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It happens on Wall St as well but more "subtle". Retail investors and tax payers have always been the bag holders.

WeylandYutani 4y ago
Do banks get hacked very often? They seem to have their security in order. Probably because they would have to reimburse their customers if something went wrong.
- ehnto 4y ago
  I imagine they do their best to run a tight ship yes, but I also imagine the fact that banks still run a lot of legacy pipelines and audits means it's also a little harder to find bugs in the apps and websites, that would actually let you achieve much.
- themihai 4y ago
  When the banks get bankrupt (i.e due overleverage, stealing/using customer's money etc) their customers get nothing back. A such example is MF Global. I'm not going into the whole story why banks and centralised/opaque finance is bad. Now the whole point of crypto was the tech behind it which was supposed to replace banks, exchanges and missuse of your OWN money. It's supposed to be an alternative to the trash financial tools we already use. The fact that people are using entities such FTX, Binance makes them deserve to be punished for their betrayal. Regardless if they use FTX or JP Morgan they pretty much deserve to experiment the shortfalls of centralised finance. I think it's part of the hello world example of what DeFi is trying to solve. One more thing: If FTX was hacked I bet it has almost nothing to do with the crypto technology. https://en.m.wikipedia.org/wiki/MF_Global https://en.m.wikipedia.org/wiki/MF_Global
  - fieldcny 4y ago
    MF Global wasn’t a bank. “Nothing to do with the crypto technology” is an empty and meaningless statement. IF, and that’s a very big if, they got hacked, the fact that $600m could be moved and disappeared so quickly is 100% to do with the “crypto technology”. In the real financial system it is exponentially harder to make money disappear, transfers are logged on three sides of the transaction, you have to hack multiple autonomous and different tech stacks, and you have to wait as the transfers get transmitted, validated and passed in.
  - awinder 4y ago
    “In January 2013, a judge approved a settlement that would return 93 percent of customers' investments” A great deal larger than nothing.
  - deleted 4y ago
    [deleted]
  - throwaway2037 4y ago
    You wrote: <<their customers get nothing back>> Another comment already noted that MF Global was not a (commercial/retail) bank. One part of it was a broker-dealer. Also, in the United States customers of MF Global brokerage were covered by the Securities Investor Protection Corporation (SIPC) which (to quote Wiki): <<can pay the customer (via its trustee) up to $500,000 for missing equity, including up to $250,000 for missing cash>>. Please read more here: https://en.wikipedia.org/wiki/Securities_Investor_Protection_Corporation https://en.wikipedia.org/wiki/Securities_Investor_Protection... Even with all of the bad behaviour during MF Global's last days (to quote Wiki again): <<In January 2013, a judge approved a settlement that would return 93 percent of customers' investments, with the prospect of additional payouts from the company's general estate.>> Impressive, considering the extent of fraud at MF Global! Can any collapsed crypto exchange claim the same recovery rate? I doubt it.
- jnwatson 4y ago
  I have direct knowledge of several bank hacks. Most of the time they don’t publish it.
  - xeromal 4y ago
    Isn't the difference that banks have insurance for those hacks?
    - drewmol 4y ago
      Yes banks have fidelity bonds called bankers blanket bonds (BBB) which cover losses from fraud, theft, etc. The FDIC doesn’t ensure against robbery, identity theft(banking fraud), etc. so this is an important protection for banks to provide.
      - xeromal 4y ago
        Ah! I had no idea FDIC didn't cover robbery. Thanks for clarifying!
        selecsosi 4y ago
        They will cover the depositor's funds up to the 250k limit in the event of an event where the bank cannot return your funds, but banks assets or property is not covered under FDIC and need to be separately insured.
pclmulqdq 4y ago
Wall Street doesn't rug pull people. It sells them bad bets and takes the opposite side of those bets. There is a massive difference.
- svnt 4y ago
  It’s not a massive difference just a rug pull at a higher conceptual level (informational) because the obvious financial rug pull was done a hundred years ago and has since been regulated.
  - pclmulqdq 4y ago
    They always give you the information, too. People just don't always like to read it. Some people don't care, and others just jump on whatever bandwagon they can find. Almost everyone who has lost their shirt in financial derivatives in the past 50 years could have learned about the risks they were taking from some text in a prospectus somewhere, but chose not to.
    - headsoup 4y ago
      That's exactly the same for crypto too though, all the warning signs are constantly there.
      - pclmulqdq 4y ago
        It's not that Wall Street gives you warning signs. They literally tell you "this is a probably a bad bet, and you should not take it" in the descriptions of most products. Very few people actually read those descriptions, despite the fact that they really should if they are buying weird financial products. The banks tell you to read them. And yes, a mortgage is a weird financial product. For example, people who lost a lot of money holding XIV (a leveraged inverse-VIX ETN) had the warning about not holding the thing overnight in bold red text in the prospectus. People holding leveraged CDOs and every kind of CDS had all kinds of warnings in big bold text in their prospectus. The good old "liar's loans" of the early 2000's had big bold text saying "it will be bad for you if you lie about your income." Pretty much the only financial products that don't come with big bold text saying "you are an idiot for buying this" are single stocks and the most boring of ETFs/mutual funds (eg SPY). Contrast that with the warning signs from crypto projects, which are a lot more oblique than big bold text in a document that they tell you to read. Wall Street screws you, but they generally do it slowly and they tell you how. Crypto projects just straight up steal your money one day out of the blue and run to Dubai.

