Founder of crypto lender Celsius Network arrested, charged with fraud • Hacker News Board

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#321

Post by gamblor956 » Fri, Jul 14, 2023, 3:38 AM UTC

jnwatson wrote: post #300

gamblor956 wrote: post #294

Earlier quoted context omitted.

So...the SEC didn't try to make you whole...it recovered about a third of the money you lost to the Ponzi scheme through a disgorgement order. The SEC can order disgorgement of profits from an investment scam (which are then returned to victims to the extent such profits are recoverable), but making victims whole for their losses is a very different thing.

No, the SEC put the org in receivership and then appointed a receiver to find where the money went.

The point of the receivership was to recover the money for creditors, not investors. Investors are quite literally the last people who get a recovery from a receivership.

I'm not going to keep arguing with a non-lawyer about something I've been involved with as a lawyer, so this will be my last comment on the matter.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#322

Post by peyton » Fri, Jul 14, 2023, 4:36 AM UTC

Vespasian wrote: post #296

tornato7 wrote: post #273

Earlier quoted context omitted.

For better or worse, Crypto is legitimately the easiest way to create a financial application, derivative, exchange etc... any programmer can create interesting, useful, and novel financial instruments like Squeeth, crvUSD, PoolTogether, etc in short order. Good luck recreating those in TradFi in under a decade, let along making them interact with each other in atomic transactions. Of course, some people see this as…

I'd argue that the difficulty in banking is not to get the technology working. Financial software is regular software with additional audits and checks to make sure it's safe against the flood of attacks it will receive. With the kind of money we are talking about, you can hire people with the expertise to reasonably protect you against bugs and software exploits (something most traditional financial companies have a…

Banks suffer breaches all the time. They’re insured. The community bank down the street probably does not have the greatest opsec.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#323

Post by jnwatson » Fri, Jul 14, 2023, 5:07 AM UTC

gamblor956 wrote: post #321

jnwatson wrote: post #300

Earlier quoted context omitted.

No, the SEC put the org in receivership and then appointed a receiver to find where the money went.

The point of the receivership was to recover the money for creditors, not investors. Investors are quite literally the last people who get a recovery from a receivership. I'm not going to keep arguing with a non-lawyer about something I've been involved with as a lawyer, so this will be my last comment on the matter.

While you are correct in the general sense, court-ordered receiverships due to SEC enforcement action are very much about recovering investor money in a fraud situation.

https://www.sec.gov/oiea/investor-alerts-bulletins/ib_receiv...

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#324

Post by realusername » Fri, Jul 14, 2023, 5:25 AM UTC

TheAlchemist wrote: post #21

toomuchtodo wrote: post #4

"Somebody is lying. Either the bank is lying or Celsius is lying.” - Alex Mashinsky EDIT: omg at the almost $5B settlement https://www.cnbc.com/2023/07/13/former-celsius-ceo-arrested-... ("The FTC also announced a $4.7 billion settlement against the exchange, which will not be paid until creditors and investors have been repaid in bankruptcy proceedings.")

All those guys are going to end up in prison. It’s fraud after fraud - biggest one being Tether. It’s just impressive how long it all takes.

I'm also surprised Tether hasn't imploded yet, it's opacity must have saved it in the short term

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#325

Post by tornato7 » Fri, Jul 14, 2023, 5:51 AM UTC

Vespasian wrote: post #296

tornato7 wrote: post #273

Earlier quoted context omitted.

For better or worse, Crypto is legitimately the easiest way to create a financial application, derivative, exchange etc... any programmer can create interesting, useful, and novel financial instruments like Squeeth, crvUSD, PoolTogether, etc in short order. Good luck recreating those in TradFi in under a decade, let along making them interact with each other in atomic transactions. Of course, some people see this as…

I'd argue that the difficulty in banking is not to get the technology working. Financial software is regular software with additional audits and checks to make sure it's safe against the flood of attacks it will receive. With the kind of money we are talking about, you can hire people with the expertise to reasonably protect you against bugs and software exploits (something most traditional financial companies have a…

If technology is not the problem then why is technology in traditional banking so bad? I do banking operations as a big part of my job, and can tell you that there are close to zero banks today that have even heard of APIs. The only ones that did were Silvergate, SVB, and Signature, and those were singled out and shut down by tradfi.

If banks had good technology then companies like Plaid and Modern Treasury wouldn't exist. MT starts off at $70k/yr, but in crypto land I could replicate their entire product with 5 lines of JavaScript.

