I just moved all my crypto off Coinbase, just to be sure. Coinmotion seems to be a stable-ish option. At least they're not looking for hockeystick growth and aquisition.
Why not to a non-custodial wallet…?
Coinbase warns that bankruptcy could wipe out user funds
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Re: Coinbase warns that bankruptcy could wipe out user funds
#112That sounds suspicious to me. In UK at least client money should be segregated especially in the context of custody assets. Really shouldn't enter the same pool of assets as Coinbase's office chairs in case of liquidation
>In UK at least client money
As I understand it, English law custody model is a trust arrangement and pure delegate custodian should be safe in the case of bankruptcy.
Shouldn't does not mean that it does not happen in the UK too. The Lehman Client Money Litigation in the UK is a good example. Lehman Brothers International fell short $2.6 billion in client money under CASS 7 (statutory trust, segregation and pooling).
Coinbase is not operating with that model. Coninbase customers can be just general unsecured creditors
> because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors
Re: Coinbase warns that bankruptcy could wipe out user funds
#113Earlier quoted context omitted.
I would argue that's the people's problem. How important is what they have to say anyway if they won't read the source and can't detect sarcasm? edit: also, even if it's not a direct quote.. c'mon, it is what he's saying. The SEC made a rule that applies _specifically for crypto companies_, saying they have to disclose that crypto assets under their custody could potentially be taken in a bankruptcy.. and this guy go…
It's not a people problem if you're making up quotes and people don't realize it. Use quoting for quotes. Everything else is in your own words, not someone elses, even if you are paraphrasing.
Thank you for summing it up this way. It certainly sounds like the original author wants to be taken seriously. In that case they should probably respect the fact that there is literally a word for what they've done. Misquote and its synonyms do not have good connotations, and in their worst form are simply libel...
Re: Coinbase warns that bankruptcy could wipe out user funds
#114Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…
I do wonder why he's allowed to say on Twitter there is no risk of bankruptcy [0]. While the risk could be minimal and maybe negligible saying "no risk" means zero chance. That can't be true of any company. For a public company ceo to say that, isn't that securities fraud? I guess even if it is fraud and they do get prosecuted by the SEC they'd just get fined for it. And maybe the fine here would be much less than th…
He probably has a disclaimer somewhere saying his tweets are "not forward looking statements" so he is only saying that as of right now in this moment there is no risk of bankruptcy
Re: Coinbase warns that bankruptcy could wipe out user funds
#115Shareholder letter that ends with #wagmi.
GTFOH
Re: Coinbase warns that bankruptcy could wipe out user funds
#116Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…
Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well.
No, it doesn't make sense at all. It is incredible to me that these are all solved problems in traditional finance.
Coinbase could utilize the services of a custodian to hold the crypto. In fact, that's what any responsible financial services company would do. It makes perfect sense because if there is a dislocation in crypto, it could bring Coinbase down but it won't bring Bank of New York down. So hold all the customer crypto at Bank of New York.
Or they could have individual wallets titled to customers. More difficult and doesn't allow them to do off-chain transfers but possible.
There are a million ways to do this, this is a solved problem in finance. Coinbase chose not to do it and now is paying for that by having to disclose the truth - retail customers are screwed if Coinbase declares bankruptcy. Whose fault is that? The CEO apologizes for it so that should tell you.
>For our retail customers, we’re taking further steps to update our user terms such that we offer the same protections to those customers in a black swan event. We should have had these in place previously, so let me apologize for that.
https://nitter.net/brian_armstrong/status/152423348004071014...
Re: Coinbase warns that bankruptcy could wipe out user funds
#117https://nitter.net/brian_armstrong/status/152423348004071014... In other words: We only disclosed these risk factors because we were legally required to. Please ignore our SEC disclosure and half-billion dollar quarterly loss, and instead trust my unregulated statements posted on Twitter. There are no risk factors, your money is safe, the music will never stop.
I don't have skin in the game (not a crypto fan, not in the US and not an investor in coinbase), but I don't think your sarcasm is warranted here (side note for any other readers, that's _not_ what his linked thread says). Regulatory capture is _real_, and dispraportionately favours incumbents. As regulations are tightened on crypto in general, firms that are not involved in the creation of said regulations are going…
I don't think regulatory capture is the issue here. We're talking about a disclosure of risks ... that seems reasonable to me.
Dude says there is no risk of bankruptcy and is predicting court case outcomes... and it is clearly in his financial interest to make the arguments he is making.
The system is rigged and other truthy arguments are all but standard operating procedure for whatever crytpo idea someone comes up with. Those arguments doesn't make mean we shouldn't be skeptical.
Re: Coinbase warns that bankruptcy could wipe out user funds
#118https://nitter.net/brian_armstrong/status/152423348004071014... In other words: We only disclosed these risk factors because we were legally required to. Please ignore our SEC disclosure and half-billion dollar quarterly loss, and instead trust my unregulated statements posted on Twitter. There are no risk factors, your money is safe, the music will never stop.
> 3. We believe our Prime and Custody customers have strong legal protections in their terms of service that protects their assets, even in a black swan event like this
> 4. For our retail customers, we’re taking further steps to update our user terms such that we offer the same protections to those customers in a black swan event. We should have had these in place previously, so let me apologize for that.
> 5. ...and it is possible, however unlikely, that a court would decide to consider customer assets as part of the company in bankruptcy proceeding
The term people might want to google is "bail-in". And it is likely that Coinbase has less protections related to that than a conventional bank.
Re: Coinbase warns that bankruptcy could wipe out user funds
#119As someone without 250k in the bank (or generally), FDIC insurance is quite reassuring. Banks pay into it like any other insurance, so it would take a huge money-doesn't-matter-anymore shock to overwhelm it. 2008 was pretty close! Crypto wouldn't do any good for me since the utility bills for all the internet infrastructure are paid for with real money (in the "most people exchange it for goods and services" sense).
There'd be nowhere to go where even a paper wallet would do me any good. You could execute a 51% attack on a solar-powered NetBSD toaster.
Re: Coinbase warns that bankruptcy could wipe out user funds
#120https://nitter.net/brian_armstrong/status/152423348004071014... In other words: We only disclosed these risk factors because we were legally required to. Please ignore our SEC disclosure and half-billion dollar quarterly loss, and instead trust my unregulated statements posted on Twitter. There are no risk factors, your money is safe, the music will never stop.
I get the point, but please don’t use a block quote when it’s not a quote. Two problems: 1. People don’t read the source. 2. People can’t detect subtle or not-so-subtle cues. Case in point: there’s already a sibling discussing “There are no risk factors” as if it’s actually a quote from Brian Armstrong.
You make valid points. I edited my post.