Mass of transactions leaving crypto.com wallets
thechainsaw.com
thechainsaw.com
The exact same thing happened at Gox. I did all kinds of mental rationalizations. Oh, they’re too big. Oh, failure was unlikely.
I managed to siphon out 7 BTC. Then I traded it 2:1 with some fellow from IRC for his BTC locked up in Gox. Woo, I was going to make a 14 BTC payday.
Nope. In fact, trading was still open on the exchange. I took a risk with that goxcoin. When the dust settled, I was left with 7.76 BTC that I couldn’t access. It’s still there. That was almost 10 years ago.
Don’t make my mistake. The very first sign that there was a problem was delays, followed by transactions over a certain amount not processing. People seem to be reporting both.
Not doing so is fraud, and there's already regulation against fraud.
Exchange should be a sort of a reserved word, like bank.
Is Coinbase at risk?
This is remarkable to watch unfold.
And now we have reports that FTX had a backdoor to "alter the company's financial records without alerting other people, including external auditors".
https://www.reuters.com/markets/currencies/exclusive-least-1...
So did Enron.
In many ways he reminded me of the MtGox dude.
https://qz.com/a-crypto-billionaire-is-joining-the-race-for-...
If he is shady, are you implying Gox was an inside job like FTX?
If they are truly holding customer funds and crypto 1:1, then you cannot do a bank run on them. They will just pay out. Which is what Armstrong says.
Frankly, after all this shit if an exchange can prove they are reliable and reputable, which Coinbase has so far, they are likely to emerge quite well out of all this (unless the entire crypto market loses all credibility or gets regulated into nothing).
I have no idea how Coinbase operates, so please forgive my ignorance: How do they prove that they are trustworthy?
This is MUCH more transparency than some corp in the bahamas.
Obviously it's not complete security, Enron was a public company and audited, but it's still considerably better than FTX or Binance.
I don't believe that is entirely accurate. Coinbase used to have a pro account with margin trading. Unless they managed to clearly unwind that business there is a risk that something went wrong at one point.
If they steal customer funds, then all is off, but same when there is no margin trading involved.
https://en.wikipedia.org/wiki/Mandy_Rice-Davies#%22Well_he_w...
https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
Though it then, by definition, makes it not a Ponzi (at that specific point), since Ponzi implies deception : banks are also unable to pay everyone at once, yet they typically aren't called "Ponzi".
It's not clear at what exact point FTX became insolvent, but I think the CEO writing an $8bn disguised accounting entry for tokens he'd lent to his girlfriend may have been it.
Not sure what to call this since I assume this has been regulated to death in normal finance ?
But it wouldn't surprise me if it had happened at some point at FTX, considering all the greed and hype around crypto...
Though I guess it might be a moot point : information doesn't travel instantly, and a judge might still deem you "guilty of Ponzi" (or whatever term is appropriate) if you haven't literally been shouting "We are insolvent !" from the rooftops ? See again : regulation.
There will probably be a lengthy argument in court (but which court - Bahamas?) as to whether they should have realized this earlier and whether their accounting was deceptive or incompetent.
(those interested should read "Lying for Money" by Dan Davies, it's an entertaining and escalating history of fraud)
There's a distinction between liquidity and solvency. Banks can run into liquidity issues, but in theory if they do their job right they should stay solvent, and will be backed by insurance / reinsurance and such. Basically a very different world from these yolo crypto outfits running out of offshore tax havens.
The bank can have done nothing "wrong", yet if the situation is bad enough : bank run + entities it has been lending to going bankrupt + entities that could bail it out going bankrupt too ; then the bank IS going bankrupt, and taking most of the opposite fraction of the money it claimed to "hold" with it...
The UK ended up owning RBS: https://commonslibrary.parliament.uk/royal-bank-of-scotland-...
Ireland got hit pretty hard: https://www.irishtimes.com/business/financial-services/2022/... but did at least manage to send Sean Quinn to actual jail.
Cyprus had too large and too dodgy a banking sector for its government to cover, so there depositors did incur real losses ("haircut").
If your assets are real and not shitcoins, there is a difference. If I have $200 in my bank, the bank takes $100 from me and buys AAPL stock (and adds their own cash); and then I go to withdraw my $200 on Saturday:
1. The bank is illiquid. I want $200 cash, but the bank only has $100 and 1 AAPL stock.
2. The bank is (likely) solvent. Unless AAPL crashes below $100 on Monday morning they are likely good for the money (AAPL, a blue chip stock, is unlikely to crash below $100) on monday morning. In this case a lender of last resort will step in (like the Fed) and bank may pay some premium for an emergency loan.
The banks are just on a different level of grift when compared to crypto exchanges
A bank with liquidity problems borrows newly printed money from the central bank and repays them with the profit generated from its loans. An insolvent bank that made too many loans that won't be repaid can't repay loans the money printers might offer it and so still gets wiped out. (Its customers get bailed out, but its shareholders don't).
Banks openly lend money to a people who are not the bank's CEO and companies which are not run by the bank's CEO and make a profit on the vast majority of them repaying the money, though typically over a time frame of years, not days. This means the lender of last resort providing funds for those days also expects to get repaid
FTX secretly lent customer funds to a single company run by its CEO to bail it out, and there was no realistic prospect of that money ever being repaid.
