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A second Bitcoin exchange collapses in Turkey amid crackdown on cryptocurrencies

• jukabo 5y ago
  Bitcoin is doing exactly as it was intended. Disrupting the ability of corrupt governments to print unlimited currency. If it wasn’t working, they wouldn’t be banning it.
  • insert_coin 5y ago
    But, they haven’t stopped printing have they? Turkey will print money until they collapse, or other countries step in and “help them”. Bitcoin will not prevent that. Venezuela has never printed more.
    • gruez 5y ago
      A more accurate statement would be stopping the government from being able to dilute your wealth by printing money.
  • krastanov 5y ago
    There are plenty of other ways to store value that is neither governmental nor cryptocurrency. Bitcoin is supposed to be better than them because it can not be as easily stopped/banned. That last promise does not seem to hold (yet?)
• jermaustin1 5y ago
  How does this happen? Why does everyone have their coins in a single place instead of their wallet? Aren't transfers in and out of wallets basically free? I dont do cryptocurrency, so I'm not familiar with the buying and selling, but why aren't the coins you buy put directly into your wallet?
  • jbverschoor 5y ago
    Because exchanges are normal applications. Otherwise trading would be slow and expensive. Also, not everybody is able to keep their private key safe
  • rspeele 5y ago
    > Aren't transfers in and out of wallets basically free? For Bitcoin, not even close. Median fee is $10 now. Several days ago it was as high as $25. The mean is much higher, roughly double the median at any given time.
  • WA9ACE 5y ago
    As much as cryptocurrency for me personally is to have control over its access via a wallet, many people do not want the responsibility to permanently losing their cryptocurrency due to any number of things that could cause a loss of access. In this case exchanges appear to have become the de facto custodian for many people's cryptocurrency holdings. We might could compare it to having cash in mattress vs an uninsured institution that could be hacked or dismantled by the state at will.
    • klmadfejno 5y ago
      Less so in a mattress, moreso in a safe, sitting in the public park, locked with a long string you probably can't just remember in your head.
  • throwaway4good 5y ago
    Because making money doing fraud when running an exchange is easy, and making money without doing fraud is hard. You accept cash from credit cards with risk of clawback etc., transaction costs for money major cryptos (bitcoin, ethereum) are through the roof, you need lots of users to make a liquid market plus cost of infrastructure and development. I don't see how an exchange is making money unless it charges ++% pr. transaction or does something that invites fraud and sudden collapse like keeping all crypto in a single wallet.
    • 5y ago
• m_a_g 5y ago
  Extreme inflation and local currency devaluation drove almost everyone in Turkey to invest in Bitcoin and other cryptocurrencies. This situation created an optimal environment for frauds and Ponzi schemes.
  • rchaud 5y ago
    And yet cryptocurrency evangelists would have you believe that fiat currency collapse is precisely when people should be switching to digibucks.
    • prox 5y ago
      Exactly because it is unregulated it is prone to collapse. Its pure 1:1 demand / supply is responsible for that, and there are no bounds to speculation. If there are any crypto advocates here : Change my mind.
  • BLanen 5y ago
    Yea, I'm sure they're actually using crypto instead of any other currency in the world that could actually be used for spending without $20 fees. Or if they want to keep their VALUE they could hold literally ANYTHING BUT the currency that's being inflated.
• anonuser123456 5y ago
  The simple fact is, the men with guns can always coerce you. 'Fixing money because governments suck' is never going to work.
  • randomopining 5y ago
    Yeah lol. That's my argument against full on crypto. It's able to exist because of the safety bubble provided by centralized government and all the complex systems of safety (law, police, army, regulations, etc) that it has created. You could never have crypto in an anarchist vacuum.
    • gruez 5y ago
      >You could never have crypto in an anarchist vacuum. This seems like a strawman to me? You can be for replacing the world's monetary system with cryptocurrency, and still believe in having a government with police, roads, and schools.
      • littlestymaar 5y ago
        It's not really a straw man because the most vocal advocates of cryptocurrencies tend to be libertarians[1]. Obviously not everyone is like that, but it's still the vocal crowd. That being said, I'd be curious to here pro-crypto arguments from someone “believ[ing] in having a government with police, roads, and schools”. This is especially interesting to me, because “school” appears in this list. [1] which cannot really be qualified as anarchists IMHO, but that's another topic.
