Topic: Recent events should make you withdraw all your coins to your own wallet: Part 2 (Read 1474 times)

There is plenty of information or say awareness thread regarding not to hold you coins over these CEX but still people prefer to go this way and then regret losing funds whenever the exchange goes bankrupt but in actual the people will be the real victim losing funds and they will be covering their personal loss with your funds.

The recent meltdown of FTX has summed up why these big exchange is also prone to high risk and your entire networth could be gone in seconds with these situations coming up.They were holding the asset reserve in their native token FTT and after the CZ decided to sell his stake of 10% in FTX and he got paid off in FTT which he stated selling while the balance sheet got leaked which states they were maintaining reserve with 1:1 ratio in FTT only.People got panicked and started selling and FTT token wasn't able to match the reserve funds while withdrawal got stuck and rest is well known how the market reacted towards it viping billion dollars out of market.

So now there are these reports stating that SBF planning to flee to Dubai and what else do you expect them to do afterwards? They are under supervision but will people get their funds back? No so your thread clearly summaries why should we always avoid keeping funds over these exchanges as Not your keys,not your coins

Keep funds in your custody if you can always and don't trust these CEX...

Another bump. Read this thread from bbc.reporter: https://bitcointalksearch.org/topic/--5419386

FTX is looking like it is in a precarious situation. Reports arose which showed that FTX was artificially inflating its balance sheet with its own token which was being printed out of thin air. Binance heard about this so decided to liquidate all their holdings to protect themselves. This caused the token price to plummet, as well as the amount of token held in reserve on FTX to plummet. This his resulted in lots of users trying to withdraw their coins from FTX, and now FTX have been delaying and staggering withdrawals because they can't keep up. Looks like they are on the verge of a bank run and/or the verge of their token dumping to worthlessness.

If for some crazy reason you are still trusting these centralized platforms to hold your coins after the number which have collapsed in recent months, then time to get your coins off of FTX and in to your own wallets. Now. Best case scenario and this is all unfounded, then you have lost nothing by withdrawing your coins.

Bump. Plenty more centralized exchanges and platforms have bit the dust.

8 August - Hodlnaut suspend all withdrawals, trades, and deposits - https://www.hodlnaut.com/press/hodlnaut-message-to-our-users
9 August - Nuri files for insolvency - https://nuri.com/blog/nuri-filed-for-insolvency/
10 August - Hotbit suspends all withdrawals and other activity - https://hotbit.zendesk.com/hc/en-us/articles/8074249353495-Announcement-on-the-Suspension-of-Hotbit-Website-Service

That last one is interesting - they state it is because a bunch of their senior managers have been subpoenaed and their funds frozen due to a criminal investigation.

Don't worry though. While centralized platforms continue to shut down all over the place and their users lose everything, the CEOs of these platforms continue to make some nice profits at your expense: https://www.coindesk.com/markets/2022/08/09/dormant-wallet-linked-to-alex-mashinsky-used-to-cash-in-on-cel-token-surge/

Some will, but the majority won't. This is proven by the very fact that platforms like Nexo and BlockFi continue to operate and attract new users while Celsius and Voyager are going through bankruptcy proceedings. There is no shortage of examples of people losing money from centralized exchanges in a variety of ways, and yet millions of users still store millions of bitcoin with such exchanges.

Would it? We've just seen many examples over the last month of platforms who were unable to satisfy all withdrawals, and yet managed to continue to operate to the point of declaring bankruptcy.

Again, doesn't seem to be any shortage of entities willing to hand out risky loans.

When enough exchanges go out belly up, and when enough lending platforms become insolvent, people will eventually wise up. Keeping customer money legally separate would prevent customers from panic withdrawing when other exchanges are insolvent, and processing withdrawals in mass is expensive and risky.

I think Coinbase trying to encumber coin to an extent that they no longer have unencumbered coin available to satisfy all customer withdrawals would be challenged in court. Also, if the financial statements reflect that the new loan is resulting in Coinbase being unable to satisfy all customer deposits, any new loan to Coinbase would be risky.

What reason do they have to change it? They know fine well that 99% of their users don't even know what that means, and of the few who do, the majority of them simply don't care because they think Coinbase are too big to fail. You've said yourself it won't be trivial to come up with a new framework to change this, and will be a lengthy and costly process. They have proven repeatedly that they don't give a damn about what happens to their users, so why would they waste their time, efforts, and money, when it will make absolutely zero difference to their profits?

Yet, it might still be beneficial to keep standard users as unsecured creditors, as they can use that as a safety net selling point to attract investment from corporations and institutions. "Hey, if it all goes to shit, we have $x billion of unsecured assets we will use to pay back this secured loan/investment you are going to offer us."

So that means the FAQ and the documents the WSJ claimed to see are not in conflict. I had originally read the FAQ differently, and I presume others similarly did.


What reason does Coinbase have to keep their customers' deposits as unsecured creditors?

They get out of it by using deliberately vague and misleading language. Emphasis mine:

I doubt it very much. They'll say they will on Twitter to placate their users, then once this episode of insolvencies and bankruptcies blows over it will all be forgotten about, and all their users will continue to be at risk as they always have been.

Cross post it to this thread: https://bitcointalksearch.org/topic/blacklist-of-unreliable-taint-proclaiming-bitcoin-services-exchanges-5401468. Get it added to the list of exchanges to avoid.

To me they let the coins come but I won't use it again ever after going to such nonsense questions that they asked,however from a lot of friends from Western Balkan countries I got a lot of other complaints as I keep contact with them and they had the same problem,they are under strict verification problem and after giving everything to such exchange it has been near one week without answer,every time they try to withdraw they got rejected,even when they withdraw crypto and not only FIAT money.

The exchange is Cex.io which recently looks like has started a massive attack against Bitcoin which they claim their mission is to provide a gateway to open financial markets.

That complicates things. The FAQ says to refer to the ToS.

Do I trust that Coinbase is trying to find a mechanism to change customers' status of "unsecured creditors"? Yes, I think they have good reason to want to change this status. I think it is not trivial to change this status, and Coinbase's lawyers will need to find a solution that is generally new.

With that being said, until the "unsecured creditors" status is actually changed, their customers should act as if they are unsecured creditors accordingly.

I would not describe it as a pyramid scheme, I would describe it as greedy, and companies doing what is essentially gambling with their customers' money.

Most won't, and they few that have will be replaced dozens of times over by more newbies willing to throw their money away during the next bull run with whatever new shiny product or platform is next.

We saw this repeatedly during the height of ICO craze in 2017/2018. Coins and tokens being released all over the place with no function whatsoever except to grow the value of the company and make the creators some profits at the expense of all their buyers. Then we saw it with IEOs, ITOs, and whatever other nonsense acronyms came next. Then NFTs. Then DeFi and tokens belonging to platforms like Celsius. We will absolutely see it again in the next few years, and lots more users will lose lots more money.

Because there is no shortage of people who are willing to throw their money away on scams with promises of getting rich quick. And so there is no shortage of scammers willing to take advantage of them.

The act of creating a token and basing your company around it is actually called "tokenomics" by the crypto industry.

Unfortunately this is also a growing trend amount crypto companies.

I'm really shocked by the number of companies in this industry making under-collateralized loans, loans with risky collateral, or simply not reacting quickly enough. I hope lenders and depositors have learned something from this catastrophe. One good rule of thumb is to avoid depositing money in any company that has its own token -- it is basically a pyramid scheme and it is destined to fail.

Name and shame please. Any exchange which actively attacks bitcoin by enforcing made up taint nonsense should be widely exposed and condemned so other people know to avoid them. There should be no place in the crypto ecosystem for exchanges which apply arbitrary and provably false metrics to users' coins.

I would go further. If you have bitcoin stored on any centralized platform, then you don't own that bitcoin. Withdraw everything, everywhere.

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Here's another exchange which has paused withdrawals: https://www.msn.com/EN-US/news/markets/zipmex-joins-growing-list-of-crypto-exchanges-to-block-withdrawals/ar-AAZPGFn
Seems like they have partially reopened some withdrawals in some regions since that article was published, but are obviously still scrambling to try to cover the big deficit in their books.