If you honestly think that's "equivalent", I'll happily share Paypal details so I can look after some of the money in your bank account in what you consider to be the same way the bank does...
I'd argue the time to get out passed long before delays. The time to get out is when a competitor has delays(if you're so lucky). I remember reading and studying Celsius vs Voyager for about a month before I put low 5 figures into Voyager. Hey, free money right?
Then Celsius hit snags, and people were -still- recommending Voyager. I noped right out and withdrew it all.
What do you know, a couple weeks later Voyager suspends all withdrawals. I believe I have like 9 dollars tied up still with them, because I keep getting weekly updates in their 'plan.'
I do feel for people who lost more than I put in, but at some point you have to expect people to know money isn't free and the gravy train doesn't last forever.
I would discourage everyone from developing the apetite for "free money" in these cases, because it isnt free. You were just lucky enough to be early in the pyramid scheme which ends with the vast majority losing everything. It was their cash you withdrew, that's the source of your "free" money.
If people want to know why these scams are so common, its because they work. People early-in, early-out extract money from the rest.
Nevertheless, in almost all cases, by the time you hear about the opportunity, you're too late to scam people. If nothing else, at least presume this.
(which is the anti-dote to FOMO: by the time you feel FOMO it's too late, you'll be the dupe)
https://news.bloomberglaw.com/bankruptcy-law/madoff-investor...
> Investors who profited in good faith from Bernie Madoff’s Ponzi scheme must return millions they received in excess of their principal, the Second Circuit ruled, affirming judgments allowing the firm’s liquidating trustee to claw back the funds.
> Net winners of Madoff’s infamous Ponzi scheme don’t have property or contract rights to profits earned over and above what they invested, even though they were unaware of Madoff’s fraud, the U.S. Court of Appeals for the Second Circuit ruled Thursday.
This is a solid argument and I'd have made it once. But given how the situation is shaping up it is difficult to avoid the comparison to gold which is also a net-negative system, has been waddling on for several thousand years now and has proven irrepressible as an asset (despite many credible efforts to stamp it out).
The argument about whether crypto as a system can create value has been settled in the affirmative. We've never seen these sort of reliable transaction guarantees before in a monetary system and some people are willing to pay for that. Value is being created. The only question still open is what cost is appropriate. So far the market has been consistently saying "more" but maybe that is an aberration.
So investors can gain money, buyers can gain gold, and everyone can come out ahead.
Unlike crypto, where one investor's gains come at the expense of another investor who loses, because few people buy crypto for its own sake.
- it's a physical object
- it has use value in jewelry
- it has use value in electronics and other industrial applications
> it's a physical object
That isn't an argument for or against crypto. Crypto is a virtual object and that is desirable, makes it easier to get past a border. I can't easily get my gold out of the country - this is one of my considerations when I started buying in to Monero. There'd be a lot less interest from inside China if crypto was a physical object.
> it has use value in jewelry
Yep. Think about that deeply. One of its primary functions is looking good, and it isn't do so well at that job compared to coloured glass. The point of gold jewellery is to show off - politely - that someone can afford to own gold. There is nothing happening there that Bitcoin can't do except Bitcoin is even more public about how much someone owns.
> it has use value in electronics and other industrial applications
And they'd be able to afford a lot more of it if the investors would go away. Gold's value has been a thing for literal centuries and electronics have only existed for decades. This isn't driving the value of gold as an investment, gold's corrosion resistance is. Crypto has arguably better, arguably worse properties over long periods of time. Really we are still to find this out, it hasn't been around long enough to know what a decade in crypto looks like (at equilibrium).
Crypto is like a family game of monopoly that gets a little out of control. There is this long-running game, and the family are really invested in trying to 'win'. So much so that they were willing to pay with real money to buy monopoly money from one another just to keep playing. As the game progressed, the banker gave out more money as people passed go, but the agreed amount for the monopoly money remained the same.
Neighbours watching the game see the family playing the game and ask to buy some monopoly money seeing it will be more valuable in just a few throws of the dice. This increased demand for a limited supply of monopoly money, which saw the people already holding monopoly money profit more. This further attracted people to the game. Soon the whole neighbourhood is trading in monopoly money, and everyone who does sees a profit.
Off the back of this successful and profitable game of monopoly, others tried to replicate it in a nearby community. Services started popping up where people offered to hold the monopoly money for people, and would allow it to be exchanged for other monopoly monies. Secretly though, the monopoly exchanges were busy trading those people's monopoly money so that they too could invest it further in the game. They justified it to themselves, promising they would return it as soon as they made it back.
Some of these exchange services played way too dangerously, and lost all of their monopoly money. This startled players of the game, and they decided to withdraw their monopoly money investment for real money they trusted before playing the game. This in turn triggered those exchanges that also gambled monopoly money to have to admit that it was no longer there.
Now to current day. More and more people get startled by losses and start pulling out to recover what they can, as promises of returning to the glory days of high value monopoly money never materialize. Most of the exchanges have their liquidity in other monopoly money exchanges, and as these 'assets' diminish, so do their own. Some hold real world liquid assets, but the people running the exchanges quickly pull this out for themselves.