        • gruez 5y ago
          >I'd be curious to here pro-crypto arguments from someone “believ[ing] in having a government with police, roads, and schools”. This is especially interesting to me, because “school” appears in this list. Is there something inherently contradictory between "a government should collect taxes and provide police, roads, and schools", and "the government shouldn't be entrusted with the ability to print money and/or dictate monetary policy"?
• m00dy 5y ago
  The news is misleading. You can still buy, sell and trade cryptocurrencies, but you can't use them for payments. I think people in Turkey got a bit scared because of the previous burst, and now all wanted to withdraw their coins. We see a classic bank run here. Luckily, this one has a very low volume.
  • grey-area 5y ago
    The news is misleading. You can still buy, sell and trade cryptocurrencies, but you can't use them for payments. So functionally the same as the rest of the world then.
    • m00dy 5y ago
      yeah, So I don't think there is a crackdown on cryptocurrencies. But there will be a regulation for centralised exchanges to have a certain amount of full paid capital.
  • tradertef 5y ago
    In the first (bigger case), it was clearly fraud (exit scam) as the CEO sold some coins very cheaply and gave away some crypto to anyone who signed up. The amount was 150+ million USD [1]. Second exchange had financial problems likely because they lost some money by keeping their assets in Lira or Dollars. This whole saga will of course cause panic in the "investors" which might cause other dominos to fall in coming weeks. [1] https://twitter.com/tufanpoyrazz/status/1386068710562181130 https://twitter.com/tufanpoyrazz/status/1386068710562181130
• lottin 5y ago
  What happened to "be your own bank"? I imagine, when it comes to it, nobody wants to be their own bank.
  • someguydave 5y ago
    sure, people in Turkey volunteered to end bitcoin experimentation
  • varispeed 5y ago
    Banks won't let it happen. There is too much money to be lost for them. You have to be a wage slave and you have to keep your measly wage in your account so that the bankers can then bet with your money on "funds". If you had money in your own bank, then where is their fun?
  • newsbinator 5y ago
    You end up with "be your own insurer" and "be your own nation-state's military".
• insert_coin 5y ago
  This is the equivalent of gold confiscation. But because the government doesn’t really care about confiscating your bitcoins, they can just “force” exchanges to fail and “destroy” their monetary value for their citizens that way. If you think just because you own bitcoin you are safe from government actions when shtf this should make you reconsider. Exchanges failing is the equivalent of gold confiscation for a digital fiat currency like bitcoin.
  • noxer 5y ago
    >This is the equivalent of gold confiscation. no. just no. its absolutely not.
    • insert_coin 5y ago
      > no. just no. its absolutely not. Denial, great argument.
      • noxer 5y ago
        Not denial its objectively nonsense. There was no collecting of crypto or something the like. Its not illegal to have or sell. Exchange are still available. They banned its use as payment (the average holder does not use it for payment). The ban is nonsense ofc but its not what you suggest it is at all. The fact that some local probably mismanaged exchange goes bankrupt after many people panic withdraw does not support you idea either.
• alienalp 5y ago
  This one was very shitty and amateur and wasnt popular at all.
• kemonocode 5y ago
  Two things worth noting here: - Not your keys, not your coins. Never keep in an exchange what you cannot afford to lose. - Governments, especially tyrannical regimes that don't even need to pretend to respect human rights, will hamper your attempts at circumventing them at every step. I wouldn't go so far as to declare the whole endeavor hopeless as some people have done here, only that you must be far more careful when covering your tracks. It's not a turnkey solution, there are few ways to get it right and a myriad ways to get it wrong, it sucks but it is how it is. If it weren't working, then they wouldn't be bothering trying to ban payments in crypto.
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  • xiphias2 5y ago
    Taking the keys private doesn't scale long term, as people still have to secure them. I believe the long term solution of secure Bitcoin storage is more companies allowing multi-sig key signing. Unchained capital allows Fidelity to hold another key and you the 3rd, but I don't see why it couldn't be done more generally using PSBTs.
