Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers • Hacker News Board

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#301

Post by lottin » Fri, Oct 07, 2022, 8:34 PM UTC

dlubarov wrote: post #296

lottin wrote: post #289

Earlier quoted context omitted.

Financing is the advancement of funds in exchange for a promise that those funds will be repaid later. For this to work the borrower must own assets that can be seized in the event of default. Since blockchain-based assets cannot be seized, this means financing is fundamentally impossible using blockchain technology. The best they can do is overcollateralised loans, where the borrower must first advance themself the…

> blockchain-based assets cannot be seized I don't see the distinction you're drawing. If they've been deposited into a smart contract like a Maker CDP, then they can be liquidated, which is much like being seized and auctioned in traditional finance. > Funds are simply swapped. If I take a margin loan against some TSLA stock, would you say I've swapped TSLA for cash? Most people (tax authorities included) would say…

The reason the collateral needs to be deposited with a smart contract is because the collateral assets are unseizable. But that defeats the purpose...

Imagine you want to make purchase, but you don't have the funds. You have two options. Option A, you save money first, until you have enough funds. Option B, you borrow money, and save later (while you repay the loan). In economics, option A is called "saving" while option B is called "financing".

Collateral isn't strictly necessary, but it's useful because it reduces credit risk and therefore lowers the cost of borrowing funds (i.e. the interest rate that the borrower is charged). However, notice that if the collateral is equal or exceeds in value the amount borrowed and it is deposited with the lender until the loan is paid off, this is no longer option B, this is option A. This is not financing.

Financing requires that the collateral (if any) is not deposited with the lender until the loan is paid off, or that, if it is, it doesn't cover the whole of the borrowed amount. For financing to work, you need legal procedures that enable the lender to seize the borrower's assets in the event of default. You can't do that with smart contracts, because smart contracts can't seize assets that are in somebody else's wallet. You can do other things for sure, but not financing.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#302

Post by saurik » Fri, Oct 07, 2022, 9:26 PM UTC

strangattractor wrote: post #298

saurik wrote: post #220

Earlier quoted context omitted.

But it isn't programmable, and I can't easily carry large quantities of it. Is it really so crazy that some people want to use crypto? The person wasn't saying "crypto uniquely solved this problem" they were defending against someone who said "crypto is useless if you can't do this".

Can't wait until all your crypto disappears because of an off by 1 bug:0 I guess that is the ultimate question - Does crypto actually solve a problem? Or at the very least solve some problems without creating more intractable problems in the process. I definitely remember it being touted as an inflation hedge. How'd that workout? Or that you cannot create more than X amount of Bitcoins - until they split the ledger.…

I honestly don't understand how any self-respecting software developer wouldn't be excited by programmable money. I have wanted programmable money for almost a quarter of a century now, ever since I was consulting for a bank on their first website back in 1998. The centralized banking system simply refuses to do it... they barely even give me API access for taxes and accounting purposes, much less being able to automate moving money around or responding to payments :/. I've anxiously followed attempts by startups to build their own credit cards with better APIs (all of which end up sucking and eventually just fold), I've abused the hell out of the mostly-undocumented OFX endpoints offered by traditional banks, I was the largest mobile/phone customer of Amazon Flexible Payments up until they shut it down and replaced it with a lame Stripe competitor, and I have built an entire empire of tooling on top of PayPal... which somehow is the closest thing we still have here in 2022.

In contrast, crypto is this almost futuristic mechanism that centers developers by giving you a serverless transactional database system on which you not only can work with money but you can implement your own money. I can build my own mechanisms for authenticating access to that money, including--if I wanted to--replicating whatever features I liked from traditional systems. It offers functionality similar to ACH and wire transfers, but as a truly federated system that allows anyone to participate. Does it allow scams? Sure... but only in the same sense that other open systems like telephone networks, e-mail, and the web allow people to run scams! Are you really so closed minded as to not think everyone should get the power to automate their own lives as they see fit? God... I bet you are also one of those people who insist no one should be allowed to write or even install software on their own devices without going through Apple, or who insist that private end-to-end encrypted messaging is going to end civilization by mostly empowering terrorists, child abusers, and "Drug Cartels" :/.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#303

Post by tornato7 » Fri, Oct 07, 2022, 10:31 PM UTC

RC_ITR wrote: post #291

aydyn wrote: post #275

Earlier quoted context omitted.

