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Crypto.com Halts Solana USDC and USDT Withdrawals (coindesk.com)
247 points by Lionga 83 days ago | hide | past | favorite | 291 comments

We're starting to see the cascade of exchange failures, just like we saw in 2008 with the banks during the GFC. The exchanges all made loans to one another in order to backstop their customer's assets. Now that the value of those loans are evaporating the entire system is going to come crashing down all at once. This is a systemic crisis, and there is no white knight to save it.

I'm curious because a lot of this started (in the short term) with Binance dumping their FTT. Just yesterday it looked like a "4D chess move" because then Binance could acquire FTX for next to nothing. Now I'm curious if Binance just tipped over the gasoline can that can finally set this whole shitshow of uselessness ablaze, but potentially taking down Binance with it.

I'm not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state internally that it made sense to sell his holdings in FTT. I could buy the idea that he wanted to hurt FTX with his tweet, but things quickly escalated out of control.

I also think the offer to buy FTX was motivated by a desire to avoid a broad crypto collapse which would hurt Binance along with everybody else. But that offer had to be withdrawn because things got so bad.

Now everybody involved is worse off than they were before, a lot of customers might lose money, and there is a pretty good chance that regulators and governments are going to get more involved in the crypto market in response.

If this was planned in advance, it was not 4D chess, it was just a really bad plan.

And also: at the time of Binance's offer to buy FTX, it makes sense only if Binance saw significant contagion risks to FTX's failure. But then they got a little closer and saw the huge hole in FTX's balance sheet and decided that they couldn't do that either. So it's really the worst outcome - they signal that FTX is important to their own business, but then can't do anything to save it. Does not seem to be good news for Binance.

Binance already knew that there was a hole there. They had just triggered the bank run by calling it out. The attempt to bail out FTX later was only for saving face and maybe also because they freaked out but couldn't stop it at that point.

And if they didn't know how large the hole was, they must have gotten a pretty good idea before signing the LOI. Even if it was rushed, surely that would be the first question they ask.

It seems clear from CZ's public announcement of a $2b FTT dump that their intention was to destroy FTX and Alameda. So my theory is that the LOI was a trap to put a nail in the coffin, destroying any remaining trust in FTX.

Before they were merely starting rumors; the phony acquisition attempt let them declare "we've seen the books and FTX is unsalvageable".

> not sure why the CEO of Binance would have wanted to acquire FTX if he really thought it was in such a bad state

FTX could have just been illiquid. With a lot of loans to other crypto players who would do fine if FTX were rescued. Turns out, they weren’t. They were fundamentally insolvent.

Acc to their press release Binance did know that they were insolvent, just not to what degree.

Personally, I think they would have known the size of the hole as well, and never intended to go through with the buyout

Perhaps he thought the block hole was a billion and found out it was 5/10/20/100 billion?

People are ascribing brilliance and cunning to something that was simple self interest. FTT was risky, so they dropped it. What would they have done if FTT was risky and they didn't intend to acquire FTX? The same thing.

> FTT was risky, so they dropped it.

Instead of quietly selling off their holdings over time, the CEO tweeted their intention to sell and triggered a death spiral.

Could've, sure, but then they'd be accused of insider trading, or trading against their users or something. With their volume would a death spiral not have happened anyway after all the downward force? You could also see it as them giving their users a chance to get out first.

Binance didn't benefit by announcing it either. The token dumped before they liquidated, and they didn't scoop up their competitor.

I think broadcasting the intent to sell the FTT was the big mistake. It isn't in their interest to announce to the market their trading plans so, and to my knowledge they are not beholden to any regulation to do so, so why do it? Just slowly offload the risky asset.

Exactly. It was an attack and it worked.

They got lost in their 4d chess maybe. Haha

> This is a systemic crisis, and there is no white knight to save it.

Fortunately, unlike 2008, the global economy doesn't depend on this stuff working.

> cascade of exchange failures, just like we saw in 2008

They are related in both being cascading crises of confidence. ‘08 manifested from a novel opacity around correlation (lack of centralised counterparty reporting) from novel non-bank banks (shadow banks). This is just a three-point recursion cycle: FTX, FTT and Alameda.

