Binance is trying to calm investors, but its finances remain a mystery(wsj.com)
wsj.com
Binance is trying to calm investors, but its finances remain a mystery
https://www.wsj.com/articles/binance-is-trying-to-calm-investors-but-its-finances-remain-a-mystery-11670679351
278 comments
From TFA:
> The reserve report, released Wednesday, is a five-page letter from a partner at the South African affiliate of the global accounting firm Mazars. It contained three numbers. The letter wasn’t an audit report, didn’t address the effectiveness of the company’s internal financial-reporting controls, and said Mazars did “not express an opinion or an assurance conclusion,” meaning it wasn’t vouching for the numbers.
> Mazars said it performed its work using “agreed-upon procedures” requested by Binance and that “we make no representation regarding the appropriateness” of the procedures.
This sounds like a Binance paid for a brand name on an empty report, while providers of said brand name (Mazars) are doing everything in their power to distance themselves from factual claims about Binance's solvency. Am I missing something here?
> The reserve report, released Wednesday, is a five-page letter from a partner at the South African affiliate of the global accounting firm Mazars. It contained three numbers. The letter wasn’t an audit report, didn’t address the effectiveness of the company’s internal financial-reporting controls, and said Mazars did “not express an opinion or an assurance conclusion,” meaning it wasn’t vouching for the numbers.
> Mazars said it performed its work using “agreed-upon procedures” requested by Binance and that “we make no representation regarding the appropriateness” of the procedures.
This sounds like a Binance paid for a brand name on an empty report, while providers of said brand name (Mazars) are doing everything in their power to distance themselves from factual claims about Binance's solvency. Am I missing something here?
Former auditor here:
1. That is standard wording for the report of "agreed upon procedures". This is not an audit it just means they only did a certain set of procedures rather than an audit.
2. Audits aren't really able to detect all fraud, especially if the management is sophisticated. But if the fraud results in obvious material discrepancies then the audit would catch it and the auditor would resign (unless they are corrupt in which case you end up with Enron where a Big 5 auditor was complicit, so now we have the Big 4).
3. In the Binance case, the obvious weird thing is they only did these very limited agreed upon procedures on 'Bitcoin', but other crypto currencies they claim to hold were not verified at the same time. Also their other liabilities are not verified.
(As some examples: they could have some non-BTC liabilities to offset the Bitcoin or CZ moved some personal bitcoin to wallets or converted some other holdings, all sorts of possibilities. Would be hard to hide from a full audit but in this case very easy to hide. )
1. That is standard wording for the report of "agreed upon procedures". This is not an audit it just means they only did a certain set of procedures rather than an audit.
2. Audits aren't really able to detect all fraud, especially if the management is sophisticated. But if the fraud results in obvious material discrepancies then the audit would catch it and the auditor would resign (unless they are corrupt in which case you end up with Enron where a Big 5 auditor was complicit, so now we have the Big 4).
3. In the Binance case, the obvious weird thing is they only did these very limited agreed upon procedures on 'Bitcoin', but other crypto currencies they claim to hold were not verified at the same time. Also their other liabilities are not verified.
(As some examples: they could have some non-BTC liabilities to offset the Bitcoin or CZ moved some personal bitcoin to wallets or converted some other holdings, all sorts of possibilities. Would be hard to hide from a full audit but in this case very easy to hide. )
Don't forget the big four signed off on evergrande and other Chinese real estate and it seems like there will be no consequences (we can't have the big zero)
Has there been an accounting fraud with Evergrande? Being overleveraged isn’t fraud.
It's fraud when you tell investors incorrect things in prospectuses, for example. These things are required to be signed off by auditors to participate in us stock exchanges
>>But if the fraud results in obvious material discrepancies then the audit would catch it and the auditor would resign
Explains "no auditor wants to work with us" line used by Tether among other crypto projects.
Explains "no auditor wants to work with us" line used by Tether among other crypto projects.
Curious did you switch from auditing to something else?
> Am I missing something here?
Nope. I can produce a similar report for 60x+ my net worth. Bank account snapshots, wire in wire out. Leveraged assets, debt ignored. This is all marketing aimed at the financially illiterate.
Nope. I can produce a similar report for 60x+ my net worth. Bank account snapshots, wire in wire out. Leveraged assets, debt ignored. This is all marketing aimed at the financially illiterate.
Nope. That's pretty much the gist of the whole shenanigan.
As a former CRO, it's not unheard of but quite uncommon to do this. Because normally it has the opposite effect.
It should have been only audited financials. But the Big 4 have failed us spectacularly in recent years.
siwatanejo(2)
Isn’t it telling that this work wasn’t done by the “big four?”
Given that the Big Four like money and are ostensibly the biggest and oldest and with the best reputation. Any perceived shaky but actually strong firm would come out gangbusters with “Old Accounting firm stakes its reputation that we aren’t full of shit.”
After the death/execution/seppuku of Anderson after Enron, the remaining four seem extra conservative these days so they would likely only take on a job if it was reputable. Even if it means hundreds of millions of dollars in fees.
This is an example where old fuddy duddy finance should help me as a consumer.
Given that the Big Four like money and are ostensibly the biggest and oldest and with the best reputation. Any perceived shaky but actually strong firm would come out gangbusters with “Old Accounting firm stakes its reputation that we aren’t full of shit.”
After the death/execution/seppuku of Anderson after Enron, the remaining four seem extra conservative these days so they would likely only take on a job if it was reputable. Even if it means hundreds of millions of dollars in fees.
This is an example where old fuddy duddy finance should help me as a consumer.
Mazars isn’t a fly by night operation. They are old and big, just not in the big 4.
Traditional finance views Mazars audits (which this isn’t) the same as a big 4 audit.
Traditional finance views Mazars audits (which this isn’t) the same as a big 4 audit.
I’m aware of Mazars and their position. I didn’t say they are fly by night, I said they aren’t as reputable or established as the big 4.
My point stands that if you want to assuage doubts, you don’t hire the #11 [0] (or #21 if just looking at US revenue [1]) firm to do it. This would be simple to get PWC or someone. But a firm that big isn’t willing to touch this kind of operation.
[0] https://big4accountingfirms.org/the-top-accounting-firms-in-... [1] https://www.accountingtoday.com/the-2021-top-100-firms-data
My point stands that if you want to assuage doubts, you don’t hire the #11 [0] (or #21 if just looking at US revenue [1]) firm to do it. This would be simple to get PWC or someone. But a firm that big isn’t willing to touch this kind of operation.
[0] https://big4accountingfirms.org/the-top-accounting-firms-in-... [1] https://www.accountingtoday.com/the-2021-top-100-firms-data
Mazars is 5th in Europe, 24 400 employees and it makes ~2 bilions in turnover.
this above comment is not bringing much value to the discussion I think.
this above comment is not bringing much value to the discussion I think.
They aren’t top 10 globally or even in the US.
They aren’t a tiny firm, but they aren’t even in the same league as the big companies. Mazars has $2B in revenue and the smallest of the big4, KPMG, has $32B.
They aren’t competitors and Mazars doesn’t even compete for work.
Here’s a list of all major US banks and their auditors [0]. Mazars doesn’t audit a single one and 90% are big4.
In my comment, I wanted to point out that Binance is not doing what a reputable financial firm would do, hire a major accounting firm and have them audit. Hiring a regional firm means they likely went down the list until they finally found an auditor willing to make any statement.
It looks silly to anyone who understands auditing.
My point was also that major audit firms risk dissolution if they are convicted like Anderson was. So there’s no way that a firm is going to risk their $30B+ audit book in exchange for a few million in fees.
Mazars doesn’t have as big a book to risk. And their customers aren’t major exchange listed firms that would have to fire them if they were convicted of fraud.
[0] https://ibanknet.com/scripts/callreports/filist.aspx?type=au...
They aren’t a tiny firm, but they aren’t even in the same league as the big companies. Mazars has $2B in revenue and the smallest of the big4, KPMG, has $32B.
They aren’t competitors and Mazars doesn’t even compete for work.
Here’s a list of all major US banks and their auditors [0]. Mazars doesn’t audit a single one and 90% are big4.
In my comment, I wanted to point out that Binance is not doing what a reputable financial firm would do, hire a major accounting firm and have them audit. Hiring a regional firm means they likely went down the list until they finally found an auditor willing to make any statement.
It looks silly to anyone who understands auditing.
My point was also that major audit firms risk dissolution if they are convicted like Anderson was. So there’s no way that a firm is going to risk their $30B+ audit book in exchange for a few million in fees.
Mazars doesn’t have as big a book to risk. And their customers aren’t major exchange listed firms that would have to fire them if they were convicted of fraud.
[0] https://ibanknet.com/scripts/callreports/filist.aspx?type=au...
KPMG does more advisory and tax than audit; Mazars the other way around. Still much bigger, but it's not apples/apples. Mazars clients are mostly European; they're BNP Paribas' auditor.
I think it's a very reasonable observation. An audit from PWC is materially different to an audit from a local accounting firm with less of a reputation at stake. The parent happens to be in error about which category Mazar's falls into (since they're probably the largest accounting firm outside the big four), but people are going to make reasonable but ignorant comments sometimes. I myself thought the exact same thing and only didn't say it because I happened to google Mazars out of curiosity.
Ever since the Trump stuff, I don't think Mazar's gets alot of trust anymore:
https://www.nytimes.com/2022/02/14/nyregion/mazars-trump-org...
https://www.nytimes.com/2022/02/14/nyregion/mazars-trump-org...
Fair point but I am pretty sure so many accounting firms messed up quite often.
Without slowing their business much.
