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To me this gives even more creedance to the rumor that they have massive liquidity problems behind the scenes. Thus the continuous outages at times when the mar

To me this gives even more creedance to the rumor that they have massive liquidity problems behind the scenes. Thus the continuous outages at times when the market is pumping. I’m highly dubious of their post mortems and the service incidents coincidental timings.

xiphias2 6y ago
Where did you read this rumor? I'm interested in the details (I know about the downtimes)
- deleted 6y ago
  [deleted]
- vmception 6y ago
  fractional reserve rumors are pervasive and nonstop for custodial exchanges there isnt really a source necessary nobody has any insight until they do
  - Scoundreller 6y ago
    In my opinion, the next custodial exchange to explode isn't a matter of if, but when, when, [...] and when.
  - slickrick216 6y ago
    Exactly this yes. I heard this on Twitter and occasionally on several different crypto forums when there’s been an outage during a price surge. I’m not saying this is definitive but the pattern is nonetheless concerning. I get service incidents happen but the timing always seems weird. That could be sample bias though.
gruez 6y ago
But why would "liquidity problems" cause outages? It's not like their servers require liquidity to operate or something. It makes much more sense that their servers are going down because trade volumes are up, thereby causing server load to go up.
- snypher 6y ago
  I believe OP is saying when they can't cover orders, they pull the plug on the market rather than be overexposed. As far as server load goes up, by how much does it need to increase to cause a problem? Are the numbers feasable, eg 100x volumes?
  - gruez 6y ago
    > I believe OP is saying when they can't cover orders, they pull the plug on the market rather than be overexposed. I still have trouble picturing how this conspiracy would work. I assume it involves coinbase pumping bitcoin prices with money that they don't have. They pump it all the way up, realize "oh shit we don't have enough real money to cover the fake money", and then pull the plug to stop the bleed? Can't they decide ahead of time how much money they can safely spend and stop accordingly? Why do they need to halt trading? If they stop pumping, and the price continues to rise, that doesn't cause them to lose any more money, because it's just other people trading with other people. >As far as server load goes up, by how much does it need to increase to cause a problem? Are the numbers feasable, eg 100x volumes? It's kind of hard to tell just by looking at the charts. Just because trade volume is low doesn't mean load on the order matching engine is low. If you spam the trading engine with tons of non-marketable orders, nothing will get executed (no volume), but the order matching engine will still have to wade through those orders.
    - Scoundreller 6y ago
      > I still have trouble picturing how this conspiracy would work. Not saying that Coinbase does this, but incoming wires/ACH/whatever continue to roll in during an outage, but they can stop the initiation of any outgoing xfers, and then be slow with them claiming a backlog. A big Canadian exchange, quadrigacx that blew up ~2 years ago was doing all sorts of tricks like this. Their bankruptcy is still ongoing, but somehow ~9 dollar in 10 went missing. The other 1 of 10 was frozen by a bank and eventually returned as $5m bank drafts that no bank would accept. Kinda like "Your money is in Bill's house, and Fred's house", except Bill and Fred didn't have houses.
beaner 6y ago
This doesn't make sense. Their exchanges are open to view live, you can literally see the books and the available liquidity.
- slickrick216 6y ago
  I didn’t think this was possible with standard coinbase. Maybe with coinbase pro you can see the order book but that could in theory be manipulated. If there’s something that easily disproved it I would be interested to see if yo don’t mind sharing.
  - tofuahdude 6y ago
    How could their order book be manipulated?
    - discodave 6y ago
      They're unregulated, so the answer is "in any way they like".
      - hungryforcodes 6y ago
        You didn’t really answer his question though.
        athriren 6y ago
        it depends on if the how is functional or espistmelogical.
      - hnracer 6y ago
        They can't remove real liquidity because then the individual posting an order will realize. They can't add fake liquidity because then the individual who attempts to lift the ghost order will realize. So how can they do this without getting caught (and they haven't been caught - firms like Alameda are watching closely)? This sounds like one of those things that's easy to just exclaim but is lacking a mapping to anything specific
ShakataGaNai 6y ago
That makes no sense. TFA says > In response to new guidance from the Commodity Futures Trading Commission Coinbase has always been trying to follow all the laws and show how "legal" crypto can be. If the CFTC says they don't like it then Coinbase is going to shut it down... maybe they'll try to fight it behind the scenes - but they want to stay online and making money. If they were going to lie, there are a lot better ways to go about it than blaming a government regulatory agency which probably will be fairly open to saying "Yes, we did ask them to close their margin trades because XYZ"
- deleted 6y ago
  [deleted]
- gamblor956 6y ago
  The "new" guidance was issued over 6 months ago... Whatever their reasons, it's clear that it wasn't the CFTC's guidance that made them suddenly pull the plug.
  - justinclift 6y ago
    Maybe, maybe not. I could kind of see them having conversations with a regulatory authority for a few months, trying to see if there's a way to keep having the product. Then, when it's clearly "Nope, not going to happen", they shut it down. That could take ~6 months with extended negotiations.
driverdan 6y ago
Posting rumors like this without any evidence is irresponsible.
The_Founder 6y ago
Typical biased unfounded hate for Bitcoin as the top comment.

