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Binance's books are a black box, filings show, as it tries to rally confidence
- joenathanone 4y agoI think these Bitcoin exchanges need to be regulated the same way banks are, or we are going to see a repeat of the early days of banking where banks would disappear overnight along with people's life savings.
- notRobot 4y agoWe could even call it something else! Like, uh, cash!
- _the_inflator 4y agoThis is part of the fraud: Convert fiat into something virtual, steal the virtual stuff, convert it back into money. Rinse and repeat. So everybody can say: Hey, it was crypto, not money.
- kodah 4y agoHaving something cash-like that's digital I think would be good. Bitcoin ain't it though.
- deleted 4y ago[deleted]
- twblalock 4y agoWe already mostly have that. Most of the US dollars that exist are already digital -- numbers in a bank account, only some of which is backed by actual dollar bills. It is trivially easy to use them to pay for things or transfer them to other accounts, and they can easily be converted to/from paper money in reasonable amounts. What we have now is fine. I don't see any benefit to making our existing currencies more "digital" than they are.
- mypastself 4y agoThe commenter you’re responding to was specifically talking about digital cash, not digital currency. Properties of cash are distinct from other forms of money in specific ways. “Ease” of conversion from one to the other doesn’t make them identical.
- twblalock 4y agoI haven't yet seen anyone demonstrate a meaningful distinction between "digital currency" and "digital cash" that actually matters for how people use money.
- mypastself 4y agoAnonymity (or pseudonimity) is a key appeal of cash as opposed to other forms of money. Combined with the ease of use of digital payments, I can completely understand the attraction that the original comment was referring to.
- Xelynega 4y agoExcept that the lack of anonymity in payments is one of the main features of blockchains. Which is it? Is digital cash a public ledger or an anonymous payment system?
- RinTohsaka 4y agoMonero bridges the two of these things together nicely.
- mypastself 4y agoThe ledger is public, but the users’ identity needn’t be. And as the other commenter noted, different blockchains use different approaches, some of which do offer full anonymity. You’ll also notice that I said “anonymity (or pseudonymity)”. But that’s immaterial to the discussion. The original question was whether or not the idea of digital cash (regardless of implementation) has any value.
- Aaronstotle 4y agoMonero does the job fairly well, the only issue is that the floating exchange rate can make it difficult. A stable-coin with Monero's properties would do well I think.
- tsimionescu 4y agoA stable coin requires proof of who owns the actual coins, so that the clubs can be redeemed for real dollars. That would defeat the whole point of Monero. There is no way to make an anonymous stable coin, as long as owning and transferring dollars requires KYC and AML.
- Kranar 4y agoDoesn't require it no. DAI is a stable coin that has held its peg to USD for something like 5 years now and there's no proof of ownership involved. https://coinmarketcap.com/currencies/multi-collateral-dai/ https://coinmarketcap.com/currencies/multi-collateral-dai/
- deleted 4y ago[deleted]
- tsimionescu 4y agoWe'll see how well it maintains its peg if/when ETH and BTC go down to nothing. Either way, as far as I understand it, the protocol keeping DAI stable requires participants to be able to tell how much money has been deposited by a particular wallet (so that the agreed upon collateral requirements can be enforced). If that understanding is correct, then DAI requires pseudonimity instead of anonimity, and so can't have any of Monero's strict privacy guarantees.
- danaris 4y agoCorrect me if I'm wrong, but haven't we already seen a bunch of cryptocurrency companies of various types do exactly that? (It's possible none of them have been exchanges; I admit I only pay peripheral attention to that sphere.)
- artursapek 4y agoIt literally just happened with FTX, which was off-shore exchange that wouldn't have been under the jurisdiction of American regulators. Ironically, a lot of Americans were using VPNs to trade there and lost their savings. Why? Because FTX.US is regulated so heavily that it isn't as attractive of a product.
- dragonwriter 4y ago> It's possible none of them have been exchanges There have been exchanges, as far back as MtGox, and as recently as FTX and FTX.US.
- dragonwriter 4y ago> I think these Bitcoin exchanges need to be regulated the same way banks are, or we are going to see a repeat of the early days of banking where banks would disappear overnight along with people's life savings. What is the gift of predicting events that have already occurred called?
- worik 4y ago> What is the gift of predicting events that have already occurred called? Learning from your mistakes.
- AnimalMuppet 4y ago> What is the gift of predicting events that have already occurred called? Retroactive precognition?