Do banks get hacked very often? They seem to have their security in order. Probably because they would have to reimburse their customers if something went wrong.

ehnto 4y ago
I imagine they do their best to run a tight ship yes, but I also imagine the fact that banks still run a lot of legacy pipelines and audits means it's also a little harder to find bugs in the apps and websites, that would actually let you achieve much.
themihai 4y ago
When the banks get bankrupt (i.e due overleverage, stealing/using customer's money etc) their customers get nothing back. A such example is MF Global. I'm not going into the whole story why banks and centralised/opaque finance is bad. Now the whole point of crypto was the tech behind it which was supposed to replace banks, exchanges and missuse of your OWN money. It's supposed to be an alternative to the trash financial tools we already use. The fact that people are using entities such FTX, Binance makes them deserve to be punished for their betrayal. Regardless if they use FTX or JP Morgan they pretty much deserve to experiment the shortfalls of centralised finance. I think it's part of the hello world example of what DeFi is trying to solve. One more thing: If FTX was hacked I bet it has almost nothing to do with the crypto technology. https://en.m.wikipedia.org/wiki/MF_Global https://en.m.wikipedia.org/wiki/MF_Global
- fieldcny 4y ago
  MF Global wasn’t a bank. “Nothing to do with the crypto technology” is an empty and meaningless statement. IF, and that’s a very big if, they got hacked, the fact that $600m could be moved and disappeared so quickly is 100% to do with the “crypto technology”. In the real financial system it is exponentially harder to make money disappear, transfers are logged on three sides of the transaction, you have to hack multiple autonomous and different tech stacks, and you have to wait as the transfers get transmitted, validated and passed in.
- awinder 4y ago
  “In January 2013, a judge approved a settlement that would return 93 percent of customers' investments” A great deal larger than nothing.
- deleted 4y ago
  [deleted]
- throwaway2037 4y ago
  You wrote: <<their customers get nothing back>> Another comment already noted that MF Global was not a (commercial/retail) bank. One part of it was a broker-dealer. Also, in the United States customers of MF Global brokerage were covered by the Securities Investor Protection Corporation (SIPC) which (to quote Wiki): <<can pay the customer (via its trustee) up to $500,000 for missing equity, including up to $250,000 for missing cash>>. Please read more here: https://en.wikipedia.org/wiki/Securities_Investor_Protection_Corporation https://en.wikipedia.org/wiki/Securities_Investor_Protection... Even with all of the bad behaviour during MF Global's last days (to quote Wiki again): <<In January 2013, a judge approved a settlement that would return 93 percent of customers' investments, with the prospect of additional payouts from the company's general estate.>> Impressive, considering the extent of fraud at MF Global! Can any collapsed crypto exchange claim the same recovery rate? I doubt it.
jnwatson 4y ago
I have direct knowledge of several bank hacks. Most of the time they don’t publish it.
- xeromal 4y ago
  Isn't the difference that banks have insurance for those hacks?
  - drewmol 4y ago
    Yes banks have fidelity bonds called bankers blanket bonds (BBB) which cover losses from fraud, theft, etc. The FDIC doesn’t ensure against robbery, identity theft(banking fraud), etc. so this is an important protection for banks to provide.
    - xeromal 4y ago
      Ah! I had no idea FDIC didn't cover robbery. Thanks for clarifying!
      - selecsosi 4y ago
        They will cover the depositor's funds up to the 250k limit in the event of an event where the bank cannot return your funds, but banks assets or property is not covered under FDIC and need to be separately insured.

pclmulqdq 4y ago

Wall Street doesn't rug pull people. It sells them bad bets and takes the opposite side of those bets. There is a massive difference.

svnt 4y ago
It’s not a massive difference just a rug pull at a higher conceptual level (informational) because the obvious financial rug pull was done a hundred years ago and has since been regulated.
- pclmulqdq 4y ago
  They always give you the information, too. People just don't always like to read it. Some people don't care, and others just jump on whatever bandwagon they can find. Almost everyone who has lost their shirt in financial derivatives in the past 50 years could have learned about the risks they were taking from some text in a prospectus somewhere, but chose not to.
  - headsoup 4y ago
    That's exactly the same for crypto too though, all the warning signs are constantly there.
    - pclmulqdq 4y ago
      It's not that Wall Street gives you warning signs. They literally tell you "this is a probably a bad bet, and you should not take it" in the descriptions of most products. Very few people actually read those descriptions, despite the fact that they really should if they are buying weird financial products. The banks tell you to read them. And yes, a mortgage is a weird financial product. For example, people who lost a lot of money holding XIV (a leveraged inverse-VIX ETN) had the warning about not holding the thing overnight in bold red text in the prospectus. People holding leveraged CDOs and every kind of CDS had all kinds of warnings in big bold text in their prospectus. The good old "liar's loans" of the early 2000's had big bold text saying "it will be bad for you if you lie about your income." Pretty much the only financial products that don't come with big bold text saying "you are an idiot for buying this" are single stocks and the most boring of ETFs/mutual funds (eg SPY). Contrast that with the warning signs from crypto projects, which are a lot more oblique than big bold text in a document that they tell you to read. Wall Street screws you, but they generally do it slowly and they tell you how. Crypto projects just straight up steal your money one day out of the blue and run to Dubai.