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PROGRAM RISKS YOUR AVAILABLE DIGITAL ASSETS WILL LEAVE GEMINI'S CUSTODY, AND YOU ACCEPT THE RISK OF LOSS ASSOCIATED WITH LOAN TRANSACTIONS, UP TO AND INCLUDING

by ains 6y ago

PROGRAM RISKS YOUR AVAILABLE DIGITAL ASSETS WILL LEAVE GEMINI'S CUSTODY, AND YOU ACCEPT THE RISK OF LOSS ASSOCIATED WITH LOAN TRANSACTIONS, UP TO AND INCLUDING TOTAL LOSS OF YOUR AVAILABLE DIGITAL ASSETS. Gemini is not a depository institution, and the Program does not offer a depository account. Participating in the Program may put your Digital Assets at risk. Loans made through the Program are unsecured. You have exposure to Borrower credit risk, and Borrowers are not required to post collateral to you or to Gemini. Transactions in Digital Assets may carry added risk compared to lending of other types of assets because transactions in cryptocurrency are in many cases irreversible. Funds may not be recoverable in the event of errors or fraudulent activity.

kylebenzle 6y ago
Awesome! So I can get a 7% return and all I have to do is trust random strangers with ALL of my money.
- rootsudo 6y ago
  Which is..exactly the same when compared to a bank, a brokerage account, or index fund.
  - greyface- 6y ago
    A bank, brokerage account, or index fund would have FDIC or SIPC insurance coverage.
    - rootsudo 6y ago
      It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
      - greyface- 6y ago
        There's no disagreement here. FDIC/SIPC protect against insolvency. The context of this discussion is borrower credit risk, i.e., the risk that the borrower becomes insolvent.
  - bdcravens 6y ago
    Aren't most of those institutions bound by certain laws and insurance requirements?
    - rootsudo 6y ago
      Not for investments. For regular banking, checking and savings, yes. That's FDIC. It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
  - jmhyer123 6y ago
    Except all of those are insured by the FDIC so there's almost no risk outside of market volatility.
    - rootsudo 6y ago
      Wrong. It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
  - passwordis1234 6y ago
    those institutions are not lending your money out in uncollateralized loans.
    - rootsudo 6y ago
      Yes they are, banks operate on fractional reserve. Banks do signature loans all the time. A popular one is known as a credit card. https://www.investopedia.com/terms/f/fractionalreservebanking.asp https://www.investopedia.com/terms/f/fractionalreservebankin... It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
  - quickthrowman 6y ago
    Bank accounts are FDIC insured up to $250,000 each. If your broker lends out your stock to short sellers, it will always return your shares, even if the short seller gets margin called and doesn’t have the money to pay back their broker. I’m not sure what you mean by “index fund”, but securities/stocks are protected by SIPC insurance, up to $500,000 per account. You will get your stocks back if a brokerage fails.
    - rootsudo 6y ago
      A bank does not mean bank account, banks offer many different investment vehicles. A savings or checking account is covered by FDIC. If your broker lends out your stock and can not recoup it, then you are also not protected by SIPC. https://www.investopedia.com/terms/f/fractionalreservebanking.asp https://www.investopedia.com/terms/f/fractionalreservebankin...
      - JumpCrisscross 6y ago
        > If your broker lends out your stock and can not recoup it, then you are also not protected by SIPC This is not true. The broker would be in default to you. If that literally pushed the broker under, SIPC would be there to pick up the pieces.
vmception 6y ago
For anyone using similar programs for years, they are the exact same Nexo Blockfi Crypto.com And Celsius All have the same inherent limitations for insurance coverage and clauses At least the autonomous onchain services let you purchase smart contract insurance to reimburse community accepted unexpected behaviors like overflows.

by ains 6y ago

kylebenzle 6y ago

Awesome! So I can get a 7% return and all I have to do is trust random strangers with ALL of my money.

rootsudo 6y ago
Which is..exactly the same when compared to a bank, a brokerage account, or index fund.
- greyface- 6y ago
  A bank, brokerage account, or index fund would have FDIC or SIPC insurance coverage.
  - rootsudo 6y ago
    It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
    - greyface- 6y ago
      There's no disagreement here. FDIC/SIPC protect against insolvency. The context of this discussion is borrower credit risk, i.e., the risk that the borrower becomes insolvent.
- bdcravens 6y ago
  Aren't most of those institutions bound by certain laws and insurance requirements?
  - rootsudo 6y ago
    Not for investments. For regular banking, checking and savings, yes. That's FDIC. It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
- jmhyer123 6y ago
  Except all of those are insured by the FDIC so there's almost no risk outside of market volatility.
  - rootsudo 6y ago
    Wrong. It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
- passwordis1234 6y ago
  those institutions are not lending your money out in uncollateralized loans.
  - rootsudo 6y ago
    Yes they are, banks operate on fractional reserve. Banks do signature loans all the time. A popular one is known as a credit card. https://www.investopedia.com/terms/f/fractionalreservebanking.asp https://www.investopedia.com/terms/f/fractionalreservebankin... It does not protect if the asset invested in goes down in value. FDIC is protection against the bank being insolvent. SIPC does not protect customers against losses from the rise and fall in the market value of investments. https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
- quickthrowman 6y ago
  Bank accounts are FDIC insured up to $250,000 each. If your broker lends out your stock to short sellers, it will always return your shares, even if the short seller gets margin called and doesn’t have the money to pay back their broker. I’m not sure what you mean by “index fund”, but securities/stocks are protected by SIPC insurance, up to $500,000 per account. You will get your stocks back if a brokerage fails.
  - rootsudo 6y ago
    A bank does not mean bank account, banks offer many different investment vehicles. A savings or checking account is covered by FDIC. If your broker lends out your stock and can not recoup it, then you are also not protected by SIPC. https://www.investopedia.com/terms/f/fractionalreservebanking.asp https://www.investopedia.com/terms/f/fractionalreservebankin...
    - JumpCrisscross 6y ago
      > If your broker lends out your stock and can not recoup it, then you are also not protected by SIPC This is not true. The broker would be in default to you. If that literally pushed the broker under, SIPC would be there to pick up the pieces.

vmception 6y ago

For anyone using similar programs for years, they are the exact same Nexo Blockfi Crypto.com And Celsius All have the same inherent limitations for insurance coverage and clauses At least the autonomous onchain services let you purchase smart contract insurance to reimburse community accepted unexpected behaviors like overflows.