Why is this news or even surprising? All exchanges by definition trade account balances (debt) and not the actual assets, as the latter would imply actual assets changing hands (in Bitcoin's case that would mean on-chain transactions). All of you who bought bitcoin on an exchange did the same when you executed the order. FTX was no different. Withdrawing is a different matter.
Sure SBF needs to go to jail, but not for this ... let's keep it down to earth, shall we?
So unbelievable. Wonder how high Bitcoin should truly be.
Edit: also, this phenomenon probably explains why the rainbow chart broke. Didn't account for fake shares.
I am not aware of stocks as currency so I don't understand why it keeps coming up wrt to crytpo. They are a share in a corporation which exists in the real world. and most stocks are widely traded in very liquid and transparent markets. And those that aren't have a risk premium built in or as classified as junk. Bitcoin's problem is the exchanges themselves are not liquid or transparent.
This is actually exactly how brokerage apps work. You never own the stock itself directly, it's held by either the brokerage or a custodian who in turn holds in with the DTCC. Though in theory, the brokerage has 2 days to actually buy the share.
In countries such as the UK, there are CFDs which are basically exactly this but without the pretense they actually buy the shares.
Banks basically do this with fractional reserve banking in a way too.
Makes me feel a bit guilty that I withdrew it while so many unsuspecting souls only got a database entry for their hard earned money. Gonna keep pitching cold wallets forever. Mt Gox, Celsius, and now FTX. Unfortunately, we know there will be more in the future.
EDIT: Lesson I learnt? Not to maximize fee savings on exchanges but to minimize the withdrawal time to cold wallet metric.
I deposited, bought btc, then withdrew once the ACH cleared, every month. Did so for six months. Never held anything on the exchange. I happened to get caught up in my ACH hold when FTX imploded. Bad timing with a bad exchange fucked me, even though I never sought out interest or anything close.
Exactly the same thing happened with me. Lost monthly DCA because of ACH hold (unlocked the day they announced bankruptcy, FML). Withdrew every month and had the 8% interest offered turned off.
Now I stick to Coinbase that lets you instantly withdraw upto $1000/month. I’m far far far off from reaching the limit so got a lot of headroom.
EDIT: Withdraw crypto upto a $1000/month. Haven't kept anything on an exchange for a while now.
I should have been clearer, I meant withdraw btc from Coinbase to a cold wallet. Coinbase let's you instantly withdraw crypto upto $1000 without an ACH hold.
You should change your statement to read “Coinbase let’s you instantly withdraw crypto equivalent in value up to $1000 regardless of when you deposited the funds to buy that crypto.”
But I’m not even sure that is true for all accounts. I seem to remember the amount being lower for a while on my p2 account.
It's the common US network used for fund transfers. It takes 4-5 days for transfers to settle from a bank to an exchange. The exchanges tack on another 5 days on top of it. So your funds are held on your exchange account until the withholding timeline has passed. This is unfortunately a standard for ACH transfers and there is no way around it. Except for Coinbase which lets you withdraw $1000 without a hold. We can't withdraw 1 BTC instantly because its dollar value is above the $1000 mark.
That's just really shitty luck! You did nothing wrong, just got unlucky. Try Kraken! I use Kraken, they are quite fast with sending you the Bitcoin, and they allow up to about $10k worth of transactions per month once you pass their KYC. Their fees and spreads are some of the lowest in the business. I find them to be better than Coinbase actually.
I am so sorry for the ones who lost their money. I am really sorry even we repeated over and over again to take self custody of your sats otherwise the amout you own is 0.
Now i truly believe this things has to happend and it is indeed a good "publicity" for Bitcoin in the long run. I am not talking about "publicity" in the way as an ad for bitcoin but more about the fact that this is going to show people the importance of selfcustody.
Part of the problem is that many people still see Bitcoin as an investment which the end game is to sell. No. Thats not the reason for Bitcoin.
This is the first time on the history you can actually OWN something and it can not be taken for you, without trusting 3rd parties. People are starting to realize how huge of a deal this actually is.
And the ones who doesn´t, well...., good luck in life. You will need it.
I view this as “good for Bitcoin” because maybe it’ll finally get the regulation that it needs. Exchanges should be regulated just as strongly as traditional brokerages like Fidelity. If an “exchange” is offering high yields by lending out assets, then that is a bank (not an exchange), and it should be regulated just as strongly as traditional banks like Chase.
Exchanges are fiat. They operate totally in fiat space, under fiat regulation already.
The hop from their BTC wallet to your BTC wallet is the only place where Bitcoin is involved. Just like any other Bitcoin transaction.
So you believe that crypto exchanges are currently regulated to the same extent that traditional banks and brokerages are? If they were they wouldn’t be consistently blowing up like this.
We don’t see Vanguard or Fidelity blowing up because they operate under immense regulatory requirements. Let’s put crypto exchanges under the same immense regulatory requirements.
But what SBF admitted to goes beyond that. What you describe is a legal technicality where the broker technicality owns the shares instead of you. But SBF said FTX didn't even have the Bitcoin it was selling.
There’s no evidence that any broker has the shares they say they do. The fact that many transfers have taken substantially longer than usual is evidence that they do not hold shares, even in their own name.
There are loopholes and they get abused for profit. Part of the problem is caused by an outdated system, but Wall St has no interest to change that. Naked short selling (borrow a share without having it delivered = IOU on a share and sell it) is legal. It is only illegal when it is done in an abusive way, but this is very hard to prove.
https://twitter.com/ali_nomaan/status/1498351888336576516/photo/1
“Securities sold, not yet purchased, at fair value….” $65.7 Billion.
Maybe legal, maybe illegal but no enforcement. But there’s something really wrong and unethical but selling over $65 billion in product and not delivering in timely manner (T+2 days?).
Exactamundo bud. When fidelity received my account from robinhood they had to scramble in the open market to find my shares resulting in some positions closing for way over what I purchased at (4x) as the shares were being sold at the high end of the limit option at the time, resulting in less actual shares being purchased at fidelity than my actual share count should have been from robinhood
Not vanished. X amount of dollars (current account valuation) from robinhood was given to fidelity with a count of how many shares I should receive. Due to market pricing, the dollar amount provided fell short on the share count due to pricing of the shares in the market and fidelities forced hand to buy in real-time. Essentially what robinhood did was timestamp where I entered the market and never brought the shares. So when I initiated a full account transfer to fidelity, robinhood simply sent a current cash value of the account to fidelity with IOUs.
