Worse is that these "audits" do not account for the other side of the equation: liabilities. They can look at the assets sure, but what good is having 1 billion if you owe 2 billion?
An actual audit is performed by an independent firm going through your books. Something that will probably never happen with crypto
This happens all the time in crypto, look at DeFi which is very transparent and analyzable. If you build a custodial centralized unregulated exchange then yeah, this kind of auditing no longer works.
And that's precisely why public ledgers are needed. These scammers are all going to be exposed thanks to people doing detective work.
Meanwhile officials at the SEC and the CTFC were busy working on allowing regulatory capture to happen, which would have allowed FTX/BlockFi to be "regulated" entities, operating as "legit" exchanges. With BlockFi offering unrealistic APYs (supposedly not knowing the ongoing scams at Alameda Research). And FTX running a downright scam, fully knowing what was going on Alameda Research. (I'll give BlockFi the benefit of the doubt).
And these crooks at FTX/Alameda and their greased officials were that close at succeeding. Pretending decentralized exchanges needed to be regulated out of existence, while putting daddy's friends' kids at the top of the crypto exchanges food chain, free to run their complete scams.
Meanwhile legit centralized players like Coinbase (I take it they're legit) seems to be doing fine. So do decentralized exchanges like Uniswap.
These guys were basically planning the next Enron, complete with deep ties high up in the administration (the SEC and CFTC are implicated in the ongoing scandal and have lots of explanation to do).
But instead of focusing on that and how, precisely, public ledgers allowed to expose these crooks (and we may see officials falling: I hope we do for there are some who are obviously in it), let's instead, on HN, hate on crypto?
I think a serious talk needs to be had here.
We're talking about Bloomberg and Sequoia and many others presenting the biggest scammer since Enron as an altruistic white knight.
I want excuses.
And I certainly want decentralized cryptocurrencies to succeed now.
Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once".
I sure hope someone who knows how to dig is working on connecting these dots and just being quiet about it. Because I haven't seen anything substantive and these regulators are going to get away with no one the wiser.
Well Elon Musk just tweeted that because they all democrats nothing will happen during the current administration.
It's very sad if there's not even an investigation but, as usual, it's likely that the crooks at the top are going to stay free. I'm not so sure however that they'll keep the exact same jobs.
> Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once".
They're all tied. The ex-CFTC commissioner (the one who just deleted his Twitter account) used to work with Gensler too. SBF's father is a well connected Stanford professor teaching tax laws and who's on air saying he's helping FTX with regulations. These guys obviously all know each other. It's more than just one coincidence. It's many coincidences.
As a sidenote Stanford as been behind quite a few very interesting characters recently: Elizabeth Holmes, SBF, SBF's two parents (one of them being implicated for sure even though he'll surely claim he had no idea what is son was doing).
Maybe it's time they were to teach integrity and ethics at Stanford? Oh, wait, someone posted here on HN that SBF's parents "are Stanford lawyers who specialize in compliance and ethics.".
I'm not sure there won't be some cleaning done at both Stanford and the MIT even if these people aren't indicted.
It's kinda bad looking on your institution when the head of the department of Economics happen to be the dad of the CEO of the biggest scam since Enron. It's also bad looking when your tax law teachers were helping the biggest scam get licenses to operate as regulated entities.
Even if nobody goes to jail, who's ever going to look at these people with any ounce of respect?
But what for? I think for many of the rest of us, crypto continues to be a solution in need of a problem, and a field full of crooks in general. Even if it was without crooks, it would still seem like an extremely high risk proposition with tenuously far fetched value-add.
Yeah, it really looks like that in the developed world. In the developing world, however, it solves some very real problems (think remittances), maybe not 100% effectively, but much better than what it's competing with.
How is that a relevant question? It's like asking if people really widely used credit cards for payments in the early days of their development.
If you study the history of credit cards there are amusing stories likes companies even mailing credit cards to households (without their request) so they are encouraged to use them.
So, the better question is: are upcoming technologies doing a better job and providing benefits older technologies can't deliver?
There are many factors that I personally find very appealing, like credible neutrality of the infrastructure itself.
