Given the speed with which they grew last two years I expect their financial and security processes to be next to nothing.
This is just tip of an iceberg. Insiders would have made tens of millions over last two years of bull run, if not more. This dude just got greedy and unlucky to get caught just as the crypto bubble began bursting.
They are much less enthusiastic about discussing incentives when it comes to things like exchange operatiors front running their clients, centralizing forces in crypto generally, etc.
There is no world in which they can put that genie back in the bottle, so I really hope they don’t actually believe it’s “temporary.”
https://uniswap.org/blog/uniswap-v3-dominance
So there is a world where centralized exchanges have far less relevance than they do today.
Edit: Also, Uniswap...ehhhh. Not a great example for your point.
At some point, you need to interact with the off-chain world (say, when you want US dollars and not tokenized US dollars), and that path to the physical world becomes a point of failure that can be controlled by mundane means such as uniformed people with guns. The crypto-utopian solution is to move everything on-chain. The pragmatist solution is centralized exchanges that more-or-less plays by the rules of wider society and is allowed by society to move stuff in and out of the blockchain.
In this context Circle is still a centralized party that's necessary to interact with the off-chain banking world. But Circle has much less room for chicanery than a traditional centralized exchange. There's no opportunity to front-run, insider trade, liquidate your customers or anything else that OP brought up in the context of centralized exchanges, because all Circle is doing is filling the very simple task of converting 1.00 USD to 1.00 USDC and nothing else.
And even that role might be obviated once enough people transact directly in the stablecoins.
(Not necessarily saying it's likely, just delineating the hypothetical word where DeFi has maximally taken over.)
Coinbase has already started doing that, by abolishing the distinction between the stablecoin, USDC, and its bank deposit USD.
It's entirely plausible that other financial institutions, beyond commpanies like Coinbase which are heavily involvd in the cryptocurrency market, begin doing that as stablecoins gain wider credibility and adoption.
And it’s it’s not even the service I was referring to (which requires that the asset classes be kept distinct).
I swear, something about that comment just set people off, when it should be uncontroversial with the caveats I gave.
Your point was well supported, so I don't see the reason why it got downvoted.
>>which requires that the asset classes be kept distinct
Yes it's not exactly what you described, but functionally speaking, it is quite similar as it enables on-chain and off-chain fiat to be converted one for one.
Please, come back to me when Uniswap's market cap isn't 1/3 of Coinbase's.
There was a case where a person had access to the credit card transaction data[1] and used that data to figure out sales prior to earning calls. That same data is available to hedgefunds willing to purchase it from Bloomberg. They call legally get a companies sales data prior to earnings and trade off that information.
1. https://www.reuters.com/article/us-sec-capitalone-insidertra...
i.e. by definition bloomberg buying the data and making it available to the terminal is making the data public.
Many things that are colloquially thought of as insider trading, are not against the law. For example it's perfectly legal for a hedge fund to hire a helicopter to circle an oil refinery day and night with an infrared camera, so they can get a precise estimate of how much revenue an energy company will announce in its quarterly earnings. This is perfectly legal because at no point was any of this information "misappropriated" in violation of a fiduciary duty. Very clearly the little guy in this case has no chance of competing, and this isn't a level playing field in any sense. But the law simply does not care.
Publicly traded companies themselves are subject to regulations that impede varrious kinds of unfair and prejudicial behavior. Isn't the colloquially interpretation less far from reality than someone might extract from your comment? Since if regulations keep the company from doing it, and 'insider trading' keeps the insiders from doing it-- you're left with those that have superhuman insight from satellite photos or whatever (technically public, but maybe only practically available to billion dollar corporations) -- and at least the hedge funds are vulnerable to noise and misinterpretation. You might get thoroughly out traded, but hopefully not through actually privileged information.
The reason I bring it up is was really the reason behind my original comment: I think that nothing about this prosecution should make people investing in crypto-commodities, ICOs, etc. particularly obscure and thinly traded ones feel any safer from exchange insiders trading against them to their detriment.
All you we can extract from this is that if exchange staff do it for their personal benefit they might get prosecuted. But the staff doing it personally in their own accounts is probably a minor problem compared to the exchange engaging in it for its own profits.
The person in question was sloppy, and as others said, this is probably just the tip of the iceberg.
The card was obviously compromised, and the only reason I didn’t lose money is that I didn’t make any available. So called, emailed, texted Coinbase on 5 different occasions and they never deactivated the card and didn’t appear to have a procedure to do so.
Not a place I would trust with money.
My assumption is that Coinbase or their card provider was breached. That happens and I get it, but the lack of action (the card is still active!) in response to repeated customer inquiry is evidence of a broken process.
It talks volumes that had they done this in a privately held network, it might have been harder to catch them.
All the "blockchain is anonymous, hence it's made by and for fraudsters" is a total nonsense.
The part after "fraudster..." is what sets apart the blockchain and traditional financial networks, when it comes to fraud.
If you commit fraud in the traditional financial system, only the financial institution has a chance to find it suspicious and tip the government agency responsible to investigate.
In the blockchain, literally ANYONE ON THE PLANET can keep an eye on the fraudster.
Are you telling me that fraudsters get caught on the blockchain more than other places?
I'm sorry, but I did not say "more" and "other places" in my comment.
What I said is what I wrote.
My point is: blockchain is not anonymous. The hate bandwagon that says fraudsters have a safe heaven for doing whatever they want without a slight chance of being caught is just fantasy land...
I’ve never heard it stated that way.
If this were a major US company ripping off say a US bank, there would be investigation. But a small start up (I'm thinking of the issuers, not coinbase) ripping off people all over the world for $100- $20k with false promises-- it's practically a victimless crime. Coinbase and the exchanges aren't necessarily guilty of this but they are complicit.
People on this forum should understand that better than most.
The way scandals are exposed are almost always through whistleblowers. That is a fact. If you want transparency and honesty in a system, establish a bounty system and protect the whistleblowers.
Sort of like door locks. They don’t eliminate all theft. But they greatly reduce casual theft.
Open secret in the industry.
Unregulated markets promote all sorts of bad actors. And since the returns are wild anyway, everyone just accepts it.
There isn't any internal control, short of bionic implants, that can prevent this.
So, yeah, this is exactly what coin base should be doing. They should require all employees to list all account addresses they have access to.
It's a trivial ask for the employee and its trivial to scan
but the point is two fold.
One: you've done your diligence so as a company you've covered your ass with the regulators.
Two: you've made it clear to the employee what the rules are, if they chose to open a new brokerage account or wallet address then they clearly know they are breaking the rules so there is no confusion.
as one compliance officer said to me, the regulators aren't looking for perfection, they are looking to see that you are following both the rule you laid out in your internal policies and that you are doing what the rest of the industry does.
Most serious hedge funds won’t even allow you to bring your cellphone inside the trading pit.
Crypto needs to grow up and accept regulation too if it wants to be taken seriously as an industry.
This is just tip of an iceberg.
Sounds like wild accusations to me. Id like to think the company executives have high integrity and maybe they caught others we havent heard of.
You need integrity to implement them, but just having integrity doesn't mean you're going to implement them, or to implement them correctly.
You need expertise, experience, and to get burned a couple dozen times before your institution figures out how to do these things right. And even then, it's a constantly moving target.