News BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

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The discussion highlights significant security issues surrounding Bitcoin exchanges, particularly focusing on the infamous Mt. Gox, which suffered a major theft leading to its bankruptcy. The exchange's management ignored critical warnings about its software's security flaws, resulting in millions lost and a tarnished reputation for Bitcoin. Other exchanges like Flexcoin and Canadian Bitcoins also reported substantial losses due to hacks and social engineering attacks. The conversation underscores the ongoing risks associated with Bitcoin transactions and the need for improved security measures in the cryptocurrency space. Overall, these incidents illustrate the vulnerabilities within the Bitcoin ecosystem that can lead to significant financial losses for users.
  • #301
Physics news on Phys.org
  • #302
Tom Brady, FTX spokesman, lost big, guess he has to keep playing a while longer

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  • #303
Seriously, think the death spiral for crypto started today

Crypto was a MLM for people who thought they were too smart for a MLM
 
  • #305
BWV said:
Seriously, think the death spiral for crypto started today
Maybe. What might and probably should have cryptobros worried is Binance, not FTX itself. I mean, a top 5 exchange failing isn't nothing, but Binance is bigger than the next 7 combined. At best, Binance acted unethically here. That alone should shake confidence that they are trustworthy with their customers' money. But if what they did was illegal they could be shut down. This could be like 2008 except instead of Bank of America maybe buying and then backing out of buying Lehman, they cut Lehman off at the knee, then got their own run because nobody trusts them anymore, then got shut down by the government.
 
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  • #306

That's today.
Office_Shredder said:
991 million dollars is approximately a billionaire. He's fine


Two days ago this was a 'safe investment' with him talking to capital hill leaders.

Today, some large fraction of his remaining net worth in is Robinhood stock. He's fine.:H
 
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  • #308
kyphysics said:
I was thinking of investing up to 1% of portfolio in BTC
The more I think about it, the less sense this makes.

Suppose you think that BTC will go back to its peak. That may sound improbable, but let's assume it That means your investment will go from 1.00 to 1.03. A whopping 3%. You can do better than this risk-free by buying T-bills.

Now if you say, "No, no, I am counting on returns from the other 99%", why are you taking 1% out of that?
 
  • #309
Vanadium 50 said:
The more I think about it, the less sense this makes.

Suppose you think that BTC will go back to its peak. That may sound improbable, but let's assume it That means your investment will go from 1.00 to 1.03. A whopping 3%. You can do better than this risk-free by buying T-bills.

Now if you say, "No, no, I am counting on returns from the other 99%", why are you taking 1% out of that?

This is just how diversified returns work? It makes perfect sense to put small parts of your portfolio in different uncorrelated assets.
 
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  • #310
nsaspook said:
Two days ago this was a 'safe investment' with him talking to capital hill leaders.
Video says that's a year ago. If I were him I'd stay in the Bahamas or find a warm non-extradition country.

[waves to the fbi agents who just started following me after I googled that]
 
  • #311
Vanadium 50 said:
The more I think about it, the less sense this makes.

Suppose you think that BTC will go back to its peak. That may sound improbable, but let's assume it That means your investment will go from 1.00 to 1.03. A whopping 3%. You can do better than this risk-free by buying T-bills.
Huh? BTC's peak was $64,000. Did you mean to say 3.03? And cryptobros obviously don't think that was anywhere close to the ceiling.
Office_Shredder said:
This is just how diversified returns work? It makes perfect sense to put small parts of your portfolio in different uncorrelated assets.
Yes, and the higher the risk and return, the smaller the investment. @Vanadium 50 I don't get your take here.

Full disclosure: I bought a powerball ticket on Sunday. And I may have last Wednesday too...
 
  • #312
russ_watters said:
Huh? BTC's peak was $64,000. Did you mean to say 3.03? And cryptobros obviously don't think that was anywhere close to the ceiling.
1% x 3x = 3% = 1.03 of your original portfolio amount.
 
  • #313
Drakkith said:
1% x 3x = 3% = 1.03 of your original portfolio amount.
Thanks. Should have seen what he meant. But I thought he was talking about the BTC investment itself, not the total account. Obviously, if someone believes BTC will only return to its former peak (vs strong odds of going to zero), that would be a terrible bet. Obviously, cryptobros don't believe that:
Reaching $1,000,000 per Bitcoin by 2030 is a pretty popular projection.

  • Crypto-trading platform BitMEX's ex-CEO, Arthur Hays, made precisely that prediction four months ago.
  • Famous growth investor Cathie Wood set the same target in April 2022.
  • Serial entrepreneur Anthony Pompliano took the stage at the same Bitcoin 2022 event to say that Bitcoin could reach $500,000 or $1,000,000 in the near future -- but anything beyond that would require a social collapse and total meltdown of the U.S. dollar.
  • In early June, MicroStrategy (MSTR -19.58%) chairman Michael Saylor doubled down on his bullish price predictions in a CNBC interview: "It's not going to zero. If it's not going to zero, it's going to a million because it's obviously better than gold at everything that gold wants to be."
https://www.fool.com/investing/2022/09/11/can-bitcoin-reach-1-million/

I other news, I'm starting a company to commercialize bitcoin-plated electronics since bitcoin is better than gold at that.
 