It is funny how I receive a lot of complaints from a lot of my friends who mine crypto that they exchange coins to an exchange and the exchange there tells them they need info to proceed further.They told me that they gave them all the screenshots needed verifying their mining activities and to one person they even requested to sign a message to verify the wallet that he was making the deposits was his,he provided him that further evidence but the funds remain locked there without further explanation from the exchange.I will tell next week the name of this exchange after a hopeful clarification has occurred,I highly doubt they will release his funds but just in case.

Get every Bitcoin you have in "shitty" exchanges that ask a lot of questions since the new law from EU has been implemented or you risk those freeze without a convincing explanation

But if they are taking their trading fees in BTC, ETH, or some other coin, the price of that asset in USD absolutely matters to how much profit they make in terms of USD, which is all they really care about.

It also conflicts with their own ToS, which say that they are under no obligation to hold on to any collateral whatsoever.

And you trust them? As I pointed out in my previous post, Coinbase lie constantly. And as we agreed on just there, other platforms such as Celsius have told blatant lies. These platforms will say anything to try to placate their users or attract new ones. Until I see legal documents from Coinbase (i.e. never) saying that users are not unsecured creditors, then anything else they say can and should be ignored.

That statement conflicts with the 'investor documents' that the WSJ has claimed to see.

The FAQ does say to refer to the TOS.

Unfortunately, customers are going to have no recourse if they relied on the discrepancy, even if there is liability on the part of Celsius, as based on their bankruptcy filings, Celsius has negative equity.

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I don't think coinbase is at serious risk of bankruptcy. Obviously, there are real risks associated with keeping your coin on an exchange, and one should consider those risks if they are going to do so.

Coinbase has said in the past that they are working on legal mechanisms to change customers' status as 'unsecured creditors'.

You can't rule anything in the crypto world out but right now even with all those dominos falling right and left I think Coinbase is still safer than a lot, and if it finally fails it will be probably among the last.

Google translation of DdmrDdmr post

To be fair nobody trusted MtGox that much at that time, they were just big but a lot had problems with it, it was previously hacked, and many were already sounding alarms about the amateurish way it was run, their whole brief existence if just a series of failure and lawsuits and hacks.
MtGox was so big because there was no real alternative at that point, not because of their trustiness.

It's probably worth pointing out that every one of the centralized exchanges and lending platforms which has gone bankrupt over the last few weeks has said some variation of "your funds are safe" in the days leading up to halting all withdrawals. Of course they are going to say that - they want to minimize any panic and any bank runs which would accelerate their demise. It's probably also worth pointing out that Coinbase lie, like, a lot. "We don't insider trade." "We don't sell your data." Lol.

Rather than basing your investment decision from a tweet, maybe look at the actual legal filings which show Coinbase making huge losses and the fact that all users are considered "unsecured creditors" (which means in the event of bankruptcy, you are absolutely last on the list to get back anything at all, as all the people who have lost all their money on Celsius and Voyager are currently finding out).

Mt Gox was too big to fail. Lehman Brothers was too big to fail. Coinbase is just another exchange.

For what it's worth, I think Coinbase probably aren't going bankrupt any time soon, but the fact remains that you should absolutely not be storing your money with them or with any other centralized exchange.

Recently DdmrDdmr has started a thread on our local section on the potential bankruptcy of Coinbase. Apart from the reasons that have been mentioned about this type of centralised entities that can freeze your coins, if Coinbase were to go bankrupt, which I still find hard to believe, we would have another reason to have had our coins in our wallets instead of there, because I doubt that in that hypothetical case, depositors would get back after the liquidation, not even close to 100% of what they deposited.

DdmrDdmr uses a Spanish article as a source, but I have searched in English and there are also some:

Will Coinbase go bankrupt?

Amid fears of Coinbase going bankrupt, CLO says ‘Your funds are safe’; company to lay off 18% workforce

LMAO. When I see these kinds of statements I start to worry.

Coinbase Under a Dark Cloud as Rumors of Bankruptcy Surface on Social Media

Where there's smoke there's fire, you know, and although sometimes what looks like smoke may have been steam or something else, I don't think we should rule out the possibility of bankruptcy even though Coinbase seems too big to fail as DdmrDdmr says.

That's a good point - I'm not sure what's worse. That they handed out loans without any idea what they were going to be used for, or they handed out loans knowing they were going to be used to gamble on pictures of apes with funny hats.

Ok, here's the same statement which was last edited just a few months ago and is still being displayed on their website: https://support.celsius.network/hc/en-us/articles/360002174718-Does-Celsius-have-an-insurance-policy-

I don't think I can argue with you on this one, at least in principle. Celsius may or may not have known the purpose of the loan, but it seems that if they did know the purpose, they had very lax standards.

Forum lenders don't take deposits, which I am aware of, and anyone trying to take deposits would likely quickly be labeled a scammer.

They made that statement in 2019, and it is possible that their business model had subsequently changed. I am not sure how much demand there is for fully collateralized crypto loans. It is also possible that greed got the better of whoever made (and approved) the decision to make these risky loans, as I would think if they turned out better, they would have made Celsius a lot of money.

Doesn't absolve people of the responsibility to do a basic amount of research in to where they are sending their money. Every service or product in existence advertises themselves positively, as does every scam in existence.

Based on thorough risk assessments, credit scores, income analysis, and so on. It seems very much like Celsius were handing out loans to any large entity which wanted one without really any due diligence on how that loan was to be repaid or what it was to be used for.

Yes, but these users have very strict limits as to what they will lend without collateral. They certainly aren't risking amounts sufficient to put them out of business should their customer default.

Mine is. While they claimed all loans were collateralized by at least 150%, we know now that this was not the case.

I noted before that the hypothecation of collateral increases risk to Celsius, although it does not mean that a loan 50% secured by collateral is now entirely unsecured, it means that Celsius has increased their leverage.

Banks make unsecured loans all the time without issue, as I noted before, credit card debt is generally unsecured, and is so profitable for banks that they have resorted to giving customers rewards for using their credit cards. There are a few forum members who have made a business out of lending, sometimes without collateral. I am sure that some of these loans have gone bad, but I believe their business is overall profitable, net of losses.

My issue is not with Celsius making unsecured loans, my issue is with the purpose of the loans, and the (what I believe) lack of documenting borrowers' ability to repay the loans.  Making a loan to a business for the purpose of buying speculating on NFTs is basically the same as giving someone a loan for gambling. Gambling loans are very risky (for obvious reasons), and anyone who borrows for this purpose needs to have the ability to repay said loan via other reliable sources of income. I can't imagine how Celsius could have documented 3AC's ability to repay their loan via some way other than their NFT bets being successful.

No, obviously not, but to complain that Celsius did with your coins exactly what they said they were going to do with your coins is just downright stupid. Nobody reads the Terms of Service for buying a video game online, sure, but you would expect if you are going to be depositing several bitcoin (or an equivalent amount of value in fiat/altcoins) to any platform then you might spend a couple of minutes reading about that platform.

Do you really think people read ToS? Using website to estimate reading time on average reading speed[1], Celsius ToS has 15193 words which could took 116.9 minutes to read whole thing. Prank by GameStation on April Fool[2] also prove almost 90% people didn't found out questionable part of ToS.

[1] https://wordstotime.com/
[2] https://www.cnet.com/culture/online-game-shoppers-duped-into-selling-souls/

The fact that as we discussed previously they handed out billions of dollars loans which were only 50% collateralized, and then went on to spend that collateral, leaving them with fully uncollateralized loans, means we can absolutely say that Celsius did not have good risk management.

I'm now seeing people complaining on Reddit and Twitter about what Celsius have said in their bankruptcy filings, as highlighted in this article: https://gizmodo.com/celsius-bankrupt-billion-money-crypto-bitcoin-price-cel-1849181797

It's only a bit shocking now? Was it not a bit shocking when you read in it in their Terms of Service before you deposited your coins? You did read their Terms of Service, right?

