[HN Gopher] Binance caught commingling funds between US and inte...
___________________________________________________________________
Binance caught commingling funds between US and international
exchanges
Author : senttoschool
Score : 270 points
Date : 2022-12-21 12:12 UTC (10 hours ago)
(HTM) web link (dirtybubblemedia.substack.com)
(TXT) w3m dump (dirtybubblemedia.substack.com)
| stephc_int13 wrote:
| Everything is crap, except Bitcoin /s
| DonHopkins wrote:
| Is there no company in the entire crypto space that isn't a
| wretched hive of scum and villainy? We must be cautious.
|
| https://www.youtube.com/watch?v=Xcb4_QwP6fE
| chakintosh wrote:
| Kraken
| esperent wrote:
| > no company in the entire crypto space that isn't a wretched
| hive of scum and villainy
|
| Entire _financial_ space. It 's just that traditional financial
| companies are better regulated (and are better at working
| within the regulations to hide their crimes). But they are not
| in any way better humans. For every FTX or Binance there's an
| Enron or Deutch Bank ten times the size and just as villainous.
| roflyear wrote:
| > Entire financial space.
|
| This is true: it is about making money, after all. Greed is a
| good thing.
| DanHulton wrote:
| It is most certainly not.
| roflyear wrote:
| If you mean greed isn't good, you're right - I meant to
| finance companies, greed is a good thing. It's the point.
| cmrdporcupine wrote:
| The problem is there _are_ people who hold strongly to an
| ideological position that greed is, in fact, a good
| thing. So if you can still edit, you might want to
| clarify that you weren 't stating that in your comment
| :-)
| DonHopkins wrote:
| Fair warning. And those same greedy libertarian crypto
| shills are a dime a dozen in these discussions, but
| nobody's buying what they have to say and more.
|
| Edit: I've recently seen a significant reduction of
| blatant crypto shilling posts from people like that on
| this forum (thanks to good moderation, and people calling
| them out on their lies, and linking to proof of their
| scams and well documented history of crimes).
|
| For example, it's been ages since I've seen any posts
| here from the notorious scammer and spammer Richard
| "Dodge Dodge" Heart (whose real name is Richard J "Spam
| King" Schueler, winner of the "Golden Pump Award" for
| "Best New Scam" for his POS get-rich-quick pyramid scheme
| called "HEX"). He was trying to recruit and exploit
| unsuspecting developers here on HN to implement and
| operate his scams in exchange for promises of shitcoin
| equity.
|
| https://bitcoin-takeover.com/deconstructing-richard-
| hearts-l...
|
| https://learn.bybit.com/defi/what-is-hex-crypto/
|
| https://protos.com/richard-hearts-curious-launch-of-hex-
| puls...
|
| https://news.ycombinator.com/item?id=29367412
|
| https://news.ycombinator.com/user?id=RichardHeart
| cmrdporcupine wrote:
| I mean clearly people _are_ buying it, or at least were
| when it looked like easy "money for nothing" to quote
| the song
| hef19898 wrote:
| Enron gave us SOX, for reasons. Deutsche Bank is, like UBS
| and basically any other international bank, involved in all
| kinds of shady businesses, from money laundering to tax
| fraud. Those banks are usually fined, I do agree so that
| those scandals are very under covered. Deutsche Ban an other
| have yet to directly defraud customers of their deposits, not
| even WireCard managed to do that.
| DonHopkins wrote:
| The armies of shill-droids that constantly post deflective
| whataboutism, fallacious predictions, unethical financial
| advice, strained rationalizations, and false equivalencies to
| justify the unregulated crypto space aren't better humans, or
| even human at all.
|
| The dark side of the force with them.
| heartbeats wrote:
| I don't think you should suggest people are "not even
| human," even if they're behaving in a deeply unethical
| fashion.
| rytor718 wrote:
| I could be wrong, but I read the implication as
| bots/machines that trade in the financial markets. But
| again I could have totally misunderstood OP.
| rocket_surgeron wrote:
| My bank is constantly and repeatedly recognized as one of the
| best-run, most ethical, and most customer-centric companies
| in the United States, if not the entire planet.
|
| Of course it is not publicly-traded, so that eliminates one
| source of pressure to be a wretched hive of scum and
| villainy.
|
| Of particular note is that they are the largest bank in the
| United States to not require or take a bailout during the
| financial crisis.
|
| I imagine credit unions have the same lack of pressure that
| my bank does and it is incomprehensible to me that someone
| would patronize a financial institution that has incentives
| to screw them over to make their quarterly report look good.
|
| It is entirely possible to interface with the financial
| system without dealing with scumbags, or putting your faith
| into digital magic beans that immediately collapse when the
| Ponzi stops.
|
| https://en.wikipedia.org/wiki/USAA
| FormerBandmate wrote:
| JP Morgan didn't require a bailout but was forced to so
| people wouldn't know which banks actually needed bailouts,
| to stop bank runs. AFAIK Wells Fargo was in the same boat
| (although the Wachovia acquisition led it to need some
| help, Wachovia was insolvent)
| rocket_surgeron wrote:
| I might be wrong but my foggy memory recalls that JP
| Morgan was in good shape because they were the top of the
| mortgage-backed security pyramid and that years later
| their penalty for misleading investors prior to the
| financial crisis was the highest of all time(or of all
| the banks?).
| adrr wrote:
| Name a financial firm that had a significant negative impact
| on consumers? Wells Fargo scandal is the only one i can name
| but the total losses to all customers involved was $2M which
| they got compensated with $140M payout.
| dumbfoundded wrote:
| Our banking system nearly collapsed in 2008. Lots of people
| got hurt. Financialization of the US economy is a larger,
| delayed version of what happened to General Electric.
| vkou wrote:
| > Our banking system nearly collapsed in 2008. Lots of
| people got hurt.
|
| Yes, plenty of people got hurt because they made shitty
| investments.
|
| How many people got hurt due to their bank running off
| with their money to the Bahamas/betting it all on red?
|
| Because that's the degree of 'hurt' that the various
| crypto exchanges have been inflicting on their customers.
| Can you find me one American who lost money from their
| savings account in 2008? Or just had it go poof from
| their stock brokerage?
| dumbfoundded wrote:
| I responded to: "Name a financial firm that had a
| significant negative impact on consumers?" I didn't
| respond to which financial firms stole money from
| customers. What SBF did was more like Bernie Madoff.
|
| The only reason we didn't have bank runs and frozen
| accounts is because the Fed stepped in to provide
| liquidity to the whole market. The banking system
| would've collapsed similar to the Great Depression
| without such action. Lots of people lost their savings in
| the Great Depression.
| vkou wrote:
| > What SBF did was more like Bernie Madoff.
|
| Retail investors used FTX, retail was not heavily exposed
| to Bernie. His marks were mostly institutional and
| accredited investors, for whom the expectations are far
| closer to the 'buyer-beware' side of the spectrum.
|
| > because the Fed stepped in to provide liquidity to the
| whole market.
|
| That's the Fed's job. Everything worked... Pretty much as
| intended.
|
| And there's a reason it's not stepping in to provide
| liquidity for the various crypto scams. Liquidity
| injections can save a situation where value exists, but
| can't be immediately realized - as in the case of a bank
| run. In this case, though, there's no value worth saving.
|
| > Lots of people lost their savings in the Great
| Depression.
|
| Which is precisely why we built systems to prevent that
| failure mode from happening again. They worked.