A lot of those affected by FTX are traders, investors. Taking bets on market. Or dumbly using FTX as a place to park their tokens, instead of self custody or multisig.
No; it's not. Cryptocurrency exists as an alternative to the government-granted monopoly on the financial sector, which consumes a huge amount of value from every transaction in the economy, causing a great deal of unneccesary misery for regular people.
This is the story of financial sector parasites hijacking a legitimate hope for emancipation from them.
I'm just of the opinion that whatever next steady state situation we might find out on the other end of a crypto-world isn't necessarily going to be better, or relatively better enough.
The more I see crypto come up, the more I become convinced that actually, perhaps it's for the best after all that the government controls the financial sector. Human in the loop sort of idea.
>I'm just of the opinion that whatever next steady state situation we might find out on the other end of a crypto-world isn't necessarily going to be better, or relatively better enough.
Oh is that so? Curious that governments are now basically salivating and trying to copy cryptocurrencies for their own CBCDs but stripping it from everything that prevents them from having full domination over their respective populations.
>The more I see crypto come up, the more I become convinced that actually, perhaps it's for the best after all that the government controls the financial sector. Human in the loop sort of idea.
Based on what evidence? Your inference is so backwards, because all of these fiascos have one thing in common: the human in the loop.
No one can ever tell me that a biased human could do a better job than an auditable open-source smart contract refined by thousands of diverse engineers that work together to create credibly neutral infrastructure transparent and verifiable by anyone. Luddites may disagree.
I haven't seen any government want to use blockhains or anything decentralized for their CDBCs. They are not a copy of cryptocurrencies. There are countries that issued their own cryptocurrencies and it didn't really work out. It is more appropriate to consider CDBCs to be the digital equivalent to cash.
A database at the fed isn't really equivalent to cash so there have been attempts like GNU Taler to build a cash like system.
>I haven't seen any government want to use blockhains or anything decentralized for their CDBCs. They are not a copy of cryptocurrencies.
Wrong, they are. Just because you haven't seen or studied it, doesn't mean it isn't so:
The United Kingdom wants CBDCs[0] for a while now and guess who is helping them in developing those technologies? Blockchain companies, because CBDCs are heavily inspired by prominent blockchains and their innovation of programmable money.
So please read correctly what I've actually written "to copy cryptocurrencies for their own CBCDs but stripping it from everything that prevents them from having full domination* over their respective populations" - Of course they would not want to copy the decentralization property because they want to maximize their power. governments only want to copy those properties which help them in that regard as I already explained.
>There are countries that issued their own cryptocurrencies and it didn't really work out.
So what? Cryptocurrencies are not a miracle cure that will fix a broken economy. We have already seen what every nation on the planet does when they can arbitrarily print money out of thin air, they abuse it, every single one of them. Cryptocurrencies can only help a nation that actually wants to act rationally and is not corrupt to the core.
>It is more appropriate to consider CDBCs to be the digital equivalent to cash.
Wrong. Cash is anonymous, which governments do not like at all, that's exactly the reason why CBDCs are the authoritarian ruler's dream tool. It gives them full control via programmability, eliminates privacy and establishes a surveillance capitalist dystopia.
"Luddites may disagree" aka "whoever disagrees must be a $this". You seem to have a lot unuanced, inflexible and strongly held beliefs about this all. Perhaps consider if there's space for a world in which cryptocurrencies aren't a silver bullet.
>You seem to have a lot unuanced, inflexible and strongly held beliefs about this all.
Peak projection. At least I provided arguments based on evidence, while you just stated your opinion which clearly ignores any evidence of corruption and abuse of power from the early history of (central) banking up until now.
>Perhaps consider if there's space for a world in which cryptocurrencies aren't a silver bullet.
Never claimed them to be silver bullets, don't put words in my mouth. Maybe you should consider a world in which you are not blind to the continuous and boundless abuses of power by (central) banks and proponents of fiat who benefit from this broken system.
This is simply because you are inured to a certain type of parasitism. Whatever system you personally believe in, that's probably not what we have right now, and not what you'll ever get with a small number of people in charge. Imagine there were a set of rules that would guarantee the perfect result. Now write those rules down, enforce with cryptographic consensus, and there you go, a cryptocurrency that is superior to the existing system.