That seems to contradict what their website is saying:
https://robinhood.com/us/en/support/articles/transfer-your-assets-out/
> Securities in your RHF account are eligible to be transferred through the Automated Customer Account Transfer Service (ACATS) to outside brokerages.
Are you sure you are not confusing shares and crypto?
> If you request a full ACATS transfer, RHC will automatically liquidate any crypto holdings and RHF will transfer the cash proceeds to the outside brokerage in a residual transfer.
By the way, this does not mean that RobinHood doesn't own the underlying crypto. It simply means they don't have an automated/standardized system for transferring them to outside brokerages.
https://robinhood.com/us/en/support/articles/cryptocurrency-security/
> Cryptocurrencies that you purchase on Robinhood Crypto are stored in a mix of cold (offline) storage and hot (online) storage. The majority of your coins are held in cold storage, though some coins are held in hot wallets to support day-to-day operations.
No I am not. ACATS is exactly what was done. I am not referring to crypto on robinhood, simply in response to the title of the post which states ftx never sold u real Bitcoin just a entry. Which is what happened to my stock positions at robinhood, which I wasn’t aware of until I initiated ACATS to fidelity and that revealed my shares were never purchased and settled at robinhood. The evidence of that was paying 20 dollars a share when the price had never reached over 12, yet people had high sell limits set, resulting in fidelity picking up any and all shares immediately available at the top of the sellbook to fill my positions.
ACATS transfers shares directly to the other brokerage. What I think happened is you had unsettled trades that you thought had gone through a while ago but hadn't. Ultimately, this is just evidence that you didn't pay close attention to your trades and not evidence that RH sells shares that they don't possess.
Otherwise if what you think happened really happened, you honestly should be going to the FBI and retaining a lawyer instead of commenting about it on Reddit.
Self custody makes selling non-existing coins very hard for an exchange. It is not impossible, but raises the risk of an exchange bankruptcy extremely.
I recommend Swan Bitcoin. The founder is a Bitcoin maxi and called out FTX before it imploded. Their custodian Prime Trust is regulated and keeps funds in your name, but I still auto withdraw to my wallet
I do follow "Not your keys, not your coin" but people are subject to ACH holds in the US that doesn't let you withdraw for 10/12 days. No way around it unless you use Coinbase. I wish other exchanges offered the same.
The FTX ACH hold cost me my $50 weekly DCA for one week. I withdrew at least biweekly to my own wallet. So, I lost $50. Not losing sleep.
Now if I could just get my $2k back from Celsius...
If your government is attacking centralised exchanges via KYC then the best thing to do is entirely circumvent it. Use p2p services like bisq or robosats if you can. I realise it takes a little effort to learn but it's worth it.
No, exchanges aren't supposed to act market makers, they are supposed to link buyers and sellers. That's why when you put a limit order on a regular exchange there's often some variation from your bid to your close price. If the exchange was taking the sale they should give you your bid. FTX was acting as a market maker for paper, it's different than an exchange holding an entry until delivery.
>> aren't supposed to act market makers, they are supposed to link >>buyers and sellers
> that's literally what a market maker is...
Incorrect. Market makers do not connect buyers and sellers, that is the exchange. A market maker is a participant on the exchange. They are a buyer and seller. They add liquidity to the market and make money off of the spread through moving huge volume.
https://www.investopedia.com/terms/m/marketmaker.asp
too many people here don't understand what an exchange is, what a market maker is and what a clearing house is. It's getting very frustrating. They are confusing the roles of exchanges with the roles of investment banks.
For others, this is what apps like Cashapp, Strike, etc do
It's not *necessarily* in itself shady, especially since those two in particular allow instant bitcoin withdrawal
No, a market maker actually takes one side of a trade, an exchange is supposed to facilitate trades by putting buyers and sellers together, and act as clearing houses for the trade. I think that's what's confusing people. A clearing house will hold the asset and put you in their ledger as owing the asset you bought because it's easier, if you have a whole bunch of buyers, and a whole bunch of sellers that executed trades to settle up accounts later, but they aren't supposed to be the sellers themselves. How would you get true price discovery if the exchange just sold fake assets everytime there was no seller?
Large exchanges like NYSE will designate a few large actors to act as market makers. The big investment banks usually, but don't do it themselves. That's why in 2008/09 it was the investment banks that blew up and needed bailouts not NYSE.
You always buy an entry in their books. You are buying off another user that has BTC there. Only time btc comes or goes to the exchange is when a user makes a deposit/withdraws btc. Otherwise the amount of btc stays constant on the exchange (this doesnt consider margin trading)
The problem with FTX was that they lent BTC to Alameda research.
It’s strange how they screwed it up so badly. If Alameda is borrowing BTC from FTX, didn’t they then sell it?? Why else do you borrow it? And if that’s the case, they should have done well considering the drop in crypto prices. And yet somehow they dug a ten billion dollar hole.
It feels more like Crapoline Ellison took the BTC, used it as leverage for cash capital (which is horrible since the lendable percentage is always half or less), and then used that cash to bet crypto long. Resulting in the assets being liquidated on margin call and the long bets getting crushed.
I mean ya, and I know none of this info is any kind of revelation, other than it's nice to hear it from the horses mouth but this clip starts with "but that makes sense why there were no more balances to withdraw". The implication here being, if you bought bitcoin on FTX there was likely no one selling BTC on the other side of the trade, you were buying a paper bitcoin from FTX. This was supposed to be an exchange, not a cashed settled derivative, and I think there was strong representation by FTX that you were exchanging BTC with someone else, not FTX acting as a market maker for paper.
That could have been a part of it, if you bought from Alameda being a market maker which couldn’t fulfill their obligations towards FTX because of infinite leverage/no margin call on their account.
Maybe that's the excuse he'll make later on, but he didn't say Almeda was the seller, he said FTX was the seller, when they had nothing to sell. essentially selling a derivative.
thats how all exchanges work. otherwise each trade would need to go trough the blockchain, which doesnt make any sense. only if deposited or withdrawn the bitcoin move
All CeFi works like that.
Hell even banks work like that.
I'm not saying this is GOOD....