Well said. Crypto is nobody's business. And when people lose their assets, it's still nobody's business.

exchange failure? this is a very small player with $500m daily volume only

it's a noise https://coinmarketcap.com/exchanges/crypto-com-exchange

it's the failure of all the suspicious exchanges for sure

It's a "very small player" that has their name plastered on one of the most prominent arenas in the United States. (FTX also had their name on another arena, for that matter!)

It's quite possible that the public perception poison will be way worse than any collapses themselves because these players have tried so hard to associate themselves with crypto in the public eye.

There's a beautiful difference. Unlike in 2008, today

- I can transact efficiently and safely without a bank account. This is currently not possible in traditional finance

- Subsequently, none of my assets are locked. I have never stored assets in an exchange, and have no need to do so.

- Exchanges can't ask daddy government to mint coins for a bailout.

Tl;dr: exchanges and banks who think they can get away with being overleveraged, doing unbacked derivatives trading, lending without locates etc. are in for a bitter surprise. Crypto can't be gamed so easily and it shows.

The problem is, if these exchanges collapse, the value of that crypto you have will drop significantly. So yes, you still have your crypto assets, but there is a real chance they could end up being worthless.

Even if you don't use exchanges, you are still exposed to their failure because they are major players in the market that determines the value of the cryptocurrencies. When major players in a market go bust, it's unlikely that any of the other market participants will end up unscathed.

Given that crypto value is based solely on what other people are willing to pay for it, it really could go to zero. It probably won't go all the way to zero, but I'd still expect a significant drop.

This indicates that the value was propped up by market manipulation. I have no problem with a crash like this, as I have no exposure to centralized * exchanges.

I also don't have illusions about price action. I don't invest into crypto to make a quick buck. I invest because I fundamentally oppose traditional finance.

> the value was propped up by market manipulation

The entire crypto market is nothing but[1] market manipulation and speculation. If that goes away your crypto will be virtually worthless.

[1] pre-empting the "but it's used for practical things in countries with crumbling economies instead of the local currency" argument: yes, but that's such a tiny portion of total market cap that it probably doesn't affect the value of your holdings by any meaningful amount.

> [1] pre-empting the "but it's used for practical things in countries with crumbling economies instead of the local currency" argument: yes, but that's such a tiny portion of total market cap that it probably doesn't affect the value of your holdings by any meaningful amount.

Also good ol' fiat dollars are better than crypto for that use case in pretty much every way.

Really, no exposure to centralized finance? You only use crypto to pay your rent and buy your groceries and your clothing? Your employer pays you in crypto?

My bad, I meant centralized exchanges, not finance. Edited my comment.

> You only use crypto to pay your rent and buy your groceries and your clothing? Your employer pays you in crypto?

Oh how I wish that was true.

So in purchasing power terms, you have significant exposure since you now have to sell X% more of your holdings to pay fiat denominated rent.

That's one perspective sure. You could also say that I have to pay X% more compared to the inflated paper gains I had before.

>This indicates that the value was propped up by market manipulation.

I'd wager the propping was part manipulation and part speculative mania, of which the latter his been dispelled.

I think the mania is still there, based on some of the reactions I see defending crypto. But a lot of people must have bailed out to make the Bitcoin price drop so much.

I'll believe the mania is over when Bitcoin reverts to pre-2017 prices and stays that way forever. Honestly I've been considering buying some because I suspect the dip will be temporary, but ultimately I'm not that foolish with my money.

crypto *is* traditional finance. whenever humans transact with each other, we reify the behavioral mechanisms which define us as a species. we cannot help but create economies, to trade and transact. all finance is "traditional" finance until our biology changes and new emergent dynamics and equilibriums establish themselves. however thermodynamics, statistics and other math might also have a lot to say on the matter.

there is no such thing as traditional finance, just finance.

When people talk about traditional finance, we mostly refer to the existing technologies for issuance of currency, settlement of fiat transactions, and the debt hierarchy.

