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Voyager suspends trading, deposits, withdrawals, and loyalty rewards

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Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#141

Post by jcranmer »

notch656a wrote: post #124
InefficientRed wrote: post #90

Earlier quoted context omitted.

I have a hard time imagining a jury coming to the conclusion that this phrasing (still on their site) isn't intentionally misleading.

USDC is supposedly USD backed, so a reasonable person would presume someone who advertises FDIC insurance of cash would assume the USDC underlying USD is backed by FDIC. Seems like pretty clear fraud to me if the USDC isn't actually FDIC insured. If they meant only some of the cash (non USDC backed) was insured they should have said that.

> USDC is supposedly USD backed, so a reasonable person would presume someone who advertises FDIC insurance of cash would assume the USDC underlying USD is backed by FDIC.

That is not how FDIC insurance works. If you don't hold USD, you don't enjoy any FDIC insurance, period. Not your USD, not your insurance.

> If they meant only some of the cash (non USDC backed) was insured they should have said that.

Judging from the text at the top of this thread, this is precisely what they said, so it's not fradulent. At no point are they saying that they offer accounts protected by FDIC insurance--instead, they're saying that their USD reserves are in FDIC-insured accounts. So no misrepresentation going on.

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#142

Post by [deleted] »

ww520 wrote: post #103

There's a myth that Voyager is FDIC insured. It's pure marketing. Voyager has an omnibus account with the Metropolitan Commercial Bank where Voyager's customers deposit their money. Voyager acts as the money manager of the omnibus account and has absolute control over the money. Metropolitan is a member of FDIC and is FDIC insured. In the case of the Metropolitan bank failing, the FDIC insurance kicks in to cover any…

[deleted]

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#143

Post by ww520 »

Barrera wrote: post #80

> We are in discussions with various parties regarding additional liquidity and the go-forward strategy for the company. While we don’t have anything else to share today, we are working diligently and hope to have more information to share soon. Translation: we are insolvent. The action we have taken prevents a run that will wipe out our working capital. We have been running a fractional reserve all along. This is ge…

Didn't they also put in a big chunk of money into Celsius? 3AC + Celsius = 0 is going to hurt.

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#144

Post by qeternity »

ww520 wrote: post #130
notch656a wrote: post #117

Earlier quoted context omitted.

What the hell? Is there no penalty for advertising as being FDIC insured when client deposits are not? Plain as day I checked their tweets and they made a statement about FDIC insurance and the next sentence was telling you to start your crypto investment.

IMO any non-FDIC entity advertising being FDIC insured is borderlining on fraudulent advertisement.

I mean technically they are FDIC insured…it’s just their “depositors” aren’t.

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#145

Post by jcranmer »

TedDoesntTalk wrote: post #137
jcranmer wrote: post #131

Earlier quoted context omitted.

If loans were a component of Voyager's reserves, then by definition, Voyager was employing fractional reserve banking. It's even more amusing that you think this crisis being caused by failed loan payments doesn't mean that fractional reserves are in play, because backing deposits with loans in lieu of cash is literally the textbook example used to illustrate fractional reserve banking.

Perhaps I just don’t understand fractional reserves.

The textbook example of fractional reserves:

You are a bank. Sally gives you $100, so now you have $100 in cash as assets. Bob comes up to and asks for $80. You agree to give him $80, on the condition that he gives you $90 next week. Now you have $20 in cash and a $90 loan backing your $100 liability to Sally. Because that $20 in cash is less than $100, you have fractional reserves.

Now, the real world is more complicated, because there's different definitions of cash and of liabilities, and even questions like "how much is this thing worth" can be very hard to pin down. But the basic idea of fractional reserves is that banks do not hold all of their reserves in cash.

And yes, the cryptocurrency industry does cater heavily to people who find the existing banking system abhorrent because it practices fractional reserve banking while practicing fractional reserve banking themselves, just far more quietly. (Indeed, a lot of the cryptocurrency industry is basically preying on people who are financially illiterate.)

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#146

Post by manwe150 »

EGreg wrote: post #56
barnbuilder wrote: post #49

Earlier quoted context omitted.

You may feel like your accounts are stable and nothing is disappearing but by CPI inflation calculations ( https://www.bls.gov/data/inflation_calculator.htm ), any money you had in that account 30 years ago has lost half its buying power. If you want to keep the money that you have worked for over the long term, your checking and savings account are not going to cut it.