I remember this one for example that was probably missed by most people. https://www.bbc.com/news/business-58671915
Trump was a loaded client and any firm doing business with any politicians should be extra-careful
I remember this one for example that was probably missed by most people. https://www.bbc.com/news/business-58671915
Trump was a loaded client and any firm doing business with any politicians should be extra-careful
These scandals can have an impact on the business, but it's true that it's not always that bad and companies can continue to be bad actors:
https://www.nytimes.com/2022/09/30/world/africa/mckinsey-cor... https://www.investopedia.com/terms/a/anderseneffect.asp
https://www.nytimes.com/2022/09/30/world/africa/mckinsey-cor... https://www.investopedia.com/terms/a/anderseneffect.asp
Also, same firm that Trump worked with. I see a potential pattern here.
Yes.
Agreed upon procedures is a standard non audit report done with a particular target use case in mind.
They can be very valuable or complete garbage. It depends on its design and purpose. The disclosures you quote are standard and would form part of any agreed upon procedures engagement. There is no nefariousness at play.
However, the better questions are:
1- Does this report result in meaningful assurance and if so, why 2- Why isn't here any audit report
Agreed upon procedures is a standard non audit report done with a particular target use case in mind.
They can be very valuable or complete garbage. It depends on its design and purpose. The disclosures you quote are standard and would form part of any agreed upon procedures engagement. There is no nefariousness at play.
However, the better questions are:
1- Does this report result in meaningful assurance and if so, why 2- Why isn't here any audit report
If I squint, I can understand the value of a non-audit-audit in some circumstances. But I don't understand the value of it in this circumstance, except for the value in obscuring one's finances behind a "serious" auditor's letterhead.
Put another way: the context is anxious investors. Is this intended to assuage them, or is it intended to dupe them?
Put another way: the context is anxious investors. Is this intended to assuage them, or is it intended to dupe them?
Not necessarily. It might simply be because they wanted to publish something now and not in a couple of months.
That’s Tether’s old line. News articles about “just a few more months” date back at least five years.
https://www.pymnts.com/cryptocurrency/2022/tether-audit-prom...
https://www.pymnts.com/cryptocurrency/2022/tether-audit-prom...
"We want to get this not-an-audit out the door now, instead of waiting for a few months" has been their line for years.
> There is no nefariousness at play.
By Mazars.
By Mazars.
How can that claim be made?
By carefully reading their statement and to realize that they have very explicitly not said that they are assuming responsibility for these figures in their role as CAs but that this is merely Binance's opinion expressed on Mazar's letterhead.
> Merely Binance's opinion expressed on Mazar's letterhead.
This alone is at least a gray area, ethically, and not necessarily in just this case.
In this particular case, it has made it possible for Binance’s chief strategy officer, Patrick Hillmann, to say things which he subsequently described as “parroting others’ descriptions of this as an independent audit.” Mazar's response so far: "No comment."
This alone is at least a gray area, ethically, and not necessarily in just this case.
In this particular case, it has made it possible for Binance’s chief strategy officer, Patrick Hillmann, to say things which he subsequently described as “parroting others’ descriptions of this as an independent audit.” Mazar's response so far: "No comment."
That's pretty much it
They're asking the auditors to tell how many sweets you have in a box, but you can only shake the box and listen to what sound it makes. And not actually do any form of due diligence
They're asking the auditors to tell how many sweets you have in a box, but you can only shake the box and listen to what sound it makes. And not actually do any form of due diligence
Chocolate covered turds look like sweets until it’s too late.
This YouTuber (Sasha Yanshin) did a scrutiny of the errors or omissions made with the different wallet checks in the report. This is the most detailed tear down I've been able to find so far on the Internet.
https://www.youtube.com/watch?v=42VnEndJ9mo
https://www.youtube.com/watch?v=42VnEndJ9mo
This is worth the watch. TL;DR: the non-audit a) doesn't cover Binance's notional holdings of $40B+ in stablecoins at all, b) doesn't match the list of wallets they've previously published, and c) there are shenanigans like billions in BTC teleporting into wallets right before the attestation date and teleporting right out afterwards.
I personally wouldn't transfer a dime into Binance, but demonstrating the ability to perform a transaction of a specific time, place, and amount isn't shenanigans.
Even though I would like to casually watch a video on Binance but I am going to pass on that channel.
That channel is defined by red backgrounds, down arrows and fire. I firmly believe that one should be open to every opinion as long as they have a built a good framework aka BS detector. I feel like this video is not going to be a casual watch for me and I am definitely not invested in Binance that much to fact check everything presented on that video.
That channel is defined by red backgrounds, down arrows and fire. I firmly believe that one should be open to every opinion as long as they have a built a good framework aka BS detector. I feel like this video is not going to be a casual watch for me and I am definitely not invested in Binance that much to fact check everything presented on that video.
I watched maybe a third of the video. It was truly awful.
I think the overall conclusion is right -- that the Mazars report does not show Binance is sound -- but, wow, what an awful way to deliver it.
I think the overall conclusion is right -- that the Mazars report does not show Binance is sound -- but, wow, what an awful way to deliver it.
That is an unfortunate side effect of the way YT is running its feed system and ad revenue sharing. A good amount of YT vid thumbnails have turned into clickbait.
I tend to agree with you, but i'm also sympathetic to the youtubers trying to maximize their engagement since this style appears to be what does it
Binance is even more shady than FTX. They are most likely not solvent. Personally, I'd move all my funds off binance to off-exchange wallets for the time being.
Just makes one wonder why the binance guy even stirred the pot initially with FTX, like 3 possibilities exist:
1. He assumed the blowout would be minimal outside of FTX and/or assumed FTX was shady but not as bad as it turned out
2. He acknowledged the possibility that binance will also get scrutiny but realized FTX was just so bad that letting it fester further will only get him arrested faster too.
3. He’s just another idiot who made money lucky.
Curious which it is.
1. He assumed the blowout would be minimal outside of FTX and/or assumed FTX was shady but not as bad as it turned out
2. He acknowledged the possibility that binance will also get scrutiny but realized FTX was just so bad that letting it fester further will only get him arrested faster too.
3. He’s just another idiot who made money lucky.
Curious which it is.
I mean fourth possibility is that binance is solvent right? I’m not assigning probabilities to any of them but taking their insolvency as a foregone conclusion seems pretty incorrect?
Assuming rational actors I can't see any reason to evade audits for years, even after litigation, unless the result of the audit would be bad.
Surely, the following two statements can be true at the same time?
1. Binance is run by criminals and all sorts of people would go to jail if anyone looked at their books.
2. Binance is solvent.
Not saying this is the case, but there's many other reasons for a crypto firm to be shady than their insolvency.
1. Binance is run by criminals and all sorts of people would go to jail if anyone looked at their books.
2. Binance is solvent.
Not saying this is the case, but there's many other reasons for a crypto firm to be shady than their insolvency.
(Not an audit expert)
I can imagine that a full audit would uncover dangerous skeletons in the closet that don’t necessarily imply insolvency. At the very least, Binance made no secret of using extremely dubious banking relationships to collect money from its clients.
I can imagine that a full audit would uncover dangerous skeletons in the closet that don’t necessarily imply insolvency. At the very least, Binance made no secret of using extremely dubious banking relationships to collect money from its clients.
Also not an audit expert, but my understanding is that they've released an audited point-in-time snapshot of their bank accounts. The problem is that there are various ways to make that number go up for an instant, so people want (amoung other things) the value of their bank accounts over a longer period.
Audits aren't all-or-nothing, they've already paid an auditing firm to do a custom audit they designed. They could have made that audit much better without going into what you're mentioning.
Audits aren't all-or-nothing, they've already paid an auditing firm to do a custom audit they designed. They could have made that audit much better without going into what you're mentioning.
See Tether. Crypto is just a massive house of cards that will collapse and drag the economy with it.
Crypto (coins, not graphy), is a superteeeny amount of "economy". Most serious finance players avoided doing anything serious with crypto mostly because it's just a very small market for them. Typical investment bank moves more money per day, than the whole cryptocurrency market is worth.
It's too small. It's entire, and arguably entirely fantastical market cap is still smaller than Apple.
> arguably entirely fantastical market cap
The idea of using market cap as a frame of reference for crypto needs to die. There are much stricter controls about how a company issues more stock (and thus can inflate or deflate the price) than how a cryptocurrency issues more coins. Also, cryptocurrency market caps are denominated as an exchange of <insert your country> fiat, whereas a company's market cap is in the fiat in which the company is actually sourced (e.g. NASDAQ).
You just can't compare the two.
The idea of using market cap as a frame of reference for crypto needs to die. There are much stricter controls about how a company issues more stock (and thus can inflate or deflate the price) than how a cryptocurrency issues more coins. Also, cryptocurrency market caps are denominated as an exchange of <insert your country> fiat, whereas a company's market cap is in the fiat in which the company is actually sourced (e.g. NASDAQ).
You just can't compare the two.
Yeah, but it makes for a fantastic scapegoat.
Scapegoat for what excatly?
The economy collapsing...it's the first comment in this thread for context.
I thought Germany's dependency on Russian gas was the reason this time?
It depends on how the media wants to spin it.
My point was, even if the whole crypto ecosystem went to zero right now, the effects on the economy at large would be negligible. However, it would be the perfect scapegoat to finally crash the economy with no survivors. The media would not have a problem with just blaming it all on crypto: as you can see here, people are already very eager to do so! No other explanation needed to convince the masses!
My point was, even if the whole crypto ecosystem went to zero right now, the effects on the economy at large would be negligible. However, it would be the perfect scapegoat to finally crash the economy with no survivors. The media would not have a problem with just blaming it all on crypto: as you can see here, people are already very eager to do so! No other explanation needed to convince the masses!
Whom exactly would want to crash the whole economy?
Maybe an audit shows they are too solvent, only achievable with profits from a prior leverage of protected customer funds that they don't want to reveal.
