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There is nothing wrong with this, and indeed it's a good thing.

by djbebs 4y ago

jakelazaroff 4y ago
Is this… sarcasm? It’s a good thing that crypto exchanges are streaming their customers’ money?
- djbebs 4y ago
  I'm 100% serious. Exchanges are not and should not be banks. They should not be comingling their assets with client assets.
  - jakelazaroff 4y ago
    (*stealing their customers’ money, but I can’t edit it without making it seem like you’re replying to something else entirely) Okay, but that’s only half of what OP said. They’re also trading on customer assets. That is an extremely bad thing no matter how you look at it.
    - djbebs 4y ago
      They shouldn't be, just like a pumpkin exchange shouldn't be trading using pumpkins that don't belong to them (or at all). That's where the crime comes in.
  - manholio 4y ago
    Yes, exchanges shouldn't commingle their assets with clients funds, yet they have large operational outlays (coding &security, traditional financial fees, meth & luxury condos in Bahamas, etc.) that seem unlikely to be coverable with trading fees alone. Even if we allow them to work like banks, they still can't seem to justify the tens of billion valuations.
    - djbebs 4y ago
      If the fees aren't enough to cover it then the company isn't profitable and should shut down. Or raise fees. "I don't make a profit if I don't steal my customers assets" isn't a valid business plan.
bestcoder69 4y ago
Said by the dog in the burning house meme.
acomms 4y ago
In a regulated market sure, but here they seem to be trading with customer assets - which is so much worse.
- djbebs 4y ago
  No regulation would have prevented this crime from happening. I want to be clear here, what happened here is already illegal as is, and no regulation would have prevented it from happening in the first place. Hell, the firm was already being audited, and those auditors didn't catch the accounting discrepancies, so it's doubtful that any additional regulation would have found this earlier either...
  - acomms 4y ago
    You aren't wrong, maybe it's my wishful thinking. What do you think the solution is here? Do you think the house of cards stayed propped up because a lot of people were in on the fraud? Were the auditors just incompetent or were they in on it? Auditors are reasonably well known firms.
    - djbebs 4y ago
      The solution is simple, relegate centralized exchanges to niches that so far can't be fulfilled in any other way (namely fiat-crypto transactions), and use them only briefly and immediately withdraw any assets from it once the transaction you need is complete. You may also take on insurance against such malfeasance on the part of the exchange, increasing your likelihood of recovering your funds. On the plus side insurance agencies now have a financial incentive to ensure the exchanges they insure are honest. In other words, see centralized entities as the unreliable partner that they are and work accordingly.
      - acomms 4y ago
        If you're on HN you can be knowledgable and proactive regarding your security with crypto, but I just don't see mainstream adoption without trusted 3rd parties. I don't think insurers would underwrite that sort of thing given crypto's history.

There is nothing wrong with this, and indeed it's a good thing.

by djbebs 4y ago

There is nothing wrong with this, and indeed it's a good thing.

jakelazaroff 4y ago

Is this… sarcasm? It’s a good thing that crypto exchanges are streaming their customers’ money?

djbebs 4y ago
I'm 100% serious. Exchanges are not and should not be banks. They should not be comingling their assets with client assets.
- jakelazaroff 4y ago
  (*stealing their customers’ money, but I can’t edit it without making it seem like you’re replying to something else entirely) Okay, but that’s only half of what OP said. They’re also trading on customer assets. That is an extremely bad thing no matter how you look at it.
  - djbebs 4y ago
    They shouldn't be, just like a pumpkin exchange shouldn't be trading using pumpkins that don't belong to them (or at all). That's where the crime comes in.
- manholio 4y ago
  Yes, exchanges shouldn't commingle their assets with clients funds, yet they have large operational outlays (coding &security, traditional financial fees, meth & luxury condos in Bahamas, etc.) that seem unlikely to be coverable with trading fees alone. Even if we allow them to work like banks, they still can't seem to justify the tens of billion valuations.
  - djbebs 4y ago
    If the fees aren't enough to cover it then the company isn't profitable and should shut down. Or raise fees. "I don't make a profit if I don't steal my customers assets" isn't a valid business plan.

bestcoder69 4y ago

Said by the dog in the burning house meme.

acomms 4y ago

In a regulated market sure, but here they seem to be trading with customer assets - which is so much worse.

djbebs 4y ago
No regulation would have prevented this crime from happening. I want to be clear here, what happened here is already illegal as is, and no regulation would have prevented it from happening in the first place. Hell, the firm was already being audited, and those auditors didn't catch the accounting discrepancies, so it's doubtful that any additional regulation would have found this earlier either...
- acomms 4y ago
  You aren't wrong, maybe it's my wishful thinking. What do you think the solution is here? Do you think the house of cards stayed propped up because a lot of people were in on the fraud? Were the auditors just incompetent or were they in on it? Auditors are reasonably well known firms.
  - djbebs 4y ago
    The solution is simple, relegate centralized exchanges to niches that so far can't be fulfilled in any other way (namely fiat-crypto transactions), and use them only briefly and immediately withdraw any assets from it once the transaction you need is complete. You may also take on insurance against such malfeasance on the part of the exchange, increasing your likelihood of recovering your funds. On the plus side insurance agencies now have a financial incentive to ensure the exchanges they insure are honest. In other words, see centralized entities as the unreliable partner that they are and work accordingly.
    - acomms 4y ago
      If you're on HN you can be knowledgable and proactive regarding your security with crypto, but I just don't see mainstream adoption without trusted 3rd parties. I don't think insurers would underwrite that sort of thing given crypto's history.