6 ms·

This is huge news, isnt it? A YC startup going bankrupt because of the Terra collapse?

by axiosgunnar 4y ago

lupire 4y ago
A fraudulent company going bankrupt because the fraud collapsed.
- xvector 4y ago
  Source on the company being fraudulent? Source on Terra being a fraud? Please provide sources for your ad-hominems.
  - braingenious 4y ago
    I’d probably assume somebody looked at “15% interest” as a sales pitch and “losing all of your money” as the actual thing that happened and concluded that it was fraud. What exactly is fraud by your estimation?
    - xvector 4y ago
      There is intent behind fraud.
      - nrmitchi 4y ago
        The "intent" that is necessary is the intent to benefit from the known misrepresentation, which in this case Stablegains did by obtaining investment from these customers. It would be ludicrous to suggest that Stabelgains needed to "intend" the end result (ie, "catastrophically fail and lose all of their customers funds") for it to be fraud.
      - kadoban 4y ago
        So if you intend for the con to survive longer than it did you're in the clear? Interesting.
  - npc12345 4y ago
    (I upvoted you btw, I don't like to censor). I'm a maximalist and even I am not that disingenous.
    - xvector 4y ago
      I simply do not believe it was fraud, and I don't see any evidence provided of it being the case. A badly-designed stablecoin? Incompetence? Sure. But the accusation of fraud requires evidence of malice.
      - npc12345 4y ago
        I see your point now.
  - lupire 4y ago
    Source: https://en.m.wikipedia.org/wiki/Do_Kwon https://en.m.wikipedia.org/wiki/Do_Kwon
  - nrmitchi 4y ago
    > Inspired by the possibilities across DeFi, our aim was to go beyond Anchor and to integrate with multiple protocols so that users could have easy access to multiple tools and allocate their assets across all of them based on their judgment of the benefits, costs, and risks of each option. Unfortunately, we didn’t get there in time. Their previous marketting said (or at least implied) that they were spread across different defi products to protect against this exact risk. That is not the same thing as "we planned to get there eventually, but didn't in time". This is borderling to an institution saying "We're FDIC insured!" but actually meaning "We hope to be FDIC insured at some point in the future". Lying to customers about what you're doing with their investment funds is 100% illegal and literally what Martin Shkreli was in prison for (and that case didn't even end with him losing all of his investors money)
    - xvector 4y ago
      Do you have a source for the misleading marketing? Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using Anchor Protocol, a decentralized lending market." This is in a giant blue block right above a "get started" link. There is no mention of anything other than Anchor being used to store investor funds. It seems to me that you are trying to twist the post-crash retrospective into a marketing statement that didn't simply exist before the crash. Where, exactly, is the lie? [1]: http://web.archive.org/web/20220203225905/https://stablegains.com/ http://web.archive.org/web/20220203225905/https://stablegain...
      - Jasper_ 4y ago
        From https://stablegains.zendesk.com/hc/en-us/articles/4402687632017-What-is-a-stablecoin-and-which-stablecoins-do-you-use- https://stablegains.zendesk.com/hc/en-us/articles/4402687632... > Our main stablecoin is USDC (USD Coin). For every 1 USDC in supply, $1 USD is kept in reserve. > The other stablecoins we may use are, UST (Terra USD) and DAI.
      - nrmitchi 4y ago
        I'd have a hard time trusting their current documentation which seems to have been heavily edited since this whole incident began, but frankly the subheader on their main landing page is "Stablegains makes it simple to earn high and stable interest from DeFi lending markets." Market(s). Plural. That at least heavily implies in their marketing that they weren't taking all of their users funds and shoving it into a single asset.
  - Tao332 4y ago
    That's not an ad hominem. The circular relationship between Terra and Luna is really fishy. It's probably not really a scam today, but similarly structured schemes should probably be classified as such and criminalized in the future.
    - somewhereoutth 4y ago
      The best explaination Ive seen (from HN I think) was that the Terra/Luna thing was an attempt to tranche the 'asset'. So Luna (junior tranche) has the risk and potential returns, whereas Terra is supposed to be less risky, less returns (Senior tranche). See MBS, CDO, CDO^2, etc.
  - Jasper_ 4y ago
    Anybody promising low-risk, high-return investment is a fraud. After all, why would they have to convince you to invest money if they could just do it themselves?
    - xvector 4y ago
      > After all, why would they have to convince you to invest money if they could just do it themselves? Capital. Taking a 5% cut of billions of dollars is going to be worth a lot more than 20% of whatever tiny amount of capital you are able to muster yourself.
      - Jasper_ 4y ago
        If you're so sure of your low-risk, high-reward strategy, get a bank loan. And then once you make more money, get an even bigger bank loan. There are ways of getting capital that don't involve the public's money.
        nrmitchi 4y ago
        This works sometimes, but banks don't want to be overexposed (even if something is very low risk). There's the old saying "If you own the bank $1m, that's your problem, but if you owe the bank $100M, that's the bank's problem". This kind of stuff happens in other industries (like real estate) all the time. Even with bank financing, you'll need another source of funds (typically LPs) to meet loan requirements.
  - JumpCrisscross 4y ago
    > Source on the company being fraudulent? See [1]. If you sell a deposit-like product by saying "you will not lose your funds," and then lose the funds, you go to jail. (First you lose your money.) [1] https://news.ycombinator.com/item?id=31462617 https://news.ycombinator.com/item?id=31462617
peter422 4y ago
Fwiw a lot of YC companies have had large collapses. For example Homejoy which is a lot bigger than this company. It happens. Startups are risky. Not huge news.
formerkrogemp 4y ago
Meh YC backs a lot of scams masquerading as businesses. This period of easy money and wealth concentration has fostered much in the way of misallocation of capital. Y-Combinator exists to make its owners money. Their primary concern is bloody Benjamins, not morality and the public interest.
- gsibble 4y ago
  As I've said elsewhere, having dealt with them and seen who they invest in, morality does not seem to be an important aspect of YC investments.
tyrfing 4y ago
Interestingly, they removed their prominent YC branding very recently after the collapse. Compare: https://twitter.com/stablegains/status/1523874916206059525 https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.c...