Say with Tether instead, if they invested in junky stuff but none of it went bust and they made way more than investing in t-bills or whatever they promised, then they may not want an audit to reveal they have 3X more than enough to cover outstanding tether, something t-bills couldn't have achieved.
Say with Tether instead, if they invested in junky stuff but none of it went bust and they made way more than investing in t-bills or whatever they promised, then they may not want an audit to reveal they have 3X more than enough to cover outstanding tether, something t-bills couldn't have achieved.
While we can’t be sure of the minutiae of their assets we can be sure due to the beauty of the blockchain that they own an incredible amount of Bitcoin.
https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
#1, 5, 10…
Same thing for Ethereum.
https://etherscan.io/accounts
This is very far from FTX in my opinion. Billion and billions of dollars of crypto in wallets we can see. And these are just the ones we know of.
https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
#1, 5, 10…
Same thing for Ethereum.
https://etherscan.io/accounts
This is very far from FTX in my opinion. Billion and billions of dollars of crypto in wallets we can see. And these are just the ones we know of.
We know they hold a lot. That’s not the same thing as owning.
The attestations Tether and Binance like to call audits are like printing off your house's appraised value of $1M. Real audits are the sort of thing that reveal you're underwater on its mortgage and leveraged its value to borrow another $1M to buy a pile of Beanie Babies.
The attestations Tether and Binance like to call audits are like printing off your house's appraised value of $1M. Real audits are the sort of thing that reveal you're underwater on its mortgage and leveraged its value to borrow another $1M to buy a pile of Beanie Babies.
As for 3), we really need to avoid the narrative that these people are idiots or stupid. They are sharks - intentionally malevolent people who have defrauded millions of people. SBF's current defense is that he was too naive and unaware of what was happening at FTX. Obviously its a lie - but we shouldn't help these people spread it.
I think his defense is sort of:
1. We had a busted accounting system
2. Early on in FTX people had to route dollars via Alameda because banking is hard
3. We accidentally credited those dollars both to Ftx and Alameda
4. Each side thought they had billions to spend / lose (their VC and related spend was WILD), and suddenly, oops!!!!!!
I suspect there's a grain of truth to this, in that steps 1-4 did actually happen to some degree and influenced expenditures/risk taking that the firm couldn't back. Given what's known (for some definition), the upper crew knew about the problem well before the bank run, and knowingly transferred funds from FTX to Alameda. This sort of 'best case' scenario still implies an absurd commingling of exchange and user funds.
It doesn't strike me as plausible that nobody ever questioned the extra billions , and it definitely isn't believable that when Alameda got margin called, they just casually 'sent' some of the double counted billions without taking some time to think "hey, so about these billions".
Also, this doesn't square with Sam constantly claiming that he misjudged whether FTT was good backing - if they didn't commingle/steal customer funds, he wouldn't have cared about FTT collateral!
1. We had a busted accounting system
2. Early on in FTX people had to route dollars via Alameda because banking is hard
3. We accidentally credited those dollars both to Ftx and Alameda
4. Each side thought they had billions to spend / lose (their VC and related spend was WILD), and suddenly, oops!!!!!!
I suspect there's a grain of truth to this, in that steps 1-4 did actually happen to some degree and influenced expenditures/risk taking that the firm couldn't back. Given what's known (for some definition), the upper crew knew about the problem well before the bank run, and knowingly transferred funds from FTX to Alameda. This sort of 'best case' scenario still implies an absurd commingling of exchange and user funds.
It doesn't strike me as plausible that nobody ever questioned the extra billions , and it definitely isn't believable that when Alameda got margin called, they just casually 'sent' some of the double counted billions without taking some time to think "hey, so about these billions".
Also, this doesn't square with Sam constantly claiming that he misjudged whether FTT was good backing - if they didn't commingle/steal customer funds, he wouldn't have cared about FTT collateral!
SBF recently said that both the FTX & Alameda/FTX Trading accounts were the same. People who signed up for just storage were exposed to the same risks as the trading degenerates. When everything collapsed, the trading degenerates could withdraw using the very same money that regular FTX users had put money in.
It's fraud, from the beginning.
It's fraud, from the beginning.
It's fraud for sure .. but it doesn't mean he intended to take the money or anything. He was just too naive to understand how dangerous mixing the funds would be during an inevitable period of pressure and (I'm guessing) felt like keeping the mondy separate is the kind of control that an overly bureaucratic bank would need, not a nimble startup like FTX :-/
Don't get me wrong, he should still go to prison.
Don't get me wrong, he should still go to prison.
The MIT educated, son of two Stanford teachers, professors of law and business, brother to a Wall Street trader, Jane Street employee, extremely well connected kid was simply too naive :(
Sorry, but you're just giving in too much in his bullshit. Especially when FTX terms of service explicitly said that your funds would never be given to FTX Trading, and that they would be kept apart. It's not an accident. Separating the funds was consciously thought of and immediately followed up by "lol no".
Sorry, but you're just giving in too much in his bullshit. Especially when FTX terms of service explicitly said that your funds would never be given to FTX Trading, and that they would be kept apart. It's not an accident. Separating the funds was consciously thought of and immediately followed up by "lol no".
I think the education, Jane St, etc... is what allowed him to be naive. He never had to do the grunt work of running ops at Goldman Sachs to earn his stripes. He just skipped to the fun part of mansions and TED talks.
Anyway, it's clearly fraud and he should go to prison. And in some ways maybe the callous disregard for bureaucracy and controls (we don't need these, it's a waste) is worse than if he had malicious intent (I'm going to take all this money and run). For the person with malicious intent, there's not much to do other than build rules to constrain future people like that since they won't learn from the punishment of others. For the person with disdain for mechanistic controls and regulation however, we do need to show that it's just not acceptable to bypass that stuff and that society will punish you severely.
Anyway, it's clearly fraud and he should go to prison. And in some ways maybe the callous disregard for bureaucracy and controls (we don't need these, it's a waste) is worse than if he had malicious intent (I'm going to take all this money and run). For the person with malicious intent, there's not much to do other than build rules to constrain future people like that since they won't learn from the punishment of others. For the person with disdain for mechanistic controls and regulation however, we do need to show that it's just not acceptable to bypass that stuff and that society will punish you severely.
I don't believe that at all. I can believe an initial loss of some amount of money, but there's no way everyone completely ignored it for years.
Like, how hard do you have to try to lose 8 Billion dollars and not know how?
I'd bet on them hoping they could make the money back after losing it, and just digging successively deeper holes. They knew what they were doing, and excuses are all about avoiding decades of well-deserved prison for the amount of people they've fucked over.
Like, how hard do you have to try to lose 8 Billion dollars and not know how?
I'd bet on them hoping they could make the money back after losing it, and just digging successively deeper holes. They knew what they were doing, and excuses are all about avoiding decades of well-deserved prison for the amount of people they've fucked over.
I don’t think they ignored it for years? That would imply most of the FTX lifetime, they’re not even and were only big for maybe 1.5-2 years?
If you look at them buying out the binance share + their VC spend, I think that was over over 4bn? Buying out binance alone was 2.5bn iirc, and they had well over a billion in investments between FTX and Alameda. That doesn’t feel like the behavior of someone who knows they’re in a huge hole, but then who knows.
Not trying to apply moral judgment or make excuses, just speculating about what happened fwiw. At the end of the day they stole customer money (a few good friends got super wrecked, I have no loyalty to ftx or anything)
If you look at them buying out the binance share + their VC spend, I think that was over over 4bn? Buying out binance alone was 2.5bn iirc, and they had well over a billion in investments between FTX and Alameda. That doesn’t feel like the behavior of someone who knows they’re in a huge hole, but then who knows.
Not trying to apply moral judgment or make excuses, just speculating about what happened fwiw. At the end of the day they stole customer money (a few good friends got super wrecked, I have no loyalty to ftx or anything)
I though SBF’s defense was poor FTX was manipulated by those bastards running Alameda, and that he had no idea what going on there.
Despite the fact that he owns Alameda.
Despite the fact that he owns Alameda.
I’m implying they’re idiots as in they can’t always think 3 steps ahead. This says nothing about their benevolence or lack thereof.
4. Years of living as a criminal, constantly afraid of getting caught, has taken a tole on his psyche. He's now starting to act in a self-destructive manner, not rationally in his best interest.
Cool movie plot
or (4) he thinks he's legit and simply experiencing a temporary setback. His intent is to put the spotlight somewhere else so he can keep the charade long enough to get the books back into balance. Motivated reasoning makes him sure this will succeed if he can buy enough time, even though that's obviously highly unlikely.
Given the negative impact of recent events on his business, he either did not expect FTX to explode so easily or wanted to get it over with.
4. He has relatives in mainland, and ccp wants crypto gone completely.
Or that they run a legitimate company and don't like scammers running competing exchanges and stealing customers money which makes the whole industry look bad
4. It is all ego driven.
All of the above?
It's difficult for anyone to be more shady than the people who stole ten billion dollars from their customers.
> difficult for anyone to be more shady than the people who stole ten billion dollars from their customers
We literally don’t know where Binance is. It’s absolutely shadier than FTX, if a better-run scam.
We literally don’t know where Binance is. It’s absolutely shadier than FTX, if a better-run scam.
And we don't know who really owns it: "...Mr. Hillmann said he couldn’t provide the name of Binance’s ultimate parent company because Binance over the past year and a half has been in the process of a broad corporate reorganization."
Even if Changpeng Zhao owns the majority of binance.com, the coins might be held by some other legally-distinct entity.
Even if Changpeng Zhao owns the majority of binance.com, the coins might be held by some other legally-distinct entity.
Hold my Cristal
Give it a few weeks to play out, at least before making that call.
Giving it a few weeks to play out is how people end up without money once withdrawals are frozen.
I'm not saying it would happen here, but in general I don't see any incentive to wait to find out and risk losing everything. Why not withdraw early and wait to see how it plays out while your money is safe?
