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The quotes around "temporarily" are editorialising, IMO. They should be removed. No fan of Binance but it's a reasonable explanation and submitter has given no

by sho 4y ago

The quotes around "temporarily" are editorialising, IMO. They should be removed. No fan of Binance but it's a reasonable explanation and submitter has given no reason to think it is not, indeed, a temporary situation, as has happened many times in the past without particular note.

janmo 4y ago
It is not reasonable at all. It means that: 1. They are not prepared at all for a "bank run" 2. USDC on the exchange are not backed by real USDC. Therefor they need to market buy them. 3. CZ is telling people to withdraw using BUSD and USDT, both more or less Binance controlled stables that are much harder to convert into real USD. It would be extremely wise to exit Binance and Binance related coins such as BNB, BUSD and Tether.
- mikelovenotwar 4y ago
  > It would be extremely wise to exit Binance and Binance related coins such as BNB, BUSD and Tether. Indeed, but the great ponzi scheme rolls on none the less :/
- Galanwe 4y ago
  > They are not prepared at all for a "bank run" Nobody is prepared for a bank run, that would be idiotic. It would mean storing strictly only liquid assets. > USDC on the exchange are not backed by real USDC. Therefor they need to market buy them. That's pure speculation on your side... Withdrawal pauses have happened many times in the past, it's not really alarming. Only when something bad happens afterward do people remember there was a withdrawal pause before, but there has been countless pauses before with no problem afterward. > Binance and Binance related coins such as BNB, BUSD and Tether. What...
  - hef19898 4y ago
    Banks are, up to whatever the legally guaranteed deposit insurance is, prepared for bank runs. And I never heard of actual banks limiting or even pausing withdrawls, non-cash, ever. And those cases where they do, e.g. Libanon, are a dead give away the economy is fucked. So, drawing from that parallel, the crypto economy might very well be fucked.
    - charcircuit 4y ago
      >And I never heard of actual banks limiting or even pausing withdrawls Most banks pause withdrawals every night. They are only open during the day. You can't just show up at 2 am and be able to withdraw 10 million dollars.
      - ohgodplsno 4y ago
        I can withdraw 1k at 2AM in any ATM in the world. The only reason why you can't withdraw 10 million at that time is purely for KYC purposes. Withdrawals aren't paused because the bank doesn't have the money, merely because there's noone physically present to handle it (partly because, even with 10 millions, you're not worth the time of an employee, and because nobody _needs_ to withdraw 10 million suddenly in the middle of the night)
        hef19898 4y ago
        You could, following regulatory and bank internal processes, trabsfer those ten million in one go to any bank account in the world so. Assuming you have internet and a phone. It is not like Binace is limiting cash withdrawls, they a halting wire trabsfers. For me that's a dead sign the money isn't there anymore.
        charcircuit 4y ago
        >Withdrawals aren't paused because the bank doesn't have the money, merely because there's noone physically present to handle it Which is what is happening to Binance.
        hef19898 4y ago
        Impossible to tell apart without properly prepared, and audited, balance sheets.
        ohgodplsno 4y ago
        No. When I can't withdraw, it's because my bank teller is sleeping. Binance has a bank teller, but he's telling you "uh hold on we need to buy your money from another teller that's sleeping because we don't actually have it. Do you want to get our monopoly money instead?" Binance is about to pull the rug.
  - flumpcakes 4y ago
    > Nobody is prepared for a bank run It's an exchange. Your money should be 100% liquid. Everyone should be prepared for a bank run. Unless they're just as dodgy as FTX and using everyone else's money for shenanigans. I don't know why people are defending this as if it is a good thing.
    - Galanwe 4y ago
      Sorry but no. No single broker on the planet is instantly liquid. At the very best daily liquid. Most currency settlements are between 1 and 3 days for DM. Your "feeling" of instantaneous transfers is just front office display, the real back office takes days.
      - yebyen 4y ago
        If your exchange is taking your deposits and market selling them before you have them on the market then they are front-runners and they cheated you. I don't know how else to say it, your buying power is not their buying power just because they have it on deposit and you trusted them. That's the thing we trusted them not to do, and that's how exchanges like FTX lose the trust of their customers. If you think this is just the cost of doing business, you're a fool. Crypto currencies do not take days to move from point a to point b. That is old world baggage.
      - imtringued 4y ago
        Brokers use conventional bank accounts for your dollar or euro account balances. The eurozone has instant SEPA now. That is as fast as it gets. Faster than most cryptocurrencies.
