Topic: Cryptsy could be working on fractional reserve. (Read 2224 times)

Cryptsy has made to many mistake to be taken serious. Fool me once shame on you, fool me twice, shame on me.
I would never register in a Cryptsy 2.0. So even if they survive which I doubt, i would not use them.

OK shorena, time for you to reference that quote.   

Is there a way "we" can catch the operator of the exchange and ask him to return the money very soon?

Coins are moving in cryptsy wallet it seems:

https://blockchain.info/address/3HNSiAq7wFDaPsYDcUxNSRMD78qVcYKicw



https://www.reddit.com/r/Bitcoin/comments/416swg/1000_btc_bounty_to_reclaim_10000_btc_stolen_from/

You called it, sir, way back then.  I applaud you.

It sucks they Goxxxed, but that's what happens when people with no fucking business sense try to start up a business.  It's unfortunate that said knuckleheads started up a bitcoin exchange and not a pizza parlor.

Were.

"cryptsy.com" is down, the offices are vacant, the CEO is missing, and the assets are involved in a divorce case.

Not could be, they are.......

You are right. It is broke now. It used to be the largest altcoin exchange. Many people traded there in the past.

On July 29, 2014, either before/after the purported hack,  Cryptsy moved about 56,000 Uno into a cold storage wallet at
https://chainz.cryptoid.info/uno/address.dws?uRAN4dj3yG8n93obakUHT8siVQap47bHrN.htm

The Uno community eventually showed this wallet to belong to Cryptsy by tracing withdrawals.  The #1 Uno wallet is still Cryptsy, but the address changes every time the cold wallet is tapped.

My question is whether the "hacker" took advantage of Vern's making changes to cold wallets at Cryptsy, or if it was a knee jerk reaction to learning he was broke, or if it hints somehow at insider activities. 

A month and a half prior to the inside hack job with Cryptsy having somewhere north of five million dollars worth of bitcoins at this juncture, folks were complaining about the exchange being slow to pay out withdraws.

I was right.

https://archive.is/jQCBM

It is all about percentages.

If an exchange deals with bitcoin primarily and has 90% of it's crypto in bitcoin, and has only $10 million in assets (small for btc-e but big for criptsy) then a 10 BTC withdrawal would not cause an issue with it's hot wallet. On the flip side if an exchange only has 10% of it's assets in BTC, still with $10 million in assets and 5% in hot wallet then your 10 BTC withdrawal would be ~12% of their hot wallet.

IMO as long as delays to not go past 24 hours or so I would not worry (not counting weekends).

Can you link me to this story? I don't remember this.

Cryptsy had security issue back in December. Who know how much bitcoin were stolen?


The next major exchange blow out will probably be Crytsy.

Gox claimed hacks the reason of the lose of coins however this is not related with criptsy but anyway i wouldnt be using an exchange that delays hours or days the wirhdrawals, all the exchanges outhere (btc-e, mintpal) etc have cold storage and their withdrawals are almost instantly so thats not a reason.

^^ that.

I think this points more to a thorough checking process for transactions over a certian, in this case larger than average, transaction request. Wether it be awaiting human approvals or access to a cold storage wallet, I feel it hints at a more robust checking system.

Cryptsy could always re-inforce their image by explaining why it takes that length of time...

Sure hope your wrong about cryptsy being the next mt.gox

if they do GOX out, I would say the same thing is true about it too, that this is not what everyone thinks, because it makes zero sense to do what GOX did, cause it is like taking a tree that produces fruit all day long and cutting it down to get the wood in the trunk, losing all that fruit the tree would have made for years to come, when you were selling that fruit off for 100s of dollars a day, and the wood is only worth say a thousand dollars.

the fact that it does  not make logical financial sense to cut and run on this game tells me that there is a LOT more to the story than meets the eye, and the same would apply to them (cryptsy) shutting down either running off with coins or stealing them, either way. does not make sense in the business aspect of things, servers are not that expensive to run, nor is bandwidth, especially when you have the bux to buy in bulk.

I have worked on a business plan to open my own exchange due to the numbers being so positive for a recognized exchange, (not so profitable if you are not getting any traders and such obviously).

reason I have not set up one yet, is that I want to put something into play that others have not, since there is stiff competition like btc38 with both it's high volume and extremely low costs on trading I mean what is cryptsy still charging? is it still 3% and 2% depending on if it is a sale or buy? how can that compete with .1% on both lol, only thing keeping cryptsy running is their willingness to put coins on their market so fast, as opposed to btc38 taking a while and more thoroughly vetting coins before adding them lol.

I think I have a good idea, that builds on the things that make trading sites valuable, but the talk about cold storage, and what not does make me revisit my business model a bit to tweak things, so I am glad this discussion was opened

They likely only have a small fraction of each of their coins in hotwallets.

What the OP is saying about his experience shows good security (at least from a wallet perspective).

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?