Topic: Bitcoin worth $1.5B withdrawn from Coinbase in 48 hours (Read 564 times)

It's owner withdrew 100,000 bitcoin from Coinbase for safe keep. Was it traded in USDT?

We don't  know how safe they are. For years they'll say their exchanges are safe. Customers aren't suspicious they're believing it because greed makes people behave bad. They don't know if their cryptocurrencies are stored safe, it doesn't stop them trusting exchanges. It's convenient and greed.

Why were people still holding Luna while this was crashing and calling it FUD?
Why are people trusting Binance #safu  when it's clear they don't have the amounts needed to reimburse a bank run?
Why are some trusting BUSD when they don't even know where the entity behind BUSD is located?
Why are people still holding their coins on CEX even if they don't daily trade and why are some still risking assets for 5% apy?
or, and let's go back in time
Why were some calling MtGox crash FUD and were still trying to send money to that exchange to get cheaper coins?

Each person has their own way of thinking, each one will rust to believe in something and completely deny something else, from religion to the politicians they vote for to the coins they invest, so there will not be a moment without at least somebody claiming that tether is safe, that is backed by something and that we who doubt this are just FUD spreaders and we're doing so because we work for the competition.


Besides greed there is also another reason, some simply don't want to accept they are wrong, so after claiming for years that UST or Binance or Coinbase is safe and that nothing can happen they don't like to admit what they are doing is risky, it has worked in the past, till now everyone who warned was wrong, so they feel like they are right and they will be always right and the rest are simply just envious fear mongers.

The same reason people continue to use all manner of unsafe and risky platforms - greed. They want profits. Trading back and forth to USDT or other centralized scammy "stable"coins allows them to chase profits more easily. It's the same reason people still store their coins on incredibly risky centralized exchanges or lending platforms, or why they throw their money away on altcoin/DeFi/NFT/etc. scams. They will keep using USDT or any of these other services, risking everything, while thinking "Well, it would never happen to me". Until, of course, it does.

The 100,000 figure I used above was simply an analogy. I was not using it in reference to USDT or any other specific platform.

That's a lot of bitcoins stored on an exchange. I can't think of how much trust this guy or institution have entrusted that amount of bitcoin on Coinbase.

Well, there's the idea that an exchange like Coinbase is "safe" for them so they deposit and let it there for a long time. But that's also good that it's been taken out there and if this is on the bank, they won't allow you to withdraw that much within a 1-2 days.

It's the way some operate their exchange business, if they don't add digits to their order books they don't attract investors. It's illegal but they've sold customers user data we know it.

That's easy to understand USDT isn't safe so why don't traders see it? It doesn't make sense they're using it to trade USDT if it isn't backed 1-to-1 on the dollar. There is a risk trading USDT, perhaps it will bring Bitfinex down when investors make high speed sell offs.

Was the 100,000 BTC converted to USDT?

Why would an exchange publish details of a loan which shows they are insolvent? They will keep it under wraps, and it will go unnoticed. Just as emergency loans to Celsius, to Voyager, to BlockFi, etc., all went unnoticed in the run up to their collapse. If it was actually this easy to verify the solvency of a centralized platform, then we wouldn't have multiple platforms going bankrupt and taking millions of users' deposits with them.

All of them.

Exchanges have been caught committing a huge number of far more illegal activities, from selling user data to insider trading to helping themselves to users' funds for their own purposes. A little bit of fudging the numbers isn't going to phase them.

USDT is insolvent and is not backed up 1-to-1 as they claim. This has been proven in court on more than one occasion. And yet it continues to be widely used. It makes no sense.

I don’t think exchanges like Binance would be attracting a well crypto-currency learned person. The dawn of the FTX issues has become quite an eye opener and many people are learning from such.

I believe we may see more withdrawals like this coming soon, imagine you had such amount on an exchange or even half of it and something happens to them, it would put anyone in a state that maybe beyond recoverable. If we weren’t affected by such exchange problems yet it’s best to learn from those that did.