Cryptocurrency perpetuates the current system but in a hyperexaggerated manner.
I don't see any legitimacy in Bitcoin. It has exactly the same problem as the current system. You can withdraw it from circulation and thereby disrupt the system for anyone who wants to use it for payments.
Meanwhile RAI does the same thing the central banks do but with the obvious difference that negative rates are allowed which means taking money out of circulation is no longer possible.
You can have public accountability without crypto. My local government publishes the salary of every employee for instance.
You say that BlockFi was offering unrealistic APYs - I wonder how clear that was as a sign that something fishy was afoot. I actually lost $1.32 due to their closing, which I think reflects how much confidence I had in them as a customer.
HN commenters pretty often ask what is a good use case of blockchains or cryptocurrencies.
Well, the failures you are seeing now are not in the blockchain native finance. They are failures of traditional finance in an unregulated industry. Celsius, BlockFi, Crypto.com, FTX... are corporations with opaque balance sheets operating in a poorly regulated sector. While all of that crap built on greed is imploding you have DeFi (short for decentralized finance, i.e. Finance primitives built on-chain) working just as intended and with 0 risk of contagion, by design.
What we are seeing is once again that traditional final is very brittle and requires very strict regulation to hope nothing breaks, when not outright requiring to be saved by socializing the losses (2008).
Blockchains solve this, they do. And we are seeing a magnificent stress test of it.
What defi provides is completely useless in 99% of cases. You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan? And of course such loans are ""safe"" because they are not loans at all.
> What defi provides is completely useless in 99% of cases.
What DeFi provides are the foundations of a publicly verifiable financial system. So either you ascribe that financial systems are useless or that public verification is useless. For the first case I will refer you to the history of the Amsterdam Stock Exchange and the economic and welfare growth that it spurred, for the second one I will refer you to 2008 and what just happened with FTX.
> You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan?
Someone that needs 5 dollars? The specific numbers are irrelevant, in fact. They are just a consequence of whatever parameters are set to ensure the safety of the loan. If your question is why do we need to constraint in any margin collateral requirements, after everything that has happened during the last 20 years... I don't know what to say to you.
this will get buried and everyone on this site will cry about how the industry is all a scam because centralized entities blew up, completely missing how a lot of the innovation is happening under the radar and on-chain
everyone will get mad, call for more regulation, more innovation will happen offshore/private deals for real innovation will get lapped up and everyone will get mad/wonder why the US didnt get a piece of the industry
loaded question. there is enough material out there to convince any good faith actor that cryptocurrencies were the breeding ground and driver for innovations in cryptography research and application (zero knowledge proofs, verifiable computations...) and smart contracts which enabled completely trust-less decentralized exchanges.
No amount of evidence will convince the bad faith actors who are hellbent on hating crypto regardless of evidence of which there are too many here on hn.
Humans are the ones committing fraud for personal gain in traditional finance as well as in crypto. This does not negate the value proposition of crypto even one bit, in fact it strengthens it even more, because proponents have been calling for maximization of trustless open-source auditable smart contracts and minimization of human interference. ftx was a banking failure, not crypto. fraud is and always was illegal, no amount of regulation can prevent that, auditable open-source smart contracts are a good solution imo.
I'm so tired of these reddit one liners "but crypto bad" tho, hn should uphold higher standards of conversation
- Scams? Yes, there are lots of scams similar to the early days of the internet where script kiddies could scam people without having special knowledge of computer science, just by downloading some tools with controllable trojans. I remember testing it out back in the days to prank my friends, but it could have been used for actual fraud and as such it was also used. There are many startups now that focus on security for the industry and the auditors are able to catch many problems because of the transparency of open-source. Anybody can read and check the smart contract before using it or trust the auditors, although admittedly there is still a lot of room for a better user experience.
-Investing? Stocks were hit similar or even harder, Facebook for instance is down -75% YTD, Peloton is done whopping -95%(!) from ATH, many more such cases. I find it kind of strange that people unfairly point at crypto while traditional finance is guilty of the same or even worse, remember the SPAC grift? People really need to actually do their due diligence - if they don't, can they really blame anyone except themselves?
