Don’t Look Too Closely at the Charts

May 10, 2023 4:49 AM

If there is one thing that I want you to take away from this article, it’s that venture capital firms and other heavily invested players in the crypto space should not be trusted to give us the facts on the industry they desperately need to promote. They will produce superficially objective-looking reports full of numbers and charts, but a critical reading shows just how blatantly they are manipulating numbers to arrive at the conclusions that fit their narratives. from Andreessen Horowitz's State of Crypto report: Narrative over numbers by Molly White
posted by chavenet (28 comments total)

Lies, damn lies, and statistics.
posted by nofundy at 5:02 AM on May 10, 2023 [5 favorites]

Molly White is an internet national treasure.

Seven billion dollars on ultraslow databases of ugly monkey jpegs with a side of burning coal. What a ridiculous, idiotic waste. It's one of the biggest arguments for high marginal tax rates and wealth taxes, how bad it is for literally everything and everyone in the world that rich people can be this shortsighted, this greedy, this naive and this stupid, and still be rich at the end.
posted by mhoye at 5:03 AM on May 10, 2023 [56 favorites]

A16z is going great!
posted by flabdablet at 5:37 AM on May 10, 2023 [2 favorites]

Love a financial vivisection, i only wish the principals would bleed.
posted by seanmpuckett at 6:03 AM on May 10, 2023 [6 favorites]

SBF says “dishonesty and unfair dealing” aren’t fraud, seeks to dismiss charges (arstechnia)

That memo, for example, concedes that Bankman-Fried and co-conspirators lied on a US bank application to open an account to receive FTX customer deposits after the bank had previously rejected an honest application. But just because the bank "was deprived of the opportunity to conduct 'enhanced due diligence' and executive committee review before opening the account," that doesn't mean that Bankman-Fried committed bank fraud, his lawyers argued. To find him guilty of bank fraud, the US would have to prove that Bankman-Fried either deprived the bank of “moneys, funds, credits, assets, securities” or caused banks to risk suffering "economic harm" from losing the "right to control" access to its bank accounts, lawyers argued.

Lying on a bank application isn't fraud, it's just depriving a bank of the opportunity to conduct due diligence. Really it's the bank's fault for believing this whole crypto thing wasn't a bunch of phoney made up numbers. Crypto bros are the real victims here.

(The sad thing is, banks should have known better than to have any business dealings with FTX. Crypto is been nothing but a scam since day 1, and anyone who convinced themselves otherwise deserves to share part of the blame, including banks. Regardless, lying on a bank application is still fraud no matter how many outlandish lies your bank willingly looks the other way on.)
posted by RonButNotStupid at 6:12 AM on May 10, 2023 [14 favorites]

... venture capital firms and other heavily invested players in the crypto space should not be trusted to give us the facts on the industry they desperately need to promote.

This "not to be trusted" applies well beyond the crypto space to virtually every sphere of human endeavor. Money, status and security are hard to hang on to in this world, and all who have them are desperately promoting something.
posted by Modest House at 6:31 AM on May 10, 2023 [3 favorites]

The boat's on fire, it's also sinking but hey, isn't the dance band really good?
posted by tommasz at 6:36 AM on May 10, 2023 [2 favorites]

Molly White is an internet national treasure.

I'm not sure how deeply I'm going to wade into this particular sewer, but I'm thankful that Molly White put on her scuba gear and dove in.
posted by clawsoon at 6:40 AM on May 10, 2023 [6 favorites]

SBF says “dishonesty and unfair dealing” aren’t fraud

If that isn't fraud....what IS?
posted by AzraelBrown at 6:40 AM on May 10, 2023 [5 favorites]

It's the south sea bubble of our generation.
posted by quillbreaker at 6:41 AM on May 10, 2023 [6 favorites]

The world of 'conventional' big banks and finance is no locus of virtue, but crypto wasn't the solution, it was just a different group (tech, libertarians, fast movers) wanting a turn at the trough.
posted by Artful Codger at 6:41 AM on May 10, 2023 [4 favorites]

If that isn't fraud....what IS?

