He emptied an entire crypto exchange onto a thumb drive
wired.com
wired.com
> Faruk Özer, Thodex Crypto founder - 11000 year sentence for $2 Billion Heist
I’m not even sure about the most important thing after reading the entire article — how much did the guy actually steal? It’s reportedly $2B from 400k people at the time, but the dude claimed in court that there were only 2027 claimants claiming $45m (is that true? Should be easy to establish from court documents), and dude claimed to have paid back $10m to 1000 people, after which “when the cold wallet was empty, he threw it into the Ionian Sea” (wat?). There’s zero comment from the author on this two orders of magnitude discrepancy, wtf.
This is a crazy part of this story! Presumably this means Ozer had friends in high places, but he didn't seem to implicate them in the trial?
Non-KYC exchanges outside the US and sharp deranged claws of the FTC and DoJ typically depend on exchange held crypto if you want near instant clearing for futures and securities trading etc.
1. Self custody is hard. You need to understand how to setup a wallet. If you lose the keys to that wallet, your money is gone. Opening an account on an exchange is so much easier, and there is usually a way to reset your password if you forget it.
Exchanges provide an online-banking style experience that most people are already familiar and comfortable with.
2. Access to markets. If you hold funds somewhere else, it takes quite a bit of time and effort to move it back onto the exchange so you can sell it later. It only really works for people who want to buy some coins and stuff them under their mattress until later. For anyone who wants to play the markets, you kind of need to keep your coins on the exchange.
Additionally, holding coins on the exchange is free. You don't have to pay the transaction fees to withdraw and deposit, which can add up, especially on congested blockchains like bitcoin and ethereum.
If you don't trust that seed phrases, which are a fundamental piece of how bitcoin key pairs are designed, will work why would you ever consider investing in bitcoin?
I totally get the stress of self custody. I just don't get why anyone that stressed about it would bother buying bitcoin.
I mean, like, take, say you get out college or whatever you're doing. You're gonna go into business; say you're going to open a bank. Now you, just for example, you've got to give it the right name. It's got to be something big and strong like Security First Trust and Federal Reserve. And you have to name a bank that because nobody is going to put their money in Fred's Bank. "Hi, I'm Fred. I have a bank. You got $1,500? I'll put it, I'll put it here, in my white suit. White suit, right-hand pocket. Ok, you gotta remember that."
(you probably have to listen to get all of it)
During the Terra collapse, there was a 2-day period where Terra's price was supported by a massive BTC reserve. Those with Luna on exchanges could quickly exit their positions, but those with Luna in wallets or locked in Anchor Protocol faced hours-long delays for their currency to be confirmed and traded.
Binance in particular has its own blockchain and gets to run fractional reserve on most of the assets bridged to that block chain - the bridge keeps the real copies of the assets while only "shadow copies" are "projected" onto the Binance chain and traded.
This is long form essay has completely unnecessary exposition. Turkey has high inflation and alot of people buy crypto to escape it, one sentence. Next.
The sooner everyone actually learns what money is, the sooner we can stop with all of this foolishness.
Money is a tax credit. It is a token that the sovereign who imposed the tax in the first place will accept back in payment of taxes.
That's it. Without taxes, there's no money. The "social contract" part is more about resources than money. By imposing the tax, the sovereign creates unemployment in terms of a currency only it can issue, and thus is able to provision itself.
why?
Contrast with a time when currency was pegged to a physical asset like gold and GBP so no depreciation in something like 300 years. Savings actually had meaning.
The government imposes a tax, the tax is due in the state's unit of account. The government can then spend its unit of account into circulation, and later accepts it back in payment of taxes.
> Contrast with a time when currency was pegged to a physical asset like gold
Even when a currency is constructed from a commodity, it is not the commidity that is the money. It is a commodity that bears the stamp of the sovereign.
> and GBP so no depreciation in something like 300 years. Savings actually had meaning.
When money was constructed from a commodity there was a terrible shortage of coin to support the economy and it was a horror show for almost everyone.
It's certainly possible to have price stability and full employment, but if you're going to choose, a bit of inflation is much, much better than deflation.
If you don't pay your taxes in your nations currency you go to prison.
Without the third guy standing there with a club it's not clear if or why they would demand dollars.
Well, maybe sales taxes when he spends his ill-gotten gains, but that's indirect and if he's effective at intimidation with his club, he arguably doesn't need the money in the first place as he can acquire goods through other means.
