What is now the difference with Ponzi platforms with cryptocurrency exchanges

[darewaller]

Ponzi is where you deposit 1 and get 2 in short time, few tokens also offer staking that similar like ponzi where the return is to good to be true. Centralized exchanges isn't a ponzi if you only use the exchange feature and you wouldn't lose your coins since in staking you need to leave your coins on the exchange.

Btw DEX is also not secure, remember there's this rug pull thing...

I believe you're refer to Uniswap, Pancakeswap etc that's not a DEX, but they're just a swap platform. A real DEX doesn't hold your coins, similar like Bisq and it's really high security since the exchange never got hacked and the developer purpose is not to make money.

This is the thing that bugs me the most about the crypto world. They do not even know what a ponzi is and they still like to talk about what type of scam something could be. Centralized exchanges are just like banks, they take people’s money and let them do whatever they want with it, while still keeping the ownership. You want to trade with it? Sure go ahead, you want to stake it, sure go ahead, you want to loan it out? Sure, just do that.

But all the time the money stays in the exchange, same as banks. The difference is that when banks collapse, government bails them out, but when an exchange collapses, there is nobody to bail them out and they just bankrupt right away.

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[kro55]

Since actions like this persists, then cryptocurrency exchanges should be regulated. They should be a certain amount, just like banks, on reserve before an exchange gets established, so if they go bankrupt the funds can be used to settle affected customers. The differences between a Ponzi site and exchange is the eligibility to swap currencies on exchanges and Ponzi sites don't come out plain to tell customers that their money is gone, they disappear.

What you are referring to is what binance has been doing, binance is the only exchange that has Safu. But that also can't be sure if binance collapses all the victims will be compensated, I don't believe it will be that simple.

In my opinion, there is no perfect solution in this case, the best way is to limit their use. Absolutely do not trust any exchange even if it is a decentralized exchange, it is not as secure as many people think. Always withdraw all your funds at the end of the day after the end of the trade and never leave too much money on any exchange.

[lixer]

FTX had become the recent trend of fail exchange that lack strong team that will make a better exchange. We should know that their is a different between an exchange and ponzi scheme. Most exchanges that short down do not do so because they intend to go away with customers funds. This happens mostly because of hacking, bad management and other factors that can easily tag a company bad and we should not be happy when many had lost their funds without having a an that they will get compensated.

I think they have a strong team because if not then they won't grow and became popular but I think they got greedy and not contented on what they currently have. This is where they messed up with the users funds in hopes of growing it more bigger but they fail and now they are in this sticky situation. Once again, this shows that greed isn't a good quality to adopt with it.

What happened with FTX is intentional and not a cause of bad management. I heard hacking have also happened afterwards but there are rumours which says that the hack was intentional or an inside job. Many will say that FTX is not far from a ponzi but there are still other exchanges which are not like that. Users should only stay vigilant and don't store most of their funds inside a cex, just in case history repeats itself.

[gantez]

But to answer your topic question, ponzi schemes are ponzi schemes and exchanges are exchanges. What made FTX a ponzi scheme in this case is because of how the CEO(and company) handled their user's funds.

Yes like you said the CEO handling of customer money in a way that they are no more in the spreadsheet or balance of the exchange account, this is fraud. Fraud is in different forms. Ponzi scheme purpose is to finally run with money from people and if exchange embezzle people's money in the manner using it to gamble or trade, it is fraud like ponzi.

[Lucius]

Sam Bankman-Fried  has a degree in physics and a minor in mathematics...

What an irony in the fact that someone trusted a man named Bankman, and it is even more ironic that he managed to sell them his worthless token and with all his tricks managed to destroy the company in a very short time. Maybe he is one of those fanatics who, like Kwon, enjoy watching companies fail, and maybe they take even greater pleasure in destroying their own company.

When I first saw that man, I thought it was some kind of joke - because to me he seemed quite incapable of keeping an ordinary chicken coop, let alone a crypto exchange.

[kryptqnick]

I think a common feature is that both can scam people and both can fail as business models. The difference is that ponzi scheme is meant to be a scam, it's designed as a scam and can't function without relying on the majority losing. Crypto exchanges, on the other hand, can be managed in ways where everyone wins: people get the services they want, exchanges get profits from the fees, traders can profit from making well-timed buy/sell orders. So it's not a scam per se, unless you'd agree that banks are a scam, for example, as they also don't really have the money of their customers and can both go genuinely bankrupt and scam their customers.

[BRINIRHA]

This is the thing that bugs me the most about the crypto world. They do not even know what a ponzi is and they still like to talk about what type of scam something could be. Centralized exchanges are just like banks, they take people’s money and let them do whatever they want with it, while still keeping the ownership. You want to trade with it? Sure go ahead, you want to stake it, sure go ahead, you want to loan it out? Sure, just do that.

