What's Up With Crypto? 3 3

[GoldFinger1969]

On 11/21/2022 at 3:32 PM, Quintus Arrius said:

Another after-action assessment from today's on-line New York Times..."FTX's $32 billion valuation was a fantasy, but nobody bothered to look at it closely. "How do you make a multi-billion company disappear in a week?

"For Sam Bankman-Fried and his crypto exchange FTX, the simple answer is that a leaked balance sheet leads your biggest rival, himself under Federal scrutiny, to instigate a sort of "bank run" you cannot possibly cover, exposing billions of dollars in shortfalls you apparently created by riskily investing money that wasn't yours.

"And revealing yourself, in the process, to be a very new kind of financial villain----one who pitches not just the prospect of profit but also deliverance from the corrupt speculative system in which you 'made' your 'billions.' "

We are dealing with multiple potential items with FTX:

• LEVERAGE:  Borrowing money to buy anything risks an implosion even if the asset is a AAA-rated Treasury bill/bond.  Lever something up 30-to-1 like Carlyle Capital did about 15 years ago, and you lose it all if the asset goes down about 3%, even if it is a "safe" investment.
• BAD INVESTMENTS:  FTX's affiliated firm via Sam Bankman-Fried, Alameda Research, appears to have been the real sinkhole.  Apparently, they lost money on crypto currencies in the last year....they also used hard cash to "bail out" other crypto players.  To finance and paper-over their losses/expenses, they borrowed money from FTX.  But that borrowing..... 
• STEALING CUSTOMER ACCOUNTS:  You can NOT co-mingle customer accounts with proprietary balances and firm capital.  JP Morgan Chase probably has $400 billion in capital; they can invest and speculate with that (subject to regulations) but JP Morgan Chase can not borrow from the millions of client checking or savings accounts at Jamie Dimon's (CEO) whim.

On 11/21/2022 at 3:32 PM, Quintus Arrius said:

Note:  According to Forbes, which cited a Pew research study conducted this past spring, "almost half of all American men ages 18 to 29 say they have invested in, traded or used a form or crypto currency."

And that's probably why half of all American men aged 18-29 don't have an IRA or Roth IRA or 401(k) or retirement nest egg.    Money for crypto, strip clubs, partying, Atlantic City and Vegas and DraftKings and FanDuel....but they don't have the $$$ to save for when they are older. 

Edited November 21, 2022 by GoldFinger1969

[Henri Charriere]

🐓:  What have you got socked away for your retirement, Q?

Q.A.:  Why you... and your brothers, "here" and "over there."

🐓:  Ever think of a reunion?

Q.A.:  Well, if you must know, yes, the thought has crossed my mind. Two things militate against it: 1- the #1 ranked collector here went all out, and he's not thru yet.  I believe he's holding the two MS-68's that disappeared close to his vest, and is holding off introducing them until he can locate the best examples possible for the two holes left in his set, and 2-  What's the point of having a reunion if I have to play second fiddle as a has-been?      

Edited November 22, 2022 by Quintus Arrius
Second thoughts...

[GoldFinger1969]

Crypto continues to get hit.  Any more weakness and we could get forced selling if we go below 16,000 on BitCoin.

[Henri Charriere]

On 11/29/2022 at 2:07 AM, GoldFinger1969 said:

Crypto continues to get hit.  Any more weakness and we could get forced selling if we go below 16,000 on BitCoin.

What is this... a prelude to True Confessions?     

[GoldFinger1969]

On 11/29/2022 at 4:12 PM, Quintus Arrius said:

What is this... a prelude to True Confessions?   

Some buyers who borrowed $$$ to buy BitCoin and crypto -- like the firm MicroStrategy -- can't hold like some retail holders who aren't on borrowed $$$.

[World Colonial]

Therre is an article on CNBC.com today about supposedly financially knowledgeable people getting caught up in the FTX debacle.  I can't find it, but one guy has $600K tied up now.  Apparently, it's his life savings, most of it from a home sale earlier this year.  His family is living with the in-laws and was intending to use that money to build another.  He'll probably end up in divorce court.

Collectively, they fell for something too good to be true, in this instance above market deposit rates which they naively believed to be realistic.  One reason they gave was backing by well-known celebrities and investors. 

They should have focused on custodial risk instead.