The more compelling argument is that we pay taxes primarily to enforce peaceful law and order, primarily through control of force - at home through the police and abroad through the army - so that our stuff isn't just taken by "someone with a club" and making it worth being part of a larger society.
You could argue that government isn't much different to a mafia, except that modern taxation is generally more transparent, fairer, impartial, and perhaps more considerate to the people with the least money. Also, they generally don't use force to enforce taxation, only the threat of a prison sentence.
It can be a useful metaphor to visualize the economy as a web of interconnected loops of cashflows with "the government" on one side and the rest of the economy the other. By raising taxes it pulls some of its inbound ends of the loops tighter and by issuing subsidies/grants/credits and loosens up the slack on its outbound ends. It doesn't actually matter how much money "the government" has, because it's the final arbiter of how much money is actually in circulation, it only exists because it issues it. In theory it can play this game to achieve good social outcomes. In practice it's more difficult to predict far-reaching consequences of some economic action.
You open say, a hard rock mine somewhere in the US, you have to get mining permits to do so which are paid in...local currency.
In most crypto, the commodity isn't very clear. I attribute it's rise largely to the tax authorities and the FATF snuffing out anonymous banking and bearer shares and most high denomination notes around that time, creating massive demand for an alternative that crypto largely fills.
Money is considerably older than taxation in money is.
This is a strange thing for you to believe. There is no evidence for it, nor any suggestion that it's likely.
Taxation in money is a recent phenomenon, well within the historical period, pretty much everywhere; before that, you have taxation in kind. (And, often treated separately, taxation in conscripted labor.) Penalties are generally the same. Monetary penalties do show up before monetary taxation does, but they apply to people who have money, not to everyone in general.
Money is a fungible form of exchange so that I can sell widgets and can buy foobars later. Many of my Bedouin neighbors pay no taxes, but they use the same money I do - both accepting it and paying in it.
The demand for that currency traces back to the willingness of the issuer to accept it back in payment of taxes.
People use the USD in all sorts of places where taxes aren't due in USD, but if the US government said "you can't pay your taxes in USD anymore" then it wouldn't take long for the USD to have no value.
Even when money is constructed from a commodity, its value is derived mostly from the nominal value ascribed to it by the sovereign.
That's why ancient coins still exist.
The US government is not the only entity that sees value in USD. So long as other bodies, especially commercial bodies, see value in USD, it will continue to be used as an exchange medium. Same for any other currency - just look to South America for examples where people have stopped trusting in the value of a currency and that currency failing, despite being able to pay taxes with it.
Nope.
> The US government is not the only entity that sees value in USD
The US government doesn't see value in the USD at all. It sees value in the resources it wants to divert to the public sector by spending the USD, which it creates.
> So long as other bodies, especially commercial bodies, see value in USD, it will continue to be used as an exchange medium
The sole reason that the USD has value is because people in the US must pay taxes in USD.
> Same for any other currency - just look to South America for examples where people have stopped trusting in the value of a currency and that currency failing, despite being able to pay taxes with it.
It's different depending on the specific nation you're talking about but when a nation issues debt in a currency other than its own (in which of course it is logically impossible for it to borrow since the currency is already a liability of the issuer) and if a country relies on imports then it loses the ability to control its interest rate and price stability.
In a sense this is like the liabilities being imposed by the foreign sector exceeding the domestic tax base, or another way of looking at it is that the resources required to provision government are not available for sale in the currency it issues.
There's also issues like corruption in the tax system itself to contend with in some circumstances.
Ehh what about the petrodollar?
It literally is the only reason. Taxation is the only reason the USD even exists.
I can’t parse the rest of your comment.
Which country lets you pay taxes in sofa cushions?
How is it relevant?
Seriously, though, I had this exact conversation with him when I first launched Intercoin back in 2018 and reached out about advising us on economics (I had interviewed many economists since then). He said he never saw any currency that was in use that wasn’t accepted for taxes. I asked what about Bitcoin and all those other cryptos.
Actually, money doesn’t require government. It simply requires a network effect, same as language, religion and culture (which also don’t require government force). Money is just the most liquid asset in a specific network. Its value comes from others accepting it for goods and services.
You may want to watch some of my discussions with economists of different schools:
https://www.youtube.com/intercoin
Or you might want to read articles like:
https://community.intercoin.app/t/rolling-out-voluntary-basi...
https://community.intercoin.app/t/local-community-currencies...
They're not money, they're a hybrid of commodity and payment system.