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Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

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Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#121

Post by lxgr »

danuker wrote: post #93
polygamous_bat wrote: post #27

Earlier quoted context omitted.

Nothing better than meeting a guy in a trench coat behind a garage in the shady part of the town to exchange your cash for outlawed, non-refundable token. No way that can go badly. Actually, scratch that. Nerds will lose their crypto wallet AND their physical wallet to the rubber hose cryptanalysis. In fact, this is a great opportunity for enterprising criminal minds.

You don't need to meet in-person. You can require ID when trading.

In a world with robust digital ID, maybe that would be a possibility (but still leaves ample room for counterparty risk).

Last time I had to "verify my ID" online, it amounted to a photo of my driver's license and knowing my previous address.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#122

Post by dvt »

rmbyrro wrote: post #112
notch656a wrote: post #91

Earlier quoted context omitted.

Not really. It's been done time and time again. Never underestimate the number of stupid people out there, desperate to break even with inflation somehow while their banks pay them negative interest rates. https://youtu.be/C6nAxiym9oc?t=260

Has it been done by you? If it's so easy with such high rewards, why don't you try an MVP the next weekend and see how it goes?

DeFi rug pulls were extremely common in the bull market, here's a list[1]. Obviously doing it "next weekend" is going to be much harder given that FTX just collapsed and all of crypto is going to hell in a hand basket.

[1] https://coinscreed.com/defi-top-10-list-of-crypto-rug-pulls....

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#123

Post by skybrian »

dvt wrote: post #58
VHRanger wrote: post #47

Earlier quoted context omitted.

The answer is that they almost certainly are securities, but the precedent isn't established. White collar prosecution is expensive and complex, and prosecutors care about their careers. They want certain wins, preferably fast. So the SEC are waiting for slam dunk cases to establish precedent. In practice this means they wait for something large and obvious to implode, and prosecute months/years after the fact.

> So the SEC are waiting for slam dunk cases to establish precedent. But this might never happen. I can launch a lending protocol completely anonymously, pump it on Twitter/Telegram, and get 7+ figures TVL overnight. It might not even be predatory (even though a lot are), but who would the SEC even go after at that point?

They could go after exchanges and apps distributed in app stores. That is, wherever normal people might go to easily buy such a thing.

Sure, people will use VPN's and side-loaded apps, but would limit the damage quite a bit.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#124

Post by jonathan-adly »

boc wrote: post #89
mirzap wrote: post #85

Earlier quoted context omitted.

Who says they want to spend US $? If bitcoin (or any other) decentralized currency succeeds and gets world-wide adoption you'll not have to convert it into anything else. You'll spend it as money. That's the ultimate goal of bitcoin. With massive adoption price movements will stabilize so price move of 1.5% will look like a huge deal then.

Because economic activity is fundamentally incompatible with a deflationary currency like Bitcoin? If I can passively generate wealth by doing nothing but waiting, so can everyone else. Only suckers would work. This is basic macroeconomics but for some reason crypto believers just choose to live in an alternative reality.

You are right - that's the undergrad class in macroeconomics. A little more depth and you will find that it's not that black and white. A centrally-managed currency really has a terrible track-record everywhere in the world except maybe the US and Switzerland (emphasis on maybe). Political-pressure on the central bank, incompetence, corruption all add up to eventually break things.

You have to have a lot of institutional checks and balances and almost unshakable faith in those institutions for things to functions. That really doesn't exist in reality.

I will give you that a perfectly managed currency (with cycles of inflation and deflation) is better than a deflationary currency for economic activity. But, you have to see that no such thing exists. The US dollar central management have been reasonably good - but that's the exception, not the rule.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#125

Post by ALittleLight »

birracerveza wrote: post #111
horsawlarway wrote: post #81

Earlier quoted context omitted.

Real question - why do you believe that "owning" your own coins matters? Further - why do you believe that ownership is related at all to the fact that you can keep ledger entry with your wallet on it? Ownership !== ledger entries. Ownership is a shared concept enforced by social constructs. It is not a fucking technical matter solved by a ledger. EX: You sign a contract to send me 1 bitcoin in exchange for my car. I…

You're still bound by meat-space and the rules of the universe. If someone gets in your house and beats you with a $5 wrench until you give him your seed phrase, you're still relying on the police to catch the thief, ledger or not. However, you're also not bound by arbitrary rules by arbitrary people that may or may not hold their end of the deal. YOU own your Bitcoin, and until YOU send it to someone it's YOURS. On…

Why would game companies want you to be able to resell their in-game cosmetics? They could make that possible now, but don't.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#126

Post by throwup »

DebtDeflation wrote: post #110
throwup wrote: post #90

Earlier quoted context omitted.