Celsius, and other lending platforms operate essentially the same way that banks operate -- that is they borrow money from depositors, and lend money out, and pocket the difference between what they pay in interest, and what they receive in interest via loan payments (less loan losses). If a platform can sufficiently manage risk, including not making risky loans, (and matching loan maturities with when they need to repay their lenders/deposit holders), they have a solid business model.

This is an example (if true) of Celsius throwing all risk out of the window.

It is not uncommon for banks to successfully lend without collateral, for example, most credit cards are unsecured loans, and credit cards are so profitable for banks that they often pay customers to use them (via new account bonuses and rewards). Banks also often lend to businesses successfully, although the underwriting process is often more complex. If Celsius really made a loan to a 3AC to buy NFTs, I think it is fair to say that the underwriting process was too complex for Celsius.

The saddest thing about this whole affair is this quote from Mashinsky, the CEO:
This should be the end of Celsius, and really, of all centralized lending platforms. They have proven without a doubt that they cannot be trusted, that they are not responsible, and that they made investments which were far too risky all in the name of making themselves profits while making their customers bear all the risk and all the fallout. Nobody in their right mind should have any coins on any of these platforms, and nobody in their right mind should ever use these platforms again. But no doubt in a few months or a year or so, all this will be forgotten and Celsius 2.0 will be back promising 20% interest (but it's definitely safe this time ), and a whole bunch of greedy users and newbies will flock right back to them. And the coins of all these users will be used to pay off all their outstanding debts from now.

I also stumbled across this Reddit post which is equal parts hilarious and sad: https://www.reddit.com/r/CryptoCurrency/comments/vy84rw/3ac_borrowed_millions_from_voyagerblockfi_user/

The summary is the under- or non-collateralized loans which firms like Celsius and Voyager were giving out to 3AC were being used to buy utterly worthless NFTs. Imaging losing all your money on Celsius because it was sent to 3AC and used to buy a jpeg of DickButt.

Yeah, seems like I was completely wrong and it took only 1 day to find out, I've just stumbled upon Tryninja's post on the other topic.

So, my positivity is done for, seems like they weren't stupid but a bit cunning in doing this, the only thing that doesn't change is that the whole thing got recked.

Also,another thing:

I'm going to stop talking about any sort of stuff, NFT, Defi, shitcoins, mining, with any of my friends and relatives, they want to talk about BTC, good, we talk they want to talk about some other investments I'm going "La la la" and I don't want to hear anything.
I've just done a tour of the chat logs on a private channel, and some other WhatsApp discussions, and seriously, I don't recognize some of them anymore, either they are on 101% hopium or they've gone full gambling addicts. I have a feeling some of them think I'm just telling them about the problems and risks just so I'm the only one "investing" and getting rich behind their backs.

A bear season is no problem for me, I don't care that much about the daily price, but what this market and the crash are doing do some individuals is really frightening.

The reports I've read said that they had $18 billion in assets at their peak.

Absolutely not. Their crypto assets will either be liquidated to pay off secured creditors or will be bought on the cheap by whoever bails them out or buys up the scraps that remain. Users will be lucky to get back anything at all, although I can also see them restructuring, consolidating their debts in to some new "VoyagerDefinitelyNotAScamToken", and then paying off their users with this useless trash.

I don't see why they wouldn't. Like all centralized platforms, standard users are being treated as unsecured creditors. In the event of bankruptcy or other liquidity crisis, their money is the first to be used and the last to be returned.

On the other thread, I was saying that those companies who don't care about security, risks, or anything else are going by the saying of getting rich or die trying, but these two (?) are really pushing it to the extreme. To me is quite funny when guys who were all suited up, conferences everywhere, full bling-bling are trying to scram and get into hiding forgetting somehow they were no master criminals in the first place and that there are people who lost millions hunting them.

And speaking of millions in a 10 billion case, how much money did 3AC actually had in the first place?
I always kept getting news about how they were frantically trying to get rid of expensive NFT they've bought for millions, and one the pictures in those replies really got me, despite being really poorly done.


There is a hard lesson to be learned here, nothing will go up forever and a clone of a thing will not just gain value as the original and keep it just because you think the 200 000 people that are following you on Twitter will keep pouring money in it. You need real money for this growth, not money from uncollateralized loans or one done with a bunch of over-estimated digital jpgs, when that money flow is cut downs goes the sand castle, it happens every single time with every industry or every scheme, just because it's crypto it doesn't mean its invulnerable.


So Gox style, but unlike Gox I don't think there will be a magical tux finding of an address with a few hundred thousand bitcoin.


Yeah, Celsius said it had resolved its liquidity problems, they're getting some money from somewhere to pay back their loans but still crickets about the money that is stuck there. But in this case, I'm a bit more positive, I don't think they are that stupid to pay their loans with the money people have on their platform.
If they do this and then file for bankruptcy they are done for

Most recent updates:

• Crypto.com have cut interest rates again
• Vauld say they are $70 million in debt
• The founders of 3AC are on the run and cannot be found to be served court summonings
• Voyager have said that customers will probably get their USD back since it is held with a fiat bank (the irony of fiat banks coming to rescue), but crypto will be allocated on an as-of-yet unclear "pro rata" basis (so expect to get very little of it back)
• Still no news from Celsius about customers ever getting back their money

The rehypothecation practice is particularly troubling to me, probably more so than the making under collateralized loans. The rehypothecation adds an additional layer of risk that they will be unable to cover withdrawals as they are requested by deposit holders, and borrowers as they pay off their loans.

Starting to delay withdrawal requests is an indication that they lack funds to cover withdrawals, but maintaining a long-standing practice of not immediately processing withdrawals until the following business day does not indicate that, as long as the delay is not increasing. They have a cutoff time, and as long as all withdrawals requested prior to the cutoff time are processed according to their schedule, all else being equal, I would not think they are having liquidity problems.

I've been speaking in generalities about all these shady platforms throughout this thread, but here is some info for Celsius:

Or a business not actually having access to the funds they need to cover customer withdrawals.

The post you were replying to was specifically about Celcus. I am really not familiar with Voyager.


Ultimately, it is up to the users of a business to properly review and understand the terms they are agreeing to prior to doing business with said business.

I don't think the lack of ~instant withdrawals is necessarily an indication that funds are not safe. It is likely more of an indication of the business not using a hot wallet, or using a smaller hot wallet.

You can see from Voyager's accounts which I linked to earlier in this thread: https://www.newswire.ca/news-releases/voyager-digital-provides-market-update-851734302.html

Crypto assets loaned: $1.12 billion
Crypto collateral held: $0.17 billion

Even considering the drop in value of most cryptos, that is insufficient to explain how they are holding so little collateral for such high liabilities. The were absolutely handing out under- or non-collateralized loans.

Voyager also admit handing out uncollateralized loans in the following legal case in NJ:

And yet, they deliberately don't make that obvious on their sites. And despite however many times I've told people to avoid these platforms, there are always multiple users saying "Well, they wouldn't do anything risky, funds are safu!"

Tether have said a lot of things which have turned out to be complete lies over the years, not least of which being "Tether is backed up 1-to-1 with USD". We've discussed this before: https://bitcointalksearch.org/topic/m.56656992. See also: https://bitcointalksearch.org/topic/m.51051918

Do you have a source for this?

They disclosed this policy, and it was public before their customers deposited their money. I don't think it is fair to cry 'scam' when this policy has been in place for time, and those trying to withdraw should not be surprised when they have to wait for a withdrawal.

It should also not be a secret that any company that pays interest on customer deposits is lending out those deposits (aka acting as a fractional reserve bank). There is literally no other way in which any company would be able to pay interest on deposits and not go out of business.

The teather statement said two things:
1 - that tether.io made an equity investment in celsius, and that equity investment is not part of their reserves.
2 - that tehter lent money to celsius, that was secured by collateral, which was held by tether, and in accordance with the terms of said loan, the collateral was liquidated to satasify (pay off) the loan in full, and excess collateral was returned to tether.

