QuadrigaCX Allegedly Traded Against Its Own Customers Without Assets To Back Them (ambcrypto.com) 93
A user writes: QuadrigaCX, the Canadian crypto exchange that made news recently with the passing of its CEO, Gerald Cotten, has been alleged to have been buying cryptocurrency from traders on its platform without having actual assets to perform the transactions. The transactions showed credit to the customers accounts, but when the customer tried to withdraw cash, they had to wait until other customers deposited cash before the funds became available. There is also an accusation that this behavior exists at many other crypto exchanges as well. Perhaps it is time to take a fresh look at Tether...
"Perhaps it is time to take a fresh look at..." (Score:5, Funny)
Re: (Score:3)
Re: "Perhaps it is time to take a fresh look at... (Score:1)
Deregulation and lack of oversight means the majority will get screwed over while a few might ... might just get rich. Everyone thinks they are one of the few, not realizing that if they haven't set the terms, written the rules, or done the time to build something, it's only a matter of time before they fall into the crosshairs of fate, criminals intent on finding out where they live, both, or far far worse.
Greed turns everyone into naive little boys and girls. The more there is to gain, the more they think
Re:"Perhaps it is time to take a fresh look at..." (Score:5, Insightful)
I really hope these stories *do* continue. I'd like to find one of these middlemen willing to violate as many financial laws as possible, so general education gets into the news cycle as to why investment regulations exist in the first place.
In addition, it would be great if it covered how each of these violations is currently playing out nearly identically to the way it did at the time in history when/prompting enactment of these regulations. A few months of this and I think even the get-rich-quickers will understand the point.
Re:"Perhaps it is time to take a fresh look at..." (Score:5, Insightful)
The transactions showed credit to the customers accounts, but when the customer tried to withdraw cash, they had to wait until other customers deposited cash before the funds became available. There is also an accusation that this behavior exists at many other crypto exchanges as well.
So you're saying they're just ordinary Ponzi schemes dressed up with fancy geekery? I'm shocked, shocked I tell you!
Re: "Perhaps it is time to take a fresh look at... (Score:1)
Except banks have minimal capital requirements that prevent a depositor from having to wait for their cash. So again there is a proven mechanism in the traditional financial market that these new currencies ignore. And yes bank runs and massive economic crises can overrun this protections but it also work millions of times a day.
Re:"Perhaps it is time to take a fresh look at..." (Score:5, Informative)
Except your money in a bank account is protected by the CDIC (if you're in Canada, or the FDIC if you're in the US), and there are all sorts of regulations to make sure that banks have enough money on hand to cover withdrawals under normal circumstances.
Re:"Perhaps it is time to take a fresh look at..." (Score:4, Informative)
Exactly this! Many of the banking regulations were put into place in the wake of a disastrous series of bank failures during the depression. These include the FDIC and minimum reserve requirements. the depression era failures are where we get the stereotype of grandma or grandpa stuffing their money in the mattress.
Crypto currencies bypass those regulations, so it should be no surprise that some "bank like" institutions dealing in crypto currencies are no safer than the pre-regulation banks.
This SHOULD serve as a warning to the deregulate all the things crowd, but I doubt very much it will sink in.
Re: (Score:1)
People never seem to understand that cryptocurrency is a completely unregulated financial market.
You have zero legal protections, because this is what you thought was a feature.
These exchanges aren't even remotely bank like. I liken it more to having someone hold on to a large pile of your cash without a receipt and without legal
Re: (Score:2)
It certainly does seem shady. I agree it reads more like a Ponzi scheme.
Re: (Score:2)
In this case, there's no guarantee you will actually be issued the stock, and if you sell it back, no guarantee that the dollar balance in your account can ever actually be withdrawn.
Meanwhile, they do their best to project a bank-like image.
Re: (Score:2)
Obviously this is not the case because the AC spoke of bank runs being "such a problem". I don't know about you but every few weeks we have a bank run in my town, which is why I keep all of my money under my mattress.
Sometimes I think that we're being inundated with people from the 1920s every time a cryptocurrency story appears.
Re: (Score:2)
No, no legitimate banks work this way. They do "overleverage" and loan out more money than they have in their cash reserve to cover withdrawals, because that's how they earn the interest that they pay customers for their deposits! Most bank loans and investments are illiquid -- you cannot simply call in the loan or
Crypto is MLM (Score:5, Insightful)
It amazes me that this Ponzi scheme is still ongoing. There's ample evidence of wash trading at all the major exchanges.
One of my favorite quotes on this is from the NYU economics professor who was famous for identifying the housing bubble, who also called out the crypto currency bubble in 2017, is asked again what he thinks of the crypto movement [cfainstitute.org]:
Re:Crypto is MLM (Score:5, Insightful)
Well, in fairness, the early days of crypto currency treated crypto currency like an actual currency: having zero intrinsic value and mainly being a placeholder for goods and services that were exchanged. In fact the original premise of Bitcoin was as a micro-payment system of nominal value, allowing people to send tiny bits of pennies, that in aggregate would matter to third world countries and various charities, etc.
