Literally a contradiction.
1. They have all the funds
2. Many are in cold storage or otherwise inaccessible in short term
3. Their cold storage restore process is so slow they need emergency help to provide liquidity in the meantime
Seems more like that they've either embezzled client funds or been hacked/lost some cold storage keys
It was the question that matters "how fast you can process user withdrawals and with what risk"
Sam owns 8% of Robin Hood that is worth around ~$1B - he could sell that and cover some of the gap. But what we do not know yet is the size of the gap in time and space. FTX had $6B withdrawals pending on Tuesday.
Not knowing too much about this space have you ever seen anything like this happen? A CEO using their personal wealth to cover their customers funds seems unlikely.
No, but I would love to see it happen, enforced by a court, and backed by a promise of jail time if the CEO fails to comply in a timely fashion.
He will have to buy equity or other product from FTX to infuse with cash. And if it is going bankrupt he has to stop running it to preserve the liability "shield" -- details of course depend on the country/state of organization/incorporation. I know nothing about the Bahamas.
Example: Elon for instance infused his own cash into Tesla, when it was going bankrupt. But he practically bought equity to my understanding.
Covering customer accounts is different, in a financial firm. I do not know what tools the Bahamas give to FTX. This is all uncharted territory. (Also there is legal exposure to other countries.)
Alemeda has like $14b assets and $8b in liabilities. But of that $14b, $5b are in their own token (FTT) which is kinda?? worth nothing at this very moment. So now the assets and liabilities are more equally matched, but less margin for shifting values of tokens.
I don’t know, but the derivative of their assets looks scary the last 24hr.
Disclaimer: not a crypto person
Cash is 100% liquid while a house is illiquid you might have millions US$ parked there but only if you manage to sell it, then you convert it into liquid cash.
Liquidity is a measure of how easy it'd be to trade a thing for another thing you want.
It is also very hard to trade worthless things for expensive things you want.
Insolvent institutions like to claim they are illiquid when in reality they are insolvent.
We've seen this happen over and over during the 2008 crisis.
Exchange withdrawals are one to many for btc helping keep size down and most other chains shouldn't have any issues. Don't see how FTX or really any exchange should be bottlenecked by blockchains here.
Right?
https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
If FTX wanted protections against a bank run they could also choose to be regulated as a bank.
Cryptocons want us to both treat crypto scams as banks and not banks depending on what suits them in the moment, just like they want us to treat cryptocurrencies as assets or currencies based on what suits their argument in the moment.
All to hide the fact that it’s a mediocre technology which has been surpassed by many other technologies for most of its possible uses and is nothing more than a Ponzi scheme designed to enrich its original backers.
How many bank runs have there been in 2022 in the developed world?
The reason people don't try to pull their money out all at once is because their deposits are insured, because their bank pays into an insurance pool.
The reason people don't try to pull their money out all at once is because their deposits are insured, because their bank pays into an insurance pool.
That wouldn't be a problem for the majority of Americans
It is actually irresponsible to the users (risk management wise) to be keeping all that cash in hand 24/7. The easiest bad case example: are you keeping all your savings under your mattress?
FTX CEO litterally said that in his tweet.
Banks make similar statements all the time -- they require regular audits of assets (stress tests) and maintain some minimum levels of liquidity.
Note: There's a difference between being a custodian of customers' investments (brokerage / commercial banking) versus proactively investing customer deposits (investment banking).
From https://en.wikipedia.org/wiki/Fractional-reserve_banking:
"Fractional-reserve banking predates the existence of governmental monetary authorities"
Real regulated banks have access to the Fed to borrow in a case of a bank run.
Anyone who has more than the insured amount, or anyone who needs their money in the near future will still engage in a run.
There were several runs during the 2008 crisis, the most famous is the run on IndyMac Bank.
Shadow banks don't.
"We never block withdrawls" is the new "We don't crash ever" as seen in the Facebook movie.
If you are in the crypto exchange business you gotta do both actually. Don't crash the website and don't suspend withdrawls ever.
Short dated government bonds would be the safest. But tweet 0 he litterally says they dont do that, they keep the cash under the mattress and you can have it if you stop by. People stopped by and there was no cash under the mattress...
how many of these y'all need before you learn: all crypto is a scam. It never was anything else, it never will be anything else because it can not be anything else.
There's an awful lot of fancy piled on the simple fact that all crypto"currencies" are negative sum games. The only disagreement is whether this is an entirely new type of scam , a "Nakamoto Scheme" or the difference between these and the classic Ponzi are irrelevant like the difference between a CRT and a HDTV and then we are looking at a Ponzi.
> There's an awful lot of fancy piled on the simple fact that all "currencies" are negative sum games.
?
Note how stocks are decidedly not like this because if you undid all stock-money transactions the sum would be positive because of buybacks and dividends.
So what? I cannot see the significance of that. There are many possible measures of value.
> if you undid all transactions then nothing is left -- but with transaction fees their sum is a negative number. But you need to measure this in something.
Yes? So what's the important difference between cryptocurrencies and traditional currencies?
I would like every elected official to have all their income and spending listed on a public ledger.
True accountability of representatives to those they purport to represent will solve so many problems, both in terms of the types of people incentivized to become public servants, and also in terms of public understanding of spending and waste.
All this "crypto" is intellectual warm-up for what is to come, I'd highly suggest looking at rollups (what I would describe as ledgers within ledgers) which are delving into the true possibilities of next-to-zero cost of immutable transaction records.
They are not a scam, but they are almost completely useless
>I would like every elected official to have all their income and spending listed on a public ledger.
A public ledger is not necessarily a decentralised ledger. This could be accomplished by any bank account controlled by a US politician to send the payments made to a US goverment controlled webapp that's then publicly accessible (by FOI request, if necessary). No blockchain, no decentralised woo needed. What you have stated is a POLTICIAL problem, and those require POLITICAL solutions. No new or speculative technology, of any sort, is needed to accomplish the problem statement.
4:03 PM · Nov 8, 2022 2) Our teams are working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches; all assets will be covered 1:1. This is one of the main reasons we’ve asked Binance to come in. [1]
has enough to cover all client holdings ---> not enough to cover all client holding in 24 hours. Either they lost a billion or so dollars of client segregated funds in a day down the back of the sofa or it was a lie the whole time.