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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

#211

Post by senko »

wmf wrote: post #148
dboreham wrote: post #65

Earlier quoted context omitted.

Wait...they're refusing to allow on-chain transfer of USDC from their custodial account to a customer's wallet? I assumed this was about exchange of USDC to fiat, hence the hand waving about banks.

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, it's a liquidity problem, not a solvency one, got it.

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

#212

Post by staticautomatic »

DebtDeflation wrote: post #200

Fun Fact - Binance is technically not headquartered in any country in the world. Originally they were based out of China, then when China banned crypto trading they moved to Japan for around a year, then got in trouble with the regulators there, left, and were trying to strike a deal with the Malta government to incorporate there, but it fell through. CZ has been saying for over a year that they will announce their n…

That's all fine until the lawsuits start and a judge or arbitrator decides for them where their principal place of business is if they don't choose one.

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

#213

Post by [deleted] »

TacticalCoder wrote: post #193
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…

> You "need" a stable coin because you're trying to have your cake and eat it too: US dollar-like liquidity and value preservation without US dollar financial regulation. That is not at all why people need/want USDC. People want stable coins because banks are all too happy refusing/blocking/reversing transactions to/from cryptocurrencies exchanges. They hypocrisy of both banks and the states on this one is amazing: "…

[deleted]

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

#214

Post by latchkey »

JumpCrisscross wrote: post #198
latchkey wrote: post #149

Earlier quoted context omitted.

Thanks for the deeper explanation and higher quality comment. What other term would you use then?

> What other term would you use then? An argument? Crypto is facing a crisis moment. An "exchange" which has never been audited and won't say where it is, legally or physically, has halted redemptions. That prompts legitimate questions as to their liquidity. Dismissing any criticism as FUD short circuits asking why we should believe their liquidity is adequate.

> has halted redemptions.

Temporarily, which is something that happens, for better or worse, all of the time with CEX, for a myriad of reasons.

It doesn't always mean that it is because of insolvency, which is what my FUD comment revolves around.

> Dismissing any criticism as FUD

That isn't what I was doing, at all.

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

#215

Post by smoldesu »

matthewdgreen wrote: post #194
rglullis wrote: post #131

Earlier quoted context omitted.

> Circle and Tether are just banks with dollar liabilities. But no regulatory oversight, and no chance for the common folk to prosecute or get their money back if they default. I am one of the resident crypto apologists here on HN, but there is no way that we should even try to accept what the big exchanges are doing. The whole point of crypto is to have systems that do not depend on "too big to fail" institutions, w…

Tether has no meaningful regulatory oversight. Circle has money transmitter licenses in most US states, some of which cover them as a virtual asset service provider, and require specific conditions around the way that they store customer funds: https://www.circle.com/en/legal/usdc-terms I'm not claiming this is perfect, but it's pretty different.

That's great, but that only eliminates 2-3 classes of fraud from their potential thousands of exploits. We put too much trust in centralized companies to manage decentralized communities, and I'd bet you dollars-to-donuts that Circle will end up complicit in some sort of scheme.

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

#216

Post by themagician »

hall0ween wrote: post #32
RobLach wrote: post #20

The moment you halt withdrawals, the jig is up.

I'm no crypto expert here, admittedly. Isn't the point of decentralization to avoid this level of control? It's like the crypto 'investor' response is "Decentralization...that's not so important. What we really want is sheer, unaltered speculation."

Centralization is required because not enough people are willing to spend real dollars, so no large organic P2P market exists (especially for majority of the altcoins). Instead you need central authority to make dollars, which is what all these exchanges do. They try to mask this behavior as best they can, but their purposes it to create dollars so that liquidity can be provided for those who want to cash out.

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

#217

Post by KMag »

graeme wrote: post #203
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…

Not volatile? The point of stablecoins is they’re supposed to match the USD in value. By definition they are more volatile than usd as they are pegged to it and vary in price

> By definition they are more volatile than usd as they are pegged to it and vary in price

I understand your reasoning, and you're correct in this case (assuming your numeraire is USD). However, if your numeraire is something like a GDP-weighted basket of USD, EUR, JPY, and CNH, it's possible for a USD-pegged asset to be less volatile than USD (since your unit of account isn't USD).

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

#218

Post by MomoXenosaga »

jacobsimon wrote: post #97
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.

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…

No post body was provided.

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

#219

Post by brewdad »

nordsieck wrote: post #119
govg wrote: post #106

Earlier quoted context omitted.

In terms of the Euro, I find it more useful to view the Eurozone as somewhat similar to the US. There's one central monetary policy for really large economies that in a different environment, would have liked to do things independently. It's especially relevant now as US states have GDPs comparable to the Eurozone constituent nations.

> In terms of the Euro, I find it more useful to view the Eurozone as somewhat similar to the US. There's one central monetary policy for really large economies that in a different environment, would have liked to do things independently. It's especially relevant now as US states have GDPs comparable to the Eurozone constituent nations. There is an enormous difference, though: internal mobility/identity. Germans tend…

> People in Oregon and New Hampshire tend not to have very strong affection for their state.

Did you miss the article last week on HN where 60% of American adults live within 10 miles of where they grew up? People in the US absolutely have a strong affinity for their states. Just as in the EU, they may choose to leave for better opportunities however.

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

#220

Post by Hasu »

zeven7 wrote: post #177
grey-area wrote: post #170

Earlier quoted context omitted.

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 understandi…

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

I do not grant this, because Ethereum has been around for 7 years and no such uses have materialized yet.

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