| dumbfoundded wrote:
| I agree that the Fed was right in letting these crypto
| scams fail. The problem inherent to the system is
| inflation. As the Fed expands its powers, it can avoid
| significant recessions/depressions but one day it won't
| work and the dollar will fail like every other fiat
| currency in the world has eventually failed. This system
| "working" isn't eliminating risk, it's polarizing it.
|
| I wrote a longer comment a year ago but here's a piece:
| "The price of gold was $45/oz in 1970. 52 years later
| it's $1,800/ounce. That's roughly 7.6% a year or 45x
| increase. If you use the inflation provided by the
| government, CPI, (1), they say inflation is only
| 3.6%/year or roughly 7x since 1970. Obviously we have a
| discrepancy. Is the dollar worth 45x less than 1970 or 7x
| times?
|
| When we look at prices of things like education, housing,
| and healthcare, the 45x number makes a lot more sense.
| Education has 30x in price over the same time period (2).
| If you're comparing prices in dollars, it feels like
| education got really expensive compared to the basket of
| goods the BEA tracks but in reality, education requires
| less gold than it did in 1970. Our incredible supply
| chains and manufacturing automation have lowered most
| consumer prices such that we don't really notice
| inflation but when you look at things that can't get much
| cheaper like housing, healthcare, education, asset prices
| of all sorts, you can't miss the fact that they correlate
| more closely with gold than the USD."
|
| (1) https://news.ycombinator.com/threads?id=dumbfoundded&
| next=29...
| vkou wrote:
| > I wrote a longer comment a year ago but here's a piece:
| "The price of gold was $45/oz in 1970. 52 years later
| it's $1,800/ounce. That's roughly 7.6% a year or 45x
| increase. If you use the inflation provided by the
| government, CPI, (1), they say inflation is only
| 3.6%/year or roughly 7x since 1970. Obviously we have a
| discrepancy. Is the dollar worth 45x less than 1970 or 7x
| times?
|
| The main[1] answer to your riddle is that the economy
| grew about ~6x faster than we have been mining gold. The
| dollar is closer to being worth 7x less than 45x less.
|
| > When we look at prices of things like education,
| housing, and healthcare, the 45x number makes a lot more
| sense. Education has 30x in price over the same time
| period (2).
|
| The same amount of education isn't actually 30x more
| expensive.
|
| Because you're not getting the same services in exchange
| for your money today, as you were 50 years ago.
|
| If you drop the money-pit sports programs, the entirety
| of the administrative sector, the nice new dorm
| buildings, and account for reduction in public funding,
| you'll find that the growth in the cost of education is
| much closer to the cost of inflation.
|
| It's not all that expensive, even in 2022, to stuff a
| group of young adults into a lecture hall and have an
| underpaid adjunct who doesn't even get health insurance
| read off Powerpoint slides to them for 15 hours a week.
| It's the everything else, most of which has nothing to do
| with education that costs money.
|
| [1] The secondary answer to your riddle is that late-
| night-infomercial-manufactured demand from goldbugs and
| other morons can easily raise the price of gold
| significantly above where it 'ought' to be. Beanie
| babies, baseball cards, NFTs, shitcoins, etc.
| dumbfoundded wrote:
| College education is ~30x more expensive (1). Home prices
| (2) & Health care (3) are ~22x more expensive. Farm land
| is up 20x (4)
|
| > The main[1] answer to your riddle is that the economy
| grew about ~6x faster than we have been mining gold. The
| dollar is closer to being worth 7x less than 45x less.
|
| How are you measuring it? It's a circular argument if you
| measure it in dollars. If it measure it in anything that
| can't be made more efficient due to automation &
| offshoring, it's no where near a 7x decrease.
|
| > [1] The secondary answer to your riddle is that late-
| night-infomercial-manufactured demand from goldbugs and
| other morons can easily raise the price of gold
| significantly above where it 'ought' to be. Beanie
| babies, baseball cards, etc.
|
| Gold is simply a good that's impossible to mass produce
| with technology. Use land, housing, healthcare, education
| or whatever you feel is most representative. Using
| toothpaste and tv's for CPI is a bad measurement in the
| last 50 years, our technology for mass producing them has
| lowered the true cost.
|
| (1) https://educationdata.org/average-cost-of-college-by-
| year
|
| (2) https://www.in2013dollars.com/Medical-care/price-
| inflation
|
| (3) https://fred.stlouisfed.org/series/ASPUS
|
| (4) https://www.statista.com/statistics/196400/average-
| value-of-...
| adrr wrote:
| Investments were only bad in the short term. TARP, which
| purchased these assets, ended up being profitable for the
| government.
| WeylandYutani wrote:
| Good call yeah. Dutch government managed to buy up banks
| for cheap and made a profit on them.
|
| "Almost crashed" is not the same as "crashed". 2008 Was a
| stress test and the system survived.
| delaaxe wrote:
| Coinbase and Kraken definitely aren't "a wretched hive of scum
| and villainy".
| blitzar wrote:
| Luna-Terra, FTX, Coinbase and Kraken definitely aren't "a
| wretched hive of scum and villainy".
|
| Oops, correction.
|
| FTX, Coinbase and Kraken definitely aren't "a wretched hive
| of scum and villainy".
|
| Dont worry, I have it right this time ...
|
| Coinbase and Kraken definitely aren't "a wretched hive of
| scum and villainy".
| selectodude wrote:
| Coinbase is a US publicly traded company regulated by the
| SEC. Their business model is garbage but they have orders
| of magnitude more data that shows that as a company,
| they're legit.
| troon-lover wrote:
| blitzar wrote:
| Enron was a US publicly traded company regulated by the
| SEC.
|
| https://www.investopedia.com/articles/00/100900.asp
|
| Theres another fun one from an NYSE stock ...
|
| In December 1996, Emanuel Pinez, the CEO of Centennial
| Technologies, and his management recorded that the
| company made $2 million in revenue from PC memory cards.
| However, the company was really shipping fruit baskets to
| customers. The employees then created fake documents as
| evidence that they were recording sales.
| nwah1 wrote:
| FTX was a golden child beloved by venture capitalists until
| last month.
|
| High likelihood we view these two similarly in the near
| future.
| nicpottier wrote:
| Disagree. Coinbase has been around forever and was born out
| of the collapse of MtGox and people wanting some adults to
| run an exchange. I would not be surprised at all if Binance
| is a house of cards, I would be very surprised if Coinbase
| was.
| bena wrote:
| Madoff Securities was founded in the 60s and didn't
| collapse until 2008.
|
| And you may say that Madoff Securities didn't start out
| as a Ponzi scheme, federal investigators believe that it
| took until the 70s for it to start. Madoff claims the
| scams didn't start until the 90s.
|
| So, "being around forever" isn't evidence of lack of
| fraud.
| ipnon wrote:
| What gives confidence in Coinbase is that it's an
| American company with no offshore subsidiary to perform
| these kinds of shady transfer shenanigans that have led
| to the demise of FTX and possibly Binance. No financial
| company is bulletproof but perhaps it can be said
| Coinbase only has as much risk as any American financial
| company. To be fair if this risk is less than your
| typical crypto darling it's definitely non-zero.
| jachian wrote:
| Even moreso than Coinbase being an American company, it's
| a PUBLIC american company that is scrutinized by the
| rules of american exchanges. This makes it more
| transparent financially than any other exchange that you
| can hold your crypto at.
| bena wrote:
| Madoff Securities was an American company whose shady
| shenanigans were all contained within the US.
|
| So the fact that Coinbase is entirely US based is also
| not a guarantee that it's not doing shady things.
