6 ms·

Crypto exchanges may be exchanging ETH loans to pass proof-of-reserve audits

39 points by VagueMag 4y ago

cuteboy19 4y ago
Worse is that these "audits" do not account for the other side of the equation: liabilities. They can look at the assets sure, but what good is having 1 billion if you owe 2 billion? An actual audit is performed by an independent firm going through your books. Something that will probably never happen with crypto
- zeroclip 4y ago
  This happens all the time in crypto, look at DeFi which is very transparent and analyzable. If you build a custodial centralized unregulated exchange then yeah, this kind of auditing no longer works.
  - cuteboy19 4y ago
    Problem is that fraud is a comparative advantage. Crypto dot com can do an advertising blitz with their money printer and no defi can match them
TacticalCoder 4y ago
And that's precisely why public ledgers are needed. These scammers are all going to be exposed thanks to people doing detective work. Meanwhile officials at the SEC and the CTFC were busy working on allowing regulatory capture to happen, which would have allowed FTX/BlockFi to be "regulated" entities, operating as "legit" exchanges. With BlockFi offering unrealistic APYs (supposedly not knowing the ongoing scams at Alameda Research). And FTX running a downright scam, fully knowing what was going on Alameda Research. (I'll give BlockFi the benefit of the doubt). And these crooks at FTX/Alameda and their greased officials were that close at succeeding. Pretending decentralized exchanges needed to be regulated out of existence, while putting daddy's friends' kids at the top of the crypto exchanges food chain, free to run their complete scams. Meanwhile legit centralized players like Coinbase (I take it they're legit) seems to be doing fine. So do decentralized exchanges like Uniswap. These guys were basically planning the next Enron, complete with deep ties high up in the administration (the SEC and CFTC are implicated in the ongoing scandal and have lots of explanation to do). But instead of focusing on that and how, precisely, public ledgers allowed to expose these crooks (and we may see officials falling: I hope we do for there are some who are obviously in it), let's instead, on HN, hate on crypto? I think a serious talk needs to be had here. We're talking about Bloomberg and Sequoia and many others presenting the biggest scammer since Enron as an altruistic white knight. I want excuses. And I certainly want decentralized cryptocurrencies to succeed now.
- boppo1 4y ago
  >the SEC and CFTC are implicated Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once". I sure hope someone who knows how to dig is working on connecting these dots and just being quiet about it. Because I haven't seen anything substantive and these regulators are going to get away with no one the wiser.
  - TacticalCoder 4y ago
    Well Elon Musk just tweeted that because they all democrats nothing will happen during the current administration. It's very sad if there's not even an investigation but, as usual, it's likely that the crooks at the top are going to stay free. I'm not so sure however that they'll keep the exact same jobs. > Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once". They're all tied. The ex-CFTC commissioner (the one who just deleted his Twitter account) used to work with Gensler too. SBF's father is a well connected Stanford professor teaching tax laws and who's on air saying he's helping FTX with regulations. These guys obviously all know each other. It's more than just one coincidence. It's many coincidences. As a sidenote Stanford as been behind quite a few very interesting characters recently: Elizabeth Holmes, SBF, SBF's two parents (one of them being implicated for sure even though he'll surely claim he had no idea what is son was doing). Maybe it's time they were to teach integrity and ethics at Stanford? Oh, wait, someone posted here on HN that SBF's parents "are Stanford lawyers who specialize in compliance and ethics.". I'm not sure there won't be some cleaning done at both Stanford and the MIT even if these people aren't indicted. It's kinda bad looking on your institution when the head of the department of Economics happen to be the dad of the CEO of the biggest scam since Enron. It's also bad looking when your tax law teachers were helping the biggest scam get licenses to operate as regulated entities. Even if nobody goes to jail, who's ever going to look at these people with any ounce of respect?
- AYBABTME 4y ago
  > want decentralized cryptocurrencies But what for? I think for many of the rest of us, crypto continues to be a solution in need of a problem, and a field full of crooks in general. Even if it was without crooks, it would still seem like an extremely high risk proposition with tenuously far fetched value-add.
zeroclip 4y ago
Reminder that this is not possible in a DEX or DeFi protocol. Can’t just hide the money when it’s all transparent on chain.
- hi5eyes 4y ago
  this will get buried and everyone on this site will cry about how the industry is all a scam because centralized entities blew up, completely missing how a lot of the innovation is happening under the radar and on-chain everyone will get mad, call for more regulation, more innovation will happen offshore/private deals for real innovation will get lapped up and everyone will get mad/wonder why the US didnt get a piece of the industry have fun being late again, hn
  - ilyt 4y ago
    - hi5eyes 4y ago
      if u say so
      - tpxl 4y ago
        Tell us about these innovations (that don't involve scamming people).
        jedimind 4y ago
        loaded question. there is enough material out there to convince any good faith actor that cryptocurrencies were the breeding ground and driver for innovations in cryptography research and application (zero knowledge proofs, verifiable computations...) and smart contracts which enabled completely trust-less decentralized exchanges. No amount of evidence will convince the bad faith actors who are hellbent on hating crypto regardless of evidence of which there are too many here on hn.
yieldcrv 4y ago
What are we renaming LA’s stadium to if Crypto.com mismanagement reaches greater heights
- bdcravens 4y ago
  Hardly a new problem. Minute Maid Park in Houston was originally Enron Field.
  - yieldcrv 4y ago
    Didn’t imply that it was I’m asking what a fun candidate would be In Miami for FTX replacement, it’s Bang Bros has submitted a bid. Not the first porn company to do that there OnlyFans is a popular revenue platform in LA, rolls of the tongue better for a stadium name too
    - bdcravens 4y ago
      Based on the Houston example, it'll probably be something boring.
saurik 4y ago
This is a link to a tweet of someone speculating about something where less than a half hour later they replied to themselves to retract the idea with evidence that undermines the accusation. So like, maybe this is true--and even if it isn't true it is still a demonstration of some ridiculous incompetence ;P--but this post is worse than speculation based on headline.
- bo1024 4y ago
  HN has become really low quality on cryptocurrency topics. Like what you'd expect on politics subreddits or something.
monero-xmr 4y ago
There is no reason each exchange can’t list every address of their wallets, hot and cold, for real time attestations. These “point in time” attestations are obvious scams. Binance posted all their addresses, these Tier 2 and 3 exchanges are shell games and they are trying to keep each other afloat.
- tommek4077 4y ago
  Bitfinex also published their adresses: https://github.com/bitfinexcom/pub/blob/main/wallets.txt https://github.com/bitfinexcom/pub/blob/main/wallets.txt
nubb 4y ago
this specific type of crime is impossible on chain and this is another win for defi and self custody (and in turn promotes being educated rather than relying on bankers). pathetic whiny HNers will cope-post all the typical bs here anyway. talk to your therapists about your problems.
gbronner 4y ago
Still rediscovering 19th century finance.