- EamonnMR 4y agoRecognition
- LatteLazy 4y agoThe fact the SEC simultaneously insists it has the right to regulate crypto AND refuses to do the basic, vanilla, widely supported stuff like require brokers to segregate funds is pretty damning.
- TedDoesntTalk 4y agoHow can they do that when these exchanges are based outside the US (except for Coinbase)
- joenathanone 4y agoCorrect me if I am wrong, but as I understand it as long as they do business in the US then they are accountable to US laws/regulations.
- AlexandrB 4y agoUsing the example of FTX, only FTX.us officially operated in the US (and was supposedly run more like a real bank), but there was always a "wink, wink, nudge, nudge" hint that if you want the good stuff you should go around the geoblocking and deal with FTX proper. The other interesting element is that the most vocal crypto backers, often for ideological reasons, want to deal with this completely unregulated system that crypto has created. If the SEC had intervened before FTX collapsed, I'm sure you would hear cries of "authoritarianism" and "fiat banks are scared" from the usual suspects. Perhaps we should let these people have what they want - consequences and all - and just limit the ability to buy Super Bowl commercials in regulated markets for unregulated products.
- KrakenEng 4y agoExchanges aren't banks and shouldn't act like banks. Banks are allowed to take deposits and lend then out, ie they don't need 100% reserves. Exchanges should be required to hold at least 100% reserves. FTX collapsed, in part, because they weren't maintaining reserves. Instead they gambled with customer money.
- jacquesm 4y agoFTX collapsed, in part, because they were acting like banks by lending out the funds they were entrusted with and leveraging them.
- JumpCrisscross 4y ago> FTX collapsed, in part, because they were acting like banks by lending out the funds they were entrusted with and leveraging them This had basically nothing to do with how FTX collapsed. It collapsed because they stole the money. They may have papered up the theft as a loan to Alameda. But that wasn't done consistently, and was ad hoc rationalization of plain-vanilla theft.
- jacquesm 4y agoThat's fair, the loans were a figleaf for theft. But in their minds they may have thought that they'd pay it all back and nobody would notice. People that steal are pretty weird when it comes to rationalizing what they are doing. I've had a bunch of people steal 100's of thousands from a gas station I owned. They would take it to the casino, bet heavily, lose everything and then do it again all in the hope that they would win, pocket the winnings and then put back the original amount. Still bugs me 16 years later.
- Xelynega 4y agoAll crypto exchanges are banks, and shouldn't be called exchanges Exchanges should be required to hold 100% reserves in the deposit currencies of their users if they want to be called exchanges, but that would require regulations to be enforced that don't even exist yetm
- jacquesm 4y agoWhy use the future tense when you can use the past and the present?
- mianos 4y agoThere are fully regulated and big five audited crypto exchanges that operate fully within the appropriate laws. They don't trade with client funds. They are not popular as they require annoying banking level KYC and are very limited by regulation as to who they can deal with. In many places, only audited high net worth individuals. These are not the places crypto-bros trade on as the fees are not subsidised by house trading or self issued coins.
- mvkel 4y agoThere are? Last I heard, none of the big five will touch crypto
- mianos 4y agoI know first hand PWC does. :) I am not sure why an auditor would not touch crypto. It should be the opposite. Any normal company that operates in financial markets should have normal company accounting and normal auditing. The issues at the moment pretty much stems from people thinking 'crypto' should be different.
- throwaway23597 4y agoBinance and Tether will not become insolvent, and that is precisely the issue. They have an essentially endless supply of laundered funds, criminal money, and international backing. It's essentially a financial weapon aimed at the West, and adversaries of the West will not let it fail. Major regulation is the only way that these beasts will be slain, but they have donned the cloak of "an exciting new fintech industry" and are lobbying like hell, so I'm not terribly optimistic.
- einszwei 4y ago> It's essentially a financial weapon aimed at the West, and adversaries of the West will not let it fail. An interesting way to phrase it but do you have any sources to back your claim? I know that Binance is being investigated for money laundering and sanctions violations. But this could just be a consequence of corporate greed and operating in unregulated markets (not some conspiracy against west).
- rvnx 4y agoIn Europe, wire transfers work exceptionally well since the introduction of SEPA Instant Credit Transfer. You have the choice between a free, transparent, technically stable, instant payment system (< 10 seconds until 100'000 EUR), using a stable currency. or an unregulated system where unknown people create and control the currency, that is generally slow, often with high payment or exchange fees and where you need to trust a lot of unknown parties (software, tools, network, coins, etc), where you can lose your key, that is falsely transparent (you see transactions, but you don't know who control the network). Mhhh...
