Coinbase is saying that if (when) they go bankrupt, you don't actually own the coins you got through them:
In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.
Coinbase said in its earnings report Tuesday that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet the exchange noted that in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.” Coinbase users would become “general unsecured creditors,” meaning they have no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.
That sounds like the sort of admission that (if there is any question at all of Coinbase's solvency) ought to trigger a bank run in a rational marketplace.
So... Big disclaimer: I'm not that familiar with this, but I do run a business, but not one that has faced bankruptcy.
I don't think this changes anything, or is even that unusual?
What I remember from bankruptcy rules is that there is an order in who gets what's left of the company:
1. The government gets the first slice of the pie, always. Any debt to them will be taken care of first.
2. Then you have secured creditors: These are things like mortgages, the creditor gets the asset that the loan was secured against: They get to repo the car, or get the office, or if they loaned you their Xerox machines, they get their machines back.
3. Then it's employee wages, but actual taxable wages, not golden parachutes (At least, I think that's how it is)
4. Then you get unsecured creditors, basically, anyone that loaned money to the company, but didn't secure it with a physical asset.
5. Then you get the stock owners, there's a whole order in these too
6. I guess if something is left, it would go to clients, but it will never get to here.
But basically, whenever Coinbase topples over, nobody will get anything, regardless on what rung on the ladder you are.
(Exception might be the secured creditors, as they might just walk up to the building and take their stuff)
BTW, I'm not in a financial business, so for us, unsecured creditors would be things like... an unsecured bank-loan, or more likely, a supplier who hasn't been paid yet but has already rendered services. I guess if your clients give you money as a business, they would fall into this category.
I don't listen to a lot of earnings calls, or rather I've never listened to a single earnings call, but I imagine that when the CEO starts a sentence with "oh, BTW, if we go bankrupt..." its probably gonna induce a bit of panic
Unless that's normal and ceos are always talking about their company going bankrupt! Like I said, I don't listen to those calls.
Coinbase is saying that if (when) they go bankrupt, you don't actually own the coins you got through them:
In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.
Coinbase said in its earnings report Tuesday that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet the exchange noted that in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.” Coinbase users would become “general unsecured creditors,” meaning they have no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.
That sounds like the sort of admission that (if there is any question at all of Coinbase's solvency) ought to trigger a bank run in a rational marketplace.
So... Big disclaimer: I'm not that familiar with this, but I do run a business, but not one that has faced bankruptcy.
I don't think this changes anything, or is even that unusual?
What I remember from bankruptcy rules is that there is an order in who gets what's left of the company:
1. The government gets the first slice of the pie, always. Any debt to them will be taken care of first.
2. Then you have secured creditors: These are things like mortgages, the creditor gets the asset that the loan was secured against: They get to repo the car, or get the office, or if they loaned you their Xerox machines, they get their machines back.
3. Then it's employee wages, but actual taxable wages, not golden parachutes (At least, I think that's how it is)
4. Then you get unsecured creditors, basically, anyone that loaned money to the company, but didn't secure it with a physical asset.
5. Then you get the stock owners, there's a whole order in these too
6. I guess if something is left, it would go to clients, but it will never get to here.
But basically, whenever Coinbase topples over, nobody will get anything, regardless on what rung on the ladder you are.
(Exception might be the secured creditors, as they might just walk up to the building and take their stuff)
BTW, I'm not in a financial business, so for us, unsecured creditors would be things like... an unsecured bank-loan, or more likely, a supplier who hasn't been paid yet but has already rendered services. I guess if your clients give you money as a business, they would fall into this category.
It’s not at all unusual or unique, except that for Americans at least we think of places that we “put money” as being safe, because those places are usually banks, and FDIC ensured up to the values that most mere mortals keep in them. I don’t ever worry if Chase has the cash to cover my account if they go bankrupt. Because I’ll get my money (up to the FDIC limit) no matter what.
Understanding that if you have real money…four, five figures or more…in Coinbase that it’s at real risk of becoming $0 any minute is a huge deal for people that may be thinking their Coinbase account in any way resembles a bank account. Because it doesn’t. At all.
I bought tickets to a music festival pre COVID and they’ve been radio silent since like mid 2021. No refunds, no nothing. I’m assuming the bankruptcy is coming and my $200 is gone forever, because yeah clients and customers come dead last when draining the corpse of value. No big deal, I expect that.
But I don’t have “college fund” levels of money, or more, in Kaaboo tickets. A lot of people *do* have substantial amounts in their Coinbase accounts.