I'm not saying it would happen here, but in general I don't see any incentive to wait to find out and risk losing everything. Why not withdraw early and wait to see how it plays out while your money is safe?
I think that comment is in reference to “Binance is even more shady than FTX” rather than advice on how to manage your funds.
Gp said give it a few weeks before declaring there’s no one shadier than FTX/Alameda
[deleted]
What about the exchange that potentially steals 70 billion (though I guess their own holdings of Binance token of 17 billion is possibly a more accurate estimate)?
I guess we'll see if Binance manages to have an 11B balance sheet hole? ;P
[deleted]
> They are most likely not solvent
On what basis do you make this statement?
On what basis do you make this statement?
For the time being? Keeping your funds on an exchange (or in a bank) means they are, quite literally, not your funds.
If you don't want the risk of loss, don't give your money to second parties.
If you don't want the risk of loss, don't give your money to second parties.
That's true for an exchange, but is absolutely not true for a bank (in a well-run modern state). At least if you don't have millions+ of dollars in the bank, the state ensures that even if the bank were fraudulent, your money is still your money.
Your statement is commonly believed, but is completely false. Money held in banks, at least in the USA, can be frozen or taken indefinitely by the state with no evidence of wrongdoing or even probable cause.
There is a blog post on my website called "Your Money Isn't Yours" about the time Chase and the state of Indiana conspired to steal all of the money I had in the world without any basis or reason.
Many people misunderstand this about property in the USA. Civil asset forfeiture among several other mechanisms means that property is guilty until proven innocent and can be stripped from you at any time without any evidence whatsoever.
Money held in the bank in your account is literally not your money. It's the bank's money with a corresponding liability to you. They prove this quite plainly by loaning it out to other parties.
There is a blog post on my website called "Your Money Isn't Yours" about the time Chase and the state of Indiana conspired to steal all of the money I had in the world without any basis or reason.
Many people misunderstand this about property in the USA. Civil asset forfeiture among several other mechanisms means that property is guilty until proven innocent and can be stripped from you at any time without any evidence whatsoever.
Money held in the bank in your account is literally not your money. It's the bank's money with a corresponding liability to you. They prove this quite plainly by loaning it out to other parties.
The government can also seize your house, your cash, or your gun using civil assets forfeiture.
So either there is no private property in the USA, or your money is your money, even if it's in a bank.
So either there is no private property in the USA, or your money is your money, even if it's in a bank.
I don't think property being subject to confiscation at any time is exactly the same thing as "no private property".
They don't really for brokerage accounts, which is what most people's retirement savings actually are in.
The post I was replying to was saying "Keeping your funds on an exchange (or in a bank) means they are, quite literally, not your funds.". I was pointing out that it's absurd to compare unregulated crypto exchanges to proper banks (in a working state - I am sure banks in failed states can well be just as bad).
Technically it's true that the depositor gives up "ownership" of his funds upon making a deposit, but in the US this is practically a moot point for most people because of FDIC protections. Depending on the state (for example, "right of setoff" in NY) there may be some unusual corner cases, but in general crypto exchanges have far more power over your crypto deposits than traditional banks do over your cash deposits.
https://www.reuters.com/markets/us/us-justice-dept-is-split-...
WASHINGTON, Dec 12 (Reuters) - Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into the world's largest cryptocurrency exchange Binance, four people familiar with the matter have told Reuters.
The investigation began in 2018 and is focused on Binance's compliance with U.S. anti-money laundering laws and sanctions, these people said. Some of the at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange and filing criminal charges against individual executives including founder Changpeng Zhao, said two of the sources. Others have argued taking time to review more evidence, the sources said.
WASHINGTON, Dec 12 (Reuters) - Splits between U.S. Department of Justice prosecutors are delaying the conclusion of a long-running criminal investigation into the world's largest cryptocurrency exchange Binance, four people familiar with the matter have told Reuters.
The investigation began in 2018 and is focused on Binance's compliance with U.S. anti-money laundering laws and sanctions, these people said. Some of the at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange and filing criminal charges against individual executives including founder Changpeng Zhao, said two of the sources. Others have argued taking time to review more evidence, the sources said.
So, the DoJ is in disagreement on when to charge them and not if. At least that's the way I read it.
Oh dear - house of cards.
Arthur Hayes of Bitmex pleaded guilty to "willfully failed to implement an anti-money laundering (AML) program at the exchange." He got six months of home confinement and Bitmex is going strong. Not sure the house of cards thing will happen.
SBF got arrested - he is going to be made an example of by the DOJ - the poster child of all that is wrong with crypto.
https://gizmodo.com/binance-crypto-ftx-withdrawals-stablecoi...
Oh dear - so it begins.
Oh dear - so it begins.
I feel like if I were a Binance investor and they came to me and said “Hey so everything is fine, just look at these three numbers I asked Mazars to write down. Also there are a ton of caveats but you get the idea,” I would immediately 100% panic. How does this reassure anyone?
>How does this reassure anyone?
By only saying "Hey, so everything is fine, just look at this fancy report with a fancy name on it" and assuming that they don't actually read it.
By only saying "Hey, so everything is fine, just look at this fancy report with a fancy name on it" and assuming that they don't actually read it.
Ordinarily I'd say no that doesn't make sense - their investors are sophisticated and they have teams that dig into this sort of thing all day long. After FTX, I don't think that holds as much water anymore.
Only Coinbase will survive at the end. It's the only one of the big exchanges that doesn't do any form of debt/lending/margin etc just straight up offering trading for a fee.
It's unlikely even Coinbase will survive: they lost $1.1 billion with a B in Q2 and $545M in Q3. Their trading fees are well known to be far higher than the competition (because they can't juice their numbers by gambling), so they rely on unsophisticated mass investors who don't know any better, but those investors are wisely staying the hell away from crypto right now.
How in the world is Coinbase losing THAT much money? Isn't the product mature and fully-featured already?
I was wondering this myself and it looks like they were +$3B profitable in 2021? A wild ride but it doesn't necessarily sound fatal.
Those times will never come again.
I said the same thing after the wild times in 2017.
Frankly I don't think anyone actually knows.
Frankly I don't think anyone actually knows.
2021 saw Hollywood A-listers pitching crypto in Super Bowl ads. It's going to take a long, long time for crypto mania to reach a similar peak again.
What strikes me as odd is that Bitcoin only topped out at ~3x what it did in 2017.
How much do Super Bowl ads actually matter? Is frivolous advertising the ultimate metric for financial froth? Or are ads like that just a symptom of macroeconomic conditions? Is it an accident that conditions were accommodative in 2017, but even moreso in 2021?
I think macroeconomics are more likely to determine meme-asset prices in the coming years than any other factor. If there's more monetary tightening ahead it's gonna be tough times for crypto, but I'm not yet convinced that we've separated from zero-rate policies for the long haul. There's some signs that inflation may not be so tenacious and that a recession is on the way, which could cause another rate U-turn pretty quick.
Recessions are very bad news for risk assets (and doubly so for meme-assets, presumably), but recessions aren't nearly as sticky as monetary policy tends to be. So I can certainly see a future where in late 2024 we have a strengthening/recovering economy, very accommodative monetary policy, and... another block halving.
Plus Bitcoin is a global asset, so there's the question on what goes on at a global macro level as well.
On the other hand, Bitcoin retains a much smaller share of the total crypto market value than it has historically. Since Bitcoin is... "slightly less disreputable" than other cryptocurrencies... that suggests that the speculators have not yet rotated out of the riskiest crypto assets.
Anyway: we will see. I don't trust anyone who is confident they know what's coming next.
How much do Super Bowl ads actually matter? Is frivolous advertising the ultimate metric for financial froth? Or are ads like that just a symptom of macroeconomic conditions? Is it an accident that conditions were accommodative in 2017, but even moreso in 2021?
I think macroeconomics are more likely to determine meme-asset prices in the coming years than any other factor. If there's more monetary tightening ahead it's gonna be tough times for crypto, but I'm not yet convinced that we've separated from zero-rate policies for the long haul. There's some signs that inflation may not be so tenacious and that a recession is on the way, which could cause another rate U-turn pretty quick.
Recessions are very bad news for risk assets (and doubly so for meme-assets, presumably), but recessions aren't nearly as sticky as monetary policy tends to be. So I can certainly see a future where in late 2024 we have a strengthening/recovering economy, very accommodative monetary policy, and... another block halving.
Plus Bitcoin is a global asset, so there's the question on what goes on at a global macro level as well.
On the other hand, Bitcoin retains a much smaller share of the total crypto market value than it has historically. Since Bitcoin is... "slightly less disreputable" than other cryptocurrencies... that suggests that the speculators have not yet rotated out of the riskiest crypto assets.
Anyway: we will see. I don't trust anyone who is confident they know what's coming next.
[deleted]
I think it was Matt Levine (Bloomberg) who wrote recently that, if crypto is so amazing and efficient, why are the trading fees 100x higher than on regulated exchanges in the boring old world of traditional finance?
Turns out, there are enormous costs in managing the risks inherent in moving value in and out of various cryptocurrencies.
Turns out, there are enormous costs in managing the risks inherent in moving value in and out of various cryptocurrencies.
Can we compare like with like? At gate.io you can have the same access to the matching engine and market data as anyone else for free. At NYSE this costs literally millions of dollars per year. At gate.io a retail trader can place a standing limit order and a other retail trader can interact with it, and this is structurally impossible in US equities because US equities has built up an extremely costly infrastructure around extracting profit from retail traders while pretending that this is good for them by publishing papers calculating how much price improvement they received compared to lit venues where there is no retail taker flow. Commissionless stock trading generally costs customers more than commissions did. At gate and a few other venues, spot fees are 0 due to recent competition over this sort of thing.
