Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers
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The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence.
Crypto doesn't have that. It has a lot of advantages (I use crypto myself) but it also has a big disadvantage, for now.
When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.
The idea that the traditional legal system prevents funny business with money is naive.
9/10/2001: Rumsfeld says $2.3 TRILLION Missing from Pentagon https://www.youtube.com/watch?v=xU4GdHLUHwU
The Pentagon’s $35 Trillion Accounting Black Hole https://www.yahoo.com/video/pentagon-35-trillion-accounting-... https://www.bloomberg.com/news/articles/2020-01-22/pentagon-...
Pentagon's Defense Logistics Agency loses track of $800m https://www.bbc.com/news/world-us-canada-42954050
Also, I don't know any law that exempts crypto companies from being taken to court.
Because modern legal systems and modern economies work on the assumption that malfeasance is a reason to un-do what crypto systems want to make indelible. This is an obvious and obviously good thing to people who are not absorbed by this odd groupthink. That impedance mismatch is an excellent indicator of why this technology is viewed as stuff for cranks and grifters, even were there useful applications to be had for the public.
> Also, I don't know any law that exempts crypto companies from being taken to court.
...while at the same time the crypto community is wracked by disposable entities fleeing into the night, beyond any practical legal reach.
On the other hand, if somebody compromises your debit card, Bank of America will make you whole while they reverse the transactions on the backend.
Bank of America can do very little for your Russian payment disputes.
Pardon the ignorance, but, how, exactly?
Didn't know crypto had a contract enforcement apparatus in Russia. How does that work?
https://news.bitcoin.com/doj-launches-network-of-over-150-fe...
It’s useful for a cartoon version of finance. It’s "perfect for finance” in that crypto users are willing to tolerate high fee burdens, which makes them profitable.
It is not about immutability or what level of transparency the ledger has, it is about control and who can influence both business as usual contract execution and exception handling. It is a power struggle. Don't miss the forest for the trees.
I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig. The owner and the bank (or government) can each have a signature, and a chargeback can occur when both signatories agree to execute it.
By the way, the law already has ways of punishing irreversible actions (i.e. murder, destruction of property).
Evading tax laws or conducting illicit transactions is a core appeal of crypto, and obfuscating identifiers in crypto to achieve those ends is what crypto tumblers are all about.
> I'm no expert but I understand that undo-ing transactions is pretty trivial if you use multi-sig.
Per [1] multi-sig only lets you require multiple signatures to create a transaction, reducing the chance you do something stupid, so sort of like a physical check that requires multiple physical signatures. Multi sig doesn't let you (or the other signers) reverse the transaction once it is complete.
For that, you must contact the recipient and convince them to return the crypto, hopefully by asking them nicely.
https://www.coindesk.com/tech/2020/11/10/multisignature-wall...
The other important aspect of a working financial system is the ability for a 3rd party (courts/law enforcement) to undo transactions. Crypto makes that impossible without the cooperation of the offender.
There are also others: https://www.coindesk.com/tech/2022/09/28/stanford-proposal-f...
The "sorts of people who take these seriously" will never be happy, so that's fine.
One still does not exist for cryptocurrency.
Crypto is unique in that transactions are immutable and do not scale in difficulty with the amount being transferred. Ransomware gangs do not choose to accept cryptocurrency payments because it aligns with their politics; they do so because it is the only way to move millions of dollars across international borders in an undoable fashion.
With crypto, you must have the help of the criminal, because only they can unlock the wallet.
(Granted, you can't deposit a house or car as collateral, if that's what you're getting at?)
I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance.
> Funds are simply swapped.
If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say that I still own the TSLA, and simply borrowed against it.
Crypto lending platforms like Aave work in the same way - users borrow against assets. Yes they're overcollateralized, but so are margin loans and many other useful loans.
Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing".
Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing.
Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.
If I wanted to finance an NFT, first I would negotiate with a lender and get a pre-approved loan. The NFT marketplace wouldn't even need to know about the lending mechanism. In a single transaction, I could take a flash loan, purchase the NFT from the marketplace, take the pre-approved loan, and use that to repay the flash loan. I now own an NFT with a lien, which I can enjoy in the usual ways, e.g. I could integrate it with my Twitter profile.
How is this not financing?
If Person B repays the loan within T days, the lien is removed, so Person B owns it free and clear. Otherwise, the NFT is transferred to Person C.
The pre-approved loan would just be a message signed by Person C, granting anyone permission to transfer a certain amount out of Person C's account if (in the same transaction) they also grant Person C a lien on that particular NFT.
Person C's loan funds wouldn't be in an ordinary account, but rather in a smart contract which understands these liens and loan approval messages.
