6 ms·

The KYC stuff goes hand in hand with regulation, which is important if you don't want all of crypto to be eaten alive by future FTXes and SBFs

pjkundert 4y ago
Nope: no amount of regulation fixes stupid. Personal responsibility to understand how things work? Unwelcome to most folks, but the only thing that works. If your institution is keeping their internal operations hidden (no provable compliance), then “regulation” is at best a delay of the inevitable corruption.
- p0pcult 4y ago
  Vast majority of the complaints about crypto fall into two categories: -lawless: e.g., ponzi scheme, rug pulls, etc. -useless: "this is just a database" For crypto to be useful, both of these challenges need to be addressed; well-designed regulation certainly will help the former, and also its perception.
  - rglover 4y ago
    They're already addressed by Bitcoin (which has zero centralized team, marketing, or promotion of future "gains"). "Crypto" (anything that isn't Bitcoin) is by design a way to run a legitimate ponzi scheme, primarily for VCs who realized it was easy money [1]. [1] https://twitter.com/SilvermanJacob/status/1595059806200643589 https://twitter.com/SilvermanJacob/status/159505980620064358...
throwaway87274 4y ago
KYC and "regulations" didn't do shit to prevent a fraud from laundering customer funds between business entities to gamble and try to save his failed hedge fund. That crime was pretty much crypto only in the sense it involved an exchange and they overleveraged themselves, but the actual crime was just straight fraud.
- p0pcult 4y ago
  What financial regulations were FTX under the jurisdiction of, in the Bahamas? Did FTX require KYC (I honestly don't know)?
  - cypress66 4y ago
    The fact that you don't even know if FTX had KYC shows how unfounded your former comment was. Yes, it had KYC. And FTX.us was under US jurisdiction.
    - p0pcult 4y ago
      You're reading into things I didn't say. I don't claim that KYC will protect people--I claim that the regulations that do protect people go hand in hand with KYC. Crypto as the libertarian dream of government-free "money" will never go beyond libertarians. Crypto as a broader-scale augment to existing financial systems? Who know? But that won't happen without KYC and regulation. Know who seems so far unaffected by this? Coinbase. The one exchange who has been operating entirely within US jurisdiction and laws; trying to be as bank-like as possible, following all the rules.
      - throwaway87274 4y ago
        Binance has been doing better than Coinbase by a large margin, fwiw. Their US presence is probably not as strong as Coinbase, but by and large they are the #1 worldwide exchange. US regulations are not necessary and really are just a pain in the ass because everything the US government touches becomes inefficient beyond belief, it simply relies on the owners of the exchange not being incompetent & fraudulent.
  - throwaway87274 4y ago
    Yeah, they were technically a Bahamas entity and fall under the jurisdiction of that country, technically, but likely under US jurisdiction as well in order to operate in the country. There's a whole really confusing business entity diagram I saw floating around somewhere, but can't find it offhand. But the way they were structured was obviously for tax havens and to blur their financial ties between entities. I'll be honest in that it goes above my head as I'm not deep into finance and regulations, however seeing statements about the level of fraud being unprecedented by the overseer of the Enron bankruptcy (who's overseeing FTX bankruptcy as well) is not very reassuring. And yes, they did require full human-verified KYC to access any exchange functionality. Actually that was a downside, because the day they filed Chapter 11, their site was compromised and who knows who potentially accessed the PII from all their customers in that mess.
cypress66 4y ago
That makes no sense. Ftx and Celsius had KYC and that didn't help at all in preventing them from stealing users money. In fact it shows how bad KYC is, because Celsius users transactions, funds, addresses etc were "leaked" in their bankurpcy filings.
rglover 4y ago
That doesn't work when the guy running the operation is being glad-handed by politicians behind the scenes and given a cake walk instead of a perp walk.
- p0pcult 4y ago
  Youre completely correct...how do you deal with this? (I think they are called laws, which are a bit like regulations)
  - rglover 4y ago
    Assuming you're speaking of corruption, there is no system of custody that inherently prevents fraud unless it's self-custody. Any middleman, anywhere, as a matter of principle cannot be 100% trusted, ever. We use laws and regulations to give us the veneer of trust, but in reality, those laws and regulations are only ever one morally corrupt individual away from being circumvented. Hence why Bitcoin and self-custody are such important ideas and how this problem ultimately gets solved. The solution being: to financially disincentivize corruption to such an extent that your only option is violence which necessitates financial corruption to exist on a meaningful scale. There's resistance to that idea because people hate to take responsibility for their actions and would rather defer/delegate it to someone else. It's the same exact problem as obesity, credit card debit, etc. "Well it couldn't possibly be my fault that I'm fat and poor, it's the evil greedy corporations!" Ironically, and at best, it's often the oroborous of government enabling the potential for malfeasance that's coming back to bite people (see: French regulation around nuclear reactor temperatures near wildlife forcing an energy crisis [1]). If the system (whatever it is) enables people to be lazy or careless, they will be. And of course, they have to deal with the consequences of that behavior, whether they are willing to mentally/emotionally accept it or not. [1] https://www.reuters.com/world/europe/frances-asn-nuclear-regulator-adapts-hot-water-discharge-rules-light-heatwave-2022-08-08/ https://www.reuters.com/world/europe/frances-asn-nuclear-reg...