|
| And the implication DonHopkins was making is that every
| major actor in the crypto space is run by scam artists
| trying to defraud people of their money. There are no
| good actors.
|
| It's not about the level of risk with regards to the
| structure of the company. It's about the people running
| it. And no manner of corporate structure is going to
| prevent people from simply lying. Which is what every
| fraud has to do at some point. By their very nature.
|
| DonHopkins is saying since we can't trust the people
| running these companies, we can't trust these companies.
|
| And the fact that they've been around for a while or are
| based solely in the US mean nothing when one of the
| largest financial scams ticked both of those boxes.
| vkou wrote:
| It's no guarantee, but it's a damn sight better than it's
| current competition.
| DonHopkins wrote:
| That's an awfully low bar.
| DonHopkins wrote:
| >Coinbase has been around forever
|
| Forever? So dry behind the ears, are you?
|
| >born out of the collapse of MtGox
|
| The apple far from the tree falls, say you?
|
| >very surprised
|
| Not Jack's complete lack of what, are you?
| gammarator wrote:
| While I agree with you:
|
| > Be kind. Don't be snarky.
|
| https://news.ycombinator.com/newsguidelines.html
| DonHopkins wrote:
| Stop focusing on the negative and commit, I will. ;)
| TacticalCoder wrote:
| Coinbase goes as far as publishing the exact identification
| numbers of all the short term US treasuries they hold that
| back the USDC they emitted. They say they're held in
| custody at BNY Mellon (IIRC). It would be quite the lie if
| that wasn't true and I'm pretty sure _many_ people are now
| carefully looking into these affirmation / proof of
| reserves / etc.
|
| Coinbase also always had exorbitant fees compared to other
| exchanges (but who's looking "smart" now, those who paid
| the huge fees at Coinbase or those who were paying
| 0.000001% / operation at FTX and are now fucked?), which at
| least make it sound like making money on actual fees was
| their business model.
|
| Now: Coinbase is leaking money by having revenues which
| fell and running costs through the roof.
|
| But, in the short term, if FTX is gone and if Binance goes,
| Coinbase becomes number one. They're already number two and
| it's very likely that Coinbase's volume is real (contrarily
| to Binance).
|
| Coinbase is a HN unicorn, US incorporated. The people
| behind it are known.
|
| They may be behind a huge scam but somehow I don't think
| so.
|
| Also I do really wonder: now that rates have gone up,
| they've got $53 bn actual USD bringing it a significant
| amount of money. Where's that money going? For a start
| they're not giving the yeld to people storing USDC in their
| own private wallet in a "your key / your coins" style. What
| about the USDC held at Coinbase for customers? Do they give
| yeld on that?
|
| $53 bn or so is a _lot_ of money with 4 to 5% yeld or
| something...
| DonHopkins wrote:
| >They say they're held in custody at BNY Mellon
|
| Doesn't the other poster's claim that the "Entire
| _financial_ space " is corrupt and that "For every FTX or
| Binance there's an Enron or Deutch Bank ten times the
| size and just as villainous" undermine the claim that BNY
| Mellon is trustworthy?
|
| I agree that USAA is a rare exception, but do you really
| trust BNY Mellon if the "Entire _financial_ space " is
| corrupt, or is that just whataboutism that ignores the
| outrageously unprecedented and shill-droid-automated
| degree of unregulated untraceable corruption in the
| crypto space?
|
| If you believe Coinbase is as rare and trustworthy an
| exception as USAA, then I've got some Trump NFT's to sell
| you!
| eqmvii wrote:
| IIRC this blog's 2022-11-04 article "Is Alameda Research
| Insolvent?" was a part of what kicked off the events leading to
| FTX's collapse: https://dirtybubblemedia.substack.com/p/is-
| alameda-research-...
| perihelions wrote:
| Contemporary HN thread:
|
| https://news.ycombinator.com/item?id=33464494 (208 comments)
| tyleo wrote:
| Wow, incredible to see all the top comments there, "This
| article is jumping to conclusions. Everything seems fine."
|
| I'm not particularly invested in the crypto space one way or
| another but just watching from the sidelines it seems like:
|
| * Many things that seemed fine in this space were not fine.
|
| * As a layman, Binance _seems_ to be in the same ballpark of
| trustworthiness as FTX.
|
| Even if you are pro-crypto it just seems like there are much
| less risky places to put your money than Binance at this
| point.
| derivagral wrote:
| As someone who loosely followed and played in the space, I
| got scared around when Binance set up their own non-eth
| chain and everyone just... was OK with it. I may recall
| wrong, but this stuff was "justified" because people didn't
| want to pay the fees and delays to trade on something like
| Uniswap.
|
| Funny, because BNB was one of my best investments at the
| time, making up for other counterparty risks I didn't
| avoid.
| Analemma_ wrote:
| The top comments did indeed say everything was fine,
| although to be fair, almost every single _reply_ to those
| comments said the OP was full of shit, and gave reasons
| which turned out to be entirely correct. By comment volume,
| the skeptics were much more represented.
|
| So it seems like the population of HN has both a bunch of
| boosters who will blindly upvote plausible-sounding
| "everything is fine" positions but also a bunch of better-
| informed people who will do the work in tearing those
| boosters down.
| burnished wrote:
| If anything, upvoting controversial comments that have a
| lot of thoughtful responses is a public service -
| argument and counter argument gets put right at the top.
| roflyear wrote:
| If you're invested in crypto, you need it to work out for
| you.
| paulusthe wrote:
| People who are heavily pro-crypto see any reporting of bad
| things as bad for adoption, and since adoption is the goal,
| the reporting is bad.
|
| They're willfully blind, and just like Elon, there's always
| somebody willing to parrot whatever they think Master wants
| them to say
| keb_ wrote:
| Reminds me of this quote by Drew DeVault:
|
| > Maybe your cryptocurrency is different. But look:
| you're in really poor company. When you're the only
| honest person in the room, maybe you should be in a
| different room. It is impossible to trust you. Every
| comment online about cryptocurrency is tainted by the
| fact that the commenter has probably invested thousands
| of dollars into a Ponzi scheme and is depending on your
| agreement to make their money back.
|
| [1] https://drewdevault.com/2021/04/26/Cryptocurrency-is-
| a-disas...
| yunohn wrote:
| The irony is that every single crypto enthusiast I know,
| builder or speculator, has invested in shitcoins and scam
| coins just to hedge their bets in the off-chance it
| pumps...
|
| They're fully aware and will tell me it's shady, and yet,
| do it anyways.
| yunohn wrote:
| > adoption is the goal
|
| Absolutely, someone needs to fund the 100/1000x Ponzi
| returns that they want.
| BLanen wrote:
| Adoption(Actually using crypto as currency) is not in any
| way a goal anymore.
|
| The goal is now just to HODL till some mythical event
| where they'll be millionaires/billionaires with a single
| coin and then just use that as collateral to buy stuff
| through defi. Very similar to the GME cult.
| kodah wrote:
| From that thread:
|
| > If the liabilities are collateralized by assets on their
| balance sheet, then the financial risk is not to Alameda
| but the lender!
|
| Turns out the lender, illegally, was FTX
| marban wrote:
| Feature of James Block
| https://www.theatlantic.com/technology/archive/2022/12/crypt...
| paulusthe wrote:
| Binance and tether have long been the dirtiest players in
| crypto, and there have been warning signs for years.
|
| Kindleberger likened financial frauds to underwater obstacles.
| When money is plentiful, the metaphorical tide is high, and the
| obstacles are hidden by the water so nobody sees them. But
| they're always there. Then, when the tide recedes (cheap money
| ends), the obstacles are exposed for all to see.