This is huge news, isnt it? A YC startup going bankrupt because of the Terra collapse?

lupire 4y ago

A fraudulent company going bankrupt because the fraud collapsed.

xvector 4y ago
Source on the company being fraudulent? Source on Terra being a fraud? Please provide sources for your ad-hominems.
- braingenious 4y ago
  I’d probably assume somebody looked at “15% interest” as a sales pitch and “losing all of your money” as the actual thing that happened and concluded that it was fraud. What exactly is fraud by your estimation?
  - xvector 4y ago
    There is intent behind fraud.
    - nrmitchi 4y ago
      The "intent" that is necessary is the intent to benefit from the known misrepresentation, which in this case Stablegains did by obtaining investment from these customers. It would be ludicrous to suggest that Stabelgains needed to "intend" the end result (ie, "catastrophically fail and lose all of their customers funds") for it to be fraud.
    - kadoban 4y ago
      So if you intend for the con to survive longer than it did you're in the clear? Interesting.
- npc12345 4y ago
  (I upvoted you btw, I don't like to censor). I'm a maximalist and even I am not that disingenous.
  - xvector 4y ago
    I simply do not believe it was fraud, and I don't see any evidence provided of it being the case. A badly-designed stablecoin? Incompetence? Sure. But the accusation of fraud requires evidence of malice.
    - npc12345 4y ago
      I see your point now.
- lupire 4y ago
  Source: https://en.m.wikipedia.org/wiki/Do_Kwon https://en.m.wikipedia.org/wiki/Do_Kwon
- nrmitchi 4y ago
  > Inspired by the possibilities across DeFi, our aim was to go beyond Anchor and to integrate with multiple protocols so that users could have easy access to multiple tools and allocate their assets across all of them based on their judgment of the benefits, costs, and risks of each option. Unfortunately, we didn’t get there in time. Their previous marketting said (or at least implied) that they were spread across different defi products to protect against this exact risk. That is not the same thing as "we planned to get there eventually, but didn't in time". This is borderling to an institution saying "We're FDIC insured!" but actually meaning "We hope to be FDIC insured at some point in the future". Lying to customers about what you're doing with their investment funds is 100% illegal and literally what Martin Shkreli was in prison for (and that case didn't even end with him losing all of his investors money)
  - xvector 4y ago
    Do you have a source for the misleading marketing? Feb. 2, 2022 [1]: "Stablegains' 15% APY is earned using Anchor Protocol, a decentralized lending market." This is in a giant blue block right above a "get started" link. There is no mention of anything other than Anchor being used to store investor funds. It seems to me that you are trying to twist the post-crash retrospective into a marketing statement that didn't simply exist before the crash. Where, exactly, is the lie? [1]: http://web.archive.org/web/20220203225905/https://stablegains.com/ http://web.archive.org/web/20220203225905/https://stablegain...
    - Jasper_ 4y ago
      From https://stablegains.zendesk.com/hc/en-us/articles/4402687632017-What-is-a-stablecoin-and-which-stablecoins-do-you-use- https://stablegains.zendesk.com/hc/en-us/articles/4402687632... > Our main stablecoin is USDC (USD Coin). For every 1 USDC in supply, $1 USD is kept in reserve. > The other stablecoins we may use are, UST (Terra USD) and DAI.