I don't endorse depositing at any particular centralized crypto exchange. They might steal your money. The London Mercantile Exchange might also do that[0].
[0]: https://finance.yahoo.com/news/analysis-turbulence-still-hau...
I don't endorse depositing at any particular centralized crypto exchange. They might steal your money. The London Mercantile Exchange might also do that[0].
[0]: https://finance.yahoo.com/news/analysis-turbulence-still-hau...
> At gate.io you can have the same access to the matching engine and market data as anyone else for free. At NYSE this costs literally millions of dollars per year.
It's not an apple-to-apple comparison because you can't trade the same products. It doesn't matter if a broker has the best features and the cheapest fees if it doesn't allow its users to trade what the majority of investors want to trade: regular stocks, ETFs, basically traditional financial instruments.
The same reasoning can be used for most blockchain products that seem to have an edge over the traditional solutions: they mostly exist in some virtual world, but once they try to connect with traditional finance and go through the corresponding legal hoops, they end up with a worse solution than what already exists.
It's not an apple-to-apple comparison because you can't trade the same products. It doesn't matter if a broker has the best features and the cheapest fees if it doesn't allow its users to trade what the majority of investors want to trade: regular stocks, ETFs, basically traditional financial instruments.
The same reasoning can be used for most blockchain products that seem to have an edge over the traditional solutions: they mostly exist in some virtual world, but once they try to connect with traditional finance and go through the corresponding legal hoops, they end up with a worse solution than what already exists.
I noted that a while ago, but as most financial insights, Levine probably write about it earlier.
https://news.ycombinator.com/item?id=26813222
https://news.ycombinator.com/item?id=26813222
For the masses, the only reason to use Coinbase at this point is to trade shitcoins. For BTC and ETH they can just use a normal broker like Interactive Brokers or Fidelity, that have been around for decades and know how to make money without losing their customers' money.
Calling anything crypto "investing" is really funny.
Agreed, this is closer to gambling. But from the "investor" perspective the difference might not be relevant.
From the global economic perspective, this is almost opposite.
From the global economic perspective, this is almost opposite.
invest
verb
gerund or present participle: investing
1. expend money with the expectation of achieving a profit
or material result by putting it into financial plans,
shares, or property, or by using it to develop a commercial
venture.
The expected return in a negative sum game is negative. We can call such schemes investments but then we're going to have to call PowerBall tickets and roulette wheels investments too.
> Their trading fees are well known to be far higher than the competition (because they can't juice their numbers by gambling), so they rely on unsophisticated mass investors who don't know any better, but those investors
IDK, to me choosing an exchange that doesn't juice their numbers by gambling sounds like what a sophisticated investor who did know better would do.
IDK, to me choosing an exchange that doesn't juice their numbers by gambling sounds like what a sophisticated investor who did know better would do.
Coinbase is losing money the old fashioned way, just spending hundreds of millions more than they're taking in.
The tide is going out on the crypto space and few will be left standing. Sure, it's theoretically possible to create a sustainable exchange, but since the entire space is built on greed, no one can resist the too good to be true gambling.
The value of all cryptos crashing for a long time could actually be good (tm). Shake the scammers and idiots and leave whats left for technology people to play with and develop without the rubbish that currently surrounds the space. The absolute best thing for bitcoin would be if no one ever expected it to be a good investment and saw it just as a way to transact money.
The value of all cryptos crashing for a long time could actually be good (tm). Shake the scammers and idiots and leave whats left for technology people to play with and develop without the rubbish that currently surrounds the space. The absolute best thing for bitcoin would be if no one ever expected it to be a good investment and saw it just as a way to transact money.
LMAX and Kraken are similar.
Coinbase will not survive, they already lost credibility due to their insider trading issue [1,2]
Coinbase also originates from wallstreet, hence why Binance is way more popular (Binance has 10x more daily volume!!! [3]), despite Coinbase having more PR presence
This FUD is another evidence that someone wants to take down Binance, they dodged the poison/trap with FTX, looks like they'll have to dodge another one real soon
[1] - https://www.theguardian.com/us-news/2022/sep/12/coinbase-cry...
[2] - https://www.justice.gov/usao-sdny/pr/three-charged-first-eve...
[3] - https://coinmarketcap.com/rankings/exchanges/
Coinbase also originates from wallstreet, hence why Binance is way more popular (Binance has 10x more daily volume!!! [3]), despite Coinbase having more PR presence
This FUD is another evidence that someone wants to take down Binance, they dodged the poison/trap with FTX, looks like they'll have to dodge another one real soon
[1] - https://www.theguardian.com/us-news/2022/sep/12/coinbase-cry...
[2] - https://www.justice.gov/usao-sdny/pr/three-charged-first-eve...
[3] - https://coinmarketcap.com/rankings/exchanges/
Binance owns CoinMarketCap since Apr 2020. I wonder how reliable the numbers are.
Since the numbers are bad (BTC having smaller market cap than Tesla) I believe them.
>Coinbase also originates from wallstreet, hence why Binance is way more popular (Binance has 10x more daily volume!!! [3]), despite Coinbase having more PR presence
Binance is more popular because Coinbase's fees are almost an order of magnitude higher..
Binance is more popular because Coinbase's fees are almost an order of magnitude higher..
Trust is key, it has nothing to do with the fees, PayPal is still the number one despite its fees
People will stick with your if you are trustworthy, it is more true with crypto where nothing is regulated nor safe nor insured by the SIPC
People will stick with your if you are trustworthy, it is more true with crypto where nothing is regulated nor safe nor insured by the SIPC
I love getting downvoted when i make a proper investigation and sourced research, makes you wonder what karma is used for in this website ;)
Their API isn't nearly as good as Binance's. The rate limits alone are way too low. Hopefully they improve this.
One thing to be aware of with Binance. As far as I understand, most of the transactions occur on their own ethereum-compatible-but-not-quite-ethereum chain called the "Binance Smart Chain". While having these sidechains can improve scalability and reduce costs (they are just another form of sharding), this presumably introduces an additional point of potential failure compared with regular centralised exchanges: not only can the exchange fail to honour withdrawals, but the bridge between the chains could also fail to honour transfers out from the Binance smart chain back to the ethereum mainnet.
There is also an additional potential point of misaccounting/fraud and also theft. What's supposed to happen with bridges is say I want to move some token from the mainnet to BSC, I send the token to the bridge on mainnet and it issues me the token on the BSC side. However, mainnet doesn't know anything about the existance of BSC so the token on the mainnet side still exists and is still a valid token on the mainnet. Likewise when I move stuff from BSC to mainnet the same thing happens - a residual token is created out of thin air on the side which the "real" asset is leaving. Now good actors should burn this token (move it to an address that noone has the private key to so it is put permanently beyond use) to make it go away but there is a lot of temptation to not do this because if you mess up or something otherwise goes wrong there is no going back. You can't "unburn" things. So rather than burning, people often put stuff into a special holding address and sort of triple pixie promise they won't double-spend it. This can also help legitimately reduce cost because next time you need to create the token on this side of the bridge you can instead take one out of this store and use that instead. You can see the problem presumably? If someone bad (either internally or via a hack) gets access to the keys to this address their motives might not be pure and suddenly they have a large amount of seemingly valid assets they can just take. This is part of what happened with the "Ronin" hack of Axie Infinity - they managed to phish a private key of the bridge and steal assets that had been bridged between networks. https://edition.cnn.com/2022/03/29/tech/axie-infinity-ronin-...
There is also an additional potential point of misaccounting/fraud and also theft. What's supposed to happen with bridges is say I want to move some token from the mainnet to BSC, I send the token to the bridge on mainnet and it issues me the token on the BSC side. However, mainnet doesn't know anything about the existance of BSC so the token on the mainnet side still exists and is still a valid token on the mainnet. Likewise when I move stuff from BSC to mainnet the same thing happens - a residual token is created out of thin air on the side which the "real" asset is leaving. Now good actors should burn this token (move it to an address that noone has the private key to so it is put permanently beyond use) to make it go away but there is a lot of temptation to not do this because if you mess up or something otherwise goes wrong there is no going back. You can't "unburn" things. So rather than burning, people often put stuff into a special holding address and sort of triple pixie promise they won't double-spend it. This can also help legitimately reduce cost because next time you need to create the token on this side of the bridge you can instead take one out of this store and use that instead. You can see the problem presumably? If someone bad (either internally or via a hack) gets access to the keys to this address their motives might not be pure and suddenly they have a large amount of seemingly valid assets they can just take. This is part of what happened with the "Ronin" hack of Axie Infinity - they managed to phish a private key of the bridge and steal assets that had been bridged between networks. https://edition.cnn.com/2022/03/29/tech/axie-infinity-ronin-...
How is this kind of sidechain any better than just having your transactions recorded in a boring old private SQL database?
The Axie Infinity hack suggests that these private chains are the worst of all worlds: they're effectively controlled by a single entity, but also far more susceptible to hacks than a well-understood traditional database. The blockchain part seems to be a pure marketing decoy that's worse than useless because it's actively harmful to customers.
The Axie Infinity hack suggests that these private chains are the worst of all worlds: they're effectively controlled by a single entity, but also far more susceptible to hacks than a well-understood traditional database. The blockchain part seems to be a pure marketing decoy that's worse than useless because it's actively harmful to customers.
Your question is just "what is the purpose of the blockchain" but with more words.
Yes…?
Spoiler alert: It has no purpose.
NIST made a handy flowchart.
https://twitter.com/vitalikbuterin/status/106746870697496166...
https://twitter.com/vitalikbuterin/status/106746870697496166...
I think seanhunter has got Binance Smart Chain a little wrong - it's just a fork of Ethereum with basically the same functions. There's a coin BNB which is like Eth and you can issue other tokens, NFTs etc on it.