I am not aware of any facts to suggest tether is in danger of having less than full reserves as a result of what is happening with celsius. I think the speculation that tether will file bankruptcy and/or will be unable to redeem all of the USDT they have issued is baseless speculation.

Don't forget forcing their users to buy and hold their worthless token so they can "unlock" various tiers of rewards. And then of course when it comes to sell the token because you are leaving the platform, it is only worth 10% of what you bought it for.

The last few weeks have made it clear that very few of these platforms put aside any assets during the bull run on which they could now fall back on, and seemed be operating on the notion that bitcoin would just increase in value forever. Either complete naivety and amateur behavior from their owners, or they simply don't care if all their users get liquidated as long as they get to run off with some nice profits.

When you think printing tokens out of thin air will get you unlimited money forever, that's how things end..
Crypto.com was not getting most of their revenues from actual usage but from selling their token and listing cryptos and projects and taking a chunk out of those, since the hype died down, the consequences of not having a solid revenue model popped immediately:

Oct 28 2021
Crypto.com Plans Monumental $100M Ad Campaign, Taps Matt Damon to Feature

20 iun. 2022
Ad spending on TV has also been down: Crypto.com’s marketing expenses decreased to $2.1 million in May, from $15 million in November of last year

And when your revenue is down, what do you do, hammer your clients so you will lose customers and more revenue..
This was the moment to slash fees, to survive on assets put aside from the bull run, and to destroy your competition by offering cheap services, instead, they are doing it completely the opposite way.

Or, in many cases, handing out uncollateralized loans worth hundreds of millions of dollars.

And a platform which has assets of over a billion dollars can afford to pay to have someone available to perform these checks 24/7. Holding withdrawals for 5 or more days is completely unjustified, and just a method to protect their fractional reserve system from a bank run.

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Looks like blockchain.com have also lost $270 million due to 3AC: https://www.reuters.com/technology/blockchaincom-faces-270-mln-hit-loans-bankrupt-three-arrows-coindesk-2022-07-08/

And it turns out that Tether had a loan with Celsius as well: https://tether.to/en/tether-discloses-celsius-loan-liquidation-process/. Of course Tether have said that this liquidation will have no affect on their reserves, but given that we know that Tether repeatedly lie about their reserves, and we've just seen a bunch of other platforms lie and say everything is fine shortly before they shut down and file for bankruptcy, then make of that statement what you will.

I suppose that this thread is being raised in a global way but I wanted to comment here that there is an exchange in Spain that has closed down leaving 100,000 people without access to their funds. If they had withdrawn their own wallets, as oeleo says, this would not have happened.

Spanish crypto platform 2gether closes unexpectedly: RTVE

First they announced in a strange way that they were going to charge 20 euros to certain accounts, but shortly after announcing it they disappeared from the social networks, the website is not working, and those who managed to request a withdrawal before the website stopped working are complaining that they have not received it, which looks like an exit scam.

My opinion is that Celcius (and other similar companies) was facing a 'run on the bank' after the collapse of TerraUSD that resulted from a mismatch of the maturities of their assets (loans) and liabilities (customer deposits), along with likely loan losses resulting from the value of the collateral being less than the repayment values of the various loans they made.

The first issue will eventually be solved by halting withdrawals, and waiting for customers to repay their loans. The second issue will lead to actual losses to their deposit holders, assuming there is insufficient equity to cover the losses. I have read reports that those who have repaid loans have been unable to withdraw their collateral, which may indicate they plan on socializing losses to borrowers who have excess collateral.

Obviously, it is nice to have the ability to ~instantly withdraw your coin, however, when you deposit your coin on a centralized exchange, you are giving them access to your money.

IMO, the reason for the security checks is not necessary to confirm that you are the rightful owner of your account, but also to confirm that your available balance is actually equal to or greater than the amount you are attempting to withdraw. I assume these exchanges use automated checks to prevent people from withdrawing amounts exceeding their available balance, but those exchanges that hold withdrawals for "security checks" also likely add a human component to add an actual person's judgment when deciding if a withdrawal should be allowed or not.

Obviously, these types of delays in withdrawals should be disclosed ahead of time, specifically prior to receiving deposits, and prior to implementing said policy for those who have already deposited. If a customer deposits money knowing they will have to wait for said security checks, it should not be a surprise when they are having to wait.

Wasn't expecting to be updating this thread almost every day, but here we are.

CoinLoan reduce their withdrawal limits by 99%, from $500,000 a day to just $5,000 a day: https://coinloan.io/blog/temporary-change-in-withdrawal-limits/

Voyager have filed for bankruptcy in NY: https://www.forbes.com/sites/ninabambysheva/2022/07/06/crypto-broker-voyager-digital-files-for-chapter-11-bankruptcy/

Meanwhile Crypto.com have slashed their rewards while hiking their fees. Obviously feeling the pinch as well.

Singapore's too hot now I think, been a lot of public outcry since even last year on various crypto companies (exchanges, crypto projects, you know the shitcoin type), then Terra, now this. Suspect the Monetary Authority is going to swoop in and do audits on all the exchanges and lenders there pretty soon, at least internally.

Wonder also if the Chinese bank runs from last month have anything to do with this. I know they're not directly into crypto and the problems have been tied to fraud in development projects but someone had to finance all those guys who flew the coop in the China crypto exodus -- many of whom landed in Singapore.

It is, eventually. And all the people who simply kept their bitcoin in their own wallet and didn't lose it by gambling on platforms with unsustainable promises will be the ones who come out on top.
[/quote]


Oh yeah, that's for certain. I meant that they took surefire bets on 100k in 2021 and still thought it would happen despite all the writing on the wall, thinking the bull would extend its overstay.

Still can't really understand the allure of 4-10% APY with all that risk, when Bitcoin already provides gains that outstrip that (only, over multi-year) without an iota of that risk.

Well, that didn't take long: https://www.vauld.com/blog/corporate-statement/

Vauld are another centralized lending platform which is popular in Singapore and India. Their backers include Coinbase and Peter Thiel. From various news articles it seems that they had at least $1 billion in crypto assets under management, and they say that their freezing of all accounts was prompted by $200 million of withdrawals since June 12th. However, on June 16th, they made a blog post saying everything is fine: https://www.vauld.com/blog/vauld-continues-to-operate-as-usual/. Maybe that should be yet another warning to everyone who is ignoring the warning signs from other lenders because their CEO is posting on Twitter that everything is fine.

It is, eventually. And all the people who simply kept their bitcoin in their own wallet and didn't lose it by gambling on platforms with unsustainable promises will be the ones who come out on top.

In addition to the interest you also earn on the collateral actually (again, depending on the asset, long story short you've to buy a portion of their shitcoin). Again, just an experiment to gain some insight into the models they use but also because I was really curious about the compliance and banking license process they've been working on for the past few years.

Absolutely am not in an illusion that they're actually going to go on forever -- but to further explain my personal interest, which I didn't make part of the thread I update in: there's also a long back story to NEXO owners -- Romanian owners, CEO himself is directly linked to the mafia (as a politically exposed person/PEP) via his father, and a decades-long effort to legitimise their wealth.

How they managed to get their various licenses (including in several US states) is probably a story in itself.


Yeah, a big circle-jerk of people loaning each other money to squeeze out as much leverage as possible. They all thought BTC was going to 100k, huh.

So you are risking your funds to earn ~4% interest on ~10% of the amount you risk? That's a big risk for very little gain.

Sure, but your collateral is currently in the hands of an unknown third party which could go bankrupt at any time, meaning you lose everything, as just happened with 3AC.

100% collateral for the average user, yes. But not for institutions or other large entities. They will be getting loans which are under collateralized or not collateralized at all. This is the crux of the problem that hit Celsius and now Voyager - huge uncollateralized loans to 3AC.

I didn't put much in there, just enough to try and earn interest in their nexo shitcoins to get me up a level, and stablecoins (with max interest). It was meant to be an experiment, and still ongoing, I'd never put my main Bitcoin in there beyond what I can afford to lose.