No, that was invented in the late 70s, with the Merkle tree.
The whole wildly expensive consensus phase in cryptocurrencies is absolutely not needed for immutable ledgers.
> It's literally perfect for finance
People have been using digital certificates in finance since the 80s. When there is a single source of truth, which is the case for almost all finance except cryptocurrencies, there is no need for the horrific expense of the blockchain.
> Also, I don't know any law that exempts crypto companies from being taken to court.
Who said that? No one. No one at all.
> Who said that? No one. No one at all.
jedberg: "[crypto] ... prevents a lot of funny business because people are afraid of getting caught and being put in jail" https://news.ycombinator.com/item?id=33110400
> No, that was invented in the late 70s, with the Merkle tree.
Ok then, crypto is like ink that cannot be erased, with distributed copies throughout the world.
My point is that like ink it's a technology like any other, that can be applied to various problems by various entities including the government. Crypto is not automatically subversive or incompatible with law/finance.
As many are finding as the U.S. Securities and Exchange Commission works down their case backlog.[1] Four enforcement actions in the last week. Kim Kardashian paid $1.1 million for hyping some crypto product without disclosing how much she was paid to do so.
I lost money on companies which marketed themselves as using crypto, but were in fact not.
Accounting failings happen to all of us. The only people with perfect bank accounts are either (1) accountants themselves or (2) never really bothered to look.
Man, was I grateful for the human considerations built into traditional banking!
With my crypto transactions I never send the private key with it, unlike with credit card payments where I transmit the private information (CC numbers). Going off anecdotes, I've found crypto to be vastly safer for my transactions than the banking system.
The number is greater than two.
In order to prevent fraud and obscure details from spies, the pentagon is setup to hand out money via multiple archaic systems rather than a single computer system. This limits the possible damages, but means audits are really slow and will report massive discrepancies before their complete.
https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
https://www.defense.gov/News/News-Stories/Article/Article/20...
And in fact that was spun too, because (as you read farther down the linked debunking) the original quote was "$2.3 trillion were unsupported by reliable explanatory information and audit trails or were made to invalid general ledger accounts", which doesn't even support "cannot track". In fact, per that statement, we can track it, we know where it went, we just don't know why or in some cases to precise recipients.
Those are accounting failings. They're bad. A system with failings like that is certainly going to be subject to exploitation and fraud. For sure they should fix it (and to some extend did). But to claim that all of that $2.3T was fraudulent is just a plain lie.
> But to claim that all of that $2.3T was fraudulent is just a plain lie.
I didn't. But I am replying to people who may think that all of crypto is fraud.
Lack of legal system is allowing for all of the problems
Ray Dalio has a good video about what that means and how this has played out every time over the past 500 years:
Dalio is talking his book.
> Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and the manager’s portfolio.
[1] https://abnormalreturns.com/2010/02/18/everybody-talks-their...
Each with their own advantage/disadvantages, and you get to choose which one to use after considering the tradeoffs.
Things I would use crypto for:
* Money transfers, particularly cross border payments. Low fees, quick confirmation from all parties.
* Any transaction that I would like to keep my privacy on (and this does not mean illegal things, btw).
Things I would never use crypto for:
* Storing wealth. For me personally it's too much of a bet, we're always one right (or wrong) math proof away from all of this becoming dust.
* Smart contracts. Anything that requires a contract between me and someone else, I'll keep using the tried and tested way of common law. I'd rather have my business backed by the Delaware Chancery Court (which has proven to be quite effective these past weeks) than by the code wrote by some random upwork contractor.
Crypto transfers for say USD->EUR via USD->BTC->EUR are just adding extra foreign exchange legs in the hope that the BTC holders on either end will give you a better deal.
Immediately followed by:
>The reason the money transfer fees exist, slow confirmation, etc is there is no incentive to do so otherwise.
Huh? Is it solved or not? It's unclear to me where do you stand.
de facto, moving ETH->ETH is faster and cheaper than using the standard forex infrastructure.
Your usage case doesn't really work because almost nobody cares about that. You'll find a few idealists interested in that, and a very few people that need to transact with some random person in Bangladesh. Pretty much everyone will just do a regular bank transfer or use Paypal.
What got crypto to become popular is the "get rich quick" schemes, which not only don't require stability, but rely on instability and people attracted to the idea of exploiting it for profit.
https://bitinfocharts.com/comparison/monero-transactions.htm...
20K transactions per day currently? A single city would have more transactions than that just from people having breakfast in the morning. And these are world-wide stats.
Well I could go on laughing at the "nobody cares" take, but you don't care so I'll leave it there. Enjoy your CBDCs in the metaverse.
