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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

by 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.

by 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.