It's been an interesting journey to say the least, as I know am a semi-expert in proof of source of funds, proof of ownership, etc. They have an intense KYC process I've never experienced with any platform before.

No idea how big their 3AC position is, they actually answer me quite promptly on a lot of questions, still vague but generally of a much higher level than any other service customer support I've ever come across.


NEXO can be quite attractive if you find out about their rates and don't mind adjusting capital around -- for example, you could actually put up collateral and borrow 10% of the value with near-zero interest... and still earn interest on that borrowed amount. I've been doing that, and paying the interest daily, there's a small bit of leftover interest actually so making profits from borrowed capital, just annoying to do it every day (as it compounds).

They do seem to be a bit more "advanced" than blockfi, celsius, etc, and as mentioned, they require minimum 100% collateralisation for all loans, so I'm not sure if they've found a way to ride this bear out safely -- wouldn't bet on it until they make their real time audit fully transparent.

[Just a note to anyone reading, totally not advising anyone to try any lender. Not your keys cannot be emphasised enough]

Greed and naivety. Every time in the past I've pointed out the risks involved in these platforms on this forum, there have been multiple other users saying how they are using these platforms and they've been working fine, they've never been scammed, yadda yadda. It all works great until it doesn't.

Give us your bitcoin and we'll give you a worthless shitcoin which we can print more of at will. You can then stake your shitcoin to earn more shitcoin, while we spend your bitcoin and then freeze everyone's account!

Looks like FTX have gone in for full bailout of BlockFi, so they will probably survive a bit longer than anticipated. Nexo just slashed all their interest rates, so they must be struggling too. Lots of rumors going around about KuCoin as well. Obviously we can't tell for sure who will be the next to collapse, but it will be someone. Only safe place for your coins is in your own wallet.

I never even heard about Voyager app until now, and I don't know why people use that for such a small earning percentage.
Taking a big risk, giving custody of your bitcoin to someone else, just to earn 12% annually is a terrible deal, but hey who am I to judge what other people are doing.
I just checked their website and sure enough, they have their own shitcoin token with revolutionary staking crap...
Let's make prediction for next crypto vompany going bust in this bear market, maybe something connected with Tether?

Hope you've since withdrawn all your coins back to your own wallets!

As you say, an audit proves nothing. We know these companies are all running fractional reserve systems and not keeping enough in reserve to cover their liabilities. All it takes is for one of their outstanding debts to default (as it just did with 3AC), and everything goes to shit.

Any idea how big Nexo's position with 3AC is/was?

I think it makes sense when you think about. There platforms which are offering 20% returns to their users must be making even more than that from the entities they are lending to in order to cover their own (substantial) profits. If I want a bitcoin loan, and I have 100% collateral to cover it, there are far more attractive rates that I can access than ~25% interest. I would only have to pay such high rates if my loan was partially or fully unsecured.

^ Nice update. Now it reminds me that I actually experimented with NEXO a while back, and provide semi-updates to this thread every now and then, probably due an update once they clarify and adjust rates (some time this month).

They refreshed their landing page and sent out a flurry of emails to users last month after Terra, 3 Arrows, Blockfi etc. And seem to almost be egging on their lending rivals by saying "This is why we do over-collateralisation for every loan" (referencing that they need minimum 100% collateral to lend out any money).

There isn't exact proof of this (I ask actually every now and then) -- even though they provide a real-time audit to all their customers of held assets, it's not proof that it's enough to cover all outstanding loans (an unknown number) if defaulted. Last month, though, they upped their insurance cover to $650M (still I believe hardly enough to cover anything in end-game scenario) so clearly they're digging in and expecting a lot of defaults.

My point -- sorry if I didn't look like I was getting there -- is that I'd assumed all lenders were doing at least 100% collateral on loans. How naive of me.

Bump.

Looks like I was wrong about BlockFi being the next to collapse, as despite a $485 million bailout from FTX just 10 days ago, Voyager are next to freeze all their customers' accounts, essentially holding their money hostage: https://www.investvoyager.com/blog/voyager-update-july-1-2022/.

According to their filed reports (https://www.newswire.ca/news-releases/voyager-digital-provides-market-update-851734302.html), out of $1.12 billion in assets they had loaned out to generate interest, $654 million of those were with Three Arrows Capital, who recently went bankrupt. That's almost 60%. You've got to wonder why they are handing out non-collateralized loans of 60% of their assets. And you've got to wonder why people believed that 10% returns was somehow sustainable. I suspect the answer is greed in both cases.

And looks like BlockFi have just increased their FTX funded bailout from $250 million to $400 million: https://blockfi.com/a-message-from-our-founders-july-2022. And with that comes an option for FTX to buy BlockFi at just $240 million or even less. BlockFi used to be valued at $4.5 billion, and is now potentially being sold at 5% of that. They are sinking fast.

https://www.forbes.com/sites/stevenehrlich/2022/06/28/bankman-fried-some-crypto-exchanges-already-secretly-insolvent/

Pretty concerning statement from the CEO of FTX here. I wonder if he is just speculating in the same way we all expect other exchanges are running fractional reserve systems and bordering on insolvency, or if other exchanges have already approached him looking for bailouts and he's turned them down.

After $485 million to Voyager and $250 million to BlockFi, wonder who he'll bail out next?

Who are the people dumb enough to still have their coins on these platforms?

How possible or how achievable is this advice to day traders? Is it possible that at the end of every day trade, they convert all the coins they traded to one coin and send to their non custodain wallet, the then next day they repeat the process. It is not something that is simple to do.

We know that exchanges are not safe, but the first step is to search for a more reputable exchange and then avoid giving out coins for high risky trades. By this only temporary funds for trade will be on exchanges.

FTX's bailout of blockfi is concerning, but what bothers me more are the withdrawal fees. It costs $25 to withdraw stablecoins, for example. If you have $1000 in blockfi, it will take 5 months of interest to pay for the withdrawal. Also, I think many people will be withdrawing all of their money before the fees start and that will create even more problems for blockfi.

o_e_l_e_o here is another recent event why people should only hold their coins in their own wallet and stay away from centralized or third party crypto services, though this is a slightly different case, but it remains the same outcome which is people losing their coins. A crypto firm called Harmony has been hit by attackers, and they have lost $100 million dollars in digital coins to the attackers. Harmony is a centralized blockchain bridge that helps people transfer their coins between different blockchains, but people that use it have to give up the ownership of their coins in the process, and that means: it is not your keys; it is not your coins!
https://www.washingtonpost.com/business/2022/06/24/crypto-hack-harmony-horizon/

Latest update to this story: https://www.coindesk.com/business/2022/06/25/morgan-creek-is-trying-to-counter-ftxs-blockfi-bailout-leaked-call-shows/

The $250 million bailout is set to wipe out all other BlockFi shareholders, as it gives FTX the ability to buy out BlockFi at close to no cost. One of these shareholders - Morgan Creek Digital - are now trying to come up with their own rescue package for BlockFi to stop this from happening. BlockFi apparently receive a number of other bailout offers, all of which would have used clients funds to secure the loan from the lender.

So, it doesn't really matter which way you look at this - BlockFi are in trouble and if you have any coins on their platform then you are at a significant risk of losing everything.

Indeed. My first direct experience with some of these shenanigans was a centralised wallet run by a mining company think it was called Eohash or Eobot? Small one, they sold mining rigs but also had a wallet, kinda like the antpool dashboard. I actually had quite a bit of coinage there as 2016 you could still do some shitcoin pow with reasonable results (okay Monero's not a shitcoin but nevermind). Had what I'd say was an impressive balance in the run up to 2017 but I left it sitting there, not realising they'd suddenly implemented a monthly % maintenance fee which wiped it all out by the time I DID go in to see a year or so later. They've closed down.