And why the hell not? It's supposed to be a currency.
> It's for large money transfers so at least compare it to bank wires.
And then what, exchange to USD? That'll bind it to an exchange rate, and create the same problems BTC has. Rather than having direct use as a currency, it's a betting mechanism.
> Very few people know about Monero yet. Credit cards were at 20K transactions per day at some point.
It's been almost a decade. That's an eternity in internet terms. If it only has 20K daily users world-wide then it's failed as a currency. People usually trade with people close to them, and if there's 20K people active in the world then that suggests either a very tight knit community somewhere nobody else cares about, or a bunch of nerds all over the world.
> If you know how to look at the chart you linked, you can see the TX count growing sustainably over several years.
I see it growing way too slowly and oddly. Yeah, there's periods of growth but there's also stalls and falls, and going back and forth. Growth also tends to start from a spike. To me that suggests Monero doesn't have that much traction of its own and in a good measure profits from the failures of other crypto systems.
I'm not sure if that's an accurate analysis on my part or not, but if there actually was interest in what monero provides I'm quite confident it should be growing a lot faster and be a lot more prominent. It's the one crypto that actually wants to be a currency, and yet near nobody seems to be interested in that, preferring to gamble with BTC and ETH.
> It's a more honest comparison to include transaction counts of non-fungible cryptocurrencies like BTC and ETH that people are unfortunately using as a currency for now.
Those are heavily congested, so the transaction counts is mostly what the network is capable of, not what people would like to have.
> Enjoy your CBDCs in the metaverse.
My what? If you're talking about the project I work on, we formed specifically around the rejection of cryptocurrency and in general don't care for fiat transactions either.
As for me, I'll continue to use Monero and precious metals and barter, and use fiat and the coming CBDCs as little as possible. If that's alright with you of course!
It takes all kinds. Though if you don't know what the Metaverse or CBDCs are you got some surprises coming!
Oddly, that didn't happen. The big players strenuously resisted any effort to alleviate the network congestion. I was feeling very confused.
It slowly dawned on me that my type of usage was a niche. The main players were interested in speculating on the value, and held huge hoards they intended to optimally sell once. They didn't care if it took 10 hours for the transaction to go through or they had to pay a ridiculous fee, because a $100 fee is effectively nothing when you're making a profit of $millions.
So far nothing has really changed my mind. If what Monero offered was what people wanted, they'd have switched over en masse, and they really didn't.
You have different standards than me as far as what constitutes a "successful" currency. And that's cool! For example you generally can't buy breakfast with the currencies of silver or gold or British Pounds (in America) either. All throughout history there has been different currencies for different situations and crypto is just another one on the pile. I wish salt would make a comeback myself. ;)
I use cryptocurrencies as private replacements for bank wires. If your standard is that you must be able to buy breakfast in a city with it, then I agree with you it is not a currency by that definition and probably never will be.
As for me I get paid for my professional services in crypto and turn around and sometimes pay other people for goods and services without any conversion in between. Sometimes I convert it to precious metal directly. Sometimes I convert it to a fiat currency or another crypto. Sometimes I hold. It's all good!
Thanks for the conversation and good luck with everything you're working on.
Let me tell you my experience with trying to remit money to my family with crypto. I really tried to give it a fair shot, because finding a cheaper way to shift money around would be really nice.
I wanted to do it via stablecoins, because I have no interest in playing the speculation game with BTC/ETH prices. So the path should be:
* I transfer money to Coinbase, and buy some USDC
* I transfer said USDC from my coinbase wallet to another exchange's wallet
* I sell USDC on said exchange for MYR
* I transfer said MYR to my bank account
* Money goes from my MYR account to my family's
Simple enough, in theory. But, the Malaysian government has granted four institutions a license to trade cryptocurrency, and three of them only trade BTC and ETH, and the last ist BTC/ETH plus litecoin, bitcoin cash, and a bunch of other ones I've never heard of.
So here I'm stuck. It sure looks like the primary audience is speculators and not people like me who actually do want to transfer money cross-border.
But is it actually cheaper though, if I chose to use ETH/BTC? Well, the target to beat is transferwise's 61 basis points (used to be 45) (I'm also a liquidity taker, since I'm not interested in playing with price movements): first is 200 bps, second is 50+10bps, third is a startup that doesn't even list fees on their website, fourth is 50 bps.
But wait, since I'm not using stablecoins anymore I have to also pay liquidity fees on the USD side. Coinbase charges 60bps, bringing the total up to 110 bps, 50 more transferwise. I'm assuming the other exchanges are around that price, but unless they're under 10bps it's not cheaper than using transferwise.