Of course finance is an incredibly nuanced word. To quote V. Buterin:

> Finance can be viewed as a set of patterns that naturally emerge in many kinds of systems that do not attempt to prevent collusion

The only point at which you should quote Buterin is if asked to quote someone with absolutely no knowledg trying to speak from a position of authority. Him making up a new definition for a widely used word to justify the existence of his shitcoin does not make it gospel.

you are displaying a lot of foolish ignorance and compounding it with misplaced certitude but in good faith and a spirit of wide eyed curiosity I applaud your lack of understanding of finance. also you get a lot of credit for using the word "nuance" as if it somehow changes the definition of the word finance.

finance, trading, barter, humans will not allow collusion to continue unchecked. so finance being defined partly as the lack of check against collision is pure propaganda by Buterin and you are his mark. the only reason the collusion rife in the crypto space is so unchecked is because its a big casino constructed for you to play in by people like SBF, CZ, V. Buterin. The whales represent a huge cartel. The drama of the last few days is a parable of collusion, retail being tricked into gambling their life savings, retail being fed lies about how the word is and how the world is not, lies which are easy to disprove.

you are a classic retail mark, being fed and regurgitating marketing and propaganda to encourage you to play your part.

look up retail FX trading manias in Japan in the early to mid 00's as recent past as prologue.

> you are displaying a lot of foolish ignorance and compounding it with misplaced certitude but in good faith and a spirit of wide eyed curiosity I applaud your lack of understanding of finance.

Why is this kind of defensive retort so commonly seen in discussions about the value of cryptocurrency?

Because it's a polarizing topic. I find this particular ad-hominem rather mild, compared to what you find on Reddit.

this is no ad hominem - I am attacking your statements here not you as a person. you are flaunting your ignorance and using some weird appeal to authority by posting a vague quote from V. B. which itself is like, not even wrong.

I am not defensive, I am embarrassed for you and all of the people poisoned by this antisocial propaganda, and it makes me despair for humanity.

I wasn't making an appeal to authority, nor was I agreeing with V.B. I was trying to point out that finance may mean different things in different contexts. Not sure why you keep obsessing over this propaganda narrative, as if I'm a brainless NPC. I'm open to learning new things, and if you're more knowledgable then I'll listen.

For instance, I really like your view of finance as these emergent properties of human behaviour. My question is then: how do you propose we refer to the entities we currently have in place for trading of securities, market making, fractional banking, clearing houses, central bank issued fiat, etc? Clearly there is a difference between those "things" and what we do in DeFi, right?

So what label am I allowed to use to distinguish these entities from DeFi?

On HN this particular flavor seems to only accompany crypto. Other polarizing topics e.g. criticism of Apple or Facebook, or even China, don’t exhibit this weird style.

First of all, the "collusion" Buterin is referring to is a game -theoretic term and is precisely defined. Based on your response I'm guessing you are not familiar with his blog post.

Calling something propaganda without being familiar with the source is probably the purest form of irony.

Dare I say - based.

Exchanges should not collapse if all they do is collect commissions from people trading. They collapse when they issue their own tokens and borrow hard assets against those very soft tokens.

Nobody in the crypto industry has the self-control to just be an exchange.

The whole idea of crypto attracts the same people as other get-rich-quick schemes. Some scammers, some earnest people. But all ultimately lacking in self control.

Yeah the exchanges are collapsing because They all held positions and went exchanges. Although at some point they collapse for counter party risk

if these exchanges collapse, the value of that crypto you have will drop significantly

The throne is never empty, right? We are probably still to find out if it’s worth sitting on long term, but since that genie left the bottle, I suspect it is.

You sound just like one of those house owners with a fat mortgage on the eve of 2008.

When you buy an asset from heavily leveraged market you get high risk even when you don't use leverage yourself.

The crypto I buy is not leveraged, it's sitting in my wallet - unlike IOUs, stocks and derivatives.

In crypto, leverage exists solely because of people who aren't doing self-custody and DeFi. They brought this upon themselves.

Genuine question: what are you doing with that crypto anyway if not planning on cashing out back into fiat currency again?

My understanding is that the vast majority of cryptos are useless for actually paying for anything and the vast majority of businesses still don’t accept them anyway. So unless you are basically only using and holding BTC (which has a relatively small market of goods that can actually be purchased with it on a daily basis), I’m not really sure what good that crypto is doing for you other than sitting around as a speculative asset which will need to be converted via an exchange.