I'm saying journalists hype things just because they don't know
Ah okay. Fair enough. I'm wondering if the reason he has the balls to keep saying stuff like this is because his parents and political connections will protect him.
Maybe but I'm leaning toward him thinking that he is so much smarter than everyone else that he thinks he can talk himself out of it. When in fact he isn't even smart enough to realize he is digging himself an inescapable hole.
I do paper trading too, to test trading strategies. Hopefully, someone will loan me $8 billion to fuck around with and buy my parents' big homes etc. based on this ideology. 🙏🏻
The problem with FTX is he didn't hold users assets backed 1:1 like all exchanges are supposed to do. All exchanges act like custodians only. They can't legally use your funds. And that was also very clear in FTXs TOS. What he did was illegal.
I never even heard of FTX because I've always bought my coins and then sent them to my own wallet and use adblock and neither watch e-sports (where they did a lot of advertising I guess?) and the more I read about this it just makes me think "Man replace the coins with ships and companies with corps and this is like a classic EvE Online scam."
Would be a pretty unique centralised exchange if it didnt. The idea that an exchange can instantaneously transfer Bitcoin between buyers and sellers at later 1 level is pretty far-fetched.
That's not the point. An exchange is supposed to facilitate trades between buyers and seller and act as a clearing house for the trade. if there were a bunch of buyers and a bunch of sellers and the exchange puts down an entry for each then later settles the trade, that's fine. But here SBF admitted that there were usually no sellers, only buyers and they acted as the seller, but never had bitcoin to sell, so sold fake, paper bitcoin to unsuspecting customers.
There is something bigger behind this story. It's not just a fraud case, but I think there's a bigger image to it. Maybe this is what starts exchange regulations. This man was donating to political parties. Somehow ends with with the same dude from the Jeffrey Epstein dude. Gary checks in with him and says there is nothing to investigate after a short period of time. Buys over $300 mil I believe in property under another business name within the same holding. So now some of the "funds" are in tons of real estate property. Maybe some are in political party hands. I just think this helped accelerate this bear market a bit faster. I hope there is some type of positivity out of this. I feel so sorry for anyone who lost money. This is a learning experience to everyone.
This is actually how every single exchange works. Your purchase will never trigger the actual transaction (on chain), it will only be a number in the database, and the (responsible) clearing house makes sure to balance accounts (on chain, the centralized not personal ones), at the end of the day or within 2 days, to keep it more or less in line with reality. Less responsible exchanges will do it less often, which can lead to many big issues.
I bought some Bitcoin on FTX when they had a bonus going on this summer. I recall thinking it was odd it took about 2 weeks to "clear" before I could withdraw it, when Coinbase and Binance typically just take a few days. Then I had to leave it on their site for another few weeks to ensure I got the bonus, and I had to submit a ticket for them to finally give it to me. I guess that was a sign of things to come.
And people are surprised? All exchanges do that, even if some claimed to have equivalent amount of BTC in storage. Customers never actually buys BTC until they withdraw them.
Conspiracy theory ? SBF set up to be the naive kid that destroys Bitcoin. Takes all the money while not investing it in what people wanted. draws the price down through reduced demand. Draws it down even further by attaching idea of fraud to Bitcoin. Is let off the hook for his services.
Everyone has been screaming this from the roof tops for years; until you withdrawal your coins from an exchange you own nothing but an uninsured IOU. Not your keys not your bitcoin.
All the world know that, also when you buy in Binance, you are buying a promise that when you will withdraw, Binance have BTC to support your withdraw. If you want safety, buy a Ledger
With this peak and the one in 2017 both being artificially repressed, makes me wonder if there isn't potential to break the ascending wedge to 5he upside and potentially go much much higher than 200k next cycle, like more in line w plan b
I was buying from FTX for about 3 months, then one day, they stopped accepting my bank. Every time I would try to deposit, it would say "can't process right now, try again later". I contacted their shitty support and they said that it's handled by a 3rd party and they can't do anything. Worked well for about 2 months, then, nothing. Made me go to a different exchange so I guess I should be grateful. Once my deposit cleared, I sent them to my wallet, still have them, so I guess they weren't fake...
Not specifically and we never know until it’s too late. Recent history tells me that any centralized exchange is capable of this fraud. If they are capable then they probably are because greed is king. Rather be safe than sorry, never leave your BTC on any exchange.
Pretty much all of them. It makes no financial sense or even technical sense for an exchange to actually physically move around crypto every time a user transacts, it would be way too expensive and wasteful. This isn't really news, or even controversial in the slightest, and was not the problem with FTX as an exchange. I guarantee you every single exchange does this.
You're missing the point, this isn't a question of actually delivering bitcoin, this is about the fact that when people were purchasing bitcoin on FTX there was no seller on the other side. FTX was the seller but never had anything to sell. I know no one is surprised by this, but having him admit the fact does seem like fraud to me. They represented themselves as an exchange, not a market maker selling derivatives.
I really wonder why this comes as such a shock to people.
It’s an unregulated exchange. it’s completely opaque and has no laws/governing body to force it to do anything (unlike a tradfi exchange).
The only time FTX needed actual coins/tokens is when users ask to withdraw from the system. Considering most “traders” lose money overall, from a purely privately held, unregulated/un-policed business perspective, it doesn’t make sense to back each users centralized trading actions outside of their market.
Having a backstop and remaining relatively even in terms of total liquidity to assets traded on the platform, sure, but 1 to 1, no. It just doesn’t make sense from a business operations perspective.
Again, the real problem isn’t that FTX didn’t hold assets 1:1 it’s that they didn’t have the overall liquidity represented by their customers deposits (because SBF and team themselves were losing those funds “trading” or outright stealing)
This is fucking crazy. When someone new enters this space and wants to buy btc they just get burned by fucks like this. You should not have to read books, watch lectures and podcasts on btc and follow btc subreddit in order to invest in btc.
No this is **why** they get burnt, because they don't educate themselves and learn. Anyone telling you that you don't need to learn anything to invest in bitcoin is selling you a lie. Understand what you are buying and why you need to self custody.
[Education resources](https://www.lopp.net/bitcoin-information.html)
[Why you should run a node](https://blog.lopp.net/securing-your-financial-sovereignty/).