  - c7b 4y ago
    > Nobody is prepared for a bank run, that would be idiotic. It would mean storing strictly only liquid assets. Binance is a broker, not a bank. A bank run on a broker simply shouldn't be possible. A broker is supposed to hold whatever the customers want to hold on their behalf (in so-called segregated accounts, so that the assets belong to the users, even if the broker should go bankrupt). If the users want to withdraw, you just give them whatever you were holding on their behalf. A broker is not supposed to invest users' funds into something else. If you're acting honestly as a broker, there can't be a mismatch between users' deposits and their assets. Don't fall for this nonsense touted by SBF, the problem is that they are acting dishonestly (and cluelessly, it seems), not that there was any sort of unfortunate liquidity crisis or whatever.
    - Galanwe 4y ago
      Holding does not mean holding _now immediately liquid assets_. For the 10000th time: no single broker has ever been instantaneously liquid.
      - hef19898 4y ago
        Sure, but they are solvent enough, aren't they? Curious, if banks screw up and ruin customers nobody is out there defending traditional banking. Still, there are people defending SBF, FTX and Binance. Not sure how Binance will do, but it doesn't look good, does it?
      - c7b 4y ago
        > Holding does not mean holding _now immediately liquid assets_ What do you mean by liquid? USDC is an ERC-20 token on Ethereum. 'Holding' it means having the private key to a wallet that has been credited with a positive balance in the smart contract. Transferring it is as easy as calling the transfer(address to, uint amount) function from that wallet - you'll have to charge the user for the transaction fee, but that's fair game. According to CZ's tweet, they don't actually hold USDC on behalf of the users, but they try to buy them on the market when users request withdrawals, which is simply not how a broker is supposed to act, and a recipe for disaster. Stop defending this practice.
      - 4y ago
  - rhaway84773 4y ago
    What a ridiculous statement. Every legitimate exchange is prepared for a “bank run”. because they don’t behave like banks since they’re exchanges. Being exchanges, they have your money in exactly the form that shows up in your account. Binance (and FTX before that) apparently doesnt, because it’s behaving like a bank and lending out your money despite claiming to be an exchange and not a bank.
  - causi 4y ago
    Nobody is prepared for a bank run, that would be idiotic. It would mean storing strictly only liquid assets. No bank is prepared for a bank run. It's not supposed to be a bank. Banks make money by using customer deposits to generate revenue through loans. Exchanges make money through fees and aren't supposed to be using customer deposits at all.
- deleted 4y ago
  [deleted]
- everfree 4y ago
  > USDC on the exchange are not backed by real USDC. Therefor they need to market buy them. Likely, USDC balances are backed by dollars in the bank account mentioned in the tweet. To convert that to USDC, they don't need to market buy it - they can wire it to Circle to get fresh USDC minted. In contrast with having all USDC always on hand (like they probably should), this lets Binance earn interest from the bank for their customer deposits. Or they could be insolvent, sure. There's really no way to reliably tell.
- deleted 4y ago
  [deleted]
jacquesm 4y ago
I agree it is editorialising, at the same time this has been a set pattern so far: first temporarily halt withdrawals, then come back with some bs excuse that the money is gone (blame the hacker, bad investments, loans, whatever) and go into bankruptcy.
- janmo 4y ago
  FTX said something very similar just days before going belly up: "Stablecoins: processing. Banks are closed for the weekend, though; USD <> stablecoin creations/redemptions might be slower until wires clear tomorrow, especially for some coins/chains." https://twitter.com/FTX_Official/status/1589510763328450561 https://twitter.com/FTX_Official/status/1589510763328450561
drexlspivey 4y ago
People hate crypto so much in here they are actually trying to start a bank run.
- stefan_ 4y ago
  Can't bank run something that's not supposed to be a bank. Remember that goblin SBF tweeting "FTX doesn't use customer deposits"?
  - mikelovenotwar 4y ago
    > Remember that goblin SBF tweeting "FTX doesn't use customer deposits"? Coming to a court room soon :)
  - frumper 4y ago
    I mean, I feel like we can call it something else, but people did a bank run on grocery stores for toilet paper in 2020. It's a term people use to convey what's happening even if it's not technically the correct term to use.
- Johanx64 4y ago
  Explain why people here hate crypto so much.
- hocuspocus 4y ago
  The funniest thing is that you're completely wrong, we (the haters on HN) aren't trying anything, we don't need to. If the entire thing collapses we won't even be able to take credit since it was put in motion by CZ himself.
readonthegoapp 4y ago
Not sure what HN rules are for Tweets, but seems Twitter OP worked very hard to not use the word 'temporarily'. This post seems like a fair summation to me -- far too kind, actually, if we want to be frank.

