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Words of warning for anyone choosing to dabble in the cryptocurrency space - anything that you “have” on an exchange account is owned by the owner of the exchan

by reidjs 3y ago

Words of warning for anyone choosing to dabble in the cryptocurrency space - anything that you “have” on an exchange account is owned by the owner of the exchange, not you. This is because whoever knows the private key to a crypto wallet is the owner of the funds. Usually, exchanges don’t give you access to the private key(s). And even if they did give you access, it’s still not safe because there’s nothing stopping them from moving the funds to a different account without your knowledge. I wouldn’t recommend buying crypto unless you at least have a decent understanding of public/private key crypto

ChumpGPT 3y ago
>I wouldn’t recommend buying crypto ftfy
wmf 3y ago
This isn't really correct, especially in New York which has strong consumer protection for crypto.
- ceejayoz 3y ago
  How many exchanges place their assets and management staff within NY's reach? Good luck getting Changpeng Zhao to show up and fork over his holdings.
  - SilasX 3y ago
    Gemini, the subject of this story, for one.
    - ceejayoz 3y ago
      That's one, and it collapsed. Ask its victims how useful NY's protections have been there thus far.
      - faraggi 3y ago
        Gemini didn't collapse. the title of this article is clickvair and it purposefully confuses Gemini with Genesis which isn't the winkelvii exchange.
      - SilasX 3y ago
        Are you thinking of Genesis? I was talking about Gemini, the exchange owned by the Winklevoss twins. It has not collapsed. (Disclosure: I am an active user.) Genesis's lending operations are what collapsed.
onlyrealcuzzo 3y ago
What does the crypto have to do with it? I wouldn't recommend giving your hard earned money to people in an unregulated market. If we didn't have banking regulations, bankers would run off with your money - and when they did - you'd be left with nothing. At least with FDIC & SIPC - you're not left with nothing when they run off.
- LambdaComplex 3y ago
  > If we didn't have banking regulations, bankers would run off with your money > What does the crypto have to do with it? The fact that crypto doesn't have those regulations.
  - buitreVirtual 3y ago
    No built-in regulation perhaps, but many jurisdictions are starting to regulate it, for good reason.
    - constantly 3y ago
      I haven’t heard of this, this is good news! Crypto is such a scam on its face. Can you share the jurisdictions that are starting to regulate it?
    - btilly 3y ago
      What crypto people want to mean by "regulate it", and what everyone else means, are unrelated. Crypto people want it to mean, "We continue to do what we want to do, but claim to follow regulations." Meanwhile everyone else means, "You follow KYC and AML regulations properly. So you shut down criminals. Can reverse transactions when ordered by a bank. And have sufficient knowledge of who you're dealing with to help law enforcement in a practical manner." Crypto people respond, "But once it is cryptographically signed on the blockchain, it is final! And wallets are designed to be anonymous! We want to be regulated, with regulations that make sense for crypto!" Sorry crypto. You can't have your cake and eat it too. Right now you're an attractive nuisance for criminal enterprises. There is no particular reason why society should want crypto to be part of the financial system. There are good reasons to shut down crimes like ransomware.
nico 3y ago
Both have their risks For example, people that had their crypto on MtGox were still able to file claims for their funds in bankruptcy proceedings And a lot of them have also been able to sell their claims, for more money than their BTC were worth when MtGox collapsed At the same time, there’s plenty of stories of individuals loosing their keys, forgetting their paraphrase or getting hacked Crypto can be pretty risky, regardless of how/where you store your funds
nerdix 3y ago
Maybe in the crypto sense but what about the legal sense? Are there regulations in this area? I know regulations are light in the crypto world so it's a genuine question. Like my bank has my money as well. If possession is all that matters then they would own it too. But luckily there are laws that say that they don't and a bank CEO that withdraws customer funds before a bank collapse is going straight to prison.
- sbf_fraud 3y ago
  It only matters if laws are enforced. Notice SBF's parents, despite all the involvement with FTX, are still running free.
  - vore 3y ago
    Are they going to keep running free though? https://www.nytimes.com/2023/09/19/business/ftx-sam-bankman-fried-parents-sued.html https://www.nytimes.com/2023/09/19/business/ftx-sam-bankman-...
  - red-iron-pine 3y ago
    nah. they're definitely under a microscope and may be nailed before too long. courts move slow. how long did it take to see Elizabeth Holmes get convicted?
basisword 3y ago
Another word of warning - don't take the advice of anyone who claims to know what they're talking about. I remember listening to a podcast where Kevin Rose said that people sitting with crypto in wallets were idiots when they can put it in BlockFi and earn interest at no risk. I was amazed. It seemed so obvious. I put my money in BlockFi and after a few weeks fortunately changed my mind. It seemed too easy. BlockFi are currently going through bankruptcy proceedings.
- jjoonathan 3y ago
  After dabbling in the technical side, I decided to wind down the wallet files that I probably wouldn't do a good job of securely storing and put everything in the biggest exchange instead. 10 years later, I'm still waiting on MtGox bankruptcy proceedings :o)
  - sidewndr46 3y ago
    I don't really understand Japanese bankruptcy law, but the final notice I saw was that the amount of funds missing is insignificant. My guess is that something about the legal system there is allowing them to delay paying out the funds more or less indefinitely.
    - Scoundreller 3y ago
      Naw, kinda the opposite. They “found” a significant amount of missing bitcoin. Then bitcoin skyrocketed in value. Technically the creditors losses are “crystallized” at the time of bankruptcy and if the organization wanted to push it, could make the creditors whole and end up with the remaining value. Sometimes this happens in real life where equity holders end up getting some payments post-bankruptcy liquidation. As I understand it, mtgox is going to go through a procedure to pay out the excess to the creditors anyway, which probably further delayed things. Many bankruptcies take a significant period of time. Even Bernie Madoff creditors continue to receive distributions from the estate.
      - 3y ago
TerrifiedMouse 3y ago
> anything that you “have” on an exchange account is owned by the owner of the exchange, not you I heard that actually applies to normal banks too. Once you deposit your money, it’s now their money with a promise to repay you what you deposited.
- lnxg33k1 3y ago
  Except bank have deposit protection scheme, so whatever happens you're covered thanks to the fact that they proved to respect a framework of regulations in order to make deposits covered
  - tromp 3y ago
    For U.S. banks, coverage is limited to $250k per bank-account-holder.
    - PawgerZ 3y ago
      You are correct. I'd like to add, though--this is a soft cap. It's $250,000 per bank, per ownership category. You are insured up to $250,000 for each of the ownership categories at a single bank. These are the ownership categories: -Single accounts (owned by one person). -Joint accounts (owned by more than one person). -Certain retirement accounts, including IRAs. -Revocable trust accounts. -Irrevocable trust accounts. -Corporation, partnership and unincorporated association accounts. -Employee benefit plan accounts. -Government accounts. If you were to open a single account at Wells Fargo with 250k in it, you can also open a joint account with 250k and have it insured. Then, you can go to Bank of America and do that same thing. Also, I'm not sure if America has ever enforced the cap, but it's safer to keep it under 250k per ownership category.
thowaway91234 3y ago
[dead]
mrtksn 3y ago
>This is because whoever knows the private key to a crypto wallet is the owner of the funds. Even better, funds don't have to exist to show them on a screen. Numerous exchanges collapsed because the stated funds weren't in the exchange in the first place and what the traders actually traded was numbers in a MySQL database when the actual funds they sent to the exchanges were being bet on somewhere else. The sad reality is, for most people in the trade crypto assets are whatever the screen says.
deleted 3y ago
[deleted]