It's the future, and anybody left holding monopoly money once again has a token money for a game people stopped playing a long time ago. They hold onto it because they either couldn't get out before it all imploded, or they delude themselves into thinking everybody will come back to the table and start playing again.
The monopoly game is over, and the family no longer talk to each other. Some of the family are now mega rich, but this was at the cost of the majority of players that joined the game, mostly those with smaller amounts invested and those who turned up late.
> And they'd be able to afford a lot more of it if the investors would go away.
They wouldn't. Gold is super valuable because it has tonnes of special properties, and there isn't much of it.
that kind of assumes the tokens produced have no value which in the case of stuff like bitcoin seems empirically not to be true. Even after all the crashes etc. you can sell them for >$10k each
And if you say the people paying $10k+ for bitcoins are just mugs, it's all 0s and 1s, it is hard to differentiate from regular currency which is also just bits of paper or 0s or 1s. Both have value because in practice you can exchange them for real stuff.
However, govt currency is propped up some by it's taxing authority (the govts ability to take value from its residents)
A fraction of that total is is worth several times more than the USD value of BTC at the time.
And yes... bitcoin has gone up a lot in that time. That doesn't mean the creditors are happy about their crypto being stuck on a bankrupt exchange for almost a decade.
I have a small fortune in the civil rehabilitation proceedings. Since mtgox went down, I've since met my wife, got married, had children, started a Masters, finished a Masters, and bought a house. Having access to my crypto at any point during that period would have been really nice.
I had tens of bitcoins when MtGox went down. But I have no proof of the transaction or even a proper memory of my account name, and I missed their stupid deadline for applying for the payback program.
I'm not sure you can still get approved as a creditor but have a go.
But everyone early on crypto knew there were some risks involved. And there is a chance you, or other creditors would have, for whatever reason, withdrawn and converted earlier to less USD (or even lost everything). Getting a fraction now can be a win for many. Call it "enforced diamond hands" if you like the meme...
I guess in the average case it is a fair outcome.
I put in $11k at $1,100/coin. I’ll be lucky to walk with 1 BTC after more than a decade. So, not really. And I’ll believe that when the coin is in my wallet. Till then, it’s a mental write-off.
The payout is clearly stipulated on the MtGox website, assuming you've done the work of registering as a creditor. The minimum you'll be walking away with is roughly ~1.5BTC.
In your wallet? 10years of your money trapped and you'd voluntarily choose to leave it dangling it in front of theives as soon as you get it back?
I never even logged in or filed a claim or took a screenshot or anything- just wrote it off
First there was MtGox where I happily sold BTC and then waited weeks for a bank transfer that never came. I was lucky to be able to re-purchase some of the BTC (at a loss) and transfer them out. That was just a few weeks before MtGox fell.
Then there was ANX/ANXPro. Everything was fine for a while. Over time, they ceased trading and at some point app and website stopped being functional. I had left some crypto there, at time it wasn't worth much. I panicked once the value shoot up and I couldn't find a way to recover them.
Fortunately, I had chosen ANX because they were local. I went to the listed address there in person, expecting it to be closed. I found the place, it was nondescript, no sign, no-one in sight. I was shaking when I pressed the bell and a guard came to answer. Fortunately, the company was still running in some fashion. There was a counter and I was able to transact my crypto out. Had I not been local, I would have probably lost it all.
Then there was FTX... I traded cautiously last year for a little while, never leaving too much for too long, then decided that crypto was all too nerve-wracking for me and sold everything I had. Probably the best thing I ever did. I have friends who lost big in the FTX debacle and will probably never recover a dime.
The morale of the story is that I wouldn't trust ANY exchange. They move so much money that the temptation is too great not to use it for something else. Despite claims, I don't trust any to have the structure and oversight necessary to avoid misusing funds that don't belong to them.
(Besides, many people are "day trading" on these exchanges because it's a form of addictive gambling)
Oh and then there's "staking": https://ftx.com/staking which encourages people to keep tokens on the exchange by pretending to pay them interest rates. And offering various other multi-level-marketing incentives. I see "Free Daily ERC20/ETH Withdrawals : NaN" on that page, which is fun.
People like the path of least resistance which is why everyone uses exchanges- it's easier than using your own cold wallet. Exchanges for good or ill has made crypto accessible to the masses.
Why are you still pretending it's new????
Assets should be valued for their properties and for their scarcity (amongst other things), and not by trend waves amplified by day trade and/or even bigger waves of chained margin calls. There are some advantages of day trading, yes, but it is mostly noise and IMO it is very good that "real crypto" can't operate "fast enough" for those who practice it.
Or, more generally, don't trust unregulated financial businesses and/or operating in shady offshore countries.
FTX was both unregulated and based in Bahamas.
(Like Robert Lincoln, who witnessed 3 presidential assassinations. I bet he was persona non grata by their successor.)
CryptoFi says "in the short run, we're all dead so exfiltrate the funds before everyone notices"
The fact that MtGox was run by a bozo was obvious from the day Karpeles gave his first interview.
Hinsight is 20/20, but the very same could be said from the FTX crew.
See this for what I mean: https://www.youtube.com/watch?v=zTFhnpf-IE0
I've been using Bitstamp since 2013 ... they're still here and ticking along nicely.
