Re:Three Arrows Capital has defaulted on a loan worth more t...
by qdog on Monday June 27, 2022 @12:34PM
(#31896992)
My understanding is that FTX probably holds a ton of cryptocurrency assets or is invested in other companies with cryptocurrency exposure and does not want a 'contagion' to spread. This might work, but I am not sure FTX has enough assets to stop it, for a similar scenario https://www.federalreservehistory.org/essays/ltcm-near-failu...
Re:Three Arrows Capital has defaulted on a loan worth more t...
by mirntyfirty on Monday June 27, 2022 @12:17PM
(#31896716)
I think it’s a strange part of human psychology to ignore objective reality and double down to complete ruin. It seems remarkably common and with corporate power being so concentrated at the top it seems rather easy for these situations to happen.
Re:Three Arrows Capital has defaulted on a loan worth more t...
by wjko21 on Monday June 27, 2022 @01:25PM
(#31897762)
I think the reason is that safety nets our system provides to big businesses (especially "too big to fail" ones) incentivizes them to take risks. If you have a 50/50 chance to strike gold or loose tons of someone else's money, why not take it. If it pans out, you get a lot of bonus $$$, if it doesn't - it's no skin off your back.
Re:Three Arrows Capital has defaulted on a loan worth more t...
by gopher_space on Monday June 27, 2022 @04:00PM
(#31899976)
I see this in my industry. Above a certain level there isn’t really a failure state that matters to an individual.
Re:Three Arrows Capital has defaulted on a loan worth more t...
by chasd00 on Monday June 27, 2022 @02:03PM
(#31898283)
Yes, it’s the throwing good money after bad problem. I think there’s a real name for it, “sunk cost” fallacy maybe?
Re:Three Arrows Capital has defaulted on a loan worth more t...
by rchaud on Monday June 27, 2022 @04:52PM
(#31900629)
I'm thinking "lender of last resort"
Re:Three Arrows Capital has defaulted on a loan worth more t...
by dropnerd on Tuesday June 28, 2022 @04:07AM
(#31905340)
most crypto trading firms have been rewarded for this behavior over the last few years, so the lesson is hard to unlearn
Re:Three Arrows Capital has defaulted on a loan worth more t...
by sp332 on Monday June 27, 2022 @02:20PM
(#31898520)
Those crypto assets might have been worth a lot more when the deal was made. And the interest rate is probably pretty high.
Re:Three Arrows Capital has defaulted on a loan worth more t...
by michael1999 on Monday June 27, 2022 @01:14PM
(#31897600)
Is it mismanagement? It's head-I-win-tails-you-lose. Why would Voyager be playing a radically different game than 3AC? That kind of leverage can mint a billionaire if the dice roll the right way.
> Last week, Alameda (FTX founder Sam Bankman-Fried’s quantitative trading firm) committed $500 million in financing to Voyager Digital, a crypto brokerage. Voyager has already pulled $75 million from that line of credit.
Am I misunderstanding something, or: what kind of mismanagement could possibly lead to loans being given out to a single entity representing, like, over 70% of the entire value of your organization (pre-default)? Its excellent that FTX/Alameda stepped in to keep them solvent and not allow this to spiral further, but at the same time, its incomprehensible to me that Voyager allowed this to happen; so incomprehensible that it feels like I'm misunderstanding something.