Proof of reserves? Insurance fund? Best I can do is a random number generator!

[Z-tight]

I want to believe that the majority of coins that are held on exchanges are owned by day traders who have little choice but to keep their coins there, because of transaction speed and costs. Because it should be a common wisdom by now that coins held on exchanges are almost as good as gone in the long term.

I also want to believe that but i am not so sure how true it is. It is hard to believe but there are so many people who believe that some centralized exchanges are too big to fail, and so instead of being their own bank and keep their coins safe, they rather just let Binance do it for them, since 'it's too big to fail'. That's the idea many people have and that's why they lose their money whenever an exchange bites the dust.

[1714281703]

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[Franctoshi]

People who still hold their funds in Binance are either ignorant, not aware of the recent events regarding centralized exchanges & lending and earning platforms or they think Binance is too big to fail. If Binance bites the dust they'll be the ones affected and a million other holders of shitcoins, the BTC network will be just fine with or without Binance.

Only fools would see what happened to FTX and still store or keep their cryptos in Binance or any other centralized exchange out there, I'm not against doing business with the platform, but the message here is never to keep your coin there at the end of the day, and relies on them for safe storage; If as an investor/trader, you are not a Safe with storing your funds “self custody” then I assure you no one can, and this reminds me of an argument with someone I know who still believes that Binance is too big to fall, and since then, I see that person as being naughty.

If Binance still claims they are “SAFU” I'm short of words, but only time will tell about their sincerity.

[DaveF]

To be totally fair Bernie Madoff, Bernard Ebbers (WorldCom), Ken Lay (Enron), Mark Swartz and Mark Belnick (Tyco), all did it too.

It's not new, and people will always believe what they want to believe.

And if you put up something that looks legit, and people are looking for a reason to believe that it is legit, then they will latch onto that as proof.

-Dave

[famososMuertos]

Wait a moment... the thing is not that you run away from the CEx, but that you take "advantage" of them with full knowledge of the facts and if it is "irremediable" to have to use them, then even more so.

The "bluff" in the code is not a surprise, no one audits them, those who grant permissions only see the "balance and loss books" (let's say it's sarcastic, but something like that), the bureaucracy has standards that it must supervise better.

The issue is that people have been walking through these types of situations from various angles, ok, we are in a crypto niche, but these bad practices have always been in all their variants, traditional e-wallets, casinos and all that "screen- balance" of any centralized service that shows you a "Value". People don't think of that value as a line of code, which in theory represents the equivalence of your money.

The incredible thing is that the ""screen- balance" " is repeated, many in these parts do not speak of Quadriga, but in any case it would be another example +.

That is, the protagonists change but the "lines of code"^scenario remain the same.

[o_e_l_e_o]

https://nitter.cz/molly0xFFF/status/1714837404635353154#m

I'll take "What is fractional reserve?" for negative $9 billion please, Alex.

FTX was insolvent for years before their eventual collapse. Your money was being used to buy mansions, holiday homes, private jets, and more. Don't worry though, I'm sure other centralized exchanges are totally different, because reasons.

I'm also laughing at just how stupid SBF was: https://newsletter.mollywhite.net/p/the-ftx-trial-day-eleven. Admitted a bunch of illegal stuff to a reporter, and then after that was reported came back and said "Uh, can you make that off the record?"

This is the kind of incompetence and sheer maliciousness you trust with your coins if you use centralized exchanges.

[o_e_l_e_o]

Unsurprisingly, SBF has been found guilty of all seven charges: https://newsletter.mollywhite.net/p/sam-bankman-fried-guilty-on-all-charges

Sentencing is awaited. His team will almost certainly appeal. Maximum possible sentence of 110 years as I understand, although he'll almost certainly get much less.

[Synchronice]

What programming language is that? I'm learning JS and it doesn't look like that, probably doesn't look like a JS framework too. Is that a python? I'm just curious.

I didn't know if this code was enough to collect millions of dollars

fttSize: coinSizeFormat.format(5250000) }} FTT
return f2d(numpy.random.normal(7500, 3000)) * daily_volume / Decimal(1'e9')

If FTX went as far as publishing insurance numbers out of thing air with no actual asset to back it up, I'm convinced that some CEX available today still indulge in those practice.

