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Voyager suspends trading, deposits, withdrawals, and loyalty rewards
- radicaldreamer 4y agoWere they gambling with customer funds? I don't understand how they lost crypto they were simply holding as a custodian...
- ansible 4y agoI sometimes wonder if I'm the only one who just wants a bank to be a bank. I've been with the same relatively small regional bank for 30 years. I have a checking account, savings account and that's it. They've been stable this entire time, and I've never worried my money was going to disappear. As another sign of being an old man, I'm old enough to remember the phrase "as safe as money in the bank". You see, when I was a kid, the banks had been operating under decades of strong regulation by the FDIC and other agencies, and were widely considered to be a safe place to put your money. Not that the banking sector hasn't seen its share of problems in that time. From the S&L crisis, to the home mortgage lending fraud that lead to the big crash. But in all that time, with just a little effort, you could put at least some of your money in a regular local bank, and expect it to be there tomorrow. Bank local! If you want to speculatively invest, that's fine. But keep some money in a local bank so that you can pay your bills next month.
- MarcoZavala 4y ago[dead]
- alexjplant 4y agoAren't retail and investment banking separate spaces? Aren't depository accounts insured to the tune of a quarter of a million dollars by the FDIC? Isn't Voyager a crypto exchange? I tend to keep my money in local credit unions as well, but I'm struggling to understand how this discussion is germane to Voyager's actions here. EDIT: See https://www.investvoyager.com/blog/voyager-is-now-fdic-insured/ https://www.investvoyager.com/blog/voyager-is-now-fdic-insur...
- iskander 4y agohttps://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bl... >the Financial Services Modernization Act of 1999...repealed part of the Glass–Steagall Act of 1933, removing barriers in the market among banking companies, securities companies, and insurance companies that prohibited any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company FDIC insurance ends up being the main guarantee of safety, especially in the modern era of 0% reserve requirements.
- NovemberWhiskey 4y ago>especially in the modern era of 0% reserve requirements. Total red herring; reserve requirements went away but they were irrelevant because banks were holding massively in excess of the required reserves in any case.
- JumpCrisscross 4y ago> especially in the modern era of 0% reserve requirements They’ve been replaced with capital requirements, which make a lot more sense in modern finance than reserve requirements.
- 4y ago
- sdfhdhjdw3 4y agoI guess everyone's strategy in the crypto space is put everything you have on bitcoin and hope it goes up. It's a really good strategy, when it works.
- barnbuilder 4y agoThe people getting wiped out by the collapse of Voyager, Celsius, etc. were not putting their money on bitcoin. They were giving it to a custodian who thought they could beat bitcoin by investing in altcoins (or lending to those who do so). This is definitely not "everyone's strategy"; plenty of us bitcoiners have been warning against this sort of irresponsible activity for a long time.
- tomjakubowski 4y agoWhat's irresponsible about that compared to just parking it in BTC?
- barnbuilder 4y agoOnce someone sends their bitcoin or "crypto" to a lending platform, they no longer own this asset. What they now have is an IOU for that asset that the platform may be unwilling or unable to fulfill in the future, as appears to be the case with Voyager and numerous others before it.
- Skunkleton 4y agoYes, but setting aside direct ownership which is not a prerequisite for investing in any coin, how is bitcoin a better choice? It seems to me that is like saying, well you really should have invested in Exxon and you would be ok now.
- sdfhdhjdw3 4y agoCrypto is one of the biggest active victim-blaming communities. "Not your wallet not your coin", or whatever they like saying, is just is just deflection from valid criticism that crypto is very easy to exploit without recourse.
- armchairhacker 4y agoI saw this on their site: > FDIC INSURED ON USD $250,000 > You USD is held by our banking partner, Metropolitan Commercial Bank, which is FDIC insured, so the cash you hold with Voyager is protected. So does that mean anyone with less than $250k is guaranteed their money? Is there any legal backing?
- ValentineC 4y agoI think the keyword here is "cash". Other forms of assets, namely crypto, aren't protected by FDIC insurance.
- koolba 4y agoI wonder if this is at all related to the recent move by Coinbase to merge USDC / USD balances.
