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Comment by ivanmontillam | Hacker News Reader

What I fear is that U.S. Government is meddling with the only exchange that works properly in Venezuela and Argentina, especifically for the P2P trade.

I know this tweet is not about P2P, but let me explain.

In Venezuela and Argentina, the parallel markets are the true king of the economy. You have to exchange money using P2P exchanges if you want to barely have decent personal finances, you know, to access good currency exchange rates.

It's true that other P2P exchanges exist, like Airtm and Reserve. They just do not have the capacity nor good exchange rates to appropriately cover market needs. They just can't, they are not as resourceful as Binance.

If the U.S. Government starts meddling with Binance and Binance has to close, reduce functionality or kill the P2P feature on the grounds of AML, it's going to send Venezuela and Argentina to the dark ages again.

EDIT: Egregious typos.

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The government isn't 'meddling' with Binance, Binance is under the spotlight because it appears that keeping reserves is a bit of a weak point with all of these new finance companies. If anything you should be grateful that there (finally) is some oversight, but I fear it is too little and too late.

I have to disagree.

That oversight in theory is good. In practice it turns out to be: "The OFAC and FATF hate your people as a whole. We cannot service you anymore. Kthxbai."

I will trust regulators when regulators do not exclude people where systems would be most useful. It all boils down to: if you're not credit worthy, you must be a terrorist, capomafia or at best, a tax evader.

See what happened to Uphold[0], which is unfortunate.

[0]: https://support.uphold.com/hc/en-us/articles/6782239879451-W...

There are plenty of ways to transact money if you’re not creditworthy. What’s “missing” is a non-fraudulent way to get credit if you’re not creditworthy, and that has nothing to do with US enforcement of fraud and everything to do with the fact that only fraudulent lenders will lend to non-creditworthy people.

> everything to do with the fact that only fraudulent lenders will lend to non-creditworthy people.

Exactly, another thing that happens is that the ways money is exchanged for black markets[0] is also the way terrorists and tax evaders would use. So, we share the same "highway" and get classified as such.

But we aren't terrorists or tax evaders, we just need to make our lives less expensive.

[0]: https://news.ycombinator.com/item?id=33967480

> But we aren't terrorists or tax evaders

You aren't but you can bet that plenty of people even if they were not terrorists definitely were evading taxes by using these services, or at a minimum worsening the strength of the local currency. If enough people do that then the effect can be so strong that you end up leaving yourself no alternative. Obviously, a stable currency requires all parties to believe in it, and this is the first problem that any competent government would have to address.

> definitely were evading taxes by using these services,

I'm not condoning tax evasion, but in South America if you are on tax evasion and you're not wealthy then you evade taxes by ideological reasons.

As a South American citizen, you'd evade taxes for:

1) Choking the government, one cent at a time.

2) If you know the Treasury Dept. of the Local Govt. is going to be looted anyway by corrupt politicians, then why pay taxes? (the most common one).

It's very easy to loot the government, just bribe the Purchases Manager of any Govt. institution and pave your way to the local top elite.

And all of this is supposed to be an argument for the US not to enforce its laws against institutions that enable such activity?

I'm not saying that they shouldn't do it. I'm only exposing its consequences.

'your people' has nothing to do with oversight of Binance. But I agree that oversight could be more precise in its goals and execution, however, and this is a big issue, it requires a well functioning, non-corrupt government in all countries participating backed by a non-corrupt police force and local financial authorities.

This is a problem in a large part of the world, and even in countries where these factors are present the size of the workforce available for regulatory oversight is usually only a small fraction of the size of the workforce available for the industry itself. That's why something like WireCard could happen in Germany. And even if the demise of WireCard also hit a lot of non-players that still doesn't mean that it isn't a good thing that they are gone.

> it requires a well functioning, non-corrupt government in all countries participating backed by a non-corrupt police force and local financial authorities.

In the current times, that's nothing realistically accessible to Argentinian and Venezuelan people.

Too much "ideal" conditions need to happen at the same time. What we need are practical solutions.

Practical solutions are not going to come cheap.

My Argentinian friends tend to view everything that happens in Argentina as part of either some nefarious plot by the US government, or the glorious struggle of the brave Argentinian people against the US government. They would certainly view anything that happens with Binance, or even FTX/SBF as the US government trying to screw them over.

I try not to be like that, but sometimes it appears like so.

Most of the time it's truly hard to see any alternative explanation, and I invest a lot to have the most nurtured worldview possible, with all the points of view considered. And even then, it's really hard to think in plausible alternative explanations that do not feel like pulling hair out of the head.