39 points by VagueMag 4y ago

Worse is that these "audits" do not account for the other side of the equation: liabilities. They can look at the assets sure, but what good is having 1 billion if you owe 2 billion? An actual audit is performed by an independent firm going through your books. Something that will probably never happen with crypto

zeroclip 4y ago
This happens all the time in crypto, look at DeFi which is very transparent and analyzable. If you build a custodial centralized unregulated exchange then yeah, this kind of auditing no longer works.
- cuteboy19 4y ago
  Problem is that fraud is a comparative advantage. Crypto dot com can do an advertising blitz with their money printer and no defi can match them

TacticalCoder 4y ago

And that's precisely why public ledgers are needed. These scammers are all going to be exposed thanks to people doing detective work. Meanwhile officials at the SEC and the CTFC were busy working on allowing regulatory capture to happen, which would have allowed FTX/BlockFi to be "regulated" entities, operating as "legit" exchanges. With BlockFi offering unrealistic APYs (supposedly not knowing the ongoing scams at Alameda Research). And FTX running a downright scam, fully knowing what was going on Alameda Research. (I'll give BlockFi the benefit of the doubt). And these crooks at FTX/Alameda and their greased officials were that close at succeeding. Pretending decentralized exchanges needed to be regulated out of existence, while putting daddy's friends' kids at the top of the crypto exchanges food chain, free to run their complete scams. Meanwhile legit centralized players like Coinbase (I take it they're legit) seems to be doing fine. So do decentralized exchanges like Uniswap. These guys were basically planning the next Enron, complete with deep ties high up in the administration (the SEC and CFTC are implicated in the ongoing scandal and have lots of explanation to do). But instead of focusing on that and how, precisely, public ledgers allowed to expose these crooks (and we may see officials falling: I hope we do for there are some who are obviously in it), let's instead, on HN, hate on crypto? I think a serious talk needs to be had here. We're talking about Bloomberg and Sequoia and many others presenting the biggest scammer since Enron as an altruistic white knight. I want excuses. And I certainly want decentralized cryptocurrencies to succeed now.