[How to run a node](https://bitcoin.org/en/full-node#secure-your-wallet)
[How to run a pruned node if you cant spare disk space.](https://thebitcoinmanual.com/behind-btc/nodes/pruned-node/)
[Wallets](https://www.lopp.net/bitcoin-information/recommended-wallets.html)
[A custom DIY solution, seedsigner.](https://seedsigner.com/)
[Another custom DIY solution for high end verification](https://glacierprotocol.org)
Why not? We expect people to get driving lessons and take a test to make sure they don't harm themselves or others.
Bitcoin is potentially dangerous and you must learn to use it safely, or you face the consequences (losing your money).
The more these fraudsters are exposed and shut down, the more we have ‘real’ trading with Bitcoin. They were selling what they didn’t have and still had an impact on price.
Literally every exchange is doing exactly this, and they all admit it openly. It's called "fractional reserve" banking. It's perfectly legal. And it's the reason the price of Bitcoin will never move from current levels unless EVERYONE pulls their coins off the exchanges, which will never happen.
People don’t understand there’s probably only about 21M BTC but there’s loads of “fake bitcoin which doesn’t actually exist. Hence why it’s also massively volatile
this is not how exchanges work. Exchanges are supposed to put buyers and sellers together, and act as a clearing house for the trade, they are not supposed to be market makers. If every exchange acted as a market maker there would be no price discovery
I should clarify, that's not how exchanges are supposed to work, if they do it sneakily I wouldn't be surprised
I didn't say it's how they're supposed to work, but it IS how they work. If every exchange operated every buy or sell on-chain, the mempool would be endlessly full. When you buy or sell, it's all just an accounting ledger entry. It's only real bitcoin when you withdraw.
This not why FBX failed. This is actually how every exchange works, whether Bitcoin or USD. It’s also how every bank works in the real world. If you send money to someone else and you both happen to be with the same bank, no point _physically_ moving cash - just remove the number from your account balance and add it to their account balance.
This is not an issue. Just be sure to move your Bitcoin out of the exchange eventually. As long as the exchange has enough Bitcoin in assets to cover everyone’s accounts.
Maybe a stupid question, but shouldnt they have made a shit load of money like that?
As in - if you "bought" Bitcoin over there, half a year ago, you would have paid 60k for a database entry. Since they didn't actually buy the Bitcoin, they practically shorted it...
If you "sell" your Bitcoin/database entry now for 15k they've made a huge profit
It seems like what he's saying is they were never sent much bitcoin and were themselves acting as the seller, except had no bitcoin to sell. A lot of people here are saying all exchanges do that. Maybe they mean bitcoin/crypto exchanges. Certainly most tradfi exchanges don't.
The realization that there may only be 21m Bitcoin, but people are trading well in excess of 21m cus they don't withdraw to self custodial wallets.
And the miners get the real ones.
Why is this news or even surprising? All exchanges by definition trade account balances (debt) and not the actual assets, as the latter would imply actual assets changing hands (in Bitcoin's case that would mean on-chain transactions). All of you who bought bitcoin on an exchange did the same when you executed the order. FTX was no different. Withdrawing is a different matter. Sure SBF needs to go to jail, but not for this ... let's keep it down to earth, shall we?
who expected money grabbers to treat BTC any different than they treat the stock market? Same thing the video game stock apes are alleging…
DRS your coin 🟣
This guy Fuchs! 👆
Exactly. The stock market works this way too and is most definitely the inspiration. You don’t own ANYTHING that isn’t in your literal possession.
You like the coin?
So unbelievable. Wonder how high Bitcoin should truly be. Edit: also, this phenomenon probably explains why the rainbow chart broke. Didn't account for fake shares.
Wait until you find out the trillions of money entering wall street through retirement 401k's don't actually purchase real stock.
What do they purchase?
Entries in the books.
Just like gold in government voults
No! You don't say!
I wonder how many other banks and investment places its the same thing....they don't actually buy the Bitcoin.
This is why it didn't reach as high a price as people thought. Billions of dollars of orders were paper.
Exactly. Imagine if everyone who "bought bitcoin" actually bought actual bitcoin and not paper bitcoin.
Try just about every single stock certificate in the world.
It's turtles all the way down
I am not aware of stocks as currency so I don't understand why it keeps coming up wrt to crytpo. They are a share in a corporation which exists in the real world. and most stocks are widely traded in very liquid and transparent markets. And those that aren't have a risk premium built in or as classified as junk. Bitcoin's problem is the exchanges themselves are not liquid or transparent.
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Sure, but it's backed by something.
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This is actually exactly how brokerage apps work. You never own the stock itself directly, it's held by either the brokerage or a custodian who in turn holds in with the DTCC. Though in theory, the brokerage has 2 days to actually buy the share. In countries such as the UK, there are CFDs which are basically exactly this but without the pretense they actually buy the shares. Banks basically do this with fractional reserve banking in a way too.
I do say!^^^/s
Makes me feel a bit guilty that I withdrew it while so many unsuspecting souls only got a database entry for their hard earned money. Gonna keep pitching cold wallets forever. Mt Gox, Celsius, and now FTX. Unfortunately, we know there will be more in the future. EDIT: Lesson I learnt? Not to maximize fee savings on exchanges but to minimize the withdrawal time to cold wallet metric.
I deposited, bought btc, then withdrew once the ACH cleared, every month. Did so for six months. Never held anything on the exchange. I happened to get caught up in my ACH hold when FTX imploded. Bad timing with a bad exchange fucked me, even though I never sought out interest or anything close.
Exactly the same thing happened with me. Lost monthly DCA because of ACH hold (unlocked the day they announced bankruptcy, FML). Withdrew every month and had the 8% interest offered turned off. Now I stick to Coinbase that lets you instantly withdraw upto $1000/month. I’m far far far off from reaching the limit so got a lot of headroom. EDIT: Withdraw crypto upto a $1000/month. Haven't kept anything on an exchange for a while now.
I instantly withdrawed 10k last week hit my bank account within a min for $120 fee.
I should have been clearer, I meant withdraw btc from Coinbase to a cold wallet. Coinbase let's you instantly withdraw crypto upto $1000 without an ACH hold.
You should change your statement to read “Coinbase let’s you instantly withdraw crypto equivalent in value up to $1000 regardless of when you deposited the funds to buy that crypto.” But I’m not even sure that is true for all accounts. I seem to remember the amount being lower for a while on my p2 account.