The only way to get the seed phrase was to use the older version (which I did) but if you were unlucky to upgrade and forget you ever had Doge, like I guess a lot of people did, too bad. You're right, it was outright theft and it actually caused some small furore from the Dogecoin "devs" at the time -- I didn't follow too much and had I better forum skills I would reference the thread I recall discussing it. This reddit thread seems to explain it in some detail (the comments) if you're interested.


100% sure. I used Exodus for most alts I had (at first I did QT on almost everything but that became a terrible hassle, doge was one of the worst IMO) and that event was actually pretty stealth mode, I only found out WHEN I downloaded new version then.

You can see the reddit thread I put in this post for more detail and context. The Doge code maintainers got into a row after that, as did some Exodus users (they or I didn't lose any coins but we know for sure n00bs caught unawares would of course never realise this theft).

I note Exodus today seems a very different wallet, I see it as an exchange actually now it has a trading function and integrated card/bank option to buy.

Just did quick search and it's poloniex which have such fee[1]. They call it "administrative fee", although it's not clear the duration to be classified as dormant account or whether it applies to all coin. BitFinex don't have such fee according to their FAQ[2].


Are you sure you remember it correctly? Their website still show page for Dogecoin[3].

[1] https://support.poloniexus.com/hc/en-us/articles/360035354512-Poloniex-US-FAQ
[2] https://support.bitfinex.com/hc/en-us/articles/213919589-What-fees-does-Bitfinex-charge
[3] https://www.exodus.com/dogecoin-wallet

Which is obviously nonsense. Once they've set up the necessary systems to create a wallet for a specific coin which can handle deposits and withdrawals for customers, it takes absolutely no effort on their end other than to let the software continue to run. Just another one of the many ways that centralized exchanges rip off their users.

Really? Did the wallet have a seed phrase you could export and recover your coins somewhere else? Cause otherwise that's just outright theft.

I think, and I could be wrong, it was either Poloniex or Bitfinex which did this. Used to get emails about it for crapcoins I'd have (yes, yes, I was a noob in 2016 too).

They called it a maintenance fee, but I believed it wasn't for profit. It was only for coins that were low network usage that they were thinking to delist (since maintaining the wallets when nodes were frequently down was a hassle). They'd only levy the fee on dormant coins, the idea was to get as many users as possible to withdraw out so they could just delist and close down the maintenance.

One wallet turned CEX I definitely remember was Exodus. A few years back they decided to drop Dogecoin and if you didn't withdraw yours before upgrading to their new version, you'd simply not see your Doge anymore.

AFAIK there aren't CEX which force you to withdraw your coin. But IIRC there are few CEX (don't remember which one) which charge fee if you store coin for long time on their service. Although it's likely they do it to earn more profit rather than convincing people to use non-custodial wallet. Kraken CEO also being honest they cannot protect you if government is after you[1].

[1] https://twitter.com/jespow/status/1494462097161220104?t=EWO80zZlf6wZp4HpkXQEhA&s=19

Plenty of DEXs effectively do this, and have no way to store your coins with them. I don't believe any centralized exchanges this, though.

Bingo. Using these platforms is simply replacing an insured and relatively safe fiat bank with an uninsured and wildly risky crypto bank.

---

It's now emerging that in return for their $250 million bailout of BlockFi, FTX will be acquiring a stake in BlockFi. I can't really think of a bigger red flag than when the entity holding your coins is auctioning off themselves to remain solvent.

Even if the exchange was objectively better in every aspect, I'd avoid it out of principle. I've also talked about it before, but if an exchange basically didn't allow you, and forced you to remove your coins from their platform, i.e doesn't have a wallet for long term storage (long term being any more than 24 hours) I'd have much more respect for a platform that did that. Since, a the mere fact you advertise users to use your wallet software, is poor security practice to begin with.

Yeah, there's hardly any security checks that need to be done. It sounds awfully alike a bank, where they need to do these checks. The thing is, a lot of the checks are easier with fiat. It just stinks of insurance for me. If they were in troubling times, I bet they wouldn't look after their customers, and just fold like the others before them.

Those who act like that are not a true long term investor but they just invest for fun or only to try if they really can earn something on hodling bitcoins as on what they heard and see. They are those people that keeps on watching their balance at all times and they seem to be uneasy. If there are dumps in the price they are also the first one that will panic and they can sell their possessions.

In hodling, you can actually earn something, the same as when they lend or stake their bitcoins on some platforms but the goodness of doing it, is that you are the ones who manage it. You have your keys and seeds with you so it is much safer.

I mean, it's obviously bullshit. Unless they are asking you to provide a selfie holding a piece of paper with your withdrawal address on it every time you want to withdraw (which they obviously aren't) any "security checks" can be automated and take place in a few seconds. Things like checking your IPs, checking for suspicious log ins or account activity, etc. They can require 2FA codes or a link sent to your email, again which can be automated to happen at any time of day or night and take a few seconds. Plenty of other exchanges and services manage it. Holding coins for two business days for "security checks" (which could be up to 6 actual days over weekends and holidays) is obviously just to give them as much warning as possible for withdrawals since they run a fractional reserve with apparently a very small amount in reserve. Explains why they've just had to take out a $250 million loan to cover all the customers who are withdrawing in the light of the Celsius insolvency.

There is no situation in which I should have to swap bitcoin for some inferior altcoin just so I don't get hammered with withdrawal fees. A fee of 1 sat/vbyte is sufficient to get confirmed within the hour >90% of the time. Exchanges charging tens of thousands of sats for something which should cost ~200 sats are stealing from you. Being forced to pay exchange fees to exchange to an altcoin you don't want just so you can withdraw it is no better.

These platforms have some conditions in their TOS, which make their position in court better than many users. They also know the slow pace of judicial procedures you need a lot of money and therefore they will not hesitate to close your account if they find any problem or violation of the terms of service (even if They let you use it)

Some platforms leave high withdrawal fees to force the user to leave his money, so look for a coin with low withdrawal fees^[1], exchange your coins to that coin, send it to a platform that gives you lower  BTC withdrawal fees, withdraw your bitcoins.

[1] https://withdrawalfees.com/

Right. Although, I'd go a stretch further than that. To mitigate the risk as much as possible, you should be selling in increments, rather than all at once. Fees might be more depending on the exchange, and whether they charge you to deposit, as well as obviously fees for selling, and potentially withdrawing. However, if a exchange is that restrictive I'd probably recommend not using them anyway.

Anyway, back to the point; selling in increments at least mitigates the risk if the exchange seizes trading during the time you're depositing, even if only for until you buy/sell. I know a lot of users aren't going to have the patience for that, but I'd seriously consider doing it considering the amount of exchanges that have pulled this sort of thing now.

I think this cements my point even more. Alright, my recommendation might not be suitable for traders looking to make the most money for their buck, but it's the safest way. Personally, I wouldn't be using an exchange that requires holding your coins for security checks.

Almost, always a indicator of someone who doesn't really understand Bitcoin, and things it should be leveraged to earn more. Don't get me wrong, there will be people who understand the risk of that, and will actually benefit from it. However, it does make me uncomfortable a little bit when I see newer users asking these sort of questions.

FUD

That's right. I've also observed that myself. Rather than safely keep them with their private keys, they sent them in all kinds of centralized sites and fake decentralized finance platforms and fake decentralized exchanges. They invested them in gambling sites, lending platforms, liquidity pools, and so forth. I mean, many must have also profited from it, but things could go wrong anytime. Crypto's history doesn't fall short of all kinds of events that should serve as warnings.

I don't know, perhaps some are really in a hurry to get rich. Or perhaps they're simply greedy.

That’s poorly managed exchange and I feel sad for the employees who might have been working hard for them. It’s insane, if they had set up of “crypto” exchanger then they should have already forecasted that in the catastrophic event such as the current bearish market how they are going to manage the central funds, companies revenue and employee salaries. Everything should have been pre-planned before taking vigours actions.

As a m’n individual I have my own set of rules. If I’m investing into crypto then I definitely know crypto is going dump itself at some point and I will have to go to stealth mode! The actions are harsh.

