The entire finance industry will repeat this quote for a thousand years
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That's some short-term thinking there!
Sadly, it bites them too late.
One thing is for sure: Technology will ensure that the fine art of relieving "suckers" from their monetary assets will reach ever higher levels of sophistication.
The only people that got fucked were the customers. The financiers got their just fine.
Well, I had to articulate something that will ring true (or at least be quoted) for at least a thousand years. You can't do that with measured expressions.
But on the main point, outward manifestation of deep crisis makes indeed for pop-corn consumption but I don't think I really exaggerate if I say that the crisis was a death moment for an entire industry. The resurrection worked. But it brought back a zombie.
The foundational myth of the financial sector, its calling card to society has been shredded. While in a world of TINA's the gainful milking of broken financial / banking systems continues unabated, this is not enough for a sector "to own the future" and NPV an infinite stream of cash.
It is now lost in fading memories but there was a time when the masters of the information universe were not "big tech" but "big finance".
Just like now there is a pseudo-ideology around "organizing the world's information" or "connecting all people", bankers used to have a pseudo-ideology about optimizing all the economy by transactionizing, financializing, securitising and marketising everything.
In fact, as the crypto boom conveniently reminded us, that ersatz ideology is still lurking around, available to any tribe that wants to try its hand at "reinventing finance" using tech.
Other governments did less well. Ireland got screwed over, but managed to send Sean Quinn to actual jail.
The UK lost £32bn on RBS https://www.spglobal.com/marketintelligence/en/news-insights... ; Fred Goodwin was not jailed, although he did eventually have his knighthood taken away.
The Greek government was almost collapsed, despite not directly having a huge link to the banking sector at all.
In any civilized country, the government would have conditioned bailouts on the people at the top being fired and prosecuted. The business criminals specifically counted on a bailout, and they should have to pay for that with treasure, flesh, and time in prison, but instead of doing any of that, disincentivizing that behavior going forward, they instead encouraged it.
That crypto companies did not get that treatment is a function of them not being the cornerstone of the economy, just a bunch of middle-class and rich people getting fucked on the side.
They're equity investors. The value of your investment may go down as well as up. They are by definition the people who signed up for a risk/reward tradeoff who should absorb losses first before any bailout.
> would have conditioned bailouts on the people at the top being fired and prosecuted
You can't prosecute people simply by government fiat! There has to have been a specific crime committed! Not even Matt Levine thinks everything is securities fraud. Please elaborate on which specific illegal acts by specific named people everyone is angry about?
So far as I'm aware those are limited to Sean Quinn, and IMO the "robosigning" scandal and a few other incidents like the Wells Fargo mass ID fraud scheme (not actually linked to the GFC)
> The business criminals specifically counted on a bailout
Evidence?
Were they retired at the time?
I’m going to assume they were working. If stocks drop 40% and you still have a job and can contribute to your retirement and personal investment accounts, a 40% drop in stocks is a sale on stocks, not a bad thing. How are their retirement funds doing now that the S&P 500 is at ~4300 in 2023 instead of ~6xx in 2008? That’s a 7x increase from the bottom in 15 years.
Assuming they didn’t do something stupid like panic sell at the bottom and buy back in years later, they’re doing just fine now.
If I stole $50 from the till at the corner gas station, I'd be arrested and prosecuted. If someone steals $50 million and their company gets bailed out by the government because they're exempt from the laws of capitalism (private profits, socialized losses) they get a golden parachute and a pat on the back.
In retrospect it might have been my best UX interaction ever.
P.S.: I sit here wondering, is it the court system that doesn't want to write "fucking" or is it a quote where the author himself bowdlerized?
On HN, that the majority irrationally hate crypto (the minority irrationally love it), and this re-enforces their views.
In real life, that people have been trying to work out how to run a crypto exchange legally for about a decade. That the SEC is (suddenly and in a change of position) making that impossible. And that playing ball with regulators and trying to do the right thing will now be punished harshly (Coinbase). And people do don't really care will just ignore regulators (Binance).
I honestly don't get why people don't see this. Japan has had decent regs for spot exchanges for a while. They work, FTX Japan creditors are basically fine because of this. <shrugs>
https://www.bloomberg.com/news/articles/2023-02-17/bankrupt-...
Now people will downvote this or reply with comments that assume all lawsuits are won or that the SEC decides what is legal or that all crypto is bad etc.
Unfortunately, there's no money in that, all the money is in running an illegal exchange trading in unregistered securities (shitcoin and staking protocols and other crap). And no matter how many times you ask the SEC, they aren't going to give you guidance on how to do <illegal thing>.
This upsets crypto people, who then go on Twitter and complain about how they are 'trying to work' but are getting stonewalled.
You should start one, you'd have a monopoly! :)
The NICE thing about crypto exchanges is the very high fees they charge (compared to any other financial market). That's why people were so surprised FTX were also committing huge fraud. Why rob your clients illegally at night when you're already "robbing" them legally with fees in the daylight?