They were hacked once in their entire history and they swallowed the loss and customers were made whole.
Also: in spite of me liking Bitstamp, I've never left any amounts on there, be it cash or crypto for more than a couple of days.
What is the point of owning crypto if you're going to leave it on an exchange?
By doing that, you're basically eliminating the one key characteristic of the medium that no other financial instrument has, save perhaps gold buried in a hole in the forest.
Repeat after me: Not Your Keys, Not Your Coins.
Big asset movements between Crypto.com and Gate just in time for a proof of reserves disclosure[2]
CEO trying increasingly hard to convince everyone not to panic
Can't blame these people, really.
1: https://www.coindesk.com/markets/2022/11/11/cryptocom-prelim...
2: https://twitter.com/shegenerates/status/1591645956767883264
If 20% of depositor funds are SHIB then 20% of reserves should be SHIB.
I wouldnt pay $10,000 a turd, but that is my value judgement, if someone else does then their problem.
Potentially destabilising is what I said. In a similar fashion to how 20% of my diet consisting of Taco Bell would carry a greater destabilising potential than a the same share of FDA recommended diet conforming home-cooked meals would.
> If 20% of depositor funds are SHIB then 20% of reserves should be SHIB.
You're the one bringing this up, not me. Not refuting it though.
This is a good time to re-read Tether's "asset assurance consolidated reserves report" for USDT. "The Management of the Company asserts the following as of 31 March 2022 at 11:59 PM UTC: ... The Group’s consolidated assets exceed its consolidated liabilities. The Group’s consolidated reserves held for the digital tokens issued exceeds the amount required to redeem the digital tokens issued. ... The reporting date is limited to a point in time as of 31 March 2022 at 11:59 PM UTC."
So, there was a moment in time when Tether was fully backed. But the accounting firm explicitly states that their opinion applies only to that moment. One wonders what the situation was the next day.
Tether says their reserves, as of that date, included $20,096,579,998 in "commercial paper". But whose commercial paper? It's known that Tether's transactions don't show up in the usual commercial paper markets.
Money is being pulled out of Tether (USDT) in big transactions. US$3 billion in the last 3 days.
None of this is definitive. But it would be a good time to get out of Tether. There's no upside, after all, and there is a downside.
[1] https://assets.ctfassets.net/vyse88cgwfbl/1np5dpcwuHrWJ4AgUg...
Surely you mean Bitfinex.
https://ag.ny.gov/press-release/2021/attorney-general-james-...
> In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’
> On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account.
They’ve been caught lying again and again and again
For anyone interested in understanding the dynamics behind bank runs, the Diamond–Dybvig model [1] is worth reading. It describes a very simplified situation where due to banks short-term liabilities and long-term assets, a bank run is a valid Nash equilibrium. I think they won a Nobel prize for this model.
There’s also some very interesting discussion at the end about preventing runs: first if banks can suspend withdrawals, and second through central bank backing. I’ll avoid summarizing it because I’m too dumb — but to quote: “Deposit insurance provided by the government allows bank contracts that can dominate the best that can be offered without insurance and never do worse.”
This will crash markets (lowering your liquidity even more) and make people want to withdraw even more once you reopen.
The situation is made worse because a lot of exchanges issue their own token: CRO in Crypto.com's case. This token provides extra liquidity to your exchange, sometimes in the billions (on paper at least), that you can borrow against. The moment you mention pausing withdrawals, your custom token will crash to the ground and you'll lose a lot of potential liquidity (See Terra/LUNA & FTC/FTT).
That’s a problem with suspending withdrawals, especially by individual institutions, generally, I think, which is one reason why government deposit insurance is the better solution, in practice. Even the 1933 Bank Holiday in the US, a government-declared suspension of banking, probably only succeeded because the government established temporary emergency deposit insurance during the break.
Yeah, this is where the fraud happens.
They're treating the token like a bond when it's just .. a made-up thing? It's not a promise to pay, it doesn't have a claim on anything, it doesn't buy you votes, it's just a shiny Pog that you can trade?
This would be like a casino claiming its chips as assets.
This phrasing is a great way to get the idea across.
As it should. Inability to withdraw obviously means they don't have the money. Any limits on withdrawals are and should be major red flags. Exchanges should be punished by the market every single time they pull stunts like that until they learn the lesson.
If a crypto exchange suspend withdrawals, on the other hand, there's no reason to suspect they're just waiting on a bunch of loans to ordinary people and businesses to come in, especially since it usually means they lied about custody of assets.
The reason a bank would suspend withdrawals is so it can be either taken over in an orderly fashion (in the US supervised by the FDIC) or so they can get a liquidity infusion (in the US, depending on their charter, from the fed).
Those regulatory agencies and bankruptcy rules don’t exist for a crypto exchange so there is very little an exchange can be doing when suspending withdrawals that doesn’t end with the exchange going bust.
The simplest approach for crypto exchanges to prevent bank runs would be to not lend out or trade with deposits. In fact, that's what some exchanges have always been doing (or at least are claiming to do).
Except the consumer is drawn to the crypto-exchanges with significant "staking" rewards. Like Crypto.com or FTX.
When you're promising free money, you can't just sit on the money. You gotta lend it out to generate those staking rewards.