I said Binance Smart Chain was an Ethereum fork. My point is to move things from the eth mainnet to or from it you need a bridge, which, looking at this[1] looks like there is a bridge which they control. The problems I mentioned are intrinsic to bridges.
[1] https://www.bnbchain.org/en/bridge
[1] https://www.bnbchain.org/en/bridge
If Binance is insolvent(which looks like the popular sentiment here), could it be possible that they're playing an angle to "fix" the solvency given enough time delay? Or does their insolvency practically guarantee that they will never be solvent again?
Obviously the answer depends on the amount of financial trouble they're in, or whether they're in trouble at all. I'm not sure about anything else though.
Obviously the answer depends on the amount of financial trouble they're in, or whether they're in trouble at all. I'm not sure about anything else though.
My guess is that binance is technically insolvent (negative net assets) but not yet factually insolvent (still able to meet day-to-day liquidity needs), and without a major turn in the crypto market, has no chance of rectifying their technical insolvency, and are playing for time with regards to their factual insolvency.
I'd bet on Binance just delaying the inevitable collapse, rather than trying to fix the underlying issues. Judging from the FTX balance sheet, they gambled all of their money on shitcoins and random projects without any sense of logic. No amount of fixing would have helped, other than an magical perpetual bull market. Odds are Binance is also fundamentally screwed.
IF they never gambled their depositors money, then they are/will be fine.
Running an exchange, taking a cut of all transactions on your platform is effectively impossible to collapse (excluding your actual costs of doing business).
Running an exchange, taking a cut of all transactions on your platform is effectively impossible to collapse (excluding your actual costs of doing business).
> never gambled their depositors money, then they are/will be fine
You’re ignoring liability. Even if they never levered, they’re vulnerable to a regulatory crackdown. Tether and Binance are predictable numpties-will-lose-money cases.
You’re ignoring liability. Even if they never levered, they’re vulnerable to a regulatory crackdown. Tether and Binance are predictable numpties-will-lose-money cases.
They can even do proprietary trading using the market information they have!
History shows that this is always what happens, and history shows it always fails. But I think history must have an (anti)survivor bias here because if you do manage to move from insolvent to solvent I think that you don't ever tell anyone.
But... on the other hand maybe history is right and everyone who gets into this mess inevitably only makes it worse by struggling.
But... on the other hand maybe history is right and everyone who gets into this mess inevitably only makes it worse by struggling.
When questioned about liability CZ callously remarked that it’s a bit complicated to audit their liabilities but they didn’t have any, and that we should “ask around”. So we now have a new audit system, “audit by ask around”.
The Binance bank run has already started within my crypto circle.
There are three ways to make a living in this business - be first, be smarter, or cheat. Now I don't cheat. And although I like to think we have some pretty smart people in this building, it sure is a hell of lot easier to just be first.
Binance is a scam. They make it extremely hard to withdraw money, with errors, fake limits, unresponsive customer support.
>They make it extremely hard to withdraw money
This might be true for Binance.us (seperate, smaller entity), I don't know but definitely isn't true for actual Binance. A few chains have occasional to frequent ~1 day deposit/withdrawal pauses but waiting a day isn't the same as it being extremely hard (and even in those cases you can convert to something else and withdraw that).
This might be true for Binance.us (seperate, smaller entity), I don't know but definitely isn't true for actual Binance. A few chains have occasional to frequent ~1 day deposit/withdrawal pauses but waiting a day isn't the same as it being extremely hard (and even in those cases you can convert to something else and withdraw that).
> They make it extremely hard to withdraw money, with errors, fake limits, unresponsive customer support.
What is the reason you say so? Meaning, is that your personal experience? What amount of money are we talking about, and why was the limit "fake"?
What is the reason you say so? Meaning, is that your personal experience? What amount of money are we talking about, and why was the limit "fake"?
personal experience, few bucks fortunately, lost and I’m giving up on it
Interesting, did this change recently? I remember cashing out almost 6 figures EUR around the peak last year without any problem. Since then I stayed away from the crypto market.
I moved away too, this happened while I was closing all my wallets across multiple plats
Out of interest, to what address was the letter from the accountants addressed to? A PO box?
South African affiliate - oh dear - let's just the accounting profession in South Africa is generally found to be wanting after several scandals they missed out on or were complicit in.
https://gizmodo.com/binance-crypto-ftx-withdrawals-stablecoi...
So much for preventing this.
So much for preventing this.
Compared to say USA ?
Enron is about the only one I heard of out of the US - here we had several big-name corporate failures and the lead auditor partner who were complicit in one major banking fraud case (he got "loans" from the bank like the FTX CEO who loaned him and others billions)
KPMG is being sued for R863m for that one - it seems the quality of work, oversight and ethics of some are severely lacking in these firms.
KPMG is being sued for R863m for that one - it seems the quality of work, oversight and ethics of some are severely lacking in these firms.
I’m waiting for Binance and Tether to collapse, and then we will know with certainty crypto’s best days are behind it, down to zero it goes.
If you have assets on Binance I would not be complacent. Get them out.
If you have assets on Binance I would not be complacent. Get them out.
I just can't see how crypto can recover tbh. What other technology spent ten years, produced basically nothing of value, is almost universally hated by the whole population and then came back to be something useful?
It's not like quantum computing where we just don't know how to make it work. There are close to no technical problems, the core idea just doesn't work.
It's not like quantum computing where we just don't know how to make it work. There are close to no technical problems, the core idea just doesn't work.
almost universally hated by the whole population
Can you source that? It feels to me like a gross exaggeration. Anecdotally I know more people that are passionate about it or just don't care than anyone who really hates it.
Can you source that? It feels to me like a gross exaggeration. Anecdotally I know more people that are passionate about it or just don't care than anyone who really hates it.
8% of (American) people have a positive view, 43% have a negative view. The rest don't care or are neutral. So although not a majority, it's pretty close.
https://www.cnbc.com/2022/12/07/just-8percent-of-americans-h...
https://www.cnbc.com/2022/12/07/just-8percent-of-americans-h...
At the bottom of the article:
"Negative views on crypto come at the same time as the public has soured on stocks. Just 26% say now is a good time to invest in equities, down two points from last quarter's survey and the most pessimistic level registered in the 15-year history of the survey. 51% say it's a bad time to invest, the third highest in the survey's history, bested only by the downbeat results of the prior two surveys."
It's an example of Base-Rate neglect.
https://en.wikipedia.org/wiki/Base_rate_fallacy
Often done in media due to a bias they are attempting to confirm. Almost all financial assets are down, and not appealing to retail investors. Negative news gets clicks.
"Negative views on crypto come at the same time as the public has soured on stocks. Just 26% say now is a good time to invest in equities, down two points from last quarter's survey and the most pessimistic level registered in the 15-year history of the survey. 51% say it's a bad time to invest, the third highest in the survey's history, bested only by the downbeat results of the prior two surveys."
It's an example of Base-Rate neglect.
https://en.wikipedia.org/wiki/Base_rate_fallacy
Often done in media due to a bias they are attempting to confirm. Almost all financial assets are down, and not appealing to retail investors. Negative news gets clicks.
Thanks for sharing that poll.
25% --> 45% since March. I'd be interested in seeing how those numbers fit into the context of longer term sentiment (eg. over the course of several years). I wonder how much it fluctuates year to year and what degree the emotion reflected in those surveys is influenced by prices at any given time (eg. inclination to be more upbeat when prices are going up).
25% --> 45% since March. I'd be interested in seeing how those numbers fit into the context of longer term sentiment (eg. over the course of several years). I wonder how much it fluctuates year to year and what degree the emotion reflected in those surveys is influenced by prices at any given time (eg. inclination to be more upbeat when prices are going up).
It would be more interesting if anyone would still care about 2022 ( % wise)
I suspect NFTs probably have even worse numbers
Public majority have no way of understanding anything important. Even it's good for their health or wealth etc. So many historical example out there.
Certainly not the whole population, but when SNL makes a joke about sitting at Holiday dinner and having to listen to so-and-so’s boyfriend talk on and on about Crypto, that’s got to be a sentiment that resonates with a lot of people
You want to take a quick poll on HN? Nearly everyone who comments here (me included) passionately hate seeing hucksters defraud the general public.
I could be lead to believe that if my main source of information were HN comments.
Imagine thinking an industry worth $800B, with 200M users, transferring billions of dollars a day, is "hated by the whole population". You really live in a bubble
200M even if accurate is still a drop in the bucket considering almost every person knows all about crypto at this point and the general sentiment on the street is that its filled with gambling, scammers, and environmental destruction.
Crypto valuations are also complete bullshit considering how much "wealth" is alt coins with no liquidity. I could easily create a multi trillion dollar market cap coin in a weekend. Doesn't mean shit.
Crypto valuations are also complete bullshit considering how much "wealth" is alt coins with no liquidity. I could easily create a multi trillion dollar market cap coin in a weekend. Doesn't mean shit.
> an industry worth $800B
According to https://coinmarketcap.com/charts/ the market cap you're referring to was $2.4T at some point in the last year, now down to the number you're quoting. With such variability, it's hard to trust this number as being anything intrinsic to the actual value of the industry.
From this link, FTX alone seems to be correlated with a fall of almost $200B in market cap, down from $1T to a bit more than $800B. If Tether eventually collapses as many even within the cryptocurrency world expect it will, how low will this number go? What about other shady companies in this space?
It's really hard to put a floor on this market cap, as opposed to regular companies that can always be sold for parts, so as a coarse approximation, they should at least be worth their assets minus their liabilities. Given that we don't even know the liabilities of actors such as Binance and Tether, we can do no such computation here.
According to https://coinmarketcap.com/charts/ the market cap you're referring to was $2.4T at some point in the last year, now down to the number you're quoting. With such variability, it's hard to trust this number as being anything intrinsic to the actual value of the industry.