by reidjs 3y ago

ChumpGPT 3y ago

>I wouldn’t recommend buying crypto ftfy

wmf 3y ago

This isn't really correct, especially in New York which has strong consumer protection for crypto.

ceejayoz 3y ago
How many exchanges place their assets and management staff within NY's reach? Good luck getting Changpeng Zhao to show up and fork over his holdings.
- SilasX 3y ago
  Gemini, the subject of this story, for one.
  - ceejayoz 3y ago
    That's one, and it collapsed. Ask its victims how useful NY's protections have been there thus far.
    - faraggi 3y ago
      Gemini didn't collapse. the title of this article is clickvair and it purposefully confuses Gemini with Genesis which isn't the winkelvii exchange.
    - SilasX 3y ago
      Are you thinking of Genesis? I was talking about Gemini, the exchange owned by the Winklevoss twins. It has not collapsed. (Disclosure: I am an active user.) Genesis's lending operations are what collapsed.

onlyrealcuzzo 3y ago

What does the crypto have to do with it? I wouldn't recommend giving your hard earned money to people in an unregulated market. If we didn't have banking regulations, bankers would run off with your money - and when they did - you'd be left with nothing. At least with FDIC & SIPC - you're not left with nothing when they run off.

LambdaComplex 3y ago
> If we didn't have banking regulations, bankers would run off with your money > What does the crypto have to do with it? The fact that crypto doesn't have those regulations.
- buitreVirtual 3y ago
  No built-in regulation perhaps, but many jurisdictions are starting to regulate it, for good reason.
  - constantly 3y ago
    I haven’t heard of this, this is good news! Crypto is such a scam on its face. Can you share the jurisdictions that are starting to regulate it?
  - btilly 3y ago
    What crypto people want to mean by "regulate it", and what everyone else means, are unrelated. Crypto people want it to mean, "We continue to do what we want to do, but claim to follow regulations." Meanwhile everyone else means, "You follow KYC and AML regulations properly. So you shut down criminals. Can reverse transactions when ordered by a bank. And have sufficient knowledge of who you're dealing with to help law enforcement in a practical manner." Crypto people respond, "But once it is cryptographically signed on the blockchain, it is final! And wallets are designed to be anonymous! We want to be regulated, with regulations that make sense for crypto!" Sorry crypto. You can't have your cake and eat it too. Right now you're an attractive nuisance for criminal enterprises. There is no particular reason why society should want crypto to be part of the financial system. There are good reasons to shut down crimes like ransomware.