Any user so keen on decentralization of the cryptocurrency ecosystem would definitely say this same thing you said, but in reality, confidence in centralized body of crypto would be restored again, just that it will take some time, and how long?, I would say as long as FTX continues to remain in the news until it is totally and absolutely forgotten.

Personally, I am an advocate of decentralized cryptocurrency system, but the reality remains that the decentralized protocols we have currently are not yet matured enough to carry the weight of the entire cryptocurrency market capitalization, many traders still largely depend on centralized exchanges for their day to day trading due to the fact that decentralized exchanges lack the liquidity and volume required to trade and make profit successfully in the shortest period of time.
The people I consider to be making serious mistakes are those that are not traders, yet they leave their bitcoins/cryptocurrencies on centralized exchanges, reason for this I don't know, but I guess this is because many will never learn in a simple way, until they are forced to learn it the hard way.

If they've taken loans days just before the audit it's got to be noticed. If they've seen it they'll publish it. I don't know if proofs of reserve aren't accurate, there isn't a way to find out which exchanges have habits for boasting unverified figures. Falsifying market cap isn't short of fraud. USDT isn't secure if it's backed by one exchange but it's used most for bitcoin transactions.

If audits get carried out it's their auditors jobs to go through everything but I'm with you, exchanges hiding their liabilities wouldn't be a surprise. It's happened before, if they're determined to hide something they'll do it. Independent verification wouldn't translate to much, the risk's too much. Where did the owner withdraw 100,000 bitcoin to?

First thing that caught my eye reading this thread (would be funny if there wasn't so much money involved) is this meme pic you posted is already outdated in a few days : another door should be added as BlockFi deserve one all for itself considering they applied for for Chapter 11 bankruptcy protection in a New Jersey court because of their exposure to FTX collapse.

Also one of the main risks is anyway that the money is stolen by somebody that works at or owns the exchange. It is more simple than you would think because they own the keys, and coins can be mixed and sold worldwide. It is basically the perfect crime to disappear with stolen bitcoins.

And how do you know the proof of reserves is accurate? What's stopping an exchange taking out a loan the day before an audit and paying it back the day after? Or borrowing funds from one of their affiliated companies or entities? Or even just the CEO topping up the exchange wallets with their own funds prior to the audit. This exact thing has happened before with Bitfinex handing hundreds of millions of dollars of crypto to Tether on the very morning of their independent audits. And yet USDT continues to have a market cap of $65 billion, despite being a fractional reserve scam. Proof of reserves proves nothing.

But without proof of liabilities, proof of reserves is meaningless. So an exchange proves they have 100,000 BTC in their wallets. What if they have 200,000 BTC in liabilities? What if they have huge outstanding loan repayments or debts they hide from the auditors? How do you even know you can trust the auditors?

It's all trust upon trust upon trust. There is no independent verification.

It's what can change between then and now what's worrying. There's trust with audits but in moving environments you don't know when the next security flaw's going to show. When it's NordVPN or ProtonVPN they've been asked by courts to hand over customers records. They've kept log times, email addresses & paying methods they don't log browsing history or anything related to customers identities. They don't give anything because they're not logging online activity.

Proofs of reserves & unexplained strange movements of funds will get published if they're audited. Complete verification of solvency shouldn't be a problem to detect but audits can't stop exchanges being targeted. Hackers are trying to get past security systems every day because they're storing billions in cryptocurrencies.

Confidence of people on crypto have surely got shaken with the FTX incident but it is not the end of the world. Such incidents have happened in past also but still crypto survived and even touched new heights. I think it is overall good for crypto that bad people or projects get wiped out from the overall scenario. Slowly, scammers will realize that people will not trust their projects and will automatically keep them away from crypto space. One more positive thing out of this is that people will realize that it is never safe to keep funds on exchanges. One should use hardware wallets for full safety. There will always be two sides to see a situation, it is upto you, if you want to see positive side or the negative one.

