[HN Gopher] Bank CEO: Retract your debanking piece? Me: No
___________________________________________________________________
Bank CEO: Retract your debanking piece? Me: No
Author : feross
Score : 209 points
Date : 2025-02-10 15:32 UTC (7 hours ago)
(HTM) web link (www.kalzumeus.com)
(TXT) w3m dump (www.kalzumeus.com)
| martinky24 wrote:
| While verbose, I do enjoy Patrick's writing. I appreciate this
| (similarly verbose!) meta-post as well.
| casenmgreen wrote:
| The more he writes, the better. All of it is worth reading.
| earnesti wrote:
| LOL no. it is super fluffy. Lots of good stuff in there, but
| just overly verbose.
| kristianp wrote:
| I wish he would learn to make less digressions. I'm
| currently reading through "debanking and debunking" [1] and
| the whole part about Silvergate is interesting, but really
| long. It is relevant, but he goes into full detail about
| it. Other writers would put that into a separate article. I
| have limited time to read about these things, maybe 15
| minutes max and his articles are often hour-long reads.
|
| [1] https://www.bitsaboutmoney.com/archive/debanking-and-
| debunki...
| casenmgreen wrote:
| Tolkien wrote of LoTR that he received endless mail from
| readers, and for every part of the story, to some it was
| especially wonderful, others especially poor.
| HeyLaughingBoy wrote:
| That's actually my only problem with Patrick's articles.
| I flag them for "read later" and then a month later I
| still haven't read them because I know how much time I
| need to set aside.
| cyanydeez wrote:
| He swerves in and out of liberal ideology saying "it
| could happen, but it's not currently; it could happen,
| but it's not some global conspiracy"
|
| He lost me in the digressions to the facts. I agree he
| presented facts but he really seems like he's trying to
| scratch the debanking itch while just saying it hasn't
| happened yet and if it does happen it's because you're
| electing liberals (again).
|
| I appreciate people who respond deeply to facts, but can
| find fault in the examples he finds to justify the
| paranoid he's apparently trying to quell.
| gadders wrote:
| FYI - The CEO of Anchorage Digital. We're not talking Jamie
| Dimon.
| geodel wrote:
| Ah, so no David vs Goliath here. Jamie might be busy with RTO
| mandate implementation nowadays.
| CaliforniaKarl wrote:
| Maybe not, but Nathan McCauley (the CEO of Anchorage Digital)
| did appear in front of the US Senate Committee on Banking,
| Housing, and Urban Affairs, on the topic of "Investigating the
| Real Impacts of Debanking in America"
|
| https://www.banking.senate.gov/hearings/investigating-the-re...
|
| So, we may not be talking Jamie Dimon, but that does not mean
| this request for retraction should be ignored.
| rekabis wrote:
| Wow. Just... _wow._
|
| While I cannot speak to anything that was written (I am far from
| being a crypto boi, all I see is snake oil and fraud tools), the
| epic disparity between the sloppy request and the meticulously
| eviscerating response is an absolute wonder to behold. The bank
| CEO brought a rubber knife to someone wielding a nuclear bazooka
| tadfisher wrote:
| At the end of the article, it's confirmed that Anchorage
| Labs/Anchorage Digital is not really a "bank" in the common
| meaning of the term:
|
| > The Bank shall limit its business to the operations of a
| trust company and activities related or incidental thereto. The
| Bank shall not engage in activities that would cause it to be a
| "bank" as defined in section 2(c) of the Bank Holding Company
| Act.
|
| Essentially Anchorage Digital is a rail for crypto to interact
| with the regulated financial industry, and their charter with
| the OCC limits them to only that form. So "bank CEO" is a
| misnomer; I would say "crypto CEO who managed to convince
| federal regulators to provide limited access to the banking
| system without allowing risky activities like lending or
| deposits".
| pjc50 wrote:
| Huh. UK doesn't allow you to register a company name
| containing "bank" unless you are in fact a bank.