It's like duck typing: walks like a duck, quacks like a duck, has duck legs. It must be a duck.

The US Department of Justice suspects Binance of processing over $10 billion in illicit funds during 2022 alone. Whatever goes on in Argentinian P2P markets is an insignificant blip against this background.

It sounds like you have a bit of a persecution complex going on. It's unfortunate if the effects on your corner of the world are negative, but it's really not even on the Americans' map most of the time.

How about creating a local solution for your local needs instead of relying on a company like Binance whose operating principles are: "We are not headquartered anywhere, our auditor says they don't know what our parent company is named, but we'll happily transmit money to Iran"? That always seemed like it might catch up with them...

Because such a company would need to be regulated. I'm not against regulation, the problem is that once you get regulation you also accept to use the legal currency exchange rate, which is expensive for most use cases.

Let me provide accurate, real-world examples:

- 1 USD = 171.276 ARS (according to XE's website, this is the official exchange rate).

- 1 USD = 311.25 ARS (according to Binance's P2P exchange, this is the parallel/black market rate).

In Argentina, most stuff is valued in USD, even if the legal tender is ARS. If you were to buy a $2500 ARS burger with Binance money, that burger costs you $8.03 USD. If you were to buy that same exact burger with a licensed properly regulated exchange, that burger costs you $14.59 USD, almost the double.

This might seem like a trivial example, and a few dollars don't seem to make much of a difference. Try the same example with your weekly grocery store basket, rental apartments, payments of a car, etc. It all adds up and most people here don't earn more than $300 USD monthly (valued in black market exchange rate, of course).

Plus, Argentina and Venezuela are heavily taxed.

EDIT: Formatting of the example.

The legal currency exchange rate in Argentina is a local problem, not an international one. This is not rare in countries with weak local currencies but it is a bit strange to blame the issuer of the currency that you chose to use privately for your troubles. In the former SovBloc countries the USD and the DM were the currencies of choice for the black market, and the official exchange rate was something ludicrous (you were even forced to exhange a certain amount per day at those rates as a tourist), but on the black market prices were entirely different showing the true value of the local currency (something slightly above the value of the paper it was printed on). That wasn't the fault of either the USA or Germany, that was entirely the fault of the party in charge at the time.

One problem with looking at the world through the lens of blaming others for local issues that you declare them in essence unfixable. If you find a way to make such a problem a local one you can actually do something about it.

Well, I was just pointing out that if Binance were to fall down (and by extension, its P2P functionality), it'd make it harder for the people to access exchange rates that have made their lives easier, the easiest they have been.

> One problem with looking at the world through the lens of blaming others for local issues that you declare them in essence unfixable. If you find a way to make such a problem a local one you can actually do something about it.

I'd not say foreign actors like the U.S. Government are meddling with Argentinian or Venezuelan economy, but I'd say that if the U.S. Government were to kill Binance, that has negative impact on this side of the world (which is my original comment).

The core problem with this economy is that most people are uneducated about political and economical issues. All they want are the local government benefits. The state of the economy affects us all local residents, but without the support of the majority I cannot change it singlehandedly.

(please don't interpret my comment as defeatist, it's only there's so much a single person can do).

> Well, I was just pointing out that if Binance were to fall down (and by extension, its P2P functionality), it'd make it harder for the people to access exchange rates that have made their lives easier, the easiest they have been.

I get that, but that's not necessarily the fault of the regulators in other countries, much more the fault of the local government not being able to provide their citizens with a stable local currency.

> The core problem with this economy is that most people are uneducated about political and economical issues. All they want are the local government benefits. The state of the economy affects us all local residents, but without the support of the majority I cannot change it singlehandedly.

I very much sympathize with you, especially in light of the US's past willingness to interfere in those local affairs when it suited their business interests. Even so, the only real solution for this problem can come from inside. Argentina has tremendous potential, natural resources and a whole bunch of other things going for it, I sincerely hope that you and your fellow countrymen will be able to somehow turn this around and make it work.

I'm glad we've come to an agreement in terms of understanding.

Thanks for holding up in this debate! (and thanks for the good wishes, of course).

The solution to that particular problem is simple, but it won't be found outside of Argentina. Think of it this way: if the fate of a country depends on a company that is not even physically present in that country then your problems are of an entirely different nature. Obviously other countries are not going to hold back on regulatory oversight of financial institutions because of some kind of persecution complex elsewhere, if anything Argentinians will benefit from this because there are fewer ways in which they can lose their money.