Genuine answer: I'm holding my crypto assets until I can exchange them for the goods and services I need. I never exchange any crypto back to fiat.

I don't "invest" to make money. It's a currency. I buy it to use it. I might have to hold it for 5 years, maybe 10, maybe 30, or maybe I'll die and crypto will never be successful (a sad thought but possible).

But in the meantime I'll do what I can to improve adoption. That includes working on core protocols, improving UX for non-technical users, or writing software that helps vendors with payment integration. I also make an effort to approach business and show that there is demand for crypto payments.

This is literally the only way to make crypto successful. All this price action non-sense, and people wanting to get fiat-rich is just unproductive noise to me.

And the people in the housing bubble mostly lived in those houses, yet they got burned by the crisis nonetheless.

You don't properly evaluate the present value of money if you are willing to trade your present money for future money at completely unknown conversion rate and adoption date.

Relative to the strategy of buying it when you could use it (which also satisfies your intents) you are practically speculating. You can also look at it like opportunity cost.

> You don't properly evaluate the present value of money if you are willing to trade your present money for future money at completely unknown conversion rate and adoption date.

Unknown can mean many things. I'm convinced that the fair value of crypto is much, much higher. Adoption is still sluggish and small.

I believe in crypto's success, which you might call speculation.

> This is literally the only way to make crypto successful. All this price action non-sense, and people wanting to get fiat-rich is just unproductive noise to me.

Why are you buying crypto regularly? If you don’t care about the price, and you have no idea what the fair value is - what’s the right coin and right amount to hold?

Your response is the first that's really interesting. I know that the fair value is much, much higher than it is now, because there is virtually no real adoption.

> what’s the right coin and right amount to hold?

That's an amazing question. I have truly no idea. I'm investing based on my personal conviction.

But this opens up a really interesting discussion about game theory and prediction markets. In a zero-sum prediction market, refusing to play is pareto-optimal and an equilibrium strategy.

So you could call me an irrational actor. I'm making a first move based on personal belief, thereby giving you an opportunity to arbitrage me. I believe that the fair value is higher than it is now. If you believe differently, short me. (I'm just joking of course, but I do find your question intriguing, and is something I've been thinking about a lot)

> I *know* that the fair value is much, much higher than it is now, because there is virtually no real adoption

(emphasis mine)

This seems like an incredibly bold claim to make. I would argue that there is little adoption because many have judged crypto to be of little value.

I often find that crypto enthusiasts who go all-in on game theory are from making rational decisions despite sounding partially logical.

This is such a meaningless stance in the context of this discussion.

If only everyone was buying various crypto and holding it in a cold wallet for the next 300 years!.. that’s the only true usage for crypto. No insidious banks, no fiat, no regulations, just pure bits in my virtual wallet until I die.

you should invest your spare cash (no matter what the currency) into actual investments. cash is dead money, and taking a buy and hold approach to foreign exchange trading is probably a bad idea compared to something like (just off the top of my head) the All Weather Portfolio.

King dollar has been disagreeing with you.

Owning coins that can't be exchanged for anything is kind of a pointless endeavor, is it not?

The value of most coins is going to zero as a result of this. Crypto is going to be a frigid wasteland after this for quite a while.

There are tons of vendors I actively use that accept crypto. Not as much as I'd like, but hardly no one.

But yeah, you're right, a currency nobody uses is obviously worthless. I'm attempting to drive adoption so that they CAN be exchanged for goods and services.

You're not getting it. Vendors almost all immediately convert Crypto to USD or their local currency. When the exchanges collapse that will no longer be possible. Poof, your ability to use Crypto also ceases at that very moment.

You are incredibly exposed to the same risk that these exchanges have.

If a large enough user base and set of vendors accept crypto, there's no need for converting to USD.

How do you handle refunds? Converting twice? Sure, charge users for it, you'll be driven out of the market by businesses who are not scared to keep a crypto wallet liquid.

How are the vendors that accept crypto paying their invoices? The company I work for has hundreds of vendors and suppliers, and none of them accept cryptocurrency. They all seem to want USD.

By expressing your desire for crypto payments to said vendors. If there's enough demand, the industry can change to accommodate it.

