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Crypto exchange AAX suspends withdrawals

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Re: Crypto exchange AAX suspends withdrawals

#671

Post by ncallaway »

bogomipz wrote: post #254
qudat wrote: post #104

Earlier quoted context omitted.

That's right. Not to mention the transaction fees are so high that moving from a wallet you own to an exchange can cost non-insignificant amount of money. Add on top of that the general volatility of crypto, people not wanting to deal with maintaining their own wallet, and you have a recipe for people keeping their funds on exchanges.

>"Not to mention the transaction fees are so high that moving from a wallet you own to an exchange can cost non-insignificant amount of money." I realize that transaction fees are probably a moving target but is there a ballpark figure you or someone else could say? I'm guessing it's percentage-based?

> I realize that transaction fees are probably a moving target but is there a ballpark figure you or someone else could say?

I'll give the answer for Bitcoin as of a couple of years ago, and others can chime in for things like Etherium and other cryptocurrencies.

With bitcoin it's not a fixed fee, it's more like a priority bid. So, there's a pool of "pending" transactions that any miner can grab from. Each pending transaction has a bid for its transaction fee. Each miner will then grab whatever set of transaction it wants to bundle into a block, and try and compute the hash for that block. Once a miner finds a hash for that block, all the transactions in that block are added to the chain and the transaction is "complete" (in practice, people will often wait until one or two blocks are added _after_ the transaction is included in the block chain to be _sure_ it's done).

So, to your question, ultimately the transaction fee is a bid for how quickly you want your transaction included. You can bid $0, and it's likely your transaction will _never_ be included. It doesn't really matter how _much_ you're transferring, but _how quickly_ you need it included in the chain.

How much you'd practically pay for a transaction (in USD) has been super variable over the lifetime of Bitcoin. It fluctuates with how many miners there are, how many transactions are happening, and the exchange rate of BTC to USD (since the feeds are paid in BTC). See the chart at the bottom of this page: https://privacypros.io/tools/bitcoin-fee-estimator/

It looks like it's generally between $0.75-$1.00 right now. So if you're making a transaction of $1M the fee is trivial, but if you're buying a cup of coffee for $5 it's...pretty high.

Re: Crypto exchange AAX suspends withdrawals

#672

Post by wizeman »

dragontamer wrote: post #669
wizeman wrote: post #654

Earlier quoted context omitted.

> Frankly, I see no contradiction, with what I said in any of my posts. Could you lay out more clearly where you think a contradiction has occurred? Sure. You said (in the context of talking about Binance and Coinbase): > Everyone in the cryptocoin world is doing this "staking" == crappy loans / bonds business. This phrase, in the context of the news we're discussing (about suspending withdrawals), implies that Coinb…

> real loans and bonds business You mean, like a Money Market fund like VMFXX? https://investor.vanguard.com/investment-products/mutual-fun... VMFXX has federal regulations, where it is _required_ to prove your liquidity reserves _DAILY_. EVERY SINGLE DAY, VMFXX publishes how much money they have that can be satisfied within 1-day, 1-week, and other such benchmarks. The entire publication is available online, every s…

> > real loans and bonds business

> You mean, like a Money Market fund like VMFXX?

No, I mean like when a bank buys government bonds, company bonds, or loans money to customers and businesses.

That's the kind of business that leads to bankruptcy if all your customers suddenly ask for their money back (which you have been lending behind their backs).

> What Coinbase / Binance is doing is "Crappy" because their reporting guidelines are so much worse than what "the real banks" are doing. There's no one checking or double-checking these reserves.

I'm not sure if that's the case, but if it is, then I agree with you.

Crypto exchanges should be the subject of periodic financial audits by reputable firms and as far as I know, some of the more reputable ones are already moving in that direction out of their own free will (to assure customers that are getting worried by their less reputable competitors that are now going bankrupt), even going so far as publishing cryptographic Merkle proofs of crypto reserves (but traditional financial audits are also necessary).

> Every single dollar (and even penny) is tracked in a money market fund. The _EXACT_ makeup of the loans is also tracked. The rules for how a "bank run" would be handled, are regulated and stated in advance. Everything has been planned out, discussed, debated, in Congress over-and-over again for the past 100 years as our laws have evolved.

It doesn't matter, bank runs can still happen when you're in the crappy loans and bonds business.

And when they do, nowadays not only banks get rewarded with government bailouts, but it's always the tax payer that ends up paying the bill, even though those tax payers are not responsible for the bank's risky and immoral (due to lack of customer consent) money managing policies. And the vast majority of those tax payers are not even customers of the bank!

Re: Crypto exchange AAX suspends withdrawals

#673

Post by nobody9999 »

zmgsabst wrote: post #399
skinnymuch wrote: post #363

Earlier quoted context omitted.

