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Brian Armstrong from Coinbase was on the latest All-In podcast and talked about this. It sounds like they're not at much risk as they are US based and are regul

Brian Armstrong from Coinbase was on the latest All-In podcast and talked about this. It sounds like they're not at much risk as they are US based and are regulated to have much higher standards of keeping reserves https://twitter.com/theallinpod/status/1591388975385612288 https://twitter.com/theallinpod/status/1591388975385612288

ignoramous 4y ago
Brian Armstrong has to say Coinbase is risk-free... I mean, what else is he going to say?
- cloutchaser 4y ago
  If what he's saying is true, there isn't really anything to worry about, and coinbase will likely be the winner here with a proven track record. If they are truly holding customer funds and crypto 1:1, then you cannot do a bank run on them. They will just pay out. Which is what Armstrong says. Frankly, after all this shit if an exchange can prove they are reliable and reputable, which Coinbase has so far, they are likely to emerge quite well out of all this (unless the entire crypto market loses all credibility or gets regulated into nothing).
  - laserlight 4y ago
    > if an exchange can prove they are reliable and reputable, which Coinbase has so far I have no idea how Coinbase operates, so please forgive my ignorance: How do they prove that they are trustworthy?
    - cloutchaser 4y ago
      They are a public company, they have an actual board, they are also audited by a big 4 accounting firm. This is MUCH more transparency than some corp in the bahamas. Obviously it's not complete security, Enron was a public company and audited, but it's still considerably better than FTX or Binance.
      - deleted 4y ago
        [deleted]
  - the_mitsuhiko 4y ago
    > If what he's saying is true, there isn't really anything to worry about I don't believe that is entirely accurate. Coinbase used to have a pro account with margin trading. Unless they managed to clearly unwind that business there is a risk that something went wrong at one point.
    - rightbyte 4y ago
      If the allow margin gambles they probably are not selling the cryptos for cash to save transaction cost and just calculate the balance virtually. With all the cryptocoin volatility I don't see how process margin calls without keeping the actual cryptocoins either, so you can give them back to the lender.
    - meltedcapacitor 4y ago
      Margin trading is safe for the exchange if it works as usually described in the terms: they just act as a bookmaker reallocating customer funds according to which side wins each peer to peer bet. There's usually rules that describe what happens in gaps, closing the winning side with a win that never exceeds what the losing side put down when opening the bet. If they steal customer funds, then all is off, but same when there is no margin trading involved.
- isolli 4y ago
  "Well he would, wouldn't he?" https://en.wikipedia.org/wiki/Mandy_Rice-Davies#%22Well_he_would,_wouldn't_he?%22 https://en.wikipedia.org/wiki/Mandy_Rice-Davies#%22Well_he_w...
1270018080 4y ago
Would the CEO ever say "Yes we are a ponzi scheme as well"?
- BlueTemplar 4y ago
  FTX pretty much did, 7 months ago : https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm... Though it then, by definition, makes it not a Ponzi (at that specific point), since Ponzi implies deception : banks are also unable to pay everyone at once, yet they typically aren't called "Ponzi".
  - pjc50 4y ago
    Banks have a liquidity and term mismatch, but are required to be solvent. Ponzi schemes offer fake balances and are insolvent. It's not clear at what exact point FTX became insolvent, but I think the CEO writing an $8bn disguised accounting entry for tokens he'd lent to his girlfriend may have been it.
    - SnowHill9902 4y ago
      When you are big enough liquidity and solvency are the same thing.
    - BlueTemplar 4y ago
      There's also maybe the option of being insolvent but nobody caring because the money is too good..? Not sure what to call this since I assume this has been regulated to death in normal finance ? But it wouldn't surprise me if it had happened at some point at FTX, considering all the greed and hype around crypto... Though I guess it might be a moot point : information doesn't travel instantly, and a judge might still deem you "guilty of Ponzi" (or whatever term is appropriate) if you haven't literally been shouting "We are insolvent !" from the rooftops ? See again : regulation.
      - 4y ago
shafyy 4y ago
Ah ok, because CEOs never make a public statement and then the next day literally the opposite of what they just said happens. Not saying that this will happen with Coinbase, but I would not believe that Coinbase is not at risk just because their CEO said it isn't.
redox99 4y ago
FTX.us was also US based.