- superjan 4y agoTrue, but how is it relevant to the comment you replied to?
- rvnx 4y agoIt's to say that "West" has a quite established and efficient transaction platform. Because of that, as part of the "West", I hardly see any benefit of crypto, unless you are in some other camp (aka: "anti-West"). This is what I meant.
- aaroninsf 4y ago"Box" is a funny word for something that has the silhouette of a tetrahedron?
- seydor 4y ago> The Reuters analysis The "investigative" part is public data that any of us can view. If there was something remarkable there, crypto bros would have found it without waiting for reuters to "review" things. Obviously since binance is not based in the US or EU, its users don't expect the same level of transparency that banks have. If reuters wanted more transparency maybe it should ask some country to allow it to base itself there. But given that they have been effectively on the run for most of their existence, it's not strange that they are keeping their secrets to themselves. I think reuters is trying to be sensational but none of the news it reports are.
- arcticbull 4y ago> If reuters wanted more transparency maybe it should ask some country to allow it to base itself there. They are welcome to base themselves in any jurisdiction however they would rather not because they have no interest in complying with the kinds of financial regulations that underpin a modern and functional economy. Why on earth would we want to compromise on these regulations and onshore these bucket shops? Just look what happens when you let them do as they will.
- deleted 4y ago[deleted]
- seydor 4y ago> They are welcome Are they? They are not unless they transform to another boring bank which defeats the purpose of the exchange. Banking is not why their users joined
- arcticbull 4y ago> Are they? They are not unless they transform to another boring bank which defeats the purpose of the exchange. Banking is not why their users joined Sure, but if their users joined to participate in an unlawful offshore casino then my point remains. They can comply with regulations, or not. It's not the responsibility of the states to bow down to binance and allow this silliness, but on binance to conform to a state regulatory framework.
- JumpCrisscross 4y ago> exchange said it dealt with net outflows of around $6 billion over 72 hours last week Has anyone tried to verify this?
- rsanaie 4y agoI cashed out of binance and the funds were wired into my account within 48hrs, thank god!
- chollida1 4y agohttps://cryptoquant.com/asset/btc/chart/exchange-flows/exchange-outflow-total?exchange=all_exchange&window=DAY&sma=0&ema=0&priceScale=log&metricScale=linear&chartStyle=column https://cryptoquant.com/asset/btc/chart/exchange-flows/excha... its measurable on chain if you know what wallet addresses to watch, which can be crowd sourced by people taking money off exchanges.
- lmm 4y agoBut there's nothing to stop Binance using other addresses, or sending funds from their known wallet addresses to other addresses they control, or adding false entries to those crowd sourced lists.
- helloworld11 4y agoI think it's amusing as hell how the founder of Binance had a spat with SBF and was partly responsible for hurrying along the collapse of FTX (though that dumpster fire was doomed anyhow), and is now reaping the whirlwind of his own backstabbing of another major crypto bro. Note: I personally believe in the utility of crypto and think much of the hate for it on HN is downright idiotic and ignorant, but giant shenanigans like these are are a separate matter of natural human greed, fraud, lies and self destructive foolishness. https://www.theguardian.com/technology/2022/nov/11/binance-ftx-collapse-cryptocurrency-exchange-changpeng-zhao https://www.theguardian.com/technology/2022/nov/11/binance-f...
- FormerBandmate 4y agoAnd it was over Twitter of all things. This is the history of 19th century banking repeating itself as a giant farce
- corv 4y agoOf course letting everyone print their own money is a farce and doesn't actually generate any value for society. In that sense Binance is guilty here with their BNB token, having also set the example for FTX' FTT token.
- YawningAngel 4y agoTo be fair to Binance, they have thus far honoured their wildcat dollars.
- mrguyorama 4y agoWildcat banks always honor their receipts. Until they suddenly don't
- cuteboy19 4y agoA lot of the journalism is being done by coindesk on this topic. Coindesk is owned by the same company who owns Gemini, a rival exchange. So it is indeed poetic
- LatteLazy 4y agoI mean... We already knew they were a black box. And anyone keeping assets on-exchange this soon after FTX frankly only has themselves to blame.
- kepler1 4y ago
- quesera 4y agoThere is more than one kind of black box. The article refers to one of the kinds that is not a flight recorder. Aside from that, your comment is not likely to generate constructive conversation.