Me personally, I find crypto to be an exciting driver for innovations in cryptography research and seeing its actual implementation working in live projects, especially ZK + verifiable computation related stuff. Most of it is working remarkably well _today_ although there is a lot of room for improvement (esp UI/UX wise), I am quite optimistic for the future.
Plenty of "smart contracts" have been drained due to programming flaws because they are so extremely complicated. Very, very few people can read and understand what is happening. It might be transparent in theory but in reality it's just for show.
>Plenty of "smart contracts" have been drained due to programming flaws because they are so extremely complicated.
So? In the early days of the internet credit card scams and all sorts of scams were running rampant, the solution was not to stop developing because it's "extremely complicated" ( not true btw ), but to continuously improve systems. There are plenty of startups now that specialize on security and auditing smart contracts.
> Very, very few people can read and understand what is happening.
Anyone who can code and has a few hours can learn about it on youtube, it's not rocket science.
>It might be transparent in theory but in reality it's just for show.
Bizarre non sequitor, its transparency is an objective fact, what "show" is it supposed to be for? Auditors have been successfully discovering bugs and fixing them because of this transparency.
This is a link to a tweet of someone speculating about something where less than a half hour later they replied to themselves to retract the idea with evidence that undermines the accusation. So like, maybe this is true--and even if it isn't true it is still a demonstration of some ridiculous incompetence ;P--but this post is worse than speculation based on headline.
There is no reason each exchange can’t list every address of their wallets, hot and cold, for real time attestations. These “point in time” attestations are obvious scams. Binance posted all their addresses, these Tier 2 and 3 exchanges are shell games and they are trying to keep each other afloat.
this specific type of crime is impossible on chain and this is another win for defi and self custody (and in turn promotes being educated rather than relying on bankers).
pathetic whiny HNers will cope-post all the typical bs here anyway. talk to your therapists about your problems.
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[ 2.7 ms ] story [ 114 ms ] threadAn actual audit is performed by an independent firm going through your books. Something that will probably never happen with crypto
Meanwhile officials at the SEC and the CTFC were busy working on allowing regulatory capture to happen, which would have allowed FTX/BlockFi to be "regulated" entities, operating as "legit" exchanges. With BlockFi offering unrealistic APYs (supposedly not knowing the ongoing scams at Alameda Research). And FTX running a downright scam, fully knowing what was going on Alameda Research. (I'll give BlockFi the benefit of the doubt).
And these crooks at FTX/Alameda and their greased officials were that close at succeeding. Pretending decentralized exchanges needed to be regulated out of existence, while putting daddy's friends' kids at the top of the crypto exchanges food chain, free to run their complete scams.
Meanwhile legit centralized players like Coinbase (I take it they're legit) seems to be doing fine. So do decentralized exchanges like Uniswap.
These guys were basically planning the next Enron, complete with deep ties high up in the administration (the SEC and CFTC are implicated in the ongoing scandal and have lots of explanation to do).
But instead of focusing on that and how, precisely, public ledgers allowed to expose these crooks (and we may see officials falling: I hope we do for there are some who are obviously in it), let's instead, on HN, hate on crypto?
I think a serious talk needs to be had here.
We're talking about Bloomberg and Sequoia and many others presenting the biggest scammer since Enron as an altruistic white knight.
I want excuses.
And I certainly want decentralized cryptocurrencies to succeed now.
Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once".
I sure hope someone who knows how to dig is working on connecting these dots and just being quiet about it. Because I haven't seen anything substantive and these regulators are going to get away with no one the wiser.
It's very sad if there's not even an investigation but, as usual, it's likely that the crooks at the top are going to stay free. I'm not so sure however that they'll keep the exact same jobs.
> Do we have a hard paper trail? Not that I doubt it, but I know apologists who will and it would be nice to have more than 'Gensler took a class by the Alameda CEO's dad once".
They're all tied. The ex-CFTC commissioner (the one who just deleted his Twitter account) used to work with Gensler too. SBF's father is a well connected Stanford professor teaching tax laws and who's on air saying he's helping FTX with regulations. These guys obviously all know each other. It's more than just one coincidence. It's many coincidences.