ignoramous 4y ago

Brian Armstrong has to say Coinbase is risk-free... I mean, what else is he going to say?

cloutchaser 4y ago
If what he's saying is true, there isn't really anything to worry about, and coinbase will likely be the winner here with a proven track record. If they are truly holding customer funds and crypto 1:1, then you cannot do a bank run on them. They will just pay out. Which is what Armstrong says. Frankly, after all this shit if an exchange can prove they are reliable and reputable, which Coinbase has so far, they are likely to emerge quite well out of all this (unless the entire crypto market loses all credibility or gets regulated into nothing).
- laserlight 4y ago
  > if an exchange can prove they are reliable and reputable, which Coinbase has so far I have no idea how Coinbase operates, so please forgive my ignorance: How do they prove that they are trustworthy?
  - cloutchaser 4y ago
    They are a public company, they have an actual board, they are also audited by a big 4 accounting firm. This is MUCH more transparency than some corp in the bahamas. Obviously it's not complete security, Enron was a public company and audited, but it's still considerably better than FTX or Binance.
    - deleted 4y ago
      [deleted]
- the_mitsuhiko 4y ago
  > If what he's saying is true, there isn't really anything to worry about I don't believe that is entirely accurate. Coinbase used to have a pro account with margin trading. Unless they managed to clearly unwind that business there is a risk that something went wrong at one point.
  - rightbyte 4y ago
    If the allow margin gambles they probably are not selling the cryptos for cash to save transaction cost and just calculate the balance virtually. With all the cryptocoin volatility I don't see how process margin calls without keeping the actual cryptocoins either, so you can give them back to the lender.
  - meltedcapacitor 4y ago
    Margin trading is safe for the exchange if it works as usually described in the terms: they just act as a bookmaker reallocating customer funds according to which side wins each peer to peer bet. There's usually rules that describe what happens in gaps, closing the winning side with a win that never exceeds what the losing side put down when opening the bet. If they steal customer funds, then all is off, but same when there is no margin trading involved.
isolli 4y ago
"Well he would, wouldn't he?" https://en.wikipedia.org/wiki/Mandy_Rice-Davies#%22Well_he_would,_wouldn't_he?%22 https://en.wikipedia.org/wiki/Mandy_Rice-Davies#%22Well_he_w...

1270018080 4y ago

Would the CEO ever say "Yes we are a ponzi scheme as well"?

BlueTemplar 4y ago
FTX pretty much did, 7 months ago : https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm... Though it then, by definition, makes it not a Ponzi (at that specific point), since Ponzi implies deception : banks are also unable to pay everyone at once, yet they typically aren't called "Ponzi".
- pjc50 4y ago
  Banks have a liquidity and term mismatch, but are required to be solvent. Ponzi schemes offer fake balances and are insolvent. It's not clear at what exact point FTX became insolvent, but I think the CEO writing an $8bn disguised accounting entry for tokens he'd lent to his girlfriend may have been it.
  - SnowHill9902 4y ago
    When you are big enough liquidity and solvency are the same thing.
  - BlueTemplar 4y ago
    There's also maybe the option of being insolvent but nobody caring because the money is too good..? Not sure what to call this since I assume this has been regulated to death in normal finance ? But it wouldn't surprise me if it had happened at some point at FTX, considering all the greed and hype around crypto... Though I guess it might be a moot point : information doesn't travel instantly, and a judge might still deem you "guilty of Ponzi" (or whatever term is appropriate) if you haven't literally been shouting "We are insolvent !" from the rooftops ? See again : regulation.
    - 4y ago

shafyy 4y ago

Ah ok, because CEOs never make a public statement and then the next day literally the opposite of what they just said happens. Not saying that this will happen with Coinbase, but I would not believe that Coinbase is not at risk just because their CEO said it isn't.

redox99 4y ago

FTX.us was also US based.