Security and commodity brokerages are supposed to work differently. If, say, Robin Hood goes belly up, the first step of bankruptcy is selling its client account holdings to a different broker, with SIPC usually picking up the cash balances and covering the cost of anything like shorts in progress that now will never be completed and will leave a discrepancy between client holdings and broker holdings. Clients are not unsecured creditors, the contents of their portfolios are assets not owned by the broker and not used to pay down debts.
Coinbase is saying that if (when) they go bankrupt, you don't actually own the coins you got through them:
In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.
Coinbase said in its earnings report Tuesday that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet the exchange noted that in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.” Coinbase users would become “general unsecured creditors,” meaning they have no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.
That sounds like the sort of admission that (if there is any question at all of Coinbase's solvency) ought to trigger a bank run in a rational marketplace.
So... Big disclaimer: I'm not that familiar with this, but I do run a business, but not one that has faced bankruptcy.
I don't think this changes anything, or is even that unusual?
What I remember from bankruptcy rules is that there is an order in who gets what's left of the company:
1. The government gets the first slice of the pie, always. Any debt to them will be taken care of first.
2. Then you have secured creditors: These are things like mortgages, the creditor gets the asset that the loan was secured against: They get to repo the car, or get the office, or if they loaned you their Xerox machines, they get their machines back.
3. Then it's employee wages, but actual taxable wages, not golden parachutes (At least, I think that's how it is)
4. Then you get unsecured creditors, basically, anyone that loaned money to the company, but didn't secure it with a physical asset.
5. Then you get the stock owners, there's a whole order in these too
6. I guess if something is left, it would go to clients, but it will never get to here.
But basically, whenever Coinbase topples over, nobody will get anything, regardless on what rung on the ladder you are.
(Exception might be the secured creditors, as they might just walk up to the building and take their stuff)
BTW, I'm not in a financial business, so for us, unsecured creditors would be things like... an unsecured bank-loan, or more likely, a supplier who hasn't been paid yet but has already rendered services. I guess if your clients give you money as a business, they would fall into this category.
It’s not at all unusual or unique, except that for Americans at least we think of places that we “put money” as being safe, because those places are usually banks, and FDIC ensured up to the values that most mere mortals keep in them. I don’t ever worry if Chase has the cash to cover my account if they go bankrupt. Because I’ll get my money (up to the FDIC limit) no matter what.
Understanding that if you have real money…four, five figures or more…in Coinbase that it’s at real risk of becoming $0 any minute is a huge deal for people that may be thinking their Coinbase account in any way resembles a bank account. Because it doesn’t. At all.
I bought tickets to a music festival pre COVID and they’ve been radio silent since like mid 2021. No refunds, no nothing. I’m assuming the bankruptcy is coming and my $200 is gone forever, because yeah clients and customers come dead last when draining the corpse of value. No big deal, I expect that.
But I don’t have “college fund” levels of money, or more, in Kaaboo tickets. A lot of people *do* have substantial amounts in their Coinbase accounts.
Fair enough, but Coinbase, for all it's faults, never claims to be a bank that keeps money save for you.
But yeah, it does do a lot of "banking adjacent stuff" and Crypto is certainly being championed as a "store of value"
And they all make it soo easy to keep the money on the exchange, and not actually cash it out, so it's not like they're impartial in this.
Maybe this will make people realize that exchanges are bad places to keep money, but people hold Tether too, and that's completely unsecured as far as I can see, so I'm not that hopeful.
I wonder what it would take for Coinbase to become FDIC ensured. Not that they would want that, but knowing how many rules there are to running a bank, I do wonder how many heart-attacks an auditor & compliance officer would get if they did a check.
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
How does this always get dumber? How? It’s like some sort of fractal stupidity where it’s all equally dumb at every level and yet also manages to get worse over time.
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
I mean, in retrospect, it's kind of a silly question by me.
Of course they're scamming, I knew that. Why would they even bother with something like this when the whole thing is based on grift?
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because mumble mumble crypto means I don’t have to follow any of your rules man! I’m an aduuuuuuuuult!
Basically they are trying to claim that the assets are theirs, not yours. Dunno if the TOS/contract you sign when you get an account says something to the effect of “you give us money and get the right to trade an equal amount of money on the exchange. If you ask for money back, we’ll consider it”
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
It's the same thing it always is with crypto. We changed dollars to funbucks and now are going to ignore all regulations and laws. No no we're not a securities exchange, we're something else entirely despite acting exactly like one.