As a sidenote Stanford as been behind quite a few very interesting characters recently: Elizabeth Holmes, SBF, SBF's two parents (one of them being implicated for sure even though he'll surely claim he had no idea what is son was doing).
Maybe it's time they were to teach integrity and ethics at Stanford? Oh, wait, someone posted here on HN that SBF's parents "are Stanford lawyers who specialize in compliance and ethics.".
I'm not sure there won't be some cleaning done at both Stanford and the MIT even if these people aren't indicted.
It's kinda bad looking on your institution when the head of the department of Economics happen to be the dad of the CEO of the biggest scam since Enron. It's also bad looking when your tax law teachers were helping the biggest scam get licenses to operate as regulated entities.
Even if nobody goes to jail, who's ever going to look at these people with any ounce of respect?
But what for? I think for many of the rest of us, crypto continues to be a solution in need of a problem, and a field full of crooks in general. Even if it was without crooks, it would still seem like an extremely high risk proposition with tenuously far fetched value-add.
If you study the history of credit cards there are amusing stories likes companies even mailing credit cards to households (without their request) so they are encouraged to use them.
So, the better question is: are upcoming technologies doing a better job and providing benefits older technologies can't deliver?
There are many factors that I personally find very appealing, like credible neutrality of the infrastructure itself.
This is the story of financial sector parasites hijacking a legitimate hope for emancipation from them.
The more I see crypto come up, the more I become convinced that actually, perhaps it's for the best after all that the government controls the financial sector. Human in the loop sort of idea.
Oh is that so? Curious that governments are now basically salivating and trying to copy cryptocurrencies for their own CBCDs but stripping it from everything that prevents them from having full domination over their respective populations.
>The more I see crypto come up, the more I become convinced that actually, perhaps it's for the best after all that the government controls the financial sector. Human in the loop sort of idea.
Based on what evidence? Your inference is so backwards, because all of these fiascos have one thing in common: the human in the loop.
No one can ever tell me that a biased human could do a better job than an auditable open-source smart contract refined by thousands of diverse engineers that work together to create credibly neutral infrastructure transparent and verifiable by anyone. Luddites may disagree.
A database at the fed isn't really equivalent to cash so there have been attempts like GNU Taler to build a cash like system.
Wrong, they are. Just because you haven't seen or studied it, doesn't mean it isn't so: The United Kingdom wants CBDCs[0] for a while now and guess who is helping them in developing those technologies? Blockchain companies, because CBDCs are heavily inspired by prominent blockchains and their innovation of programmable money. So please read correctly what I've actually written "to copy cryptocurrencies for their own CBCDs but stripping it from everything that prevents them from having full domination* over their respective populations" - Of course they would not want to copy the decentralization property because they want to maximize their power. governments only want to copy those properties which help them in that regard as I already explained.
>There are countries that issued their own cryptocurrencies and it didn't really work out.
So what? Cryptocurrencies are not a miracle cure that will fix a broken economy. We have already seen what every nation on the planet does when they can arbitrarily print money out of thin air, they abuse it, every single one of them. Cryptocurrencies can only help a nation that actually wants to act rationally and is not corrupt to the core.
>It is more appropriate to consider CDBCs to be the digital equivalent to cash.
Wrong. Cash is anonymous, which governments do not like at all, that's exactly the reason why CBDCs are the authoritarian ruler's dream tool. It gives them full control via programmability, eliminates privacy and establishes a surveillance capitalist dystopia.
[0] https://www.youtube.com/watch?v=0u8eZcPnWeU
Peak projection. At least I provided arguments based on evidence, while you just stated your opinion which clearly ignores any evidence of corruption and abuse of power from the early history of (central) banking up until now.
>Perhaps consider if there's space for a world in which cryptocurrencies aren't a silver bullet.
Never claimed them to be silver bullets, don't put words in my mouth. Maybe you should consider a world in which you are not blind to the continuous and boundless abuses of power by (central) banks and proponents of fiat who benefit from this broken system.
