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Author Topic: icbit.se refusing to release funds  (Read 3463 times)
Fireball
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April 12, 2013, 02:11:04 PM
 #21

The only moral of the story:
Don't try to escape with other people's money. Futures contract is an obligation with a possibly limited profit but unlimited risk. Margin requirement is a function of volatility and possible risks, and they were and are changing every day, sometimes a few times per day.

No, you're refusing to understand because it suits you, you are not an unbiased observer apparently.

The only thing which suits me is carrying payouts according to the contracts. If someone tries to run away with money he (obviously!) owes to the counterparty, that's kind of theft we are preventing.

And this is the case those persons wanted to withdraw money when the price was determined to fall with subsequent clearings, thus putting all debt they can't cover to the exchange.

zebedee: if you don't understand the problem, please try to understand it first and only then reply. Or are you also affected and wanted to run away with money, and hence defending such behavior?

And what about the guy with no coins on the exchange? You treat him differently. That is unfair and not impartial, and hence unjustifiable.

I have no skin in this game, I'm just pointing out the obvious. It's concerning that you don't see it.

Not differently, same way. Maintenance margin is not personal per account, it's global per instrument, so everyone is treated fair.
In fact, this whole thing is about being fair to traders.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
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J_Coin
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April 12, 2013, 04:38:50 PM
 #22

So how do you pursue traders who have defaulted, but keep their coins in an external wallet?
Fireball
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April 12, 2013, 04:52:52 PM
 #23

So how do you pursue traders who have defaulted, but keep their coins in an external wallet?

The margin requirements mechanism prevents them from withdrawing those coins to an external wallet.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
Follow us in Twitter: https://twitter.com/orderbooknet
zebedee
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April 12, 2013, 11:06:53 PM
 #24

So how do you pursue traders who have defaulted, but keep their coins in an external wallet?

The margin requirements mechanism prevents them from withdrawing those coins to an external wallet.

You're ignoring the point (deliberately?) again. Two guys buy 500 contracts, same price. One has nothing left after initial margin. One still has 10 coins.


Market dumps, suppose new variation margin is 10 coins. Ten minutes before the next clearing the guy with 10 coins wants to withdraw them. Your current policy is to deny him. But the other guy with nothing on the exchange is not being penalised. This is not impartial and it is unfair and asymmetric.


You're breaking your contract. Clearly as you don't take 100 percent margin, the contract is implicitly that putting up future variation margin is optional - if you refuse you're at risk of forced closure. That's fine as it's mutually understood. The guy with 10 coins is exercising his right to not put up more and be force closed.

However, simply because he has coins you can seize, you're stealing them and denying him equal treatment with others with identical contractual obligations who haven't left coins lying around for you to grab uncontractually.

That is simply not right. Can you genuinely not see that?
Fireball
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April 12, 2013, 11:13:42 PM
 #25

But the other guy with nothing on the exchange is not being penalised. This is not impartial and it is unfair and asymmetric.

He is, his margin call will obviously come earlier.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
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zebedee
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April 12, 2013, 11:17:15 PM
 #26

But the other guy with nothing on the exchange is not being penalised. This is not impartial and it is unfair and asymmetric.

He is, his margin call will obviously come earlier.

OK that's slightly more promising. Where are these rules and procedures laid out? It doesn't accord with my experience in March.
J_Coin
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April 13, 2013, 05:34:30 AM
 #27

@Fireball at this point I think you are smart enough to realize you were wrong and are deliberately trying to mislead.  The point of the matter is that you refused to honor my withdrawal request and then changed margin requirements after the fact to specifically target my account and give your actions the veneer of legitimacy.

Even today when I asked you if you would consider writing that confiscation of funds was possible you replied by 'No, only margin.'  Going forward do you intend to honor withdrawals made BEFORE you change margin requirements?  If not that is not *just margin*  you may also want to let people know how much you feel you are entitled to of their non margin funds.

You are even changing rules based on this.  Why don't you just own up to a bad decision?  I have no intention of pursuing this further, but on principle I find what you did and your continued sophistry abhorrent.

yury
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April 13, 2013, 06:35:21 AM
 #28

I think there is a failure to communicate here. The icbit administrator sees the exchange as one thing, while most of the traders see it as something else.
 
The admin believes that people are accountable for their promises. If they buy on margin, they are promising to repay the debt in full. For example, suppose I buy a contract. Rather than pay the entire cost, I pay 10%. Who is paying for the rest of the contract? Well, traditionally it is a lending bank. However, there is no bank here, so icbit gives you a "loan" and sets a margin. If your investment tanks, the entire value of the contract must be payed out. If I put in only 10%, where does the rest come from? It has to come from icbit, however icbit has no intention of losing money because of my poor investment. So, icbit says that I am responsible for the remainder. At this point, icbit and many traders do not see eye to eye.
 