| Y_Y wrote:
| I'm sure there is a statement very similar to yours that is
| true, but as it is written it seems not to be so, since
| there are plenty of non-banks listed by Companies House
| here: https://find-and-update.company-
| information.service.gov.uk/s...
| pjc50 wrote:
| The list is at https://www.legislation.gov.uk/uksi/2014/3
| 140/schedule/1/mad... , linked from the rules at
| https://www.gov.uk/government/publications/incorporation-
| and...
|
| Enforcement may vary.
| renewiltord wrote:
| The registered company name is Anchor Labs, Inc. and it
| probably DBAs as Anchorage Digital. The tag line is "crypto
| bank for institutions" but the registered name does not
| include 'bank'.
|
| EDIT: Pay attention to comment below. This comment is
| incomprehensive.
| tadfisher wrote:
| There are two companies here. "Anchorage Digital Bank,
| National Association" is the "bank" with the OCC charter.
| "Anchor Labs, Inc.", who confusingly labels their service
| as "Anchor Digital", has a relationship with the former,
| and the article hints at some form of obscured ownership.
| renewiltord wrote:
| Well, color me corrected.
| aidenn0 wrote:
| When a _journalist_ asks you "Did you really mean that thing you
| just said?" you probably said the wrong thing.
| pavlov wrote:
| But in today's media environment you just double down, pretend
| it's exactly what you meant, and get outraged that the
| journalist must be a deep state agent for even daring to
| suggest otherwise.
| rapjr9 wrote:
| This article rambles endlessly and mentions crypto 145 times and
| appears to assume banks are not corrupt.
|
| So is illegitimate debanking an example of a real useful purpose
| for cryptocurrencies? I'm also thinking of the current Musk
| takeover of the Treasury payments system as perhaps leading to a
| useful purpose for cryptocurrency. For example, the regular
| payment of funds from a grant could be set up as an Ethereum
| smart contract. Or funds allocated by the US House could be a
| smart contract to prevent any other level of government from
| tampering with them. If you can't trust the banks or government
| then does cryptocurrency have some benefits? This was not seen as
| a Western problem because we had rule of law, but now, maybe it
| is. Decentralization and operating outside the control of a bank
| or government can be very useful features if the bank or
| government is corrupted. Like holding gold, except much easier to
| use because it is digital. Much easier to hide from a corrupt
| government also, maybe, though the government could know you had
| the funds depending on how the cryptocurrency works. In the old
| days people used to hide grain underneath their house to keep the
| government or armies from taking it, so they could survive the
| winter. Yes, criminals can hide and use cryptocurrencies also,
| but they always used money/fungible assets even before
| cryptocurrencies, to the tune of trillions of dollars. Seems like
| trying to control money has not worked very well in controlling
| criminals and instead root causes should be addressed.
| tadfisher wrote:
| At this point, I have to assume this take is intentional, with
| the goal of misleading everyone involved to view the crypto
| industry as a victim of evil bankers and their bought-and-paid-
| for regulators.
|
| 1. Define "illegitimate debanking". Debanking of whom? Crypto
| companies, end users, their surrogate banks and holding
| companies? You'll find the original article defines several
| forms of what crypto people mean when they say "debanking", and
| that the explicit goal of the term is to conflate all of them.
| Which is restated quite clearly in this "rambling", and as you
| seem to have missed the _central thesis of this and the
| preceding article_ , I believe you are complicit.
|
| 2. If you believe the banking system and the government is
| corrupted, how does cryptocurrency solve the problem? Does it
| matter if the US debt is held in dollars or Dogecoin when the
| US defaults on the debt? Or, as I suspect, when you ask if it
| makes sense to use crypto in order to hide funds from the
| government, are you advocating that the act of government
| taking money through taxation (i.e. "funding the government")
| is the corruption you speak of?
|
| 3. Yes, criminals deal in all sorts of securities to launder
| money. Cryptocurrency is a wonderful way to facilitate this, as
| is art, cars, or anything else of value. Are you saying we
| should address the root cause of criminality, and ignore the
| tangible financial risk of supporting cryptocurrencies in the
| regulated financial industry?
