Popular Post Deraj Posted June 11, 2021 Popular Post Share Posted June 11, 2021 Nearly a month after I put Swing down; here is why. Here’s a peak into the company I ran and why rage finally got the best of me. I’m not releasing this to attempt to ease back into the business sector; this is simply my story on what really happend. Appologies for the wall lf text; this was originally written on 5/27. What Made TOSE Fail? Above and beyond the obvious reasons TOSE is no longer with us - (if you aren’t aware I deleted the entire server and VPS hosting the bot.) there were key reasons that it simply wasn’t sustainable long term. Without a doubt the technology utilized for TOSE is unique and purpose built; it functions beautifully for the basic environment of a virtual stock market. TOSE didn’t fail because of the platform it was built upon; TOSE was going to fail because of several systemic issues. I’m likely the only Swing member that understood the entire issue; and it needs to be broken down into multiple parts to really grasp. First and foremost TOSE was built to generate revenue via brokerage fees; this is fairly standard even in real world investing scenarios; but the controlling entity behind TOSE; The Swing had interests in nearly every facet of the business economy. This immediately creates a conflict of interest. The exchange could not operate without bias; it simply was not possible. Take it one step further; monies from TOSE flowed into the Swing; and more often than not sat there for extended periods of time. Swing was also involved in lending, resource trading and several other income producing verticals; and the funds were almost always commingled. While we didn’t practice very good asset management internally - we always had the money on hand to cover withdrawals from the exchange; but without a doubt we were using TOSE money for loans and loan money for TOSE. For the majority of my tenure at Swing we had at least 10 billion in liquid cash on hand at any given moment — until we didn’t. To compound the imbalance of cash supposedly held in TOSE compared to what we actually had on hand was from what I’ll call over valuation. Over valuation came from long term share flipping and heightened investor confidence. Essentially an investor could buy low, and sell high over and over again — multiply that by the estimated 100 Active traders on the platform; some stocks were increasing in value (well in excess of book) without the cash actually being there to back them up. The cash often didn’t need to be there — investors were making profit, not cashing out; rinsing and repeating - over and over and over. I noticed something interesting when running the SWGB IPO - which sold out incredibly fast; but it generated very little - “new capital” in the exchange. This indicated to me there was a lot of “liquidity” in the market that really didn’t actually exist. For the majority of its existence TOSE ran unregulated. Taith and other companies already indexed were free to create as many companies as they desired — and rarely did they bring fresh new cash into the exchange. Without regulation - many of the companies became highly over hyped and over valued in comparison to their actual book value. Take for instance Top Hat; at the time I imploded TOSE I had just taken over Top Hat. They initially raised about 2 billion in initial capital; and at the time I took it over they had a negative net worth and a negative ESV. A far cry from its value on TOSE. A similar situation ensued with Almighty Corporation; it was consistently over hyped and traded at 8-10x its actual book value. The lack of regulation allowed for some of the issues; and a lack of fiduciary duty on behalf of Swing was to blame for the rest. We knew there were issues; we simply did not correct them. The constant share flipping and over valuation most certainly added to the deficit of what truly existed in the exchange and what we actually had on hand. The last time I checked, TOSE had over $11B in liquid cash in the exchange; and Swing had about $5B in liquid cash. There was never a run in the market; which was a huge fear of mine because I knew if a run was timed right the actual cash wouldn’t be there; especially in the final month or so of TOSE. During the peak of Swing’s lending career we had a near constant flow of repayments into the company and a very low default rate: but it grew and so did the size of the loans; which depleted the cash reserves we had on hand. Tie in a couple of huge setbacks and the environment was ripe for failure. I had already dealt with the setback of losing Benj to family obligations; and I navigated Taiths fall fairly well given the circumstances; but that was an exhausting time too. The day the most recent global war kicked off (early May) Galactic Empire was couped and multiple parties laid claim to their small 1 Billion dollar offshore. Among the drama from that a Swing employee mistakenly sent three $1B dollars payments to inactive nations. That distribution was supposed to send out $1B in total to 15 nations; instead we lost two