Binance outflows hit $6B as Mazars halts ‘proof of reserves’ work • Hacker News Board

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

#61

Post by wkdneidbwf » Sat, Dec 17, 2022, 5:06 PM UTC

hn_throwaway_99 wrote: post #49

jacquesm wrote: post #42

Earlier quoted context omitted.

Chances are they'll be dead if enough people act on that. So they're doing the opposite: reassuring people that everything is fine. If there is one common element that precedes every bank run and run on crypto exchanges and such then it is the 'everything is fine' phase just prior to the implosion.

One clarification: 1. For a bank run on an actual bank, it is known that a bank doesn't keep all your assets on hand - they are loaned out, which is (largely) what allows you to earn interest. So it is known that if everyone tries to withdraw at the same time that there won't be enough money. 2. For an exchange/brokerage, your money/assets are explicitly NOT supposed to be lent out without your permission. So, in the…

these are the key points that get overlooked. i keep seeing that folks expect these brokerages to work like banks work.

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

#62

Post by akudha » Sat, Dec 17, 2022, 5:07 PM UTC

epolanski wrote: post #26

jacquesm wrote: post #8

Earlier quoted context omitted.

Interesting how the players change but the script is exactly the same and yet, people keep falling for it. I really don't get it. I once knew some people that were up to their necks in an MLM/pyramid scheme, it was like a cult, no matter how many examples you gave them of people ending up losing their shirts they would buy more of the crap and stuff it in every nook and cranny of their house being sure that they were…

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 conveniently banning non-accredited investors from so many legit investment opportunities. What % of the population are accredited investors? I bet it is not even 10%

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

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

#63

Post by xiphias2 » Sat, Dec 17, 2022, 5:07 PM UTC

ProjectArcturis wrote: post #32

"To prepare a proof of reserves report, an auditor uses procedures agreed with the company but does not vouch for whether those procedures are appropriate. The auditor also does not give any assurance or opinion over the numbers in the report, as it would in a full financial audit." What does it say that a lower-tier accounting firm wouldn't even complete this garbage process?

Cz said to CNBC that the big four can't audit a crypto exchange. Then the reporters told him that Coinbase is audited by Deloitte. He didn't really have an answer, it's quite awkward clip.

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

#64

Post by danuker » Sat, Dec 17, 2022, 5:09 PM UTC

jacquesm wrote: post #59

danuker wrote: post #46

Earlier quoted context omitted.

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

Unless those assets devalue or are not easily liquidated.

Exchanges are in the business of "liquifying". But, indeed, it can go wrong, with severe consequences.

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

#65

Post by jacquesm » Sat, Dec 17, 2022, 5:10 PM UTC

wkdneidbwf wrote: post #61

hn_throwaway_99 wrote: post #49

Earlier quoted context omitted.

One clarification: 1. For a bank run on an actual bank, it is known that a bank doesn't keep all your assets on hand - they are loaned out, which is (largely) what allows you to earn interest. So it is known that if everyone tries to withdraw at the same time that there won't be enough money. 2. For an exchange/brokerage, your money/assets are explicitly NOT supposed to be lent out without your permission. So, in the…

these are the key points that get overlooked. i keep seeing that folks expect these brokerages to work like banks work.

The problem is that these brokerages do work like banks work but pretend that they are holding all of the reserves on the books.

They are leveraging and borrowing from the customer funds with abandon, just like a bank but without the associated regulatory oversight and rulebooks.

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

#66

Post by theknocker » Sat, Dec 17, 2022, 5:12 PM UTC

No post body was provided.

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

#67

Post by tipalink » Sat, Dec 17, 2022, 5:14 PM UTC

wpietri wrote: post #57

jacquesm wrote: post #8

Earlier quoted context omitted.

Interesting how the players change but the script is exactly the same and yet, people keep falling for it. I really don't get it. I once knew some people that were up to their necks in an MLM/pyramid scheme, it was like a cult, no matter how many examples you gave them of people ending up losing their shirts they would buy more of the crap and stuff it in every nook and cranny of their house being sure that they were…

I think "cult" is the exact dynamic at play here. As much as I love the internet, it has enabled distributed cults on a level rarely seen before. Not only does it support traditional cults with central leaders and official dogmas (which I think includes most MLMs), but they've allowed for a sort of emergent, leaderless cult based on collective creation of the memes that drive it. E.g., QAnon and the cryptocurrency bu…

> they've allowed for a sort of emergent, leaderless cult based on collective creation of the memes that drive it.

with a high entertainment appeal, might i add!

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

#68

Post by jakelazaroff » Sat, Dec 17, 2022, 5:15 PM UTC

MarkPNeyer wrote: post #56

eloff wrote: post #45

Earlier quoted context omitted.

Cryptocurrency is a useful proxy for people behaving badly. Maybe because it’s unregulated, maybe because it was such an easy target for grifters of all sorts.

Note that FTX didn’t own a single bitcoin. They had lots of knockoffs, but no bitcoin.

Why is that relevant?

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

#69

Post by WastingMyTime89 » Sat, Dec 17, 2022, 5:15 PM UTC

purpleblue wrote: post #53

janakalin wrote: post #5

FTX was also audited by a top firm, Armanino!Changed nothing... In the article says: Following the collapse of FTX, Paul MacIntosh, EY’s US financial services crypto co-leader, said on LinkedIn that proof of reserves reports do not assess companies’ internal controls, “which ultimately was the downfall of FTX”.

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.

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

#70

Post by chasd00 » Sat, Dec 17, 2022, 5:15 PM UTC

hn_throwaway_99 wrote: post #49

jacquesm wrote: post #42

Earlier quoted context omitted.

Chances are they'll be dead if enough people act on that. So they're doing the opposite: reassuring people that everything is fine. If there is one common element that precedes every bank run and run on crypto exchanges and such then it is the 'everything is fine' phase just prior to the implosion.

One clarification: 1. For a bank run on an actual bank, it is known that a bank doesn't keep all your assets on hand - they are loaned out, which is (largely) what allows you to earn interest. So it is known that if everyone tries to withdraw at the same time that there won't be enough money. 2. For an exchange/brokerage, your money/assets are explicitly NOT supposed to be lent out without your permission. So, in the…

If there’s a single case of an exchange using a customer’s assets to make bets isn’t that a fraud charge? Or with the unregulated nature of crypto is it not that explicit?