursements staggered across several years. Creditor repayments w ftx funds in play, insider restitution in play
SBF's main hope at reducing sentence is to help in these matters
FTX account withdrawers fine, madoff analogy inaccurate
Where Madoff analogy more apt is in mass indictment (50 ppl were indicted in Madoff contagion)
SBF can't really turn on his own staff as regs likely have enough there from existing pleas
He may find his only option is to turn on US crypto firms closest to his conspiracies
Dec 18, 2022 • 6 tweets • 1 min read
With realignment and disintermediation continuing, much of market structure of foreign exchange trading will likely change drastically in the coming years
A regulated perpetual swap FX ECN with daily exchange-for-physical market--where delivery is facilitated by payments firms
Clients could onboard w a single MTF, trade nonexpiring fx derivatives to hedge risk, and when they seek delivery of currency1 vs currency2 can "elect to settle" bliaterally against a panel of payments brokers similar to what they'd currently do against say Western Union
Dec 12, 2022 • 5 tweets • 1 min read
My thoughts on video games vs touch grass (and I don't think it's a binary thing necessarily)
Lots of games today are too simple and easy
They're focused on giving you the illusion of control and the illusion of progress. As long as you put in time and or money, you'll improve
This becomes very appealing to some, and it's a dangerous loop bc whenever they compare the real world to games, they are struck by how much more complex and difficult the real world is
This causes a retreat into the safety of the online world and a rejection of difficulty
Dec 11, 2022 • 7 tweets • 2 min read
Reflecting back, the real injustice is against the firms that didn't partake in any rehypothetication or flywheel trades, and thus grew much slower than their peers during the bull mkt
Their biz models looked much weaker than otherwise bc they had to compete w flywheelers
In a late biz cycle bull mkt where the structural risks in flywheeling are poorly understood, those who don't join in end up looking like grumpy old fools who haven't accepted some new paradigm. Investors may even ask for mgmt change to push the firm into flywheeling
Dec 11, 2022 • 6 tweets • 2 min read
Just to be clear, when I discuss how sbf/ftx/alameda hunted clients including ourselves, I'm not whining about it. Regulators and prosecutors will do their jobs. I've moved on.
Au contraire I think crypto trading industry deserves much of the pain its feeling. It was all here.
MSM didnt put gun to my head and say trade on FTX. Our own greed did. They had better liquidity and terms than others could offer bc the secret ingredient was crime.
Same is true for many of you, whether it was ref links or sponsorships. Whether it was collat terms or fees.
Dec 9, 2022 • 5 tweets • 1 min read
Had a call yesterday w someone who asked "how come you and Do Kwon came back right after FTX went down, is it just to deflect from your own issues?"
I replied Do Kwon has been building on Luna classic + luna2 literally continuously and hasn't taken more than a week Twitter break
As for myself, I have firmly said we were hunted since my July Bloomberg interview. Go back and read it.
Simply the truth, but one so inconvenient that at the time my own advisors didn't want me to say it bc it could be "bad optics" and seen as "deflecting"
Dec 8, 2022 • 5 tweets • 1 min read
There's this notion that "Luna would've failed anyway, if Alameda/FTX + affiliated parties used their clients' assets and positions to orchestrate an elaborate attack on it then who cares" in some pockets
This actually gets to a basic white hat vs black hat argument
If you think theres a design flaw in something, you could try to help fix it. Black hat hacks are also illegal
The fact that some leaders of the industry decided it made more sense to attack it in such a pvp way, and to sabotage any possible recovery, is the most bearish thing
Dec 7, 2022 • 4 tweets • 1 min read
They took us to see Albany, where they lived
There was a card game in one of the living rooms
Later we went to the padel ball courts and played a few rounds of padel
Constance drove us around a bit in her car, we visited her lovely house and cats
Someone mentioned that SBF encourages his staff to date each other
It was a source of pride in how tight knit the community was
Caroline and Trabucco were friendly, we talked about mkts briefly
Dec 4, 2022 • 10 tweets • 2 min read
I went to the Bahamas in late Apr and met most of the FTX team for the first time in person. They were pretty welcoming and engaging. This will be first in a series of random recollections from that trip
I took this photo a few min before a dinner started
They sat SBF across from me but unfort he had some business to attend to so only stayed 15min
I ended up in a 3hr debate w Ramnik from FTX Ventures about effective altruism
Dec 1, 2022 • 4 tweets • 1 min read
1) ftx and Alameda have been commingled since inception 2) SBF doxxed himself as insolvent since July, the reason the mkt knew was bc of his frantic actions
a) fake bailout of lenders
b) pissing off eq investors by raising downround
c) asking for money in first mtg abroad
3) if you watch the Matt Levine interview v closely, you will better understand what happened in May/Jun also. Look at how he discusses opportunity in engineering and then buying huge liquidations 4) re-read some old Trabucco threads on liquidations 5) understand ftt origins
Nov 27, 2022 • 5 tweets • 1 min read
I think MSM's take on SBF comes from a much more deepfelt POV than ppl realize, which is that all crypto is a scam anyway and at least this guy was doing some good (defined by them) w it. Fact that he admitted it was performative is irrelevant, as they are not intentionalists.