| rapjr9 wrote:
| I'm taking a Zero Trust approach to the movement of money.
| You have to assume there are insiders in banking and
| government with malicious intent. How do you protect against
| them? Could cryptocurrencies be worked into a solution?
| tadfisher wrote:
| > I'm taking a Zero Trust approach to the movement of
| money.
|
| This is begging the question.
|
| > You have to assume there are insiders in banking and
| government with malicious intent. How do you protect
| against them?
|
| We have a system of rules in place to disincentivize
| certain behaviors in government. This system is written
| down as the U.S. Code. If you can't trust this system, you
| might as well write off the concept of democracy as a
| whole, because a lot more than our banking system depends
| on a very deep-seated social contract which assumes that
| the people trust the government they elect.
|
| > Could cryptocurrencies be worked into a solution?
|
| Of course they can. The questions are: Why would we want
| this? What problems do cryptocurrency solve uniquely? What
| trade-offs would we make by implementing such a solution?
| And that is why statements like this belie the fallacy of
| crypto proponents: you are begging the question when you
| ask how to integrate crypto with the financial system, and
| do not address any of the myriad of shortcomings of doing
| so.
| Analemma_ wrote:
| > I'm taking a Zero Trust approach to the movement of
| money.
|
| One of the points Patrick stresses repeatedly in both the
| original article and in his response to McCauley is that
| providing banking services to cryptocurrency companies is
| not merely being a "dumb pipe" which facilitates
| transactions. Giving anybody (whether an individual or a
| business) a checking account means opening yourself up to
| counterparty risk, which can blow you up if you model it
| incorrectly. And this is not a hypothetical: he
| specifically points out that this is what happened to
| Metropolitan when they worked with Voyager. And Patrick
| further elaborates that crypto companies love to push this
| counterparty risk under the rug by heaping it onto others,
| then complaining when the inevitable result is that nobody
| wants to do business with them.
|
| The point of all the above is that "a zero trust approach
| to money movement" does not and cannot exist. You can
| _pretend_ it exists, by finding some patsy to take the
| counterparty risk for you, but once you run out of suckers,
| reality will reassert itself and no amount of complaining
| about government interference will change the fact that you
| 're an unacceptably risky customer and that's why nobody
| wants to give you an account.
| quinnjh wrote:
| > For example, the regular payment of funds from a grant could
| be set up as an Ethereum smart contract.
|
| Not clear to me what problem this solves- but the result would
| be so incredibly kafkaesque that I can actually see it
| happening.
| rapjr9 wrote:
| I was thinking the smart contract part would just be the
| periodic disbursement of funds, nothing complex. The hope was
| that using a cryptocurrency and smart contract would make
| periodic disbursement untamperable. If smart contracts can be
| tampered with, then I see no point in their existence. The
| untamperability of a disbursement process for cryptocurrency
| would depend on the implementation. Maybe it's not possible
| to do that. Has anyone tried? Maybe the money could always be
| shut off at the source, but that could also take down all
| payments (something the Democrats are currently threatening
| to do). Bugs in such a system could be a big problem, they
| might initiate things that would be very difficult to stop.
| Ultimately the input to the system, the laws passed by
| Congress, would affect the correctness of the system. Laws
| are not always logical, which could be an issue, though they
| tend to get very specific where money is involved.
| dumah wrote:
| The law has recently changed quite a bit with respect to
| the very nature of a smart contract (Tornado).
|
| I don't think they're very specific.
|
| The lack of specificity was such that the government is now
| purporting to end "regulation by enforcement".
| perching_aix wrote:
| > and appears to assume banks are not corrupt.
|
| Did we read the same article?
| itsoktocry wrote:
| > _That piece is the definitive explanation of the issue._
|
| Is it common to say this about your own work?
| alwa wrote:
| It's uncommon for it to be true--but patio does go on to supply
| third-party blurbs to support the idea, and as far as I
| understand his reputation, I believe his claim is probably
| accurate.