The typical order in which you address problems like these (looking at it historically) is to first fix your government, then to fix your economy and finally to reap the benefits from that. Argentina looked to me like it was heading in the right direction, this love affair with crypto is at best a distraction.

No, Argentina is not heading in the right direction in that sense.

The economic situation has worsened for the commoner, everything gets more expensive gradually. People have started making concessions on what to buy or not.

The government is not fixable at this point, because of the populist agenda (same as Venezuela, but less deadly).

> if anything Argentinians will benefit from this because there are fewer ways in which they can lose their money.

It turns out the easiest way to lose the money is to keep it sitting at an Argentinian bank. The devaluation is just too violent. If you want to track how to country is doing, please track the black market exchange rate (which is why I claim in my original comment as the true king of the market). Tracking the official exchange rate as you're probably are doing, is not an effective measure as it's seldom used for transactions.

For a practical example, see [0].

[0]: https://news.ycombinator.com/item?id=33967480

I didn't say 'is', I said 'was'.

Well, housing Nazis tends to put you on, at the very least, a "tread with caution" international list, not to mention on the very infamous Mossad's "blacklist". Argentina and Switzerland are their black sheep for housing Nazis and stealing the Jewish gold.

That happened 70 years and many governments ago and has absolutely no bearing on international dealings with either Switzerland or Argentina today any more than that dealings with Germany do and has nothing at all to do with Binance.

Don't forget to tell that to Mossad who not even a few years ago hunted down a 90 years old Hungarian dude who was nothing more than a simple guard at one of the concentration camps, forget which one.

The Mossad's relentless focus and unlimited budget to go after these assholes is commendable. But that is a very long way from seeing the present day Argentina as directly influenced by the Nazis.

Laszlo Csatary is probably who you are thinking of. We're rapidly approaching the end of the hunt though, simply because there are fewer and fewer of the escapees still alive.

Which is my point exactly. Relentless focus and unlimited budget and you only get to see the tip of the iceberg in the news. Can you imagine that Mossad is like "we only hunt old Nazis but the countries benefited from their gold we leave them alone and don't meddle in their politics"? Because I don't.

Now let's talk about paperclips...

While the US importing Nazi scientists is ethically very questionable, it's not really the same. Many of those scientists were guilty of benefiting from the work of forced labor and such, though typically weren't involved in enslaving people themselves, while the Nazis given refuge in Argentina were directly responsible for not only that but the abuse and murder of millions of innocent civilians.

The motives were fairly closely aligned though, both the US and Argentina at the time hoped that bringing these Nazi operatives into their respective countries would give them an edge military wise.

Also, let's not belittle the involvement of the German scientists that went to the US in the Nazi campaign, they knew very well what they were doing and each and every rocket launched against London had the signature of Werner von Braun on it. See also: Tom Lehrer.

A use case indeed for crypto, Especially if your friends and customers are from Argentina, Nigeria, Venezuela, Russia, Ukraine and Iran who's currencies have been totally de-vauled and close to worthless.

One can use that to send USDC worldwide, instantly, cheaply and can exchange that to their local fiat currency. USDC doesn't require an exchange at all, only if you are exchanging it to fiat.

Both pro-crypto and anti-crypto vocals are going to have to concede on their extremities and eventually settle with crypto sitting around for a very long time in a regulated setting.

You're mixing so many things up that I don't know where to start.

But if your customers are in Venezuela, Russia or Iran and you use stablecoins to work around US or international sanctions, you're facing pretty serious legal troubles.

If ending up in jail is a valid use case for you, sure.

> But if your customers are in Venezuela, Russia or Iran and you use stablecoins to work around US or international sanctions, you're facing pretty serious legal troubles.

Not if one gets a license to operate in those sanctioned countries.

> If ending up in jail is a valid use case for you, sure.

Sigh.

So NGOs with licences to operate in sanctioned countries should be put in jail for aiding people without access to money to pay for food due to blanket sanctions then?

It appears that HNers here are just too privileged to not see the global money transfer use-case, especially with countries who's currency has lost 90% of their value.

> They just do not have the capacity nor good exchange rates

They could grow very rapidly if the customer base were to show up and demand it.

I bet within a week they could 10x - at least for basic functions of deposit, exchange, withdraw.

And then become big enough to appear in the radar of regulators.

I elaborate more on this at[0].

[0]: https://news.ycombinator.com/item?id=33966948

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