There have been a few scandalous incidents in cryptocurrency that have slowly started to erode people's faith in cryptocurrency.

Luna Crashed
The biggest cryptocurrency hit was Terra Platform's Luna, Luna crashed 99% from May 11 - May 12 and dropped 0.02 from $120.  Luna's price continued to decline until it finally dropped to $0.00000112.  Those who had invested in the Luna platform and made long-term stakings were left completely bereft.

3Arrows Capital (3AC)
June15(Chapter 15) A Singapore based crypto hedge fund three arrow capital 3AC bankruptcy $10 billion Crypto funds due to the bear market and Luna Crashed.
After Luna Crush it once again created a negative image in the public mind.  As a result, people's confidence in cryptocurrency is decreasing day by day.

FTX hacked and bankruptcy
The recent FTX hacked bankruptcy heralds a scandalous chapter in cryptocurrency.  The FTX hack, one of the leading centralized exchanges in cryptocurrencies, and scamming users to the tune of $600 million has once again lost people's trust in centralized exchanges.  Now people no longer want to keep cryptocurrencies on centralized exchanges.  So people are constantly withdrawing cryptocurrencies due to fear and loss of confidence.



Possible next target Coinbase, binance, blockfi and Kucoin

Due to low trust of people in centralized exchanges and FTX's liquidity crisis and hacked people are vulnerable.  Moreover, many thought that FTX might be followed by Coinbase's hack and bankruptcy.  So 50k bitcoins were withdrawn from Coinbase on 24th November and 50k were withdrawn on 25th November.  That is 48 hours 100k bitcoins are withdrawn.

You are absolutely right. Exchanges have to make their system more secure, transparent, provide good quality service, to win the confidence of investors and keep their business running, otherwise, investors will move to decentralized exchanges. Collapse of FTX exchange has made inventors more vigilant and those who suffered will think thousand times before opening their account in any centralized exchange.

There are two points I would make about third party audits. First of all, they simply move the trust requirement. Instead of trusting the entity itself, you are now trusting the auditor. They still don't allow anything to be independently verified by the user themselves. And secondly, even if you do trust the auditor, they only show a snapshot at the time of the audit. Anything could have changed between then and now.

Not at all. In addition to the points I made above in regards to VPN providers, when it comes to exchanges, there are even more unknowns. The proof of reserves which many exchanges are starting to publish is easily tampered with or altered to make it appear more favorable to the exchange, and proof of reserves without proof of liabilities is absolutely meaningless.

There is no way for a user to ever verify completely the security, privacy, or solvency, of a third party they are using. The only way to do this is to keep your coins in your wallet.

There isn't proof Binance, Bitfinex & KuCoin have better security to FTX. Their security could be worse we don't know. I made wrong assumption.

We don't know about security used by exchanges that's why I don't use them. Big brands NordVPN & ProtonVPN publish transparent audit reports every year to gain trust. If Binance, Bitfinex & KuCoin did the same it wouldn't stop hacking attempts, we know security flaws can be discovered after audits but can third party published audits of exchanges be considered proof of security?

Coinbase does not publish this news, you need to know that we are using blockchain, which means everything is transparent and public, everyone can find it on the on-chain data. I don't see this as negative news, it shows that people have awakened and are more concerned about the safety of their property. Besides, this will also cause exchanges to try to improve their services if they still want to stay in business.

That's a big assumption to make, and one which is not true. FTX was the second biggest exchange in the world. Everyone assumed they would have decent security, and instead they had an unsecured group email account. Everyone assumed Coinbase had good security, and instead their data was being sold by a third party. Everyone assumed that Binance, that Bitfinex, that KuCoin all had good security, and all have been hacked and had coins stolen.

The fact is that we have absolutely no idea what security exchanges do or do not have. You are trusting complete strangers, who have shown time and time again that they are grossly incompetent. Handing over coins or data to any exchange is a huge risk.