- InefficientRed 4y agoI have a hard time imagining a jury coming to the conclusion that this phrasing (still on their site) isn't intentionally misleading.
- notch656a 4y agoUSDC is supposedly USD backed, so a reasonable person would presume someone who advertises FDIC insurance of cash would assume the USDC underlying USD is backed by FDIC. Seems like pretty clear fraud to me if the USDC isn't actually FDIC insured. If they meant only some of the cash (non USDC backed) was insured they should have said that.
- jcranmer 4y ago> USDC is supposedly USD backed, so a reasonable person would presume someone who advertises FDIC insurance of cash would assume the USDC underlying USD is backed by FDIC. That is not how FDIC insurance works. If you don't hold USD, you don't enjoy any FDIC insurance, period. Not your USD, not your insurance. > If they meant only some of the cash (non USDC backed) was insured they should have said that. Judging from the text at the top of this thread, this is precisely what they said, so it's not fradulent. At no point are they saying that they offer accounts protected by FDIC insurance--instead, they're saying that their USD reserves are in FDIC-insured accounts. So no misrepresentation going on.
- yieldcrv 4y agonot your keys, not your coins
- Animats 4y agoAnother one? Tether is looking stressed. In the last three months, a lot of Tether has been cashed out. Look at the chart for Market Cap -> Last 3 months.[1] From US$82 billion to US$66 billion. Today, US$200 million was cashed out. Every few days, their market cap drops suddenly. At this rate, in a few months we'll find out how much backing Tether really has, because it is being paid out. Stablecoins have two stable values: 1 and 0. [1] https://coinmarketcap.com/currencies/tether/ https://coinmarketcap.com/currencies/tether/
- marcell 4y agoTether's market cap dropping without a price drop is indication that they are liquid and able to handle (to date) almost $20 billion in withdrawal over a 1 month period. That is impressive and a sign of their robustness. They are passing a stress test so far. Their blog counters much of the FUD out there: https://tether.to/en/news/ https://tether.to/en/news/
- Animats 4y ago"The valuation of the assets of the Group have been based upon normal trading conditions and do not reflect an unexpected large-scale sale of assets, or the case of any key custodians or counterparties defaulting or experiencing substantial illiquidity, which may result in materially different or delayed realisable values. No provision for expected credit losses was identified by management at the financial reporting date." Yesterday, Voyager could have said that.
- adrr 4y agoWhats the limit on withdraws before they have liquidity issues? Easiest way to make investors confident is due a full audit with a top 4 auditing firm.
- marcell 4y agohttps://tether.to/en/transparency/#reports https://tether.to/en/transparency/#reports They claim 85% cash/cash equivalents, 15% less liquid assets. Cash equivalents is broken down also, 55% is Treasury bonds.
- Ancalagon 4y agoI interviewed with Voyager just before the drop in stocks. It was a pretty arduous process iirc, glad I didn't make it through.
- chx 4y agoReminder: all crypto"currencies" are a scam. It never was and for the foreseeable future it can not be anything else. https://news.ycombinator.com/item?id=31462469 https://news.ycombinator.com/item?id=31462469
- knowaveragejoe 4y agoBy this description, any speculative investing is a "scam". Kind of devalues the term "scam" IMO.
- Barrera 4y ago> We are in discussions with various parties regarding additional liquidity and the go-forward strategy for the company. While we don’t have anything else to share today, we are working diligently and hope to have more information to share soon. Translation: we are insolvent. The action we have taken prevents a run that will wipe out our working capital. We have been running a fractional reserve all along. This is getting tedious. Also: Voyager's alleged debtor, 3AC, just filed for Chapter 15 Bankruptcy: https://www.bloomberg.com/news/articles/2022-07-01/crypto-hedge-fund-three-arrows-files-for-chapter-15-bankruptcy https://www.bloomberg.com/news/articles/2022-07-01/crypto-he...
- TedDoesntTalk 4y ago> We have been running a fractional reserve all along How do you know that? It’s possible 3 Arrows missed their loan payments and that was enough to prevent them from meeting liquidity demands, no?