This dynamic actually exists even in much more conservative/slower moving fields like hardware manufacturing. It's a slow process

This train of thought requires every single person involved in production down to the person putting the item on your doorstep to be a true crypto believer.

Don‘t forget the IRS!

I was giving OP the benefit of the doubt that they live somewhere with terrible currency policy and no cap gains like Turkey or Czech Republic.

But yeah, something tells me the taxman isn't all that interested in your bitcoins.

Honest question: Suppose you lived in a world where crypto was more common. What if you have a vendor who refuses to use crypto? Would you still transact in fiat?

Even if crypto catches on more than it has, I do not think everybody will want to deal with it. I am do not do any importing or exporting. Dealing with another currency just seems like wasted energy.

I'm a pragmatic person, not some crazy fundamentalist. I do use fiat where necessary, yeah.

> I do not think everybody will want to deal with it.

The thing is, crypto should be much, MUCH easier to deal with, we just don't have mature software/UX around this. Because we're still figuring out best practices, and people are learning about this tech.

And when the mom-and-pop bookstore down the road can no longer exchange their crypto for fiat (needed to pay their taxes), do you think they’ll keep accepting your crypto?

It depends on the government.

"Crypto Currency Now Accepted For All State Tax Payments" https://tax.colorado.gov/cryptocurrency

Ohio tried it, and now http://ohiocrypto.com/ is a blank page.

I looked at the Colorado site. I predict this will also get shut down. Basically you are paying more just so you can say, "I paid my taxes with cryptocurrency", which honestly seems stupid.

"A sufficient amount of cryptocurrency to cover the tax, obligation and fees is converted to dollars"

No it doesn't. Your crypto is not and will not be denominated in crypto. It's still dollars.

Good proxy for the promise and reality of crypto though - you need to interact with some shitty PayPal crypto platform and they charge you charge 1.8% for the luxury of doing so.

For comparison, what is the credit card fee?

For a better comparison, the debit card fee would be about 25¢.

And do those vendors use crypto to buy from their suppliers? Otherwise, they have to raise their crypto denominated prices as the exchange rate falls and you're still in the same boat as selling it yourself.

"Solana’s native SOL token suffered as a result of FTX’s collapse, dropping over 40% on Wednesday at a price of $14.37. This is 92% below its price from a year ago."

I looked it up and it was trading for $230.23 on Nov 9, 2021. As of posting this comment it's at $13.16

Back in the day, SOL used to stand for "shit outta luck"

What's old is new again. I think this qualifies as poetic justice?

Apparently, it still does.

Seeing your name greyed out within a few mins, guess you hit a nerve with the HN SOL peeps.

Ouch, it would appear so, though I'm at 1 now.

Good thing I invested heavily in ITYS.

At the end of day, this entire fiasco really drives home the point if its not your keys its not your coins. Shady exchanges/banks can always collapse and take your entire portfolio with it, but if you have a securely backed up wallet, then your coins will be untouchable no matter what kind of shady shenanigans goes down in the wider cryptocurrency landscape.

Sure, you still have your coins, but who cares if they’re worthless?

I’m not sure “not your keys, not your wallet” is really the message to take away from ~Celcius~ ~Terra~ ~TAC~ FTX.

I think people are too hyper focused on the price aspect of cryptocurrencies. The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.

The genie is already out of the bottle and there is no way to put it back. There will always be those especially in the younger generations that want something better than the current system. Bitcoin shows that you can have a completely transparent monetary system based on code that is available to be audited by anyone. Bitcoin may or may not survive, but the idea behind it will.

It is true that a cabal of rich people cannot arbitrarily modify the money supply. We instead get a permanently chosen system of money supply that was created by an ideologically driven software engineer who appears to have vanished into the ether. Is it not possible that Satoshi chose a less optimal system than the central banks would? The finite and logarithmic rewards make a huge huge huge difference in the eventual distribution of BTC worldwide, should it become a dominant system. In my opinion, a system where early adopters get unimaginably rich forever is simply unethical.

And if another system eventually wins... then isn't that simply an example of a cabal of people (though not necessarily rich at first in this case) modifying the rules for money supply? Doge produces a different outcome than BTC. That's important.