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  • #314
Apparently, SBF is warning that without cash, FTX will be forced into bankruptcy. But they have all those bitcoins (cryptocurrency). Why do they need cash?

Bloomberg reported Wednesday,
FTX investors have been warned that the crypto exchange may be forced to file for bankruptcy protection if it doesn't get a cash infusion.
. . .
Bloomberg reported the FTX exchange faces an $8 billion shortfall.
 
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  • #315
Astronuc said:
Apparently, SBF is warning that without cash, FTX will be forced into bankruptcy. But they have all those bitcoins (cryptocurrency). Why do they need cash?

Bloomberg reported Wednesday,
How do you know FTX owns any bitcoin? An estimator website showed a slight negative amount of btc left in that exchange.
 
  • #316
BWV said:
Seriously, think the death spiral for crypto started today
Honestly, it's hard to say. I've heard that on every dip already: in 2011, 2013.04, 2013.12, 2014, 2017, 2019, 2021.04, 2021.12 ...

The top of the first one was around $22 :doh:

It's kind of classical series of bubble-like exponential runaways. I see no way to predict if this one was the last.

What's actually exactly the point: this 'asset' is fit only for speculation (the gambling type) and nothing else.

Ps.: honestly, the movement so far looks rather corrective than terminal, and that would imply further peaks ahead. But: no way to know. Fortunately, I don't have to 'know' o0)
 
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  • #318
Office_Shredder said:
This is just how diversified returns work?
Actually no.

If I have half my money in stocks and half in bonds, I have diversified.
If I have 99% of my money in stocks and 1% in bonds, I have not.

If he has ~100 different asset classes, 1% level allocations make sense. But if he has 100 different asset classes, I would question what strategy could possibly require that many.
 
  • #319
russ_watters said:
Huh? BTC's peak was $64,000. Did you mean to say 3.03?
No.

He has $100. He then keeps $99 and buys his 1% in Bitcoun. That dollar goes up to $4. Now he has $103.
Alternative strategy: Put $100 into Treasuries. Now he has $103.
Same reward, for less risk.
 
  • #320
Vanadium 50 said:
He has $100. He then keeps $99 and buys his 1% in Bitcoun. That dollar goes up to $4. Now he has $103.
Alternative strategy: Put $100 into Treasuries. Now he has $103.
Same reward, for less risk.
See my response to Drakkith; you're low on the predicted potential upside of Bitcoin by around a factor of 15. If it goes from $20k to $1m the final portfolio value is $149 (if there's no return on the $99).
 
  • #321
Vanadium 50 said:
Actually no.

If I have half my money in stocks and half in bonds, I have diversified.
If I have 99% of my money in stocks and 1% in bonds, I have not.

If he has ~100 different asset classes, 1% level allocations make sense. But if he has 100 different asset classes, I would question what strategy could possibly require that many.
If you are 100% invested in bonds, then moving 1% to stock diversifies your portfolio. Going to 1% is clearly better than staying at 0% for most people.

I'm not saying everyone should invest in bitcoin, but claiming there's no point because you're only doing 1% is wrong. The first 1% is the best 1%.
 
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  • #322
russ_watters said:
Video says that's a year ago. If I were him I'd stay in the Bahamas or find a warm non-extradition country.

[waves to the fbi agents who just started following me after I googled that]

The video was last year but he was one of the top policymaker advisers until the crash this week.
https://www.politico.com/news/2022/11/10/crypto-megadonor-sam-bankman-fried-00066062
Crypto critics are urging lawmakers to tread lightly with industry power brokers.

“This is what happens when instead of doing robust public interest policy, you hitch your wagon to charismatic founder types who make a lot of promises they can’t ultimately deliver on,” said Americans for Financial Reform senior policy analyst Mark Hays. “Sam may be one of the biggest and clearest example of that kind of hubristic figure, but there have been many before him and will likely be many after him.”
 
  • #323
Astronuc said:
was thinking of investing gambling losing/burning up to 1% of portfolio in BTC. :oldbiggrin:https://finance.yahoo.com/news/hostaged-ftx-funds-sold-pennies-195751906.html :))

:rolleyes:

Meanwhile - (Bloomberg) -- "Amazon.com Inc. is the world’s first public company to lose a trillion dollars in market value as a combination of rising inflation, tightening monetary policies and disappointing earnings updates triggered a historic selloff in the stock this year."
https://finance.yahoo.com/news/amazon-becomes-world-first-public-191725519.html

So it was overvalued? :olduhh:
I thought $AMZN was overvalued when it was in the $3,600 range (pre-split). I think it deserved its haircut.

