>While many are celebrating the news as a testament to the resilience of blockchain technology and its ability to track and recover lost funds, others remain skeptical and express concerns about the long-term viability of FTX.
> The road to recovery for FTX began when the company enlisted the help of a team of forensic accountants, legal experts, and blockchain analysts to track down the lost funds. Their diligent efforts led to the identification and recovery of the missing assets, which had been scattered across various wallets and storage facilities.
This article offers zero details on what exactly these assets are and where they are at. Why should I believe any of this?
>With the recovery of $7.3 billion, FTX's journey to redemption has begun. The saga serves as a cautionary tale for the cryptocurrency world, emphasizing the importance of robust security measures and due diligence to protect both investors and the broader digital asset landscape.
This sounds like some kind of PR campaign. For an article that mentions "the resilience of blockchain technology and its ability to track and recover lost funds" it's quite ironic that it's also completely devoid of details. One would think that, after this whole obnoxious episode, FTX would want to prove that these $7.3B in "assets" actually exist.
Edit: Just realized this is from that NFT pump and dump site that Horowitz invested in.
I liked the way Matt Levine put it: if you’re the sort of company that sometimes randomly finds large amounts of assets you had lost track of, you should be worried you might later find large amounts of liabilities you had lost track of.
> This article offers zero details on what exactly these assets are and where they are at.
Yes. There's a bit more detail in a court filing here.[1] It's a shiny PowerPoint type presentation with little supporting data.
In their latest court filing, FTX only claimed to have $6.2 billion in assets recovered. They had $5.4 billion back in January. The additional money is $0.6 billion from settlements with some parties involved with FTX, and $0.3 billion in cash from somewhere. The remaining $0.9 billion is the crypto assets going up.
There was a court hearing today, which is probably where the news story originated.
No transcript yet.
There still is an "FTX", and the new management is proceeding as if they expect to come out of this with a viable company. This is a chapter 11 reorganization, not a straight liquidation. At least for now.
Meanwhile, Bankman-Fried is trying to get the court to release funds to cover the premiums on the officers and directors insurance policy which might pay his legal bills.[2]
> The road to recovery for FTX began when the company enlisted the help of a team of forensic accountants, legal experts, and blockchain analysts to track down the lost funds.
This pretty much encompasses why crypto currencies wont work. Most folks cant afford forensic accountants, legal experts.
Cryptocurrencies do work. Maybe you can connect what's happened here to some specific shortcoming of cryptocurrencies - but it's not clear to me that anybody would need a forensic accountant just by nature of cryptocurrency.
I have a bunch of Crypto in a hardware wallet. Properly maintaining your coins is absolutely not something average people can do. I'm not trying to pat myself on the back here, I'm just trying to point out that doing this right isn't easy. "Cryptocurrencies do work" is true for some definition of "true" that doesn't include normal, largely non-technical people.
I know I probably have a minority point of view, but I don't see Bitcoin as primarily competing with payment systems (e.g. credit cards). I see it as primarily competing with currency. One could envision a credit card denominated in BTC that offers transaction reversibility and dispute resolution features. Additionally, for those who may be uncertain about their ability to securely manage their own private keys, a BTC-denominated "bank account" could be a viable solution.
I'm having trouble following your argument (disclaimer: I understand the philosophical arguments underlying BTC and crypto in general, some technical details of how to manage it, little of the math). You say that you don't see it competing with payment systems but as a currency, but isn't the benefit BTC is supposed to offer the infrastructure itself? How is that not a "payment system", in the abstract sense?
For example:
>One could envision a credit card denominated in BTC that offers transaction reversibility and dispute resolution features.
> but isn't the benefit BTC is supposed to offer the infrastructure itself?
My point is that the "infrastructure" is nice, but it's not the sole advantage of Bitcoin. The primary benefit, in my opinion, lies in its predictable and unalterable supply mechanism, which prevents any entity from manipulating it. While the on-chain payment system and the relative ease of self-custody are great features (and necessary for the system to work), they are not essential for enjoying the benefits of Bitcoin as a currency with an immutable supply. You can still reap those benefits when using "off chain" payment systems that use BTC balances (e.g. credit cards/PayPal/Cash App/etc.). Also, Bitcoin has an open API, making it easy to create payment systems on top of it (the equivalent for USD would be... obtaining an account at the Federal Reserve? transporting cash?).