|
| Binance is just going to be the last domino to fall as a result
| of cheap money ending.
| tyleo wrote:
| Another (more humorous) version of this metaphor is, "You
| don't find out who's been swimming naked until the tide goes
| out"
| rabidonrails wrote:
| That's a Buffet-ism
| wyxuan wrote:
| If I had to make a guess on what is going on, Binance US is using
| Binance cloud, which allows for other platforms to tap into
| Binance's orderbook liquidity and infra. Mandala(an exchange)
| uses it, and their token mdxt doesn't trade on Binance but still
| uses their infra and wallets for instance.
|
| There could be a similar arrangement where US pairs don't appear
| on the intentional exchange and vice versa, even if they use the
| same infra
| europeanguy wrote:
| I'm very skeptical of crypto, but what this is telling me is that
| at least one pro-crypto argument has _some_ merit: _some_ degree
| of additional transparency. Anyone could look at these addresses.
| This isn't the case with accounts in traditional banks.
| im3w1l wrote:
| My unfounded guess is that this more about tax dodging /
| regulation skirting than a sign of an imminent collapse. They may
| have to pay a fine or something but will survive.
| lifeinthevoid wrote:
| My guess is it's both.
| DonHopkins wrote:
| And just because your crypto lost 90% of its value yesterday
| doesn't mean it can't do that again tomorrow.
| LatteLazy wrote:
| This is like the "trick" I use to avoid US speeding fines: I
| don't speed in the US.
|
| Then same level of fake "outrage" and (at best) ignorance applies
| to the rest of the article.
|
| There really SHOULD be a requirement for centralised exchanges to
| hold coins (in wallets they alone control etc) equal to customer
| deposits (with a reasonable get out for USD/USDT/USDC/BUSD etc
| fungibility). But there isn't. So Binance.US is free to hold them
| or transfer them to Binance. And given the terrible service
| offered by US banks, it is not surprising that they have to use
| Binance(main)'s rail to access payments. In fact it's totally
| standard.
| keb_ wrote:
| I had recently remembered that I used Binance to purchase $100
| worth of XRP in 2017 (around the time everyone was jumping on the
| crypto wagon), so I decided to try to log in to see how my
| investment was going.
|
| This is when I found out Binance no longer allowed US investors,
| and I was redirected to a US site (Binance.us). The problem was
| my account was on Binance.com, and it was not migrated in anyway
| to this new US site.
|
| I contacted support and they gave me a 7 day period to log in and
| withdraw my funds (which in itself is weird -- why not just
| migrate my account to the US site; why the sketchy, arbitrary 7
| day period? whatever). I was finally able to log in! And I saw
| that my $100 investment had (unsurprisingly) turned into $17. I
| chuckled and tried to get my 17 bucks out anyway, only to find
| that the site no longer even offers a way to withdraw funds as an
| American!
|
| This whole experience that spanned maybe an hour was hilarious.
| I've resigned to the fact that I was scammed out of a hundred
| bucks. Woulda been nice to use that to buy a few games on Steam,
| but oh well, here we are. Hope this tale at least amuses or
| informs someone.
| chakintosh wrote:
| Bag holder lol
| raffraffraff wrote:
| Your % loss in crypto value for that period is almost exactly
| the same as mine, even though I didn't have any XRP and "spread
| my investment" over 4 different cryptocurrencies.
|
| Thankfully my "investment" was low enough to walk away from. It
| was basically an experiment. Glad I did it. Now I know. Of
| course my wife told me it was a ponzi scheme from the start,
| and was completely right. The real combined value of all the
| crypto in the universe is zero. The market just hasn't
| corrected itself yet.
| thatguy0900 wrote:
| As long as you can buy illegal stuff online with it it isn't
| zero. There's real value in that, to some at least.
| arcticbull wrote:
| Anything other than a privacy coin isn't anonymous, it's
| pseudonymous. Carrying out illicit transactions on a public
| ledger is akin to just sending your transaction history to
| every investigative service on earth: the FBI, NSA, CIA -
| and abroad of course, the PRC government. They are now, or
| will in the future, just run it through automated
| deanonymization tooling.
|
| To borrow an expression from Nicholas Weaver, crimes on
| public ledgers are just prosecution futures.
| dumbfoundded wrote:
| It's the dumbest technology to try to buy illegal stuff
| now. Most coins have touched an exchange and everything you
| do is public. Once deanonymized, it's the opposite of
| private.
|
| Monero & Zcash are exceptions and the only parts of crypto
| I'm bullish about (including some new upcoming chains like
| Ironfish & Aleo). I think private p2p cash has a lot of
| value. BTC & ETH are the opposite of private.
| WeylandYutani wrote:
| There's no statute of limitations on buying child
| pornography in my country. Drugs nobody cares.
| thatguy0900 wrote:
| For now it seems the agencies with the technical
| expertise to prosecute arnt going after the occasional
| drug buyers, it's pretty safe. Of course, nothing
| stopping future better police from taking through old
| records
| kube-system wrote:
| It's still useful as a means of transferring money for
| those in jurisdictions that don't care about their
| illegal activity. Like the countries that tolerate
| cybercrime as long as it is directed outside of their own
| borders. Or dictators themselves trying to avoid
| sanctions.
| dumbfoundded wrote:
| It's still useful for now, but it will get less and less
| so. The tornado cash dev is in jail for writing code that
| made such efforts easier. Since coins can be marked by
| "good" actors as having been involved in illegal
| activity, they can't ever be used again.
|
| Let's say a US company gets ransomware attacked by a
| Russian national and demands payment in bitcoin. US
| company pays in bitcoin and later reports crime. All
| accounts get flagged. Anyone helping that address offramp
| the money will be in trouble. So there has to be a
| Russian exchange dealing with Russian banks that's
| creating a track record of provably aiding in crime. It's
| either going to be such a small amount no one cares or
| the Russian companies involved will be sanctioned.
|
| Because of the public permanent record, the utility of
| ETH and BTC are decreasingly useful. Things like instant
| international settlement, fast payments, and the alike
| can always be better done with tradfi. Privacy and
| avoiding regulation was the only real utility ever.
| altdataseller wrote:
| What are examples of private p2p cash?
| dumbfoundded wrote:
| Monero & Zcash are the best examples right now but like
| bitcoin, they are volatile and not practical for actual
| commerce outside of use-cases (like crime) where it's
| worth the cost.
|
| Stablecoins are a large use case in crypto now but there
| isn't a private stablecoin yet (I'm ignoring all SGX
| based technology). A private stablecoin, fully backed by
| audited bank reserves would enable something like a
| private Venmo. This private Venmo would know how much you
| brought in and took out but would have no idea what your
| transaction history looks like. I think in the next few
| years we'll see a private Venmo.
| meepmorp wrote:
| The real treasure was the German amphetamine paste we
| bought along the way
| tnel77 wrote:
| >> The real combined value of all the crypto in the universe
| is zero. The market just hasn't corrected itself yet.
|
| It's comments like these that make me happy that Reddit has
| "RemindMe!"
| ls15 wrote:
| > The real combined value of all the crypto in the universe
| is zero.
|
| Can I have your leftovers?
| 1vuio0pswjnm7 wrote:
| "Your % loss in crypto value for that period is almost
| exactly the same as mine, even though I didn't have any XRP
| and "spread my _investment_ " over 4 different
| cruptocurrencies."
|
| The only cryptocurrency that the SEC has said publicly it
| will not treat as a security is BTC. There are allegedly a
| few more but the SEC has not disclosed which ones. That
| leaves every other one open to SEC regulation.
