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Comment by z9znz | Hacker News Reader

FTX is just one input. Seeing that Crypto.com has 20% of their reserves stored in a pointless sh-tcoin (SHIB) is just further proof that people running cryptocurrency exchanges are idiots or greedy fools.

One or another variation of this story has played out many times already. Then the whole sand castle crumbles, and a lot of fake money gets wiped away.

The entire cryptocurrency space is just an unregulated gambling arena. There may be some solid, well-intentioned efforts within it, but they are completely overshadowed (and overcapitalized) by the purely insane gambling ones.

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Crypto.com has 20% of their reserves in SHIB since that’s what their users own 1:1. That’s the correct approach; you would prefer they gamble with their customer’s assets by swapping a portion to more blue chip crypto like ETH?

You are correct that the reserves SHOULD just reflect customer holding but what are the odds that customers of what is the 5th or 6th largest exchange in existence are in aggregate holding 20% of their crypto portfolio in SHIB?

that's exactly what I'd expect from the users of an exchange called crypto.com

I'm not trying to defend them, but if 20% of the customer assets are in SHIB then that should be the pct they are holding in reserve?

Indeed, my assumption was probably wrong. In one of the two articles I read, I didn't see the quote about it being 1:1 analysis against customer holdings. I believed it included general hedging assets of the exchange.

As long as the exchange is not loaning or collateralizing against these SHIB holdings, then it's nothing of concern. It does still paint a pretty bad picture of the exchange or its customers based on the huge percentage of "value" stored in a coin which has absolutely no point in even existing (but that's beside the point of my original inaccurate post).

> It does still paint a pretty bad picture of the exchange or its customers

It just paints a bad picture of the customers. If that is what CDC users wanna buy, then the exchange needs to have enough to support the liquidity needs of their customers. CDC might be doing a lot wrong, but that probably isn't one. Wish you would edit your comment now that you understood the context of your assumption.

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