Those other billionaires donating a ton may be mostly legally doing their huge business. That doesn’t make it moral or ethical or completely legal. If the entire system is corrupt, pointing all fingers at the corrupt Dem party when the Repub part is just as corrupt if not more so is weird, uniformed, and biased. Are you spreading election misinformation?

Excusing criminality by saying “well, legitimate business isn’t totally ethical!” is nonsense gaslighting.

>Excusing criminality by saying “well, legitimate business isn’t totally ethical!” is nonsense gaslighting.

I think the point was not whataboutism, but rather that the sewer of filthy lucre that we call "campaign finance," regardless of who gives/receives such funds, creates perverse incentives in the political system and should be discouraged/done away with.

That's not a partisan take IMHO.

Re: Crypto exchange AAX suspends withdrawals

#674

Post by baobabKoodaa »

latchkey wrote: post #552
shmatt wrote: post #543

Earlier quoted context omitted.

BlockFI was offering 8.5% APY on deposits. FTX was offering 8% A true exchange, where you just buy and sell, will never pause withdrawals because they won't be acting with these ponzi-like methods A decentralized exchange won't give you free money, so less people will use it. Also the same with a centralized exchange offering you 0% APY and full liquidity at all times. You could build one, but will people sign up?

> A decentralized exchange won't give you free money, so less people will use it. UNI and SUSHI are prime examples of a DEX giving out free money.

How?

Re: Crypto exchange AAX suspends withdrawals

#675

Post by dragontamer »

wizeman wrote: post #672
dragontamer wrote: post #669

Earlier quoted context omitted.

> real loans and bonds business You mean, like a Money Market fund like VMFXX? https://investor.vanguard.com/investment-products/mutual-fun... VMFXX has federal regulations, where it is _required_ to prove your liquidity reserves _DAILY_. EVERY SINGLE DAY, VMFXX publishes how much money they have that can be satisfied within 1-day, 1-week, and other such benchmarks. The entire publication is available online, every s…

> > real loans and bonds business > You mean, like a Money Market fund like VMFXX? No, I mean like when a bank buys government bonds, company bonds, or loans money to customers and businesses. That's the kind of business that leads to bankruptcy if all your customers suddenly ask for their money back (which you have been lending behind their backs). > What Coinbase / Binance is doing is "Crappy" because their reporti…

> No, I mean like when a bank buys government bonds, company bonds, or loans money to customers and businesses.

Did you see the asset sheets on VMFXX? Its all government bonds, loans, and so forth. There's no "cash" just sitting there. Its all, completely composed of various kinds of loans (averaging 11-days in maturity).

I've given you a "real bank" (Vanguard, an investment bank specifically but yes, a bank), that's conducting these "loans" / bonds that you're talking about.

I've also brought up SWVXX, Schwab's competitor fund, is a "prime" MMF that consists _mostly_ of commecial paper (ie: loans to non-government entities), with higher levels of risk involved.

--------

Based on how this discussion is going, perhaps I should focus on SWVXX instead.

http://hosted.rightprospectus.com/SF/MMD/Fund.aspx?cu=808515...

There's even "less cash" here than in VMFXX. That's why I'm talking about these money-market funds. These are... the things you're trying to talk about, right? These banks / entities that are making a ton of loans / bonds to each other?

I'm thinking of real-world entities and trying to match them up to what you're talking about. These things have names ya know. They're not just mysterious "banks" out there. People invest into SWVXX or VMFXX, or other such tickers / funds.

> Weighted Average Maturity: 9 days

You see that? It will take 9 days for most of those funds to mature and turn into cash, on the average for SWVXX today. This isn't "cash", its a pile of loans. Very short-term high-quality loans, but its a pile of loans. Is this not what you were trying to talk about?

> That's the kind of business that leads to bankruptcy if all your customers suddenly ask for their money back (which you have been lending behind their backs).

Yes. That's why there's strict liquidity tests, liquidity reserves, and publication requirements for entities such as SWVXX. The risk is real, and we need to keep an eye on it to make sure that Schwab and Vanguard aren't cheating the books.

Those publication requirements simply do not exist for Binance or Coinbase. There's no asset sheet vs liabilities sheets. There's no reporting guidelines. There's nothing.

Re: Crypto exchange AAX suspends withdrawals

#676

Post by cykros »

bmmayer1 wrote: post #563
LawTalkingGuy wrote: post #476

Earlier quoted context omitted.

Until recently all crypto exchanges had to be scams . They can only profit by selling/loaning customer funds or by trading with a dishonest advantage by being the house. If an exchange was profitable, and they all were, it was because it was a scam. This is the same analysis that shows that Tether is a fraud. If they took a dollar for every dollar token sold and then paid to store those dollars as collateral they'd b…

Not necessarily -- you can create a profitable exchange by having a standard taker fee or commission. That's how exchanges have made money since the dawn of time and there's nothing wrong with it. The issue with FTX etc is that they didn't segregate their revenue model from their customer accounts. That's a no-no not only from a legal perspective but from a risk management perspective.