Stuff done by people who are not Sam Bankman-Fried. Specifically, things done by people significantly poorer than Sam Bankman-Fried. It can't be fraud if you're this rich.
posted by Dysk at 6:54 AM on May 10, 2023 [6 favorites]

SBF says “dishonesty and unfair dealing” aren’t fraud

If that isn't fraud....what IS?

Well when a dirty guy goes into a 7-11 and tries to pass a fake $5 to buy a beer that’s fraud. When somebody dines and dashes at a small restaurant that’s fraud. When a person on the street asks for gas money but then buys a sandwich or heaven forfend just pockets the money that’s most assuredly fraud.

When a college educated person lies to multiple institutions and millions of people that’s just a honest mistake
posted by Uncle at 6:57 AM on May 10, 2023 [11 favorites]

Molly White is very active on Mastodon if you want to avoid Twitter.
posted by terrapin at 6:57 AM on May 10, 2023 [12 favorites]

No no no no no it's not an honest mistake. That's not his defence at all. His defence is "you should have known better." Seriously, that's the heart and soul of it. If you can be fooled, you're a chump, you're sheep, you're there to be fleeced. Much, much more malevolently evil than "honest mistake."
posted by seanmpuckett at 6:59 AM on May 10, 2023 [19 favorites]

The part of Andreessen Horowitz's fraud-embracing investments I'd like to learn more about is how much they've been able to cash out early.

The usual VC fund has a structural problem which is that the payoff comes 7-10 years after the initial investment. It takes a long time for a fund to make investments, then the companies they invest in to mature and have an exit, whether an IPO or acquisition (or failure).

Andreessen Horowitz reportedly has been taking various crypto tokens in exchange for investments in some of its companies. Those tokens then have some liquidity, often immediately, although details vary wildly. All those tokens claim to have underlying value related to the company's services. In reality, many of them get pumped for awhile and then become worthless. It's one of the bigger scams embedded in the cryptocurrency ecosystem; a few insiders cash out early by selling magic beans to suckers the public.

I'm curious to what extent Andreessen Horowitz has been cashing out tokens from their investments. Also what they've told their LP investors, whether they've promised earlier returns because of this new fraud-like structure they are participating in.
posted by Nelson at 7:06 AM on May 10, 2023 [11 favorites]

It's amazing how many questions on bank applications are basically fraud traps.

Questions that straight up ask if you have things (business relationships, contracts, sources of income) that you haven't disclosed to the bank. I assume answering "yes" to any of these questions results in an automatic rejection and answering "no" when you should have answered "yes" automatically makes the application exhibit A in your fraud trial.
posted by RonButNotStupid at 8:01 AM on May 10, 2023 [4 favorites]

It's one of the biggest arguments for high marginal tax rates and wealth taxes, how bad it is for literally everything and everyone in the world that rich people can be this shortsighted, this greedy, this naive and this stupid, and still be rich at the end.

While I agree with your sentiment, NFTs (and crypto in general) aren’t the best examples, because so much of the “value” is driven by absurd assumptions (check out White’s posts on “market cap”), wash trading, and people moving imaginary money around. Yes, some people have made money off crypto and related things, but it wasn’t old money wealth so much as a glut of cash from tech jobs feeding into ideological fantasies, fraud, and financial ignorance and delusion.
posted by GenjiandProust at 8:05 AM on May 10, 2023 [3 favorites]

I like Molly White, but about halfway through I wondered why I was reading such a long piece on something I knew was already a scam, but damn the next slide was just so bad (I think the datacenter one) and she did so much work to totally debunk it I just kept going from there.

I have somehow been insulated from the phrase "up and to the right" until this point in time.

If that isn't fraud....what IS?

I know this is a rhetorical question, but the answer is that it's lying to deprive someone of something of value. It's why Santos was indicted for fraud against donors, but not voters.
posted by mark k at 9:17 AM on May 10, 2023 [7 favorites]

This quote from Chris Dixon:

a recent start-up that we announced funding for … essentially [it’s] a service similar to Twitter, except instead of being controlled by a company … it’s an open protocol. … the sad fact is RSS was … the closest thing we had to an open protocol that could compete with social networks. And it essentially lost [because] it could not compete on features. [If] I go to Twitter, I can be C Dixon on Twitter. If I go to RSS, I have to set up a website and pay $10 a year and all these other kind of wonky things.