billion (we got one back) That same day The Alliance was blitzed, causing over $1B in damages and we had to negotiate our way out of the war; which obviously wasn’t cheap. That same day Benj stepped down and appointed me as his successor. The following day Epi tried to lay claim to the same Schrute Farms offshore; losing us another cool billion. We survived that day by the skin of our teeth and decided to reinvent ourselves into a real alliance. I believed that the Alliance could possibly help us to turn more profits and make up for the large losses we had just incurred. But that venture was one step forward and two steps back. With a sudden influx of people in my orbit and a war on the horizon I secured our assets at BLUM; what a horrible choice on my part, because my credentials fell into the wrong hands. A former raider who was brought into the fold to “help” Gabe with Internal affairs wiped out nearly $10B of assets most of which were all marked for investors and safekeeping. This situation was the straw that broke my back. I had been fighting an uphill battle for months now and was not getting much support from my circle. In a moment of rage and disappointment I decided to put The Swing down for good. In my eyes I’d fought enough to keep up this never ending cycle. I may never know the motives of the party to swiped our bank. I have my theories; but they are just that. At the end of the day - I know an exchange can’t operate as a profit center with another multi-dimensional corporation. Centralization of assets poses a large risk to all parties involved. Be it an internal bad actor plotting to swipe the bank, or lazy corporate executives commingling and dipping into funds which they don’t actually own - the risk of loss is great. Combine over valuation and stock flippers; you’ve got a cocktail for disaster. TL;DR: There isn’t one. 2 2 14 1 Quote Link to comment Share on other sites More sharing options...
Merky Mo Posted June 11, 2021 Share Posted June 11, 2021 Huh, some interesting insight. 1 Quote Link to comment Share on other sites More sharing options...
shashwat Posted June 11, 2021 Share Posted June 11, 2021 well dont know what to say on this topic , but creates a bit of clash of my own views Quote Link to comment Share on other sites More sharing options...
im317 Posted June 11, 2021 Share Posted June 11, 2021 so poor bookkeeping, fractal reserve lending and trading. what i don't get is why stocks being over valued was an issue. i assume that has to do with the conflict of interests because the market itself is not at fault when people can not sell there stock for what it had been previously trading for. maybe having information about the trade volume of individual stocks could have helped people mitigate that risk. there is also the question of why when you were hit you first looked to cover your own nations losses, unless i misunderstood that part. still paying someone to stop hitting you is at best bad practice long term and at worse indicates a total bank failure if the reason you needed to pay was that you could no longer keep the money safe. no clue how much of this is true but it just goes to once again show that if something seems to good to be true it probably is. Quote Link to comment Share on other sites More sharing options...
JadenStar10 Posted June 11, 2021 Share Posted June 11, 2021 1 Quote Coal Duke (Imperator Emeritus) of The Coal Mines Diety Emeritus of The Immortals, Patres Conscripti (President Emeritus) of the Independent Republic of Orange Nations, Lieutenant Emeritus of Black Skies, Imperator Emeritus of the Valyrian Freehold, Imperator Emeritus of the Divine Phoenix, Prefect Emeritus of Carthago, Regent Emeritus of the New Polar Order Link to comment Share on other sites More sharing options...
Mayor Posted June 11, 2021 Share Posted June 11, 2021 20 minutes ago, Deraj said: What Made TOSE Fail? I had already dealt with the setback of losing Benj to family obligations; I had already dealt with the setback of BenJ getting raided and deleting most of his cities, projects and billions of infrastructure, and then deleting his nation due to the utter might of Calondia. FTFY 4 2 Quote Link to comment Share on other sites More sharing options...
Arawra Posted June 11, 2021 Share Posted June 11, 2021 Thank you for taking the time to write this, it was very well written and informative~ 6 Quote Look up to the sky above~ Link to comment Share on other sites More sharing options...
Danzek Posted June 11, 2021 Share Posted June 11, 2021 (edited) 14 minutes ago, im317 said: what i don't get is why stocks being over valued was an issue. dunno. It seems like a separate issue in that its a ponzi scheme only held up by the systemic issue of actually converting those stocks and cashing out. the cash from the original sale of the shares was embezzled on their other ventures / buying cities or whatever, or wasted it on dumb stuff like sending schrute's 1b offshore to 4 different people and paying off pirates Edited June 11, 2021 by Borg 1 Quote Link to comment Share on other sites More sharing options...