boppo1 4y ago
>the SEC and CFTC are implicated Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once". I sure hope someone who knows how to dig is working on connecting these dots and just being quiet about it. Because I haven't seen anything substantive and these regulators are going to get away with no one the wiser.
- TacticalCoder 4y ago
  Well Elon Musk just tweeted that because they all democrats nothing will happen during the current administration. It's very sad if there's not even an investigation but, as usual, it's likely that the crooks at the top are going to stay free. I'm not so sure however that they'll keep the exact same jobs. > Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once". They're all tied. The ex-CFTC commissioner (the one who just deleted his Twitter account) used to work with Gensler too. SBF's father is a well connected Stanford professor teaching tax laws and who's on air saying he's helping FTX with regulations. These guys obviously all know each other. It's more than just one coincidence. It's many coincidences. As a sidenote Stanford as been behind quite a few very interesting characters recently: Elizabeth Holmes, SBF, SBF's two parents (one of them being implicated for sure even though he'll surely claim he had no idea what is son was doing). Maybe it's time they were to teach integrity and ethics at Stanford? Oh, wait, someone posted here on HN that SBF's parents "are Stanford lawyers who specialize in compliance and ethics.". I'm not sure there won't be some cleaning done at both Stanford and the MIT even if these people aren't indicted. It's kinda bad looking on your institution when the head of the department of Economics happen to be the dad of the CEO of the biggest scam since Enron. It's also bad looking when your tax law teachers were helping the biggest scam get licenses to operate as regulated entities. Even if nobody goes to jail, who's ever going to look at these people with any ounce of respect?
AYBABTME 4y ago
> want decentralized cryptocurrencies But what for? I think for many of the rest of us, crypto continues to be a solution in need of a problem, and a field full of crooks in general. Even if it was without crooks, it would still seem like an extremely high risk proposition with tenuously far fetched value-add.

zeroclip 4y ago

Reminder that this is not possible in a DEX or DeFi protocol. Can’t just hide the money when it’s all transparent on chain.

hi5eyes 4y ago
this will get buried and everyone on this site will cry about how the industry is all a scam because centralized entities blew up, completely missing how a lot of the innovation is happening under the radar and on-chain everyone will get mad, call for more regulation, more innovation will happen offshore/private deals for real innovation will get lapped up and everyone will get mad/wonder why the US didnt get a piece of the industry have fun being late again, hn
- ilyt 4y ago
  - hi5eyes 4y ago
    if u say so
    - tpxl 4y ago
      Tell us about these innovations (that don't involve scamming people).
      - jedimind 4y ago
        loaded question. there is enough material out there to convince any good faith actor that cryptocurrencies were the breeding ground and driver for innovations in cryptography research and application (zero knowledge proofs, verifiable computations...) and smart contracts which enabled completely trust-less decentralized exchanges. No amount of evidence will convince the bad faith actors who are hellbent on hating crypto regardless of evidence of which there are too many here on hn.

yieldcrv 4y ago

What are we renaming LA’s stadium to if Crypto.com mismanagement reaches greater heights

bdcravens 4y ago
Hardly a new problem. Minute Maid Park in Houston was originally Enron Field.
- yieldcrv 4y ago
  Didn’t imply that it was I’m asking what a fun candidate would be In Miami for FTX replacement, it’s Bang Bros has submitted a bid. Not the first porn company to do that there OnlyFans is a popular revenue platform in LA, rolls of the tongue better for a stadium name too
  - bdcravens 4y ago
    Based on the Houston example, it'll probably be something boring.

saurik 4y ago

This is a link to a tweet of someone speculating about something where less than a half hour later they replied to themselves to retract the idea with evidence that undermines the accusation. So like, maybe this is true--and even if it isn't true it is still a demonstration of some ridiculous incompetence ;P--but this post is worse than speculation based on headline.

bo1024 4y ago
HN has become really low quality on cryptocurrency topics. Like what you'd expect on politics subreddits or something.

monero-xmr 4y ago

There is no reason each exchange can’t list every address of their wallets, hot and cold, for real time attestations. These “point in time” attestations are obvious scams. Binance posted all their addresses, these Tier 2 and 3 exchanges are shell games and they are trying to keep each other afloat.

tommek4077 4y ago
Bitfinex also published their adresses: https://github.com/bitfinexcom/pub/blob/main/wallets.txt https://github.com/bitfinexcom/pub/blob/main/wallets.txt

nubb 4y ago

this specific type of crime is impossible on chain and this is another win for defi and self custody (and in turn promotes being educated rather than relying on bankers). pathetic whiny HNers will cope-post all the typical bs here anyway. talk to your therapists about your problems.

gbronner 4y ago

Still rediscovering 19th century finance.