In addition to this, they are reason for the traders aggression and sell off. Anyone who got the tip that they will be halting the withdrawals would instantly go transfer the funds.

Illogical to force that rule anyways, they will not be removed from the court orders considering the whole scenario and their deeds.

I don't disagree, but as I said in my previous post, the outcome is the same, regardless of the reason behind why people are leaving their coins with third parties, be it convenience, laziness, greed, impatience, lack of knowledge, etc. If you leave your coins with a third party, that third party could go bankrupt resulting in your losing everything, regardless of how reputable or trustworthy you think that third party is. It can happen to these lending platforms, but it can also happy to centralized exchanges.

Absolutely. Take a look at something like Coinbase's SEC filings, which explicitly state that if anything happens to Coinbase, all its users will be treated as "unsecured creditors", meaning any coins you have on Coinbase will be used to pay off their debts and liquidations, you will not get your coins back, and there is nothing you can do about it.

I think it is important to note that bitcoin hasn't done this. Bitcoin is still a peer to peer currency. It is these centralized scam platforms and get-rich-quick users who buy bitcoin only to try to make more fiat who are doing this.

---

It has just come to my attention that BlockFi is closed today for the Juneteenth holiday, and that will not be processing any withdrawals: https://nitter.net/BlockFi/status/1537105514399670273

Why? Has the bitcoin network shutdown? Have miners stopped mining? No, of course not. Seems very much like they are stalling for time to try to claw back some of their risky investments so they can refill their wallets for the ongoing onslaught of people trying desperately to withdraw their coins. I suspect the next thing will be random bugs and errors preventing withdrawals (like Binance's "stuck transaction" nonsense).

Edit: I stand corrected on this last point: https://bitcointalksearch.org/topic/m.60404376. Still doesn't make sense to me that a bitcoin based company can't process any transactions on federal holidays. And people are totally fine leaving their coins on a platform which only works business hours? Crazy.

You are right and so is the OP. I believe I must have felt that way too sometimes that earning from your Bitcoin stash is some sort of a good Idear instead of just HODLing in your personal wallet but seeing what is happening and can still happen to other exchanges and staking/lending sites, I wouldn't want to amp up the risk of losing everything through that means. I think what has happened will change some people's mind about this and do it the proper way.

To me, what this makes me wonder is how BTC has progressed on the basis of its market becoming a kind of financial casino that the whitepaper wanted to run away from.

From the idea of a P2P currency, apart from BTC, thousands of centralized currencies were created and are exchanged for it in search of the quick profit in centralised exchanges, and to top it off lately with an emphasis on leverage: "borrow against your Bitcoin". But in order to borrow you have to give up your private keys, just as you have to give up your private keys in order to get a measly interest.

I would say that many of those who have seen their funds frozen in Celsius have invested because they have seen the Youtuber of the moment, hoping to make a lot of money and not so much because they have an alternative for their savings that cannot be confiscated by anyone if they take minimum safety measures.

Those of us who have some idea of the subject will never have a significant part of our BTC holdings in exchanges.


Like it or not, most retail investors are impulsive people who look to bitcoin or any other investment for a magical way out of their shitty lives, and their way of thinking doesn't usually involve a boring strategy along the lines of: buy bitcoin, store it in a hardware wallet and don't worry about the price in 5 years.

The problem with some is that they simply can't wait. They simply can't just patiently wait. It seems a lot simply cannot relax. They cannot stay put. They're antsy with their Bitcoin. They have ants in their pants!

How many times have we read posts asking how they could earn from their Bitcoin? How many times have we heard people saying they'd rather invest their Bitcoin and earn a little than just HODL it and earn nothing?

A lot are saying they want to make the most of their Bitcoin. They just can't let it sleep in their cold storage. They'd rather stake or lend them because they're not spending them anyway; they're keeping them long-term anyway.

I hope people will finally learn from this!

Worthy advice.

It is never easy to control emotion, greed, fear, leverage when you are in pain. The motivation to cover and equalize your loss is big that will be cause of worse things. Your advice is very relevant. Withdraw coins from exchange to own wallet will help two things

• Avoid any bad thing happens on that exchange
• Avoid uncontrollable, emotional orders from your side

It is good to avoid forced liquidations and become holders, wait for sunshine again. Additionally, it gives you time to switch off your computers and do some outdoors activities, enjoy your life.

Ah, so that is what whammied the crypto prices yesterday. No wonder then.

I was commenting in another thread about some Chinese banks experiencing run-offs, well you don't really have to look further than these "banks" aka. interest platforms that are also experiencing run-offs but they are having a definite impact on the prices of all cryptocurrencies as a result.

---

There was a gambling project that I was supposed to launch 7 months ago with some other people using some borrowed money from investors and personal funds. Looking back, and although I could not see it at the time, I am really glad it did not end up happening because then for sure we would be guarranteed to be insolvent from run-offs too (we returned all the borrowed money to the investors) and our personal reputations ruined.


Looks like a cue that BTC will fall to $11K in a week or so. I don't know.

One thing that I find pretty cool at this stage is that when you borrow $100,000 and can't afford to pay in this market, you're going to have to worry and get caught, but if you go into the millions, hundreds of millions, or even billions of dollars and are not able to repay, the one who is worried is not you, but the lender. I also just heard that Solend is controlling a whale wallet through voting. This is also seen as a violation of the investor's right to manage assets. It is really bad to see a decentralized algorithm central but controlled.

These centralized crypto lending websites are different from exchanges, many members who say big exchanges are safe use them for trading, p2p activities and make the mistake of not only revealing their identity to the third party service, but leaving their funds in the exchange which is a very dangerous thing to do, because many things can happen that will make them lose their money, but they do not leave their money there because of they want interest on it, they leave it there because some of them are lazy and do not have understanding of crypto risk, so they want convenience that come at an expense.

But centralized crypto lending websites are different, and they are the platforms i referred to in my earlier post, now here is why i mentioned 'greed' and 'impatience', the investors that take their money from their wallets and deposit it into lending platforms, are doing it so it can generate interest for them and no other thing else, Celsius promised over 20% interest, BlockFI, Gemini Trust, also promise to pay huge returns, so i call the investors who deposit to this platforms greedy and impatient because they are lured by these interest rates, that they forget what their money is going to be used for, and how risky it is. If you take a look at how much these platforms claim to have, then you will understand that investors are depositing huge sums of money into these lending websites, and only caring about the promise of good interest (greed).

By giving your crypto to the use of exchanges, all their advantages are lost. After all, the point is to single-handedly own crypto like a personal bank. Whoever has access to this is the owner. By storing crypto in exchanges, users can't be called owners or masters in any way.

Big or small exchanges, it doesn't matter. The only important thing is that your crypto with them and exchanges will always find a reason or excuse under which they can take away your savings. Events like these show that you need to keep your crypto out of exchanges and not use it unless absolutely necessary. It is foolish to expect exchanges to fulfill their obligations when they can ignore their fulfillment.

I'm not so sure. We often see users on this forum say that big exchanges are safe, they have insurance, they can't possibly go bankrupt, and so on. Events like this just go to show that none of that is true.

Getting pennies on the dollar for what little assets they manage to recover will be little consolation.

And yet the outcome here is the same. The users deposited their coins with a third party, and are now being denied access to those coins.

Which is very easy to do, and the whole point of this thread: Withdraw your coins to your own wallet. Then, just wait.

It is especially important and relevant with centralized lending platforms. The bear market, the collapse of Terra, Lido Finance, 3 Arrows Capital show that (but it is not strange, we all know about it) liquidations are terrible and not exclude any entity, individual or institutional.

Any entity / participant in the market over leverage will be liquidated by the market. People can think (naively) that institutional investors, venture capitals are too big to be liquidated and collapsed. They are wrong because even amongst institutional investors, there are competitions and they will kill each other at right time. It is like natural selection amongst wild animals in nature.

In bear market, it is time to survive. The first priority for everyone. Sun will shine after the bear market ends but only if you can avoid liquidations and lose your capital in bearish period.

