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Comment by prepend | Hacker News Reader

But that’s so simple to validate. I mean, I have funds in a few accounts and every one of them shows up in FDIC’s bankfind tool and “member fdic” is advertised by the banks.

The link you posted does mention fdic but it says Gemini’s deposits are fdic insured (probably true as what kind of a crazy company keeps cash in uninsured accounts). Definitely shady of them to word it like that as it’s likely meant to confuse and mislead. But again, pretty easy to validate and disprove before sending any funds.

I hope you get something back and I guess the good news is that you only make this mistake once in life and teach everyone in your family how to avoid.

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Yep, no argument that I should have checked the FDIC's bankfind tool, which I do make liberal use of now. I guess I just made the mistake of thinking that Gemini wouldn't have been able to do this for so long if it were a scam, especially since they repeatedly claimed they were working with regulators.

I'm also reasonably sure that the FDIC insurance stuff was more prominently displayed on their site, though I'm having trouble confirming that so maybe I'm just misremembering.

And indeed, I have helped a few people avoid these scams now. When friends of mine ask me about investing in crypto now, I tell them "I think you should buy Treasury Bills directly from the government for safe short term stuff, and probably just find a good low cost index fund from a registered broker for longer term stuff".

You're not crazy that it used to[1] be less clear what exactly FDIC insurance applied to.

Originally:

> Gemini is a U.S. company regulated by the New York Department of Financial Services. GUSD reserves are eligible for FDIC insurance up to $250,000 per user while custodied with State Street Bank and Trust.¹

Later:

> Gemini is a U.S. company regulated as a limited purpose trust company by the New York State Department of Financial Services. Each GUSD corresponds to a U.S. dollar held by Gemini in accounts at U.S. FDIC-insured bank accounts and money market funds holding short-term U.S. treasury bonds and maintained at a custodian. The cash portion of these GUSD reserves may be eligible for FDIC “pass through” insurance for Gemini customers, in the event of the failure of a bank holding the U.S. dollar deposit portion of the GUSD reserves.

[1] https://web.archive.org/web/20211201224824/https://www.gemin...

> But that’s so simple to validate.

Simple to who? Simple to you? I didn't invest in Gemini and also thought these returns were obviously bunk, but I've never heard of "FDIC's bankfind tool" before your comment.

The guy already said he accepts his share of the blame for not doing DD, but I'm not sure why you're so insistent that it's entirely his fault when SBF was clearly committing fraud.

Simple to anyone with significant sums of money to invest.

Either someone is competent enough to earn thousands to hold with FTX or competent enough to inherit win and not have it wasted away.

Either way, if I have $10-100k or whatever and this isn’t simple for me then the issue isn’t FTX, it’s me and I’m going to eventually lose it.

I’m saying it is OP’s fault because he invested in magical thinking. Of course it’s also SBF’s fault for committing fraud. But this is an entirely avoidable fraud as it’s not a complicated con.

If I buy magic beans from a traveler whose fault is it? It’s certainly the traveler’s fault for claiming they will grow into a beanstalk to heaven, but it’s also my fault for believing such a tale.

> Simple to anyone with significant sums of money to invest.

Remember Bernie Madhoff?

Hedge funds are quite different than cash accounts. And Madoff at least had a story with fake statements and whatnot.

FTX was patently impossible.

Genesis was claiming that the Earn program was effectively using cryptocurrency as collateral on high interest loans. I knew how high the interest was on credit cards and auto-loans and payday loans, so it didn’t seem ponzi-like to me.

To be clear, I didn’t ever directly do anything with FTX, at least not knowingly. I was unaware of the cross-mingly that was happening with SBF, Genesis, and Alameda, so no matter how “impossible” FTX seemed, it wouldn’t have saved me if I didn’t know FTX was involved.

That said, 7% when banks and bonds are are offering 0.1% should have more directly set off my bullshit alarm.

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