- jcranmer 4y agoIf loans were a component of Voyager's reserves, then by definition, Voyager was employing fractional reserve banking. It's even more amusing that you think this crisis being caused by failed loan payments doesn't mean that fractional reserves are in play, because backing deposits with loans in lieu of cash is literally the textbook example used to illustrate fractional reserve banking.
- TedDoesntTalk 4y agoPerhaps I just don’t understand fractional reserves.
- jcranmer 4y agoThe textbook example of fractional reserves: You are a bank. Sally gives you $100, so now you have $100 in cash as assets. Bob comes up to and asks for $80. You agree to give him $80, on the condition that he gives you $90 next week. Now you have $20 in cash and a $90 loan backing your $100 liability to Sally. Because that $20 in cash is less than $100, you have fractional reserves. Now, the real world is more complicated, because there's different definitions of cash and of liabilities, and even questions like "how much is this thing worth" can be very hard to pin down. But the basic idea of fractional reserves is that banks do not hold all of their reserves in cash. And yes, the cryptocurrency industry does cater heavily to people who find the existing banking system abhorrent because it practices fractional reserve banking while practicing fractional reserve banking themselves, just far more quietly. (Indeed, a lot of the cryptocurrency industry is basically preying on people who are financially illiterate.)
- ww520 4y agoThere's a myth that Voyager is FDIC insured. It's pure marketing. Voyager has an omnibus account with the Metropolitan Commercial Bank where Voyager's customers deposit their money. Voyager acts as the money manager of the omnibus account and has absolute control over the money. Metropolitan is a member of FDIC and is FDIC insured. In the case of the Metropolitan bank failing, the FDIC insurance kicks in to cover any loss of the omnibus account upto 250K. However, Voyager is NOT a member of FDIC and is not FDIC insured. In the case of Voyager failing, the money is gone. FDIC won't be involved as Metropolitan is still fine. Voyager customers hoping FDIC coming in to cover their loss are going to have a rude awakening. Edit: A simple analogy is that your parents and you open a shared account with a bank. Your parents lose all the money from the account. FDIC is not going to cover any of the loss since the bank is fine.
- notch656a 4y agoWhat the hell? Is there no penalty for advertising as being FDIC insured when client deposits are not? Plain as day I checked their tweets and they made a statement about FDIC insurance and the next sentence was telling you to start your crypto investment.
- ww520 4y agoIMO any non-FDIC entity advertising being FDIC insured is borderlining on fraudulent advertisement.
- qeternity 4y agoI mean technically they are FDIC insured…it’s just their “depositors” aren’t.
- oldgradstudent 4y agohttps://www.consumerfinance.gov/compliance/circulars/circular-2022-02-deception-representations-involving-the-fdics-name-or-logo-or-deposit-insurance/ https://www.consumerfinance.gov/compliance/circulars/circula...
- deleted 4y ago
- ezekiel11 4y agoJust curious, how many of you hold crypto? I've always stayed away from it but what is a % of HN who support crypto roughly?
- wly_cdgr 4y agoHow can a bank get off the ground without using fractional reserves or relying on the founders putting their own money at risk to start the business? No giving out loans until you've created enough of a buffer? But how to build that buffer in the first place, high fees? But how to successfully enter a competitive market as an unknown newcomer charging high fees?
- captn3m0 4y agoThe regulator usually demands the former (a war chest).
- allenrb 4y agoIt’s almost as if unregulated financial institutions don’t operate on the same standards as regulated ones. That would be crazy, though, so it must not be true. If you’ve never read about what markets were like 100+ years ago (at least in the United States), it’s enlightening. Turns out that people lost money left and right due to fraud and mismanagement. Why would we expect anything different now?
- 5350-uiop-1130 4y agoknowing how this market works, probably not a good idea to short the voyager token
- Simon_O_Rourke 4y ago> We are in discussions with various parties regarding additional liquidity and the go-forward strategy for the company. I actually smiled at that rather eloquent retelling of the old classic "dude, we're totally f*ked and don't know what to do". As other posters have sagely advised, keep some of your money in a small regional bank!
- hestefisk 4y agoSo a bank but not a bank.