I have a doubt absolutely every company lies about numbers that they show on their website.

For newbies that'll come across this thread, if you still have coins on exchanges, get them off right away. Exchanges aren't wallet to store your coins with them and don't believe whatever excuse they'll give to make you believe they'll look after your coins. Take the security of your coins as your personal business and store them offline in a hardware wallet.

Do you know that people with the ability of critical thinking are a minority of our society? A very tiny minority. It doesn't matter how many times you are going to warn someone, they'll still do it if they want to do it. People can't learn, even on their own mistakes. That's not my problem, nor your problem. Bitcoin, a decentralized currency with free, non-custodial wallet is in front of us and people still prefer to store them on Binance. I don't know what is the solution of this problem.

[nelson4lov]

~Snipped

If FTX went as far as publishing insurance numbers out of thing air with no actual asset to back it up, I'm convinced that some CEX available today still indulge in those practice.

I have a doubt absolutely every company lies about numbers that they show on their website.

Yes, that's true; as there is no way to actually verify assets that users have deposited to an exchange. They can simply display whatever numbers they want and users will have no choice than to believe. For close source systems like that, it's hard to verify. It's not on-chain.

Unsurprisingly, SBF has been found guilty of all seven charges: https://newsletter.mollywhite.net/p/sam-bankman-fried-guilty-on-all-charges

Sentencing is awaited. His team will almost certainly appeal. Maximum possible sentence of 110 years as I understand, although he'll almost certainly get much less.

I'll be looking forward to the judgement. It's one thing to be found guilty, it's another thing to be duly punished.

[goldkingcoiner]

If you've not been following the FTX trial, you really should, because the level of fraud on display is enough to even rival that of CSW. Here are two snippets of code (pictures courtesy of https://nitter.cz/molly0xFFF) which have been submitted as evidence in the trial. This code is regarding FTX's insurance fund which was widely publicized:

   

The first picture above shows how the value of 5,250,000 FTX Token supposedly in the insurance fund was "calculated". It wasn't. It was just coded in. insuranceFund.size = 5250000 FTT.

The second picture above shows how the value of USD in the insurance fund was "calculated". The daily trading volume on FTX was multiplied by a random number, and this was used to adjust the insurance fund to a new size.

This is the kind of bullshit centralized exchanges are using in their "proof of reserves", "safu funds", "insurance funds", "collateral funds", "1-to-1 matching reports", and all the other trash they peddle to convince you your funds are totally safe. Literal random number generators. They will do and say anything to get you to hand over your coins to them. Don't fall it.

Once again conclusive proof that centralized exchanges cannot and should not be trusted! The weak point always remains the same: "Trust us". A decentralized technology should be completely unreliant on trust. But it does not work if you give someone else custody of your wallet.

I keep telling people:
Do not store your money on centralized exchanges, if possible. If you absolutely have to sate your urge to daytrade or something then at least use decentralized services. (But watch out for DeFI scammers.)

[o_e_l_e_o]

What programming language is that? I'm learning JS and it doesn't look like that, probably doesn't look like a JS framework too. Is that a python? I'm just curious.

The screenshot on the left is Javascript; the one on the right is Python.

Yes, that's true; as there is no way to actually verify assets that users have deposited to an exchange.

The solution is obvious - put your coins in your own wallet. Then it is trivially easy to verify every single satoshi you own.

[LoyceV]

The first picture above shows how the value of 5,250,000 FTX Token supposedly in the insurance fund was "calculated". It wasn't. It was just coded in. insuranceFund.size = 5250000 FTT.

The second picture above shows how the value of USD in the insurance fund was "calculated". The daily trading volume on FTX was multiplied by a random number, and this was used to adjust the insurance fund to a new size.

To me, this looks like a bunch of nerds IT guys who got in over their head after attracting much more money than they can handle. It looks like they're still just kidding around, without realizing there are real-life consequences to what they're doing.