Hope it makes sense, let me know if anything is still unclear.
Thanks for the genuine response (I know BTC arguments on HN can get repetitive and dumb).
>The primary benefit, in my opinion, lies in its predictable and unalterable supply mechanism, which prevents any entity from manipulating it.
I agree, and to add to this point the supply is fixed. No more printing. I don't necessarily disagree with your response, it's just that I find this
>...the relative ease of self-custody
hard to believe. It's not easy. The Average Joe just buys BTC on Coinbase (or cashapp or whatever) and it sits there. Those are not their Coins (we all know this). Maybe I've missed something in the past couple years that's made things easier, or maybe I'm just a puritan who insists on hardware wallets.
Anyway, I'm mostly arguing against myself here because I do think that the fiat system is a problem. But again, even if I make that argument I struggle to see BTC as an actual currency and not as some sort of reserve asset. I don't think there's an example beyond Gold where something has existed as both. And making the argument that BTC is the same as Gold is a very strong argument to make, because without electricity and the internet my BTC is worthless. Suppose for a moment that the US does troll itself into a WWIII scenario with Russia and/or China in the next couple years - a war where Internet infrastructure will obviously be a target. Is BTC still worth anything? Gold will still be worth something, because it has physical uses in war time. But BTC?
You can arguably be your own btc bank a hell of a lot easier than you can be your own usd bank.
I know I don't have room for a vault full of gold that is as theft-proof as even basic cryptography, and I certainly don't have direct api access to the ACH network or any of the other networks a bank does.
The necessary steps to host your own btc are not nothing, but compared to that they are practically trivial.
My point was that it would have likely been harder for them to track down missing cash. We're dealing with a fraud case here, that's why there is a specialized recovery team.
Does anyone else find the phrasing of this article confusing? It seems disingenuous to state "FTX discovers $7.3b in assets" when most of those assets were never lost. As I understand it, they've discovered an additional $0.8b; $7.3b is the total discovered so far. They're still insolvent.
> As I understand it, they've discovered an additional $0.8b
That’s right, and that’s since January. Plus, that’s at least partly (mostly?) due to crypto prices, according to the Reuters report[1]:
> FTX has benefited from a recent rise in crypto prices, Dietderich said.
... which is to the disadvantage of the people who held crypto at FTX, because at best they’ll apparently be partially compensated based on prices from November.
Reading the latest update from the bankruptcy, regulation and enforcement definitely would have helped - I suspect any appropriate auditor conducting a thorough audit would have very quickly realised that the business lacked any controls at all on expenditure (amongst many other issues).
Instead, their auditors claim they stand by their work as they weren't asked to audit any internal controls. For a company with billions in customer deposits, that should never have happened.
The growth in the recovered sum can likely be attributed to the recent upswing in cryptocurrency markets. I hope that this does not provide an undue advantage to SBF in his legal defense (e.g. "look FTX is solvent!").
“There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again.”
It's weird they say "discovered". I'm sure somebody knew the assets were there.
I feel it speaks to the Trustee's lack of diligence that it took them this long, and wonder what else they're missing. They ought to be getting disclosures under oath from everyone involved.
39 comments
[ 2.3 ms ] story [ 79.1 ms ] threadWhat long-term viability?
>With the recovery of $7.3 billion, FTX's journey to redemption has begun. The saga serves as a cautionary tale for the cryptocurrency world, emphasizing the importance of robust security measures and due diligence to protect both investors and the broader digital asset landscape.
This sounds like some kind of PR campaign. For an article that mentions "the resilience of blockchain technology and its ability to track and recover lost funds" it's quite ironic that it's also completely devoid of details. One would think that, after this whole obnoxious episode, FTX would want to prove that these $7.3B in "assets" actually exist.
Edit: Just realized this is from that NFT pump and dump site that Horowitz invested in.
Yes. There's a bit more detail in a court filing here.[1] It's a shiny PowerPoint type presentation with little supporting data.
In their latest court filing, FTX only claimed to have $6.2 billion in assets recovered. They had $5.4 billion back in January. The additional money is $0.6 billion from settlements with some parties involved with FTX, and $0.3 billion in cash from somewhere. The remaining $0.9 billion is the crypto assets going up.