|
| In context it strikes me less as stroking his own ego and more
| as contextualizing the bank CEO's claim.
| mplewis wrote:
| When you're Patrick McKenzie, it's just the truth.
| itsoktocry wrote:
| patio11 is decidedly anti-crypto from what I gather. Nothing
| wrong with that, but he's been calling for Tether to implode
| for, what, 5+ years? He's not omniscient about this stuff.
|
| https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
| ahnick wrote:
| Tether was very likely insolvent at one point in its life,
| but seems to have been able to fill the hole over time
| given they basically just _print_ profits from the interest
| on its USD holdings.
| malthaus wrote:
| no, but like with paul graham's essays, people have an
| unhealthy obsession with both their writing (which is
| irrelevant outside of the ycombinator/sv bubble) to the point
| where it seems to signal to be part of an insider club more
| than provide actual value, which may lead to fuel one's ego a
| bit too much.
|
| turning this into another overly verbose blog post doesn't
| really help my thinking on the matter (which, to be fair, is
| even less relevant than his musings)
| patio11 wrote:
| This is occurring against a backdrop of e.g. hearings of the
| U.S. Senate Banking Committee. I regret to inform you that
| the broader issue is of great interest outside our circles.
|
| One of the three witnesses the Senate Banking Committee chose
| to call requested, the following day, a retraction from me...
| for reasons.
|
| I certainly did not see this ever happening when I started
| selling bingo cards on the Internet, but here we are.
| itsoktocry wrote:
| Yeah, pg is a great example: obviously bright guy, pioneering
| VC, who now dishes out some of the worst takes on Twitter.
| Are we supposed to care what he thinks still?
|
| For what it's worth, I think patio11's writing on software
| consulting is the best I've ever read. I'm sure he knows this
| space well, but there are...different viewpoints.
| anon84873628 wrote:
| I interpreted that to imply the subsequent phrase "within the
| Bits about Money universe." As in, the article you're currently
| reading is not going to be explaining the topic again.
|
| But a whole paragraph of this piece is analyzing the use of the
| term "retraction," so I guess we could expect him to be a bit
| more careful with the word "definitive".
| skybrian wrote:
| Nit: published today and the URL contains 2025/02/10, but the
| article is dated tomorrow. Oops!
| kruuuder wrote:
| Afaik, he lives in Japan, so that could be the correct date.
| Macha wrote:
| Not any more, but who knows what's set to Tokyo timezones (or
| could be just pessimism about the finish date)
| patio11 wrote:
| Appreciate the note. The production configuration still thinks
| it is in Tokyo, and I did all my reviews on a laptop that knows
| it is in Chicago. Will fix.
| patio11 wrote:
| (Fixed.)
| pavel_lishin wrote:
| > _I recently received a request for retraction from a bank CEO.
| (Tweets sometimes become unavailable.)_
|
| More than that, threads are no longer visible if you are not
| logged into Twitter.
| torlok wrote:
| I wish I could go back in time and stop being aware of who egg
| boy and Horowitz are.
| jszymborski wrote:
| This is a truly excellent level of snark:
|
| > If one's bank does not employ an individual who understands the
| above paragraph to mean that Silvergate was solvent, Anthropic
| will sell you artificial cognition for $20 a month. Claude 3.5
| Sonnet demonstrates sufficient reading comprehension to analyze
| complex technical documents to the standards of an early-career
| employee in financial services. We would recommend supervising
| Claude with management at least as competent as it.
| csours wrote:
| > We would recommend supervising Claude with management at least
| as competent as it.
|
| _insert reaction meme here_
|
| The drive to fight can make people say some really dumb stuff
| sometimes (speaking about the banking CEO)
| andrewflnr wrote:
| > We have no specific knowledge about Anchorage Digital's
| relationship with its former bank or more than forty prospective
| banks, and will let the common factor in those discussions
| describe them.
|
| My god, nothing left but a smoking husk after that burn.
| patiofanmostly wrote:
| I enjoy a lot of patio11's writing, but I find this article
| disappointing.
