Brings back really bad memories of Crypty, lost so much to their stupidity and then missed out on the settlement.
Coinbase warns that bankruptcy could wipe out user funds
251–260 of 473 posts
Re: Coinbase warns that bankruptcy could wipe out user funds
#252Earlier quoted context omitted.
I wouldn't be sure what the man on the clapham omnibus thinks of that kind of disclaimer. He'd be exposing himself to considerable risk by relying on it
The last time I was on a Clapham omnibus, there was an old chap in the back seats in the process of taking his trousers off
Ah, an institutionalized investor.
Re: Coinbase warns that bankruptcy could wipe out user funds
#253Earlier quoted context omitted.
No, I left custodial holdings out of those numbers. The dead reply to my comment at the top of the thread makes a good point that loss of the custodial holdings in a hack would bankrupt them.
Wouldn't a hack of the custodial holdings just mean their customers lose their money but the business is otherwise a going concern (for that few moments until everybody stops paying them)?
They get a lot/most of their money from fees with ongoing transactions. If you look at the ‘5 minutes ahead’ picture if there is a hack that either 1) steals all customer assets, or 2) requires them to freeze all activity for a serious length of time, it’s a ‘no longer going concern’ type situation.
No transactions? No income. No trust/willingness for people to continue doing transactions? No future income.
Re: Coinbase warns that bankruptcy could wipe out user funds
#254As someone without 250k in the bank (or generally), FDIC insurance is quite reassuring. Banks pay into it like any other insurance, so it would take a huge money-doesn't-matter-anymore shock to overwhelm it. 2008 was pretty close! Crypto wouldn't do any good for me since the utility bills for all the internet infrastructure are paid for with real money (in the "most people exchange it for goods and services" sense).…
> You could execute a 51% attack on a solar-powered NetBSD toaster.
I don't think you understand the basics of Bitcoin.
Re: Coinbase warns that bankruptcy could wipe out user funds
#255I have been trying, unsuccessfully for 2 years to validate my account on Coinbase. I have over 100k in ETH stored in their wallet, have the highest levels of access to their services but CANNOT trade because they have NO HUMANS available. Their systems DO NOT work and there is NO contact info nor any way to actually reach a person. So I have been trading with others and will never use CB for anything but cold storage…
I've been in that situation before with Coinbase, getting ignored and slow-rolled by their know-nothing support team. I submitted a complaint to the CFPB, not expecting much as I'm not in the US, and shortly afterwards Coinbase started replying to me properly. I eventually got my account back. Maybe worth a go.
Re: Coinbase warns that bankruptcy could wipe out user funds
#256Earlier quoted context omitted.
> No, but the users would be last in liquidation preference, so would end up screwed anyways. Cite please, because if true that would be mind-boggling.
not so mind boggling, if you regard it as any other company. Say you ordered a pair of jeans from Sears, via the catalog. And unfortunately your cash transfer cleared on the day they went bankrupt. They owe you a pair of pants, or your money back if they cannot deliver the product you ordered. They also owe their employees money, if they have not issued payroll yet for that month. They also owe their bondholders mone…
What if you received your pants, but they were defective so you sent them back to be repaired? Do you then lose them during bankruptcy, and they get auctioned off?
Re: Coinbase warns that bankruptcy could wipe out user funds
#257Remind me what is the point of holding cryptocurrency again?
A. speculation B. diversification against more tradional assets C. store of value if you don’t have access to any better financial instruments D. keeping some ready on hand to pay off ransomware attacks
Regarding B, Is there any evidence that BTC is countercyclical? It seems to have followed the conventional market down over the past week.
Re: Coinbase warns that bankruptcy could wipe out user funds
#258Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…
Surprised that customer positions aren't considered loans with first rights over all other lenders in a bankruptcy proceeding. The company shouldn't be playing around with these, but based on this statement it sounds like they are doing something odd and trying to run a fractional reserve system, or leveraging customer deposits for other high risk activity such that the money may not be there. Makes me think that I s…
You probably should. You wouldn't give Coinbase your SSH private keys, crypto keys are no different.
Re: Coinbase warns that bankruptcy could wipe out user funds
#259Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…
Coinbase looks more like a brokerage to me than a bank. While SPIC insurance covers some of your assets the bigger protection comes from brokerage rules around segregating user funds from company funds and the expectation of the courts that those funds won’t be used to settle company debts. So it is a little surprising to me that crypto assets wouldn’t be treated similarly, which is probably why the SEC is demanding…
Banks have rules around commingled funds (banks can’t gamble with customer accounts) but this doesn’t look like a bank.
Re: Coinbase warns that bankruptcy could wipe out user funds
#260FDIC doesn't even have enough funds to cover 1.3% of all deposits. Consider that before assuming your investments are protected.
FDIC has the weight and backing of a very large government who is capable of creating more fiat currency as needed.
> creating more fiat currency as needed
Ironically, this very thing led to FDIC failing to meet their obligation deposit amount of 1.35%.