pjkundert 4y ago

Nope: no amount of regulation fixes stupid. Personal responsibility to understand how things work? Unwelcome to most folks, but the only thing that works. If your institution is keeping their internal operations hidden (no provable compliance), then “regulation” is at best a delay of the inevitable corruption.

p0pcult 4y ago
Vast majority of the complaints about crypto fall into two categories: -lawless: e.g., ponzi scheme, rug pulls, etc. -useless: "this is just a database" For crypto to be useful, both of these challenges need to be addressed; well-designed regulation certainly will help the former, and also its perception.
- rglover 4y ago
  They're already addressed by Bitcoin (which has zero centralized team, marketing, or promotion of future "gains"). "Crypto" (anything that isn't Bitcoin) is by design a way to run a legitimate ponzi scheme, primarily for VCs who realized it was easy money [1]. [1] https://twitter.com/SilvermanJacob/status/1595059806200643589 https://twitter.com/SilvermanJacob/status/159505980620064358...

throwaway87274 4y ago

KYC and "regulations" didn't do shit to prevent a fraud from laundering customer funds between business entities to gamble and try to save his failed hedge fund. That crime was pretty much crypto only in the sense it involved an exchange and they overleveraged themselves, but the actual crime was just straight fraud.

p0pcult 4y ago
What financial regulations were FTX under the jurisdiction of, in the Bahamas? Did FTX require KYC (I honestly don't know)?
- cypress66 4y ago
  The fact that you don't even know if FTX had KYC shows how unfounded your former comment was. Yes, it had KYC. And FTX.us was under US jurisdiction.
  - p0pcult 4y ago
    You're reading into things I didn't say. I don't claim that KYC will protect people--I claim that the regulations that do protect people go hand in hand with KYC. Crypto as the libertarian dream of government-free "money" will never go beyond libertarians. Crypto as a broader-scale augment to existing financial systems? Who know? But that won't happen without KYC and regulation. Know who seems so far unaffected by this? Coinbase. The one exchange who has been operating entirely within US jurisdiction and laws; trying to be as bank-like as possible, following all the rules.
    - throwaway87274 4y ago
      Binance has been doing better than Coinbase by a large margin, fwiw. Their US presence is probably not as strong as Coinbase, but by and large they are the #1 worldwide exchange. US regulations are not necessary and really are just a pain in the ass because everything the US government touches becomes inefficient beyond belief, it simply relies on the owners of the exchange not being incompetent & fraudulent.
- throwaway87274 4y ago
  Yeah, they were technically a Bahamas entity and fall under the jurisdiction of that country, technically, but likely under US jurisdiction as well in order to operate in the country. There's a whole really confusing business entity diagram I saw floating around somewhere, but can't find it offhand. But the way they were structured was obviously for tax havens and to blur their financial ties between entities. I'll be honest in that it goes above my head as I'm not deep into finance and regulations, however seeing statements about the level of fraud being unprecedented by the overseer of the Enron bankruptcy (who's overseeing FTX bankruptcy as well) is not very reassuring. And yes, they did require full human-verified KYC to access any exchange functionality. Actually that was a downside, because the day they filed Chapter 11, their site was compromised and who knows who potentially accessed the PII from all their customers in that mess.

cypress66 4y ago

That makes no sense. Ftx and Celsius had KYC and that didn't help at all in preventing them from stealing users money. In fact it shows how bad KYC is, because Celsius users transactions, funds, addresses etc were "leaked" in their bankurpcy filings.

rglover 4y ago

That doesn't work when the guy running the operation is being glad-handed by politicians behind the scenes and given a cake walk instead of a perp walk.

p0pcult 4y ago
Youre completely correct...how do you deal with this? (I think they are called laws, which are a bit like regulations)
- rglover 4y ago
  Assuming you're speaking of corruption, there is no system of custody that inherently prevents fraud unless it's self-custody. Any middleman, anywhere, as a matter of principle cannot be 100% trusted, ever. We use laws and regulations to give us the veneer of trust, but in reality, those laws and regulations are only ever one morally corrupt individual away from being circumvented. Hence why Bitcoin and self-custody are such important ideas and how this problem ultimately gets solved. The solution being: to financially disincentivize corruption to such an extent that your only option is violence which necessitates financial corruption to exist on a meaningful scale. There's resistance to that idea because people hate to take responsibility for their actions and would rather defer/delegate it to someone else. It's the same exact problem as obesity, credit card debit, etc. "Well it couldn't possibly be my fault that I'm fat and poor, it's the evil greedy corporations!" Ironically, and at best, it's often the oroborous of government enabling the potential for malfeasance that's coming back to bite people (see: French regulation around nuclear reactor temperatures near wildlife forcing an energy crisis [1]). If the system (whatever it is) enables people to be lazy or careless, they will be. And of course, they have to deal with the consequences of that behavior, whether they are willing to mentally/emotionally accept it or not. [1] https://www.reuters.com/world/europe/frances-asn-nuclear-regulator-adapts-hot-water-discharge-rules-light-heatwave-2022-08-08/ https://www.reuters.com/world/europe/frances-asn-nuclear-reg...