Follow-up to Friday’s post on FTX

This is Joseph.

Perhaps it was a mistake to post on a fast-changing event but the FTX saga definitely has taken some rather unexpected twists:

So it really is looking like this company was a straight up Ponzi scheme. Which probably shouldn't be a surprise given the interview with Sam Bankman-Fried where Matt Levine characterized his business model as:
I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good.
So perhaps there we warning signs about cryptocurrency as an investment? Insofar as a currency is a financial instrument, there is rarely a more dangerous market than currency speculation. Insofar as it is an investment, the fundamental value of zero really needs to be engaged more. I am hoping Mark comes back to this as cryptocurrency is really his wheelhouse and he has been proven right

What I found more fascinating is how an educated person could have ended up describing (and agreeing they were describing) a Ponzi scheme as their business model. Then I read this:

Then it made sense. If the world is about six-paragraph blog posts (not that I, clearly, object to the medium) then it is hard to get depth on any subject. When you are running a financial services company based on a physics undergraduate education, it is easy to become arrogant. 

Speaking of arrogant, Twitter laid (Read more...)