Goldman-Backed Circle Buys Digital Exchange Poloniex
bloomberg.com
bloomberg.com
https://www.rollingstone.com/politics/news/the-great-america...
> Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national clichè that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline The Committee To Save The World. [...]
The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.
At the end of the day description without clarity is a bad thing.
Goldman is a company that's funded entire wars, on both sides of conflicts. If you dig behind almost all revolutions, governments, and companies, on the planet chances are Goldman Sachs is behind there lurking.
Google can only dream of having 1/1000th's the influence of Goldman.
Goldman is more politically connected (and more widely invested, at least per dollar of assets, because it's an investment bank, and not tech firm that invested in other firms incidentally), sure, but Google is much bigger by many measures (nearly 8 times the market cap, for instance.)
Sure, if you measure by exactly what an investment bank specializes in, its unsurprising that Goldman does somewhat more of it than Google, but still...
> For Goldman Sachs that would be trillions or on the order of the GNP of the largest countries.
For Google, if it hasn't already crossed into the trillions it will soon; at over $100 billion in annual revenue with over 20% annual revenue growth, it doesn't take that long to pump a trillion dollars through even without counting money flowing through in forms of transaction facilitation that aren't revenue, such as Google's various payment systems.
You can measure Google influence by daily users/processed ads views/youtube videos, and number of people affected by product decisions inside Google.
Google banning crypto ads may have greater impact than GS investments into niche companies.
So, given that number, Goldman manages (and is accountable to clients, as well as their own shareholders, for the management of) a little under 2 Googles worth of market value.
Google manages 1 Google worth of market value, accountable only to Google shareholders.
The point is: with $1.5 trillion in assets, Goldman Sachs can, just by slight adjustment in its investment policies, make whole countries prosper economically, or ruin them. Google does not have that much influence.
You're significantly overstating the influence of one institution which, while veritable in financial and New York City Democratic circles, is also one amongst many heavy banks which now have to share the mantle with the likes of BlackRock, Fidelity, et al, not to mention the reach and influence of tech.
I do believe Goldman Sachs is the more powerful institution of the two we've been discussing - listing off other influential financial institutions doesn't really support the counter-argument. Google is also one amongst heavy tech companies such as Apple (arguably the most influential tech company since it has the most capital, not because it has the highest market cap), facebook, etc.
Goldman has influence worldwide. Google can hardly go 6 months without a billion dollar fine from the EU. Google lags behind Baidu and Soso in China - these institutions are just not in the same ballpark.
If both of them were to disappear off the face of the Earth tomorrow, which would would people notice more? Which one would people miss more?
Google MarketCap is based on a promise that tech is taking over the world, but the day to day business of Google is pretty much insignificant.
Goldman literally decides the direction of the world through their investments, policy and lobbies.
The fact that they are pretty much invisible is actually a feature.
If you dislike Goldman Sachs, you’re inclined to believe it. If you don’t dislike Goldman Sachs, you’re inclined to be more skeptical about it. The description is fully open to interpretation, which means believing it is a function of ideology and identity more than facts and reality.
Descriptions are only meaningful insofar as they help differentiate things. There is no precision in calling a giant financial company a vampiric squid. So what do we actually learn? It’s a total sideshow to a meaningful discussion about cryptocurrencies, cryptocurrency exchanges, the evolving role of traditional financial institutions in cryptocurrency trading, or the future legitimacy of digital currencies as an asset class.
A lot of the issues with current exchanges is a combination of scaling issues, scaling/trust, and regulation. I feel like conventional equities exchange would be able to deal with those issues quite easily
For starters, cryptocurrency exchanges need to know the crypto they trade with VERY well. It's an area where the law won't help you if you mess up. If someone steals a bunch of bitcoin from your exchange, a police report isn't going to get it back, it's gone for good.
Then add in that crypto exchanges are 24/7 (not just during business hours), and I'd argue that scaling them is much harder, nobody knows if cryptocurrencies will double (or more) in usage over the next few months, or if they will halve (or more) in that same time. A single runup could cause 10X the trading activity overnight.
I do think that we need more legal, regulated competition in this area, but I don't think for a second that the answer is Nasdaq trying to shoehorn cryptocurrencies into their current systems, they are just too different.
With good KYC regulation and enforcement many "hacks" can be mitigated. The Bitgrail hack, for example, was performed by customers taking advantage of shitty code. Presumably they know which accounts withdrew funds, but if they knew who the customers were that belonged to those accounts, they could go after them. This stuff is a big reason why I support exchanges being regulated as money transmitters.