[VKurtB]

FOMO is the most vile thing that exists. 

[Henri Charriere]

It is my understanding that some well-known celebrities are being sued because they promoted or otherwise endorsed a "product."  I can't see being liable for something no one, basically, knew anything about.  Caveat emptor!

[World Colonial]

On 12/6/2022 at 7:22 PM, Quintus Arrius said:

It is my understanding that some well-known celebrities are being sued because they promoted or otherwise endorsed a "product."  I can't see being liable for something no one, basically, knew anything about.  Caveat emptor!

I've read the same thing, but not the legal basis for any of it.

I consider it utterly absurd.

[VKurtB]

On 12/6/2022 at 7:32 PM, World Colonial said:

I've read the same thing, but not the legal basis for any of it.

I consider it utterly absurd.

Depending on the state, celebrities have special liability for endorsing commercial things, just as public figures have a higher burden of proof in libel cases.

For it to be otherwise would create a system in which celebrities can act recklessly with impunity. Liability is theirs. 

[GoldFinger1969]

On 12/6/2022 at 6:55 PM, World Colonial said:

Therre is an article on CNBC.com today about supposedly financially knowledgeable people getting caught up in the FTX debacle.  I can't find it, but one guy has $600K tied up now.  Apparently, it's his life savings, most of it from a home sale earlier this year.  His family is living with the in-laws and was intending to use that money to build another.  He'll probably end up in divorce court.

I don't understand how some people can be that financially irresponsible.  In an age where prudent investing options are 24/7, to get taken in by crypto and to have your entire life savings in a super-risky asset is insane.

These people always seem to end up with hucksters and frauds, never with people like myself who were honest and knew what we were doing.  I got the small fish, the big ones went to the scamsters who ripped them off. 

On 12/6/2022 at 6:55 PM, World Colonial said:

Collectively, they fell for something too good to be true, in this instance above market deposit rates which they naively believed to be realistic.  One reason they gave was backing by well-known celebrities and investors. 

They should have focused on custodial risk instead.

The celebrities didn't back anything.  They made a terrible decision and they want someone else to pay for it.  The celebrities never said there was no risk, FDIC insurance, etc.

The custodial risk is key.  But fraud has nothing to do with endorsers.  That is on Sam Bankman-Fried, who seems to be getting a pass from the media elite.  I'm sure it has nothing to do with his 2 Stanford Law professor parents or the political donations he made. 

[GoldFinger1969]

On 12/6/2022 at 6:55 PM, World Colonial said:

Therre is an article on CNBC.com today

Got a link, can't find it. 

[GoldFinger1969]

On 12/6/2022 at 9:01 PM, VKurtB said:

Depending on the state, celebrities have special liability for endorsing commercial things, just as public figures have a higher burden of proof in libel cases.  or it to be otherwise would create a system in which celebrities can act recklessly with impunity. Liability is theirs. 

An advertisement is not a legally binding affirmation that you won't lose money.  If I see a baseball commercial, decide to play, and then get hurt -- do I sue the sporting goods company ?

These people have a cause of action against SBF, who many now don't want to sue or criticize because that's the guy they trusted.

People want to blame everybody else for their financial mistakes except the #1 person responsible:  themselves. 

[VKurtB]

On 12/6/2022 at 10:58 PM, GoldFinger1969 said:

An advertisement is not a legally binding affirmation that you won't lose money.  If I see a baseball commercial, decide to play, and then get hurt -- do I sue the sporting goods company ?

These people have a cause of action against SBF, who many now don't want to sue or criticize because that's the guy they trusted.

People want to blame everybody else for their financial mistakes except the #1 person responsible:  themselves. 

Oh they surely do have a cause of action against SBF, who may or may not be insolvent, but according to TV news stories for weeks now, they ALSO have a cause of action against the endorsing celebrities. Lawsuits against them are already in the courts. 

Edited December 7, 2022 by VKurtB

[GoldFinger1969]

On 12/7/2022 at 12:06 AM, VKurtB said:

Oh they surely do have a cause of action against SBF, who may or may not be insolvent, but according to TV news stories for weeks now, they ALSO have a cause of action against the endorsing celebrities. 

For what ?  For liking the product ?  We're talking fraud.

I hope the judge assigns court costs to the plaintiffs for frivilous lawsuit.