From this link, FTX alone seems to be correlated with a fall of almost $200B in market cap, down from $1T to a bit more than $800B. If Tether eventually collapses as many even within the cryptocurrency world expect it will, how low will this number go? What about other shady companies in this space?
It's really hard to put a floor on this market cap, as opposed to regular companies that can always be sold for parts, so as a coarse approximation, they should at least be worth their assets minus their liabilities. Given that we don't even know the liabilities of actors such as Binance and Tether, we can do no such computation here.
It’s easy, the floor is the sum
the value of the parts. So approximately $0.
Made up numbers. You can't just sum up fictional "market caps", number of unique wallet addresses and wash trades to conclude it must be doing amazing.
For those 200M I'd like to see an independent source before I believe it. Or are you trying to claim 1 wallet = 1 user or something?
When it comes to money moved: the top 1% in the US possess more wealth than the whole middle 60% of income distribution combined.
So if you believe that moving a lot of money inherently implies broad adoption in the population you live in a very small bubble far away from reality.
When it comes to money moved: the top 1% in the US possess more wealth than the whole middle 60% of income distribution combined.
So if you believe that moving a lot of money inherently implies broad adoption in the population you live in a very small bubble far away from reality.
https://www.coinbase.com/about claims 108M verified users so 200M overall is not that absurd. That doesn't mean that all these users own significant amounts in crypto though.
> worth $800B, with 200M users, transferring billions of dollars a day
None of these statements are true. All of them (especially when it comes to monetary values) are wishful thinking.
None of these statements are true. All of them (especially when it comes to monetary values) are wishful thinking.
You can't go out and buy a loaf of bread with bitcoin, how is it supposed to be worth $800B?
The core idea does not work for many, if not most, of the things people have promised it can work for -- but that's very different from "doesn't work."
I'd say it's still a pretty strong contender not for "cash in hand" but for a better "money in your mattress."
I'd say it's still a pretty strong contender not for "cash in hand" but for a better "money in your mattress."
So the only use cases so far are pleasing paranoid schizos, ransomware, and scams?
Cash in your mattress is likely much safer than in your bitcoin wallet.
Cash in your mattress is likely much safer than in your bitcoin wallet.
What if I can’t decide which is better so I further diversify into both?
[deleted]
MLMs like Amway are still around though. Crypto operates like an MLM in many ways.
It's weird, tokenomics is both feature and bug. Tokens incentivise hosting nodes and the ponzi nature of crypto solves the network-effect cold start problem (eg drivers and riders on Uber)
Imagine if there were some token attached to Mastodon, maybe we'd all have ditched Twitter already.
I liked Moxie's post about how no one wants to build servers. Maybe a next gen crypto that is peer oriented and works on mobile is key.
Not a maxi or mini but definitely find that some interesting phenomena have played out through crypto beyond "just" speculation
Imagine if there were some token attached to Mastodon, maybe we'd all have ditched Twitter already.
I liked Moxie's post about how no one wants to build servers. Maybe a next gen crypto that is peer oriented and works on mobile is key.
Not a maxi or mini but definitely find that some interesting phenomena have played out through crypto beyond "just" speculation
> is almost universally hated by the whole population
Haters do not move the market at all, unless they are willing to short the coins. Only the participants, whatever their intentions are, move the market.
Haters do not move the market at all, unless they are willing to short the coins. Only the participants, whatever their intentions are, move the market.
Social approbation is missing from your calculation, and is very powerful. When you don’t get invited to social events anymore because of crypto, that is the haters moving the market.
Eventually to sustain the value, crypto has move past hype and be actually used for something. If regular people won't use it to buy coffee or store money, eventually the trading bots shuffling billions of imaginary tokens around won't cut it.
What’s surprising is Tether seems to keep getting away with enquiries against them. Does anyone really believe that they have enough cash to cover all the Tether coins out there?
Note that even if you get them out, don't count on keeping any profits you may have made
> Investors who profited from Bernard Madoff’s massive Ponzi scheme even though they knew nothing of it must still pay back their profits, an appeals court decided Thursday.
https://www.nbcnews.com/news/us-news/innocent-madoff-investo...
> Investors who profited from Bernard Madoff’s massive Ponzi scheme even though they knew nothing of it must still pay back their profits, an appeals court decided Thursday.
https://www.nbcnews.com/news/us-news/innocent-madoff-investo...
All of these scams are bad for cryptocurrency, its best days will be some time after they all collapse (if that ever happens, maybe they'll just make new scams forever.)
Binance and Tether collapsing would mean the opposite, that crypto's worst days are behind it.
It's only a matter of time https://www.forbes.com/sites/michaeldelcastillo/2020/10/29/l...
Binance is another fraudulent crypto company like any other in that space.
Binance was partly responsible (rightly or not) for triggering FTXs collapse. Edit: Triggered, not caused. He controlled the timing.
Doing so without having their own house in order would be suicidal. I'm not saying they are safe. Just that CZ is either much happier he can deal with a "bank run" or crazy.
Does anyone know why it is so difficult for companies to provide audits? It seems like it SHOULD be very doable for them to get PWC or similar in, show them all the deposits and all the assets, do some spot checks on individual accounts, and get a meaningful bill of health?
Doing so without having their own house in order would be suicidal. I'm not saying they are safe. Just that CZ is either much happier he can deal with a "bank run" or crazy.
Does anyone know why it is so difficult for companies to provide audits? It seems like it SHOULD be very doable for them to get PWC or similar in, show them all the deposits and all the assets, do some spot checks on individual accounts, and get a meaningful bill of health?
The only way for them not to trigger the FTX crash’s at the point they did, would have been to absorb 8 billion $ worth of missing funds and handing over control of a much larger set of funds to the people responsible for those losses.
They weren’t partly responsible for FTXs crash for looking at that balance sheet and going wtf, we’re out. Even if they themselves are running the same scam. They might just be much less under water and trying to keep their head above it, until the goldfish forget about the FTX crash.
They weren’t partly responsible for FTXs crash for looking at that balance sheet and going wtf, we’re out. Even if they themselves are running the same scam. They might just be much less under water and trying to keep their head above it, until the goldfish forget about the FTX crash.
I am not sure I follow your logic. CZ and Coindesk triggered (not caused, but triggered) the collapse by announcing they thought there was an issue. CZ could have avoided that without giving FTX any money by just not doing it: quietly selling Binances FTT. I do't blame CZ for the problems at FTX. I am just saying, if you trigger a (justified) bank run in a competitor, you have to expect people to withdrawn from your own org too. So triggering it and NOT being solvent yourself is inviting disaster...
> quietly selling Binances FTT
I don't think this was possible. This would have crashed FTT anyway, so people would have looked at it and found out that Binance was behind this. If Binance hadn't communicated about this beforehand, it would have made them look even shadier.
I don't think this was possible. This would have crashed FTT anyway, so people would have looked at it and found out that Binance was behind this. If Binance hadn't communicated about this beforehand, it would have made them look even shadier.
Fundus are SAFU
https://www.youtube.com/watch?v=DelF6zEHXpE
https://www.youtube.com/watch?v=DelF6zEHXpE
Surprising that this is not the front page. FTX related news are still front page but this is in the obscurity. Any of these two YC funded?
Nah not YC funded. The Binance stuff is basically rumours hence not that high ranked.
Wouldn't be better to ask for a proper audit from one of the big 4 (EY, PWC, KPMG, Deloitte), instead of something that looks fishy?
Edit: typo.
Edit: typo.
But CZ seems like such a straight shooter.
they're of course not actually trying to calm investors - if they wanted to do that, they would just publish an actual audit report of a snapshot of their finances. instead, they want investors to feel calm and leave them alone to their elaborate deceptions.
Binance is that not much different from Alameda and FTX.
[deleted]
Spoiler: Its a fraud
No need to calm, as Binance is well trusted by everyone.
It amazes me how confident the comments against and in favor of crypto/Binance are. It is very likely that you don't have appropriate knowledge or don't have access to critical information as to why something is the way it is.
The youtube link posted below is supposedly revealing irregularities with the audit, but the basic knowledge of how the blockchains work invalidates the irregularities. The claim is that the audit is missing a bunch of wallets and coins, but they don't understand that BSC, ETH and BTC wallets also hold other coins, not just BNB, ETH and BTC (e.g. ETH and BSC wallets can hold basically any coin and even BTC wallet can actually hold USDT/TETHER).
Unless you work at Binance and have access to all the financials, your guess is basically a coin flip wether they are solvent or not.
As an example, a few weeks ago crypto.com was said to be insolvent and there was a bank run [1] [2], however nothing collapsed. As always, be cautios, not your keys, not your coins, but I would definitely not bet (short) that they would collapse.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. “ – Mark Twain
For fellow technological enthusiasts, an interesting innovation from Binance: they generated the merkle tree where any Binance user can independently self verify his assets within the platform [3].
[1] https://news.ycombinator.com/item?id=33590579
[2] https://twitter.com/marionawfal/status/1591803227003129858
[3] https://www.binance.com/en/proof-of-reserves
The youtube link posted below is supposedly revealing irregularities with the audit, but the basic knowledge of how the blockchains work invalidates the irregularities. The claim is that the audit is missing a bunch of wallets and coins, but they don't understand that BSC, ETH and BTC wallets also hold other coins, not just BNB, ETH and BTC (e.g. ETH and BSC wallets can hold basically any coin and even BTC wallet can actually hold USDT/TETHER).
Unless you work at Binance and have access to all the financials, your guess is basically a coin flip wether they are solvent or not.
As an example, a few weeks ago crypto.com was said to be insolvent and there was a bank run [1] [2], however nothing collapsed. As always, be cautios, not your keys, not your coins, but I would definitely not bet (short) that they would collapse.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. “ – Mark Twain
For fellow technological enthusiasts, an interesting innovation from Binance: they generated the merkle tree where any Binance user can independently self verify his assets within the platform [3].