So it's really not looking so good. It's not cheaper, it's not simpler, and it involves just as many KYC checks (required in both countries, and very strict ones on the Malaysian side).
How many people were prosecuted for the 2008 financial crisis though? Neither did the "threat of violence" nor the legal system prevent or even deter those perpetrators.
Crypto also benefits the rich (like everything), but not as disproportionately as the current legal system.
This debate reminds me of the nature vs nurture debate in biology. It's a mirage. In reality, it's nature via nurture. Similarly, there is no inherent divide between government and crypto. One can extend the other.
Are you sure? The WSJ says that 0.01% of all holders control 27% of Bitcoin, vs. the top 1% of households who control about a third of all U.S. wealth.
https://www.wsj.com/articles/bitcoins-one-percent-controls-l...
Whereas in legal-land, the more money you have, the better your lawyers (and whatnot) you can hire.
I stand by my point that crypto disproportionately benefits the rich far more than fiat.
In my view that extends to wallet management, since the rich have security staff dedicated to keeping their Bitcoin secure.
Cryptocurrencies are not about making poor people rich and rich people poor. It is about having the a ability to do frictionless, uncensorable financial transactions among many other things.
The "Bitcoin rich" are vaulting their BTC in tens or hundreds of wallets, mostly cold (hardware and paper), and those have to be managed, backed up, and secured.
> Cryptocurrencies are not about making poor people rich and rich people poor.
Agreed, crypto culture leans to wealth redistribution from suckers to grifters.
And the distribution of Bitcoin might be skewed because one of the largest holders (Satoshi) is possibly dead, and many others would be custodial addresses (centralized exchange addresses, and large funds like microstrategy).
Furthermore, many of the addresses being considered would be inactive addresses by people who have moved on to new addresses. In that case, you have many addreses with "dust" balances which are not claimed by anyone, perhaps as much of 80% of addresses which have ever been used. I have gone through at least 6 such addresses myself, and I no longer use the Bitcoin network (or have funds on it)
It's a lot different than the dataset used for considering wealth distribution among a known population number, whose monetary declarations are necessarily exposed to a government which can publicize this kind of data in a more accurate way.
At the end of the day, any power you think you may have is an illusion. It all comes down to who has the monopoly on violence.
Many people have lost their BTC and other coins to hacks, phishes, hardware failures, software failures and so on. So in the sense of the people from the general public, yes, I can steal your Bitcoin.
> This is like blaming gold itself if the owners of a gold bank run off with the gold.
You can keep it under the mattress and expose yourself to one kind of failure mode. You can also keep it with the bank with the clear expectation that the owners will not run off with the gold and also expect the state to go after the owners if they do. Which is not happening here.
Let's fix that phrase:
- yes, I can steal your Bitcoin keys
And then go further and transfer the bitcoins
Other than that, no, you CANNOT steal "my" bitcoins
Cryptographically verified exchange is a different kind of exchange, and it has its own benefits and drawbacks. one of the benefits of this kind of exchange is that mere custody of the currency in question does not relate to ownership.
Does that make gold worse or better than bitcoin? No, it just makes them different.
Crypto has certain vulnerabilities that gold doesn’t. But it also has lots of benefits.
But I don’t know of any situations where gold banks let them drive trucks of $40M in gold before they stopped customers. It’s just harder to move.
It can lift it several stories up, into the building, where the bank can unload it safely without risk of robbery.
Also, of course, you can't actually steal bitcoin, you can merely steal the keys. That is an actual distinction because possession of the article itself is meaningless without the other half of the cryptographic operation it takes to move it.
bitcoin is harder to insure because guaranteeing the safety of keys remains a challenge.
If I steal your keys, I steal your Bitcoin. And it’s easier to steal the private keys to $40M in Bitcoin than it is to steal $40M in gold (700 kg).
What I meant with my poor analogy is that if a bank is planning on blocking customers from withdrawing funds, it’s much harder to ship out the gold to their friends than to ship out Bitcoin. It’s pretty trivial to allow Bitcoin withdrawals. It’s just logistically hard to coordinate the transport of 700kg of gold out of the bank and to somewhere else.
arguably, if we are making value statements, there are a set of similar trade-offs for physical protection of keys vs. primary material. 700kg is harder to move: that's a security feature. keys are small: that's a security feature, because they are a small O(1) surface area to protect regardless of how much value they maintain control over at any given moment.
these are simply tradeoffs. it is only "easier" to steal keys if they are left unprotected.
here's the enormous truck you would need to carry $40m in gold, apparently: https://www.tkingauto.com/mini-truck/rear-single-tire-truck/...