Participating on the Internet requires either esoteric skills or a gateway. The non-commercial gateways don't scale, and the exception proving the rule is Wikipedia, where readers outnumber editors 10,000 to 1. The commercial gateways scale, but they pollute, suck blood, and monopolize. The problem was clear as early as Eternal September (1993): AOL sorta made the Internet broadly accessible and also sorta ruined it.

Why must selling out remain the only way to get popular? Why must selling out destroy?

arguments grossly oversimplified for clarity.
posted by PresidentOfDinosaurs at 10:16 AM on May 10, 2023 [2 favorites]

I remember that Marc Andreesen blocked me on twitter and I never understood why, but I also didn't exactly miss him when I realized he'd had me blocked. And Chris Dixon has been an obvious pump-and-dump cheerleader for "web3" for a while. It shocks me that anybody puts money into their funds, but I guess the two of them have been a prime example of the low interest rate phenomenon of the SV investing herd.

(Can somebody please take Sam Altman down next?)
posted by fedward at 10:46 AM on May 10, 2023 [6 favorites]

I have somehow been insulated from the phrase "up and to the right" until this point in time.

Oh god, back when I worked at Amazon in the Internet Stone Age of 2005–2007, this phrase was so ingrained in the culture that we would use it all the time for no reason. (“Where are you going for lunch?” “Up and to the right!”)

There was a rule that all metrics must be graphed such that the “good” direction was up and to the right. So, for example, you couldn’t present a normal graph showing the number of error pages over time, because that’s a number that you want to go downward. Instead, you’d need to invert the graph by plotting the percent of pages without errors. Or show the original graph but with the Y axis flipped.
posted by mbrubeck at 10:59 AM on May 10, 2023 [12 favorites]

However, reacting to my own comment above, I wonder how many crypto holders paid capital gains on their various trades, and whether, in the absence of good record-keeping, the state shouldn’t just estimate and fine. Discovering that playing with mostly-imaginary money means paying real taxes would be quite the lesson to watch being learned from the sidelines. I know this year’s US Federal tax form kind of forced the issue, but I imagine there’s 10+ years of back taxes to collect.
posted by GenjiandProust at 6:45 PM on May 10, 2023 [2 favorites]

the boat's on fire
and there's no captain at the wheel
and the sewers are all muddied with ten thousand bored ape nfts
and a bank fraud shows

the exchanges are corrupt
and we're on so many boards with the mining rig on and the wallets drawn

we're trapped in the belly of this horrible macaque
and the macaque is bleeding to death

the moon has fallen down
and the avatars are all leering
and the coins are all dead
at the top of their charts
posted by polytope subirb enby-of-piano-dice at 2:47 AM on May 11, 2023 [6 favorites]

up and to the right, boys
up and to the right
up and to the right, boys
the far, far right
posted by flabdablet at 3:19 AM on May 11, 2023 [2 favorites]

it went like this:

the shitcoins toppled in on themselves
hodlers clutching tokens
denied it's a bubble
and minted their tears

bitfinex was beautiful on fire
all pump and dump schemes stretching upwards
everything drawn by some 4channer fash

i said, "buy this, you're a genius, we'll go straight to the moon now"

you backed my dao
and we fell into it
like a daydream
or a p2e

we woke up one morning and fell for another rug pull scam
for sure it's the right clickers' fault
i open up my wallet
and it's full of coal
posted by polytope subirb enby-of-piano-dice at 3:56 AM on May 11, 2023 [5 favorites]

Came for the financial grar, stayed for the poetry.
posted by Artful Codger at 6:30 AM on May 11, 2023 [2 favorites]

we're trapped in the belly of this horrible macaque
and the macaque is bleeding to death

Godspeed You! Bored Ape
posted by atoxyl at 9:46 AM on May 11, 2023 [10 favorites]