|
| The purpose of the article seems to be for patio11 to
| congratulate himself for being so clever and to mock this CEO for
| daring to question him. I don't feel like he actually addresses
| the CEO's criticism in good faith.
|
| To look at the very first point:
|
| >> _Silvergate was trivially solvent based on their call reports.
| Anyone assessing their liquidity position saw this (we were doing
| so). Your implication that they were doomed due to BSA findings
| doesn't comport with any regulatory practice--banks don't get
| closed for this._
|
| > _Had we stated or implied that Silvergate was insolvent, that
| would have been very improper. Insolvency of a financial
| institution is a serious charge. We assume McCauley believes we
| must have made it, because no bank CEO could possibly believe
| that solvency is the only obligation of a financial institution.
| We did not make this accusation._
|
| I'm admittedly not knowledgeable about banking regulation, but it
| seems like patio11 is willfully misinterpreting the CEO's
| criticism. The CEO's claim was that patio11's article implied
| that Silvergate was doomed due to BSA findings, not that patio11
| accused Silvergate of being insolvent.
|
| I don't think the CEO did a great job either, as his criticism
| doesn't cite specifics in patio11's article, but patio11 is just
| further muddying the water by dunking on the CEO rather than
| considering whether he misrepresented anything in his piece.
|
| patio11 also inexplicably switches from "I" to "we" partway
| through the article for no apparent reason other than to sound
| more pretentious. There is the line "The following is in the
| voice of the company." but he continues to refer to himself as
| "I" after that announcement.
| hnthrow90348765 wrote:
| The CEO isn't simply questioning him, he is asking for a
| retraction. That is worth this sort of article when it's your
| livelihood and reputation.
|
| This would have been a nothing-burger if he hadn't used
| 'retraction'.
| lesuorac wrote:
| Patio11 is just responding to any interpretation of the CEO's
| comments.
|
| If the CEO doesn't think Silvergate being solvent was relevant
| then why did he bring it up? You could assume incompetency on
| behalf of the CEO to bring up a non-sequitor but why bother
| assuming when you can just add words to address it.
|
| And right after the solvency discussion, patio11 goes on to
| list 5 banks in the last decade that were directly closed
| because of BSA issues.
| patiofanmostly wrote:
| > _If the CEO doesn 't think Silvergate being solvent was
| relevant then why did he bring it up? You could assume
| incompetency on behalf of the CEO to bring up a non-sequitor
| but why bother assuming when you can just add words to
| address it._
|
| The CEO's assertion isn't a non-sequitur. It supports the
| claim he makes in the next sentence, which is the actual
| criticism of patio11's piece.
|
| Let's simplify the example:
|
| >>CEO: _Arnold Schwarzenegger won Mr. Universe four times in
| the late 60s. Your implication that Schwarzenegger was
| physically unfit in the 1960s doesn 't comport with any
| reasonable definition of physical fitness._
|
| >Critic: _Had we stated or implied that Arnold Schwarzenegger
| did not win Mr. Universe, that would have been very
| improper._
|
| Is it obvious in that case that the critic is not addressing
| the CEO's actual point?
|
| You can imply that Arnold Schwarzenegger is physically unfit
| without specifically claiming that he never won Mr. Universe
| just like you can imply that Silvergate was doomed for
| shutdown by regulators without specifically saying that
| Silvergate was insolvent.
| mcmcmc wrote:
| To be frank it seems like you're the one doing the willful
| misinterpretation. The purpose was to make a statement that
| asking a journalist for a retraction is serious business with
| legal implications, and doing so flippantly is a good way to
| get dunked on.
|
| The CEO bringing up solvency before claiming that "banks don't
| get closed for [BSA findings]" implied that banks not suffering
| from insolvency don't get shut down, which is throughly
| debunked with several examples.
| timerol wrote:
| The response to the Silvergate section was in two parts: one
| response for solvency, and one response for BSA.