    - nrmitchi 4y ago
      I'd have a hard time trusting their current documentation which seems to have been heavily edited since this whole incident began, but frankly the subheader on their main landing page is "Stablegains makes it simple to earn high and stable interest from DeFi lending markets." Market(s). Plural. That at least heavily implies in their marketing that they weren't taking all of their users funds and shoving it into a single asset.
- Tao332 4y ago
  That's not an ad hominem. The circular relationship between Terra and Luna is really fishy. It's probably not really a scam today, but similarly structured schemes should probably be classified as such and criminalized in the future.
  - somewhereoutth 4y ago
    The best explaination Ive seen (from HN I think) was that the Terra/Luna thing was an attempt to tranche the 'asset'. So Luna (junior tranche) has the risk and potential returns, whereas Terra is supposed to be less risky, less returns (Senior tranche). See MBS, CDO, CDO^2, etc.
- Jasper_ 4y ago
  Anybody promising low-risk, high-return investment is a fraud. After all, why would they have to convince you to invest money if they could just do it themselves?
  - xvector 4y ago
    > After all, why would they have to convince you to invest money if they could just do it themselves? Capital. Taking a 5% cut of billions of dollars is going to be worth a lot more than 20% of whatever tiny amount of capital you are able to muster yourself.
    - Jasper_ 4y ago
      If you're so sure of your low-risk, high-reward strategy, get a bank loan. And then once you make more money, get an even bigger bank loan. There are ways of getting capital that don't involve the public's money.
      - nrmitchi 4y ago
        This works sometimes, but banks don't want to be overexposed (even if something is very low risk). There's the old saying "If you own the bank $1m, that's your problem, but if you owe the bank $100M, that's the bank's problem". This kind of stuff happens in other industries (like real estate) all the time. Even with bank financing, you'll need another source of funds (typically LPs) to meet loan requirements.
- JumpCrisscross 4y ago
  > Source on the company being fraudulent? See [1]. If you sell a deposit-like product by saying "you will not lose your funds," and then lose the funds, you go to jail. (First you lose your money.) [1] https://news.ycombinator.com/item?id=31462617 https://news.ycombinator.com/item?id=31462617

peter422 4y ago

Fwiw a lot of YC companies have had large collapses. For example Homejoy which is a lot bigger than this company. It happens. Startups are risky. Not huge news.

formerkrogemp 4y ago

Meh YC backs a lot of scams masquerading as businesses. This period of easy money and wealth concentration has fostered much in the way of misallocation of capital. Y-Combinator exists to make its owners money. Their primary concern is bloody Benjamins, not morality and the public interest.

gsibble 4y ago
As I've said elsewhere, having dealt with them and seen who they invest in, morality does not seem to be an important aspect of YC investments.

tyrfing 4y ago

Interestingly, they removed their prominent YC branding very recently after the collapse. Compare: https://twitter.com/stablegains/status/1523874916206059525 https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.com/stablegains/status/1523874916206059525 https://web.archive.org/web/20220510035811/https://twitter.c...