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Comment by quasse | Hacker News Reader

I am extremely out of the loop on the latest crypto developments / schemes, but

* Where did this foundation get $3B to buy Bitcoin?

* Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?

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> Is there any proof at all that they traded it to a counterparty who actually attempted to prop up UST and didn't just run off with them?

This brings up an exceedingly funny point: blockchains excel at making every transaction public (a property that nearly nobody actually wants) and simultaneously offering complete privacy to institutional actors.

In other words: privacy for me, but not for thee.

Reminds me of the Peruvian general Óscar Benavides: “For my friends, everything; for my enemies, the law.”

The whales got a bailout, while retail got market forces.

Perón said a more radical version of this on camera[0]: "To friends, everything; to the enemy, not even justice"

"Al amigo, todo; al enemigo, ni justicia."

[0]: https://www.youtube.com/watch?v=WDh9M9aty4U

Why can't non-institutional actors achieve the same level of privacy? Seems like it would be much, much easier for smaller actors since they are dealing in much smaller amounts..

> Why can't non-institutional actors achieve the same level of privacy?

Non-institutional actors are transacting over an immutable public ledger. Institutional actors are transacting via backchannels. In other words: the cryptocurrency transaction space is "schizophrenic": the traffic that supports high valuations is not settled on the chain itself, but via gentlemen's agreements. Non-institutional actors could do the same thing (and get the same privacy), but then it's just normal money laundering instead of "decentralized finance."

> Institutional actors are transacting via backchannels.

As in, they are keeping funds on centralized exchanges? Users can do the exact same thing if they want, not sure I get your point.

See the original comment: the point is that there's no actual way to verify the central claim ("$3B in Bitcoin was sold [...]"). We're expected to take everyone's word for it. This is in marked contrast to how two arbitrary users are expected to transact via a blockchain.

How would you verify that something was sold outside of a blockchain? The receiver of the item would need to prove it's in their possession, which is pretty easy on BTC.

I guess I'm not sure how you get from that to privacy only being achievable by institutions?

I didn't. That's not a property I want in a financial system; it's one I want in a legal system.

The only points being made are that (1) virtually nobody actually wants their entire life's transactions recorded on an immutable public ledger, and (2) the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely.

> the people whose economic activity currently backs the speculate value of these coins play by a different rulebook entirely

I guess this is where I don't know what you mean, specifically

* From Crypto Bros putting cash in Luna, hoping it will reach the moon, as the name implies. The foundation bought BTC as hedge in case Luna/Terra goes haywire.

* No, there's no proof.

That's where it gets incredibly funny. They persuaded everyone that UST was worth $10Bn dollars and then went and bought $3Bn of BTC with the profits. At which point the obvious question is "Hey - isn't this asset by definition worth $3Bn"? And the answer is "Oh, no, by the time it drops from $10Bn to $7Bn we've burned all our collateral and it's worth 0".

The even funnier aspect is that that instead of trying to stabilize the token or just liquidating all UST at 30¢ on the dollar, the creators decided to abscond with all the collateral and leave UST holders with nothing

On the second point, to be fair you can look at the UST graph and see that someone did indeed burn a tonne of Luna to support UST. It's probably impossible to really prove that every penny went to supporting it, and it's probably impossible/unlikely that Do Kwon really bankrupted himself for this, but at the very least we can say someone decided they were going down with the ship and set a lot of money on fire. Difficult to see who would've done that other than LFG.

It’s impossible Do Kwon bankrupted himself. No one is going to do something no one believes any one in crypto or Wall Street would do and keep quiet about it: be selfless, stick to your previous words that critics never believed, and not be keeping a good chunk of money for yourself.

If this happened, we will be seeing massive PR about this. Do Kwon would become a huge symbol and become a millionaire again if he actually did that and opened his life and books to scrutiny to prove everything as much as possible.

Burning Luna (which can be created out of thin air) and burning USD/Bitcoin are entirely different things.

The point is that UST had significant rallies- that indicates a massive effort to support it that failed.

How do you know it doesn't amount to 1B? Or 500MM? Or 250MM? Unless there is transparency all of these is speculation, and since it is all depositor's monies, we should assume the worse until it's been proven otherwise.

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