Your living in a make believe fantasy world. There is no FX crypto hedge, and clearly when dealing with investor collateral no hedging is required. This is the function of collateral, margin, and margin calls.

let me just give you some interesting stuff to read: dunning-kruger effect

Hopefully you're just trolling. Also FX has nothing to with it, FX is short for Foreign Exchange.

I'm not going to answer this question again. The very short answer is below. For the detailed answer and explanation please look back in the thread.

They have to hedge every time someone deposits Crypto with them, and it is converted into flexUSD, otherwise they, CoinFlex, are just buying the Crypto with dollars.

Edit:

Here is the detailed explanation as there are a lot of posts to trawl through to find it:

For FlexUSD to be "pegged to the dollar" and a "stable coin", Coinflex 100% have to be Delta and Gamma neutral on their own book, exactly for the reason that they are not a fund or a trader.

To simplify this point, on day 1 of them opening, if their first ever client deposited 10 Bitcoins with them and the Bitcoin price was $50,000, Coinflex would immediately convert the Bitcoin into 500,000 FlexUSD coins, each of which has a $1.00 price, and a $1.00 value. The $1.00 price cannot ever change within the client's account. They can earn interest and a share of other clients' trading fees but this will increase the number of FlexUSD coins that they own, it won't change the value from $1.00, because the price is pegged to the dollar.

The only exception to this is on a secondary market where FlexUSD can trade at a different price to $1.00 for reasons of market speculation, e.g. speculation that there is going to be a rug pull or an insolvency.

So coming back to Coinflex's position on their book. They have given the client $500,000 worth of FlexUSD fixed at a price of $1.00, but Coinflex are now the owners of 10 Bitcoins.

If Coinflex do not either immediately sell those 10 Bitcoin to realise $500,000 of USD, or hedge their holding of Bitcoin by selling 10 Bitcoin futures contracts to another one of their clients,
or on a different trading exchange as a futures trade, and then the price of Bitcoin halves to $25,000, and then that first ever client of their's liquidates their $500,000 worth of FlexUSD, Coinflex have now only got $250,000 worth of Bitcoin (10 x $25,000), so Coinflex as a company are now $250,000 in the red.

Delta neutral as I'm sure you know, means when one is not in that position, where if one is given a position of long 10 Bitcoin by a client, you immediately sell those Bitcoins or do an exact hedge to effect a neutral (or flat) book, where you have no exposure to any price movements, up or down.

I mentioned Gamma neutral too, even though it is really a traded options hedging term, because it does apply to Coinflex, in the sense that if in the scenario above, Coinflex's first ever client deposited 10 Bitcoins when Bitcoin is priced at $50,000, and a split second later, a new client deposits $500,000 of "cash" (Fiat) and immediately buys 100 XYZcoin from Coinflex on the exchange (just using a random coin name to demonstrate a point), that is priced at $5,000 per coin, then Coinflex now appear to be Delta neutral, because they are long of $500,000 of Bitcoin on their book, and simultaneously, short of $500,000 of XYZ coin.

However, it is often the case that one coin reacts differently to sharp overall Crypto market moves than another, i.e. if Bitcoin falls 10%, XYZ might fall only 5% or it could fall $20%, so being Gamma neutral within a certain small margin of certainty/error is very important, and there is, or at least should be, historical data on every established Crypto coin as to its estimated market movement relative to a market movement in Bitcoin. So it is not good enough just to hedge solely based on aggregated current market price dollar holdings on your book, Gamma also has to be taken into account.

Hedger
An investor who takes steps to reduce the risk of an investment by making an offsetting investment. There are a large number of hedging strategies that a hedger can use. Hedgers may reduce risk, but in doing so they also reduce their profit potential.

Pegged

The term pegging refers to the practice of attaching or tying a currency's exchange rate to another country's currency. Pegging often involves preset ratios, which is why it's called a fixed rate. Pegs are often put in place to provide stability to a nation's currency by linking it to an already stable currency.

i mean he said bank deposits could go poof just the same... he's just trying to troll and has a very long history of it

Wait, is this conjecture, or have there been rumblings to this effect?

Yeah, sorry, I did see the first post where you warned me he was a known troll, but I thought he maybe genuinely didn't understand.

I think you will find that the Urban Dictionary has a very different meaning of the word pegging.

The fact ECB hasn't flipped out and shown some faux rage over such a thing alone means it hasn't happened.

I’d assume that if Polk faces a grand jury indictment they will go over every inch of his financial dealings with a fine tooth comb. And what better place to start than an illegal gambling operation , which is what it would be called if the feds started looking for **** on Doug.