xiphias2 6y ago

Where did you read this rumor? I'm interested in the details (I know about the downtimes)

deleted 6y ago
[deleted]
vmception 6y ago
fractional reserve rumors are pervasive and nonstop for custodial exchanges there isnt really a source necessary nobody has any insight until they do
- Scoundreller 6y ago
  In my opinion, the next custodial exchange to explode isn't a matter of if, but when, when, [...] and when.
- slickrick216 6y ago
  Exactly this yes. I heard this on Twitter and occasionally on several different crypto forums when there’s been an outage during a price surge. I’m not saying this is definitive but the pattern is nonetheless concerning. I get service incidents happen but the timing always seems weird. That could be sample bias though.

gruez 6y ago

But why would "liquidity problems" cause outages? It's not like their servers require liquidity to operate or something. It makes much more sense that their servers are going down because trade volumes are up, thereby causing server load to go up.

snypher 6y ago
I believe OP is saying when they can't cover orders, they pull the plug on the market rather than be overexposed. As far as server load goes up, by how much does it need to increase to cause a problem? Are the numbers feasable, eg 100x volumes?
- gruez 6y ago
  > I believe OP is saying when they can't cover orders, they pull the plug on the market rather than be overexposed. I still have trouble picturing how this conspiracy would work. I assume it involves coinbase pumping bitcoin prices with money that they don't have. They pump it all the way up, realize "oh shit we don't have enough real money to cover the fake money", and then pull the plug to stop the bleed? Can't they decide ahead of time how much money they can safely spend and stop accordingly? Why do they need to halt trading? If they stop pumping, and the price continues to rise, that doesn't cause them to lose any more money, because it's just other people trading with other people. >As far as server load goes up, by how much does it need to increase to cause a problem? Are the numbers feasable, eg 100x volumes? It's kind of hard to tell just by looking at the charts. Just because trade volume is low doesn't mean load on the order matching engine is low. If you spam the trading engine with tons of non-marketable orders, nothing will get executed (no volume), but the order matching engine will still have to wade through those orders.
  - Scoundreller 6y ago
    > I still have trouble picturing how this conspiracy would work. Not saying that Coinbase does this, but incoming wires/ACH/whatever continue to roll in during an outage, but they can stop the initiation of any outgoing xfers, and then be slow with them claiming a backlog. A big Canadian exchange, quadrigacx that blew up ~2 years ago was doing all sorts of tricks like this. Their bankruptcy is still ongoing, but somehow ~9 dollar in 10 went missing. The other 1 of 10 was frozen by a bank and eventually returned as $5m bank drafts that no bank would accept. Kinda like "Your money is in Bill's house, and Fred's house", except Bill and Fred didn't have houses.

beaner 6y ago

This doesn't make sense. Their exchanges are open to view live, you can literally see the books and the available liquidity.

slickrick216 6y ago
I didn’t think this was possible with standard coinbase. Maybe with coinbase pro you can see the order book but that could in theory be manipulated. If there’s something that easily disproved it I would be interested to see if yo don’t mind sharing.
- tofuahdude 6y ago
  How could their order book be manipulated?
  - discodave 6y ago
    They're unregulated, so the answer is "in any way they like".
    - hungryforcodes 6y ago
      You didn’t really answer his question though.
      - athriren 6y ago
        it depends on if the how is functional or espistmelogical.
    - hnracer 6y ago
      They can't remove real liquidity because then the individual posting an order will realize. They can't add fake liquidity because then the individual who attempts to lift the ghost order will realize. So how can they do this without getting caught (and they haven't been caught - firms like Alameda are watching closely)? This sounds like one of those things that's easy to just exclaim but is lacking a mapping to anything specific

ShakataGaNai 6y ago

That makes no sense. TFA says > In response to new guidance from the Commodity Futures Trading Commission Coinbase has always been trying to follow all the laws and show how "legal" crypto can be. If the CFTC says they don't like it then Coinbase is going to shut it down... maybe they'll try to fight it behind the scenes - but they want to stay online and making money. If they were going to lie, there are a lot better ways to go about it than blaming a government regulatory agency which probably will be fairly open to saying "Yes, we did ask them to close their margin trades because XYZ"

deleted 6y ago
[deleted]
gamblor956 6y ago
The "new" guidance was issued over 6 months ago... Whatever their reasons, it's clear that it wasn't the CFTC's guidance that made them suddenly pull the plug.
- justinclift 6y ago
  Maybe, maybe not. I could kind of see them having conversations with a regulatory authority for a few months, trying to see if there's a way to keep having the product. Then, when it's clearly "Nope, not going to happen", they shut it down. That could take ~6 months with extended negotiations.

driverdan 6y ago

Posting rumors like this without any evidence is irresponsible.

The_Founder 6y ago

Typical biased unfounded hate for Bitcoin as the top comment.