[Henri Charriere]

Eric Adams, the mayor of New York City said if he won the election (which he did) he wanted to be paid in crypto currency.  I never heard anything after that initial news release.

[VKurtB]

On 12/6/2022 at 11:10 PM, GoldFinger1969 said:

For what ?  For liking the product ?  We're talking fraud.

I hope the judge assigns court costs to the plaintiffs for frivilous lawsuit.

It’s in court in California already. Also, Texas securities regulators are after the celebrities. 
“Tom Brady, Steph Curry, Larry David probed by Texas over FTX endorsements”

Edited December 7, 2022 by VKurtB

[VKurtB]

On 12/6/2022 at 11:20 PM, Quintus Arrius said:

Eric Adams, the mayor of New York City said if he won the election (which he did) he wanted to be paid in crypto currency.  I never heard anything after that initial news release.

For Adams, he’s worth every lost dime. 

[GoldFinger1969]

On 12/7/2022 at 12:27 AM, VKurtB said:

It’s in court in California already. Also, Texas securities regulators are after the celebrities. 
“Tom Brady, Steph Curry, Larry David probed by Texas over FTX endorsements”

Larry David said NOT TO invest in Crypto. 

 

[World Colonial]

On 12/6/2022 at 9:01 PM, VKurtB said:

Depending on the state, celebrities have special liability for endorsing commercial things, just as public figures have a higher burden of proof in libel cases.

For it to be otherwise would create a system in which celebrities can act recklessly with impunity. Liability is theirs. 

I only took a few law classes at university, back in 1986 and 1987.  I know it wasn't comprehensive, but generally to win damages you had to 1) have a contractual relationship with "consideration" 2) suffer a loss and 3) prove the defendant was negligent causing your loss.

I know this doesn't cover everything (like libel or slander).

Is this right?

Seems to me that this is something new which the was just "made up", again.  I'm pretty confident no would have won this type of claim 35 years ago.

These plaintiffs suffered a loss but blaming an endorser is ridiculous.  So, everybody who lost money is going to claim it was because they couldn't help being persuaded by these celebrities that this was such a fantastic "investment"?

You can't "fix stupid" and that's what applies here.  If anticipating the potential consequences by every insufficiently_thoughtful_person is the legal standard, this country is truly doomed.

[World Colonial]

On 12/7/2022 at 12:27 AM, VKurtB said:

It’s in court in California already. Also, Texas securities regulators are after the celebrities. 
“Tom Brady, Steph Curry, Larry David probed by Texas over FTX endorsements”

I am against crypto regulation for many reasons, but the first is that it confers legitimacy.

This is a** covering, plain and simple.  In typical fashion, regulators close the barn door after the horses have bolted.

[World Colonial]

On 12/6/2022 at 11:25 PM, GoldFinger1969 said:

I don't understand how some people can be that financially irresponsible.  In an age where prudent investing options are 24/7, to get taken in by crypto and to have your entire life savings in a super-risky asset is insane.

The answer is easy.  When it happens on a large scale, it's due to a mania.  This is how people behave during a mania.  I assume you've read it in historical counts.

The real solution to this situation is to let enough people learn their lesson by eating their losses.  Instead, you now have the "industry" calling for regulation which they previously opposed.

Crypto is literally nothing.  Regulating nothing is plain stupid, but that's what's almost certainly going to be the outcome.  It won't prevent people from losing money in the future, even if it doesn't happen under the same circumstances. 

It won't prevent these people from losing money because when you pay something for nothing, well....you can do the math.

On 12/6/2022 at 11:25 PM, GoldFinger1969 said:

The celebrities didn't back anything.  They made a terrible decision and they want someone else to pay for it.  The celebrities never said there was no risk, FDIC insurance, etc.

Yes, I know that, but that's what I infer is the claim, presumably because they were paid to promote it.  I presume this is the entire legal basis of the lawsuit.  The celebrities received money and were negligent in (supposedly) not doing due diligence on the "product" they endorsed.  If correct, it's trying to "fix stupid".

On 12/6/2022 at 11:25 PM, GoldFinger1969 said:

The custodial risk is key.  But fraud has nothing to do with endorsers.  That is on Sam Bankman-Fried, who seems to be getting a pass from the media elite.  I'm sure it has nothing to do with his 2 Stanford Law professor parents or the political donations he made. 

