Topic: Cryptsy could be working on fractional reserve. - page 2. (Read 2218 times)

That literally indicates nothing other than Cryptsy having a manual process to verify large withdrawals which makes perfect sense

It's more than likely considering the handful of withdrawal and balance bugs that allow users to withdraw coins they do not have.

I would find it unlikely that they are running on a fractional reserve.

There are probably two reasons for the delay in larger withdrawals:

1 - They likely have a relatively small amount of coins in their hot wallet. They would also likely send only a certain percentage of the coins in the hot wallet at one time (this could be done on an hourly basis or possibly on a per user bases, for example only send a max of 10% of coins in the hot wallet to users every hour, or only send a max of 1% of coins in hot wallet to each customer). The earlier would prevent them from having their entire hot wallet stolen if they encountered a zero day attack - in the above scenario they would only lose a max of 20% of the hot wallet funds if a zero day attack was discovered within 2 hours.

2 - By deducting coins from a user's account prior to transmitting the transaction to the network a user will have some time to login (or attempt to login), notice that their balance is lower then expected, and contact support. This would give them time to stop a withdrawal and investigate who the real account owner really is (and where to send the coins). A zero balance is on the dashboard is much more noticeable then a zero balance and a (for example) 2.5 BTC pending withdrawal as a user may not notice that the 2.5 BTC is pending withdrawal but would rather see 2.5 BTC and assume that everything is okay.

If they dont use cold storage for majority of there funds I wouldn't be using them at all. This is exactly why some larger withdraws take time because they're manually processed.

i wonder why does OP think that cryptsy might be working on fractional reserve? Why do they have to?  They don't lend out any coins. The only thing they facilitate is exchange of coins from one hand to another. They need not operate on fractional reserve in a normal operation scenario.

Now, if they are messing with client funds...that is if they are siphoning the funds or paying themselves or their own employees out of client funds..then it is a different story all together.

They do, anything else would be stupid.
ser here:
 https://altcoinpress.com/2014/05/cryptsy-rules-many-of-cryptos-richest-wallets/



quoted for reference.

Cryptsy will be the next Mt. Gox. Mark my words.
Posted from Bitcointa.lk - #s8tpZJPkh3567O1z

I don't know if cryptsy has a cold storage. Probably that's not what OP was talking about. But if coins outside of the exchange are traded inside it, isn't this close to fractional reserve too? 

If you are indeed talking about  large withdrawals the reason could be their cold storrage. Any reasonable big amount of coins should not be storred online.  A securitiy machanism for this storrage could make withdrawals only possible every 12 hours (e.g. need confirmationd of at least 2 out of 3 possible people)

I've noticed that withdrawing a large amount of coins from the exchange takes AGES compared to withdrawing a small amount. Sometimes, it even takes more than a day for a withdrawal request to be registered in the blockchain. And while the withdrawal is Pending to be Processed, the coins are nowhere to be found. No coins in your account, no transaction in the blockchain. So during the time your withdrawal order is still pending (this could take hours for large amounts) the exchange could be doing anything with your coins. If they weren't using fractional reserve, then there's absolutely no excuse to delay orders that much. We've yet to see a proof by cryptsy that they're not running of fractional reserve. Because if they do, they could go bankrupt at any time with all this intense trading in their exchange. Could cryptsy be the MtGox of altcoins?