However fiat money must be protected by people with guns against forgery. With one exception: people in power are allowed to counterfeit it, thus robbing the common people, under protection of people with guns.
Gold and Bitcoin are immune to both types of forgery.
You only get a net positive income for producing gold if the price is higher than the cost of production.
It also worked before the US went to a fiat currency in 1971 when Nixon took us off the gold standard. It also allowed for massive deficits because before they couldn't spend what they didn't physically have and now they can just print it without gold backing it.
Balancing the money amount to the workforce.
And that's what bothers me with the fetishization of "violence is not the answer".
Violence is DEFINITELY an answer. It's what state entities do on a regular basis. Now, it's not wise to rely on violence regularly, when more peaceful methods exist and are more effective.
In my mind the advantage for a US Government-backed crypto is the violence you mentioned above and convenience/traceability. The loss of anonymity I'm sure is a feature to them, not a bug.
Anyone remember the Clipper Chip[1]? CBDC's are literally that but for finance.
Being able to see who is sending money to whom is incredible valuable (even without the ability to manipulate that money, which is worth even more) - remember how much the US intelligence community values metadata.
Sure, the US government has a large amount of insight into financial transactions now, but there's a difference between "a lot" and "literally all of it".
People here seem quite comfortable with the idea of giving their own government the Clipper Chip for finance - are they so quick to forget the lessons of history?
We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless.
If you give away your crypto to some centralized entity and "trust them" that they'll keep your stuff and not steal it, then you don't get the point of crypto and you're using it wrong.
Yes, I know holding your own keys is hard. There are a lot of things that can be done to improve the UX. And even then, I don't think crypto needs to be easy enough for your grandma to use it, because I don't think crypto needs to replace TradFi for every transaction.
I've also heard stories where people were locked out of exchanges during crashes, preventing liquidation, because exchanges stopped or delayed deposits during high volume trading.
Its super cool that you can keep your own crypto, but if you can't trade that crypto, whats the point?
Your parents will never have a custodial wallet. The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
No, it is you who missed the point yet again. If you give your crypto to Coinbase it isn't your crypto anymore. You are entrusting Coinbase with your crypto. FDIC insurance may be helpful if your bank has financial difficulties, but any money you entrust to the bank can be seized just as easily as Coinbase can seize your money. Ask a truck driver who participated in the lockdown protests in Ottowa how secure their fiat money was in the bank after it was unilaterally seized by the government.
> The fact that traditional banking is easier than 'doing crypto right' should give you all the adoption metrics you need.
Does anyone go into crypto because it is "easier" than traditional banking?
Even if you have a private wallet, you don't 'own' your own crypto.
When the Solana network was down [0], could the people that 'own' their own wallets trade their crypto? What about the people with their coins on an exchange?
Don't do that if you want to actually own your coins.
A recent example is Solana. Their network keeps crashing [0]. Everyone keeping their own keys are completely locked away from trading their coin. Everyone with their coin owned in a centralized exchange can trade freely.
If you hold your own coins, you're vulnerable to network attacks and AMM instability/hacks.
If you put the coins on an exchange, you're vulnerable to the exchange's liquidity issues.
How much downtime did Terra have before it crashed?
Nothing like losing all your money because you can't unlock your wallet any more. Or sent it to the tip.
In contrast, crypto is this almost futuristic mechanism that centers developers by giving you a serverless transactional database system on which you not only can work with money but you can implement your own money. I can build my own mechanisms for authenticating access to that money, including--if I wanted to--replicating whatever features I liked from traditional systems. It offers functionality similar to ACH and wire transfers, but as a truly federated system that allows anyone to participate. Does it allow scams? Sure... but only in the same sense that other open systems like telephone networks, e-mail, and the web allow people to run scams! Are you really so closed minded as to not think everyone should get the power to automate their own lives as they see fit? God... I bet you are also one of those people who insist no one should be allowed to write or even install software on their own devices without going through Apple, or who insist that private end-to-end encrypted messaging is going to end civilization by mostly empowering terrorists, child abusers, and "Drug Cartels" :/.
Saurik, it is HN, where people complain endlessly about Paypal, but never want to fix it because that would be 're-inventing banking'.
Bitcoin you can hold it, transfer it, and not much more. Having smart contracts (like Ethereum) allows you to have something like Uniswap, which is decentralized and allows you to trade your coins.
Yes, it's not a fiat on/offramp, but if stablecoins are actually good and backed, in the scenarios you describe you would just buy/sell stablecoins and at a later point exchange those stables for cash.
look into decentralized finance and you will be amazed
But hey now you got my interest: if it's not for normal people for whom is crypto then in your opinion?