There was a court hearing today, which is probably where the news story originated. No transcript yet.
There still is an "FTX", and the new management is proceeding as if they expect to come out of this with a viable company. This is a chapter 11 reorganization, not a straight liquidation. At least for now.
Meanwhile, Bankman-Fried is trying to get the court to release funds to cover the premiums on the officers and directors insurance policy which might pay his legal bills.[2]
[1] https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=...
[2] https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=...
This pretty much encompasses why crypto currencies wont work. Most folks cant afford forensic accountants, legal experts.
For example:
>One could envision a credit card denominated in BTC that offers transaction reversibility and dispute resolution features.
This is a payment system, right?
My point is that the "infrastructure" is nice, but it's not the sole advantage of Bitcoin. The primary benefit, in my opinion, lies in its predictable and unalterable supply mechanism, which prevents any entity from manipulating it. While the on-chain payment system and the relative ease of self-custody are great features (and necessary for the system to work), they are not essential for enjoying the benefits of Bitcoin as a currency with an immutable supply. You can still reap those benefits when using "off chain" payment systems that use BTC balances (e.g. credit cards/PayPal/Cash App/etc.). Also, Bitcoin has an open API, making it easy to create payment systems on top of it (the equivalent for USD would be... obtaining an account at the Federal Reserve? transporting cash?).
Hope it makes sense, let me know if anything is still unclear.
>The primary benefit, in my opinion, lies in its predictable and unalterable supply mechanism, which prevents any entity from manipulating it.
I agree, and to add to this point the supply is fixed. No more printing. I don't necessarily disagree with your response, it's just that I find this
>...the relative ease of self-custody
hard to believe. It's not easy. The Average Joe just buys BTC on Coinbase (or cashapp or whatever) and it sits there. Those are not their Coins (we all know this). Maybe I've missed something in the past couple years that's made things easier, or maybe I'm just a puritan who insists on hardware wallets.
Anyway, I'm mostly arguing against myself here because I do think that the fiat system is a problem. But again, even if I make that argument I struggle to see BTC as an actual currency and not as some sort of reserve asset. I don't think there's an example beyond Gold where something has existed as both. And making the argument that BTC is the same as Gold is a very strong argument to make, because without electricity and the internet my BTC is worthless. Suppose for a moment that the US does troll itself into a WWIII scenario with Russia and/or China in the next couple years - a war where Internet infrastructure will obviously be a target. Is BTC still worth anything? Gold will still be worth something, because it has physical uses in war time. But BTC?
You can arguably be your own btc bank a hell of a lot easier than you can be your own usd bank.
I know I don't have room for a vault full of gold that is as theft-proof as even basic cryptography, and I certainly don't have direct api access to the ACH network or any of the other networks a bank does.
The necessary steps to host your own btc are not nothing, but compared to that they are practically trivial.
This required that bitcoin be accessible, but it is not. Well you can call it an exotic currency
i.e. it's not 7.3B in n00tn00t tokens, where there's no market depth and they are therefore useless ...
Probably not if they are users funds, I hope everyone who was wronged gets their $ back.
That’s right, and that’s since January. Plus, that’s at least partly (mostly?) due to crypto prices, according to the Reuters report[1]:
> FTX has benefited from a recent rise in crypto prices, Dietderich said.
... which is to the disadvantage of the people who held crypto at FTX, because at best they’ll apparently be partially compensated based on prices from November.
[1] https://www.reuters.com/technology/bankrupt-crypto-exchange-...
I mean, yay, this is great news for depositors, but, um, assuming no malicious intent, this is perhaps not a good look for a financial company.
I'm not sure more regulations will help, but it may encourage depositors to be more diligent about who they store their money with.
Instead, their auditors claim they stand by their work as they weren't asked to audit any internal controls. For a company with billions in customer deposits, that should never have happened.
As it did in Japan, where the customers already got their money back.
As if I forgot where I put them and then my memory miraculously came back.
<sips coffee>
I feel it speaks to the Trustee's lack of diligence that it took them this long, and wonder what else they're missing. They ought to be getting disclosures under oath from everyone involved.