Comment by JumpCrisscross

4 years ago

> For what it's worth, they are also a YC backed company

Severely disappointing. I respect PG too much to believe he would knowingly condone this. The partner who did this didn't understand what they were investing in or should be decoupled with haste.

At the very least, the Alaska RMB, U of M Endowment, Bloomberg's family office and SMC should be asking why their capital is backing what should have been clear as day ex ante a fraud. Anyone living in Alaska, going to or an alumni of U of M or Stanford, or working for Bloomberg should be asking the same question.

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JumpCrisscross

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tptacek  4 years ago

What does Paul Graham have to do with any of this? He hasn't been operationally involved with YC for years, lots of them, so far as I know. Also: YC invests in companies that are 2-3 people and a vague idea; that's the whole concept. Why wouldn't YC end up backing a shady cryptocurrency company? I read all of your comments and guess we're on the same page about "crypto" and wish YC was staying the hell away from it --- but if they're going to invest in "crypto" startups, they're going to get their share of companies like this.

  • kasey_junk  4 years ago

    If you believe this company is an outright fraud (I don’t have an opinion) “shrug its crypto” is a horrendous defense for the funds backing it.

    At a bare minimum they should be doing due diligence for their own investors to prevent losses if not the higher standard of being a good citizen and shutting down the fraud.

    We would not think it’s ok for a fund backing pharma startups to give cash to Avon Barksdale…

    • tptacek  4 years ago

      I think I'm saying that YC by design funds companies at a point where it's too early to reliably determine whether they're an outright fraud. And YC can't shut down anything; they invest relatively little money and take zero control over their portfolio companies. The best they can do is performatively kick companies out of the program, so they can't access Bookface or whatever.

      2 replies →

    • akerl_  4 years ago

      Let’s be honest, a VC fund would be backing Marlo, he’s got way more startup energy.

sergiomattei  4 years ago

Let’s not even get started with Sama pushing Worldcoin, a pretty exploitative attempt at getting everyone’s irises with a pre-mined currency supposed to revolutionize world finance.

  • majormajor  4 years ago

    The VC drive to jump into the crypto world was startling to me. People hold varying opinions on various crypto products, but so many of the ones getting investment are making claims that should gather extreme scrutiny from a crowd that should be familiar with finance and returns. "We expect 10%+ returns for a long time"? Folks investing in companies instead of banks should know firsthand that guaranteed market-beating returns are almost definitionally suspect!

    Even if you think it's not fraudulent on the part of the founders, the industry is frothy and unproven and fraud-adjacent enough that investing in many companies in the space should appear to be a huge potential reputational risk beyond just losing some invested money. The people putting up the cash should be looking long and hard at this whole story.

    And then once you get into the details, the moment you hear about one of the use cases for defi lending leading to these high interest rates being "put up crypto collateral to borrow to buy even more crypto since it's appreciating rapidly"... run!