[1] This is too long to explain but basically something similar to multisig and time locks to add extra security. Nothing like this exists at least easy to use right now.
If my non-tech savvy grandma wanted to own some bitcoin, I'd probably suggest she just keeps it on the exchange. Counterparty risk is probably less than risk of user error.
I sure am glad that I can be my own bank!
The time before, I phoned my bank and told them I had a charge I didn't recognize, they asked me to fill in a form and refunded me within 48 hours.
top of HN today
EDIT: link to thread https://news.ycombinator.com/item?id=33125442
People always say this, but you definitely have to trust that a group of unknown validators/miners/stakers will choose to keep working on your chosen chain, just as much as you have to trust that the bank will keep doing it's job as they promised you they would.
And before you say "I don't need trust, validators have economic incentive to keep doing it, and if they don't someone else will", I have something to tell you about why people choose to work at banks (it's the salary).
This statement supports exactly the opposite of the point you're trying to make.
Think about it:
* Bankers have economic incentive to work at a bank (the salary)
* Validators have economic incentive to work on your chain (the block rewards)
That's literally the entire point. You don't need to trust any validator, only that the majority are self-interested, rational actors.
My point is that by the same logic then banks are also trustless.
You need to trust bankers because nothing prevent them to just take your money. They're not working for you, they are working for the bank.
They can 100% choose to stop validator your particular chain, therefore causing all transactions to cease.
Remember when that literally happened to Solana?
> My point is that by the same logic then banks are also trustless.
There's no logical connect with what you're saying at all. Ethereum is "trustless" because nobody can steal ETH from a properly secured wallet, not even the validators.
You should probably understand the basics of how validators work before making a comment on them....
And to be clear, what I mean is that there's nothing to stop validators from not doing work on your behalf, therefore killing the chain.
Remember when that literally happened to Solana?
Edit: >You should probably understand the basics of how validators work before making a comment on them....
I'd love for you to walk me through, in detail how Ethereum and Bitcoin compile transactions into blocks, since you're the expert.
This is an even better incentive mechanism than a bank salary. It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.
1) My joke was how much work you were having “properly secured” do. It’s a genuine trope called no true Scotsman. Every crypto phenomenon that involves theft “wasn’t decentralized enough” or “wasn’t properly secured”. But then centralized databases are discussed as a monolith.
2. > Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain.
Sure. That’s an economic incentive. Bank workers get fired and lose salary if they don’t show up.
3. > It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.
Yeah, like getting paid in stock?
Edit: still waiting for the definition of a mempool as well.
They can suddenly leave your cryptocurrency of choice by simply cashing out and switching to the "block rewards" of another crypto scheme, and then you are going to be alone with the bad actors.
But my main point is that people see a problem with the government and jump to the conclusion that we should just get rid of the whole institution without understanding the history of that institution. So bitcoin decided to get rid of govt control of money, which is just like a small town getting rid of their property taxes. It sounds great and works great until a bridge unexpectedly collapses and you have no way to pay for a new one, or until someone finds a bug in your defi code and borrows all your crypto for 1000 years at a zero interest rate.
"Any crypto that is actually usable by normal people isn't real crypto and any problems with that stuff doesn't count!"
This “buh buh buh Bitcoin isn’t a crypto!” meme that’s popped up since the last major crash is childish.
> We hear stories here every now and then about how their bank/paypal/etc froze their money and they are fucked. Crypto allows you to actually own your stuff. With fiat unless you hold cash, you can't do that. Crypto is about being trustless.
It's funny how you write "with fiat it unless you hold cash, you can't do that". So what you mean is really with fiat you can do it just as well? The reason why people don't want to hold large amount of cash is convenience, the possibility of it getting stolen, lost... Interestingly many of the same reasons why people don't want to hold crypto themselves either.
I'm not even endorsing crypto, Just pointing out how much people misunderstood what the point of crypto even is. No company should receive money for holding your keys unless its dropbox
it is not likely what Celsius did was legal (or consequence free via the legal system) , so that has nothing to do with the matter that their company held crypto assets
adding clearer fiduciary duties to company’s that hold crypto assets is entirely possible and so also has nothing to do with crypto
But it does have to do with crypto, because the company involved was holding crypto like a bank, but aren't regulated like a bank because it was crypto.
Crypto, unless it receives the backing of a country (that is, the US decides to switch to bitcoin for some reason), will _never_ have actual value.
This isn't decentralized cryptocurrency, this is sending coins to some centralized corporation and expecting that everything will be fine.
> Crypto doesn't have that ... for now.
Subtle!
