Topic: Why are so many Derivative Exchanges are filling for Bankcruptcy ? - page 2. (Read 523 times)

This is an exchange in Southeast Asia, with headquarters in Singapore and Zipmex with branches in Australia and Indonesia.
Zipmex was one of the exchanges involved in the collapse of Terra and the investment fund Three Arrow Capital, so it is not surprising that they declared bankruptcy.
Luna's death is the root cause of the recent crashes, the consequences are really too big for the market, are there any other companies or exchanges that will go bankrupt because of luna?

The trading Fee is one of the many factors, there are ways from which exchanges make money , one is listing any coin or token for which they may ask from 20,000 usd to almost anything , 2ndly the people's funds which exchanges hold they park the funds somewhere else just like banks, 3rd and most important is most exchanges have raised funds from VC's from millions to billions dollars depending on their volume, so according to my opinion is which i said earlier govts should work on bankruptcy laws just like in shares and stocks.. so it will be a nightmare for a company to actually file for it, looking at situations it seems like its a cup cake for an exchange to file for bankruptcy...which is absolutely not right for crypto community as a whole...

Funny enough, the Celcius ceo once told the media that because of people controlling their own keys end up in loss of funds, they should have learned to keep their funds in the hands of Celcius. 
I think people didn't buy his shit. So he ended up collapsed.

It means there just isn't enough money flowing around and enough people trading. Come on print more bills Feds! Lower the interest rates.

I honestly believe that the liquidity situation is more than enough for it. I am not saying that it is the only reason but it does make sense for it to be a good reason. When you are running an exchange, that means you are making money based on trades, the more volume there is, the more trading fee you are getting.

If there are not enough trading fees coming at your way, then it won't be available for you to keep it going since you won't be able to keep the lights on. On the other hand, if we are talking about something that is generally not a great, then having low security could put you at risk as well. Getting hacked and losing the funds could make you bankrupt in the first place.

I don't hear this exchange so I conclude that they are not famous one so maybe the reason why they file bankruptcy its because they didn't reach more crypto traders globally. So if they are not earning reliable profits to sustain their business then this will happen to them. Maybe those filling a bankruptcy status is to lessen up the damage they can get to their costumers and other entities who they owe money.

There are so many ponzi schemes which such exchanges are offering and people who just want to earn a bit by investing are falling victim , think of million of people who have actually invested in all these exchanges, and imagine how they would be able to recover from such losses, as most of them would have put their hard earned money ... This is certainly alarming for crypto community as a whole, probably there is no instant solution to it , but more education should be provided to people so they understand the repercussions of investing in such schemes where they promise to make you you rich without putting much effort or money... Derivative exchanges are finding new ways to make people fool without a vision and thereby its hard to digest for anyone, that without banks or law making agencies being involved this kind of things does happen,...

There could be n number of reasons for a company to go bankrupt. Derivative exchanges are even more prone to such things because they make money out of thin air without holding the actual asset. They allow their traders to bet on price differences that are going to occur in future. So it is a high risk business.

There are other kind of crypto business goong bankrupt as well. I have seen Celcius has also filed for bankruptcy. They gambled for bullish bitcoin but failed to protect the business during a bearish time. So poor fund management is another reason for such bankruptcy cases.

I was skeptical about the documentary that was talked about on the forum, but after watching it some things became clearer to me, although no one can say for sure that Cotten is dead because the only ones who allegedly saw the body are his wife and a doctor in India who pronounced him dead. Even with all the evidence about how he ran his exchange office, there is a justified suspicion that he is alive somewhere and enjoying the few million dollars that he managed to hide from the authorities and the public.


As stated in several places in the article, it seems that this company ran into problems long before the final collapse, but it was successfully hidden. I remember some discussions when things were still in their infancy and I never liked the idea of cryptocurrencies being used in such a way, especially when the whole business model was in some kind of gray zone. In an ideal world, that CEO and everyone who participated in everything would be convicted and sent to prison, and their assets would be seized and sold to settle their clients.

---

It's a real rarity today to read something that isn't mere sensationalism and clickbait, but there are obviously still some journalists who know their job.


Most of them say what people want to hear, but they are actually doing something completely different in the background, and that is nothing that should surprise us. That's why I'm always careful about people who try to position themselves as some kind of crypto leaders, and at the same time use Bitcoin as a story through which they sell their product (token). Every day I wonder if people will finally understand that they shouldn't be so naive and believe that someone is pro-Bitcoin just because he invested in Bitcoin, or has a company that trades with Bitcoin.


On the link I posted above in the post, you can see the report of the Canadian authorities, which summarizes what they concluded from their investigation. However, it seems quite unreal to me that a man managed to gamble away more than $160 million through various investments, as if he was a total anti-talent for such things, and everything that was revealed in the documentary clearly shows that he was a very insidious scammer from his earliest days.

Excellent article, and it shows the situation perfectly right now, all these saviors are just using the community and its funds to get rich.

Laser eyes, fuck the banks, fuck the government, they keep shouting these as they know the userbase is susceptible to this message, and if somebody dares contradicts them there is the mass destruction weapon of the cultist, the FUD!!!!! Dare to say anything about an exchange, a token and you're going to labeled as a FUD-ist, a horde of 5$ investors who think their pennies will turn into millions by hitting like and kissing the ass of some cryptopornstar will start crying FUD, will swear everything is fine, that moon is scheduled tomorrow.

And these pieces of * like Mashinsky know that you just have to throw a few useless tokens at them and you have an army of online supporters ready to ridicule any attempt at showing the truth.

Just as the other moron tattooed a useless token on his arm, I wonder what story is behind that shirt, I have a feeling right now that the majority or at least a large chunk of the money he made selling his tokens is sitting right now in a bank, not in a Defi solution that would magically replace banks.