by sho 4y ago

janmo 4y ago

It is not reasonable at all. It means that: 1. They are not prepared at all for a "bank run" 2. USDC on the exchange are not backed by real USDC. Therefor they need to market buy them. 3. CZ is telling people to withdraw using BUSD and USDT, both more or less Binance controlled stables that are much harder to convert into real USD. It would be extremely wise to exit Binance and Binance related coins such as BNB, BUSD and Tether.

mikelovenotwar 4y ago
> It would be extremely wise to exit Binance and Binance related coins such as BNB, BUSD and Tether. Indeed, but the great ponzi scheme rolls on none the less :/
Galanwe 4y ago
> They are not prepared at all for a "bank run" Nobody is prepared for a bank run, that would be idiotic. It would mean storing strictly only liquid assets. > USDC on the exchange are not backed by real USDC. Therefor they need to market buy them. That's pure speculation on your side... Withdrawal pauses have happened many times in the past, it's not really alarming. Only when something bad happens afterward do people remember there was a withdrawal pause before, but there has been countless pauses before with no problem afterward. > Binance and Binance related coins such as BNB, BUSD and Tether. What...
- hef19898 4y ago
  Banks are, up to whatever the legally guaranteed deposit insurance is, prepared for bank runs. And I never heard of actual banks limiting or even pausing withdrawls, non-cash, ever. And those cases where they do, e.g. Libanon, are a dead give away the economy is fucked. So, drawing from that parallel, the crypto economy might very well be fucked.
  - charcircuit 4y ago
    >And I never heard of actual banks limiting or even pausing withdrawls Most banks pause withdrawals every night. They are only open during the day. You can't just show up at 2 am and be able to withdraw 10 million dollars.
    - ohgodplsno 4y ago
      I can withdraw 1k at 2AM in any ATM in the world. The only reason why you can't withdraw 10 million at that time is purely for KYC purposes. Withdrawals aren't paused because the bank doesn't have the money, merely because there's noone physically present to handle it (partly because, even with 10 millions, you're not worth the time of an employee, and because nobody _needs_ to withdraw 10 million suddenly in the middle of the night)
      - hef19898 4y ago
        You could, following regulatory and bank internal processes, trabsfer those ten million in one go to any bank account in the world so. Assuming you have internet and a phone. It is not like Binace is limiting cash withdrawls, they a halting wire trabsfers. For me that's a dead sign the money isn't there anymore.
      - charcircuit 4y ago
        >Withdrawals aren't paused because the bank doesn't have the money, merely because there's noone physically present to handle it Which is what is happening to Binance.
        hef19898 4y ago
        Impossible to tell apart without properly prepared, and audited, balance sheets.
        ohgodplsno 4y ago
        No. When I can't withdraw, it's because my bank teller is sleeping. Binance has a bank teller, but he's telling you "uh hold on we need to buy your money from another teller that's sleeping because we don't actually have it. Do you want to get our monopoly money instead?" Binance is about to pull the rug.
- flumpcakes 4y ago
  > Nobody is prepared for a bank run It's an exchange. Your money should be 100% liquid. Everyone should be prepared for a bank run. Unless they're just as dodgy as FTX and using everyone else's money for shenanigans. I don't know why people are defending this as if it is a good thing.
  - Galanwe 4y ago
    Sorry but no. No single broker on the planet is instantly liquid. At the very best daily liquid. Most currency settlements are between 1 and 3 days for DM. Your "feeling" of instantaneous transfers is just front office display, the real back office takes days.
    - yebyen 4y ago
      If your exchange is taking your deposits and market selling them before you have them on the market then they are front-runners and they cheated you. I don't know how else to say it, your buying power is not their buying power just because they have it on deposit and you trusted them. That's the thing we trusted them not to do, and that's how exchanges like FTX lose the trust of their customers. If you think this is just the cost of doing business, you're a fool. Crypto currencies do not take days to move from point a to point b. That is old world baggage.
    - imtringued 4y ago
      Brokers use conventional bank accounts for your dollar or euro account balances. The eurozone has instant SEPA now. That is as fast as it gets. Faster than most cryptocurrencies.
- c7b 4y ago
  > Nobody is prepared for a bank run, that would be idiotic. It would mean storing strictly only liquid assets. Binance is a broker, not a bank. A bank run on a broker simply shouldn't be possible. A broker is supposed to hold whatever the customers want to hold on their behalf (in so-called segregated accounts, so that the assets belong to the users, even if the broker should go bankrupt). If the users want to withdraw, you just give them whatever you were holding on their behalf. A broker is not supposed to invest users' funds into something else. If you're acting honestly as a broker, there can't be a mismatch between users' deposits and their assets. Don't fall for this nonsense touted by SBF, the problem is that they are acting dishonestly (and cluelessly, it seems), not that there was any sort of unfortunate liquidity crisis or whatever.
  - Galanwe 4y ago
    Holding does not mean holding _now immediately liquid assets_. For the 10000th time: no single broker has ever been instantaneously liquid.
    - hef19898 4y ago
      Sure, but they are solvent enough, aren't they? Curious, if banks screw up and ruin customers nobody is out there defending traditional banking. Still, there are people defending SBF, FTX and Binance. Not sure how Binance will do, but it doesn't look good, does it?
    - c7b 4y ago
      > Holding does not mean holding _now immediately liquid assets_ What do you mean by liquid? USDC is an ERC-20 token on Ethereum. 'Holding' it means having the private key to a wallet that has been credited with a positive balance in the smart contract. Transferring it is as easy as calling the transfer(address to, uint amount) function from that wallet - you'll have to charge the user for the transaction fee, but that's fair game. According to CZ's tweet, they don't actually hold USDC on behalf of the users, but they try to buy them on the market when users request withdrawals, which is simply not how a broker is supposed to act, and a recipe for disaster. Stop defending this practice.
    - 4y ago
- rhaway84773 4y ago
  What a ridiculous statement. Every legitimate exchange is prepared for a “bank run”. because they don’t behave like banks since they’re exchanges. Being exchanges, they have your money in exactly the form that shows up in your account. Binance (and FTX before that) apparently doesnt, because it’s behaving like a bank and lending out your money despite claiming to be an exchange and not a bank.
- causi 4y ago
  Nobody is prepared for a bank run, that would be idiotic. It would mean storing strictly only liquid assets. No bank is prepared for a bank run. It's not supposed to be a bank. Banks make money by using customer deposits to generate revenue through loans. Exchanges make money through fees and aren't supposed to be using customer deposits at all.
deleted 4y ago
[deleted]
everfree 4y ago
> USDC on the exchange are not backed by real USDC. Therefor they need to market buy them. Likely, USDC balances are backed by dollars in the bank account mentioned in the tweet. To convert that to USDC, they don't need to market buy it - they can wire it to Circle to get fresh USDC minted. In contrast with having all USDC always on hand (like they probably should), this lets Binance earn interest from the bank for their customer deposits. Or they could be insolvent, sure. There's really no way to reliably tell.
deleted 4y ago
[deleted]