The word violence has many euphemisms, but you are using the word violence here as a euphemism for the power of the state to enforce its laws. You can argue about the laws themselves (as we all do) but to not enforce the law is anarchy.
https://en.wikipedia.org/wiki/Rai_stones
One could argue that, in this case, the entire society is "people with guns". Which is fair enough, but, again, it's important to keep in mind that this concept does not intrinsically require anything equivalent to the modern state.
Crypto is a bit like the early internet. People thought the liberation of information would make people smarter and democracies. Instead we built giant skinner boxes where people ignore valuable information in favor of random stimuli.
It’s likely the most dystopian outcome for crypto is the most likely - something like Central Bank Digital Currencies where every transaction is logged and financial privacy is erased. At the edge you might have something like flexible pricing where anyone who doesn’t own a business will be charged more money for transactions if they have more money, thus making sure that capital owns everything and can’t be threatened in the future.
That is already the case though with just regular bank accounts and debit/credit cards, no? There's still privacy in cash, but cash is getting more and more limits placed on it to make it harder to use for this exact reason - and it's not even new, e.g. Sweden has been intentionally openly pursuing "cashless society" as a goal for over 20 years now.
what does this have to do with EDM?
Techno = A movement that is largely an exercise in pushing computers/midi to their limit while creating inventive music.
EDM = event driven marketing. pop music with a 4x4 kick drum.
...Yeah I know, semantics.
Also, I'm sure it's super hard to push the limits of all 127 values of dynamic range that MIDI offers, especially when you also write all your music on common time
Celcius is not decentralized, it is not a community led-project, it is not free/open source software.
So who is "they"? It's obvious to me that the type of person who endorses something like celcius just sees cryptocurrency as a free money machine, and does not actually have real princples regarding decentralization and whatnot.
Cryptocurrency can be strong against censorship etc. But it is clearly not sufficient in itself for censorship resistance etc (e.g. what value is being secured? from who? how?) It is analagous to saying that encryption is good for security but the presence of encryption is not sufficient for security (e.g. what data is being secured? from who? how?).
The fact that celcius can steal your deposit despite the fact that cryptocurrency is involved is analagous to the fact that GMail can read your emails despite the fact that HTTPS is involved.
The issue is people keep reinventing centralized banking on top of it. Exchanges for example are actually just banks in disguise. Of course reinventing centralized banks brings forth all the problems associated with centralized banking. Problems society has already identified and remedied. All the drawbacks and none of the benefits.
The solution is of course to stop reinventing banks and start using cryptocurrency like it was meant to be used: as a currency.
He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.
These people will be charged with a crime, and the government is going to find something that sticks. Securities fraud, wire fraud, whatever fits.
https://www.justice.gov/usao-sdny/pr/three-charged-first-eve...
https://www.justice.gov/usao-sdny/press-release/file/1521186...
So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself.
HA! I dodged it all!
.... no. The spirit of the law is that this is a financial transaction just the same.
BitCoin and all the other crypto currencies are no different. It's all play money.
A story as old as time. For example, in the past (and even today), you can buy pricey paintings. Still fraud if you use that to dodge taxes. Still fraud if you steal a painting, and not because it's a physical object. It's something that is considered to have value, based on the notion that it is not hard to sell.
Celsius didn't steal anything.
Web3. Ask me a hard one next time.
Less-flippantly: Probably fraud, regardless of how many disclaimers your website has in 4pt font.
Mainly because your argument is wrong all the way around.
Celsius never accepted any "real money" from anyone. Any "fake money" they allegedly "stole" came from their own account, not those of their customers.
You can argue (perhaps correctly) that they shouldn't have traded their real money for funny money, but it's ultimately no different from any other financial instrument.
P(scam/medical)=0.3%
"Your report that Mr. Goldstein withdrew millions of dollars in advance of the “pause” is flatly mistaken. The reality is that Mr. Goldstein did not withdraw even one dollar in the four weeks prior to the pause—to the contrary, he deposited over $90,000 in CEL tokens in late May, just three weeks before the pause. Most of the supposed “withdrawals” from our client’s account were, in fact, regular-course transfers between his accounts and involved corresponding deposits. Indeed, in the year before the pause, Mr. Goldstein had net positive deposits into Celsius (including interest), not withdrawals. Your account unfortunately distorts Mr. Goldstein’s position, as he currently has millions locked up in Celsius, making him one of the Company’s largest unsecured creditors. Nuke is proud of his work to create a secure platform for Celsius users, and has been working tirelessly day in and day out to help restructure the Company to the benefit of all its creditors."
Sorry, that is garden variety PR verbiage.
"regular-course transfers between his accounts and involved corresponding deposits"
So is it accounting, or fraud? Answer: Yes to both.