|
| Above every cryptocurrency, save for a few, hangs the sword
| of Damocles.
|
| With the ongoing FTX story, it is nice to see people on HN
| are now able to comfortably confess their crypto losses.
| ls15 wrote:
| > That leaves every other one open to SEC regulation.
|
| Only those that fail the Howey Test, I think.
| In doing so, the Supreme Court established four criteria to
| determine whether an investment contract exists. An
| investment contract is: An investment of money
| In a common enterprise With the expectation of
| profit To be derived from the efforts of others
|
| https://www.investopedia.com/terms/h/howey-test.asp
| starwind wrote:
| Crypto is def the future
| yunohn wrote:
| They actually did the same in NL, when they ran afoul of
| regulations here. I had to transfer to Coinbase to cash out.
| lebed2045 wrote:
| Lucky you. I deposited a bunch on ethers in 2017/18 and wasn't
| being able to withdraw anything since. They claim my passport
| isn't enough, so I couldn't withdraw the same money I deposited
| to the same address. After several weeks of attempts I gave up
| and call it a loss.
|
| So, saying it out loud: Binance had scammed me. Happy to jump
| of public debate about it on Twitter(same nickname).
| lebed2045 wrote:
| This is bizarre. There was a reply to this comment from of
| person who claimed there's something wrong with me, and when
| I reply to it with my contacts. Now I don't see any of this
| comments. So if the parent comment is deleted- so all replies
| to it as well?
| mlyle wrote:
| It's right there next to your comment, flagged and
| collapsed by default.
|
| https://news.ycombinator.com/item?id=34082481
| salawat wrote:
| Turn on Show-dead in your account profile.
|
| The community will collectively mod nuke comments that are
| blatant violations of the site guidelines. Those without
| show-dead on will no longer see it. You can view even dead
| posts by turning on show-dead.
|
| It also gives you aore accurate view of what Dang has to
| deal with on a regular basis.
|
| As far as I'm aware, you can't delete a replied to post.
| sy7ar wrote:
| lebed2045 wrote:
| Well, this is a problem. As a little man who shared a
| personal story - there's no way people on internet can
| believe me over all mighty Binance.
|
| But this is my story, Binance took my deposit and never
| gave it back. Although I have no influence whatsoever,
| there are still a few hundred people from the blockchain
| industry whom I met over a years on hackathons and
| conferences. Perhaps we might have friends/contacts in
| common https://twitter.com/lebed2045? via whom happy share
| all details.
|
| What's my motivation to lie? when if this story even get
| attention (that is unlikely) - binance would always able to
| disprove it by sending tx proofs that they sent money back
| or never took in the first place?
| Lionga wrote:
| You can check out anytime you like, but you can never leave in
| the Hotel of Binance
| darkwizard42 wrote:
| You can withdraw your money by moving it to a Binance US wallet
| or honestly any other wallet (including one on Coinbase) and
| withdraw from there in USD.
|
| I'm not sure where you missed this in your exploration. I went
| through this recently as well.
| keb_ wrote:
| I did consider that, and at first tried to, but then it asked
| me to verify my identity. Which I had done already years ago.
| I frankly did not feel like going through all the trouble of
| uploading my drivers license/supporting documents for $17.
| Maybe I'll try again before the 7 days is up? IDK it's the
| week of Christmas.
| hartator wrote:
| Maybe it's not worth to give away all your data again to
| maybe get $17?
| smabie wrote:
| Can't withdraw funds as an American? This is factually not true
| keb_ wrote:
| The only way I could see was transferring it to some Euro
| banks or e-cash services I do not possess. In the withdrawal
| process, I could not even designate my country as "USA". That
| or transferring to another coin wallet, but that also
| required me going through the identification process again
| (which I had already done in 2017). I did not feel like going
| down the rabbithole of research/contact support/waiting for
| $17. I'm lucky enough that I make more than $17 an hour, and
| I also value my time more than that.
| robotnikman wrote:
| I don't even think you can even withdraw XRP anymore from any
| exchange due to the whole SEC investigation thing. At least
| that's what I experienced when I tried last year.
| rich_sasha wrote:
| Not to try and create excuses for them, but if I trade on
| Binance.US, can I trade against someone placing orders on
| Binance.com? Because if yes, then the commingling of assets is
| expected and necessary.
|
| Say I register at Binance.US, deposit some USD[T] and buy some
| BTC instead. Now someone on Binance.com does the opposite - sells
| me BTC, receives USDT. Now we both withdraw - except my BTC was
| deposited at Binance.com and the counterparty's USDT was
| deposited... elsewhere (who knows were).
|
| This doesn't apply, however, if people trading at Binance.US
| believe they are only trading with each other...
| Sakos wrote:
| Banking/finance regulations are very strict. Just because you
| might want that kind of functionality doesn't mean you get to
| implement it even if it breaks regulations.
| blitzar wrote:
| It is possible that the one "international" exchange is the
| marketplace where buyers and sellers are matched, while the .us
| is the custodian of us clients. Thus you would constantly have
| settlements (net) between the .us custodian and the .int
| custodian for matched trades on "the exchange".
|
| This is how I would set it up, but wtf would I know.
| glitchc wrote:
| Except regulations prohibit that. You as a user need two
| separate accounts, one for each entity, and an audit trail
| demonstrating compliance with laws for transfers between those
| two entities.
| sjsdaiuasgdia wrote:
| Binance.US was supposed to be a separate entity, operating
| under US regulations and thus allowing people in the US to use
| it directly.
|
| Quoting the article:
|
| >Our data suggest that Binance.US's "market maker" is a single
| pair of addresses that exclusively transfer funds between
| Binance and Binance.US. These addresses move customer assets
| from the U.S.-based exchange to the much larger offshore entity
| to perform trades. This means that for all practical purposes,
| there is no real difference between having your money with
| Binance.US or directly with Binance. Given that Binance was
| barred from doing business in the United States, it certainly
| appears that Binance.US is little more than a convenient
| fiction to evade regulators.
|
| So yes, Binance.US was created to give the impression of a
| separate business entity to appease US regulators and entice US
| investors. But it appears to all be a shell game. Deposited
| funds may as well have been deposited directly into Binance,
| which is against the public perception they created.
| rich_sasha wrote:
| My point is, it depends what "separate" means. It's not
| uncommon for regulated exchanges to have multiple shell
| exchanges, just as this article alludes Binance does, where
| orders are just routed somewhere else. If that's the case
| then it's unavoidable that client money moves.
|
| What is unclear to me is what independence is promised. Did
| they promise a fully segregated business with no links? If
| TFA is right then this is violated.
|
| But maybe they just promised a US entity for dealing with
| international Binance. If so, the only benefits you reap is
| there is a US business you can sue and some kind of financial
| supervision - quite light by the sound of it. And not, by
| itself, unheard of in regulated finance.
|
| Just saying "look money flowing to and fro" contradicts some
| but not all sane definitions of "independent".
| sjsdaiuasgdia wrote:
| >In public, Zhao said the new U.S. exchange - called
| Binance.US - was a "fully independent entity."
|
| While definitions can have nuance, the "fully" prefix is
| worthy of consideration here. That doesn't seem to lend
| itself to being an accurate description of a shell
| exchange.
|
| If you're concerned the "fully" part didn't come from CZ:
|
| >For instance, Binance.com is not available to US users,
| while there is a brand partnership with Binance.US, which
| is a fully independent entity that is a compliant and
| regulated exchange in the US, to provide US users with a
| safe, secure, and compliant trading platform. [1]
|
| This is pretty clearly saying one thing then doing another.