Now maybe, just _maybe_, the lending out of customer deposits could be a tightly regulated activity. Maybe regulations upon the types of securities that you lend to (ie: to AAA rated corporates), as well as maturity (ex: 1-week expiration or daily expiration).
Oh wait, that's a Money Market Fund. Add on FDIC insurance and you're now at a federally regulated savings account.
Staking itself wouldn't be a problem. There would be some risk involved in case of technical problems (for example due to Slashing on Ethereum), but in overall that risk should be relatively small. Exchanges could still hold all of the coins, but just use some of the coins for staking (if users owning the coins opt-in to staking).
The problem occurs when exchanges lend out stored coins without the approval of the user: Either to lend them for shorting or to invest them into something that they assume would appreciate faster.
None of the staking schemes have adequately explained who's taking the other side of the trade. Who wants to borrow a token for a very high interest rate? So far the only examples are "people putting it into an even bigger fraud" and "people providing soon-to-be-worthless collateral".
I'm referring to coins that are staked by validators in a proof-of-stake chain. The "other side of the trade" is not someone borrowing the coins, but are the transaction fees on the chain and for some chains also the artificial inflation (due to newly created coins).
There is risk involved, but not traditional counterparty risk (when excluding the exchange itself), as nobody is "borrowing" the coins.
This is a pet peeve of mine but I can’t stand the smug “maybe, just maybe” trope.
If you want a "stablecoin", its called VMFXX. https://investor.vanguard.com/investment-products/mutual-fun...
1 VMFXX has been $1 for decades, never budging, never moving. The regulations and infrastructure to support such a thing already exists and have always existed to anyone who has any clue about banks / finances at all.
So why haven't stablecoins been designed to act like MMFs (like VMFXX) ?? Answer: because the cryptocoin community does not want a MMF. Its the only explanation. The cryptocoin community wants 6%, 10%, 18%+ returns on their "stablecoins". And its impossible to do that with MMFs.
As far as I know the two largest stablecoins (Tether and USDC) do not pay any interest. The interest that some exchanges pay on stablecoin balances is because they lend them out and/or use them as collateral. But that does not have anything to do with the stablecoin itself. If VMFXX was tokenized on the blockchain it would be used in exactly the same way.
I'm going the opposite direction here.
If Tether / USDC really wished to "prove that they have liquidity reserves", they should go to the US Government and get the "Money Market Fund" / "Money Market Account" stamp of approval. And then invite the banking regulators to come in and count all their reserves.
I'm not sure if there are any legal or regulatory issues that would prevent stablecoins from getting those certifications. Tether definitely looks sketchy, but USDC has regular audits with public results.
> There’s also some very interesting discussion at the end about preventing runs: [...]
Did they not consider matching liability and asset duration as a solution?
If nothing else, the core business of the bank is about borrowing cheaply (hence short term) and making risky, long term loans (hence bringing in interest).
If they want to finance the loans by long term loans themselves, much of the profit goes away and the business isn't sustainable.
It's obviously a sliding scale but that's the starting point.
Short term loans have higher interest rate, usually, but have transaction fees.
It's obviously worth it to the bank's shareholders if the bank is bailed out by tax payers when things go wrong. But if there's no bailout it may not be worth it for them -- at least not in the long run.
People would not be keen on 30 year notice deposit accounts to match 30 year mortgages.
In a period of normalcy, these small delays are forgotten. However users are extremely nervous right now. Users can interpret small delays as insolvency, which causes a torrent of withdrawals which take even longer to process.
I don’t know if crypto.com is solvent. If you have money on there, you should probably get it out now. But there is also an innocent explanation to all of this.
I don't intent this as a dig at economics; there is no Nobel prize for mathematics either. Though I have my doubts about the rigorousness of some economic research, we all stand to benefit from better economics
I guess nobody cares about message forum well-actuallys, least of all the Nobel Prize itself.
crypto dot com CEO Kris Marszalek also does not seem to understand that this is a particularly bad time to tell his customers that he is an incompetent criminal who is constantly trading against them with funds he does not have and misappropriating their deposits because less than a week ago customers of a different exchange lost 10 billion dollars in a similar situation.
This is not how hedging works and he also explains this in a subsequent tweet: https://twitter.com/kris/status/1591928970693726211
It's not "trading against it's customers" and very common practice with basically all exchanges to make sure liquidity is always there
Here's one way a crypto exchange could work:
- many users deposit coins and fiat
- some of those users are market makers
- the users trade with each other
- the exchange just custodies the coins and fiat and collects fees
- the exchange does not need to send customer funds to another exchange because it is not assuming twenty million dollars of directional risk
Can you explain your understanding of how it should work instead?