But all the time the money stays in the exchange, same as banks. The difference is that when banks collapse, government bails them out, but when an exchange collapses, there is nobody to bail them out and they just bankrupt right away.

because actually I am still new to crypto investment. and a few weeks ago more of my assets were kept in the Exchange. because at first I did not understand the big risk I faced when I put my assets on the stock exchange. But then after hearing the news about FTX. so I learned the lesson that as long as my assets are still on the exchange, it's the same as me still not having my own coin. so finally now I have moved my assets into a private wallet with a private key that only I know. I would be really surprised if such a big exchange and its CEO have done such a terrible thing with the customer's money in that exchange. it's a terrible thing but definitely a lesson for many people like me who are new to crypto investing.

[348Judah]

As far as am concerned, those ponzi schemes have advanced into crypto projects as well eince they discover that people want cryptocurrency and that's the central attraction for them to invest their money with, so i count them altogether as same thing since anything that can take away someone's entire asset without refund overnight has thesame identity to that of ponzi regardless of whatever the coin investment it maybe.

[NotATether]

To be clear, it's only if you see an APR or yield on the exchange. If you see any of those, then it means that the exchange has HYIP-like tendencies, only they are more glorified, feel entitled to your documents, and fall in slow motion.

[vv181]

Don't say you have to put your coins in your personal wallet or Dex. There you have someone you trust and breaking the trust. This is not good for cryptocurrency or what do you think about the trust broken?

Tracing back to when Bitcoin started, trust is the thing a has little mere significance. As the saying goes, "don't trust, verify". The problem with the current condition is that those centralized entities lack firm and stable regulation. Some say, regulation will make cryptocurrencies worse, but, in fact, that kind of centralized entity and the people who are also using them will surely get the benefit of it.

The point is, people have a choice whether they want to trust somebody or not, and people are still able to use crypto in a sovereign way. Trust is the complete opposite of the spirit of what Bitcoin has started, so if some people still want to rely on third parties, a tightly regulated ecosystem will ensure the trust of the users.

[Bitstar_coin]

Yeah, never trust an exchange to keep your money safe because you don't know what will suddenly happen that will result in an unexpected loss of funds.
I wouldn't call them a Ponzi platform even if it is beginning to look like it with all the recurring cases we are experiencing. Exchanges were supposed to be an easy means for people to buy and sell crypto, making it more accessible to as many people as possible, but some of them have lost track of that and aim to bite more than they could chew.

[uneng]

We can't generalize. A crypto exchange has nothing to do with ponzi schemes. Scammers CEOs pumping and dumping native tokens from their own exchanges with customers' funds have. What must be clear is that an exchange can exist and launch their own token in a fair, legit and sustainable way, respecting and protecting customers and investors. Only time will tell who has been operating their platforms in an honest way, but it's unlikely every exchanges are going to fall, because it's unlikely all of them adopted the same criminal practices. Let's see the next episodes of crypto universe...

[albon]

We may find exchange platforms in the future like a Ponzi scheme. There is a difference between them, but the two share that they are not safe places for investors and traders. How many exchange platforms have been hacked so far? How many exchanges have gone bankrupt early? How many victims of exchange platforms and Ponzi scheme? In fact, after what happened to the FTX platform, it will be difficult for any investor to put his wealth in any exchange platform, which is indeed a great risk. I see that exchange platforms are not the right place to hold our tokens on it, It is only for P2P and some simple trading.

[coupable]

To put your savings in your own wallet and secure it with well-known means of protection, including not to share your private keys and passwords with anyone. Any damage that occurs to it will be your responsibility alone, and we cannot blame anyone.
As for decentralized platforms, they may be more secure than centralized platforms, but this does not mean that they are the best way. I remember the CryptoBridge platform when it was launched it was a decentralized platform and then suddenly they started asking for identity documents from users before the platform stopped and users' money was lost. There are many other examples that confirm that it cannot be trusted one hundred percent.

You need to have good knowledge in order to be able to protect your investments from fraudsters. But for this you need to spend a lot of time to thoroughly understand all aspects, it is difficult and therefore most people study these important issues superficially. In the end, it's about your money, and so it should be one of the main things you need to worry about.

It is really difficult for the majority of users, especially since they are accustomed to giving importance to their personal data and important data on the Internet, imagining that nothing bad can happen to them on the pretext that nothing happened to them in the past. For users who are used to taking precautions in general on the Internet, they will find it much easier. The issue goes beyond how to deal with platforms and wallets to knowing basic storage and protection methods, in addition to how to deal with problems .

[Cookdata]

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A Ponzi scheme (/ˈpɒnzi/, Italian: [ˈpontsi]) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.