That is a different issue and not related to "not your keys, not your coins." The issue here is that investors are ignoring, or perhaps not understanding, the risks of of their investments. Every investment has some risk, even one that is believed to be safe.

This what I actually do.

Exchanges should only be seen and be used as an exchange. I really avoid using these exchanges other features like staking, saving, earning, there's also some games on those exchanges etc. that will only risk my funds on this platforms.

things to note.

there are some people that use custodial services/exchanges as a wallet and leave funds in there for months/years without looking at the funds long term. treating the wallet as a retirement investment to hoard long term

many exchanges/wallets have terms which say if the exchange/wallet deems there is a service breach they can stop use of certain services/functions and offer a redemption/refund.. but with a clause that this option is only open for 90days after service suspension. and if there is no contact or no instruction to withdraw in those 90 days. then the customer forfeits their value entirely.

so again dont treat custodial services as a long term wallet that you can just leave funds in and forget about for many months. you might find out the funds have been taken from you.

a prime example would be this:
in early 2017 ($2k/btc) someone has 0.5btc and not required KYC because value was ~under $1k
however by late 2017 it became $10k($20k/btc). where the exchange demands KYC due to value increase triggering KYC limit requirement. but the customer has not opened their account due to wanting to hoard and not touch it until retirement.
exchange treats it as a breach for not providing KYC, and no communication from customer to get KYC, so suspends customers access to certain functions/services. and by spring 2018(90days later).. the coins are forfeited.

this would all be seen by the customer as morally wrong and thought of as theft.. but under business terms of the main big brand exchanges business terms of service. deemed as acceptable and deemed as the customer agreeing to that theft due to agreeing to the terms of service.

the small print of one example

https://www.coinbase.com/legal/user_agreement/united_states#general-obligations-taxes-designating-a-fiduciary-and-termination
6.9. Suspension, Termination, and Cancellation.
Coinbase may suspend, restrict, or terminate your access to any or all of the Coinbase Services, and/or deactivate or cancel your Coinbase Account(s), with [/u]immediate effect[/u] for any reason at its sole discretion and is under no obligation to disclose the details of its decision to take such action with you. You acknowledge that Coinbase's decision to take certain actions, including limiting access to, suspending, or closing your account for any reason in our sole discretion, may be based on confidential criteria that are essential to Coinbase's risk management and security protocols. You agree that Coinbase is under no obligation to disclose the details of its risk management and security procedures to you.

You will be permitted to transfer Supported Digital Assets or funds associated with your hosted Digital Asset Wallet(s) and/or your USD Wallet(s) for ninety (90) days after Account deactivation or cancellation

though under regulations a exchange cant freeze an account and refuse refund/withdrawal, without a court order.
however be very wary of the exchanges own business service/membership policy about how it interacts with its customers about the services it offers and how customer should use them services in their service policy(not the regulatory policy).

they CAN stop function of certain features and tools and services. as thats the businesses own decision/discretion to make about who and how users can use its services(as with any business) but if this is the case where the 'freeze/ban' is not due to a court order due to some criminal investigation. but instead just a breach of service.. the service should offer an exit method as part of their policy to ban users.

if an exchanges service policy states that they as a business decide to keep funds locked up for a breach of business service(unrelated to criminal investigation via regulatory policy) then NEVER use that thieving exchange.. because that is theft

yes its morally wrong and criminal for the business to have such business terms in its policy to just withhold funds unrelated to any criminal investigation court order. but customers/victims can only really make that argument by trying to sue the exchange. which the business will counter argue that the customer agreed to let the business keep the funds after a breach when they signed up(agreeing to the terms).. or counter argue by saying the agreement included a clause where customers agreed to go to arbitration and not ever sue the company(emphasis: please avoid businesses with these clauses)

in short. read the terms. dont keep funds in businesses longer then needed to make a a swap/trade and accept the risks that they could steal your funds thinking that your value is not worth it to fight in court over

Most likely, due to rapidly falling crypto prices, the value of collateral backing the various loans they have made has fallen below the repayment amounts for the various loans, and any amounts available to cushion against loan losses have been exhausted.

I think it is very unlikely that Celsius' customers will not see any of their coin again. It is more likely they will face losses, and will experience delays in being able to withdraw the amounts available to customers.

Ultimately, in a free market, it is up to the market to decide if the compensation (interest) is worth the risks associated with keeping coin on a platform such as Celsius. I think time will tell if their customers will end up as a net beneficiary to keeping their coins at Celsius.

As you note, the TOS clearly stated that coin deposited would be used to fund loans.

this is actually uncalled for because it a breach against our trust and believe on them to be able to secure our private lives without a compromise but they failed, instead they take an advantage on users, i pity alot of users who where still in dark about using centralized exchanges because they aren't aware of the risk thereof but those that quite alright knows what's at stake and still remain with centralized exchanges shouldn't be considered for pity whenever they encounter a strike from one of the demerits in CEX.


just for the sake of those trading that can't do without using centralized exchange I've said it all over that any amount that should be there must not exceed what they can afford loosing, while decentralized exchanges are best for investments, am not against going under maintenance but we should consider it the longevity or time taken in doing so, anything the exceed one or two hours going under maintenance should be suspected for some reasons beyond ordinary eyes can see because we are dealing with customer/users of over millions in numbers and you can't expect to have them risk their live investment on a feeble site that does not worth it at all.


because many failed to realise the coins remain being not their own 100% not until the possess the keys to it.

Well for those who do not know, i guess this is what they used peoples' money to do, and it went wrong:

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It is funny how people take away their bitcoins from their personal wallets and put it in a centralized crypto lending website all because of promises of a certain percentage of interest, when they can just keep their coins in their personal wallets and make ROI in the long term; many of them know the risks involved, the terms of service, and what the platforms are using their money to do, but they are lured by the promises of up to 20% interest, so greed/impatience, and not lack of information is the major problem affecting customers of these platforms.

well researched. factual. no drama. no fantasy.

good advice. well earned 50 merit.

people should only use exchanges the very day they want to buy/sell. and then get the funds out same day. dont rely on central services as a custodian wallet mid-long term.

Part 1 is here: https://bitcointalksearch.org/topic/recent-events-should-make-everyone-withdraw-all-their-coins-to-their-own-wallets-5387401. In that thread I spoke about how centralized exchanges and services were freezing the accounts of their users and seizing their coins, often indiscriminately and because of completely external reasons that the users themselves had no control over. If, for some crazy reason, you still have coins on a centralized platform, then the recent events with Celsius really should be the last wake up call that you need.

If you are unaware, Celsius Network is insolvent. About a week ago Celsius completely froze all accounts, all transfers, all trading, and all withdrawals: https://nitter.net/CelsiusNetwork/status/1536169010877739009. The next day it is reported that they have hired restructuring advisors: https://archive.ph/riZJu. Celsius have 1.7 million customers, all of whom are currently unable to access any of the coins they deposited to Celsius, and indeed, are unlikely to ever see them again. Lured by the ridiculous promises of 20% returns, users completely ignored the fact that their Terms of Use explicitly stated that their coins would be lent out and used to make highly risky investments, and if something went wrong they have absolutely zero protection, despite this being repeatedly pointed out. Well, something has gone wrong, and now these users have lost everything.

So, given that these centralized platforms are gambling your money and go bankrupt at any time, why are your coins not in your own wallet yet? In particular, I'm thinking about the millions of people using BlockFi. If you look at the first two underlined links above, you'll notice that BlockFi's terms are almost identical to those of Celsius. BlockFi are losing large amounts of both Bitcoin and Ethereum from their central wallets as users try to withdraw their coins while they still can. They've just announced they are cutting 20% of their staff. They just been fined $100 million by the SEC. They refused to deny giving users' money to Three Arrows Capital, which has also just collapsed in to insolvency: https://nitter.net/BlockFi/status/1537137936549957632

BlockFi will be the next to collapse, but it certainly won't be the last. Get your coins out of every centralized exchange and platform in existence and in to your own wallet now, before it is too late.