jacquesm 4y ago

I agree it is editorialising, at the same time this has been a set pattern so far: first temporarily halt withdrawals, then come back with some bs excuse that the money is gone (blame the hacker, bad investments, loans, whatever) and go into bankruptcy.

janmo 4y ago
FTX said something very similar just days before going belly up: "Stablecoins: processing. Banks are closed for the weekend, though; USD <> stablecoin creations/redemptions might be slower until wires clear tomorrow, especially for some coins/chains." https://twitter.com/FTX_Official/status/1589510763328450561 https://twitter.com/FTX_Official/status/1589510763328450561

drexlspivey 4y ago

People hate crypto so much in here they are actually trying to start a bank run.

stefan_ 4y ago
Can't bank run something that's not supposed to be a bank. Remember that goblin SBF tweeting "FTX doesn't use customer deposits"?
- mikelovenotwar 4y ago
  > Remember that goblin SBF tweeting "FTX doesn't use customer deposits"? Coming to a court room soon :)
- frumper 4y ago
  I mean, I feel like we can call it something else, but people did a bank run on grocery stores for toilet paper in 2020. It's a term people use to convey what's happening even if it's not technically the correct term to use.
Johanx64 4y ago
Explain why people here hate crypto so much.
hocuspocus 4y ago
The funniest thing is that you're completely wrong, we (the haters on HN) aren't trying anything, we don't need to. If the entire thing collapses we won't even be able to take credit since it was put in motion by CZ himself.

readonthegoapp 4y ago

Not sure what HN rules are for Tweets, but seems Twitter OP worked very hard to not use the word 'temporarily'. This post seems like a fair summation to me -- far too kind, actually, if we want to be frank.