One thing has surfaced since then, that Quadridrga has financed itself on customers' money, and lost a lot of them during the time of actually operating, so the claimed 130 million have never been actually there, much of it being spent in the year before Cotten's supposed or real death. They've managed to get ahold of real estate investments of 20 million, so it's highly likely he sold or used his customer's funds well beyond that date to purchase stuff for himself and then run the business as a Ponzi.

So, basically, the exchange was already bankrupt with almost nothing left some 8 months prior to his again...death?

Maybe one of the reasons for the closure of an exchange in the cryptocurrency business is the lack of proper supervision in this type of business. Second, if an owner of an exchange only wants to accumulate a large amount of funds, it will actually cause the company to collapse. And they may not be able to get their main goal to stay in this industry, so what happens is that the event is always offset. Which causes their client traders to withdraw from using their platform.

According to my opinion , Why is it that always at time of dip we see exchanges being shutting down and running away with people's money, These exchanges have found loop holes of bankruptcy where the company looses everything and owners become more rich ,  there is a chronology, which is followed by every exchange , that every exchange has their own token and their main purpose is to roll out their tokens to people in lieu of their funds, and peoples funds are been used somewhere else to make profits .. Somehow people also fall for their bait in terms of ROI . which is beyond imagination , take an example of Voyager, which such a pomp and show they promised returns upto 9% to lure people but at the end of the day people do not realize how can such calculations be possible at the time if market goes down...

I think it's because they are tied to their own program return promise, "Staking". Perhaps what the user sees are programs that should be described in general articles about it, such as consensus contributions, network security, etc. But, who knew they were doing something else behind the scenes?  In fact lending platforms like Celsius can offer more returns for liquidity providers than normal staking rewards.

Haven't heard that name in a few years. Did we every get to the bottom of it? Last I looked in to it (which, as mentioned, was several years ago) I was thoroughly unconvinced by the story that he had died. It looked far more likely that he had scammed all his customers, fled the country, faked his death, and was living the high life somewhere under a new identity. It seemed all this was planned in advance, so by the time the exchange collapsed and people started looking for him, he was already long gone.

You can read the report here: https://www.arkhamintelligence.com/reports/celsius-report

It seemed he spread it out over time long before they declared bankruptcy, so little to none of it will be able to be examined or clawed back as part of the bankruptcy filings, although I'm sure he also took the necessary to steps to ensure his own holdings were entirely separate to those of Celsius for this exact reason. Doesn't matter to him though, it's only the average Joe who has lost any money, and we know that centralized exchanges don't care about those people at all.

The same thing that Gerald Cotten did with his clients' money in the case of his crypto exchange Quadriga, if the Canadian authorities' investigation is to be believed. It just shows how much people have misunderstood the basic concept of Bitcoin and treat it in the same way as fiat, and when situations like this happen, they blame everyone else but themselves.

---

I haven't followed what's been happening with that company lately and this is new information to me, so I'm wondering if there is any criminal or misdemeanor liability here or if the CEO, as I said before, is using loopholes in the law to get out of the whole thing much richer than before. Generally speaking, events like this give a bad picture when it comes to Bitcoin, although of course it is not Bitcoin's fault that such companies exist or that people are naive to trust them.

I read an interesting article about him today, and what he promoted for years is obviously no longer valid - because the banks that he often mentioned in a negative context are now mentioned as potential saviors.

I don't think Coinbase or Binance have learned any lessons either. Coinbase have obviously been through bear markets before, but still seemed to be caught so off guard by this one (that wasn't/isn't even that bad) that they had to fire 20% of their workforce. Imagine if the price dropped to $3k again like it did in 2018. I have a suspicion that Coinbase would be breaking out some fairly drastic measures to stay afloat if that were to happen.

Case in point: As Celsius declares bankruptcy and all its users are likely to lose everything, reports say that the CEO Mashinsky sold around $45 million worth of his centralized CEL token he very kindly gave to himself. This is where customers' money has gone - straight in to his pocket.

The simple explanation is that they gambled with other people's money and lost.  It's so easy for operations to massively profit when the price is rising, but things get more complicated once that gravy train stops.  It's like musical chairs and these are the exchanges that couldn't find a seat.  That's why the test of time is so important to Bitcoin projects.  If you're thinking about depositing money somewhere or investing in something, make sure it's survived a downcycle.  Anything in crypto that's been operating for less than 4 years should be considered a test.  Without seeing how it performs in the downturns, you really can't have an idea of how healthy a crypto organization is.

It's funny that I have been trading derivatives for a while now and this is the first time I am hearing about zipmex. Looking at the name, it's one of those exchange you feel was inspired by BitMex to an extent that they had to even borrow part of the name. 
It doesn't give any confidence to use it, does it?

I read up some information from Reuters, and it seems the recent Celsius and Babel Finance turmoil affected them too

Exchange has an operational cost that includes the salary of there worker and other fixed cost. Since there main source of income is trading fees, They are killed by it once they don't have enough profit to sustain this fixed expenses. And also they owns part of the liquidity of the exchange tokens, So they are hit hard on bear market because there assets stock on the tokens liquidity is dumping its value whic makes them bankrupt during bear market.

Look back in time to the 2013-15 altcoin boom and bust. Many exchanges did not survive that.
Then look at the 2017 BTC boom and the 2018 fall. A bunch of exchanges failed then too.
Same thing going on now.
And guess what. Sooner or later there will be a massive BTC rally and a 'new shiny thing in crypto' and a bunch of new exchanges will pop up. And then when the cycle turns (hint it will that's why it's called a cycle) they will implode too.

-Dave