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Comment by marcell | Hacker News Reader

Under SEC logic, this action is meant to protect the users of Binance US who. According to SEC logic, those users the victims of malfeasance by Binance US and it's decuitful, fraudulent actions.

I would ask: is there even a single Binance US user that wants the SEC to take custody of their assets? instead of sticking with Binance US?

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I’m sure many long-term customers of Bernie Madoff secretly hoped his scam could have kept going because they had been enjoying those nice pyramid returns for years, and it stung that the money flow stopped.

The SEC enforces the law. It’s not some kind of poll where you ask the victims whether they’ve been mostly enjoying the law-breaking activities and would like to see them continue.

Exactly.

Of course not but the same users would blame the SEC when they loose money. Just like silicon valley bank depositors

SVB went down due to the Fed’s aggressive interest rate hikes that left their loan portfolio underwater. “Management” or Any other explanation is pure propaganda, especially considering how it happened to FRB and how the government responded by implicitly guaranteeing every depositor in the banking system. Is every bank mismanaged? It was Kremlin levels of double talk.

> SVB went down due to the Fed’s aggressive interest rate hikes that left their loan portfolio underwater

This is like saying your boat sank because the water dared to come in. Yes. But there’s also a hole in it.

SVB failed to diversify their holdings. The venture capitalists who caused the run and their funds also failed to diversify.

Was there concentration risk? Yes, absolutely. It was completely gaping failure of regulators to not force SVB to address that previously.

But when you look at the scale of the bailout: how it fell to other banks to pay a special assessment to refill the FDIC insurance fund to cover 100% of deposits, you have to recognize that this event was far beyond the mismanagement at a single institution. Then, it happened again at FRB.

The solution that the government came up with to solve the issue —- creating a moral hazard by implicitly guaranteeing 100% of deposits —- undermines the claim that it was merely mismanagement.

We don’t deploy nuclear weapons as pest control.

SVB was told by the fed that they were over-exposed to interest rate risk after audits in 2021 and 2022. SVB fired their chief risk officer (presumably for saying the same thing) and didn't fill the position during the same timeline.

By that revisionist version of events, every other bank should also have failed by now.

The government created a special guarantee for all depositors precisely to prevent runs on banks.

JP Morgan was granted a special waiver to buy FRB.

It’s pretty obvious that what happened was that SVB and FRB management teams were set up as scapegoats to save face while the government worked in the background to halt the sector from unwinding.

I happen to agree that this was the right thing to do.

I don't see how you can call them scapegoats and that someone else is "saving face". That implies someone else did something wrong, and they're taking the blame for it, so someone else doesn't look bad. What is that and who is that someone?

The management of SVB and FRB gambled and lost. They have no one to blame but themselves. Events that followed seemed like reasonable steps to take to clean up their mess.

When SVB failed, the deposits were guaranteed at 100%, for accounts that were far beyond the $250,000 limit. The money to guarantee those deposits came from the FDIC Insurance Fund. A special assessment -- a fee -- was charged to all other banks in the entire Federal Reserve system to refill the insurance fund.

The Biden administration claims that this was not a bailout because taxpayers didn't pay to cover these deposits. Technically, he's right. Instead, bank customers ultimately performed the bailout. It's just the case that 99% of American taxpayers are also Federal Reserve bank customers.

So, let's go back to your "gambled and lost" argument. SVB and FRB gambled, but I lost. You lost. Your neighbor lost. That person that doesn't have a bank account and the folks that had $400M USD in their SVB accounts didn't lose.

The solution to force you and I to pay higher fees to fund a not-a-bailout for SVB depositors to prevent broader contagion was the right call, but to explain it away as merely affecting a small number of executives and shareholders is a lie.

This doesn’t answer the question of who is being scapegoated or who is saving face or from what.

Everyone knew interest rates would go up at some point in the near future. SVB management didn't care about it.

Can you point to a single semi-prominent crypto person who has blamed to SEC for losing their funds?

One wrinkle is that the SEC is ordering Binance to honor customer withdrawals so at least customers won't be stuck in a multi-year limbo as with Celsius and others.

> is there even a single Binance US user that wants the SEC to take custody of their assets

No FTX user would have wanted its assets frozen a few years ago.

You think all of their customers were fully on board with having funds commingled? Not even one that honestly thought they were legit?

User's don't get a vote. Those who would rather stick to Binance US after learning their funds were commingled shouldn't have a vote.

Same thought. I also want to know if is there any Binance US user trust SEC more than Binance US itself.

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