I agree.

[VKurtB]

On 12/7/2022 at 7:19 AM, World Colonial said:

I only took a few law classes at university, back in 1986 and 1987.  I know it wasn't comprehensive, but generally to win damages you had to 1) have a contractual relationship with "consideration" 2) suffer a loss and 3) prove the defendant was negligent causing your loss.

I know this doesn't cover everything (like libel or slander).

Is this right?

Seems to me that this is something new which the was just "made up", again.  I'm pretty confident no would have won this type of claim 35 years ago.

These plaintiffs suffered a loss but blaming an endorser is ridiculous.  So, everybody who lost money is going to claim it was because they couldn't help being persuaded by these celebrities that this was such a fantastic "investment"?

You can't "fix stupid" and that's what applies here.  If anticipating the potential consequences by every insufficiently_thoughtful_person is the legal standard, this country is truly doomed.

What if the paid celebrity endorsers were paid from stolen account holder funds?

[World Colonial]

On 12/7/2022 at 10:19 AM, VKurtB said:

What if the paid celebrity endorsers were paid from stolen account holder funds?

I agree that's a factor, but wouldn't the plaintiff have to prove they either did or should have known it?

I guess that's a basis of the claim?

[VKurtB]

On 12/7/2022 at 9:23 AM, World Colonial said:

I agree that's a factor, but wouldn't the plaintiff have to prove they either did or should have known it?

I guess that's a basis of the claim?

That’s what trials are for, I suppose. 

[GoldFinger1969]

On 12/7/2022 at 10:25 AM, VKurtB said:

That’s what trials are for, I suppose. 

This is why courts are overjammed.  Any sensible judge should throw the case out immediately and assign court costs to the plantiff.

If not, maybe I can sue McDonalds for my high cholesterol. 

Or Coca-Cola.

Or 3 Musketeers bar and Mars....

Or that steak company !

 

Edited December 7, 2022 by GoldFinger1969

[VKurtB]

On 12/7/2022 at 9:33 AM, GoldFinger1969 said:

This is why courts are overjammed.  Any sensible judge should throw the case out immediately and assign court costs to the plantiff.

If not, maybe I can sue McDonalds for my high cholesterol. 

Or Coca-Cola.

Or 3 Musketeers bar and Mars....

Or that steak company !

 

The bar for throwing a case out is very high, or very low, depending on your preferred metaphor. You know how they say you can indict a ham sandwich? Well it turns out you can sue the mustard on that sandwich. 

[Henri Charriere]

This talk of mania and how people would react is probably going to be covered in Sociology classes for years to come.  It brings to mind that scene when someone on the floor of the stock exchange [in the 1983 movie, "Trading Places"] exclaims in a state of excitement: "Look, the Duke Brothers are trying to corner the market!" With a crop report in hand, the Dukes had every reason to believe was authentic, they proceeded to buy with confidence----until Eddie Murphy and Dan Ackroyd spoke up at a strategic moment, and shouted Sell! resulting in a massive sell-off and unrecoverable losses for the Dukes who also suffered the dignity of hearing a member order their seats on the exchange be sold.

Probably the same kind of mindless reactive behavior with Bernie Madoff. Everybody hears about the investments being made by prominent people and nobody wants to be left out. Human nature.  Who can blame them?

[I have fought the inclination to retread this thread and single out the few who spoke out with such self-assured confidence in defense of crypto: "What say ye now, ye of such unabashed great faith?" but believe they have suffered enough.]

[GoldFinger1969]

[ShelHarby]

Bitcoins do not have a single center. No legal entities or individuals would provide guarantees or profit from attracting new users. There are only so-called cryptocurrency exchanges, where all transactions with this type of asset occur. However, these structures cannot influence the rate of this cryptocurrency. Based on this, it is wrong to say that bitcoin is a scam. Of course, those who came to the system among the first have some advantages, and the most important of them is the exchange rate difference of the virtual currency. But they came to the system on their own and not at the invitation of some company promising bright prospects. And look at the experience of previous years. There are a lot of people who made decent money on the same bitcoin using a bitcoin mixer, and there are those who invested a lot of money and did not take anything out.

Edited January 4, 2023 by ShelHarby