Moving money via USDC on Polygon/Ethereum is far and away the easiest and most secure banking experience. I can do things that are simply impossible with regular banks, like write custom logic to determine how many approvers a transaction requires, or use an escrow contract to ensure both parties deliver on a promise with no middleman.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#326

Post by mvdtnz » Fri, Jul 14, 2023, 5:51 AM UTC

latchkey wrote: post #306

mvdtnz wrote: post #213

Earlier quoted context omitted.

> Moving large amounts of money I can do this with any remittance company > 24/7 worldwide Table stakes for any remit company > outside of any bank This is a con, not a pro. Banks add value and protect your money. They are regulated, insured and backed. > quickly All remit companies are instant nowadays (except in USA which has stupidly slow banking) > low transaction fee Bitcoin network fees are approximately equal…

> Banks add value and protect your money. They are regulated, insured and backed. Which country are you referring to exactly? Or do you only have a US centric view on these things?

I'm not American and have never been to America or held an American bank account. So, no.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#327

Post by esperent » Fri, Jul 14, 2023, 6:05 AM UTC

mschuster91 wrote: post #150

Workaccount2 wrote: post #75

Earlier quoted context omitted.

They probably do but the editors remove them. It seems that rule number one of running a news site is to never have any external links. It's like a casino, they want you to come in and get lost.

That seems to be the case for US media... here in Germany, it's a bit different at least for quality media. Spiegel, Heise, Die ZEIT and T-Online all happily link to sources, even up to competing news media.

I'm not if Reuters has a main country now, but it's originally English.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#328

Post by nathias » Fri, Jul 14, 2023, 6:18 AM UTC

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

because we don't like tyranny

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#329

Post by esperent » Fri, Jul 14, 2023, 6:24 AM UTC

tornato7 wrote: post #235

thrownaway89865 wrote: post #50

Would someone explain to me what the endgame of these fraudsters is? I mean, of course they are trying to get rich quick pulling these schemes but you would believe that they do it because they perceive that there is some sort of opportunity to cash out without inevitably going to prison some day, right? What is the thought process in the mind of these criminals when shit hits the fan? Maybe just hire very expensive…

FTX, 3AC, Celsius, etc. took the crypto pill and believed their investments were going to the moon with no way to stop it. That's why they took such risky bets (with customer money, too) - because in the certain case that Bitcoin hit $1M they would be trillionaires. Of course because of this attitude there was way too much leverage in the system, which drove up prices to ATHs temporarily, but when the money supply ra…

> in the certain case that Bitcoin hit $1M they would be trillionaires.

I never could understand this. Crypto currently makes up about 7% of the world's money supply, according to a quick search.

Bitcoin is currently ~30k USD. If you bumped that to 1 million USD, a 33x increase in value, and assume that other crypto would go up roughly the same amount...

... You get the impossible answer that crypto would be worth well over 200% of the entire rest of the money in the world.

This is ignoring inflation but from what I heard crypto nuts really thought this was possible in a short time frame, like 5-10 years, in which case inflation of real money wouldn't make a huge difference.

This is just ridiculous. All the possible outcomes don't make sense:

* you end up with a small group of mostly men controlling nearly all crypto so it's no different from the old system.

* Except there's even less checks and balances.

* It would massively destabilize the world economy and cause all kinds of inequality issues for people who don't have internet/technical ability

* But most importantly, the existing world governments would never accept it. At some point they would see this new force destabilizing their economies and established power structures and just say hell no. It would start with China and US, but eventually nearly every country in the world followed this. Then crypto is worthless because you can't spend it in a legal way and there's no way it would maintain a high value.

Re: Founder of crypto lender Celsius Network arrested, charged with fraud

#330

Post by tinco » Fri, Jul 14, 2023, 6:53 AM UTC

reaperman wrote: post #105

legitster wrote: post #69

Let's say I run a swap meet for people to buy and sell Pokémon cards. There are lots of scammers out there, but I promise people they are going to get good prices. And I even offer to buy cards off of people at good prices to drum up interest. Tomorrow, the SEC decides that Pokémon cards are securities (far-fetched, but work with me here) Suddenly, anyone buying and selling them becomes a criminal. I tell people via…

You may be aware already, but if you replace Pokemon with Magic the Gathering cards this actually becomes almost unbelievably close to a true story (minus the SEC story arc). The first "huge" bitcoin exchange[0] was originally a Magic card exchange which got extended to support cryptocurrencies. "Mt. Gox" = "Magic the Gathering online exchange". If it hadn't been hacked it would likely be in Coinbase's shoes right no…

It would never have ended up in Coinbase's shoes. The founder is a notoriously bad programmer and business leader.

Even if he wasn't hacked he would've gone bankrupt because of his failing market manipulation bot that was making loss despite having full info to an exchange in the most over heated market of the past 50 years.

I don't think even A16Z would burn their money on MtGox.