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> but also the risk that if they steal customer funds executives can go to jail What? This isn't a risk... just don't steal/commingle the funds. Plenty of bank

> but also the risk that if they steal customer funds executives can go to jail What? This isn't a risk... just don't steal/commingle the funds. Plenty of banks have done that just fine! This whole post is nonsense. Coinbase reassuring assets aren't commingled explicitly in an announcement like this is in-line with their usual writing tone for public announcements. Their whole brand is "the regulation friendly crypto exchange." It seems to me that this is more just about the fact they've downsized a bunch with layoffs, and Coinbase Japan is just a casualty of that. Nothing more to it.

forgetfreeman 4y ago
Would you like to review the number of times exchanges previously hyped on HN have tripped over the incredibly low bar that is "just don't steal customer funds"?
- 3np 4y ago
  Only one, FTX? The rest have AFAIK been treated with (well-deserved given events) at the very least suspicion and FUD.
  - voxic11 4y ago
    You missed the one which is the entire reason FSA has so much power now. Mt. Gox stole/comingled customer funds (though they lost even more to hackers).
    - 3np 4y ago
      Actually, the Coincheck hack was what triggered most of it. Please show me HN hyping either, through...
- marcell 4y ago
  I don’t know if many major exchanges that stole customer funds. FTX is the only one I can think of. MtGox was a hack followed by a coverup.
Laaas 4y ago
Since when are banks not commingling funds? Do you think they have a separate vault with cash per customer? You account with them is just a number in a database they can change arbitrarily.
- rippercushions 4y ago
  Coinbase is not a bank, it's an exchange, and exchanges are absolutely not supposed to "commingle" (read: trade with) your funds. Even FTX paid lip service to this idea by structuring Alameda as a theoretically separate company.
- smcl 4y ago
  You’re mixing up two different things. When you're talking about "commingling" each client’s assets/deposits, yeah that's something all banks and wealth managers have done since basically forever. They will hold these assets in aggregate, and maintain a logical balance for each client somewhere (big piece of paper or a DB) then regularly (nightly at least) ensure the quantities of these two match (if they don't match somoeone needs to root-cause and fix ASAP). That's totally normal and I don't think anyone here has a problem with that. What the OP is talking about is mixing up these client assets together with the cash and assets the company uses for its operations - payroll, trading, expenses, whatever. This is a huge no-no and regulators will come on you like a ton of bricks if they even catch a whiff of you doing this. This is meant to protect against dumb shit like FTX lending out all their client deposits to Alameda. It is still possible to fuck up under regulations like this but that'd probably be at the hands of either a very savvy fraudster in a senior-ish position in the organisation (who will certainly get caught no matter how much they cover their tracks) or a criminally incompetent CFO who hasn't been ensuring their ops staff are following processes.
- csomar 4y ago
  Banks commingle with supervision from the state. Most countries will bail depositors if banks go under.

forgetfreeman 4y ago

Would you like to review the number of times exchanges previously hyped on HN have tripped over the incredibly low bar that is "just don't steal customer funds"?

3np 4y ago
Only one, FTX? The rest have AFAIK been treated with (well-deserved given events) at the very least suspicion and FUD.
- voxic11 4y ago
  You missed the one which is the entire reason FSA has so much power now. Mt. Gox stole/comingled customer funds (though they lost even more to hackers).
  - 3np 4y ago
    Actually, the Coincheck hack was what triggered most of it. Please show me HN hyping either, through...
marcell 4y ago
I don’t know if many major exchanges that stole customer funds. FTX is the only one I can think of. MtGox was a hack followed by a coverup.

Laaas 4y ago

Since when are banks not commingling funds? Do you think they have a separate vault with cash per customer? You account with them is just a number in a database they can change arbitrarily.

rippercushions 4y ago
Coinbase is not a bank, it's an exchange, and exchanges are absolutely not supposed to "commingle" (read: trade with) your funds. Even FTX paid lip service to this idea by structuring Alameda as a theoretically separate company.
smcl 4y ago
You’re mixing up two different things. When you're talking about "commingling" each client’s assets/deposits, yeah that's something all banks and wealth managers have done since basically forever. They will hold these assets in aggregate, and maintain a logical balance for each client somewhere (big piece of paper or a DB) then regularly (nightly at least) ensure the quantities of these two match (if they don't match somoeone needs to root-cause and fix ASAP). That's totally normal and I don't think anyone here has a problem with that. What the OP is talking about is mixing up these client assets together with the cash and assets the company uses for its operations - payroll, trading, expenses, whatever. This is a huge no-no and regulators will come on you like a ton of bricks if they even catch a whiff of you doing this. This is meant to protect against dumb shit like FTX lending out all their client deposits to Alameda. It is still possible to fuck up under regulations like this but that'd probably be at the hands of either a very savvy fraudster in a senior-ish position in the organisation (who will certainly get caught no matter how much they cover their tracks) or a criminally incompetent CFO who hasn't been ensuring their ops staff are following processes.
csomar 4y ago
Banks commingle with supervision from the state. Most countries will bail depositors if banks go under.