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Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

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Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#151

Post by jacquesm »

ryloric wrote: post #148

This feels a lot like how a credit crunch happens with regular money. "Coins you own keys to = Coins in some online wallet = coins on exchanges = coins you lent out for interest" is the assumption everyone makes. They're all different types of assets but normal market conditions create the illusion they're all one and the same. There's 1 1 exchange possible, you can easily move coins from an exchange to your wallet,…

And if the funds are held in a regular account the Fed or other local institution like that will likely make you whole up to a point (usually $100K or thereabouts). As soon as you go unregulated that is no longer the case.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#152

Post by oh_my_goodness »

SV_BubbleTime wrote: post #138
willmadden wrote: post #112

Earlier quoted context omitted.

Bitcoin has already reached 50% of the 27 year lifespan of the average fiat currency. https://cointelegraph.com/news/bitcoin-is-already-at-40-of-a...

I suppose that makes the case that Bitcoin is a fiat currency. I have yet to see strong indicators of that.

Can you point to any indicator that it's anything else?

EDIT: https://en.wikipedia.org/wiki/Fiat_money

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#153

Post by Animats »

jacquesm wrote: post #128
polygamous_bat wrote: post #123

Earlier quoted context omitted.

> ... with Coinbase it is the investors funds at risk, not the customers funds Oh boy are you in for a surprise: "In its quarterly report, Coinbase added a risk disclosure: if the company were to file for bankruptcy, the court might treat customer assets that the exchange is custodian for -- their Bitcoin, Dogecoin or whatever -- as Coinbase’s assets. And they’d be at the back of the line for repayment, forcing norma…

Ouch. Thanks for that. I wonder why the normal customer funds segregation rules do not apply to crypto assets.

Go read FTX's statement to Congress from a few months back on why crypto exchanges should not be hobbled by all those old rules about separation of functions.

There's nothing prohibiting a crypto exchange from having a separate company to hold customer's assets. In a bankruptcy, the custody company should still be solvent. That's required in Japan.[1] Customers of FTX Japan still have their assets.

[1] https://www.coinfirm.com/blog/japan-crypto-asset-regulations...

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#154

Post by imhoguy »

danuker wrote: post #46
imhoguy wrote: post #11

Proof of reserves != proof of liabilities. Proof today != proof tomorrow.

Indeed. An exchange can borrow loads of assets, have an "attestation" that the assets are in their accounts, then pay them back.

Exactly. Exchanges are important to exist. The problem is that some crypto exchanges became ordinary but unregulated banks and they sell "printed" crypto asset giving illusion the user owns crypto on blockchain.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#155

Post by jrumbut »

akudha wrote: post #62
epolanski wrote: post #26

Earlier quoted context omitted.

You would be surprised at human greed. Was it last week when there was an interview with several "investors", and pretty much all of them admitted they knew they were speculating in a highly volatile and unregulated market before they lost all their savings in FTX' crash? They knew the risks, they tried anyway, some really needed that money.

It is greed for sure. But it is also the lack of legit opportunities to invest, unless one is an accredited investor. I found a handful of places I wanted to invest, but I can't, because I am not an accredited investor. I am left with stock market and crypto. It is super funny (sad?) that I can go to Vegas and blow up my life savings in a matter of hours. There are no rules to save me from that. But there are rules c…

> At this point, there doesn't seem to be any difference between Vegas and Crypto...

I'm not sure this is fair to Vegas. Sure the odds are against you but if you somehow win they'll cash your chips out.

I'm also not sure about the lack of investment opportunities. Returns in the public market and real estate have both been quite decent. In my adult life I've bought index funds and a small, crappy house and they're both worth more than what I bought them for.

I appreciate the desire to get involved with early stage companies but I'm not sure how many really want to put in the effort to bring in someone who doesn't have enough money to be an accredited investor. That accreditation bar isn't very high, anyone under it doesn't have much capital by definition.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#156

Post by jacquesm »

Animats wrote: post #153
jacquesm wrote: post #128

Earlier quoted context omitted.

Ouch. Thanks for that. I wonder why the normal customer funds segregation rules do not apply to crypto assets.

Go read FTX's statement to Congress from a few months back on why crypto exchanges should not be hobbled by all those old rules about separation of functions. There's nothing prohibiting a crypto exchange from having a separate company to hold customer's assets. In a bankruptcy, the custody company should still be solvent. That's required in Japan.[1] Customers of FTX Japan still have their assets. [1] https://www.co…

I work a lot with trustees that hold third party funds, there isn't a single one of them that would ever commingle funds to the degree that these exchanges do (or even any degree at all other than to separately invoice customers for work and fees), and all of the rules around such third-party monies should be mandatory for any exchange. But as was pointed out elsewhere in this thread even that may not be enough if an exchange goes bankrupt.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#157

Post by purpleblue »

WastingMyTime89 wrote: post #69
purpleblue wrote: post #53

Earlier quoted context omitted.

Armanino is not a top firm. If you're not using Big 4, there's a reason.

There are plenty of reasons for not using a Big 4 their prices being one. They are not the be all and end all of auditing.

Auditors are not for your company. Auditors are for your investors. Auditors are not your friends. If you are investing a large amount of money in a company, and they are using a non-Big 4 firm, then any problems are on you.

I've routinely joked to my wife that her life would be much easier if they fired their auditors and went with BDO or some smaller auditing that they could bully around. The thing is, that's exactly how companies with weak accounting think, and FTX proves that point.

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#158

Post by kevinak »

CydeWeys wrote: post #139
bufferoverflow wrote: post #133

Earlier quoted context omitted.

How do you lose so much money when your business it to charge fees? You'd have to do something really stupid to not make money.

Well for starters they have over a thousand employees, plus office leases, plus I'm sure cloud provider fees, marketing, and more. There are expenses for sure.

It's definitely strange. Binance did $40 billion in volume in the last 24 hours. Even if their effective fee is only 1/100 of a percent that's $4 million. If we assume they do half that volume every day on average that's 730 million in revenue per year. Surely costs can't be that high?

Re: Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work

#159

Post by bushbaba »

Animats wrote: post #72

"Binance has said it holds more than $60bn in assets, enough to honour withdrawals. The company’s disclosures do not include its liabilities, which makes it difficult to ascertain its financial health." Possibilities: 1) They're insolvent. Liabilities exceed assets. (Like FTX.) 2) Their accounting is so screwed up they can't produce a balance sheet. (Like FTX). 3) They have a large number of interconnected corporate…

5) they print more tether when needed to handle withdrawals. But such massive tether prints can cause market issues.
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