Recent events should make you withdraw all your coins to your own wallet: Part 2

[o_e_l_e_o]

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

[1714852090]

1714852090

[1714852090]

1714852090

[stompix]

The founders of 3AC are on the run and cannot be found to be served court summonings

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.

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)

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.

Still no news from Celsius about customers ever getting back their money

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

[o_e_l_e_o]

And speaking of millions in a 10 billion case, how much money did 3AC actually had in the first place?

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

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.

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.

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

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.

[stompix]

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

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.

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 hope you are telling them to get their coins out and in to their wallets ASAP. Nexo and BlockFi users have been handed a lifeline here by Celsius and Voyager collapsing first. They would be insane to ignore it. Best case scenario it's all fine and they lose out on a few months of interest. Worst case scenario they lose everything.

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.

[o_e_l_e_o]

The saddest thing about this whole affair is this quote from Mashinsky, the CEO:

I am confident that when we look back at the history of Celsius, we will see this as a defining moment, where acting with resolve and confidence served the community and strengthened the future of the company.

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.

[PrimeNumber7]

This should be the end of Celsius, and really, of all centralized lending platforms.

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.

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.

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.

[o_e_l_e_o]

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

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

The bankruptcy filing notes that users who signed up for Celsius all agreed to terms of service that allowed Celsius to just stop withdrawals at any time. And it’s honestly a bit shocking to see it all laid out in the bankruptcy paperwork in such stark terms:

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?

[ABCbits]

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

The bankruptcy filing notes that users who signed up for Celsius all agreed to terms of service that allowed Celsius to just stop withdrawals at any time. And it’s honestly a bit shocking to see it all laid out in the bankruptcy paperwork in such stark terms:

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 conis? You did read their Terms of Service, right?

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/

[o_e_l_e_o]

Do you really think people read ToS?

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.

[PrimeNumber7]

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

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 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.

[o_e_l_e_o]

And those couple of minutes probably spent to read Celcius website/social media and any page about Celcius from Google search result. I can understand why user complain since their ToS and advertisement (which use word such as "Unbank", "no lockup" "HODL") is quite different.

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.

Banks make unsecured loans all the time without issue

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.

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.

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.

My issue is not with Celsius making unsecured loans

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

[PrimeNumber7]

Banks make unsecured loans all the time without issue

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.

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.

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.

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.

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

My issue is not with Celsius making unsecured loans

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

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.

[o_e_l_e_o]

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.

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.

They made that statement in 2019, and it is possible that their business model had subsequently changed.

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-

[Don Pedro Dinero]

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.

[o_e_l_e_o]

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

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).

I don't think we should rule out the possibility of bankruptcy even though Coinbase seems too big to fail as DdmrDdmr says.

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.

[stompix]

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.

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

- The market is low, logically creating less income.
- The company's shares, at their current value it is understood, could pose a problem in the short term.
- They have recently closed their affiliate program, which gave rewards to users for referring new customers.
- There have been cases of recent liquidity crises, with already known results, trapping thousands of clients and their assets.

Less income but not a lot less, yes volumes are low but still, they make money out of the trading value not out of the individual value of the assets, the company share price is quite irrelevant, there has been no company that is going to collapse because of the share price if that drops to 1$ they can just buy it back, stockholders should be concerned with that, not the company.
The affiliate program, well, I don't know how it worked and how much they were paying and of course not how much they were making out of it from the extra advertising so, it might be a cut to save money short-term or it might have been completely unprofitable.
The liquidity, that's a guess, and nobody but the ones at Coinbase could be guessing this, but if Coinbase is lacking these, then the others are already toasted.

Mt Gox was too big to fail.

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.

[PrimeNumber7]

They made that statement in 2019, and it is possible that their business model had subsequently changed.

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-

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.

Recently DdmrDdmr has started a thread on our local section on the potential bankruptcy of Coinbase.

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.

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"

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

[o_e_l_e_o]

Less income but not a lot less, yes volumes are low but still, they make money out of the trading value not out of the individual value of the assets

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.

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

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

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

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.

[swogerino]

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

[o_e_l_e_o]

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.

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.

Get every Bitcoin you have in "shitty" exchanges

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


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.