Or even worse in some cases, someone that maliciously "burns" all of your bitcoin irrevocably destroying it forever by sending it to a bad address. Even if you catch the person that did it, that bitcoin is gone forever, and you can't just bring it back without concensus of the extreme majority of all miners and users (which isn't going to happen in bitcoin, it barely happened in Ethereum when it was much smaller with the DAO hack)
That's really nice because at least you don't have appreciable risk from the exchange itself when you use CFE from your usual broker.
The big players that you'd expect to move first in traditional financials would be the clearing houses, notable The Clearing House and Apex, with Apex, as the scrappy upstart, seeming to be the obvious candidate for offering vaulting/clearing facilities for cryptocurrencies. I'm surprised they haven't made a move into it, though I've heard rumbling that they've been dipping their toes into the space.
Because of this, a legitimate exchange would never really gain traction. Just look at Gemini.
Cryptocurrencies are far from unregulated[1].
[1]https://coincenter.org/entry/cryptocurrencies-are-far-from-u...
Manipulating customer margin calls becomes trivial if you can look at the books and calculate if buying/selling x amount of the order book will margin call y amount of funds and decide its worth it.
>Coinbase, Inc. is licensed by the Virginia State Corporation Commission as a money transmitter, but such license does not cover the transmission of virtual currency
On top of that, we're talking about the big players like Bitfinex, who created USDT simply so they didn't have to comply with any sort of banking laws, let alone securities trading regulations.
Even so, these so called regulations you point to don't exist on the biggest exchanges like Bitfinex, Binance, or even Poloniex. Poloniex pulled out of states once licenses started being required to deposit USD.
Not necessarily. Certainly not if you see theee accounts as a source of lead generation.
Scenario:
(a) Regulators approve Bitcoin for use in banking, let's say
(b) Some change is proposed to the Bitcoin protocol, improving privacy
(c) Regulated firms are not able to do proper KYC/AML stuff if the upgrade activates
(d) Firms and regulators (and maybe legislators) push back against the upgrade
Now you have core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol.
It could be argued this would be a good thing.
As it stands, if someone nabs your crypto you have no means of recourse, this is a bad thing.
I'm pro-centralisation in the sense that it comes with regulatory protections that are a net good for the average person, in my opinion.
If decentralisation comes with the risks that cryptocurrencies presently present, I'm not really interested.
Reading your comment, I don't know why you would be interested in cryptocurrency at all.
1. Are optimistic about bitcoin.
2. Want to see it be useful for something besides speculation.
People don't speculate in physical cash. Also, cash being physical constrains the speed at which it can move. It also makes things like cameras useful.
A: Regulator influence on Bitcoin would be good, as it makes theft easier to reverse.
B: But how would you do that while keeping the decentralization?
C: You can't. But no one likes to hear that if they're optimistic about Bitcoin and think it can be use outside of speculation.
Me: Cash has the same theft-irreversibility issue, with the same tradeoff against centralization. What's the difference?
I was asking how your comment was relevant to that exchange, not for a second way to restate what you already said. I was confused because your followup comment did not have any clear relationship to that exchange, about the tradeoffs between utility, reversibility, and decentralization. To quote your comment, with remarks about the relevance:
>People don't speculate in physical cash.
How is it relevant that people don't speculate in physical cash? The fact that people don't speculation in physical cash doesn't mean people only speculate in Bitcoin.[1]
>Also, cash being physical constrains the speed at which it can move.
How is it relevant that cash has this constraint? That would be a point in favor of bitcoin in the context of the above discussion, and would lower the burden for proving utility.
>It also makes things like cameras useful.
I don't see the relevance of this either.
So, again, I'm asking how your comment relates to the discussion that just happened. It seemed like you were just dropping in to make a general "why bitcoin is bad" argument, which is why I asked how the comment was relevant. I still don't see it. Can I assume there was no relationship, and you just saw it as an opportunity to say why bitcoin compares favorably to cash?
[1] The comment only works if you assume Bitcoin is only used for speculation, which would be assuming your conclusion.
Nobody (in the general sense) actually cares about decentralization; it serves no utility in and of itself. People only care about the ability to easily transact regardless of borders.
> Me: Cash has the same theft-irreversibility issue
I'd argue this isn't entirely correct. A cash holder can insure against theft of cash kept on premises, and in transit to a deposit facility; professional services can be hired to transport cash. As far as I'm aware these protections don't exist for cryptocurrency
> The comment only works if you assume Bitcoin is only used for speculation
At this stage it appears to me that is it's only (major?) legitimate use. Other uses probably include money laundering, and the exchange of value between parties involved in illegal activities, or for the purposes of evading regulations.