Source: https://en.wikipedia.org/wiki/Ponzi_scheme

Just for more engagement for other people to know what SBF has done to investors and traders, that is the meaning of a Ponzi scheme. SBF has done more harm than good and this will hunt other centralized exchanges, the trust is no longer there and not just that, people have learned to move their trading to decentralized exchanges. The entire capitalist who invested in FTX, the whale are all mostly at losses and the ones who have sold back to stablecoin has been unable to withdraw and the chance of getting their money back is slim or at least, it will take months or years, it is high time we all avoid these centralized exchanges

[justdimin]

What you are referring to is what binance has been doing, binance is the only exchange that has Safu. But that also can't be sure if binance collapses all the victims will be compensated, I don't believe it will be that simple.

In my opinion, there is no perfect solution in this case, the best way is to limit their use. Absolutely do not trust any exchange even if it is a decentralized exchange, it is not as secure as many people think. Always withdraw all your funds at the end of the day after the end of the trade and never leave too much money on any exchange.

Binance collapsing would be quite difficult, it would require a lot of money to do that and I do not think that it would be that possible. I am not saying that it's impossible neither, but it’s quite difficult for something that large to ever drop victim to some hacking attempt.

I would like to emphasize very carefully, I am not saying "impossible" so take all the safety and security measures that you can, that’s a guaranteed thing, if you can do that then it would be great, but if you don't and you have to put it on some exchange, Binance is better than any other and that would be a much better method for you, because all other exchanges are even worse.

[Gayong88]

What causes the exchange to crash? that there is a lack of transparency with FTX owners and management. So, it may take time for many users to trust other cryptocurrency exchanges. This can be seen when you compare one cryptocurrency exchange to another by asking their security system if possible.

Joining a Ponzi scheme to get rich quicker then they should know that it is a scam and will fail at one point in time. It's like gambling, don't use your real funds in such platforms. Also society should be aware of such things.

Luckily, there are still people building cryptocurrency exchanges in a transparent and customer-friendly manner.

[Minor Miner]

What you are referring to is what binance has been doing, binance is the only exchange that has Safu. But that also can't be sure if binance collapses all the victims will be compensated, I don't believe it will be that simple.

In my opinion, there is no perfect solution in this case, the best way is to limit their use. Absolutely do not trust any exchange even if it is a decentralized exchange, it is not as secure as many people think. Always withdraw all your funds at the end of the day after the end of the trade and never leave too much money on any exchange.

Binance collapsing would be quite difficult, it would require a lot of money to do that and I do not think that it would be that possible. I am not saying that it's impossible neither, but it’s quite difficult for something that large to ever drop victim to some hacking attempt.

I would like to emphasize very carefully, I am not saying "impossible" so take all the safety and security measures that you can, that’s a guaranteed thing, if you can do that then it would be great, but if you don't and you have to put it on some exchange, Binance is better than any other and that would be a much better method for you, because all other exchanges are even worse.

Yes, anything can happen in this market but I also agree with you that binance crash is very unlikely. I also used a lot of exchanges but in the end I ended up with binance, I almost don't trust any 2nd exchange even with FTX and coinbase, and I am not a victim of FTX recently. I also want to emphasize like you, everything has risks and binance is no exception, although binance is considered the safest by far, the future is unpredictable. But I was prepared mentally as well as willing to take risks because when I entered this market, I determined that investing in cryptocurrencies was risky.

[Plaguedeath]

Yes, anything can happen in this market but I also agree with you that binance crash is very unlikely. I also used a lot of exchanges but in the end I ended up with binance, I almost don't trust any 2nd exchange even with FTX and coinbase, and I am not a victim of FTX recently. I also want to emphasize like you, everything has risks and binance is no exception, although binance is considered the safest by far, the future is unpredictable. But I was prepared mentally as well as willing to take risks because when I entered this market, I determined that investing in cryptocurrencies was risky.

Back in few years ago, Mt.Gox was the biggest exchange since 2013 and anyone really trust it. No one expect Mt.Gox because it's the most biggest and popular centralized exchange, just like you thought on Binance. But on 2014 everyone was wrong, Mt.Gox collapse and they can't refund to every holders until right now, even though there's progress that they're promise to pay the Bitcoin in this year.

Sooner or later Binance will collapse, no one can predict the future and you're not working in Binance, so you're not know the actual of Binance's financial.

[serjent05]

What happened on FTX exchange isn't a Ponzi scheme, it is a mismanagement of funds and a possible fraud from the management.  It is obvious that the anti-crypto media will take this opportunity to throw stones at the cryptocurrency industry.  So we just need time for the event to cool down.

As we know Ponzi scheme is a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.[1] but FTX does not offer a quick return on their investment that is paid by the later investors. FTX is an exchange and somehow uses their client money for other purposes.




[1] https://www.google.com/search?q=ponzi+scheme+meaning&rlz=