Withdrawals from BlockFi continue to be paused
blockfi.com
blockfi.com
We've changed to that URL now from https://blockfi.com/november-11-2022-blockfi-update.
I've moved the generic comments to the other ongoing thread in this equivalence class:
Crypto Exchange AAX Suspends Withdrawals - https://news.ycombinator.com/item?id=33593646 - Nov 2022 (584 comments)
> “We have limited platform activity, including pausing client withdrawals as allowed under our Terms. We request that clients not deposit to BlockFi Wallet or Interest Accounts at this time.”
An address of an insolvent company may not be able to legally return funds; i.e. once they receive funds they may have a fiduciary duty to distribute them in a certain way, for example by order of a bankruptcy court.
tl;dr: They may only be able to ask people not to deposit, but not prevent them from depositing. And if users do deposit, they might not be allowed to give it back.
Quote: > We are shocked and dismayed by the news regarding FTX and Alameda. We, like the rest of the world, found out about this situation through Twitter. Given the lack of clarity on the status of FTX.com, FTX US and Alameda, we are not able to operate business as usual.
Oh the irony.
I'm sure each one of them wants to give some kind of reassurance to panicked customers but is powerless to help and is worried about saying anything that could get them in trouble legally.
I just closed a story on AAX suspending withdrawals and now I see this. I wonder what the rest of the week will bring.
The OG crypto people were being bribed by all the money coming in and the ones that remained "pure" were being shunned as "toxic btc maxis".
This is like a massive wildfire that gets rid of all the "overgrowth". If it wasn't for this, there was a non zero chance that bitcoin would slowly die out.
Worse we would've ended up in a dystopian future of CBDCs and social credit etc.
I think we might still be heading there. The Fed announced recently (iirc) that a CBDC is officially on the way.
What do you mean by returns?
Nov 2020, when Paypal launched the ability to buy and hold crypto, I bought $100 of btc and $100 of eth as an experiment to see what happens over time with a buy and hold approach. I haven't touched either of them since.
While the btc hasn't done well (currently $103), the eth is worth $270. Total % gain is 86.80%. At the peak over the summer, my $200 had turned into like $1400.
Maybe index funds have done better than that? I don't know... what confuses me is with ROI... crypto by itself doesn't offer ROI other than buy/hold, where index funds often have dividends.
In the long run it seems unlikely there will be more than a couple surviving cryptocurrencies (see: Metcalfe's Law), and there will be a lot of chaos between now and then.
Nothing since Nov 11. Their silence is deafening
If either Binance or Tether goes down, it's all over. Both are opaque and probably have less reserves then they claim. As withdrawals continue, we'll find out who really has assets.
People who like to read financial statements are awaiting the filings in the FTX bankruptcy. For the first time, all those related companies have to file public financial statements under penalty of perjury. Expect a lot of "They did what with that money?!"
What may well happen now is that US crypto exchanges, and those that deal with US persons, will be required to become brokers, dealers, or "national securities exchanges" under the Securities Act of 1934, like real stock exchanges.[1] The SEC can now do this, because, last week they finally won the first big lawsuit on whether crypto is a security.[2] Now they can tell all crypto issuers to register and file an S-1 under penalty of perjury, and tell all exchanges to register as brokers, dealers, or exchanges. The crypto community will scream and demand Congress exempt them. No one in Washington will listen any more. Do regulated US exchanges go bust and lose billions of customer funds? No. Any questions?
Crypto companies wanted special regulations for crypto, but it's too late for that. They'll probably have to become broker-dealers. Series 7 exams. Registered representatives. FINRA regulation. SIPC insurance. Audits. Compliance departments.
(I've had a US broker go bust when they were holding stock of mine. I got it out in about a week, after making a lot of phone calls.)
It's not the end of the crypto world. Gemini will probably become a regulated exchange. Maybe Coinbase.
[1] https://www.law.cornell.edu/uscode/text/15/chapter-2B
[2] https://www.natlawreview.com/article/sec-v-lbry-inc-sec-s-la...
What Coinbase wanted:
"Our financial regulatory system is predicated on the ongoing existence of a series of separate financial market intermediaries — exchanges, transfer agents, clearing houses, custodians, and traditional brokers — because it never contemplated that distributed ledger and blockchain technology could exist. A new framework for how we regulate digital assets will ensure that innovation can occur in ways that are not hampered by the difficulty of transitioning from our legacy market structure."
That's exactly how FTX got into trouble. They were an exchange, a transfer agent, a clearing house, and a broker. Also a market maker and a trader. No separation of functions or funds. Blockchain didn't help.
"Responsibility over digital assets markets should be assigned to a single federal regulator. Its authority would include a new registration process established for marketplaces for digital assets (MDAs) and appropriate disclosures to inform purchasers of digital assets. Additionally, in the tradition of other markets, a dedicated self-regulatory organization (SRO) should be established to strengthen the oversight regime and provide more granular oversight of MDAs. Together, they should formulate new rules that permit the full range of digital asset services within a single entity: digital asset trading, transfer, custody, clearing, settlement, money payment, staking, borrowing and lending, and related incidental services."
Again, note the "full range of digital asset services within a single entity". And again, that's the problem, not the solution. That's close to a traditional "bucket shop", a fake broker that pretends to do trades but really just makes entries on its own books. They wanted a "new registration process" with "appropriate disclosures". That means a "litepaper" instead of an S-1 filing under penalty of perjury. And a "self-regulatory organization". Also, although they don't say it here, they wanted regulation by the Commodity Futures Trading Commission, not the Securities and Exchange Commission. The CFTC only regulates what are basically derivatives. The underlying assets are something real, or at least semi-real like ETFs. So the CFTC isn't set up to evaluate initial public offerings.
There's more, but you get the idea. They wanted to go on with what they're doing without having to disclose much, be audited much, or be responsible for much.
It's now clear that regulation of crypto requires the two basic SEC functions - disclosures from issuers, and separation of functions and outside audits of those who handle other people's money. Lack of the first one is why crypto has "rug pulls", and lack of the second is why it has exchange collapses.
[1] https://assets.ctfassets.net/c5bd0wqjc7v0/7FhSemtQvq4P4yS7sJ...