|
| [1]: https://www.binance.com/en/blog/from-cz/a-letter-from-
| our-ce...
| rich_sasha wrote:
| Thanks.
|
| I'm not saying Binance did nothing wrong, only the
| article does not elaborate what promise of independence
| is made.
|
| These statements, while certainly very strongly hinting
| at total separation, are vague enough that they could
| mean anything.
|
| Clearly, the powerhouse of transparency that is Binance
| could just cut all such speculation by providing a proper
| audit. We're all arguing around the margins of a slightly
| dog-chewed napkin containing scribbles pinky promising
| Binance is good for the money...
| pjc50 wrote:
| The "correct" way to do that would be to maintain two sets of
| accounts, two bank accounts, and two wallets. Do settlement
| between the two of them as necessary.
|
| Additionally, the "broker/dealer" function wallets and bank
| accounts should be separate, preferably in separate corporate
| identities, from the "free lunch and buy a castle" corporate
| accounts.
| vgatherps wrote:
| I love some good exchange fud but this article is hot garbage.
| None of the claims remotely follow from the evidence.
|
| * all exchanges transfer a lot back and forth on behalf of their
| clients. Arb desks, market makers, etc. To conclude commingling
| is laughable.
|
| * binance international has many different products and clientele
| (much more retail and people with positions) than binance us
| (mostly just hfts, little real world traction). No surprise that
| the turnover to assets is different. It doesn't mean that trades
| awe executing in binance international instead of US.
|
| * binance saying some market makers have headquarters outside the
| US does not mean binance us trades actually happen on binance.
| This is so horribly, terribly wrong it makes me doubt the article
| is good faith.
|
| * A market maker isn't a pair of address that move funds back and
| forth, unlike the article claims.
|
| The claim doesn't even make sense. Binance US trades hundreds of
| millions a day, and the lifetime back but forth transfer is under
| 2 billion??? That doesn't add up to "binance us does it's trades
| in binance international".
|
| The claim doesn't even make sense. There's no reason to send
| funds over to binance international, do the trade for each party
| there, and send funds back. If the claim is that a market making
| firm does so then, yeah sure, many do, so what? That's literally
| how cross exchange arb works, "but in the low one and sell on the
| high one".
|
| Let's keep the content of a respectable quality. This is someone
| putting out some garbage so if binance does collapse, they can
| claim they called it ahead of time.
| totalZero wrote:
| 1. Securities exchanges have a well-defined process for
| clearing transactions, and don't receive off-schedule payouts
| from ostensibly independent entities in order to make those
| transactions work out.
|
| 2. If Binance goes under, what happens to the holdings of
| Binance.US customers if they are depending on transactions
| debited from Binance? It's not about clientele, it's about
| where the assets are parked.
|
| 3. You have the article's causality chain backwards. They
| establish the hypothesis first and then note that offshore
| market-making (noted in the Binance.US TOS) supports the
| hypothesis.
|
| 4. The article puts "market maker" in quotation marks, implying
| that it's not a real market maker but rather a vehicle to move
| funds to the other entity for the purpose of effecting trades.
| I interpret this as a no-arbitrage condition between the
| Binance and Binance.US.
|
| 5. The amount of money is irrelevant. If your assets are
| deposited in a regulated entity and then they get transferred
| to an unregulated entity for any reason aside from clearing
| your own transactions, something strange is going on.
|
| 6. Cross-exchange arb shouldn't result in USDT deposits on
| Binance.US dropping to six figures and then needing a $10M
| lifeline from Binance.
|
| 7. This "someone" as you put it was fairly prescient with
| regard to Alameda and FTX, using similar methodology, and faced
| similar criticism for the four or five days between their
| publication and the collapse of the FTX empire.
| panphora wrote:
| This is the same reporter who warned investors about
| Alameda/FTX right before they collapsed. [0] [1]
|
| They also brought attention to Celsius two months ahead of
| their collapse. [2]
|
| A lot of crypto ponzi schemes have been covered up with "Oh,
| that was just us doing arbitrage."
|
| Celsius founder in 2020:
|
| "We lend financial assets to players that can transact and
| generate income for themselves through arbitrage, market making
| or shorting certain stocks or digital assets."
|
| Almost every brilliant arbitrage has blown up in the faces of
| high-risk entities or never happened to begin with (SBF's
| Japanese arbitrage trade looking pretty suspicious right now,
| with a $9B hole in his balance sheet).
|
| The confidence of your remarks also strikes me as strange,
| seeing as we've now experienced one domino after another of
| "we're perfectly solvent and not doing anything bad" to "we're
| closing withdrawals and all the money's gone" (LUNA/UST,
| Celsius, 3AC, Voyager Digital, BlockFi, Genesis, FTX... all
| just in the last year.)
|
| How can you have so much confidence these trades aren't
| suspicious?
|
| [0] https://dirtybubblemedia.substack.com/p/ftxed-the-tangled-
| ti... [1] https://dirtybubblemedia.substack.com/p/is-alameda-
| research-... [2]
| https://dirtybubblemedia.substack.com/p/celsius-networks-uns...
| vgatherps wrote:
| You've literally not responded to a single comment I had
| kamranjon wrote:
| I think the article was suggesting that the volume of trading
| exceeded the store of assets on Binance.US and as such required
| funds be transferred from Binance proper because it had a much
| better volume:exchange ratio.
| mikeyouse wrote:
| Right - and the Binance.US TOS tries to maintain that they
| are _not_ related parties with Binance even though they share
| common owners:
|
| _As part of an effort to offer digital asset trading
| technology to its customers through the Binance.US platform,
| BAM Trading entered into licensing agreements with Binance
| Holdings Limited ( "Binance"), which operates the world's
| largest digital asset exchange. BAM Trading and Binance share
| common majority ownership, but are not within the same
| corporate structure._
|
| The article is exactly right afaict.
| vgatherps wrote:
| This doesn't follow - if I'm an HFT firm I'll turnover the
| same assets many times back and forth.
| np- wrote:
| I have no dog in the fight, but I did find it interesting that
| the top comment on HN for the Alameda article written by this
| very exact author was very similar in tone completely
| dismissing the article and saying it's total nonsense, and that
| the author knows nothing. As we all found out a few days later,
| the article was 100% on the nose. So reasonably, it seems we HN
| readers would have to take the total outright dismissal of this
| article with a grain of salt...
|
| https://news.ycombinator.com/item?id=33464494
| vgatherps wrote:
| Your link is to the parent post, not, me, but:
|
| " nobody knows what the liabilities are. At one extreme, if
| the liabilities are all cash, alameda is in a dire place. At
| the other, if the liabilities are just the tokens on their
| balance sheet, there's nothing particularly interesting. "
|
| Is obviously not a total dismissal - I'm on mobile so can't
| scroll around to find my other one but it largely says the
| same thing.
|
| Also, if you can't really imply anything other than "I'm a
| shill because I said the balance sheet wasn't certain
| evidence of insolvency", what's the point? Shill accusations
| are explicitly called out by dang and the rules for this
| reason
| np- wrote:
| Never implied that you are a shill at all. Just that I have
| noticed a common theme on HackerNews where people tend to
| comment as if they "know it all" (and maybe you do, how do
| I know). I just want to make aware that this article writer
| has earned credibility, and as a layman I am much more
| willing to put a higher weight on the article than a rando
| taking it down and calling it garbage based on what doesn't
| seem to be any special insight into the situation.