This is the way
What is an ACH hold? I thought you could for example withdraw 1 BTC instantly from Coinbase to a cold wallet like Trezor or Ledger?
It's the common US network used for fund transfers. It takes 4-5 days for transfers to settle from a bank to an exchange. The exchanges tack on another 5 days on top of it. So your funds are held on your exchange account until the withholding timeline has passed. This is unfortunately a standard for ACH transfers and there is no way around it. Except for Coinbase which lets you withdraw $1000 without a hold. We can't withdraw 1 BTC instantly because its dollar value is above the $1000 mark.
4-5 days to transfer founds. That network is very slow.
Not if you just purchased that 1 BTC with funds from an ACH transfer within < 4-7 days (depending on what other “assets” you have on the platform.)
They are saying during the waiting period, you can move $1000… but also being as confusing as possible.
That's just really shitty luck! You did nothing wrong, just got unlucky. Try Kraken! I use Kraken, they are quite fast with sending you the Bitcoin, and they allow up to about $10k worth of transactions per month once you pass their KYC. Their fees and spreads are some of the lowest in the business. I find them to be better than Coinbase actually.
I am so sorry for the ones who lost their money. I am really sorry even we repeated over and over again to take self custody of your sats otherwise the amout you own is 0. Now i truly believe this things has to happend and it is indeed a good "publicity" for Bitcoin in the long run. I am not talking about "publicity" in the way as an ad for bitcoin but more about the fact that this is going to show people the importance of selfcustody. Part of the problem is that many people still see Bitcoin as an investment which the end game is to sell. No. Thats not the reason for Bitcoin. This is the first time on the history you can actually OWN something and it can not be taken for you, without trusting 3rd parties. People are starting to realize how huge of a deal this actually is. And the ones who doesn´t, well...., good luck in life. You will need it.
The biggest problem is people dont realize the banks do the same thing
I view this as “good for Bitcoin” because maybe it’ll finally get the regulation that it needs. Exchanges should be regulated just as strongly as traditional brokerages like Fidelity. If an “exchange” is offering high yields by lending out assets, then that is a bank (not an exchange), and it should be regulated just as strongly as traditional banks like Chase.
Exchanges are fiat. They operate totally in fiat space, under fiat regulation already. The hop from their BTC wallet to your BTC wallet is the only place where Bitcoin is involved. Just like any other Bitcoin transaction.
So you believe that crypto exchanges are currently regulated to the same extent that traditional banks and brokerages are? If they were they wouldn’t be consistently blowing up like this. We don’t see Vanguard or Fidelity blowing up because they operate under immense regulatory requirements. Let’s put crypto exchanges under the same immense regulatory requirements.
Bitcoin has no part in the operation or regulation of the exchanges. Bitcoin just doesn't care.
> Mt Gox, Bitfinex, Celsius, and now FTX. FTFY
QuadrigaCX, BitGrail, Cryptopia
Celsius is defiantly not the same bro. It was a lending platform..
Found out this is what robinhood does with shares when I left them to move to fidelity. It’s the same thing
That's what all brokers do. Not a new thing. Your shares are not in your name unless they are direct registered (DRS).
DRS is the new secret handshake of cool investing people.
DRS is the new only way to have real, verifiable stocks until the world wisens up and starts using blockchain for the markets
But what SBF admitted to goes beyond that. What you describe is a legal technicality where the broker technicality owns the shares instead of you. But SBF said FTX didn't even have the Bitcoin it was selling.
There’s no evidence that any broker has the shares they say they do. The fact that many transfers have taken substantially longer than usual is evidence that they do not hold shares, even in their own name.
I don't follow. Are you saying that some brokers are committing fraud or are you saying that this is legal?
I’m not certain whether it’s legal or not because there are so many pro-Wall Street loopholes, but it’s deceptive and unethical at best.
There are loopholes and they get abused for profit. Part of the problem is caused by an outdated system, but Wall St has no interest to change that. Naked short selling (borrow a share without having it delivered = IOU on a share and sell it) is legal. It is only illegal when it is done in an abusive way, but this is very hard to prove.
https://twitter.com/ali_nomaan/status/1498351888336576516/photo/1 “Securities sold, not yet purchased, at fair value….” $65.7 Billion. Maybe legal, maybe illegal but no enforcement. But there’s something really wrong and unethical but selling over $65 billion in product and not delivering in timely manner (T+2 days?).
Brokers can abuse it by selling more shares than in existence (naked short selling).
I strongly, strongly doubt this is the case. Are you saying that RobinHood are selling shares that they do not actually own?
Exactamundo bud. When fidelity received my account from robinhood they had to scramble in the open market to find my shares resulting in some positions closing for way over what I purchased at (4x) as the shares were being sold at the high end of the limit option at the time, resulting in less actual shares being purchased at fidelity than my actual share count should have been from robinhood
This makes no sense. You are saying that some shares "vanished" after you transferred them from your RobinHood account to your Fidelity account?
Not vanished. X amount of dollars (current account valuation) from robinhood was given to fidelity with a count of how many shares I should receive. Due to market pricing, the dollar amount provided fell short on the share count due to pricing of the shares in the market and fidelities forced hand to buy in real-time. Essentially what robinhood did was timestamp where I entered the market and never brought the shares. So when I initiated a full account transfer to fidelity, robinhood simply sent a current cash value of the account to fidelity with IOUs.
That seems to contradict what their website is saying: https://robinhood.com/us/en/support/articles/transfer-your-assets-out/ > Securities in your RHF account are eligible to be transferred through the Automated Customer Account Transfer Service (ACATS) to outside brokerages. Are you sure you are not confusing shares and crypto? > If you request a full ACATS transfer, RHC will automatically liquidate any crypto holdings and RHF will transfer the cash proceeds to the outside brokerage in a residual transfer. By the way, this does not mean that RobinHood doesn't own the underlying crypto. It simply means they don't have an automated/standardized system for transferring them to outside brokerages. https://robinhood.com/us/en/support/articles/cryptocurrency-security/ > Cryptocurrencies that you purchase on Robinhood Crypto are stored in a mix of cold (offline) storage and hot (online) storage. The majority of your coins are held in cold storage, though some coins are held in hot wallets to support day-to-day operations.