Can you explain why people with these roles work at an exchange, an entity that does not engage in systematic trading or take on any nonzero amount of directional risk ever? https://www.linkedin.com/in/chen-x-74a83322/ https://www.linkedin.com/in/wanghan https://www.linkedin.com/in/nicolasbourdrez/ https://www.linkedin.com/in/ronaldyiap/ https://www.linkedin.com/in/ernest-lim-88529b135/ https://www.linkedin.com/in/pravin-pathmanathan/ https://www.linkedin.com/in/jin-marcus-wang/ https://www.linkedin.com/in/calen-zeng-b3324a196/ https://www.linkedin.com/in/zzhuaj/ https://www.linkedin.com/in/yining-liu-763a5041/ https://www.linkedin.com/in/yu-tao-930721/ https://www.linkedin.com/in/tom-chan-812b4090/ https://www.linkedin.com/in/mark-amsellem-71a1a132/ https://www.linkedin.com/in/oliver-jieren-jia-636166b6/
Can you explain why they are hiring for these HFT/systematic trading roles? https://www.linkedin.com/jobs/view/3262469829/ https://www.linkedin.com/jobs/view/3254166615/ https://www.linkedin.com/jobs/view/3104863804/
Thanks.
To front run customer orders and make a profit?
Crypto is unregulated. Why not?
I read his tweet like eight times, going "wait I don't understand what he's saying, what am I missing?". Then I finally realised he was full of shit. No, that REALLY isn't how hedging works, indeed! :)
The US has more reason to sanction the rogue dictatorship of Singapore than Cuba.
I only care if bittrex, bitmex or binance got any problem.
any company exchange that is not lending customer assets will function completely fine during a bank run even if 100% of assets are withdrawn in quick succession, nobody should have anything to worry about ever, but so far these are mismanaged companies with poor collateral choices for their creditworthiness.
many crypto skeptics only see headlines when things go wrong, but many people that use crypto regularly know that there are plenty of exchanges and services that have had 100% withdrawals just fine, something that would be called a "stress test" on poorly run services or a "black swan" in the traditional banking world. these big ones from the last cycle got hooked on leverage, the ones that didn't will be fine as long as they stick to just running an exchange instead of additional overhead.
i'm a crypto noob - this is what i've been wondering - isn't the point of crypto that you can participate in these transactions directly without trusting an intermediary? why do people use exchanges?
people chose to learn or lose their funds. pretty simple.
when it comes to "hard" versus unfamiliar, it will just be different people that chose to be crypto natives and self-custody and use on-chain services. its the same with every other advancement, there are still people that don't use ATMs and don't trust them due to the new problems that arise from their existence. there are still people that don't use discount brokerage firms because they are more familiar with calling their broker, computers are hard and they don't trust their money on the internet or services on the internet. its the same with crypto: nobody can stop you from becoming your parents, can't blame the user experience on everything.
The alternatives, as far as I know, are to find a friend willing to give you some crypto for money, or to buy mining equipment and get crypto from that, or to find some trusted physical exchange to pay cash to and trust they will pay the crypto you bought into your wallet.
Even after you get in, you'll have to create and manage your own wallet for every crypto you want to trade in (though an on-chain DEX could in principle handle that for you, I believe none of the popular ones do, based on previous discussions). There are probably apps that help, depending on how much you want to go trust-less.
When you pay for something, you want the thing you buy to actually arrive, and if that's something off-chain (like real money), you need to trust your counterparty to actually deliver it.
Crypto exchanges also solve the reverse problem: how to trade real money for cryptocurrency. That can't be done on chain.
Exchanges can also cut out blockchain transaction fees and transaction rate limits, and offer all sorts of tempting (but probably fraudulent) financial products.
So you get exchanges that just lets you trade without actually sending things on the networks since they are so useless.
And trading/speculation/gambling is 99% of what people do with cryptocurrencies.
This part can still be done on chain, "automated market maker" is the term to search for for more information about how this part of the problem is usually solved.
Yes, the money launderer [1], one whose founder is coming out of house arrest [2] (and is also a money launderer [3]), and one that can’t tell you where your money is [4]. What could go wrong.
[1] https://home.treasury.gov/news/press-releases/jy1006
[2] https://www.reuters.com/legal/government/crypto-exchange-bit...
[3] https://www.coindesk.com/markets/2021/08/10/bitmex-announces...
[4] https://www.coindesk.com/markets/2020/10/29/leaked-docs-reve...
Up to users if they want to trust that.
[0] https://thechainsaw.com/defi/crypto/crypto-com-accidentally-...
(If I were designing one of these things, which I am not, I would make a transaction payee-initiated, like the issuing of an invoice which the payer signs)
https://www.whio.com/news/trending/50-billion-accidentally-d...
Seems silly buy is there no exchange that is happy to just make a transaction fee?
Besides, which ones really are decentralized? Can you name one that doesn't have a central control point? Most have an update system, allowing one person to either completely modify the smart contract code or to enable/disable trading.
Uniswap v1 volume: $144k, v2: $111,784k
“Impermanent loss” is just losing to arbitrage. It’s a necessary feature of being an LP.
People just don’t notice how much they are losing b/c the prices are so volatile.
The ruse won’t last forever.
For that matter, though, a lot of people who buy the top lose.
Crypto needs to have more UTILITY. The financial sector in general is just overleveraging the normal economy, this isn't just crypto. Ironically, Bitcoin was started in response to the 2008 financial crisis, where the govt repealed Glass-Steagall and then bailed out the banks. At least here, the government isn't bailing anyone out with taxpayer dollars.
And look... in China it's not much better. Their real estate bubble is very reminiscent of 2006 USA ... Evergrande is just the most well known poster boy.