Kraken does at least. AIUI their auditor is given a snapshot of all account balances at a particular point in time, and builds a merkle tree. You can then reconstruct your expected merkle leaf and verify that your specific account was included in the tree. You can verify on the auditor's website, or you can do it by hand. Kraken's help page even has code snippets in Python/Go/etc to make it easy! More info: https://w…

No, they do not. They only verify BTC and ETH, no other holdings, and they don't audit liabilities at all, meaning that they could be using your BTC as collateral for loans. Also, the audit they did last December was the second in 8 years and AKAIK they haven't done another since. Kraken is in no way "audited".

Full of misinformation.

> They only verify BTC and ETH

Click the link and you see this isn't true: "ADA ADA.S BTC BTC.M DOT DOT.S DOT.P etc etc"

> they don't audit liabilities at all

All liabilities were verified by the auditors and included in the merkle tree, and as mentioned, all users can independently verify that their specific liabilities are present. What more would you expect?

> the audit they did last December was the second in 8 years

Their most recent audit was end of Q2 this year. They do audits semi-annually.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#127

Post by JumpCrisscross »

jonathan-adly wrote: post #124
boc wrote: post #89

Earlier quoted context omitted.

Because economic activity is fundamentally incompatible with a deflationary currency like Bitcoin? If I can passively generate wealth by doing nothing but waiting, so can everyone else. Only suckers would work. This is basic macroeconomics but for some reason crypto believers just choose to live in an alternative reality.

You are right - that's the undergrad class in macroeconomics. A little more depth and you will find that it's not that black and white. A centrally-managed currency really has a terrible track-record everywhere in the world except maybe the US and Switzerland (emphasis on maybe). Political-pressure on the central bank, incompetence, corruption all add up to eventually break things. You have to have a lot of instituti…

> centrally-managed currency really has a terrible track-record everywhere in the world except maybe the US and Switzerland

TIL nobody uses the euro, pound, yen or renminbi.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#128

Post by PretzelPirate »

BLanen wrote: post #79
TSiege wrote: post #11

This also seems to be affecting Gemini Earn customers https://twitter.com/lawmaster/status/1592870524941922305

Gemini saying "yea uh you had to read the fine print and it's not actually us" is a hilarious copout and cryptobros repeating the line HAHA

I did read the fine print when looking into this which clearly stated the loans were high risk and you may not get back any of your money.

I have reasonable risk management and decided the returns weren't worth the risk, but it seems that many people either have worse risk management or were desperate to better their financial situation and saw a high-risk bet as the only option.

I hope we haven't raised people with such poor risk management, so I wonder if people are desperate to gamble because they don't see a better solution.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#129

Post by nradov »

VHRanger wrote: post #47
dvt wrote: post #24

Maybe someone can explain this to me (not an expert in traditional finance), but how in the world are lending instruments not categorized as securities? Let's say I lend you 10 bucks (and I earn some interest on the money over time T), you give me a receipt/contract, and then I sell that receipt to someone else before T expires (the price I sell at is some complicated equation based on your chance to default, inflati…

The answer is that they almost certainly are securities, but the precedent isn't established. White collar prosecution is expensive and complex, and prosecutors care about their careers. They want certain wins, preferably fast. So the SEC are waiting for slam dunk cases to establish precedent. In practice this means they wait for something large and obvious to implode, and prosecute months/years after the fact.

There are no prosecutors in the SEC. Their attorneys can only bring civil enforcement suits. When they find evidence of criminal activity they pass that to the Justice Department for possible prosecution.

Re: Genesis' Crypto-Lending Unit Is Suspending Withdrawals in Wake of FTX Collapse

#130

Post by Animats »

BLanen wrote: post #79
TSiege wrote: post #11

This also seems to be affecting Gemini Earn customers https://twitter.com/lawmaster/status/1592870524941922305

Gemini saying "yea uh you had to read the fine print and it's not actually us" is a hilarious copout and cryptobros repeating the line HAHA

The fine print: "Gemini is partnering with accredited third party borrowers including Genesis, who are vetted through a risk management framework which reviews our partners’ collateralization management process."

Over at Genesis, there's this news article: "Crypto lender Genesis accepts NFTs as collateral for loans" [1] or [2]. That's in the Financial Times today. Does this mean that on the same day, Genesis stopped withdrawals and started accepting NFTs as collateral? What this seems to say is that Genesis borrows money at a high interest rate and lends it out on even riskier loans. What could possibly go wrong? Or, more to the point, what has already gone wrong?

[1] https://www.ft.com/content/ce600e79-93cf-40c8-928c-e9bbd6607...

[2] https://archive.ph/8e4LJ

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