Of course our regulatory apparatus has just let them get away with it.
E: wow i am late
Aioua on
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
I believe Robin Hood is actually two different brokers, Robin Hood securities and Robin Hood crypto, which taken togther are the pubically traded stock company Robin Hood.
They gave me free crypto which I sold and got a different set of paperwork for when doing my taxes
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
Does the wallet Coinbase maintains on your behalf have any relevant regulatory similarities to what would happen to the contents of a safe deposit box?
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
Does the wallet Coinbase maintains on your behalf have any relevant regulatory similarities to what would happen to the contents of a safe deposit box?
Didn't the FBI just steal a bunch of people's safety deposit boxes in California because they thought the bank was doing crimes?
Man, I went to Luna's reddit because I thought I might find amusement in a cryptobro meltdown. I was wrong, it's not amusing, it's very sad. The titles of the three stickied threads at the top of the sub, and another thread:
For everyone panicking, here are some National helpline numbers.
My ex-colleague attempted suicide
For those considering suicide, here’s my story of attempted suicide.
I lost over 450k usd, I cannot pay the bank. I will lose my home soon. I'll become homeless. suicide is the only way out for me
How does this always get dumber? How? It’s like some sort of fractal stupidity where it’s all equally dumb at every level and yet also manages to get worse over time.
Gaaah!
That was my reaction upon reading the post/article about Terra and Luna too. Yet another multibillion dollar scheme that I've never heard of but which somehow has the potential to wipe out tens of billions beyond what it contains in itself.
Interesting. Thanks Hevach. I’ll pause for a moment and admit I know fuck all about this. Though it still feels like as good a day as any to clear out my Coinbase account.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
Does the wallet Coinbase maintains on your behalf have any relevant regulatory similarities to what would happen to the contents of a safe deposit box?
Didn't the FBI just steal a bunch of people's safety deposit boxes in California because they thought the bank was doing crimes?
Or did that bullshit get overturned eventually?
They ended up losing that one, but it took a while. It's still in appeals but the judge and the first level of appeals have both said they can't use anything in the boxes as evidence and can't take any of it as civil forfeiture.
Edit: Also, it wasn't the bank criming, it was an alleged crime ring using safe deposit boxes as dead drops to transfer money and goods between people. The FBI fudged the warrant application to get everyone's boxes in the whole bank and ended up pulling in a ton of extra opposing lawyers and screwed themselves. Best part: every suspected dead drop box was empty anyway.
Safe deposit boxes are different from bank accounts, though - they aren't covered by the FDIC and the bank can enter it without your permission as covered in either the contract you sign with them or under any applicable law (such as unclaimed property law).
Coinbase is saying that if (when) they go bankrupt, you don't actually own the coins you got through them:
In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.
Coinbase said in its earnings report Tuesday that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet the exchange noted that in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.” Coinbase users would become “general unsecured creditors,” meaning they have no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.
That sounds like the sort of admission that (if there is any question at all of Coinbase's solvency) ought to trigger a bank run in a rational marketplace.
So... Big disclaimer: I'm not that familiar with this, but I do run a business, but not one that has faced bankruptcy.
I don't think this changes anything, or is even that unusual?
What I remember from bankruptcy rules is that there is an order in who gets what's left of the company:
1. The government gets the first slice of the pie, always. Any debt to them will be taken care of first.
2. Then you have secured creditors: These are things like mortgages, the creditor gets the asset that the loan was secured against: They get to repo the car, or get the office, or if they loaned you their Xerox machines, they get their machines back.
3. Then it's employee wages, but actual taxable wages, not golden parachutes (At least, I think that's how it is)
4. Then you get unsecured creditors, basically, anyone that loaned money to the company, but didn't secure it with a physical asset.
5. Then you get the stock owners, there's a whole order in these too
6. I guess if something is left, it would go to clients, but it will never get to here.
But basically, whenever Coinbase topples over, nobody will get anything, regardless on what rung on the ladder you are.
(Exception might be the secured creditors, as they might just walk up to the building and take their stuff)
BTW, I'm not in a financial business, so for us, unsecured creditors would be things like... an unsecured bank-loan, or more likely, a supplier who hasn't been paid yet but has already rendered services. I guess if your clients give you money as a business, they would fall into this category.