nico 3y ago

Both have their risks For example, people that had their crypto on MtGox were still able to file claims for their funds in bankruptcy proceedings And a lot of them have also been able to sell their claims, for more money than their BTC were worth when MtGox collapsed At the same time, there’s plenty of stories of individuals loosing their keys, forgetting their paraphrase or getting hacked Crypto can be pretty risky, regardless of how/where you store your funds

nerdix 3y ago

Maybe in the crypto sense but what about the legal sense? Are there regulations in this area? I know regulations are light in the crypto world so it's a genuine question. Like my bank has my money as well. If possession is all that matters then they would own it too. But luckily there are laws that say that they don't and a bank CEO that withdraws customer funds before a bank collapse is going straight to prison.

sbf_fraud 3y ago
It only matters if laws are enforced. Notice SBF's parents, despite all the involvement with FTX, are still running free.
- vore 3y ago
  Are they going to keep running free though? https://www.nytimes.com/2023/09/19/business/ftx-sam-bankman-fried-parents-sued.html https://www.nytimes.com/2023/09/19/business/ftx-sam-bankman-...
- red-iron-pine 3y ago
  nah. they're definitely under a microscope and may be nailed before too long. courts move slow. how long did it take to see Elizabeth Holmes get convicted?

basisword 3y ago

Another word of warning - don't take the advice of anyone who claims to know what they're talking about. I remember listening to a podcast where Kevin Rose said that people sitting with crypto in wallets were idiots when they can put it in BlockFi and earn interest at no risk. I was amazed. It seemed so obvious. I put my money in BlockFi and after a few weeks fortunately changed my mind. It seemed too easy. BlockFi are currently going through bankruptcy proceedings.

jjoonathan 3y ago
After dabbling in the technical side, I decided to wind down the wallet files that I probably wouldn't do a good job of securely storing and put everything in the biggest exchange instead. 10 years later, I'm still waiting on MtGox bankruptcy proceedings :o)
- sidewndr46 3y ago
  I don't really understand Japanese bankruptcy law, but the final notice I saw was that the amount of funds missing is insignificant. My guess is that something about the legal system there is allowing them to delay paying out the funds more or less indefinitely.
  - Scoundreller 3y ago
    Naw, kinda the opposite. They “found” a significant amount of missing bitcoin. Then bitcoin skyrocketed in value. Technically the creditors losses are “crystallized” at the time of bankruptcy and if the organization wanted to push it, could make the creditors whole and end up with the remaining value. Sometimes this happens in real life where equity holders end up getting some payments post-bankruptcy liquidation. As I understand it, mtgox is going to go through a procedure to pay out the excess to the creditors anyway, which probably further delayed things. Many bankruptcies take a significant period of time. Even Bernie Madoff creditors continue to receive distributions from the estate.
    - 3y ago

TerrifiedMouse 3y ago

> anything that you “have” on an exchange account is owned by the owner of the exchange, not you I heard that actually applies to normal banks too. Once you deposit your money, it’s now their money with a promise to repay you what you deposited.

lnxg33k1 3y ago
Except bank have deposit protection scheme, so whatever happens you're covered thanks to the fact that they proved to respect a framework of regulations in order to make deposits covered
- tromp 3y ago
  For U.S. banks, coverage is limited to $250k per bank-account-holder.
  - PawgerZ 3y ago
    You are correct. I'd like to add, though--this is a soft cap. It's $250,000 per bank, per ownership category. You are insured up to $250,000 for each of the ownership categories at a single bank. These are the ownership categories: -Single accounts (owned by one person). -Joint accounts (owned by more than one person). -Certain retirement accounts, including IRAs. -Revocable trust accounts. -Irrevocable trust accounts. -Corporation, partnership and unincorporated association accounts. -Employee benefit plan accounts. -Government accounts. If you were to open a single account at Wells Fargo with 250k in it, you can also open a joint account with 250k and have it insured. Then, you can go to Bank of America and do that same thing. Also, I'm not sure if America has ever enforced the cap, but it's safer to keep it under 250k per ownership category.

thowaway91234 3y ago

[dead]

mrtksn 3y ago

>This is because whoever knows the private key to a crypto wallet is the owner of the funds. Even better, funds don't have to exist to show them on a screen. Numerous exchanges collapsed because the stated funds weren't in the exchange in the first place and what the traders actually traded was numbers in a MySQL database when the actual funds they sent to the exchanges were being bet on somewhere else. The sad reality is, for most people in the trade crypto assets are whatever the screen says.

deleted 3y ago

[deleted]