Now, it looks reasonable. Sure, the retail side is mostly mature and arguably has peaked already (although, the third-party seller unit is actually growing very rapidly for them), but AWS and the ad biz segments are awesome. The real problem is macro/recessionary times. They can't help that AWS' growth went from 40%+ to just 20%-range. Lots of tech companies are laying people off right now (so data center/cloud growth won't be so strong for the moment). Once we get out of this recessionary period, they'll likely see growth accelerate again in their key growth drivers.

Plus, they just completed a HUGE capex cycle, so free cash flow takes a hit during those times. Historically, they take a stock hit after a huge capex investment, but then see the stock rebound fast and furious (without the capex spend and seeing some of the investments pay off immediately). THIS TIME, we're practically in or headed for a recession right after their capex spend late last year and early this year. So the timing was arguably unlucky.

I've been picking up some Amazon (my position is small, b/c I like other companies better).
 
  • #324
Rive said:
Honestly, it's hard to say. I've heard that on every dip already: in 2011, 2013.04, 2013.12, 2014, 2017, 2019, 2021.04, 2021.12 ...

The top of the first one was around $22 :doh:

It's kind of classical series of bubble-like exponential runaways. I see no way to predict if this one was the last.

What's actually exactly the point: this 'asset' is fit only for speculation (the gambling type) and nothing else.

Ps.: honestly, the movement so far looks rather corrective than terminal, and that would imply further peaks ahead. But: no way to know. Fortunately, I don't have to 'know' o0)
The scheme ends when it runs out of new money, we saw the death of leverage as a source of new funds this year and FTX is likely the end of institutional capital. Joe weisenthal summed it up nicely:
The primary purpose of crypto is "number go up." When "number go down," it's not doing its job. So naturally, any interest in the space is going to wane during times when there's a lot of red on the screen.

But this is true of stocks as well. Everyone wants in during the boom. Everyone loses interest during the bust. Wash, rinse, repeat, etc.

All that being said, there's another dynamic with crypto specifically that I think will make the SBF disaster painful and damaging for a long time to come. One of the big trends in recent years has been the rush of "institutional money" into the space. "The institutions are coming" has been a major bull narrative.

But institutions have faced an obvious dilemma. Crypto might be a big scam, and there's a lot of reputational risk associated with it. Like do you really want to be the allocator at a big endowment or something that placed a big bet on Beanie Babies? On the other hand, crypto might be the future of finance and the Web. And so do you really want to be the allocator that missed this ongoing revolution? There's plenty of opportunities to be humiliated in both directions!

But investors found a solution: Invest in blue chip entities that have good reputations that are also in crypto. So for example, VC firms that have gotten into this space are in the sweet spot here, where the allocator can have "crypto exposure" while also investing in a vehicle associated with a reputable brand that long precedes the industry.

It's pretty obvious that SBF came to occupy this space, allowing investors to have exposure to the industry, with minimal reputational risk. Now the empire is in tatters of course. But who else is there now? Who are you going to trust if your job is to invest on behalf of some big fund or corporation or endowment?So yes obviously, the massive plunge in the value of the coins will naturally ice the interest in the space. But now beyond that there are fewer entities that can solve the embarrassment problem that make people feel comfortable investing in the first place.

Follow Bloomberg's Joe Weisenthal on Twitter @TheStalwart

 
  • #325
Office_Shredder said:
The first 1% is the best 1%.
This is the very same argument I tell myself that lifting a bottle of beer is weightlifting.
 
  • #326
Wall Street Journal reports "FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall".

That sounds dodgy. Was that legal?
 
  • #327
Astronuc said:
Wall Street Journal reports "FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall".

That sounds dodgy. Was that legal?

There isn't really enough information here. Crypto exchange customer agreements are pretty weak, basically you sign your property over to them for them to do with as you want.
 
  • #328
Astronuc said:
Was that legal?
Does anybody care? Part of the point of crypto is taht it can be used to pay for things that aren't legal. You can't have that and the kind of banking regulation we are used to in the First World.
 
  • #329
Vanadium 50 said:
Does anybody care? Part of the point of crypto is taht it can be used to pay for things that aren't legal. You can't have that and the kind of banking regulation we are used to in the First World.
The users and holders of Bitcoin are different groups. To the holders, yeah, it matters a lot.
 
  • #330
Binance now lists its addresses on some of its tokens' blockchains : https://www.binance.com/en/assets-proof. So we can know their reserves in real time, for many coins. (Strangely they did not list their Monero reserves, which they are accusated to have almost none, and keep the price artificially low for XMR... Binance CEO dismissed highly rated reddit questions about.this, in a reddit AMA apparently). CZ says he's all for transparency, but I would say not entirely.