> Uhh, do bankers get paid for not doing their job? > My point is that by the same logic then banks are also trustless. There's no logical connect with what you're saying at all. Ethereum is "trustless" because nobody can steal ETH from a properly secured wallet, not even the validators. You should probably understand the basics of how validators work before making a comment on them....

Nobody can steal money from a 'properly secured' safe or centralized database either? And to be clear, what I mean is that there's nothing to stop validators from not doing work on your behalf, therefore killing the chain . Remember when that literally happened to Solana? Edit: >You should probably understand the basics of how validators work before making a comment on them.... I'd love for you to walk me through, in…

A centralized database is owned by a centralized entity and the admin can change it at will to steal money - or at least the owner of the hardware can shut off power. Let's talk about Ethereum here since Solana hardly counts as decentralized. Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain. If a validator decides to stop proposing or attesting to blocks, they will be penalized by the network and lose money. There's about $20bn of ETH staked that can literally disappear from existence if all of those validators decide to stop doing work.

This is an even better incentive mechanism than a bank salary. It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#304

Post by tornato7 » Fri, Oct 07, 2022, 10:36 PM UTC

itake wrote: post #294

tazard wrote: post #151

Earlier quoted context omitted.

I think you missed the whole point. Celsius, centralized exchanges, etc, you don't actually own the crypto. You have an account on a site. If you want to own your crypto and also trade between currencies, your better off using something like Uniswap

I think you missed my point. A recent example is Solana. Their network keeps crashing [0]. Everyone keeping their own keys are completely locked away from trading their coin. Everyone with their coin owned in a centralized exchange can trade freely. If you hold your own coins, you're vulnerable to network attacks and AMM instability/hacks. If you put the coins on an exchange, you're vulnerable to the exchange's liqui…

Yes, if you use Solana you should be aware that the chain very regularly has serious downtime. Ethereum gas fees can spike but generally there has never been downtime.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#305

Post by tornato7 » Fri, Oct 07, 2022, 10:38 PM UTC

smoldesu wrote: post #196

tazard wrote: post #151

Earlier quoted context omitted.

I think you missed the whole point. Celsius, centralized exchanges, etc, you don't actually own the crypto. You have an account on a site. If you want to own your crypto and also trade between currencies, your better off using something like Uniswap

I think you've missed the point as well. Nobody owns anything with crypto. When you give your crypto to Coinbase, there is no $250,000 FDIC insurance that comes along with it. You don't even get to know what wallet it's in, and if Coinbase decides to go sideways, they can snatch up your money with no legal consequence . You're right that part of the problem is the US failing to regulate them, but there's nothing to r…

By the way, these days there are wallets insured by Lloyd's which is a good of a guarantee as FDIC

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#306

Post by sgammon » Sat, Oct 08, 2022, 12:00 AM UTC

tekknik wrote: post #285

sgammon wrote: post #274

Earlier quoted context omitted.

yes, you sure can, but that's just a matter of delegated custody; the facility that stores it for you is acting as your agent. bitcoin is harder to insure because guaranteeing the safety of keys remains a challenge.

No bitcoin has always been difficult to insure because no sane company would insure something that can double or triple value overnight. The extreme finite quantity of bitcoins is what makes it difficult to insure.

i suppose i thought you meant insurance against theft, not loss of value

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#307

Post by sgammon » Sat, Oct 08, 2022, 12:05 AM UTC

prepend wrote: post #281

sgammon wrote: post #232

Earlier quoted context omitted.