Indeed. There's a reason FTX had a spread charged of 0.1% while more legitimate (hopefully) operations such as Coinbase and Kraken charge around 10x as much. If they're not making their money there, where exactly are they taking...err, making it from?

Re: Crypto exchange AAX suspends withdrawals

#677

Post by HenriTEL »

Lichtso wrote: post #481
HenriTEL wrote: post #448

Earlier quoted context omitted.

Those exchanges don't have the ability to trade crypto for fiat (to my knowledge) so it's not a real alternative.

Not an exchange, but still a decentralized system which can be used as off- and on-ramp: https://bisq.network/

Very interesting. You still need bitcoin as proof of good will to make a trade but then you've plenty of ways to proceed to the actual trade in fiat.

Re: Crypto exchange AAX suspends withdrawals

#678

Post by wizeman »

dragontamer wrote: post #675
wizeman wrote: post #672

Earlier quoted context omitted.

> > real loans and bonds business > You mean, like a Money Market fund like VMFXX? No, I mean like when a bank buys government bonds, company bonds, or loans money to customers and businesses. That's the kind of business that leads to bankruptcy if all your customers suddenly ask for their money back (which you have been lending behind their backs). > What Coinbase / Binance is doing is "Crappy" because their reporti…

> No, I mean like when a bank buys government bonds, company bonds, or loans money to customers and businesses. Did you see the asset sheets on VMFXX? Its all government bonds, loans, and so forth. There's no "cash" just sitting there. Its all, completely composed of various kinds of loans (averaging 11-days in maturity). I've given you a "real bank" (Vanguard, an investment bank specifically but yes, a bank), that's…

> I've given you a "real bank" (Vanguard, an investment bank specifically but yes, a bank), that's conducting these "loans" / bonds that you're talking about.

Investment banks are not problematic because the customer is the one who decides how much and where their money is getting invested (therefore he knows how much he is risking, and how it is getting risked).

This is unlike what happens with traditional banks, which is what I was referring to when talking about the crappy loans and bonds business (and lending the customer's funds behind their backs, even if the customer is aware of it and does not consent).

> Those publication requirements simply do not exist for Binance or Coinbase. There's no asset sheet vs liabilities sheets. There's no reporting guidelines. There's nothing.

If that's the case, then I agree, this should change. I would prefer if exchanges themselves would do this and customers would verify this, but even though I'm a libertarian, I wouldn't object to the government requiring reasonable, periodic financial audits of crypto exchanges by reputable financial audit firms because I am in favor of complete transparency[0] (be it regarding government or companies) and I recognize that too many bad apples are entering the crypto business and ruining its reputation (and customers of crypto exchanges are obviously not doing sufficient due diligence).

[0] More transparency can greatly increase the benefits of market-based capitalism, because it works more efficiently (i.e. market participants make better decisions and get more value out of it) when the participants are acting with more information than when they are acting with less information.

Re: Crypto exchange AAX suspends withdrawals

#679

Post by freejazz »

djbebs wrote: post #152
acomms wrote: post #61

Earlier quoted context omitted.

In a regulated market sure, but here they seem to be trading with customer assets - which is so much worse.

No regulation would have prevented this crime from happening. I want to be clear here, what happened here is already illegal as is, and no regulation would have prevented it from happening in the first place. Hell, the firm was already being audited, and those auditors didn't catch the accounting discrepancies, so it's doubtful that any additional regulation would have found this earlier either...

Regulation would have prevented it from occurring. FTX didn't sell its services in the US (FTX US did) and they certainly didn't have a NYS Bitlicense. I think this is facially obvious.

Re: Crypto exchange AAX suspends withdrawals

#680

Post by tinco »

kibwen wrote: post #408
rippercushions wrote: post #195

Earlier quoted context omitted.

Well, let's not forget that BTC has gone up from $300 to $15,000 in the meantime, meaning those fractions are still worth 50x what they were back in 2014. Although who knows what the value of BTC will be once the funds are released, which is itself an event that's likely to crash the market through oversupply.

> Well, let's not forget that BTC has gone up from $300 to $15,000 Depending on how one measures. Prior to Gox's implosion, BTC was $1,000, which is the price people were actually depositing at. Meanwhile, the fact that we're denominating in USD means that we have to account for inflation if we want to compare historical data, which means the current price is more like $13,000 in 2014. There's quite the difference be…

I prefer to use the trustee's watermark which reflects the value of Bitcoin after the price manipulation of fake Bitcoin being sold by MtGox had been taken out of the market at $460. But your point is made even stronger if you consider that same money could have been safely invested with a steady interest of 2-4%. And that's if you disregard that the sort of risky investments that that sort of play money could have gone to, nearly all of those investments have been extremely lucrative the past 8 years.
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