| shockeychap wrote:
| This looks like a potentially huge revelation. The wallet
| analysis looks sound, and, if correct, the implications of US
| customer funds being comingled in this manner could set the stage
| for an even worse scenario for US customers than that of FTX.
| Even SBF in all his criminality knew not to play AS fast and
| loose with US customer funds as he did with international, and
| John Ray has indicated that US customers will fare much better
| overall than others.
| mr90210 wrote:
| "Even SBF in all his criminality knew not to play"
|
| Even what? Really?
| heartbeats wrote:
| According to John J. Ray, the clean-up guy, FTX.us is
| solvent, or at least more so than the FTX.com silo.
| kwantam wrote:
| Do you have a source for this? I'd really love to read more
| about it.
|
| My impression from Ray's congressional testimony was
| "FTX.us might be solvent, but we don't know yet because the
| forensic accountants are still chipping away". But I was
| only half focused and am not confident I remember
| correctly.
| shockeychap wrote:
| I had originally heard it during the congressional
| testimony, but given that it's over three hours long, I
| don't know exactly where.
|
| The gist of what was said, is that a lawmaker cited
| something about FTX.US being "98% solvent" and asked John
| for confirmation of this. John stated that he couldn't
| give any figures at the moment, but there was generally
| truth to the statement that U.S. customers would be hurt
| less than others.
|
| Here's an article that touches on it.
|
| https://www.bloomberg.com/news/articles/2022-12-13/ftx-s-
| us-...
| 411111111111111 wrote:
| Total nonsense. FTX made no distinctions, neither by contract
| nor by country of origin.
|
| They'll pay out people from the US first for sure, but that's
| just how the bankruptcy process works and there likely won't be
| anything left by the time the queue moved down to foreign
| holders. But the reason you've provided is just plain fake news
| ferminaut wrote:
| > TX made no distinctions, neither by contract nor by country
| of origin.
|
| Apparently there was special rules for Japan. The regulations
| were a result of Mt Gox failing. Basically you cant comingle
| funds and the accounts need to be linked to a trusted third
| party.
|
| https://www.coindesk.com/consensus-
| magazine/2022/12/13/japan...
| dieselgate wrote:
| The whole thing about being "a wholly separate entity" in the
| context of binance and ftx us/intl. is such legal line to
| distract people. SBF in an interview mentioned ftx us and intl.
| have different "principal addresses and everything" for the two
| companies. I started a business a few months ago (details not
| important here) and hire a registered agent service to also serve
| as my principal address (details not important really but I rent
| and cannot use my residential address for these business
| purposes). So yes legally they're separate entities but that
| really doesn't mean much in a functional sense.
| Mistletoe wrote:
| Why does it keep referring to Binance.us as a trick or ploy? It
| is the only way to use Binance for investors in the USA. Like
| most exchanges long ago they kicked all the USA based people off.
| Then exchanges were created that fulfilled USA regulations and
| rules. Typically coins that could be securities aren't included.
| Exchanges like Binance.us, FTX.us were created. Americans without
| a VPN haven't been able to use exchanges Bitmex, Binance.com,
| FTX.com etc. for a long time. This isn't a ploy or trick any more
| than a separate website for GDPR countries is a trick.
| jacquesm wrote:
| Any examples of those separate websites for GDPR countries?
|
| The thing I most frequently come across is companies that more
| or less outright admit that without tracking their users they
| can not make the numbers work or that they refuse to abide by
| the law and so they block EU citizens outright.
| kasey_junk wrote:
| Nit: blocking EU citizens is not refusing to abide by the
| law. It's one of several perfectly valid compliance
| approaches.
| Gwypaas wrote:
| Because they are not keeping your money/stocks/tokens/whatever
| like they promised and should. Like all real brokers do. A bank
| run can not happen for a broker.
|
| It is like Vanguard sending your money to their hypothetical
| Chinese subsidiary because that is where they think the market
| is most efficient. Then when the Chinese government seizes that
| company's accounts, you are shit out of luck because your money
| is not where it is supposed to be, and the US entity is
| bankrupt.
| rileymat2 wrote:
| Not exactly, you should dig deeper, many brokers do use your
| shares. If you agree to it... and you very well could have
| not reading fine print.
|
| "To be clear, your brokerage firm cannot lend out your stocks
| without your permission. However, you may have signed a
| customer agreement that explicitly allows your broker to lend
| out your securities. This clause is often tucked deep within
| the customer agreement, and few investors pay much attention
| to it."
|
| https://www.sonnlaw.com/faq/can-my-broker-lend-my-shares/
| kasey_junk wrote:
| Those shares would still list you as the beneficial owner
| at Cede though so if the broker becomes insolvent (perhaps
| due to counterparty risk from short sellers) your shares
| are not available to other creditors and continue to be
| yours.
| pooper wrote:
| The whole concept makes no sense for me.
|
| If someone deposits cash, don't offer any interest. Keep it
| as cash (or something backed by the US dollar).
|
| I can give Vanguard USD 5000 and feel safe thinking I can buy
| VTSAX anytime.
|
| This is all these exchanges need to do. Just execute lots of
| trades and you will make a few pennies every time.
|
| Why is it so difficult?
| drexlspivey wrote:
| That's not difficult, it's what Coinbase and Kraken do. But
| what if you want to offer derivative products that are
| leveraged by default where someone can deposit 5k and wants
| to buy 30k worth of a shitcoin that can drop 90% in a day?
| cuteboy19 wrote:
| Where is the proof that kraken does it?
| drexlspivey wrote:
| They are reportedly preparing for an IPO so presumably it
| will be in their S-1
| DebtDeflation wrote:
| Because >90% of crypto exchange volume is just fake wash
| trades that don't generate fees for the exchange.
|
| SBF laid out in detail how crypto exchanges actually make
| money back in an April interview:
|
| https://www.bloomberg.com/news/articles/2022-04-25/sam-
| bankm...
| almostkorean wrote:
| This article has nothing to do with how crypto exchanges
| make money. They make money from trading fees. Let's say
| your claim about wash trades is true, why wouldn't the
| exchange make money from those fake trades?
|
| To answer GPs question, legit exchanges do spend a lot of
| money and effort on keeping user's assets secure so it's
| maybe not as easy as it seems. But in the case of FTX, I
| totally agree. FTX was like 2nd or 3rd highest volume
| exchange and could have been a highly profitable business
| on it's own. Only SBF knows the answer to why that wasn't
| enough.
| gruez wrote:
| >SBF laid out in detail how crypto exchanges actually
| make money back in an April interview:
|
| >https://www.bloomberg.com/news/articles/2022-04-25/sam-
| bankm...
|
| "exchange" is mentioned exactly zero times in the
| article. However, I'll let that slide as presumably you
| meant to imply that exchanges make money through yield
| farming, which also doesn't make sense because yield
| farming doesn't involve the participation of exchanges at
| all. As mentioned in the article, the concept is that a
| smart contract accepts deposits and hands out tokens,
| which constitute the yield. No part of that requires
| exchanges.
| DebtDeflation wrote:
| You seem to be under the impression that a crypto
| exchange is like a modern day stock or commodities
| exchange. It is not. It's much more akin to a hybrid of
| an 1860's era wildcat bank and a 1900's era bucket shop.
| Their main business is NOT executing crypto trades on
| behalf of customers no matter what they might say.
| Mistletoe wrote:
| You really need to provide some citations. The fees are
| actually extremely lucrative, check the Coinbase filings
| during the bull run. The FTX trading fees were massive as
| well and is one of the reasons SBF is a profound idiot.