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    • dumpsterdiver 5y ago
      > Taking the keys private doesn't scale long term, as people still have to secure them. I believe the long term solution of secure Bitcoin storage is more companies allowing multi-sig key signing. It's a mixed bag, because while multi signature key signing would help mitigate events in which a key is compromised or lost, it would also expand the attack surface. Some might argue that it's easier to obtain a user's login credentials (for instance, by exploiting an XSS on a site storing one of your keys, or by posing as a support agent who "verifies" your security questions) than it would be to trick someone into handing over their private key outright. You do have a valid point though, in the long term it's unclear how well people will manage to secure their keys if they choose to take that burden entirely upon themselves. A natural disaster, for instance, could cause a lot of private keys to be lost. That being said, I would never trust a 3rd party to hold any of my private keys, because at that point they are no longer private.
• ronhav3 5y ago
  What is the real relationship between the 'crackdown' and these exchanges collapsing ? Is the collapse an excuse to arrest the operators?
• xvilka 5y ago
  With Turkish lira in a deep fall it will not help.
• aazaa 5y ago
  Exchanges are the low-hanging fruit for attempts to "ban" cryptocurrencies. This well-known pressure point has been used for years now. There's nothing new in that sense. What isn't well appreciated is just how difficult it will be to ban the transaction of cryptocurrencies outside of a government monetary system. Remove the exchanges and there goes the leverage. What also isn't well appreciated is that clamping down on exchanges is by far the best way to ensure a transition to a self-contained cryptocurrency economy that requires no on- or off-ramps. The more governments try to exploit their leverage with exchanges, the more they drive use patterns that will ultimately render that advantage useless.
  • leifg 5y ago
    Yes the government will never be able to ban cryptocurrency transactions on the blockchain. But if you can’t convert your cryptocurrency into fiat money the whole concept is pretty useless. Yes there might be a future where these “use patterns” don’t rely on exchanges but it’s been 10+ years with Bitcoin and I haven’t seen them. So let’s continue this conversations when crypto exchanges are replaced by “something”.
• nprz 5y ago
  Nearly every BTC post on HN is filled with comments deriding the usefulness of the currency, and yet we still pretty frequently see governments attempt to ban and outlaw the use of cryptocurrencies. Why are governments spending energy and effort to outlaw something that is so apparently useless?
  • creepto 5y ago
    BTC isn't a currency. That's the old narrative, now it's a "Store of value" and a "hedge against inflation".
  • vadansky 5y ago
    >Nearly every MML post on HN is filled with comments deriding the usefulness of ponzi schemes, and yet we still pretty frequently see governments attempt to ban and outlaw them. Interesting. Not saying BTC is that, but just because the government is against it doesn't mean it's suddenly useful
    • jl2718 5y ago
      I think the Bitcoin crowd would welcome government involvement if it were solely for the purpose of consumer protection. It would have been easy for Turkey to prevent this, but instead, they turn the victims into criminals. Is there anybody of note in the Bitcoin space that has ever suggested that custodial arrangements of crypto should be completely without legal or technical means of protection for depositors? No. But there is almost nothing that any government on earth offers for that kind of assurance to the consumer. Conversely, they have all established legal and technical means that they may confiscate deposits. They’re not doing anything to stop this ‘ponzi scheme’. They’re just making sure they can profit from it.
  • bafumio 5y ago
    I'm not following your argument. One issue if bitcoin is that countries will block it because countries don't want to loose the co trol over currency. It is also purely against btc not the idea of cryptocurrency or the thought of having one global trusty cryptocurrency. My personal btc hatred comes from the huge energy waste though.
• fovc 5y ago
  Total crypto noob question: What is the lowest cost way to convert some USD in a bank account into BTC? I looked at some exchanges and the fees seemed to be in percentage points which seemed outrageously expensive!
  • tgsovlerkhgsel 5y ago
    USD in a US bank account? IIRC Gemini, Coinbase Pro, Kraken are the most reputable US exchanges. Not necessarily the very cheapest.
• 1cvmask 5y ago
  This is such a clickbait title of the highest order. Two large local exchanges collapsed recently in what are most definitely exit scams. Cryptocurrency is still legal. You can not use cryptocurrency for local payments online and offline. There was only one place that had announced that would accept crypto (Bitcoin) as payment the week it was made illegal by the central bank. It was the local Rolls Royce and Lotus car dealership. The reasoning of the ban that goes into effect April 30 was for KYC and AML reasons.
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• bafumio 5y ago
  Right now every 10 minutes 300000$ are given miners to mine one block for avg 2000 transactions. Wtf what a waste
• Slaren 5y ago
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• Shorel 5y ago
  Well, your BTC should always be in your own wallet, not in an exchange.