One could argue that there are plenty of downsides to over-centralization (i.e. 'Too big to fail'), but the solution is not to start from scratch, it's to logically think about the kind of financial system we want (given the one we already have) and build that.
Conversely, the answer is not be techno-cowboys who know people with cryptography degrees who re-discover what bank runs are.
For medical bills, that's a false and yet correct analogy. The hospital did, in theory, create money out of thin air (at least from an accounting perspective). In this case, it is the hospital (ie: The investor) who will go under if the patient does not pay her bill.
And that's fine. Investors are in it for yield which carries risk. This is different from putting money on an exchange or a bank. You are looking here for a store, unless you willingly signed up for some yield thing.
The hospital patient cannot settle debts with his medical care that he received or deposit it in a bank.
... and Microsoft and Apple incorporating ads into their paid products
... and Google updating Google TV with ads where there were none before
... and laptop companies filling their laptops with bloatware
... and plenty of others
crypto is supposed to be one bank for every person. don't know how we get there, but we are learning that traditional bank/exchanges should not exist
In finance, bad actors outcompete good ones absent regulation. The game is one of confidence and compounding. Until the music stops, venues promising higher returns bleed well-run ones dry. Add to that crypto’s Gresham’s law-esque selection for gamblers, and you wind up with little market space for well-run exchanges. (Which have never been exchanges, but quasi broker-banker-money market funds.)
Not just in finance. Everywhere.
With crypto we just see all this happening real fast, in real time.
It seems more prevalent in finance. In the real economy, consumers show scepticism. They’re trading money for a good or service they get at or shortly after the point of sale. Financial and insurance products are more difficult to diligence; you don’t know what you’re getting (or not) until long after purchase.
The appearance of ethics/morals might be a benefit, but true ethics/morals are often a cost.
Amazon.com shows how the goods market is as bad it can be when transaction costs decrease.
You’re underestimating people’s 5k fomo ptsd, imo. I definitely have one and will think twice before not buying in again.
Now it's just democratized. But at least Web2 led to tech that served a lot of people, until it got commoditized. Crypto doesn't really have great applications yet. (With a few exceptions.)
I seem to remember Softbank propping up companies like WeWork... and spectacularly losing money. Even this year they lost a lot. Uber and many others were basically money-losing unit economics being propped up by ever larger infusions of money until the stocks were dumped on the eager public in an IPO. But at least the corporations serve people.
https://www.wsj.com/articles/SB10000872396390443720204578004...
How were Adam Neumann, Travis Kalanick and Elizabeth Holmes any better than these crypto bros?
The online advertising industry is in a constant race to the bottom. Look at how much Facebook and Google dropped relative to, say, Apple and Verizon.
Throughout all this, the open source community in Web1, Web2, Web3 has been building some amazing stuff, but people like to create business models to dump
People still seem to think they're an aberration.
They're not. The entire modern economy is fundamentally scammy. Especially, but not exclusively, the financial industry.
Crypto is just the stinky tip of an iceberg of fraud and predatory exploitation which goes all the way from top to bottom.
Bitcoin will be back in a few years in a new bubble. Halving in 2 years...
That's the only way it will grow.
Betting on investors risk tolerance for cryptos success is a losers game long-term. At least from a technologist perspective. From a finance perspective there's plenty of money to be made if you aren't left holding the cards.
It earns nothing so that's near zero. (Not quite zero because apparently you can use it to buy drugs or avoid export controls)
To use your metaphor, Bitcoin and Ethereum are more in the [schemes] class, rather than two specific schemes.
Now of course nothing is eternal, but years-shorting crypto is too much of a risk for me.
Trying to rebuild a user base without those things will essentially be impossible. Even during the days of free money in 2021, the full crypto user base wasn't huge. With high interest rates, tons of fraud in the rearview mirror, and enormous obstacles to usage, the community will be a tiny fraction of even its previous tiny fraction of traditional banking customers.
$100K-$1m: At this point, you are looking at a heavily regulated exchange or an OTC trader. Those exists (ie: Gemini).
$1m+: Deal OTC directly with an "exchanger" that has a banking license. (There is one in WY)
If FTX kept to their ToS they would have all the funds available and there would be no collapse. But they were greedy, decided to use user funds without authorization, then lost them and the whole thing came coming down.
Exchange which is transparent and truly does not trade with customer assets has no risk involved (other than hacking and similar) and should/would be a massive money printing machine.
Some miners are already spending more on energy & operations cost per coin than the market value, so even if the price holds I expect to see some miners drop out of the market.
-0% in 2 years is a less impressive number.
I am not convinced it will end crypto, a lot of people still want to speculate and the system is too extensive to topple easily. Market not moving seems to be proof of that.
https://www.proserveit.com/blog/five-monkeys-experiment-less...
But really who cares? Smart contracts and stablecoins can continue to work the same no matter market volatility.
Even ignoring the constant hacks of smart contracts, work for what purpose?
