6 ms·

Suspending withdrawals should not be legal. It’s not their money, it belongs to their customers. Law should require that depositors always be the most senior c

• karatinversion 4y ago
  Funny how it goes with the entities that talk like banks but are set up as regulatory bypasses
  • JimmyRuska 4y ago
    They attack banks as being poor investments, and position themselves as the modern way to get better yields https://twitter.com/mashinsky/status/1430874984692555781 https://twitter.com/mashinsky/status/1430874984692555781
    • hotpotamus 4y ago
      I used to think all these guys were brilliant predators. I've updated my thinking in that I allow for the possibility that some are dumb predators but I can't tell the difference.
      • JimmyRuska 4y ago
        It's a ponzi. The goal is to grow as fast as possible before a liquidity crunch makes you go insolvent. But the main goal was always to get that payday after bankruptcy steals the user funds.
    • JetSpiegel 4y ago
      https://twitter.com/CelsiusNetwork/status/1536169010877739009#m https://twitter.com/CelsiusNetwork/status/153616901087773900... > @CelsiusNetwork is pausing all withdrawals It's the CIIIRCLE of LIFE!
• once_inc 4y ago
  Their Terms and Conditions regularly state that users of the platform don't deposit their money, but actually lend that money to the platform, and that the platform isn't obligated to pay back that loan in case of default. Basically, for a marginal yield in a volatile industry, you are increasing your exposure to counter-party risk. People using these services are greedy and dumb, and I can't for the life of me understand why anyone would do this. Also; I expect that a significant number of these companies will eventually be sued and will be forced to repay their customers.
  • unityByFreedom 4y ago
    > I expect that a significant number of these companies will eventually be sued and will be forced to repay their customers. The money was already moved. They will declare bankruptcy.
    • highwaylights 4y ago
      Exactly this. Also, they may not have lost any real money, so the users may not have the rights they think they do here (and probably shouldn’t, given the courts aren’t funded to pursue imaginary internet money).
  • makeitdouble 4y ago
    While this is an edge case with a service that is far from being mainstream, I wonder if that kind of setup will propagate to standard financial products. I am thinking about how over the years we stopped owning digital purchases like music and books, and instead moved to a model where the service gives unlimited access to the good in exchange for a one time payment. At first it was a few fringe services, and now this is basically the norm when it comes to digital purchases. How far would we be from a future where a brick and mortar "banks" offer their standard services, but also a "fancy account" that feels more attractive but doesn't actually work like a bank account anymore.
    • JumpCrisscross 4y ago
      > wonder if that kind of setup will propagate to standard financial products It won’t. It’s been outlawed since the 30s. China had its wealth management product era, and is now cracking down. Nobody financially literate should be falling for a yield farming scheme.
• WJW 4y ago
  If you want that kind of security, normal banks are a better place for your money. Traditional finance may have its drawbacks but at least customers losing their deposits because the bank went bankrupt is extremely rare these days.
  • JanSt 4y ago
    Isn‘t it technically the same? Your deposits would be used to pay back the banks debt before it would be given back to you? Yes, it‘s rare but the process seems to be the same?
    • JumpCrisscross 4y ago
      > Your deposits would be used to pay back the banks debt before it would be given back to you No. In most systems, depositors are first. In America, banks don’t go bankrupt, but instead go into court-supervised FDIC receivership. I have some sympathy for those who lost money in the first few crypto failures. At this point, it’s fools being separated from their money.
    • pjc50 4y ago
      Your deposits are bank debt. What happens in these situations is that liabilities (debts, including deposits, unpaid wages, rent etc) exceed assets (cash, investments), usually because some of the investments turn out to be worthless. So you get whatever fraction of the deposit that can be covered by the sale of the remaining assets. This is why Western governments have bank insurance schemes to make the depositors whole in these cases.
  • AllegedAlec 4y ago
    Over here banks decided that they own your money, and that if you withdraw large enough sums they're allowed to charge you for it. Banks are just as bad, if not more so because of how ingrained into the political system that are.
    • roflyear 4y ago
      Over where? Can you name an instance of a bank that did not allow people to withdraw money? Fees don't exactly count unless they are outrageous. Bank fees are usually fixed. Like $20 wire fee.
• deleted 4y ago
  [deleted]
• JimmyRuska 4y ago
  TOS: " Due to the market being in a nascent stage, during a market disruption or during a force majeure event, you may face difficulties or impossibility in liquidating your position under certain market conditions. " "23.3. Please note that in particular, any of your losses caused by any of the following events, including but not limited to: " " loss of profits, sales, business, business opportunity or revenue; " (they made this section a lighter hard to read gray than the rest of their TOS) https://www.vauld.com/legal/terms-and-conditions https://www.vauld.com/legal/terms-and-conditions Even Celsius was more straightforward "In the event that Celsius becomes bankrupt, enters liquidation or is otherwise unable to repay its obligations, any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable, and you may not have any legal remedies or rights in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under any applicable laws." https://celsius.network/terms-of-use https://celsius.network/terms-of-use
  • notahacker 4y ago
    "Loss of business opportunity" feels particularly broad in a clause giving them scope not to repay your money... almost like they wanted to leave scope to rugpull even if the service was operating at a small profit.
• graeme 4y ago
  A LOT of regulation goes along with that. These entities eschewed regulation and those investing talked about the benefits of eschewing it. The people whose withdrawals are suspended are NOT depositors. They’re unsecured creditors, the terms of such services generally say they transfer the right in the tokens to the exchange or lending co. These companies aren’t banks. They should not have been allowed to grow as they did; they were obvious ponzis. Had they had the regulations you advocate they could never have formed in the first place, or they never would have got capital.
  • doggwalker 4y ago
    It is almost like there is a reason and purpose for having highly regulated financial markets. Who knew? At least when Full Tilt Poker was raided the previous decade the online gamblers didn't pretend Full Tilt was some kind of depository bank.
• soco 4y ago
  One of the crypto selling points is the independence from legislators evil.
• unityByFreedom 4y ago
  It's a scam, not the government's fault. There would be no way to enforce such a law. It's on you to understand that get-rich-quick schemes are too good to be true.
• Canada 4y ago
  That's kind of what's going on here already. If the company is able to resume withdrawals then everyone is going to withdraw and it's over. If the company is not able to do so then it's ultimately going to be liquidated, and then it's over. What isn't clear is how and when the depositors want that to happen. There are going to be positions where you could liquidate now at a loss, or you could wait it out and that position is whole or at a profit. Who gets to decide? It's less bad overall if the company suspends withdrawals and tries to sort it out in an orderly manner than if it just hastily liquidated everything to survive the run until the moment of running out of assets to deliver.
• aahortwwy 4y ago
  Nah, depositors should just use smart contracts to ensure they don't get screwed. /s
• pjc50 4y ago
  > Law should require This is a matter for Singaporean bankruptcy law. This company seems to not have been registered as a bank or whatever the equivalent in local finreg terms is, so you'll just have to file with the Singaporean court and hope.
• lmm 4y ago
  Law should require that anything to do with cryptocurrency is illegal. Otherwise it will always find a way to bypass the rules.
• roflyear 4y ago
  Are you legitimately surprised that crypto firms are doing this? Did you think they wouldn't?