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I guess they want to give insiders the chance to pull out to 100%. But ye ... there should be a controlled collapse of these things. Immediate liquidification

I guess they want to give insiders the chance to pull out to 100%. But ye ... there should be a controlled collapse of these things. Immediate liquidification with depositors having priority.

cm2187 4y ago
Which in banking is known as bail-in (regulations introduced after 2008). In the financial service industry you can't really do a chapter 11, i.e. operate while being protected from your creditors, as your business is precisely to take money from creditors (unlike a car manufacturer). That left you as only solution of either doing a bail out (3rd party, typically state, injecting capital) or going bust Lehman's way. Bail-in was introduced where the regulator has the power to declare a bank non viable, and to impose an extra-judicial restructuring over a weekend so the bank can operate normally on Monday morning. The losses in the restructuring follow a modified creditor hierarchy, which essentially follows the creditor hierarchy with some tweaks (tries to avoid restructuring deposits, complex liabilities or anything secured, and favors restructuring subordinated instruments and wholesale funding liabilities). Crypto is reinventing all the financial scandals and fuckups of the last century and re-discovering the benefit of the financial regulations it was designed to avoid.
pjc50 4y ago
> controlled collapse Controlled by whom? The whole point of cryptocurrency is to get beyond such limitations as "FDIC insurance" and "accredited investor" and "anti money laundering", and allow people to give their money directly to Singaporean scammers without legal recourse.
- wmf 4y ago
  It wouldn't be hard to come up with a fair liquidation algorithm.
  - sbierwagen 4y ago
    Why would the bank want the liquidation to be fair? The primary selling point is that they're unregulated. The goal is to steal money.

I guess they want to give insiders the chance to pull out to 100%. But ye ... there should be a controlled collapse of these things. Immediate liquidification with depositors having priority.

cm2187 4y ago

Which in banking is known as bail-in (regulations introduced after 2008). In the financial service industry you can't really do a chapter 11, i.e. operate while being protected from your creditors, as your business is precisely to take money from creditors (unlike a car manufacturer). That left you as only solution of either doing a bail out (3rd party, typically state, injecting capital) or going bust Lehman's way. Bail-in was introduced where the regulator has the power to declare a bank non viable, and to impose an extra-judicial restructuring over a weekend so the bank can operate normally on Monday morning. The losses in the restructuring follow a modified creditor hierarchy, which essentially follows the creditor hierarchy with some tweaks (tries to avoid restructuring deposits, complex liabilities or anything secured, and favors restructuring subordinated instruments and wholesale funding liabilities). Crypto is reinventing all the financial scandals and fuckups of the last century and re-discovering the benefit of the financial regulations it was designed to avoid.

pjc50 4y ago

> controlled collapse Controlled by whom? The whole point of cryptocurrency is to get beyond such limitations as "FDIC insurance" and "accredited investor" and "anti money laundering", and allow people to give their money directly to Singaporean scammers without legal recourse.

wmf 4y ago
It wouldn't be hard to come up with a fair liquidation algorithm.
- sbierwagen 4y ago
  Why would the bank want the liquidation to be fair? The primary selling point is that they're unregulated. The goal is to steal money.