| He could have banked those fees forever but he wanted
| more and more gains so went to the dark side trading and
| using user funds and of course losing them.
|
| > The (FTX) crypto exchange's revenue soared more than
| 1,000% from $89 million to $1.02 billion in 2021.
| HDThoreaun wrote:
| Crypto exchanges have nothing to do with yield farming.
| They make money on fees and probably buying bonds with
| dollars left in accounts.
| fnordpiglet wrote:
| You'll never get rich thinking like that.
| blitzar wrote:
| > Why is it so difficult?
|
| Well while you are deciding if you are going to buy
| something with your 5k or not, I, a gigabrain genius, can
| take your 5k and buy the latest mooning stable dog coin and
| turn it into 50k gaurantteeed and when you want to buy your
| shares sell it for massive gainz and keep the 45k I made
| for myself.
| jeroenhd wrote:
| Crypto is unregulated so there's nothing stopping you from
| doing more than just profiting off of transaction costs.
| Why get rich slowly when you can get rich quickly? During
| the height of the cryptocurrency craze, everyone was making
| huge profits using this business model. I assume the
| profits stopped when the market shrunk, putting shady
| companies (slightly) below solvency.
|
| It's hard to compete in a market where big, scummy brokers
| will ask no transaction fees because they use their
| customers' assets to speculate and profit. Had they
| switched tactics to a transaction fee based approach,
| they'd risk large customers taking their assets to another
| broker, which can cause insolvency problems to become
| visible. Switching business models after having your shady
| business model collapse may not be an option!
|
| I think you can make a decent amount of profit in the
| cryptocurrency market by just doing the thing that's normal
| for real brokers, but you'll need quite soms scale to
| become seriously profitable. You'll also need to prove
| somehow that your nee company is the real deal unlike all
| of your shady competitors.
|
| There are probably real exchanges out there, completely
| solvent and doing honest trades, but without large volumes
| you'll probably never hear of them. The most risky
| businesses will make the most money, provide the cheapest
| service, and get most of the attention, at the risk of
| collapsing and taking the price of their speculative assets
| down with them.
| kasey_junk wrote:
| Coinbase lost its shirt last quarter doing that. Even in
| the traditional finance worlds the exchanges have to be
| extremely consolidated and offer myriads of products to
| make it.
| Mistletoe wrote:
| The crypto market imploded last quarter, that is to be
| expected. Brian Armstrong and Coinbase have been in this
| through multiple cycles and know how it goes. Coinbase
| still has 5.4 billion in cash to make it through the
| tough times and make lots of money on the next crypto
| manic cycle. Based on previous cycles, the bottom is
| already in for crypto. Think of crypto bull runs like the
| holiday season for retail businesses. It's where they
| make their money.
|
| https://www.macrotrends.net/stocks/charts/COIN/coinbase-
| glob...
| AlexandrB wrote:
| > Based on previous cycles, the bottom is already in for
| crypto.
|
| Why would you base any crypto predictions on previous
| cycles? Has the crypto market ever experienced a cycle
| with high inflation and rising interest rates?
| chessgecko wrote:
| The trick is that they pretended they were compliant with us
| regulations when they weren't. Some users probably don't mind
| this, but if there are issues they might change their mind.
| Sakos wrote:
| Did you read the post at all?
|
| > Binance.US was described as a separate entity from Binance
| that was merely licensing the name and certain features from
| the main company.
|
| > In public, Zhao said the new U.S. exchange - called
| Binance.US - was a "fully independent entity." In reality, Zhao
| controlled Binance.US, directing its management from abroad,
| according to regulatory filings from 2020, company messages and
| interviews with former team members. An adviser, in a message
| to Binance executives, described the U.S. exchange as a "de
| facto subsidiary."
|
| > These public issues have led many to wonder whether Binance
| and Binance.US are truly separate entities. We can now report
| that based on blockchain transfers, market data, and company
| disclosures, it appears that there is no meaningful separation
| between the two firms. In fact, we show that Binance.US both
| transfers customer deposits to Binance and pays customer
| withdrawals using transfers back from the offshore exchange's
| wallets. Further, we demonstrate that trades allegedly
| happening on Binance.US's exchange are likely being conducted
| directly on the main Binance exchange.
|
| > It turned out that Binance US apparently didn't have enough
| USDT in its wallets to pay back customers for several hours.
|
| > However, Binance.US apparently had to pull money from the
| main Binance exchange to pay back customer withdrawals. In
| other words, Binance.US customers were paid back using funds
| transferred from the offshore Binance exchange! We must ask,
| why were U.S. customer assets held in Binance addresses?
|
| > We conclude that a significant portion of Binance.US customer
| deposits are commingled with other deposits on Binance's main
| exchange.
|
| > Our data suggest that Binance.US's "market maker" is a single
| pair of addresses that exclusively transfer funds between
| Binance and Binance.US. These addresses move customer assets
| from the U.S.-based exchange to the much larger offshore entity
| to perform trades. This means that for all practical purposes,
| there is no real difference between having your money with
| Binance.US or directly with Binance. Given that Binance was
| barred from doing business in the United States, it certainly
| appears that Binance.US is little more than a convenient
| fiction to evade regulators.
|
| > In reality, Binance.US appears to be little more than a
| facade to obfuscate the fact that an unregulated offshore
| crypto business currently under investigation for money
| laundering and sanctions violations is doing business in the
| United States despite being banned from the country.
|
| The post explains quite clearly why they call it a trick.
|
| If I use Vanguard in the US, it is a completely separate entity
| from Vanguard in Europe. This is to ensure they meet the
| regulations of where they're operating. This is standard
| operating procedure. What Binance is doing is not.
| ZeroGravitas wrote:
| Imagine you set up a seperate GDPR compliant site to keep the
| regulators happy, then behind the scenes transferred the
| customer info to the standard site and just continued to do all
| the stuff the GDPR tells you not to.
|
| Thats what they are alleging here, and why the supposedly
| seperate company is just a trick.
| piva00 wrote:
| > This isn't a ploy or trick any more than a separate website
| for GDPR countries is a trick.
|
| If the EU citizens data is sneakily transferred out of
| jurisdiction and used without consent it's a trick and illegal
| by the GDPR.
| seydor wrote:
| I don't see the point of trying to take down Binance by spreading
| fud. If Coinbase is all that s left, then what is the point of
| having bitcoin at all, if it is going to be as regulated as the
| dollar. This would render coinbase redundant too
| lamontcg wrote:
| I'm shocked shocked to find that commingling funds is going on
| here!
|
| We haven't even hit the real recession in the broader economy
| yet.
| simple-thoughts wrote:
| To be frank, the evidence here is quite slim. It would be
| expected that market making funds would operate on both binance
| and binance.us and transfer funds between them either to provide
| liquidity or conduct arbitration. That's not to say you should
| trust Binance, all centralized exchanges are suspect and CZ
| himself has said that eventually dex will supersede cex.
| sjsdaiuasgdia wrote:
| We should definitely not trust CZ because he said Binance.US is
| an independent entity then he ran it as a subsidiary. That's a
| pretty solid lie and also solidly explained in the article.
|
| An independent entity operating as an exchange might do market
| making activities with many other exchanges. It seems
| Binance.US only does that with Binance.
|
| An independent entity operating as an exchange should be
| directly responsible for and in possession of customer funds
| that have been deposited with them. Binance.US couldn't fulfill
| withdrawals without Binance's help. That should not ever be
| necessary if these are separate entities.
___________________________________________________________________
(page generated 2022-12-21 23:02 UTC)