>A cash holder can insure against theft of cash kept on premises, and in transit to a deposit facility; professional services can be hired to transport cash. As far as I'm aware these protections don't exist for cryptocurrency
You're referring to an optional add-on to cash that is not inherent to it. The act of holding cash does not automatically get you the protection of someone replacing it when you're mugged, and neither does Bitcoin have automatic replacement.
There do exist services that will thusly insure cash. But there's no inherent reason why it can't be provided for bitcoin too, it's just that the market isn't bit and mature enough for people to have sought it out (though Coinbase claims to have it).
In any case, the whole issue of "insurance in transit" is kind of obviated for an electronic currency too, at least with respect to physical theft.
What evidence do you have to support this ridiculous claim? The vast amount of interest in cryptocurrencies seems to indicate otherwise, not to mention the use of all kinds of decentralized cryptographic protocols.
I'm bullish on crypto as a global "internet dollar" but bearish that Bitcoin is the right one.
I might add that banks want in because they make money on orderflows. Bankers will trade anything (orange juice concentrate/pork belly/oil/derivatives/shares/you name it.)
Every new "coin" that comes along now just becomes a pump and dump.
Bitcoin was around before it had any value and people were just giving it to one another for fun or buying Pizzas for 20,000. It has benefited most from the "network effect" . My only major concerns about it are the environmental effects and transaction throughput.(other coins are allegedly faster for now but will probably buckle if they become as big as the above three.)
LTC is around nearly as long ,, and ETH is a whole new concept, though it has security and programming issues.
I should mention its survival doesn't mean it's value will go up.
For example a coffee machine that accept BTC, it can then pay for the water, electricity and buy more beans, milk etc from the Bitcoin it earns itself without human attention. Arguably easier to track the profitability and economics of the machine, with less effort - still needs to be cleaned and refilled (for now!).
You could take this one concept and apply them to things like self-driving cars or mobile phones.
Yes, all of those low-level tax evaders with their thousands of dollars in Bitcoin avoiding taxes via easily traceable transaction and plenty of digital forensic evidence! That's the real concern preventing bitcoin's adoption by legitimate businesses. /s
The IRS could employee <10 people fulltime to monitor these guys each year and not break even in returnable taxable income...
There are far bigger problems with cryptocurrency adoption/scaling that are tirelessly being worked on.
Money laundering and tax evasion via cryptocurrencies has hardly resulted in any level of significant criminality, despite the endless years of FUD/hype that it's attracted...
https://bitcointalk.org/index.php?topic=1102135.0
https://forum.bitcoin.com/dev-tech-talk/simple-guide-to-tumb...
Freedom from law and oversight is mostly what the Cryptocoin anarcho-capitalist and libertarians focus on as the primary benefit. Satoshi's white paper stresses the feature of pseudo-anonymous transactions. Bitcoin tumbling has been going on since the very early days of the Bitcoin network. zKSnarks are an innovation to make this even more obfuscated and less traceable.
This is why a few of the most famous Bitcoiners are trying to establish a tax haven in Puerto Rico.
Dozens of American entrepreneurs, made newly wealthy by
blockchain and cryptocurrencies, are heading en masse to
Puerto Rico – a US overseas territory – this winter. They
are selling their homes in California and establishing
residency on the Caribbean island in hopes of avoiding
what they see as onerous state and federal taxes on their
growing fortunes, some of which reach into the billions of dollars.
ICOs and fundraisers are an easy front for money laundering in cryptocoin land.
Based on Goldman's well documented history of price manipulation tactics (in regulated markets), allowing them to own an unregulated exchange is just about the worst thing to happen to cryptocurrencies in a long, long time.
So they're probably buying Polo for X shares of Circle, where X depends on their current undisclosed valuation. But it's probably a pretty big chunk of their total.
https://www.circletrade.com/ and simple searches do not give much information.
There's a certain hivemind around tether that wont necessarily be convinced by the due diligence on a large deal. For some that Goldman is involved is only more evidence.
Tether is a lesson in not believing the commonly accepted "truths" in online forums. Paid comments and self-interest abounds. Reader beware.
They’ve taken a lot of regular folks money and provided no confidence to date that they’re solvent.