As it is, people keep falling back on the SEC "aren't going to give you guidance on how to do <illegal thing>" but that's not what anyone is asking. And it's not even true, the SEC did give Coinbase plenty of advice and their blessing and permission to list publicly, before deciding all crypto is illegal and previous advice doesn't matter...
1. The way they are doing something is criminal. (Stealing customer funds, comingling the books with their trading arm, operating while insolvent, failure to KYC/AML.)
2. They are doing something criminal. (They allow trading in illegal products.)
Coinbase is, per the allegations, in category #2. FTX was in #1 and #2. Binance looks to be in #1 to at least some extent (to an unclear degree), and #2.
#1 is a problem for any financial business. Every firm does it to some extent or another. They get punished and fined for it, and restructure operations to avoid repeating those mistakes. It's why compliance departments exist. That an exchange is doing #1 in a small way is not particularly newsworthy. (But if it's doing it in a big way, it is.)
It's just regulatory problem. You can fix it by doing the right thing.
But I'd be shocked if there are any exchanges that are not in category #2. You can't just fix it by tightening up your compliance controls - you have to exit most of you business to do so. But that's not a reason to crack down on them. Just because it's not the exchange's customers that get defrauded by the exchange in #2, doesn't mean that they aren't a ripe category for fraud, by the coin issuers, against the buyers.
> Unfortunately, there's no money in that
Not to mention that you'd be outcompeted by the crooks.
> before deciding all crypto is illegal
Except they didn't do that.
Why aren't Japanese exchanges more popular, then?
> how to run a crypto exchange legally
I think the answer has always been "you can't sell unregistered securities to the US general public", and that's bad news for 99% of crypto products. Bitcoin being the possible exception because it seems genuinely leaderless.
Fair question: Japanese exchanges are only open to Japanese residents (and NOT to US citizens even if they are Japanese residents).
>"you can't sell unregistered securities to the US general public
Sounds easy, just let us know what counts as a security. Because the SEC doesn't seem sure. Or rather it's very sure but cannot tell anyone, but definitely know, but has changed it mind and won't go on record.
As it is, this will be decided by the courts. Let's see how that goes...
Until everything collapses.
It turns out finance regulators have heard about WhatsApp and will take it out on your firm if you use it.
https://www.computerworld.com/article/3675289/16-wall-street...
https://www.bloomberg.com/news/articles/2022-09-27/wall-stre...
Only beat by the latest: "I still have the phone but I've been told to never switch it on again ever to not compromise national security".
In case of highly-relevant info mixed with other non-relevant, but highly-confidential information, some courts allow a trusted third-party to see the documents and use their judgement what to submit to the court as part of the subpoena.
"But courts won't know what is in the encrypted info, so can't subpoena it, and you can't get in trouble over that." doesn't work. They order you to hand everything over. If you decline, and the opposing party convinces someone on your side to cooperate, you are in trouble.
If you decide not to turn something over, you get a nice stint in contempt-of-court land, which may include some all-expense paid nights at a not-so-nice hotel.
Traditional finance already knows what not to put in writing at all. Some crypto bro amateurs just gave their compliance training people a ton of funny quotes to work with.
Am I the only one noticing that the quote complains about them putting it in writing and not actually doing it? Like the industry is more focused on avoiding logging your crimes and not actually committing crimes?
Just as in safety culture, train all you will — if the lived culture is "rules are for losers" and people who follow them have it harder guess what is going to happen?
There is a complicated limbo with things like LIBOR, where practice drifted into quietly rigging the number, first in phone calls and then chat channels, and everybody involved kind of forgot it might not be percieved as legal once the outside world realised what happened. https://www.investopedia.com/terms/l/libor-scandal.asp
Nice thing is that once you are in the club like the banks the worst that happens is a small fine. Crypto hasn't donated to enough politicians yet so they are actually targeted for real punishment at the behest of the enforcement arm of the big banks, the SEC
The primate AI is hallucinating after decades of prompt injections.
What obligation do we have to coddle “higher ups” figurative identity?
I'm honestly curious how people jump to such conclusions
After the FX scandals with the 'Cartel' chatroom, the libor scandals, we've seen compliance digging through all your Bloomberg chats and mails to find just about anything that sounds dodgy.
Crypto is new to this game, the other players have seen it before.
Fox could have carried on lying forever if they'd remembered not to libel a business, only individuals and minority groups.
The SEC would not fabricate a quote like this, no, and it's very weird that you're suggesting they might.
Just to be clear, Binance is operating out of the US so it's very doubtful they provided much logs to the SEC, let alone compromising logs.
This is an absolutely ridiculous demand, of course. I don't have any special access to the SEC, and yet I am very confident they are not fabricating quotations from Binance. First, because crypto operators really are dumb enough to commit this kind of thing to writing -- it is very plausible. And second, because the incentives are all wrong for the SEC to fabricate evidence. It would eventually come out, and then they would lose all credibility. There's just no upside in it for the SEC.
> Just to be clear, Binance is operating out of the US so it's very doubtful they provided much logs to the SEC, let alone compromising logs.
If they used a hosted chat service, like Slack, Teams, or iMessage, the US would have had access to that via subpoena. I expect it is something along those lines.