They would argue that crypto industry itself allowed FTX to get this big, so whatever blight is upon them is upon all. SBF harnessed the collective greed of the industry and transmuted it into a modicum of good; he squeezed blood from a stone.
Nov 26, 2022 • 8 tweets • 2 min read
I had an intense dinner conversation back in Apr w a Melbourne-based family office. He was an ardent impact investor who rejected crypto as well as consequentialism. He asserted that we must acknowledge the true costs of hype cycles and also that ends do not justify means.
He believed that capitalistic endeavors must in and of themselves directly create a better world, that it is not enough to use wealth generated from capitalism itself to later build that world.
Nov 22, 2022 • 9 tweets • 2 min read
I think the space can recover faster if
1) regulatory cleansing of rampant insider trading + conflict of interest at crypto firms, esp US-based
2) development of a barbell approach: on the one hand highly transparent custodians+exchanges, on the other hand self-custody+DeFi
3) new generation of investors and builders focus less on ponzinomics
4) strongform focus on decentralization even if it takes much longer
5) focus on growth that benefits users and creates permanently valuable communities
6) regs on marketing / PR / lobbying
Nov 22, 2022 • 4 tweets • 1 min read
A central idea in Tim Keeley's contention that theres no such thing as a "critical period to learn languages" is identity malleability
Reason why children learn languages (and cultures) quickly is bc they can readily adopt new identities without fear of suppressing the old
He argues the inability to learn a foreign lang to native ability, or to adopt the local dialect of a place, always comes from a notion of self
His paper on Russian Israeli and Arab Israeli accents in Hebrew is seminal, showing how tribe identity is crucial in shaping speech
Nov 21, 2022 • 5 tweets • 1 min read
Several antecedents to recent turmoil can be found by analyzing mar2020
1) MMs demanding nonliq terms due to unreliable cross-exch basis
2) naive belief in communitarian backstop (ppl decided not to margin call each other)
3) naive belief in internalizing liquidations
Blockfi publicly declared they didnt margin call anyone below 5.4k even tho price went to 3.6k
Lenders didnt margin call Babel or Celsius and waited for mkt to recover
Meanwhile many careful trading firms blown out (bitmex basis fell $1k+ below other venues, 90% of OI liqed)
Nov 10, 2022 • 4 tweets • 1 min read
So a surreal thing happened a few weeks ago, by a beach during sunset. 10 german teens 5 guys 5 girls, all drunk, waded waistdeep into the ocean, taking tiktoks of the moment
Riptide started pulling them in deeper, one guy said "lets go back," the group ignored
Next thing you know theyre getting submerged, fast, by the current
Two girls pass out, one guy said "lets lock arms," one girl said "you take them back, i can swim"
Seven come back fine, two bodies roll onto the beach, one other unfound until 12 hrs later, 1 km away, dead
Nov 9, 2022 • 6 tweets • 1 min read
There I was, surfing the wave of waves, next moment wiped out, board broken, rocks reefs everywhere
The sudden pain of business failure and loss of purpose, as a golden child of the industry + biz cycle more broadly, was as difficult as the ensuing ostracization and demonization
To all those who supported us throughout, thank you, I am deeply grateful for your empathy and compassion
To all those who did not but reserved judgment, I understand your skepticism, thank you, I am deeply grateful for your patience and forbearance
24 subscribed