[1] https://news.ycombinator.com/item?id=33590579
[2] https://twitter.com/marionawfal/status/1591803227003129858
[3] https://www.binance.com/en/proof-of-reserves
"Unless you work at Binance and have access to all the financials, your guess is basically a coin flip wether they are solvent or not."
This is one of the reason why Binance should be regulated properly or closed down.
This is one of the reason why Binance should be regulated properly or closed down.
> As an example, a few weeks ago crypto.com was said to be insolvent and there was a bank run [1] [2], however nothing collapsed.
Partly because they “oppose-daisied” $400M of their holdings with a misclick. Not confidence inspiring. https://www.bloomberg.com/news/articles/2022-11-13/crypto-co...
Not collapsing could mean solvency, but it could also just mean the run wasn’t big enough.
Partly because they “oppose-daisied” $400M of their holdings with a misclick. Not confidence inspiring. https://www.bloomberg.com/news/articles/2022-11-13/crypto-co...
Not collapsing could mean solvency, but it could also just mean the run wasn’t big enough.
What say you to Jesse Powell's questions about Binance's proof of reserves?
https://twitter.com/jespow/status/1600787933065117696
https://twitter.com/jespow/status/1600787933065117696
Even if Binance is 100% solvent, big crypto money needs to be stored with multisig between multiple companies.
I advise everyone to use casa hodl for storing btc and eth if they are afraid of doing it themselves.
I advise everyone to use casa hodl for storing btc and eth if they are afraid of doing it themselves.
Everyone seems to unison on keeping it off any exchange or any other unregulated scam. If Casa Hodl goes with your money you almost deserve it
Casa is not a custodian. It's a multisig solution. https://keys.casa/how-it-works
https://keys.casa/
What do you mean?
A friend was asking me what should a friend of him do with a significant amount of BTC/ETH (tens of millions of dollars), as the owner died and there are 3 children who need to get it when they get 18.
Lawyers are not capable of handling that much money without professional help, so I adviced them to go to a place when they help them with the self custody step by step with open source software.
What do you mean?
A friend was asking me what should a friend of him do with a significant amount of BTC/ETH (tens of millions of dollars), as the owner died and there are 3 children who need to get it when they get 18.
Lawyers are not capable of handling that much money without professional help, so I adviced them to go to a place when they help them with the self custody step by step with open source software.
Binance is the closest thing to a global, borderless bank that exists today. They exist everywhere and nowhere. Their legal entities shift based on what is needed at the moment. They have the ability to easily create tens of millions of dollars as needed based on their BNB reserves, tight relationship with Tether, their ability to launch new token projects (i.e. unregulated securities offerings), and their stablecoin BUSD. They act as an investment bank - I know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition.
I would say it’s quite likely they are fractional reserve but they are so absolutely huge it would take a lot more FUD than exists currently to damage them even a little. They have a lot of room to maneuver.
I would say it’s quite likely they are fractional reserve but they are so absolutely huge it would take a lot more FUD than exists currently to damage them even a little. They have a lot of room to maneuver.
Ooh boy...
> Binance is the closest thing to a global, borderless bank that exists today.
There are several very large international banks you're ignoring.
> They exist everywhere and nowhere.
I read this as "we can do business with you everywhere, except if you need to sue us, at which point you can't sue us anywhere." Which is a massive red flag.
> Their legal entities shift based on what is needed at the moment.
Man, prosecutors are going to have a field day with this--this is gold mine for proving intent to defraud!
> They have the ability to easily create tens of millions of dollars as needed
One of the most poignant lessons of financial history is that wildcat banking does not make for stability.
> tight relationship with Tether
Extraordinarily high exposure to a creaky pillar of the cryptocurrency economy.
> their ability to launch new token projects (i.e. unregulated securities offerings)
Incredibly illegal in the US, which means they're in shitloads of trouble if they're actually trying to transact in USD and not magic-dollar-pegged tokens.
> They act as an investment bank - I know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition.
So their due diligence on loans is absolute and total shit. Their balance sheet must be creaking badly then!
> they are so absolutely huge it would take a lot more FUD than exists currently to damage them even a little
The thing about too big to fail is that it's not that someone is so big there's no way they can fail; it's that someone is so big the government is forced to bail them out instead of letting them fail. Given that cryptocurrency is dominated by people at best thumbing their noses at the idea of government control, what government is going to be willing to step in to save the failing too big to fail crypto bank?
> Binance is the closest thing to a global, borderless bank that exists today.
There are several very large international banks you're ignoring.
> They exist everywhere and nowhere.
I read this as "we can do business with you everywhere, except if you need to sue us, at which point you can't sue us anywhere." Which is a massive red flag.
> Their legal entities shift based on what is needed at the moment.
Man, prosecutors are going to have a field day with this--this is gold mine for proving intent to defraud!
> They have the ability to easily create tens of millions of dollars as needed
One of the most poignant lessons of financial history is that wildcat banking does not make for stability.
> tight relationship with Tether
Extraordinarily high exposure to a creaky pillar of the cryptocurrency economy.
> their ability to launch new token projects (i.e. unregulated securities offerings)
Incredibly illegal in the US, which means they're in shitloads of trouble if they're actually trying to transact in USD and not magic-dollar-pegged tokens.
> They act as an investment bank - I know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition.
So their due diligence on loans is absolute and total shit. Their balance sheet must be creaking badly then!
> they are so absolutely huge it would take a lot more FUD than exists currently to damage them even a little
The thing about too big to fail is that it's not that someone is so big there's no way they can fail; it's that someone is so big the government is forced to bail them out instead of letting them fail. Given that cryptocurrency is dominated by people at best thumbing their noses at the idea of government control, what government is going to be willing to step in to save the failing too big to fail crypto bank?
> The thing about too big to fail is that it's not that someone is so big there's no way they can fail; it's that someone is so big the government is forced to bail them out instead of letting them fail. Given that cryptocurrency is dominated by people at best thumbing their noses at the idea of government control, what government is going to be willing to step in to save the failing too big to fail crypto bank?
This is some of why tether is still going strong, I think. Everyone in the crypto economy has enormous exposure to tether blowing up, so everyone tries to ignore it.
The people doing the bailing out are everyone who holds crypto, I guess. This was done explicitly when Bitfinex's money launderer stole their money -- Bitfinex did a "bail-in" where they gave all their customers except coinbase something like an 80% haircut.
Not saying you're wrong, but there is a parallel that has propped up the ecosystem for quite some time! And I guess it gets worse: as too-big-to-fail entities don't fail, they get bigger and perceived-safer which works until it doesn't.
This is some of why tether is still going strong, I think. Everyone in the crypto economy has enormous exposure to tether blowing up, so everyone tries to ignore it.
The people doing the bailing out are everyone who holds crypto, I guess. This was done explicitly when Bitfinex's money launderer stole their money -- Bitfinex did a "bail-in" where they gave all their customers except coinbase something like an 80% haircut.
Not saying you're wrong, but there is a parallel that has propped up the ecosystem for quite some time! And I guess it gets worse: as too-big-to-fail entities don't fail, they get bigger and perceived-safer which works until it doesn't.
It sounds like you should know that Binance has a fully regulated and approved United States entity at https://Binance.us
As their licenses (https://support.binance.us/hc/en-us/articles/360050532193) state, it's entirely appropriate to use Binance for transmitting payments, for which they're approved and regulated, and entirely inappropriate to trust Binance for any investment, for which they are not licensed. The key part of being a bank or a broker is about properly holding others' funds as liabilities or in custody respectively (and so are the relevant regulations), which Binance.us can't do.
From the slogan at Binance.com homepage "buy, trade, hold" it's approved to do only the first two.
From the slogan at Binance.com homepage "buy, trade, hold" it's approved to do only the first two.
So did FTX.
"has" != "is"
I hope you realize that while you're trying to argue that all of this is a good thing, it's actually making them sound worse-than-FTX levels of sketchy.
I am someone who believes in maximal decentralization, I am fine with FTX imploding let alone Binance. I am just stating an observation of the Binance situation.
This absolutely screams red flags.
> know a prominent crypto entrepreneur that got loaned 8 figures after a text message to help finance an acquisition
I work in finance and can guarantee you that I wouldn't touch such a "bank" with a 50 foot pole while wearing a hazmat suit.
Let's just say that their "risk management" doesn't seem up to scratch if what you're claiming is true.
I work in finance and can guarantee you that I wouldn't touch such a "bank" with a 50 foot pole while wearing a hazmat suit.
Let's just say that their "risk management" doesn't seem up to scratch if what you're claiming is true.
> They have the ability to easily create tens of millions of dollars as needed based on their BNB reserves
Sounds like a huge red flag.
Sounds like a huge red flag.
Woohoo magic mystery money! How did that work out for FTX with FTT?
I was told crypto was the answer to central banks printing money. Ironically a tech friend predicted all this way way back at the start, I mentioned one of the advantages of bitcoin was the fixed amount and he replied "What stops your exchange from showing $1000 on the webpage but not actually holding that amount?"
Exactly the problem unfolding years later.
Exactly the problem unfolding years later.
That sounds like a massive red flagged fraud.
This... is not reassuring.
They exist everywhere, except for all the countries that have specifically banned them for not complying with national laws.
Fantastic! How do I give them all my money?
[deleted]
People really falling for a machine-generated comment here. Don't feed the troll
Not feeding trolls is a good principle but I doubt this is a generated comment, let's save that accusation for when we need it, and when we do make it let's make it with evidence.
If we just start accusing each other of being bots whenever we think someone is trolling or acting in bad faith we're going to create cover for the actual bots.
If we just start accusing each other of being bots whenever we think someone is trolling or acting in bad faith we're going to create cover for the actual bots.
https://archive.vn/bwuu7