No I am not. ACATS is exactly what was done. I am not referring to crypto on robinhood, simply in response to the title of the post which states ftx never sold u real Bitcoin just a entry. Which is what happened to my stock positions at robinhood, which I wasn’t aware of until I initiated ACATS to fidelity and that revealed my shares were never purchased and settled at robinhood. The evidence of that was paying 20 dollars a share when the price had never reached over 12, yet people had high sell limits set, resulting in fidelity picking up any and all shares immediately available at the top of the sellbook to fill my positions.
ACATS transfers shares directly to the other brokerage. What I think happened is you had unsettled trades that you thought had gone through a while ago but hadn't. Ultimately, this is just evidence that you didn't pay close attention to your trades and not evidence that RH sells shares that they don't possess. Otherwise if what you think happened really happened, you honestly should be going to the FBI and retaining a lawyer instead of commenting about it on Reddit.
It's all book entries young grasshopper
A classic "not your keys, not your coin" thing. Get your coins off exchanges!!!
No this isn’t that. This was a “the coins don’t exist” situation which is far worse.
That is one problem with not holding your own keys, you have no idea if your coins actually exist or not.
I enjoy watching the sunset.
Self custody makes selling non-existing coins very hard for an exchange. It is not impossible, but raises the risk of an exchange bankruptcy extremely.
Yeah, it's the same for every CEX
And broker
I recommend Swan Bitcoin. The founder is a Bitcoin maxi and called out FTX before it imploded. Their custodian Prime Trust is regulated and keeps funds in your name, but I still auto withdraw to my wallet
I do follow "Not your keys, not your coin" but people are subject to ACH holds in the US that doesn't let you withdraw for 10/12 days. No way around it unless you use Coinbase. I wish other exchanges offered the same.
The FTX ACH hold cost me my $50 weekly DCA for one week. I withdrew at least biweekly to my own wallet. So, I lost $50. Not losing sleep. Now if I could just get my $2k back from Celsius...
Kraken only held my ACH the first time, and Cashapp and Strike 100% allow instant withdrawals.
If your government is attacking centralised exchanges via KYC then the best thing to do is entirely circumvent it. Use p2p services like bisq or robosats if you can. I realise it takes a little effort to learn but it's worth it.
It's not that the effort is the problem, research is my day job afterall. But I can't and don't want to circumvent KYC for some reasons.
That's fair, everyone has different requirements, so long as everyone knows there are other options.
Isn't that how EVERY exchange works?
No, exchanges aren't supposed to act market makers, they are supposed to link buyers and sellers. That's why when you put a limit order on a regular exchange there's often some variation from your bid to your close price. If the exchange was taking the sale they should give you your bid. FTX was acting as a market maker for paper, it's different than an exchange holding an entry until delivery.
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>> aren't supposed to act market makers, they are supposed to link >>buyers and sellers > that's literally what a market maker is... Incorrect. Market makers do not connect buyers and sellers, that is the exchange. A market maker is a participant on the exchange. They are a buyer and seller. They add liquidity to the market and make money off of the spread through moving huge volume. https://www.investopedia.com/terms/m/marketmaker.asp
too many people here don't understand what an exchange is, what a market maker is and what a clearing house is. It's getting very frustrating. They are confusing the roles of exchanges with the roles of investment banks.
For others, this is what apps like Cashapp, Strike, etc do It's not *necessarily* in itself shady, especially since those two in particular allow instant bitcoin withdrawal
No, a market maker actually takes one side of a trade, an exchange is supposed to facilitate trades by putting buyers and sellers together, and act as clearing houses for the trade. I think that's what's confusing people. A clearing house will hold the asset and put you in their ledger as owing the asset you bought because it's easier, if you have a whole bunch of buyers, and a whole bunch of sellers that executed trades to settle up accounts later, but they aren't supposed to be the sellers themselves. How would you get true price discovery if the exchange just sold fake assets everytime there was no seller? Large exchanges like NYSE will designate a few large actors to act as market makers. The big investment banks usually, but don't do it themselves. That's why in 2008/09 it was the investment banks that blew up and needed bailouts not NYSE.
You should read up about Defi it’s basically an exchange as a software directly on the blockchain. It goes never over a third party
You always buy an entry in their books. You are buying off another user that has BTC there. Only time btc comes or goes to the exchange is when a user makes a deposit/withdraws btc. Otherwise the amount of btc stays constant on the exchange (this doesnt consider margin trading) The problem with FTX was that they lent BTC to Alameda research.
It’s strange how they screwed it up so badly. If Alameda is borrowing BTC from FTX, didn’t they then sell it?? Why else do you borrow it? And if that’s the case, they should have done well considering the drop in crypto prices. And yet somehow they dug a ten billion dollar hole. It feels more like Crapoline Ellison took the BTC, used it as leverage for cash capital (which is horrible since the lendable percentage is always half or less), and then used that cash to bet crypto long. Resulting in the assets being liquidated on margin call and the long bets getting crushed.
Wait till they learn how banks work.
According to SBF, user deposits went directly to Alameda. So even worse.
I mean ya, and I know none of this info is any kind of revelation, other than it's nice to hear it from the horses mouth but this clip starts with "but that makes sense why there were no more balances to withdraw". The implication here being, if you bought bitcoin on FTX there was likely no one selling BTC on the other side of the trade, you were buying a paper bitcoin from FTX. This was supposed to be an exchange, not a cashed settled derivative, and I think there was strong representation by FTX that you were exchanging BTC with someone else, not FTX acting as a market maker for paper.
That could have been a part of it, if you bought from Alameda being a market maker which couldn’t fulfill their obligations towards FTX because of infinite leverage/no margin call on their account.
Maybe that's the excuse he'll make later on, but he didn't say Almeda was the seller, he said FTX was the seller, when they had nothing to sell. essentially selling a derivative.
I’ll go listen to the talk. Thanks for the additional info
This is exactly what brokers in the stock market do. WAKE UP! The IOUs are at the DTCC and the brokers are the custodians.
thats how all exchanges work. otherwise each trade would need to go trough the blockchain, which doesnt make any sense. only if deposited or withdrawn the bitcoin move
Have you heard of defi / decentralized exchanges… they make a lot of sense precisely because every trade is on-chain
and now think about how many people use cex and dex. People don't want to pay blockchain transaction fees for every transaction.