? Candidly I don't know what you mean, so I will share this anecdote about gold in trucks: there is a building in downtown Chicago, built at the height of the mob days, with an elevator which can lift an entire (full) armored car. It can lift it several stories up, into the building, where the bank can unload it safely without risk of robbery. Also, of course, you can't actually steal bitcoin, you can merely steal th…

Stealing the keys is effectively stealing Bitcoin. Otherwise you get into semantic mumbo jumbo because Bitcoin isn’t owned by anyone, it’s just assigned to an address that is controlled by a private key, etc etc. If I steal your keys, I steal your Bitcoin. And it’s easier to steal the private keys to $40M in Bitcoin than it is to steal $40M in gold (700 kg). What I meant with my poor analogy is that if a bank is plan…

yes, i agree, but that is still a distinction, is it not? i'm not making a value argument, i'm merely pointing out that possession of the currency itself is not the same as the keys required to exercise control over the currency.

arguably, if we are making value statements, there are a set of similar trade-offs for physical protection of keys vs. primary material. 700kg is harder to move: that's a security feature. keys are small: that's a security feature, because they are a small O(1) surface area to protect regardless of how much value they maintain control over at any given moment.

these are simply tradeoffs. it is only "easier" to steal keys if they are left unprotected.

here's the enormous truck you would need to carry $40m in gold, apparently: https://www.tkingauto.com/mini-truck/rear-single-tire-truck/...

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#308

Post by lmm » Sat, Oct 08, 2022, 12:37 AM UTC

tekknik wrote: post #284

lmm wrote: post #256

Earlier quoted context omitted.

"Easily" is far from my experience. I eventually got everything back but it took literally years.

I’d love to hear more.

I don't know much more, which is the frustrating part of the experience. When we got an actual court date they were suddenly happy to give me all my money back, and I was too tired to push further. But until then it was block, stall, ask for more copies of the same identity verification documents or claim that they somehow didn't meet the requirements (e.g. claiming that my bank statements weren't acceptable identify verification because they didn't show the account being in active use, despite it being my main daily account), insist simultaneously that they couldn't tell me anything but it would all be resolved soon.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#309

Post by ericd » Sat, Oct 08, 2022, 3:43 AM UTC

arcticbull wrote: post #185

ericd wrote: post #160

Earlier quoted context omitted.

It’s his book because he believes it’s true, not because he’s trying to influence things. I’d highly recommend reading Big Debt Crises.

Sorry, when I said "talking his book" that's like a finance term for advocating for things that would benefit the positions you hold. > Talking your book is a phrase used to describe what portfolio managers are doing when they discuss their portfolio holdings. It is generally assumed that this discussion is to create interest (and buyers) of these securities. This will ultimately benefit the price of the security and…

Sorry for the poor wording of my response, I knew what you meant. I meant that he’s invested the way he is because he believes in what he’s talking about in terms of macro trends. And then I confusingly recommended reading his printed book, which I’ve found very helpful in understanding what the central banks have been doing, and allowed me to be well positioned for this inflation well before it picked up to where it is now.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#310

Post by RC_ITR » Sat, Oct 08, 2022, 4:28 PM UTC

tornato7 wrote: post #303

RC_ITR wrote: post #291

Earlier quoted context omitted.

Nobody can steal money from a 'properly secured' safe or centralized database either? And to be clear, what I mean is that there's nothing to stop validators from not doing work on your behalf, therefore killing the chain . Remember when that literally happened to Solana? Edit: >You should probably understand the basics of how validators work before making a comment on them.... I'd love for you to walk me through, in…

A centralized database is owned by a centralized entity and the admin can change it at will to steal money - or at least the owner of the hardware can shut off power. Let's talk about Ethereum here since Solana hardly counts as decentralized. Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain. If a validator decides to stop proposing or attesting to blocks, they will be pen…

> Let's talk about Ethereum here since Solana hardly counts as decentralized.

1) My joke was how much work you were having “properly secured” do. It’s a genuine trope called no true Scotsman. Every crypto phenomenon that involves theft “wasn’t decentralized enough” or “wasn’t properly secured”. But then centralized databases are discussed as a monolith.

2. > Ethereum stakers are subject to an Inactivity Leak penalty if they don't do work for the chain.

Sure. That’s an economic incentive. Bank workers get fired and lose salary if they don’t show up.

3. > It's like if a bank made all it's employees keep all their money with the bank and if they didn't do their job they lose all their savings.

Yeah, like getting paid in stock?

Edit: still waiting for the definition of a mempool as well.