|
| The core of the latter is pretty short, essentially "Silvergate
| was incompetent and the original article is correct as written"
|
| The section mentions Anchorage's OCC consent order for their
| own BSA issues, as well as an explanation of why these issues
| are important and gives examples of banks that were shut down
| by regulators.
| 6LLvveMx2koXfwn wrote:
| What was he saying about "buying ink by the barrel"?
| throwanem wrote:
| He quotes an old truism against unnecessarily picking fights
| with the media - in the saying's heyday, this being newspaper
| publishers, who notionally bought ink by the barrel (though
| more likely as a concentrate), and certainly could and did
| slant both editorial and opinion coverage in the organs they
| owned. The specifically quoted figure uses ink in the
| (specified) large volume of a barrel as metonymous of the
| volume of negative coverage, accurate or otherwise, anticipated
| to comprise the publisher's side of the fight.
| 6LLvveMx2koXfwn wrote:
| OK thanks for answering in good faith - however I was
| alluding to his verbosity . . .
| throwanem wrote:
| More of any Bits about Money article isn't written down
| than is. In this case, much more.
| lelandbatey wrote:
| Hey Patio11, totally off topic but I did want to say thank you
| for recommending "The Dragons Banker" in your October "Fiction
| and Finance"[1] post, it was a wonderful read in the under-served
| "person who is very good at their job does great work in wild
| circumstances" genre. Thank you for writing a relaxing and
| lighthearted recommendation post in your otherwise pretty serious
| newsletter, I hope it can remain an October tradition.
|
| [1] - https://www.bitsaboutmoney.com/archive/fiction-about-
| finance...
| wonder_er wrote:
| I always enjoy patio11's writing.
|
| I remember feeling what felt like barely constrained rage in his
| piece where he was proving provenance of a document or a
| prediction around how COVID could interact with the populations
| in Japan. 0, 1
|
| The whole point of 0 ("dropping hashes") was to make sense of 1
|
| 0: https://www.kalzumeus.com/essays/dropping-hashes/
|
| 1: https://www.kalzumeus.com/2020/04/21/japan-coronavirus/
|
| I believe i perceive a similar level of outrage and indignation
| over what feels like a serious mismanagement of real resources.
|
| Like... Blowing up banks hurts real people, represents real
| fraud, and after dealing with the people and groups he dealt with
| through the vaccinateCA effort, I think he is tying together
| basically a comprehensive legal defense that someone else could
| run while charging someone like this banker/pretend banker with
| fraud.
|
| even if there was jail time on the other side of it.
|
| Maybe it's also a little bit of a show of force, explaining what
| it might be like for a bank to go after an independent and
| resourced individual.
|
| I expect anyone else who might think of going after him, after
| encountering this piece, will be a bit less inclined to pursue
| bullying as a strategy.
| Animats wrote:
| This is a good read. Most of the first part recaps how banking
| compliance really works. That's worth reading, but mostly for
| education. Keep skimming until you get to the section about The
| Current Thing. Then read through to the end, where this finally
| gets to the point.
|
| The point being that what the crypto industry really, really
| wants is easy access to retail customers. They need more suckers
| to keep the Ponzi schemes going. Plus they want protection from
| regulators after they steal customer funds.
|
| For what? For stuff like this, which appeared on Reddit today. If
| you missed it, don't worry. There will be another one tomorrow.
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|
| This stuff makes FBX look good. Crypto keeps developing lower and
| lower tiers of crappy investments.
|
| Current losses from crypto scams add up to about $76 billion.
|
| Don't expect much regulation in the US, with the CFTC shut down
| and TRUMP having his own memecoin. (It's down 80% from peak.)
|
| [1] https://www.web3isgoinggreat.com/
| cyanydeez wrote:
| I stopped at the current thing.
|
| I already know crypt past, crypto future and crypto now is a
| scam.
|
| Except, the facts are pretty myopically one sided. It takes a
| lot of effort to keep seeing principled republican ideas.
|
| Anyway, the world is often about which facts are curiously
| cataloged, cross references and regurgitated versus those
| thrown in the kitchen drawer.
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