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Exchanges aren't banks, and crypto exchanges especially shouldn't be banks. Crypto is liquid and can be redeemed in its own denomination instantly if you hold i
by zeven7 4y ago
Exchanges aren't banks, and crypto exchanges especially shouldn't be banks. Crypto is liquid and can be redeemed in its own denomination instantly if you hold it in a simple wallet. That's what exchanges should be doing. They shouldn't be doing fractional reserve banking, and a run shouldn't be possible. Preventing runs on a crypto exchange is exceedingly easy if the operators aren't taking risks with client funds.
- eru 4y agoWell, it seems the word 'exchange' in this case is used with a different meaning when applied to FTX than the meaning you have in mind.
- stale2002 4y agoWhich is exactly the problem. This should be illegal, and people who do this should go to jail. Customer funds should be 1 to 1 backed with assets.
- deleted 4y ago[deleted]
- vba616 4y agoAre you saying that fractional reserve banking should be illegal, or that insolvent banks should be illegal? I think the second one already basically is. Or at least with a real bank, they get shut down and the FDIC bails the depositors out. Educated rumor is suggesting FTX may be insolvent, not only the victim of a bank run type scenario.
- eru 4y agoAs long as noone is being lied to, I don't see any problems. Case A, tell your customers that their funds have asset backing, and have asset backing: fine. Case B: tell your customers that their funds have no asset backing, and have no asset backing: fine. (Those customers deserve what they get.) Case C: tell your customers nothing, and do whatever you feel like: fine. (Those customers deserve what they get.) Case D: tell your customers that their funds have asset back, and have no asset backing: bad.
- stripedfish7 4y agoExcept none of these 4 cases happened with FTX. SBF claimed that assets WERE backed, while it appears that they were not.
- eru 4y agoThat would be case D, wouldn't it be?
- HelloNurse 4y agoAssets backed with lies and cryptobullshit. At least someone has had a learning opportunity.
- stale2002 4y ago> As long as noone is being lied to That is exactly what is happening. There is lots of lies being told, with no transparency, and then people's money disappears. Instead of that, if people money disappears, we should arrest the people who made it disappear.
- eru 4y agoNo argument from me there. I was just narrowly addressing the point in stale2002's comment. Though to be honest, it is well known that the long term fate of any crypto exchange is to go bust. So no one could really claim that they didn't know it was coming. Crypto is glorified gambling. (At least so far. In principle, crypto can mature over time into something more serious.)
- deleted 4y ago[deleted]
- headsoup 4y agoI don't think it can, because all those serious things already exist and require the kinds of governance that the crypto promise rails against.