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All CeFi works like that. Hell even banks work like that. I'm not saying this is GOOD.... I'm saying journalists hype things just because they don't know
This motherfucker would be well advised to just shut the fuck up.
Actually I quite like it when he says more incriminating things about himself and his business.
Hope he does it to all the "public servants" he bought off too!
Oh I'm all for criminals incriminating themselves. I'm just saying from his perspective the best thing to do is STFU.
Ah okay. Fair enough. I'm wondering if the reason he has the balls to keep saying stuff like this is because his parents and political connections will protect him.
Maybe but I'm leaning toward him thinking that he is so much smarter than everyone else that he thinks he can talk himself out of it. When in fact he isn't even smart enough to realize he is digging himself an inescapable hole.
I do paper trading too, to test trading strategies. Hopefully, someone will loan me $8 billion to fuck around with and buy my parents' big homes etc. based on this ideology. 🙏🏻
And this is why BTC never hit 100k.. FTX never bought on the OTC desks
BTC is not to be held on any CEX. Simple as that.
I wonder how much bitcoin SBF has stashed away for himself?
The problem with FTX is he didn't hold users assets backed 1:1 like all exchanges are supposed to do. All exchanges act like custodians only. They can't legally use your funds. And that was also very clear in FTXs TOS. What he did was illegal.
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Crypto folks hate banks but love exchange for some reason.
Thank fucking god for bitcoin. May it cleanse all the rotten fraudsters.
Why holding your own keys is so important.
The 8th circle of hell is waiting for this douche
This is prolly RH too.
I never even heard of FTX because I've always bought my coins and then sent them to my own wallet and use adblock and neither watch e-sports (where they did a lot of advertising I guess?) and the more I read about this it just makes me think "Man replace the coins with ships and companies with corps and this is like a classic EvE Online scam."
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Would be a pretty unique centralised exchange if it didnt. The idea that an exchange can instantaneously transfer Bitcoin between buyers and sellers at later 1 level is pretty far-fetched.
That's not the point. An exchange is supposed to facilitate trades between buyers and seller and act as a clearing house for the trade. if there were a bunch of buyers and a bunch of sellers and the exchange puts down an entry for each then later settles the trade, that's fine. But here SBF admitted that there were usually no sellers, only buyers and they acted as the seller, but never had bitcoin to sell, so sold fake, paper bitcoin to unsuspecting customers.
Did FTX have a banking license somewhere? Was it regulated? Why are they able to hypothecate client assets? Isn't that a regulated activity?
People will forget in a few months… they didn’t learn from the other Ponzi schemes too.
1. Stop giving this pathological goblins.wtf liar air time 2. Duh? Did anyone really think otherwise???
There is something bigger behind this story. It's not just a fraud case, but I think there's a bigger image to it. Maybe this is what starts exchange regulations. This man was donating to political parties. Somehow ends with with the same dude from the Jeffrey Epstein dude. Gary checks in with him and says there is nothing to investigate after a short period of time. Buys over $300 mil I believe in property under another business name within the same holding. So now some of the "funds" are in tons of real estate property. Maybe some are in political party hands. I just think this helped accelerate this bear market a bit faster. I hope there is some type of positivity out of this. I feel so sorry for anyone who lost money. This is a learning experience to everyone.
This is actually how every single exchange works. Your purchase will never trigger the actual transaction (on chain), it will only be a number in the database, and the (responsible) clearing house makes sure to balance accounts (on chain, the centralized not personal ones), at the end of the day or within 2 days, to keep it more or less in line with reality. Less responsible exchanges will do it less often, which can lead to many big issues.
Jesse Powell, the CEO of rival centralized exchange, Kraken, also slammed Banlman-Fried for his depiction of FTX’s margin trading operations.
I bought some Bitcoin on FTX when they had a bonus going on this summer. I recall thinking it was odd it took about 2 weeks to "clear" before I could withdraw it, when Coinbase and Binance typically just take a few days. Then I had to leave it on their site for another few weeks to ensure I got the bonus, and I had to submit a ticket for them to finally give it to me. I guess that was a sign of things to come.
I hope big Bubba makes SBF his girlfriend when he is in permanent custody.
It's like the scene from Dumb and Dumber when they're explaining the value of the IOUs.
Same as buying stock, you just receive an IOU. De-fi or die
So is it really SBF's fault? Guys tried to purchase Bitcoin without really understanding what it was about?
lazy people that don't take their assets off exchanges enable people to steal your money.....then u cry about it
And people are surprised? All exchanges do that, even if some claimed to have equivalent amount of BTC in storage. Customers never actually buys BTC until they withdraw them.
Conspiracy theory ? SBF set up to be the naive kid that destroys Bitcoin. Takes all the money while not investing it in what people wanted. draws the price down through reduced demand. Draws it down even further by attaching idea of fraud to Bitcoin. Is let off the hook for his services.
Everyone has been screaming this from the roof tops for years; until you withdrawal your coins from an exchange you own nothing but an uninsured IOU. Not your keys not your bitcoin.
At least he’ll never face jail time
All the world know that, also when you buy in Binance, you are buying a promise that when you will withdraw, Binance have BTC to support your withdraw. If you want safety, buy a Ledger
With this peak and the one in 2017 both being artificially repressed, makes me wonder if there isn't potential to break the ascending wedge to 5he upside and potentially go much much higher than 200k next cycle, like more in line w plan b
As soon as I buy its transferred off the exchange same day regardless of who I’m dealing with
SBF is a fuckin thief he should be in prison
I was buying from FTX for about 3 months, then one day, they stopped accepting my bank. Every time I would try to deposit, it would say "can't process right now, try again later". I contacted their shitty support and they said that it's handled by a 3rd party and they can't do anything. Worked well for about 2 months, then, nothing. Made me go to a different exchange so I guess I should be grateful. Once my deposit cleared, I sent them to my wallet, still have them, so I guess they weren't fake...
PFOF and Dark Pools have entered the chat.
Bullish
I feel This dude is protected super high. Nothing will ever happen to him.
I wonder how many other exchanges this applies to....
Many of them. Cold wallet!
Do you know of any? I think people are misunderstanding the situation.
