Law should require that depositors always be the most senior creditor. And suspension of withdrawals is the deposit taker defaulting on its obligations, which allows depositors to force the company into liquidation. The proceeds of which are shared between creditors on an amount-owed basis.
Basically, for a marginal yield in a volatile industry, you are increasing your exposure to counter-party risk. People using these services are greedy and dumb, and I can't for the life of me understand why anyone would do this.
Also; I expect that a significant number of these companies will eventually be sued and will be forced to repay their customers.
The money was already moved. They will declare bankruptcy.
Also, they may not have lost any real money, so the users may not have the rights they think they do here (and probably shouldn’t, given the courts aren’t funded to pursue imaginary internet money).
I am thinking about how over the years we stopped owning digital purchases like music and books, and instead moved to a model where the service gives unlimited access to the good in exchange for a one time payment. At first it was a few fringe services, and now this is basically the norm when it comes to digital purchases.
How far would we be from a future where a brick and mortar "banks" offer their standard services, but also a "fancy account" that feels more attractive but doesn't actually work like a bank account anymore.
It won’t. It’s been outlawed since the 30s. China had its wealth management product era, and is now cracking down. Nobody financially literate should be falling for a yield farming scheme.
https://www.ipe.com/local-authorities-hold-over-1bn-in-icela...
(why would a UK council keep its money in an Icelandic bank? Higher interest rates. Where did the higher interest rates come from? Higher risk.)
If a platform wants people to lend money to them, they should be a licensed (and FDIC-insured) credit institution.
"23.3. Please note that in particular, any of your losses caused by any of the following events, including but not limited to: "
" loss of profits, sales, business, business opportunity or revenue; " (they made this section a lighter hard to read gray than the rest of their TOS)
https://www.vauld.com/legal/terms-and-conditions
Even Celsius was more straightforward
"In the event that Celsius becomes bankrupt, enters liquidation or is otherwise unable to repay its obligations, any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable, and you may not have any legal remedies or rights in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under any applicable laws."
The people whose withdrawals are suspended are NOT depositors. They’re unsecured creditors, the terms of such services generally say they transfer the right in the tokens to the exchange or lending co.
These companies aren’t banks. They should not have been allowed to grow as they did; they were obvious ponzis. Had they had the regulations you advocate they could never have formed in the first place, or they never would have got capital.
At least when Full Tilt Poker was raided the previous decade the online gamblers didn't pretend Full Tilt was some kind of depository bank.
No. In most systems, depositors are first. In America, banks don’t go bankrupt, but instead go into court-supervised FDIC receivership.
I have some sympathy for those who lost money in the first few crypto failures. At this point, it’s fools being separated from their money.
This is why Western governments have bank insurance schemes to make the depositors whole in these cases.
Fees don't exactly count unless they are outrageous. Bank fees are usually fixed. Like $20 wire fee.
12k cash. You can withdraw to another financial institution without restriction.
So what? It's your money. Why would you have to pay a goddamn 0.5% plus whatever over anything over that amount?
Similar to the way Merrill Lynch was forced into a shotgun marriage with Bank of America to avoid a collapse, and a number of similar firms during the collapse of Wall Street.
Yeah the Merrill Lynch one I am more familiar with and how much it has cost BoA
As in: none of the scum responsible was strung up and all the dipshits that caused all of it were bailed out, you mean.
It's less bad overall if the company suspends withdrawals and tries to sort it out in an orderly manner than if it just hastily liquidated everything to survive the run until the moment of running out of assets to deliver.
This is a matter for Singaporean bankruptcy law. This company seems to not have been registered as a bank or whatever the equivalent in local finreg terms is, so you'll just have to file with the Singaporean court and hope.
> @CelsiusNetwork is pausing all withdrawals
It's the CIIIRCLE of LIFE!