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Binance freezes withdrawals of stablecoin USDC as investors pull $2B

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Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#171

Post by neeleshs »

dheera wrote: post #152
soerxpso wrote: post #132

Earlier quoted context omitted.

> So effectively, Binance is refusing to honor its commitment to depositors to give them their money on demand. That's called a "default." What? So if I go into the bank at 4 AM and ask to withdraw $100,000, and they respond, "Sure, we'll need a few hours to get those funds together," the bank has defaulted?

Presumably they just need to wait until 9am when people at work, so I wouldn't consider that a default. If they say they need a few hours at 9am, they've defaulted. It would be a big "ha" if they couldn't get them together by 9:05am because they've done shady things with your money.

Umm.. that's not how banks operate. If I want to withdraw a million in cash, it is reasonable for the bank to ask me to wait until it mobilizes the cash. If they don't let me transfer money to another bank/account, that's problematic.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#172

Post by aclatuts »

dheera wrote: post #152
soerxpso wrote: post #132

Earlier quoted context omitted.

> So effectively, Binance is refusing to honor its commitment to depositors to give them their money on demand. That's called a "default." What? So if I go into the bank at 4 AM and ask to withdraw $100,000, and they respond, "Sure, we'll need a few hours to get those funds together," the bank has defaulted?

Presumably they just need to wait until 9am when people at work, so I wouldn't consider that a default. If they say they need a few hours at 9am, they've defaulted. It would be a big "ha" if they couldn't get them together by 9:05am because they've done shady things with your money.

Most Canadian banks need a few business days just for 5 thousand and above in cash. There is more zeros in bank accounts there is physical money in circulation.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#173

Post by three_seagrass »

Octokiddie wrote: post #22

> The world's biggest crypto exchange will freeze all withdrawals of USD Coin while it conducts a "token swap" to boost its holdings of the dollar-pegged cryptocurrency, the crypto group's CEO Changpeng Zhao said Tuesday It's worth noting that USDC is not even a token controlled by Binance. It's controlled and issued by Circle. So effectively, Binance is refusing to honor its commitment to depositors to give them the…

>I'm frankly amazed that people with the ability to understand this alphabet soup mumbo jumbo keep falling for the same scam over and over again. Underneath all of the slick marketing and nerd posturing is a simple truth: these are all fractional reserve systems. Conceptually, they are no different than banks or pyramid schemes.

There are rational people who knowingly invest in ponzi and other schemes because they think they can get out before the music stops playing.

Some ultimately do, and some ultimately get caught.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#174

Post by mikeyouse »

driverdan wrote: post #157
dheera wrote: post #152

Earlier quoted context omitted.

Presumably they just need to wait until 9am when people at work, so I wouldn't consider that a default. If they say they need a few hours at 9am, they've defaulted. It would be a big "ha" if they couldn't get them together by 9:05am because they've done shady things with your money.

That's not how banks work. You can't go into a bank and withdraw $100k in cash. Most banks don't hold that much cash.

Yes they do... and if it was an exceptionally small bank that didn't have it at the moment, with a day or two notice, they'd happily give you $100k in cash after receiving it from the Fed or from their vault cash providers. A busy ATM will contain more than $100k and on premises ATMs are often refilled from the bank's vault.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#175

Post by neeleshs »

kikokikokiko wrote: post #169
wmf wrote: post #148

Earlier quoted context omitted.

So let's imagine that Binance has $4B of USD customer liabilities backed by $2B of USDC and $2B of BUSD. Fully solvent and fully liquid. Then customers try to withdraw $3B of USDC which Binance does not have. Binance would be happy to give you BUSD but for whatever reason customers specifically want USDC. (I am absolutely convinced that Binance is evil but this specific situation does not appear particularly bad.)

So, they need to find gullible 3rd parties that accept to give them hard cash (USD) in exchange for their in house created clown money (BUSD), and then use this hard cash to go to the market and buy USDC. How is this different from FTX padding their balance sheet with billions of their own made up clown money? Crypto is ponzies all the way down.

In general I agree crypto feels like ponzi. But in this specific case, they seem to be fully solvent relative to US dollars? If clown money was floating, it would definitely be iffy. But it's tethered to the dollar. It's almost an IOU in that sense relative to the dollar. They don't have enough specific "currency" (usdc), but as long as I can withdraw to USD, it is not a scam.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#176

Post by rvz »

bellip wrote: post #94
Octokiddie wrote: post #22

> The world's biggest crypto exchange will freeze all withdrawals of USD Coin while it conducts a "token swap" to boost its holdings of the dollar-pegged cryptocurrency, the crypto group's CEO Changpeng Zhao said Tuesday It's worth noting that USDC is not even a token controlled by Binance. It's controlled and issued by Circle. So effectively, Binance is refusing to honor its commitment to depositors to give them the…

Yes, it's digital already. However banks manage the whole system and they can do whatever they want with your money if you are nobody. I have been waiting for 2 and a half months for an international payment via SWIFT, I worked long hours for that money and I needed it urgently. The money left the sender's account 2 and a half months ago. Neither of us has the money in our accounts while the bank tells us to just wai…

> Maybe you are privileged enough to never have this kind of issues, but some of us do.

Correct.