What we see now, is something completely different: the treatment of crypto as an investment security itself, which makes absolutely no sense because it has nothing tangible backing it up.
So the problem isn't with bitcoin as much as the perverse way people have now begun to use it, which is fundamentally different than how it was originally designed.
Now bitcoin (and all crypto) is basically a distributed money laundering system with a Ponzi scheme on top. There is no reason for anybody to be in this space unless they're a criminal, or want to engage in criminal-like behavior (such as profiting by exploiting others and not offering anything of real value in return).
Crypto and blockchain offer nothing to regular, ethical businesspeople. But they're like catnip to anarchists and narcissists.
Re: (Score:1, Funny)
This is FALSE.
The investment side IS backed up by the fixed issuance quantity absorbing whatever portfolio allocation the worlds investing and saving populace decides to put into it over time. Even at a measly 10% allocation of all cash, gold, savings, you're looking at $1M coin. Start digitizing even just 10% of stock, commodity, real estate and derivatives markets and yeah, $100M is no problem. From $0 10 years ago, to $100M 10-20 years from now. That's your return. And it WILL happen because investors an
Re: (Score:2)
Re: (Score:2)
So look, I decided to give myself a challenge and select no more than one comment from any Slashdot story.
https://news.slashdot.org/comm... [slashdot.org]
https://news.slashdot.org/comm... [slashdot.org]
https://hardware.slashdot.org/... [slashdot.org]
https://news.slashdot.org/comm... [slashdot.org]
https://news.slashdot.org/comm... [slashdot.org]
https://yro.slashdot.org/comme... [slashdot.org]
https://news.slashdot.org/comm... [slashdot.org]
https://news.slashdot.org/comm... [slashdot.org]
I could go further (by looking further back in time) but I think the point is made.
Re: (Score:2)
It works pretty well on the Dream Market.
Cryptocurrency value for money (Score:5, Insightful)
Re: (Score:2)
It's a great object lesson for people who think that government financial regulation is bad, such as most of the bitcoin evangelists. Of course, the lesson seems to be utterly lost. As you say, entertaining though.
Seriously though, if you were twenty something, fresh out of college, running your first business nearly solo from your basement, and a bunch of idiots gave you hundreds of millions of dollars, would you not steal them?
Re: (Score:2)
Schadenfreude trade offs of cryptocurrency vs Congress:
Cryptocurrency isn't completely free entertainment because one way or another the public ends up paying for the scams. But for how much it costs you personally it's a bargain.
Congress has Hiking the Appalachian Trail [wikipedia.org], revelations about pa
Re: (Score:2)
I'm beginning to think that cryptocurrency is some of the best value you can get for your money.
Congresspeople are the best value you can get for your money. Cryptocurrency is a distinct second.
Re: (Score:2)
We should at least require that all cryptocurrency algorithms do something useful like protein folding
When I first read about Bitcoin (on here, no doubt), I initially misunderstood its premise and thought it was backed by processing power (i.e. we'd be buying and selling units of "computing time"). I quickly realized that this wouldn't work - it would be deflationary - but it didn't sound so silly after I found out what BC was actually backed by
Cardpool does the same thing (Score:1)
If you try to sell a gift card to Cardpool for Amazon credit when they're all out of Amazon gift cards, they will delay processing your order for an eternity (most likely, due to waiting for people to sell them some unwanted Amazon gift cards).
The internet is full of shady dealings.
Re: (Score:2)
The usual way you solve that is to allow bidding, with the highest bidder getting the exchange first instead of the first person to enter a bid. That way if there's a shortage of Amazon gift cards, the excess bids for Amazon gift cards makes them more valuable, enco
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
Comment removed (Score:4, Informative)
Re: (Score:2)
No. It's not the same. Your bank is earning interest on the money it loans out.
So it's exactly the same. The bank expects to get the loan amount plus interest back whereas these guys expected to make money when the crypto rose in value. In either case, there is a risk that the bet will not pay off and the person making it will end up in trouble because they have lost the assets they need to repay the customer.
The only difference is that banks are highly regulated and, as a result, have to keep the risk of the bets they make under control. In return they have a central, government
Perhaps ... (Score:2)
Perhaps it is time to take a fresh look at Tether...
No, perhaps it's time to take a fresh look at not using fake "currency" slung by carnival hucksters who make Donald Trump look like Mother Theresa by comparison.
lol what the hell? (Score:2)
> Perhaps it is time to take a fresh look at Tether...
Why? Their auditors bailed when they couldn't find assets to back the coin, which is just the more severe form of the same damn scam
Author owns tether - suspicion level 1.0