Traditionally, when a lending bank offers you a margin, if your investment falls below the margin, you can add money to keep your position open, or the bank sells you futures. If the trader chooses to let his investment go, then he loses no more than what he put in (say 10%). I believe most traders feel this is how icbit should operate. Unfortunately, if this happens someone needs to pay the counter party, and it is not going to be icbit.
 
The current infrastructure on icbit is absolutely not compatible with icbit's philosophy. This is the half of the problem. The icbit platform reserves an initial margin. The implication being that this is the most you can lose in one trading session. Unfortunately, this is simply not true. The administrator made it clear in chat and email that the idea is that each trader is responsible in full, even though the system reserves only a small amount. This leads to the second half of the problem. There are no written guidelines that state this.
 
I was recently bitten by this bug. I assumed that I was responsible for only the initial margin. I tried to move funds elsewhere. My withdrawal was suspended and then rejected. I wrote the administrator about it.
 
Quote
I am not sure if you remember, I spoke with you on chat last night. I requested a withdrawal of 3 BTC to my MtGox account, and the transaction was pending. I had enough funds in my account at the time. The margin increased after my withdrawal. I asked you about it. I believe you said it would go through the next day when MtGox started working again. It seems it did not. Can you please advise? Thank you.

I got a very nice response.
 
Quote
I'm really sorry, but I see that your account is empty now after it was margin called. If you wanted to leave some BTC on your account, you should have told me to sell off your positions earlier, and not just withdrawing money.
 
However it's a bit tricky, because as you say you made the withdraw request before teh margin requirements increase. However, it was after the market collapsed, so it was already obvious that you were trying to salvage as much funds as possible.
 
I am up to settle this, but I need some reasons. If I decide to settle this, I will have to pay this 3 BTC from my pocket, but I need some reasons why I should do so. The reason that first you bought as much contracts as possible, then had enough of time to sell them, didn't sell, and then tried to withdraw money when it was hard to sell, is a bad excuse.

At this point, it should be clear what is happening. The administrator believes I owe my counter parties. I was under the impression that all I owed was the initial margin, and the rest of my funds were mine to do what I pleased with.
 
Quote
Thank you for getting back to me. I did not buy as many contracts as possible. I had about half the contracts I could afford. I was trying to hedge my bets. I was expecting the market to keep crashing. I believe it was around 150-180 at the point. I moved about half of my funds to MtGox (at least, that was the idea) and I was going to sell those for USD to buy at a lower price. I left the other half and maintained my long position in case the dip was short lived.

The admin's position should be clear, but his failure was in not documenting policy. I pointed this out.
 
Quote
May I suggest making the policy clear in the future. I feel like I cannot make any sensible trades. Any generally safe action I take backfires when the policy changes. This is not the first time this is happening. I have lost over 5 BTC in all on icbit due to last minute rule changes. I understand that you need to react to ever changing market conditions. However, an imperfect policy that everyone knows about is infinitely better than a constantly changing set of rules.
 
If you wish to hold funds that have been requested for withdrawal, this is highly unusual, but acceptable as long as everyone knows. If you wish to change margins at random times of the day, this too is fine, as long as everybody knows. What is not acceptable is a trader coming back from lunch and seeing that all of his money is gone because there were 2 unannounced clearings.

And he agrees.
 
Quote
I fully agree with your concerns. We are going to write up a general "terms" page, discuss it with community, and then ask our users to accept it.

So, in the end, I was partially compensated for my loss from icbit's personal wallet. This clearly shows he is trying to take steps in the right direction.
 
I would argue that the obvious interpretation of the initial margin is the maximum amount you are liable for. And when withdrawing funds, those funds are automatically safe. These are not the only interpretations, but I would think most people would agree with them. The admin clearly does not. This is fine, but he must publish a clear policy before I use the exchange again.
zebedee
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April 14, 2013, 10:12:24 AM
 #29

But the other guy with nothing on the exchange is not being penalised. This is not impartial and it is unfair and asymmetric.

He is, his margin call will obviously come earlier.

A little further thought shows this is impossible unless you clear continuously and require immediate settlement of margin calls.


Neither is true.  Even then your claimed strategy fails for jumps in the price.

So I stick to my original position : you treat people differently depending upon whether they have coins you can grab.  People who might not want to further support losing positions should not leave coins on your exchange and instead should just let you close them out.

I think this is wrong, and you should just admit it and change your policy to equal treatment - i.e. people can withdraw all unmargined coins regardless of mark to market PNL until they become margined at next clearing.  And your terms should state clearly that winning positions are not guaranteed their full mark to market PNL in the case a counterparty doesn't put up coins. That is fair, sensible, and should be acceptable to anyone who understands futures trading.

I don't find your current approach honest or genuine.
akwfleaspirit
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June 30, 2013, 04:17:50 PM
 #30

Something is definitely not right with icbit.
https://bitcointalk.org/index.php?topic=246845.0
Lethn
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July 01, 2013, 08:21:37 AM
 #31

This is precisely why I hate the idea of trading with margin.
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