News for hackers. Stuff that matters.

A comment on I watched a friend of mine pump a shitcoin on Binance by buying billboards. Parent comment

Re:I watched a friend of mine pump a shitcoin on Binance by ... by onlyrealcuzzo on Tuesday July 12, 2022 @10:40AM (#32070673)
> So, where am I misunderstand the situation here?

It's pretty simple.

They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. If the coin price goes down 1%, the borrower is wiped out.

You don't need fractional reserves for leverage.

[ Parent | on HN ]
Re:I watched a friend of mine pump a shitcoin on Binance by ... by pbhjpbhj on Friday July 15, 2022 @09:25AM (#32107931)
>They put in $10 to borrow 100x$10 to buy $1000 worth of the coin. //

If that is all with the coin seller/creator then you're not actually borrowing the money they're just saying 'that $10 token you bought from me 1s ago is worth $1000, you're rich'; you bought $10 worth of coins, the market price is $10, there's no actual leverage involved it's just a deceit.

If the seller is taking the $10 you pay to a different institution, borrowing $1000, then buying the coins, then legitimately they can say it's $1000 of coins. It's still clearly a scheme. The company lending that money are morons in this case unless they are doing it knowing full well that they are going to need to pursue people for the debt.

[ Parent | on HN ]