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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

#151

Post by kragen »

arcticbull wrote: post #71
AmericanChopper wrote: post #67

Earlier quoted context omitted.

> makes customers whole *As long as whole is less than $250k.

Yes, that's the worst case - however in the real world the FDIC and the OTS (Office of Thrift Supervision) does their best to ensure nobody loses any amount of money regardless of their account balance. In the case of WaMu in 2008 for instance, the OTS took possession of the bank and sold it to JPMorgan Chase. They didn't draw on the deposit insurance fund and everyone stayed whole. [1] "According to FDIC spokeswoman…

At my first tech job we stored our source code repo on a NetApp FAServer. Super reliable hardware, RAID4, built-in snapshots so users could recover their accidentally deleted files without sysadmin intervention. No developer lost a byte of their data once the NetApp was installed.

Until we found out that one guy had done the wrong thing and corrupted a file a few months ago. That's how we found out our backups (made with the very expensive backup software Alexandria) didn't work. And this was well before Git, so we didn't have multiple redundant repositories we could sync from to recover. The humongous NetApp rackmount RAID was 35 gigabytes if I recall correctly.

This is a problem with improving reliability through redundancy: sometimes instead of getting reliability, you just shift the failure modes to more catastrophic systemic failures, because they happen too rarely for people to assess the risks properly.

Speaking of systemic failures, everybody who's had US$10k in the bank since last year (or in other dollar-denominated assets such as T-bills) has lost US$800 of it to inflation over the last year. What else could you have you spent US$800 on? If your retirement fund has US$100k in the money market that inflation cost you US$8000.

Still, be glad you're not in Argentina. Our central bank printed a trillion pesos last month, a quarter of the monetary base, and the inflation over the last year has been about 60%.

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

#152

Post by majormajor »

AmericanChopper wrote: post #97
pkulak wrote: post #94

Earlier quoted context omitted.

Folks with more than 250k know not to put any of it over the bounds of the FDIC.

$250k is only just a home down payment in a lot of cities.

That doesn't stop you from spreading it out... while you say "only" just a down payment, it's also worth noting that a down payment is the single largest cash transaction many people will ever make. Which is all the more reason that it doesn't make sense to have a giant balance all in the same spot 99% of the time.

("A lot" of cities is also doing a lot of work in that sentence... 250k is 20% of 1.25M. That would buy you a lot of house in the vast majority of US cities.

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

#153

Post by hn_throwaway_99 »

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…

I'd be interested if someone can comment with more information. Here are the details from Voyager's legal docs:

> Customer understands and acknowledges that Customer may arrange to deposit United States Dollars (“USD” or “Cash”) into the Account. Cash deposited into the Customer’s Account is maintained in an omnibus account at Metropolitan Commercial Bank (the “Bank”), which is a member of the Federal Deposit Insurance Corporation (“FDIC”). Voyager maintains an agreement with the Bank whereby the Bank provides all services associated with the movement of and holding of USD in connection with the provision of each Account. Therefore, each Customer is a customer of the Bank. All U.S. regulatory obligations associated with the movement of, and holding of, USD in connection with each Account are the responsibility of the Bank. For purposes of clarity, any services pertaining to the movement of, and holding of, USD are not provided by Voyager or its Affiliates. Cash in the Account is insured up to $250,000 per depositor by the FDIC in the event the Bank fails if specific insurance deposit requirements are met. FDIC insurance does not protect against the failure of Voyager or any Custodian (as defined below) or malfeasance by any Voyager or Custodian employee.

My reading of that, then, is that if you have USD cash in that account, then Voyager can NOT restrict your withdrawal of that cash, due to this line "All U.S. regulatory obligations associated with the movement of, and holding of, USD in connection with each Account are the responsibility of the Bank." They are clearly saying here that, basically "For purposes of your cash, you are an individual customer of the Bank (which is FDIC insured), and the Bank is responsible for following Banking regulations". AFAIK banks are not allowed to just restrict withdrawals as Voyager has done.

So it seems like your crypto could all be tits up, but your cash should be FDIC insured.

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

#154

Post by woodruffw »

vba616 wrote: post #150
woodruffw wrote: post #104

Earlier quoted context omitted.

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 contro…

Far be it from me to defend Chase. I thought they might be a good example of a “more boring” bank in the sense that the GP meant. But I agree completely that, for many people, a small bank or credit union is a much better choice.

