
Coinbase acquires decentralized cryptocurrency trading platform Paradex - iMuzz
https://www.reuters.com/article/crypto-currencies-coinbase/coinbase-acquires-cryptocurrency-trading-platform-paradex-idUSL2N1SU1KK
======
hendzen
Circle acquiring Poloniex changed the game. The rumored assurances from
regulators that Poloniex's prior KYC/AML transgressions would be ignored as
long as Circle fixed them going forward was all it really took. Now we are
seeing a huge wave of M&A deals while Coinbase uses its very strong financial
position to buy up the the less compliant but cashflow-rich overseas
exchanges. In particular I wouldn't be surprised to see a huge deal such as
Coinbase acquiring BitFinex/Tether at a greatly reduced price w/ some
negotiated deal with US regulators to phase out Tether as long as holders can
prove their Tether balances were acquired legitimately.

That said, if trading is the killer app for Bitcoin/Crypto [0] in general -
what is the point of this whole business? For example most of the genuinely
innovative things I've seen on the ETH blockchain like 0x (the backbone of
Paradex), dydx (decentralized derivatives) and related technologies or higher
level platforms like relayers and decentralized exchanges involve trading.
Which begs the question - what tokens are actually worth trading in the first
place? Is all this value really justified by CryptoKitties?

Just making HFT bots to trade around a bunch of monopoly money that is useless
other than hype-driven speculation? I'm sure this could continue for way
longer than I and other skeptics expect, as it already has before, but the
whole cryptocurrency sector seems fairly irrational to me. And I say that as
someone who was VERY interested/knowledgable about bitcoin during the 2013
bubble, to the point where I was hanging out on IRC channels like #bitcoin-
wizards, discussing BIPs etc.

[0] - [https://tradingplacesnewsletter.com/move-over-crypto-
enthusi...](https://tradingplacesnewsletter.com/move-over-crypto-enthusiasts-
wall-street-will-take-it-from-here-5b5a9067bc5)

~~~
guildenstern
There is absolutely no chance that bitfinex and/or Tether will be acquired by
any legitimate institution, much less Coinbase. They are far to steeped in
fraudulent behaviour to ever go legitimate without regulatory punishment.

~~~
hendzen
Why not? Circle (US based) bought Poloniex which is one of the biggest Tether
exchanges.

If you're Coinbase and you get to buy Bitfinex/Tether at a firesale price +
pay some fines to the SEC if needed, why not?

~~~
guildenstern
Bitfinex isn’t a company that ignored some AML requirements and they’re not a
company just using Tether. They’re the company responsible for tether, they
are the creators of Tether. Tether is hugely fraudulent, it’s foundation is
fraudulent, they haven’t just avoided some regulations. There’s no way that
Coinbase or any other legitimate institution would open themselves up to being
responsible for that.

~~~
MichaelGG
Who has Tether defrauded? I agree Tether may have just issued without backing,
but they don't promise being able to withdraw. So who is actually being
harmed? And why is it unfixable? What if Coinbase promised to completely cover
any usdt shortfall?

~~~
askmike
I think the criticism from the regulators has to do with the fact that you
cannot create something representing a dollar without approval from regulators
and without requiring anyone to do KYC - effectively circumventing all KYC/AML
systems in place in the traditional financial system.

------
iMuzz
Paradex is a decentralized exchange that's built on top of the 0x protocol.

DEXs are great because you can trade cryptocurrency pairs without trusting an
intermediary (think Mt. Gox for why this is needed).

This move shows that Coinbase is serious about building a decentralized
trading platform (unless this is just an acquihire which would be very
disappointing).

Really exciting news!

~~~
joosters
If there's no intermediary, what exactly have Coinbase bought?

~~~
philfrasty
There is an intermediary in 0x called a relayer (receiving relayer fees) that
brings together both buyer and seller through e.g. an exchange UI. Just the
transaction itself does not require an intermediary and is therefore not prone
to counter party risk (of course if buyer and seller knew each other before
they could just skip the relayer).

------
hapnin
Awesome. Now people have hundreds more semi-anonymous tokens to which they can
attach their personal information.

------
thisisit
I had to lookup what exactly Paradex was and it seems the platform is based on
0x. Given that decentralized exchanges have issues like front running, open
arbitrage etc[0], I think this might not be a wise move.

[0]: [http://hackingdistributed.com/2017/08/13/cost-of-
decent/](http://hackingdistributed.com/2017/08/13/cost-of-decent/)

~~~
patatino
Will Warren, co-founder of 0x addressed these topics in two blog posts

[https://blog.0xproject.com/front-running-griefing-and-the-
pe...](https://blog.0xproject.com/front-running-griefing-and-the-perils-of-
virtual-settlement-part-1-8554ab283e97)

[https://blog.0xproject.com/front-running-griefing-and-the-
pe...](https://blog.0xproject.com/front-running-griefing-and-the-perils-of-
virtual-settlement-part-2-921b00109e21)

------
fwdpropaganda
> That said, if trading is the killer app for Bitcoin/Crypto [0] in general

I've had this thought myself. I think we can agree that most solid evidence
points to Yes, trading is the killer app. Trading on something that has no
intrinsic value. I.e. gambling.

And hey, gambling is a legitimate killer app. The gambling industry is
enormous.

------
wslh
> The financial terms of the deal were not disclosed.

Acquihire? It would be weird for Coinbase to take full advantage of a
descentralized exchange because many of the tokens clash with regulations and
even being decentralized makes Coinbase the owner and target for SEC.

~~~
patatino
Both coinbase and 0x have filed for regulations with the SEC. Will be
interesting to see what the SEC decides.

[https://www.sec.gov/Archives/edgar/data/1735689/000173568918...](https://www.sec.gov/Archives/edgar/data/1735689/000173568918000002/xslFormDX01/primary_doc.xml)

[https://www.sec.gov/Archives/edgar/data/1735709/000173570918...](https://www.sec.gov/Archives/edgar/data/1735709/000173570918000001/xslFormDX01/primary_doc.xml)

------
pibi
> While we work to integrate with Coinbase, the Paradex app will be
> temporarily unavailable, starting today, May 23, at 3pm ET.

What's the point of a decentralized exchange if the frontend code can be
shutdown at will?

~~~
fwdpropaganda
> What's the point of a decentralized exchange if the frontend code can be
> shutdown at will?

You can have decentralization with respect to some components of the exchange
and not others. In the case of Paradex it seems the point of decentralization
is that you don't have to trust the exchange for custody. That's quite good by
itself, even if they can shut down the frontend at will.

