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Would someone mind calming me by explaining why this is not a huge red flag, this isn’t the beginning of the end, and a theoretical crypto crash won’t throw the market into turmoil (or why the current market turmoil ain’t so bad)? I don’t have any kids to feed, just young dumb and tired of market crashes.
Earlier quoted context omitted.
For some reason I missed that! This FAQ- "We don’t hold customer funds – at the time of the trade, we send the cryptocurrency directly to your wallet" I guess shows this isn't another Quadriga event. So that's good!
What's a Quadriga event?
Basically the founder lived the high life with his partner, multiple houses, a yacht, etc etc, and it looked like a stunningly successful and honest exchange. He died in India when he was there apparently building orphanages.
It turns out that he ran the entire thing from his laptop and nobody else could get in as he didn't share the passwords to anything. It further turns out that when people started investigating properly, the whole enterprise was insolvent, because he had viewed the customer funds and company funds as personal funds, 'normal' money and cryptocurrency alike, and he had gambled most of the cryptocurrency away in bad trades on other exchanges, and most/all of the 'fiat' was gone too. He also turns out to have had a history of involvement in scammy 'hyper-growth investment!' stuff.
His death looks very convenient, and IIRC his widow won't allow the body to be exhumed and checked to make sure it's really him (it probably is, I have no idea). The funds were gone.
The question is here - how can they run out of liquidity in the first place? Surely as an honest exchange platform you match buyers and sellers, and take a transaction fee? This implies they have been playing games with customer deposits. Which would be shocking for a cryptocurrency platform!
They're an OTC platform and retailer. Meaning when customers buy or sell through their platform, the counterparty is Bitprime, not other customers. As for their "swap" service, that's just proxied to Changelly, another company. Looks like they don't even maintain custody of user funds at all. All this is very clear from the existing docs on their site.
Oh that's interesting. Then that's a very different proposition.
Earlier quoted context omitted.
For some reason I missed that! This FAQ- "We don’t hold customer funds – at the time of the trade, we send the cryptocurrency directly to your wallet" I guess shows this isn't another Quadriga event. So that's good!
What's a Quadriga event?
> The company's CEO and founder, Gerald William Cotten (born 11 May 1988),[2] died in 2018 after traveling to India. Up to C$250 million (US$190 million) in cryptocurrency owed to 115,000 customers was missing[3] or could not be accessed because only Cotten held the password to off-line cold wallets.[4][5][6]
> Blockchain analysts have reported that they are unable to find evidence of Quadriga's cold wallets on the blockchain, a public ledger used for cryptocurrencies.[37][38]
> Ernst & Young found five Quadriga cold wallet addresses, but they were empty, containing no cryptocurrency since April 2018.
Would someone mind calming me by explaining why this is not a huge red flag, this isn’t the beginning of the end, and a theoretical crypto crash won’t throw the market into turmoil (or why the current market turmoil ain’t so bad)? I don’t have any kids to feed, just young dumb and tired of market crashes.
Cryptocurrencies are a tiny and insignificant part of the financial landscape. Maybe (formerly) a bit larger than VC but even less influential.
The question is here - how can they run out of liquidity in the first place? Surely as an honest exchange platform you match buyers and sellers, and take a transaction fee? This implies they have been playing games with customer deposits. Which would be shocking for a cryptocurrency platform!
> Our fee structure is different to that of a brokerage or exchange. As a retailer, our expenses are generally higher than a sole crypto trader’s.
So apparently not an "exchange platform", but rather a "retailer".
Presumably they're trying to cater to less-technical folks who'd pay extra for the convenience/ease.
> What you see is what you get! Our advertised rates include ALL fees, and the price agreed upon at the time of purchase is fixed regardless of what happens in the market. Our fees appear slightly higher than exchanges because we have done all the hard work for you – with education and support to help get you started, and no need for you to deal with multiple exchanges or currency conversions.
Would someone mind calming me by explaining why this is not a huge red flag, this isn’t the beginning of the end, and a theoretical crypto crash won’t throw the market into turmoil (or why the current market turmoil ain’t so bad)? I don’t have any kids to feed, just young dumb and tired of market crashes.
It has only just begun...
It’s all a house of cards. I spent a little time in the industry and the most prominent voices are just snake oil salesmen and charlatans now. Anyone who truly believed from the beginning made so much money that it’s not worth the risk for them to be publicly involved in the community. It became an MLM for bros and basement-dwellers alike to gamble their stimulus checks on.