Deraj Posted June 11, 2021 Author Share Posted June 11, 2021 16 minutes ago, im317 said: so poor bookkeeping, fractal reserve lending and trading. what i don't get is why stocks being over valued was an issue. i assume that has to do with the conflict of interests because the market itself is not at fault when people can not sell there stock for what it had been previously trading for. maybe having information about the trade volume of individual stocks could have helped people mitigate that risk. there is also the question of why when you were hit you first looked to cover your own nations losses, unless i misunderstood that part. still paying someone to stop hitting you is at best bad practice long term and at worse indicates a total bank failure if the reason you needed to pay was that you could no longer keep the money safe. no clue how much of this is true but it just goes to once again show that if something seems to good to be true it probably is. Keep in mind, The Swing was something I “inhertited” to say the least. I was not the visionary and didn’t establish the business model. My thought regarding “over valuation” comes from seeing how the inflows and outflows of TOSE actually happend. I suspect at some point early on, the money was never there to back it up; and the problem exacerbated itself as time went on. Within the environment if I buyer bought a stock from a seller; it did not nessicarilly mean the buyer just funded their account. I have more data I’ll eventually cover which goes in deeper to why this was part of the problem. 1 Quote Link to comment Share on other sites More sharing options...
MBaku Posted June 11, 2021 Share Posted June 11, 2021 13 minutes ago, Deraj said: My thought regarding “over valuation” comes from seeing how the inflows and outflows of TOSE actually happend. I suspect at some point early on, the money was never there to back it up; and the problem exacerbated itself as time went on. Within the environment if I buyer bought a stock from a seller; it did not nessicarilly mean the buyer just funded their account. I have more data I’ll eventually cover which goes in deeper to why this was part of the problem. It seems to me that at some point - either money was being added to the server economy that wasn't backed up by in-game trades or the money that was added to the economy was backed up by in-game trades and was lost due to a lack of book keeping and intentional or unintentional embezzlement. The only way $1m should be able to enter the TOSE bot is that a banker accepts $1m money in-game and adds it to the alliance bank. I know that some folks were given authority to receive this money and it wasn't well accounted for. As someone that used to have banker perms - I feel like I had the opportunity to just not report these types of trades, but accept the trade and add the money to the economy. I think it was a big lack of oversight issue - because TOSE was massive and took a number of competent people to run effectively - something that was sorely lacking towards the end. 2 Quote Link to comment Share on other sites More sharing options...
Popular Post Zygon Posted June 11, 2021 Popular Post Share Posted June 11, 2021 I love when people waste my time with this in Alliance Affairs, like wtf? 7 4 1 Quote Link to comment Share on other sites More sharing options...
Kosta Posted June 11, 2021 Share Posted June 11, 2021 29 minutes ago, Zygon said: I love when people waste my time with this in Alliance Affairs, like wtf? Is it worth the read @Zygon? 😂 1 Quote Link to comment Share on other sites More sharing options...
shashwat Posted June 11, 2021 Share Posted June 11, 2021 37 minutes ago, Zygon said: I love when people waste my time with this in Alliance Affairs, like wtf? well i think its not a matter worth read for you , then i think it wasnt worth commenting , forum always show the topic 1 2 Quote Link to comment Share on other sites More sharing options...
Sam Cooper Posted June 11, 2021 Share Posted June 11, 2021 Alliance Affairs not Failed Business Affairs. 2 Quote Link to comment Share on other sites More sharing options...
TitanJazza Posted June 11, 2021 Share Posted June 11, 2021 Good read Quote Link to comment Share on other sites More sharing options...
Nokia Rokia Posted June 12, 2021 Share Posted June 12, 2021 I didnt read the full things my head hurts and im tired I took the 15bil debt from Deraj that TW lost i plan to pay that off regardless of how stupid that sounds and Ill be attempting to make some payments to people who invested in Summit Banking years ago while repaying Souparmon 600mil Old Debts from 2 years ago this has been annoying but oddly is possible if anyone else needs repayment i can add proven debts to my list and overtime repay say the 25bil missing for people at my own expense so hang on top your seats this is gonna take a few years and dont expect me to care about how bad you want a money return because I choose who is on the list and which level of importance they hold and so far it goes The Wei, Murtaza, The Shadow, Souparmon, whoever ever else i choose to put here Quote Link to comment Share on other sites More sharing options...
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