61–70 of 111 posts
I'm not sure what people expected investing in a coin called "Polybius"[0]. [0] https://en.wikipedia.org/wiki/Polybius_(urban_legend)
I'm not sure what people expect of crypto in general yet this thing as a whole has some insane marketcap.
I'm not sure what people expected investing in a coin called "Polybius"[0]. [0] https://en.wikipedia.org/wiki/Polybius_(urban_legend)
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This is an important aspect of the financial world to understand, because a lot of things work this way. It doesn't have to be a "Ponzi scheme", this happens anywhere where a lot of people pool money together, nominally have an agreement that they can withdraw whenever they like, and that money is used for something illiquid, regardless of the reason for the illiquitity, resulting in a situation where if too many peo…
I get the general concept, but trying to apply it to bank deposits is terrible. The whole point of banking regulations and FDIC insurance are to make it so banks are an abstraction where the customers don't have to care what a bank is invested in (for better and for worse). The straightforward way to reduce the risk of bank runs is to increase the reserve requirements which I believe is the exact opposite of what the…
I believe risk can be moved around, but it can't be eliminated. This is probably fairly mainstream Wall Street analysis, too. I also believe that all attempts to move around risk must also increase it on the net, e.g., if you do the extremely popular financial move of taking a modest chance of modest loss and stuffing all the risk into a small chance of total loss and then hoping that just never happens, that the total risk has increased. This is probably less mathematically provable, and depends on a lot of assumptions about how one compares various classes of risks. (I base my thinking on a variant of what you might call the "more or less efficient market hypothesis"; if there was a way to net reduce risk overall, it would probably already have been taken.)
The bank abstraction you refer to is in my opinion in that class of "extremely popular financial moves". Yes, it removes the modest risk of partial loss, but it moves the risk entirely into a small chance of total loss when the entire system comes down instead. I worry about the net effect of millions of little financial transaction that all perform that particular risk management move. It ends up creating a lot of easily-hidden correlations in the system, and no one entity (let alone person) can have a view of the whole situation.
In the end, the risk is moved around, but the bank run is still a possibility and no amount of financial abstraction can truly remove the fact that the liquidity term mismatch is a fundamental aspect of such an operation that can't be erased, only managed.
They also specifically ask for people who made withdrawals. In a fraud like this, those who lost money often recover from the people who got out in time. Eg almost 90% of the losses from Bernie Madoff were recovered by suing those who innocently withdrew their 'gains' before the ponzi scheme was discovered.
Liars gonna lie. My deposit and withdrawal addresses and the blockchain kinda shows no, I wasn’t made whole
It takes awhile to come to grips with this and actually see yourself as victimized- I mean, a really long time. The overall personal lesson is don’t give strangers money, especially if it’s too good to be true.
Feeling depressed thoughts and guilt over the greed of seeking interest takes awhile to move beyond.
They also specifically ask for people who made withdrawals. In a fraud like this, those who lost money often recover from the people who got out in time. Eg almost 90% of the losses from Bernie Madoff were recovered by suing those who innocently withdrew their 'gains' before the ponzi scheme was discovered.
That's fascinating. It would seem to set up a situation where your incentive, if you suspect a Ponzi scheme, is to quietly withdraw your money early then keep your mouth shut. Unfortunate if true.
What this does is it creates an incentive to not invest in a ponzi, period. Without this rule, it makes sense for me to invest into something that I think is a Ponzi, as long as I believe that I'll be able to cash out before it collapses.
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As long as you were going to pay taxes and weren’t actually defrauding people, might as well file a report in case anything comes of it.
It’s worth noting that Luke would be a prime target for nation state hackers from DPRK and the likes. What happened here was likely a failed attempt to slip a backdoor into bitcoin core, attackers pulled out and took his bitcoins as a consolation prize after he realised his server had been compromised. The FBI should absolutely be jumping on this, not because of bitcoin, but because of the likely perpetrators.
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How? The blockchain doesn't store names or SSNs for every address. If the victim/user uses a mixer they can get their coins out easily and anonymously.
I've been watching some of Coffeezilla's videos lately and he often gets into the analysis of "following the money" from one crypto wallet to another to show how lots of his subjects conducted their scams. Were these individuals just sloppy (probably) or is there some kind of forensic analysis that can be performed blockchains to trace the path of tokens/funds/credits through a mixer? Although I know nothing about cr…
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How? The blockchain doesn't store names or SSNs for every address. If the victim/user uses a mixer they can get their coins out easily and anonymously.
Note that everybody who uses a mixer is potentially participating in money laundering, sanctions evasion, etc. The whole premise is that you put money in and are given some different money out. But where does your money that you originally put in go? If it went to North Korea, congratulations on your crime.
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I get the general concept, but trying to apply it to bank deposits is terrible. The whole point of banking regulations and FDIC insurance are to make it so banks are an abstraction where the customers don't have to care what a bank is invested in (for better and for worse). The straightforward way to reduce the risk of bank runs is to increase the reserve requirements which I believe is the exact opposite of what the…
The FDIC has already come perilously close to running out of money once. It can happen again. I believe risk can be moved around, but it can't be eliminated. This is probably fairly mainstream Wall Street analysis, too. I also believe that all attempts to move around risk must also increase it on the net, e.g., if you do the extremely popular financial move of taking a modest chance of modest loss and stuffing all th…
Furthermore I'd argue that insuring deposit banks through the asset-limited FDIC is yet another setup to socialize catastrophic losses. If bank deposits were guaranteed by the Fed directly, the Fed could print an unlimited number of dollars to make depositors whole, thus completely eliminating the risk that a USD-denominated deposit simply vanished. (The realized damage would instead be expressed as monetary inflation)
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I think you're missing an important component: > who were requesting withdrawals from their HashFlare account So it was more like a ton of people pay a farmer to grow a field of corn, and when they ask for corn in return, the farmer buys corn somewhere else and presents it as from his field. Meanwhile the farmer hasn't planted what they should have, and hopes not too many people ask for their cork or they'll crash.
So the real issue is 'Hashflare did not have sufficient assets to cover balances in all customer accounts'. Akin to 'farmer neither has corn growing nor money to buy corn to fulfil promises to customers' That would be the crime...
The expectation was this farmer would grow new calories (increasing the supply of food for the region).
You may argue there is a fixed number of crypto released and thus not fair, but allocating that money towards the open market instead of toward hardware and energy company has an impact on the crypto's value.