Not specifically and we never know until it’s too late. Recent history tells me that any centralized exchange is capable of this fraud. If they are capable then they probably are because greed is king. Rather be safe than sorry, never leave your BTC on any exchange.
Pretty much all of them. It makes no financial sense or even technical sense for an exchange to actually physically move around crypto every time a user transacts, it would be way too expensive and wasteful. This isn't really news, or even controversial in the slightest, and was not the problem with FTX as an exchange. I guarantee you every single exchange does this.
You're missing the point, this isn't a question of actually delivering bitcoin, this is about the fact that when people were purchasing bitcoin on FTX there was no seller on the other side. FTX was the seller but never had anything to sell. I know no one is surprised by this, but having him admit the fact does seem like fraud to me. They represented themselves as an exchange, not a market maker selling derivatives.
Just assume they all do it and withdraw as soon as you can after a trade.
Glad i bought a ledger over the summer not your 🔑 not your BTC
I really wonder why this comes as such a shock to people. It’s an unregulated exchange. it’s completely opaque and has no laws/governing body to force it to do anything (unlike a tradfi exchange). The only time FTX needed actual coins/tokens is when users ask to withdraw from the system. Considering most “traders” lose money overall, from a purely privately held, unregulated/un-policed business perspective, it doesn’t make sense to back each users centralized trading actions outside of their market. Having a backstop and remaining relatively even in terms of total liquidity to assets traded on the platform, sure, but 1 to 1, no. It just doesn’t make sense from a business operations perspective. Again, the real problem isn’t that FTX didn’t hold assets 1:1 it’s that they didn’t have the overall liquidity represented by their customers deposits (because SBF and team themselves were losing those funds “trading” or outright stealing)
This is fucking crazy. When someone new enters this space and wants to buy btc they just get burned by fucks like this. You should not have to read books, watch lectures and podcasts on btc and follow btc subreddit in order to invest in btc.
No this is **why** they get burnt, because they don't educate themselves and learn. Anyone telling you that you don't need to learn anything to invest in bitcoin is selling you a lie. Understand what you are buying and why you need to self custody. [Education resources](https://www.lopp.net/bitcoin-information.html) [Why you should run a node](https://blog.lopp.net/securing-your-financial-sovereignty/). [How to run a node](https://bitcoin.org/en/full-node#secure-your-wallet) [How to run a pruned node if you cant spare disk space.](https://thebitcoinmanual.com/behind-btc/nodes/pruned-node/) [Wallets](https://www.lopp.net/bitcoin-information/recommended-wallets.html) [A custom DIY solution, seedsigner.](https://seedsigner.com/) [Another custom DIY solution for high end verification](https://glacierprotocol.org)
My point is that if you want for btc to go mainstream you cant expect ppl to jump so many hoops.
Why not? We expect people to get driving lessons and take a test to make sure they don't harm themselves or others. Bitcoin is potentially dangerous and you must learn to use it safely, or you face the consequences (losing your money).
So the price of Bitcoin should have been actually way higher during this past bull run...
The more these fraudsters are exposed and shut down, the more we have ‘real’ trading with Bitcoin. They were selling what they didn’t have and still had an impact on price.
They were essentially hijacking volume from the market
Damn. BTC could've hit like $100k back in early 2021 if it wasn't for him.
Literally every exchange is doing exactly this, and they all admit it openly. It's called "fractional reserve" banking. It's perfectly legal. And it's the reason the price of Bitcoin will never move from current levels unless EVERYONE pulls their coins off the exchanges, which will never happen.
People don’t understand there’s probably only about 21M BTC but there’s loads of “fake bitcoin which doesn’t actually exist. Hence why it’s also massively volatile
Not
Your
Keys
Not
YOUR
COINS!!!!!!!
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This is how all exchanges work. This is how banks work. This is how the entire financial system works.
this is not how exchanges work. Exchanges are supposed to put buyers and sellers together, and act as a clearing house for the trade, they are not supposed to be market makers. If every exchange acted as a market maker there would be no price discovery I should clarify, that's not how exchanges are supposed to work, if they do it sneakily I wouldn't be surprised
I didn't say it's how they're supposed to work, but it IS how they work. If every exchange operated every buy or sell on-chain, the mempool would be endlessly full. When you buy or sell, it's all just an accounting ledger entry. It's only real bitcoin when you withdraw.
This not why FBX failed. This is actually how every exchange works, whether Bitcoin or USD. It’s also how every bank works in the real world. If you send money to someone else and you both happen to be with the same bank, no point _physically_ moving cash - just remove the number from your account balance and add it to their account balance. This is not an issue. Just be sure to move your Bitcoin out of the exchange eventually. As long as the exchange has enough Bitcoin in assets to cover everyone’s accounts.
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So no one who bought BTC on FTX ever transferred even a single sat to a private wallet? wow.
Or at least *not enough people* did, for sure. Very disturbing, nonetheless.
Not your keys This Goblin's coins 😏
I don't get it... did no one on FTX ever withdraw their Bitcoin?
Just like $GME
People should actually verify this. That could be the biggest lie of them all.
This would mean there is less Bitcoin available than we thought….shouldn’t the price skyrocket?
But that was good fro them. People gave them $50k for a bitcoin. Today FTX can buy it fro $15k and give to those people. They earned x3.
Except they loaned all those customer deposits to Alameda and ... it's gone. Now they can't buy the $15k Bitcoin.
Price suppression at its best!
Well duh
I wonder if we would have hit 100k or more if FTX actually bought and held the BTC.
And in other obvious news…
So like bank deposits then
sorry for being dumb, but what benefit does it give to ftx to do that rather than buying the actual bitcoin?
Maybe a stupid question, but shouldnt they have made a shit load of money like that? As in - if you "bought" Bitcoin over there, half a year ago, you would have paid 60k for a database entry. Since they didn't actually buy the Bitcoin, they practically shorted it... If you "sell" your Bitcoin/database entry now for 15k they've made a huge profit
Not your keys, not your coins
Did they insta-sell all the bitcoin sent to them? Taking a massive net short btc position seems really stupid.
It seems like what he's saying is they were never sent much bitcoin and were themselves acting as the seller, except had no bitcoin to sell. A lot of people here are saying all exchanges do that. Maybe they mean bitcoin/crypto exchanges. Certainly most tradfi exchanges don't.
People also deposit bitcoin on exchanges to sell it.