Online sentiment is purchasable, many icos offer pay-per-comment schemes and unsuspecting people read enough sockpuppet comments eventually believing it as fact, this is not contained to cryptocurrency and I worry when it seriously spreads to more important parts of modern life.
> provided no confidence to date that they’re solvent.
Goldman Sachs just bought a good fraction of all tether in existence for hundreds of millions, does this not say something?
Please check my other comment here for a proposition.
But that's exactly what you are about to do as part owner of Broadcom. I would certainly say that, this is how equity works.
GS/Circle now have over $200M of Tether liabilities on their books.
Now step back for a moment and ask yourself who has more grasp on the financials of the situation: The acquisitions team of a half billion dollar deal or a group of internet commentators?
It still doesn't say 'audit', which is claimed right there on the tether homepage
That's now occured, it's clear they can handle the sort of % collapse that would decimate financial institutions approved by regulators (see Swiss currency movements bankrupting regulator approved companies far across the globe)
They operate in a grey area of international law that often falls outside the world police grasp, this obviously upsets the world police.
There's more to tether than meets the eye, one day it will be a study into online misinformation.
This is just more misdirection.
Tether claim frequent audits yet have never had one. That's a straight up lie.
Goldman Sachs just bought a company with $200m worth of Tether liabilities. I'm sensing some cognitive dissonance from the usual tether-doom crowd about that fact.
Nope, didn't. I said there were no audits, you did some handwaving, I repeated that there have been no audits.
>> Goldman Sachs just bought a company
No, they didn't.
This is predictable and irritating. A startup which was already in the cryptocurrency space, in which Goldman had invested 50 million (alongside another 150 million from other parties), bought Poloniex. Goldman did not. Learn to actually read the news. Goldman do not fully or even 50% own Circle.
Step up mate. The offer was made, put your money where your mouth is. If you are so confident why not bet on it? we can make it cryptographically provable for all to see, why on earth would you not get involved in such a sure thing? Step back for a moment and look at what is happening with online commentary re: tether and ask yourself whether you are a victim of it.
Still no audits. Still got lies on their homepage.
And seriously, are you twelve? You sound like it.
We'd appreciate it if you'd (re-)read https://news.ycombinator.com/newsguidelines.html and take the spirit of this site to heart when commenting.
I will consider myself reminded of the rules.
Here's how I see it play out in the next few months
1) Circle decides to pull away from USDT
2) Clients are given a choice to either move USDT to their own off-exchange wallet or allow Circle to attempt to convert to fiat, no further other trading is allowed during this cancellation period. Circle then freezes remaining USDT wallets and tries to redeem them to USD with Tether Inc to settle with clients in USD.
3) Tether Inc can't support the withdrawl request, thankfully though the T&C say they dont have to.
4) Shit hits the fan.
5) It becomes evident where the "paid comments" and "self-interests abound" align
I have no inside info about their finances other than a gut feeling about the campaign against them.
Would love to see some commentators put their money where their mouth is.
Happy to negotiate longer timeframes.
See also: https://en.wikipedia.org/wiki/British_Virgin_Islands_bankrup...
It will help them perhaps more easily manipulate the market. After all, they can collect info on all the players' behaviors and predict trends accordingly? Deploy massive amounts of capital where needed? The possibilities are endless.
http://fortune.com/2018/02/26/circle-cryptocurrency-trade-bi...
As much as I delight in seeing a traditional firms add legitimacy to cryptocurrency, I can't help but be slightly suspicious when a known HFT player buys an exchange in a market that's largely unregulated.
Granted, to the best of my knowledge true HFT isn't really possible in the FX market, and major players there still find a way to make everything a veritable cesspool.
Competing against someone who bought an exchange and is running an HFT bot on the same servers, yeah I would stay far away from anyone doing that.
Coinbase/GDAX isn't perfect by any means, but they do seem to be getting more stable, while doing 3-4x the volume of Polo.
How does this work now? Like, can you own a large exchange and also trade on it?
https://poloniex.com/press-releases/2018.02.26-Poloniex-join...
1. But does that mean now that Goldman Sach will allow their clients (or their own internal) to at least allow investment in crypto?
2. How to know if there are not manipulating the market?
3. If Poloniex suffers liquidity issues (if USDT is invalidated) then is Goldman going to take care of the situation?
I genuinely wish now, DEX platforms should be promoted like the one we have for BitShares. Centralised crypto exchanges are beating the purpose of decentralization.
What books or websites should one read to learn about such things?
https://www.bloomberg.com/research/stocks/private/snapshot.a...