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All in.
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LOL LAW and CRAPTO collide in predictable ways!
Nah, I looked into these sort of accounts. This was exactly what the TOS stated. This isnt lol law. Not really lol crypto as much as lol rubes for not understanding that they were making an unsecured loan that was nothing like holding money in a deposit account.
This should have absolutely been regulated so that it was only available to qualified investors. It was essentially start up financing.
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Ya these things were very very clearly stated as unsecured loans and as such lumping the people making the loans in with the rest of the unsecured creditors makes sense.
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That isnât significant at all. The companies were actually laughably transparent in the risks the customer was taking. Their customers just didnât know or care.
Procedurally itâs fine, but from the standpoint of âwas this what your average investor was expecting?â the answer is probably not and regulation on how various financial instruments should be marketed would probably lead to better aligning your average investor expectations with legal obligations.
Sure, but the problem is kind of twofold because you have a % of crypto investors who are willing to take that risk and those folks would had been fine with despositng money into an interest bearing account run by Fult tilt back in their hey day. On the other side, how would you protect those who truly felt that their money was safe other than literally stating that their money was unsecured - which is also a part of the regulation. Do you only allow high income earners the opportunity to invest in these companies?
âOver the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,â Rubin wrote. âAside from physical collectibles (trading cards) driving 99% of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.â
Oh look, getting rugged by another guy whoâs mad that flooding the market with hundreds of thousands of stock image jpegs that exceeded actual demand by orders of magnitude didnât result in instant and sustainable mega profits. Shocking that a company whose entire business model is enormous markup on Chinese sweatshop apparel didnât have any actual ideas here.
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Yeah, it both sucks for those people and was entirely predictable. People talked about using BlockFi here and got roasted for it. Then, a few months later, this was posted as an explanation of how BlockFi offered those juicy yields:
Looking back at this 4/15/21 article is interesting.
This is a Sponsored Deep Dive on a company Iâve been wanting to dig into for a long time. BlockFi offers up to 8.6% APY on deposits, which is obviously tempting and also confounding. Iâve had so many text conversations with friends that go something like, âI want to do this, but it has to be bullshit, right? How does that even work? We need you to do a Not Boring on this.â
Iâm happy to report that it is not bullshit, and I have the receipts to prove it.
[submitted too soon]
The first question anyone has when they hear about BlockFi is: âWhatâs the catch? 8.6% APY sounds too good to be true. That canât be legit.â
Yes, indeed. That seems like a very good initial response.
I went DEEP to understand how they do it, and itâs legit.
Oh, phew, thatâs a relief. I wonder how that works.
Essentially, BlockFi arbitrages the fact that traditional finance and crypto donât like to deal with each other.
This is⌠what?
To a client, BlockFi looks and feels like an online bank. When I set up my account, it felt very much like setting up a regular online bank account. [âŚ] Within two days of starting the process, I now have a meaningful amount of my net worth in BlockFi. I wouldnât recommend it if I didnât trust it for myself. And it was easy.
This is all very bad!
But how again does the high-yield make sense?
Thereâs this tension in crypto: thousands of people have made millions of dollars by buying and hodling bitcoin, ETH, and other coins. On-chain, theyâre very wealthy. But to actually use that wealth to buy things, they need to sell coins.
Yes, go on.
BlockFi solves that by offering USD loans collateralized by bitcoin at rates as low as 4.5% APR.
I see. So theyâre letting crypto holders borrow money against their crypto. That seems like something theyâd want. But something seems wrong. I just canât put my finger on itâŚ
The BlockFi Interest Account is normally where people start to give me quizzical looks, because BlockFi offers up to 8.6% APY on stablecoins and 6% APY on bitcoin.
Yes, this is it - how on earth is it sustainable to borrow at 8.6% and lend at 4.5%? That is the worldâs worst banking model. It seems like the friends youâre talking to are quite smart.
Obviously, there is no free lunch
Obviously
Still⌠8.6% is a lot. It beggars belief. I didnât understand it at all, which is why I wanted to write this piece in the first place, to dive in and see if I could figure it out and explain it.
Youâre doing a bang-up job so far.
Remember from earlier that banks want to pay high interest rates. It attracts deposits, which enable more lending, which makes more money.
Thatâs true as long as they lend at higher rates than they borrow. BlockFi apparently doesnât (didnât)!
Anyway, the column goes on to argue that BlockFi is engaging in arbitrage, but that doesnât appear to be true, and Iâm tired of copy-pasting.
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Yep, this is what I posted
Bankruptcy court basically just affirmed yes this is clearly what it was.
The dangers of shitty regulation.
This guy Friedberg was Ultimate Betâs lawyer.
Jan 5 (Reuters) - FTXâs former top lawyer Daniel Friedberg has cooperated with U.S. prosecutors as they investigate the crypto firmâs collapse, a source familiar with the matter said.
Friedberg gave details about FTX in a Nov. 22 meeting with two dozen investigators, the person said. The meeting, held at the U.S. Attorney for the Southern District of New Yorkâs office included officials from the Justice Department, Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission, the source said.
Emails between attendees scheduling the meeting with those agencies were seen by Reuters.
Friedbergâs cooperation has not been previously reported. He has not been charged and has not been told he is under criminal investigation, the source said.
Instead, he expects to be called as a government witness in Bankman-Friedâs October trial, the person said.
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Feels like if your lawyer is flipping on you youâre turbo fucked.
just when it was starting to get good, you thought, âwtf am i doing?! ahahaha
Had some funds in BlockFi for a while but something always felt âoffâ about it and fortunately had the common sense to get out of there months before it all collapsed (but not the common sense to have avoided it in the first place (Pomp shilling it should have been my first clue)).
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Man I really hope that thereâs no real connection between crypto firms and regulated financial institutions. Cause thatâs how we get financial crises.
Anyway,
Thereâs not enough money in crypto to take down financial firms systemically. Maybe 1 or 2 at most.
After gaining access to his brotherâs wallets, the newly flush Gary took out a $1.2 million loan through BlockFi, using bitcoin as collateral, to purchase a luxury condo in Cleveland.
He also âspent bitcoin extravagantlyâ at strip clubs and on private jet flights. Photos recovered from his cell phone show a lavish evening out at a club: Gary bathing in a tub full of cash, a blissful smile on his face as scantily-clad dancers mingle behind him. A text reveals that Gary paid $122,232 for the privilege of swimming in the pool of 100,000 one-dollar bills surrounded by the dancers. The massive bill included $15,000 for a âdancer feeâ and $25,000 for the room.
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