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

#155

Post by 323 »

uncletammy wrote: post #115
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…

> At this rate, in a few months we'll find out how much backing Tether really has, because it is being paid out. As someone who's been watching Tether since it's inception, I say don't count on it. They've managed to continuously escape the consequences of running a dangerous fractional reserve system. The main beneficiaries of this system are now companies with incredibly deep pockets who aren't afraid of deploying…

Have you ever considered for a nano-second the alternative that they actually might have the reserves to back it all up?

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

#156

Post by bandyaboot »

prohobo wrote: post #52
sdfhdhjdw3 wrote: post #42

Earlier quoted context omitted.

Crypto is one of the biggest active victim-blaming communities. "Not your wallet not your coin", or whatever they like saying, is just is just deflection from valid criticism that crypto is very easy to exploit without recourse.

I disagree. To me it's like saying passwords are broken because most people choose "password123". Or like saying dollar bills are bad because they can rip. Safety rails should be made of course, but if you aren't even maintaining basic hygiene within a system then I'm sorry but that's on you. People are learning to use better passwords, and people learned long ago to keep their paper money in a wallet. The same will…

> The same will happen with crypto.

What’s the motivation for this to happen?

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

#157

Post by 323 »

iancarroll wrote: post #32
smoe wrote: post #26

Earlier quoted context omitted.

Seems like a marketing spin to lure customers into a false sense of security. From the fine print in the user agreement: "Cash in the Account is insured up to $250,000 per depositor by the FDIC in the event the Bank fails if specific insurance deposit requirements are met. FDIC insurance does not protect against the failure of Voyager or any Custodian (as defined below) or malfeasance by any Voyager or Custodian empl…

If FDIC insurance is applicable, though, that should mean your cash is being held in your name with the underlying bank. It is unlikely that Voyager would have any right to those assets upon bankruptcy or insolvency -- if they do (I am no expert), that would destroy the neobank model to some extent. > Voyager maintains an agreement with the Bank whereby the Bank provides all services associated with the movement of a…

But how could then Voyager generate yield on funds locked into an underlying bank, more than what that bank offers on deposits?

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

#158

Post by vgb2k18 »

asdff wrote: post #134
sdfhdhjdw3 wrote: post #2

I guess everyone's strategy in the crypto space is put everything you have on bitcoin and hope it goes up. It's a really good strategy, when it works.

Even better strategy imo is considering market caps alone. Dump money into the top x coins by market cap and the intertia will carry you. Whenever crypto dumps people say its the end, but get real. This is more speculative than the lottery for a lot of people. It will always have its lemmings and grifters pumping it back up after a dump. Just ride the tide. Buy low, wait, sell high, wait, buy low. Don't put all your…

> Just ride the tide. Buy low, wait, sell high, wait, buy low.

I think you're underselling the difficulty of this problem by the adverbial just.

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

#159

Post by smoe »

iancarroll wrote: post #32
smoe wrote: post #26

Earlier quoted context omitted.

Seems like a marketing spin to lure customers into a false sense of security. From the fine print in the user agreement: "Cash in the Account is insured up to $250,000 per depositor by the FDIC in the event the Bank fails if specific insurance deposit requirements are met. FDIC insurance does not protect against the failure of Voyager or any Custodian (as defined below) or malfeasance by any Voyager or Custodian empl…

If FDIC insurance is applicable, though, that should mean your cash is being held in your name with the underlying bank. It is unlikely that Voyager would have any right to those assets upon bankruptcy or insolvency -- if they do (I am no expert), that would destroy the neobank model to some extent. > Voyager maintains an agreement with the Bank whereby the Bank provides all services associated with the movement of a…

Statement from Metropolitan Commercial Bank

"Metropolitan Commercial Bank maintains an omnibus account specifically designated for the benefit of Voyager customers. [...] Voyager is responsible for maintaining records to determine the ownership and amount of each of its customer’s funds on deposit in the omnibus account."

https://www.mcbankny.com/fdic-coverage-available-to-voyager-...

Unless I misunderstand, there seems to be no account separation whatsoever on the side of the bank and no "each Customer is a customer of the Bank"

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

#160

Post by wly_cdgr »

How can a bank get off the ground without using fractional reserves or relying on the founders putting their own money at risk to start the business? No giving out loans until you've created enough of a buffer? But how to build that buffer in the first place, high fees? But how to successfully enter a competitive market as an unknown newcomer charging high fees?
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