Ask yourself this, you’ve just been outed as being a huge part of a $50million dollar securities fraud, do you really think your other businesses are safe?


One of the real stresses of owning a business is that you are responsible for keeping bread on your employees tables. If you **** that up, real people suffer.


I’d assume if there was a criminal investigation they would give polk a deal to testify against the real mastermind .

How would they work out what the deal is, would they use ICM or a straightforward chip model?

Pegged (see also): the act of being anally violated, often with a strap on of some sort

“Doug pegged his followers pretty hard when he guaranteed coinflex was not a scam”

Agree with your post except for the part where my point was unrelated.

My point was that "due diligence" can mean almost anything, and quite often, it will never uncover what should be sought. So saying "Hey, I did my due diligence" is not always what it's cracked up to be. Hence the story I posted above: due diligence missed precisely what it should have revealed, and yet it still counts as due diligence.

When it comes to this Coinflex saga, Doug can claim he did his due diligence until he's blue in the face, but such a claim is meaningless – both for and against him – unless we know what it entailed.

Please don't joke about this.

I mean, I don't know how many more times Doug's gotta explain this. He asked Mark Lamb and a bunch of his crypto buddies if Coinflex was a trustworthy site that fully collateralized FlexUSD and they all said yes. Mark Lamb then explained that they can get 20% returns through crypto sorcery (but not with any kind of lending or risky positions) and that's all Dougie needed to know. HOW MUCH MORE DUE DILIGENCE DO YOU EXPECT ONE MAN TO DO?!!!!

Doug seems to genuinely believe that is the standard for due diligence. Just ask the scammers to reassure you its not a scam, and your all set.

This is easily the most obnoxious and ridiculous post on this site in awhile

Coinflex is in this position now because they took park in risky uncollateralized positions, not because the premise of the returns was scam. Just to clarify.

Is this the largest scam any 2p2er has been involved with

ROTFLOL. And why do you think they did this? Could it be that given the costs involved to actually hedge their position rather than bet on their position they couldn't both pay the interest and hedge? Do you equally hold Madoff was not a scam because he didn't do what he claimed he was doing as it was not possible to do that and give the returns he was giving?

Comparatively speaking, Coinflex was not scam.

Also to clarify, they find themselves in this position now because they took park in risky uncollateralized positions.

Cmon guys, CoinFlex was not a scam. In fact, it was working as intended just fine until one day it didn't.

You’ve made a number of very good posts in this discussion. This is not one of them. It seems beyond a stretch to conclude that Polk was anything more than an overly enthusiastic, and well-compensated, pitch man for a company that turned out to be shady. Should he have known that everything wasn’t above board? Reasonable people can probably disagree on that, but your intimation that he was privy to the details of illegal activity seems completely unsupported, as is the suggestion that The Lodge is going to be investigated for money laundering.

Have you ever been to a poker room that offers 5/10+ games

There are tons of people (mostly low level drug dealers etc) laundering money in EVERY poker room around the world because it would be super easy to do for low level drug dealers etc to clean their winnings and anyone who has played poker for a decade plus has encountered some characters who are obviously doing just that. There are a ton of obvious drug dealers laundering money at Crown and other cardrooms in Australia I don't see why it'd be any different in America. I think most of the bigger level criminals launder through casinos in VIP rooms etc on low house edge games but if you're a random drug dealer who is making mid 5 to low 6 figures it's super easy to play a bunch of random live poker, be a close enough to break even player, turn lots of cash into chips and randomly mix it with clean money from actually playing poker nobody is going to bat an eye when random 2/5 grinder cashes out an extra 3k or 5k or whatever occasionally beyond their actual winnings - Australian casinos can pay out via cheques, no idea if American/etc ones do the same but the fact that there are people laundering their money at a random card room would not be news unless it's enormous sums or the card room itself is somehow facilitating this, how on earth would you police it in a cardroom with 100 tables, there is no way any cardroom has enough manpower to determine whether Bob Drugdealer cashing out $4792 in chips after a long session of 5/10 is even up or down for the session let alone the original source of all of the funds when he's rebought eight times for varying amounts, traded cash for chips with other players in the room and so on.

You do realize that this is EXACTLY what the OP was suggesting, right? And it was that suggestion that led me to inquire whether this was mere conjecture on his part, or whether there have been rumblings that The Lodge is going to be investigated for “somehow facilitating this” money laundering. As to the rest of your post, I mean, sure…?