Business creditors (secured or no) are second behind the govt and equal to wages. The only secured creditors that go before have actual collateral being currently held by themselves
Man, I went to Luna's reddit because I thought I might find amusement in a cryptobro meltdown. I was wrong, it's not amusing, it's very sad. The titles of the three stickied threads at the top of the sub, and another thread:
For everyone panicking, here are some National helpline numbers.
My ex-colleague attempted suicide
For those considering suicide, here’s my story of attempted suicide.
I lost over 450k usd, I cannot pay the bank. I will lose my home soon. I'll become homeless. suicide is the only way out for me
How does this always get dumber? How? It’s like some sort of fractal stupidity where it’s all equally dumb at every level and yet also manages to get worse over time.
Gaaah!
That was my reaction upon reading the post/article about Terra and Luna too. Yet another multibillion dollar scheme that I've never heard of but which somehow has the potential to wipe out tens of billions beyond what it contains in itself.
While not as desperate, there's a lot of bitter posts across all crypto social media. Pretty much every non-pegged coin is down 25-40%, with Terra being the biggest top50 hit -98% in last 7 days.
Doge Coin $200
ShibaInu coin $150
Bored Kennel Yatch Club $800
Luna coin $3,600
UST terra $150
someone who is good at the economy please help me budget this. my family is dying
That Luna/Terra setup is utterly bizarre and should be illegal, if it isn't already. I'm not even entirely sure I understand how the whole thing was supposed to work, other than the scam part that seemed to work pretty well.
Man, I went to Luna's reddit because I thought I might find amusement in a cryptobro meltdown. I was wrong, it's not amusing, it's very sad. The titles of the three stickied threads at the top of the sub, and another thread:
For everyone panicking, here are some National helpline numbers.
My ex-colleague attempted suicide
For those considering suicide, here’s my story of attempted suicide.
I lost over 450k usd, I cannot pay the bank. I will lose my home soon. I'll become homeless. suicide is the only way out for me
How does this always get dumber? How? It’s like some sort of fractal stupidity where it’s all equally dumb at every level and yet also manages to get worse over time.
Gaaah!
That was my reaction upon reading the post/article about Terra and Luna too. Yet another multibillion dollar scheme that I've never heard of but which somehow has the potential to wipe out tens of billions beyond what it contains in itself.
The crypto community was full of so much smug dickery that it’s hard to resist the point and laugh response, but yeah a lot of people are hitting bottom very, very hard. It’s always been gambling, they’ve always been gambling addicted, they were just winning. Until they weren’t. So the fall will be steep, and disastrous, and yeah no small number will be unable to handle it.
That Luna/Terra setup is utterly bizarre and should be illegal, if it isn't already. I'm not even entirely sure I understand how the whole thing was supposed to work, other than the scam part that seemed to work pretty well.
I don't even get what people are mad about. Luna Coin is currently worth $1.10
Thats more than a dollar! The stable coin is working better than expected!
Terra was pegged to be $1, but with incentives for people to do arbitragy things to maintain supply/demand equilibrium there
Basically every “algorithmically pegged” stable coin has had a period of depegging and only 1 has recovered to “about” $1
Terra wobbled a little bit and then whoops Anchor dropping rates and LFG selling all its Bitcoin basically told everyone it was toast and started a run, and there was nobody left to do the arbitragy stuff to peg it again
Selling all their BTC puts downward pressure there, a top-20 coin crashing shakes confidence, and oh yeah there’s a crypto derivatives market so UST and LUNA cratering is wiping out other coins now too
It’s an opaque scenario to people not immersed in crypto (I’m sure everything I typed above is some flavor of incorrect) but it really seems to be a perfect storm example of why this market can’t continue unregulated…
It's weird that Luna Coin is a "Top 50" coin, which means that there are, like, 45 other coins in the top 50 that no one has ever heard of?
Like, I've read all these crypto threads since back in the ButtCoin era, and I don't think I've seen it one single time before this news of it crashing and taking billions of crypto dollars with it?
Edit: fuck, remember when we all learned about Wolf Safe Poor People Coin cause someone's coworker became a millionaire in it, and now coinbase shows its value with an e-11 power sign next to it. But I've heard of it! Unlike Luna coin.
It's weird that Luna Coin is a "Top 50" coin, which means that there are, like, 45 other coins in the top 50 that no one has ever heard of?
Like, I've read all these crypto threads since back in the ButtCoin era, and I don't think I've seen it one single time before this news of it crashing and taking billions of crypto dollars with it?
I think it even was in the top 10 for a moment.