Half in 30 years? That’s pretty good! Ethereum fell by that much in a couple weeks. On the way up in a bull market it’s all roses, but in a bear market, these things can crash hard. Money losing value gradually — Demurrage — makes people actually spend money rather than hoard it. If you want the money to earn interest, you will have to take some risk. Invest in some assets. Usually, stocks or real estate or (finally…

Most of that sounds right, but the money to pay it back is not a zero-sum game. It can also comes from increased velocity, quantitative easing, the net present value utility function, or by temporarily exchanging it for other asset classes (eg building real estate is a form of increase to the money supply), and probably other sources too

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#147

Post by qeternity »

marcell wrote: post #28
Animats wrote: post #23

Another one? Tether is looking stressed. In the last three months, a lot of Tether has been cashed out. Look at the chart for Market Cap -> Last 3 months.[1] From US$82 billion to US$66 billion. Today, US$200 million was cashed out. Every few days, their market cap drops suddenly. At this rate, in a few months we'll find out how much backing Tether really has, because it is being paid out. Stablecoins have two stable…

Tether's market cap dropping without a price drop is indication that they are liquid and able to handle (to date) almost $20 billion in withdrawal over a 1 month period. That is impressive and a sign of their robustness. They are passing a stress test so far. Their blog counters much of the FUD out there: https://tether.to/en/news/

You do understand that Charles Ponzi’s ability to meet early redemptions is exactly what gave him credibility?

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#148

Post by NovemberWhiskey »

darkerside wrote: post #127
NovemberWhiskey wrote: post #60

Earlier quoted context omitted.

I invite you to look at the list of failed banks provided by the FDIC: https://www.fdic.gov/resources/resolutions/bank-failures/fai... Notice that the vast majority of these are smaller, local or regional banks.

Aren't there just more of them? When Bear and Lehman failed, each was a huge percentage of large banks, all at once.

Neither Bear Stearns nor Lehman Brothers were deposit-taking banks.

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#149

Post by hn_throwaway_99 »

NovemberWhiskey wrote: post #92
woodruffw wrote: post #63

Earlier quoted context omitted.

Pointing to the list of failed banks from the website of the government agency that insures them and makes customers whole doesn't convey as strong of a point as you might have intended.

I think it perfectly well makes the point that regional banks are much more likely to practice poor risk management and fail than larger banks. If your goal is "boring banking", having to have the FDIC come in and arrange a sale of your bank is ... not it?

> I think it perfectly well makes the point that regional banks are much more likely to practice poor risk management and fail than larger banks.

That doesn't at all follow just from the fact that a list of failed banks included many, many more smaller regional banks than larger banks:

1. I'm assuming there ARE a lot more smaller, regional banks than large banks, so you'd expect them to be the majority of a list of failed banks.

2. The failure of a single large bank affects many more customers and a lot more money than a single small bank failure.

3. It's pretty clear that large banks in the "too big to fail" category will get institutional and government support (e.g. the government even operates a "systemically important financial institutions" list), while smaller banks will be allowed to fail. While that may mean your money is safer in a larger institution, it's not really because "regional banks are much more likely to practice poor risk management and fail than larger banks".

Re: Voyager suspends trading, deposits, withdrawals, and loyalty rewards

#150

Post by vba616 »

woodruffw wrote: post #104
NovemberWhiskey wrote: post #92

Earlier quoted context omitted.

I think it perfectly well makes the point that regional banks are much more likely to practice poor risk management and fail than larger banks. If your goal is "boring banking", having to have the FDIC come in and arrange a sale of your bank is ... not it?

Oh, that's a good point. I guess the most boring bank possible would probably be something like Chase. That being said, it looks like we average around 4 regional bank failures a year in the US. There are a little under 5000 banks in the US, almost all of which are regional, so that leaves a 0.08% chance that any particular one of them will fail (all things being equal, which they probably aren't).

>I guess the most boring bank possible would probably be something like Chase

A bank like Chase has all sorts of fees and minimums for a simple checking account - which a normal regional bank doesn't.

What's the benefit to an a average person of banking with a subsidiary of a huge Wall Street bank? They don't even want your business. The only reason they are even offering consumer services is because of out of control empire building, like how JP Morgan bought Chase Manhattan.

You don't have to bank with a national brand name.

You don't have to pay a monthly fee for checking.

You don't have to have a monthly direct deposit.

You don't have to have a $1500 minimum balance (like with Chase).

And credit unions are fine of course, but banks have free checking too.

I wonder if there are a lot of people who think you will get food poisoning from any hamburger not made at a McDonald's.

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