If that statement had any credibility, there would be "independent auditor" and the named auditor in it.
It is remarkable how they used the depositors or investors money to pay for their lawyers and yet the government considers this a chapter 11 instead of 7, as if there is any way to conduct business going forward. Reputation gone, money gone, the owners gone.
Every time something like this happens, on such a scale, makes you wonder, how can so many people fall for this?
I am not sure greed is the only factor, there must be more behind it, some shrinks will have a field day.
And all the victims are now asking for a government intervention.
There is no free lunch, even mashinkis money will come at a large cost. From what I read, many lost over 100k and some lost 7 digits, certainly some shady people amongst these.
In conclusion, this was planned from the very beginning. If they could run this profitable, fine, if not, they hiding money followed by chapter 11 was the backup plan.
Does it?
If you're going to work every day to make a dollar, and your friend just sits on his ass and plays video games and makes a dollar every day off his CryptoKitty investments - and you can see the actual money in your friend's account - after a certain period of time, it's hard for anyone to resist, no matter how dumb it sounds.
Even Newton lost all his money in the South Sea Bubble... Twice!
The same way that people keep falling for the same sorts of conspiracy theories over the years.
Add to that, the fear of missing out, and you can extra marvelous quantities of wealth from suckers. Several industries use FOMO to manipulate people into purchasing things that they probably shouldn't - like cars, MLMs and real estate (sample: "buy now, or forever be priced out of the market!"). After having been screwed (too many times!) previously by FOMO, I have an extremely adverse over-reaction to it: I have to walk away before I get angry.
- If Celsius is a trading platform, how can Celsius itself owe anybody anything?
- My naive understanding is that cryptocurrency, being based on blockchain, is a log of universally agreed upon, legitimate transactions. So how can there be a liquidity crisis at all, let alone one in the billions? How is the platform allowing transactions not backed by actual funds?
2. The liquidity crisis happened because of off-chain financing which models current lender/borrower agreements.
By the way, there are legit decentralised blockchain based lending platforms like Aave.
Celsius is similar, but they also offer a loan system on top of it. So the coins you give to celsius are not only no longer owned by you, but they're also not even present in a Celsuis wallet.
[1] https://www.cnbc.com/2022/09/23/celsius-has-a-hail-mary-bank...
This is why it is unsafe to keep too many funds custodially with untrustworthy parties and why it is a good idea to minimize the amount you have custudially (e.g. on exchanges see mt gox fiasco)
The answer is - it's not all on the blockchain. The vast majority of transactions involving bitcoin are nowhere near a blockchain, they're all on a database (or similar tech) that the exchange runs. Blockchain transactions only occur on deposit or withdrawl of funds into or out of the exchange. If (as in the case of an entity like Quadriga CX) somebody 'accidentally' removes and loses most of the cryptocurrency, the exchange can continue to operate for quite some time, so long as everyone doesn't try to withdraw at once.
And also because the entire business model is completely unsustainable, preying on peoples greed.
The fact is all of these exchanges and most of these crypto corporations are actually unregulated centralized banks in disguise. They're sitting on massive amounts of money in the form of customer deposits and you better believe they're gonna be leveraging as much of it as possible. Meanwhile everybody's accounts are showing the deposits as if all their money wasn't tied up in the bank's own investments. Someone screws up, risks a little too much and gets liquidated or called or something? Money's gone, the bank owes customers more money than it has, people notice and try to withdraw all the money all at once, the bank runs start and the liquidity crises set in.
Fractional reserve banking is at the root of this problem. You literally cannot have these issues without banks.
I'm pro-crypto, I think the innovation and paradigm are brilliant - I am developing a small project in crypto. I don't fool myself into believing the hype that exceeds it's capabilities, project organization or true architecture at hand.
Cheers
See this (entertaining) video :) https://www.youtube.com/watch?v=rTwzM0_PjPw
LOL!
Either really stupid --- or really smart.
He did nothing that was technically illegal --- because it was only play money --- i.e. not legal tender.
The really stupid people are those surrendering legal tender in order to play a game with "Monopoly Money".
It's not just about crypto, it's about who is allowed to use inside information.
Celsius was a scam, if something seems too good to be true then it is. The same applies to LUNA and it's Anchor protocol which was giving 20% APY on the UST stablecoin. We saw what happened there.
Anyone who withdrew money from Celsius in the 90 days leading up to the bankruptcy can be ordered by the judge to put it back in, and that timeline is extended to 1 year for insiders. [1]
A bunch of the folks who thought they got out of Madoff's fund learned that lesson last time.
[1] https://www.lowenstein.com/media/3095/beware-of-bankruptcy-c...