And yeah, trends do go fast, and Luna & Terra had a meteoric rise and fall.
I think it also was the most used in the DeFi sector. Decentralized finance;
Basically, if you're tired of the MAN preventing you from doing things like naked shorts or trading on margin with unlimited liability, then DeFi might be for you! It's a completely unregulated market where "pumping" of coins is not illegal, but expected and where you can be wiped out in an instant if someone craters the price with market manipulation to "trigger all calls" and other things we don't allow because it pretty much ruins everyone who isn't a scammer.
If you mainly got your news from here, then you missed most of this because we're into making fun of monkeys.
I mean... look at them monkeys... they think they're art!
Posts
So... Big disclaimer: I'm not that familiar with this, but I do run a business, but not one that has faced bankruptcy.
I don't think this changes anything, or is even that unusual?
What I remember from bankruptcy rules is that there is an order in who gets what's left of the company:
1. The government gets the first slice of the pie, always. Any debt to them will be taken care of first.
2. Then you have secured creditors: These are things like mortgages, the creditor gets the asset that the loan was secured against: They get to repo the car, or get the office, or if they loaned you their Xerox machines, they get their machines back.
3. Then it's employee wages, but actual taxable wages, not golden parachutes (At least, I think that's how it is)
4. Then you get unsecured creditors, basically, anyone that loaned money to the company, but didn't secure it with a physical asset.
5. Then you get the stock owners, there's a whole order in these too
6. I guess if something is left, it would go to clients, but it will never get to here.
But basically, whenever Coinbase topples over, nobody will get anything, regardless on what rung on the ladder you are.
(Exception might be the secured creditors, as they might just walk up to the building and take their stuff)
BTW, I'm not in a financial business, so for us, unsecured creditors would be things like... an unsecured bank-loan, or more likely, a supplier who hasn't been paid yet but has already rendered services. I guess if your clients give you money as a business, they would fall into this category.
Unless that's normal and ceos are always talking about their company going bankrupt! Like I said, I don't listen to those calls.
It’s not at all unusual or unique, except that for Americans at least we think of places that we “put money” as being safe, because those places are usually banks, and FDIC ensured up to the values that most mere mortals keep in them. I don’t ever worry if Chase has the cash to cover my account if they go bankrupt. Because I’ll get my money (up to the FDIC limit) no matter what.
Understanding that if you have real money…four, five figures or more…in Coinbase that it’s at real risk of becoming $0 any minute is a huge deal for people that may be thinking their Coinbase account in any way resembles a bank account. Because it doesn’t. At all.
I bought tickets to a music festival pre COVID and they’ve been radio silent since like mid 2021. No refunds, no nothing. I’m assuming the bankruptcy is coming and my $200 is gone forever, because yeah clients and customers come dead last when draining the corpse of value. No big deal, I expect that.
But I don’t have “college fund” levels of money, or more, in Kaaboo tickets. A lot of people *do* have substantial amounts in their Coinbase accounts.
Fair enough, but Coinbase, for all it's faults, never claims to be a bank that keeps money save for you.
But yeah, it does do a lot of "banking adjacent stuff" and Crypto is certainly being championed as a "store of value"
And they all make it soo easy to keep the money on the exchange, and not actually cash it out, so it's not like they're impartial in this.
Maybe this will make people realize that exchanges are bad places to keep money, but people hold Tether too, and that's completely unsecured as far as I can see, so I'm not that hopeful.
I wonder what it would take for Coinbase to become FDIC ensured. Not that they would want that, but knowing how many rules there are to running a bank, I do wonder how many heart-attacks an auditor & compliance officer would get if they did a check.
Same, thanks for the explanation, but then it leaves the question: Why does coinbase not follow your outlined protocol? Because they ARE claiming that clients are unsecured creditors? Meaning that your outlined safety nets will never engage?
Gaaah!
Because crypto skirts the law. They don't need to carry SIPC insurance because they don't trade anything covered by the mandate.
Likewise, if a mixed broker like Robin Hood goes under, it's pretty clear what happens with any cash balance and stocks in your portfolio, but it's much less clear about crypto. SIPC probably won't cover it and they might be able to get away with yoinking it all from you.
I mean, in retrospect, it's kind of a silly question by me.
Of course they're scamming, I knew that. Why would they even bother with something like this when the whole thing is based on grift?
Because mumble mumble crypto means I don’t have to follow any of your rules man! I’m an aduuuuuuuuult!
