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Wait...they're refusing to allow on-chain transfer of USDC from their custodial account to a customer's wallet? I assumed this was about exchange of USDC to fia

Wait...they're refusing to allow on-chain transfer of USDC from their custodial account to a customer's wallet? I assumed this was about exchange of USDC to fiat, hence the hand waving about banks.

fallingknife 4y ago
Not your key, not your crypto.
- dboreham 4y ago
  Definitely, but why would they not be able to submit a txn to the chain to move a token balance "because bank closed" ??
  - vrc 4y ago
    Likely a lie for less savvy investors. Or they need cash to recapitalize before being able to transfer to wallets. Or people are withdrawing to fiat which would need a bank in many cases. My money is on it being a combination, but that they definitely don’t have reserves to cover a mass run on USDC.
  - fallingknife 4y ago
    Because the tokens aren't there. The web UI says they are but what's on the chain? You don't know because you don't have the keys. Hence my previous comment.
- vkou 4y ago
  This seems like a major bug with crypto. I don't have physical possession of my bed when I get up from it and go to work, but I've yet to come home and discover a grifter, or conman sleeping in it. Likewise, if I lose my car keys, society still manages to acknowledge that I am still the owner of my car.
  - nibbleshifter 4y ago
    There's a variety of "social recovery mechanisms" being worked on in ETH land, at least.
  - fallingknife 4y ago
    And there's the much more important case. What if someone gets your keys? With bank fraud you will most likely get the money back. With crypto, not a chance.
wmf 4y ago
So let's imagine that Binance has $4B of USD customer liabilities backed by $2B of USDC and $2B of BUSD. Fully solvent and fully liquid. Then customers try to withdraw $3B of USDC which Binance does not have. Binance would be happy to give you BUSD but for whatever reason customers specifically want USDC. (I am absolutely convinced that Binance is evil but this specific situation does not appear particularly bad.)
- kikokikokiko 4y ago
  So, they need to find gullible 3rd parties that accept to give them hard cash (USD) in exchange for their in house created clown money (BUSD), and then use this hard cash to go to the market and buy USDC. How is this different from FTX padding their balance sheet with billions of their own made up clown money? Crypto is ponzies all the way down.
  - neeleshs 4y ago
    In general I agree crypto feels like ponzi. But in this specific case, they seem to be fully solvent relative to US dollars? If clown money was floating, it would definitely be iffy. But it's tethered to the dollar. It's almost an IOU in that sense relative to the dollar. They don't have enough specific "currency" (usdc), but as long as I can withdraw to USD, it is not a scam.
  - hedora 4y ago
    In the hypothetical situation, both the BUSD and USDC are fully backed by USD. However, from an external observer's perspective, it is indistinguishable from the case where $1-2B USD is stuffed in a mattress in a country without extradition treaties. (Which is why regulated financial institutions are externally audited and stuff.)
  - wmf 4y ago
    BUSD is not clown money; it's pretty tightly regulated by the state of New York. It looks like Binance just redeemed $700M of BUSD, presumably to convert it to USDC. https://twitter.com/whale_alert/status/1602741130394845185 https://twitter.com/whale_alert/status/1602741130394845185

Wait...they're refusing to allow on-chain transfer of USDC from their custodial account to a customer's wallet? I assumed this was about exchange of USDC to fiat, hence the hand waving about banks.

fallingknife 4y ago

Not your key, not your crypto.

dboreham 4y ago
Definitely, but why would they not be able to submit a txn to the chain to move a token balance "because bank closed" ??
- vrc 4y ago
  Likely a lie for less savvy investors. Or they need cash to recapitalize before being able to transfer to wallets. Or people are withdrawing to fiat which would need a bank in many cases. My money is on it being a combination, but that they definitely don’t have reserves to cover a mass run on USDC.
- fallingknife 4y ago
  Because the tokens aren't there. The web UI says they are but what's on the chain? You don't know because you don't have the keys. Hence my previous comment.
vkou 4y ago
This seems like a major bug with crypto. I don't have physical possession of my bed when I get up from it and go to work, but I've yet to come home and discover a grifter, or conman sleeping in it. Likewise, if I lose my car keys, society still manages to acknowledge that I am still the owner of my car.
- nibbleshifter 4y ago
  There's a variety of "social recovery mechanisms" being worked on in ETH land, at least.
- fallingknife 4y ago
  And there's the much more important case. What if someone gets your keys? With bank fraud you will most likely get the money back. With crypto, not a chance.

wmf 4y ago

So let's imagine that Binance has $4B of USD customer liabilities backed by $2B of USDC and $2B of BUSD. Fully solvent and fully liquid. Then customers try to withdraw $3B of USDC which Binance does not have. Binance would be happy to give you BUSD but for whatever reason customers specifically want USDC. (I am absolutely convinced that Binance is evil but this specific situation does not appear particularly bad.)

kikokikokiko 4y ago
So, they need to find gullible 3rd parties that accept to give them hard cash (USD) in exchange for their in house created clown money (BUSD), and then use this hard cash to go to the market and buy USDC. How is this different from FTX padding their balance sheet with billions of their own made up clown money? Crypto is ponzies all the way down.
- neeleshs 4y ago
  In general I agree crypto feels like ponzi. But in this specific case, they seem to be fully solvent relative to US dollars? If clown money was floating, it would definitely be iffy. But it's tethered to the dollar. It's almost an IOU in that sense relative to the dollar. They don't have enough specific "currency" (usdc), but as long as I can withdraw to USD, it is not a scam.
- hedora 4y ago
  In the hypothetical situation, both the BUSD and USDC are fully backed by USD. However, from an external observer's perspective, it is indistinguishable from the case where $1-2B USD is stuffed in a mattress in a country without extradition treaties. (Which is why regulated financial institutions are externally audited and stuff.)
- wmf 4y ago
  BUSD is not clown money; it's pretty tightly regulated by the state of New York. It looks like Binance just redeemed $700M of BUSD, presumably to convert it to USDC. https://twitter.com/whale_alert/status/1602741130394845185 https://twitter.com/whale_alert/status/1602741130394845185