I don't see any legitimacy in Bitcoin. It has exactly the same problem as the current system. You can withdraw it from circulation and thereby disrupt the system for anyone who wants to use it for payments.
Meanwhile RAI does the same thing the central banks do but with the obvious difference that negative rates are allowed which means taking money out of circulation is no longer possible.
You say that BlockFi was offering unrealistic APYs - I wonder how clear that was as a sign that something fishy was afoot. I actually lost $1.32 due to their closing, which I think reflects how much confidence I had in them as a customer.
Well, the failures you are seeing now are not in the blockchain native finance. They are failures of traditional finance in an unregulated industry. Celsius, BlockFi, Crypto.com, FTX... are corporations with opaque balance sheets operating in a poorly regulated sector. While all of that crap built on greed is imploding you have DeFi (short for decentralized finance, i.e. Finance primitives built on-chain) working just as intended and with 0 risk of contagion, by design.
What we are seeing is once again that traditional final is very brittle and requires very strict regulation to hope nothing breaks, when not outright requiring to be saved by socializing the losses (2008).
Blockchains solve this, they do. And we are seeing a magnificent stress test of it.
What DeFi provides are the foundations of a publicly verifiable financial system. So either you ascribe that financial systems are useless or that public verification is useless. For the first case I will refer you to the history of the Amsterdam Stock Exchange and the economic and welfare growth that it spurred, for the second one I will refer you to 2008 and what just happened with FTX.
> You need $4 to get a "loan" of $1 in DeFi. Who in the world needs such a loan?
Someone that needs 5 dollars? The specific numbers are irrelevant, in fact. They are just a consequence of whatever parameters are set to ensure the safety of the loan. If your question is why do we need to constraint in any margin collateral requirements, after everything that has happened during the last 20 years... I don't know what to say to you.
everyone will get mad, call for more regulation, more innovation will happen offshore/private deals for real innovation will get lapped up and everyone will get mad/wonder why the US didnt get a piece of the industry
have fun being late again, hn
No amount of evidence will convince the bad faith actors who are hellbent on hating crypto regardless of evidence of which there are too many here on hn.
I'm so tired of these reddit one liners "but crypto bad" tho, hn should uphold higher standards of conversation
- Scams? Yes, there are lots of scams similar to the early days of the internet where script kiddies could scam people without having special knowledge of computer science, just by downloading some tools with controllable trojans. I remember testing it out back in the days to prank my friends, but it could have been used for actual fraud and as such it was also used. There are many startups now that focus on security for the industry and the auditors are able to catch many problems because of the transparency of open-source. Anybody can read and check the smart contract before using it or trust the auditors, although admittedly there is still a lot of room for a better user experience.
-Investing? Stocks were hit similar or even harder, Facebook for instance is down -75% YTD, Peloton is done whopping -95%(!) from ATH, many more such cases. I find it kind of strange that people unfairly point at crypto while traditional finance is guilty of the same or even worse, remember the SPAC grift? People really need to actually do their due diligence - if they don't, can they really blame anyone except themselves?
Me personally, I find crypto to be an exciting driver for innovations in cryptography research and seeing its actual implementation working in live projects, especially ZK + verifiable computation related stuff. Most of it is working remarkably well _today_ although there is a lot of room for improvement (esp UI/UX wise), I am quite optimistic for the future.
So? In the early days of the internet credit card scams and all sorts of scams were running rampant, the solution was not to stop developing because it's "extremely complicated" ( not true btw ), but to continuously improve systems. There are plenty of startups now that specialize on security and auditing smart contracts.
> Very, very few people can read and understand what is happening.
Anyone who can code and has a few hours can learn about it on youtube, it's not rocket science.
>It might be transparent in theory but in reality it's just for show.
Bizarre non sequitor, its transparency is an objective fact, what "show" is it supposed to be for? Auditors have been successfully discovering bugs and fixing them because of this transparency.
I’m asking what a fun candidate would be
In Miami for FTX replacement, it’s Bang Bros has submitted a bid. Not the first porn company to do that there
OnlyFans is a popular revenue platform in LA, rolls of the tongue better for a stadium name too
pathetic whiny HNers will cope-post all the typical bs here anyway. talk to your therapists about your problems.