Basically they are trying to claim that the assets are theirs, not yours. Dunno if the TOS/contract you sign when you get an account says something to the effect of “you give us money and get the right to trade an equal amount of money on the exchange. If you ask for money back, we’ll consider it”
It's the same thing it always is with crypto. We changed dollars to funbucks and now are going to ignore all regulations and laws. No no we're not a securities exchange, we're something else entirely despite acting exactly like one.
Of course our regulatory apparatus has just let them get away with it.
E: wow i am late
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
I believe Robin Hood is actually two different brokers, Robin Hood securities and Robin Hood crypto, which taken togther are the pubically traded stock company Robin Hood.
They gave me free crypto which I sold and got a different set of paperwork for when doing my taxes
Does the wallet Coinbase maintains on your behalf have any relevant regulatory similarities to what would happen to the contents of a safe deposit box?
Didn't the FBI just steal a bunch of people's safety deposit boxes in California because they thought the bank was doing crimes?
Or did that bullshit get overturned eventually?
Damn...
That was my reaction upon reading the post/article about Terra and Luna too. Yet another multibillion dollar scheme that I've never heard of but which somehow has the potential to wipe out tens of billions beyond what it contains in itself.
They ended up losing that one, but it took a while. It's still in appeals but the judge and the first level of appeals have both said they can't use anything in the boxes as evidence and can't take any of it as civil forfeiture.
Edit: Also, it wasn't the bank criming, it was an alleged crime ring using safe deposit boxes as dead drops to transfer money and goods between people. The FBI fudged the warrant application to get everyone's boxes in the whole bank and ended up pulling in a ton of extra opposing lawyers and screwed themselves. Best part: every suspected dead drop box was empty anyway.
Safe deposit boxes are different from bank accounts, though - they aren't covered by the FDIC and the bank can enter it without your permission as covered in either the contract you sign with them or under any applicable law (such as unclaimed property law).
Business creditors (secured or no) are second behind the govt and equal to wages. The only secured creditors that go before have actual collateral being currently held by themselves
ShibaInu coin $150
Bored Kennel Yatch Club $800
Luna coin $3,600
UST terra $150
someone who is good at the economy please help me budget this. my family is dying
The crypto community was full of so much smug dickery that it’s hard to resist the point and laugh response, but yeah a lot of people are hitting bottom very, very hard. It’s always been gambling, they’ve always been gambling addicted, they were just winning. Until they weren’t. So the fall will be steep, and disastrous, and yeah no small number will be unable to handle it.
I don't even get what people are mad about. Luna Coin is currently worth $1.10
Thats more than a dollar! The stable coin is working better than expected!
Oh.
Oh no.
Nononononono
Basically every “algorithmically pegged” stable coin has had a period of depegging and only 1 has recovered to “about” $1
Terra wobbled a little bit and then whoops Anchor dropping rates and LFG selling all its Bitcoin basically told everyone it was toast and started a run, and there was nobody left to do the arbitragy stuff to peg it again
Selling all their BTC puts downward pressure there, a top-20 coin crashing shakes confidence, and oh yeah there’s a crypto derivatives market so UST and LUNA cratering is wiping out other coins now too
It’s an opaque scenario to people not immersed in crypto (I’m sure everything I typed above is some flavor of incorrect) but it really seems to be a perfect storm example of why this market can’t continue unregulated…
Glad I snuck that one in on page 100 so we can all forget it
Like, I've read all these crypto threads since back in the ButtCoin era, and I don't think I've seen it one single time before this news of it crashing and taking billions of crypto dollars with it?
Edit: fuck, remember when we all learned about Wolf Safe Poor People Coin cause someone's coworker became a millionaire in it, and now coinbase shows its value with an e-11 power sign next to it. But I've heard of it! Unlike Luna coin.
New thread title.
I think it even was in the top 10 for a moment.
And yeah, trends do go fast, and Luna & Terra had a meteoric rise and fall.
I think it also was the most used in the DeFi sector. Decentralized finance;
Basically, if you're tired of the MAN preventing you from doing things like naked shorts or trading on margin with unlimited liability, then DeFi might be for you! It's a completely unregulated market where "pumping" of coins is not illegal, but expected and where you can be wiped out in an instant if someone craters the price with market manipulation to "trigger all calls" and other things we don't allow because it pretty much ruins everyone who isn't a scammer.
If you mainly got your news from here, then you missed most of this because we're into making fun of monkeys.
I mean... look at them monkeys... they think they're art!
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