The CEO of Crypto.com has been doing damage control all day on Twitter. He's doing a livestream AMA on Youtube at 2AM EST.
pretty hilarious
Crypto exchanges operate on a cold storage concept, how fast they can get their cold storage to their hot wallet is always a mystery
each wallet having many kinds of assets, instead of just a single asset (your local currency), instead of man hours to move those esoteric assets they just need a little transaction fee
there are a lot of ways to improve this operational experience, that this exchange just didn’t do, so even as a joke it relies on perpetuating ignorance to discredit an entire concept
Last time they were activated was in 2008 - supposedly there’s video somewhere.
https://www.wdtc.net/armored.shtml
FDIC’s main responsibility is to avoid bank runs and they have many tools beyond taking banks like WAMU into receivership.
I feel like the only real way they could be run while avoiding this to only work as a broker to make dealto purchase coins available to users and possibly also sell a wallet software or something that is mostly a frontend and no keys/money is kept with them. Then they are only ever able to trade on the exchange fees and purchase money for the wallets they get. But I guess such a reasonable way to run a buisness is no way to get filthy rich...
Geez, isn’t that a dogecoin knockoff meme coin? Guess you can now become a crypto billionaire on the back of a knockoff of a meme. What a strange world we live in.
The point of Dogecoin was to mock how ridiculous the "sound money" narrative of cryptocurrency is by showing how easily more - infinitely more - of it could be created with almost zero efforr, and nobody seemed to care to do the least bit of common sense research before ithrowing real money into it.
I am no fan of crypto but that is non different then any fiat money no? In fact dodge at least has some sort of rate limit where fait system have non.
But being limited has no inherent value.
Their states command economic, diplomatic or military power which they often use to protect and develop their economies and the associated currencies. Often the decision makers are accountable in the form of elections and rule of law.
Crypto on the other hand is purely market driven and free floating. It's very easy for bad actors to manipulate the currency itself rapidly, something that does not happen to Dollars or Euros.
Cryptobros and others disagree whether anything outside of fully unregulated market forces is a good thing.
There is a lesson here about how the developer doesn't have any influence over the crypto once a community gets involved. At least, not in their capacity as a developer.
The "clowns at the Fed" who manage the world's -- by far -- safest liquid asset
ha-ha-ha-ha-ha, and what do you think 10 pounds note is? Take 5 pounds note, throw some logo around, add Queen face and voila
Crypto made me understand how much money are laying around. Now only if I could build a product people wanted...there is literarily money growing on trees.
My point tho is that people have a lot money laying around.
They don't. The taxi drivers, hairdressers, and hotel doormen that got caught up in crypto are going to lose a significant chunk of their life savings if these exchanges blow up. There's 2-3 trillion dollars in crypto at this point, how much of that is from unsophisticated retail investors? A quarter? Half? Nobody knows.
No, there's not.
Issuing a trillion CJCOINs and selling one for $1 gives me a trillion dollar market cap, by cryptocurrency valuation standards. There's not actually a trillion dollars invested into the CJCOIN ecosystem.
Their advertising budget is absurdly large, and then they pay some hefty interests to their customers.
Is there any part of the business that actually make money for them? Because it seems like all they do is loan more money to keep the Ponzi scheme going.
I do think there has been lots of FUD about crypto.com such as moving money into their own wallet and back, but do feel I would sleep better at night with funds in Coinbase.
Since the caveman days, not your keys, not your coins.
Dogecoin is the original.
Shiba Inu (SHIB) was created in mid-2020 as a lookalike cash grab on the then-surging Dogecoin. It was shilled heavily on Twitter and across social media. Ads attempted to confuse would-be investors looking to buy Dogecoin. For some reason or another it maintains a modest market cap.
The success of Shib spawned countless more lookalikes, eg. Baby Shiba Inu, etc.
Withdrawals are still open. I believe Binance was doing some bailing-out.
What's your point?
(Disclaimer: Own no crypto, believe Tether is suspicious, etc..)
i hate to say it but
not your keys
not your crypto
Personally, I reckon they'll be fine. Crypto.com has been playing nicely with regulations and did the right business decisions (downsizing, reducing of rewards) at the right time. They are in my eyes one of the most regulated and "playing by the books" exchange out there, but yes time will tell.
So far I've not seen any arguments of them actually doing anything wrong, just the echo chamber about "funds are leaving Crypto.com, so you should do too", including in this thread here. If the proof of reserves that they published holds up, this should be no problem for them to overcome.
RE: the constant argument that 20% of their asset reserves are in SHIB - this is not CDC making investments in SHIB, but users buying SHIB and having it in their wallet. Says more about the userbase as a whole than it does about CDC who only enables it
/EDIT: the CEO had an AMA on YT just now that goes into a lot of the points I mentioned: https://www.youtube.com/watch?v=SQeqdR_nbNY
That means at best their internal processes are terrible
What Kris said in the AMA was something along the lines: Whitelisted addresses where funds can get sent to are heavily controlled, and no matter where it went by accident, all whitelisted addresses are at places that can be 100% retrieved again
I know it’s a harsh take because when crypto companies aren’t failing and crypto is pumping no one notices or panics about all the liquidity issues occurring.
Still with all the dominoes that have fallen recently who knows how healthy/secure the companies on the whitelist are.
Propose to buy delayed or blocked crypto for a discount, wait for the echo chamber to be proven wrong, sell.
I have no funds on crypto.com currently, but I still reckon they'll be fine
The mass hysteria was last year and the years before, this is a return to reality.