[ExI] bitcoin again

[Stathis Papaioannou]

On Sun, 27 Nov 2022 at 08:55, spike jones via extropy-chat <
extropy-chat at lists.extropy.org> wrote:

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> *…*> *On Behalf Of *Stathis Papaioannou via extropy-chat
> *Subject:* Re: [ExI] bitcoin again
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> On Sun, 27 Nov 2022 at 02:18, spike jones via extropy-chat <
> extropy-chat at lists.extropy.org> wrote:
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>  …
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> >…I am a total cryptocurrency exchange virgin… do feel free to offer your
> take on this article, which (guessing by their choice of advertising) might
> be a parody:
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>  "There Will Be Pain" - Binance's 'CZ' Floats Billion Dollar Bailout For
> Distressed Crypto | ZeroHedge
> <https://www.zerohedge.com/crypto/there-will-be-pain-binances-cz-floats-billion-dollar-bailout-distressed-crypto>
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> >…A few months ago SBF was saying much the same things: crypto lending
> services were in trouble, but FTX was solid, overflowing with money, and
> would save the crypto world. It turns out that the reason he was saying
> these things was that he knew FTX was in trouble and wanted to boost
> confidence so that the value of the FTT token securing loans would be
> maintained, customers would not withdraw their funds and maybe more VC
> investors would invest in the company. It was working until CZ decided to
> publicly declare that he would crash the price of FTT he held (which was a
> lot, from a previous deal with FTX) by dumping it all.
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> Stathis Papaioannou
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> Stathis, do forgive my tyro queries.  Did you mean that CZ intentionally
> crashed the FTX token even though he held a lot of them, reducing his own
> net worth, in an effort to intentionally wreck a competitor?  Perhaps this
> was an attempt to buy the tattered remains of FTX for a song?
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> Seems self-defeating, but perhaps effective.
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CZ had over $500 million worth of FTT tokens, and he announced on Twitter
that he would sell them. The CEO of Alameda Research offered to buy all
these tokens at a fixed price (around the market price prior to the tweet),
but CZ said no: he was going to sell them on-market. At the same time, it
came to light that these tokens were being used by FTX as collateral for
loans. Normal practice in the crypto world is to use coins such as BTC or
ETH as collateral for fiat loans, which are liquidated if the borrower
defaults or if the value of the collateral drops below an agreed amount.
But using a coin that you created, the value of which depends on the
financial health of your company, to secure loans to yourself, can
obviously lead to trouble. CZ saw an opportunity to give the toppling
edifice a push, bringing it all down.

> --
Stathis Papaioannou
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