- greenyoda 4y agoIn particular: > In science, computing, and engineering, a black box is a system which can be viewed in terms of its inputs and outputs (or transfer characteristics), without any knowledge of its internal workings. Its implementation is "opaque" (black). The term can be used to refer to many inner workings, such as those of a transistor, an engine, an algorithm, the human brain, or an institution or government. https://en.wikipedia.org/wiki/Black_box https://en.wikipedia.org/wiki/Black_box
- ericpauley 4y agoSibling comments aside, flight data recorders are (by design) not black, so the name really doesn’t make any sense.
- mopsi 4y agoMost participants of Black Tuesday experienced red color, but in both cases black refers to something more abstract: darkness, death.
- jacquesm 4y agoIt's time to go find a nice juicy head of lettuce I think.
- rchaud 4y ago> managing director, Pierre van Helden, said Cape Town-based FiveWest receives a "minimal yearly license fee" from Binance to facilitate crypto derivatives trading for Binance's South African users. "How Binance operates globally is unclear to us," van Helden said. He added that Zhao's company was "cooperative" on compliance and said FiveWest has regular meetings to ensure requirements are met. I was wondering how an audit for a company moving billions of dollars ended up in the hands of a South African branch office of an accounting firm (Mazars).
- yalogin 4y agoWe got really lucky that the crypto industry is not regulated. If it were, the politicians would have gotten the opportunity to bail SBF out. Of course they wouldn’t want all the job losses!
- rossdavidh 4y agoKidding aside, I think this is an excellent point.
- erung88 4y agotrue, regulated means politicians can get a cut on every dollar.
- Xelynega 4y agoThe same politicians that are laughing at the tech layoffs? They don't care about job losses.
- yalogin 4y agoLooks like the sarcasm didn’t come across from n my comment above. Should have added a /s
- paulpauper 4y agoWhat will happen when BTC, ETH are close to worthless but stable coins are the only things left? I guess it will prove once once for all the supremacy of the dollar.
- neilv 4y ago> "We are a private company and are not required to publicize our corporate finances," he continued, comparing the exchange to privately-held firms such as U.S. candy maker Mars. In a statement, Mars said Did Reuters solicit a response from Mars on that?
- ineedasername 4y ago>”Mars Inc., when reached for comment on whether or not they feared Binance’s statement might lead to contagion & collapse of their own enterprise, stated “No, we make things.” When pressed further and informed that similar comments from Binance’s CZ helped precipitate the collapse of FTX— once valued around $32B, close to Mars Inc’s $37B annual revenue— the spokesperson for Mars simply repeated “We make things.” But then after a pause added “And they’re delicious.” These comments have so far baffled crypto insiders who sought clarification after such a brief statement, but Mars Inc has yet to respond.”
- Waterluvian 4y agoPlease tell me this is actually real.
- sanj 4y agoIt isn’t. But reality is almost as good: In a statement, Mars said it was "absurd" to compare its corporate governance and financial reporting requirements with Binance's, adding that its goods and services are "highly regulated."
- ineedasername 4y agoI wish it was. It's the reality I pictured in my head if a $37B corporate behemoth perked up its ears at the mention of its name. And send out a confused Assistant Director of PR to comment on why their corporation was not an apt comparison point for Binance when it comes to financial accountability. In my imagination this PR person, with odd brevity for someone in their profession, chose the simplest and most fundamental reason to explain things. And then at the end remembered they should put in a good word for their products while they had the chance. Sadly it's not the world we live in, but if there's any Mars, Incorporated person stumbling on this comment (maybe a dev? They have to have all sorts of IT departments...) do what you can, spread the word, and try to get a PR rep to say something hilarious about this. Maybe something like "Our customers do often find our products have completely disappeared after acquiring them, but in our case they usually find the process enjoyable." Or: "We were crypto before crypto was crypto. Every year countless customers airdrop our "tokens" to children in costumes, or while lying to their kids about a bunny. And as for our industry as a whole if not Mars Inc. itself, I can tell you with absolute truth that what we produce has gone to the moon!"
- tyingq 4y agoI'm impressed the article avoided the obvious jab about Binance having a very private and very not-immutable ledger.
- wesapien 4y agoIt doesn't matter because those who want privacy will use chains that are meant for it. Same thing with immutability. There is clearly a market for them.
- theGnuMe 4y agoBinance is a scam.
- dang 4y agoMaybe so, but can you please not post unsubstantive comments to Hacker News? We're trying for something else here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html