The eternal hate for crypto is by a screaming minority who are too privileged to even bother realising the majority of people are worse off in countries like Argentina, Nigeria, and Turkey which their currencies have lost over 80% of their value and is quite frankly worthless.

Using USDC as a cheap, fast, global way of sending money is a good alternative for those that don't have a choice in those countries. For those that keep shouting the existing solutions: Wise is neither same day or cheap to send money globally, . Same is true with SWIFT. FedNoW only works in the US and is not global and UPI is also not global.

Crypto and stablecoins tick all the boxes as a 24/7 cheap and very fast way of sending money globally.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#177

Post by zeven7 »

grey-area wrote: post #170
jacobsimon wrote: post #97

Earlier quoted context omitted.

Stablecoins have totally valid use cases in the crypto ecosystem that don’t involve skirting regulations. People want something that isn’t volatile. It takes days to deposit and withdraw actual USD from exchanges and requires centralized entities that charge fees (or are totally untrustworthy as we’ve seen). Contracts and dapps can hold and interact with USDC to create useful applications that aren’t just speculative…

If a stablecoin is fully backed by USD, why does it exist? The only reasons for these coins to exist are: 1. Avoid proper financial controls and regulations imposed on real currencies and operate illegally. 2. To separate fools from their USD and replace it with USDT or whatever.

Those are not the only possible reasons for stable coins to exist.

The obvious other reason is to use them on the blockchain. You cannot use USD on the blockchain.

Maybe you don't think there's anything of value on the blockchain and that's why you don't see a use for it. I don't want to get into an argument over whether blockchain tech has a use case or a future in this comment chain, but for the sake of understanding what stable coins could be used for just grant the following:

- There is some use for ETH out there that doesn't involve avoiding financial controls and regulations or separating fools from their USD

If you will grant that, then it's easy to see why here would be a use for USDC or similar. ETH price fluctuates. If you need to be able to utilize Ethereum, it's helpful to have value on it. If you don't want that value to fluctuate, you can hold it in USDC and convert to ETH when you want to use it. Plain and simple, this is the first application for stable coins.

If you will not grant that there is a use case for ETH then there's no point in having a discussion about stable coins anyway. That's a separate discussion that needs to be had first.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#178

Post by thatguy0900 »

rufusroflpunch wrote: post #113
hef19898 wrote: post #110

Earlier quoted context omitted.

Morgan Stanley ised to take a couple of days as well to wire Euros to my bank account. Never ever was that an issue, or something I wanted to solve by using an almast-but-not-really Euro, or Dollar.

It’s not really any less of a dollar than any other dollar is. All of our digital dollars are just bank liabilities. Circle and Tether are just banks with dollar liabilities. Their liabilities can be transferred on crypto networks rather than traditional bank wires.

It is less of a dollar, because I can say you can exchange it for a dollar when you can not, in fact, exchange it for a dollar when you try to,because I never had enough(or any) dollars. In the real world when the bank runs out of dollars the government will give me dollars instead.

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#179

Post by lallysingh »

notch656a wrote: post #74
wpietri wrote: post #60

Earlier quoted context omitted.

> US dollar-like liquidity and value preservation without US dollar financial regulation. Or in other words, they'd like the benefits of regulation without the costs of regulation. Which I certainly appreciate. As a child my plan for adulthood was desserts all the time, no vegetables ever.

More like they trusted two (well actually three if you count US gov) centralized entities instead of one. It's like asking permission from both momma and pappa to eat desert. They should have just depended on the single entity backing USDC rather than putting themselves in a situation where they'd be also be fucked if Binance froze by leaving their tokens on exchange. When you put USD backed stablecoin on exchange yo…

America went back to floating in 1971. The convertability with gold was only around for 17 years [1]. I don't know why that's relevant to USDC - there's no absolutely stable store of value, everything fluctuates.

USDC doesn't sound tenable.

[1] https://en.m.wikipedia.org/wiki/Bretton_Woods_system

Re: Binance freezes withdrawals of stablecoin USDC as investors pull $2B

#180

Post by zeven7 »

grey-area wrote: post #170
jacobsimon wrote: post #97

Earlier quoted context omitted.

Stablecoins have totally valid use cases in the crypto ecosystem that don’t involve skirting regulations. People want something that isn’t volatile. It takes days to deposit and withdraw actual USD from exchanges and requires centralized entities that charge fees (or are totally untrustworthy as we’ve seen). Contracts and dapps can hold and interact with USDC to create useful applications that aren’t just speculative…

If a stablecoin is fully backed by USD, why does it exist? The only reasons for these coins to exist are: 1. Avoid proper financial controls and regulations imposed on real currencies and operate illegally. 2. To separate fools from their USD and replace it with USDT or whatever.

This is akin to asking why commodity futures exist. It's an abstraction that provides utility. In the case of commodity futures, it allows commodities to be traded on an exchange where bags of onion seeds would otherwise be difficult to trade. In the case of USDC it allows USD to exist on the blockchain so that it can interact with smart contracts.

Believe it or not, if you want to invest in gold, the only option isn't buying and storing physical gold in your home. That might even be a dangerous idea.

Stocks are certificates which claim partial ownership of a company. But how can owning a piece of paper be like owning a part of a company? What is a company anyway but an abstraction over the concept of group liabilities, assets, contracts, and actions? Or do you think companies only exist to allow people to break laws under another identity?

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