I don't think fair distribution of cryptocurrency in the bootstrap phase is a solved problem. We got a long way to go if we are to come up with a fair system. Satoshi went with the best that he could come up with which is a no premine solution.

A slightly better solution would be a no premine coin with a global announcement for 5 years before the mining begins so everybody gets a fair shot at participation. I am sure we can develop even more fair forms of distribution with sufficient research.

Honestly, that would give wealthy people (and possibly scammers) plenty of time to figure out how to game the rules.

Nobody is going to be rich forever, because nobody is going to live forever. You have a very hard time limit to spend your coins.

Coins don't return to the reward pool when somebody dies. A system of new aristocratic families based on who was an early adopter and held on to some BTC is not something I'm excited about.

The world was much more unequal than today back in the time. It all diffuses quickly with usage.

We might have different definitions of "quickly."

I also don't think that going backwards is a good thing. Yes, BTC is more equitable than a system of divine right of kings where the monarchy literally owns everything. Hooray.

> The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.

I don't get it. How does this description fail to encompass the likes of SBF, CZ, or Do Kwon? And while they didn't modify the money supply (although UDT kinda did), their actions had a strong impact on the value of money. So anyone holding coins in their own wallets still got screwed by their actions.

Bitcoin only solves the problem of manipulation of the underlying money supply. It does not solve the problem of fraud and scams. Maybe one day we can also solve that problem with exchanges existing only as smart contracts, but with exchanges that are not completely transparent you always run into the risk of getting defrauded because you don't really know what's going on under the hood.

What everyone is saying and you’re missing, is that those scams and frauds affect the inherent value of your bag, and reduces your purchasing power of services/products. You can take solace in having X/N possible BTCs, but you’ll need 100X when the price falls.

Yeah. The transparency of smart contracts has ensured that there's no scams in that space.

I always see advocates for crypto bashing central exchanges, but at the same time they bemoan the slow pace of adoption. I just don’t see it ever being even remotely main stream without central organizations. It is far too much work managing it all yourself even for tech savvy people. Just the process of downloading a wallet and downloading ledger is a huge pain in the ass. And then have to do it for every crypto if you’re not using a multi-wallet!

Downloading a wallet takes a few seconds. You dont need to download a ledger to pay.

If you’re storing your own crypto you need a wallet, backups, and cold storage at the very least. Plus you need to remember your seed phrase. If I lose my bank account info or cards I have several ways of getting access to my money, crypto no so much.

It has been a while since I set up but last time I did I had to download the blockchain’s ledger aka the history of every single transaction. Is this no longer the case?

no longer)

I'd rather not have my access to my net worth be behind a six word phrase. Might be tough to pay for shit after I get hit by a car or get old or something and have trouble remembering stuff.

> people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.

Is this satire?

Because crypto currencies are not the gleaming example of “free of manipulation” that you think they are. There’s endless cases of whales, exchanges, NFT groups and crypto-celebrities using their capital and power in order to manipulate markets and supply in exactly their favour. The NFT space was especially bad for this. In fact, a lot of those NFT groups are exactly what I’d describe as a “cabal”.

That was my reaction but you said it better than I could so I'll let Depeche Mode say it

    The grabbing hands grab all they can
    Everything counts in large amounts

> The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.

Is this really true, given that the largest currency pair of Bitcoin is with USDT, which is alleged to have been arbitrarily created at whim to pump up the price of Bitcoin?

What this has also shown is that most people (literally almost everyone) are better off relying on the traditional financial system.

> There will always be those especially in the younger generations that want something better than the current system.

Sure, this isn't it though.

Let’s not forget the frictionless enablement of spectacular ransomware enterprises, and the glorious enrichment of dangerous actors with stolen funds. It’s a small price to pay for all this… freedom?

It also enabled about $60+ million dollars to be donated to Ukraine and that's just one data point. Whether these other problems are a small price to pay will depend on who you are talking to. To the Ukrainians that benefited from these donations and to those that have food, weapons and shelter from these donations, it is most likely a small price to pay.

Perhaps a portion of these donations could have come from other sources if cryptocurrencies did not exist, but there isn't really a good way to quantify that, so I won't go into that discussion.

A quick google shows that the US government has given $16.8bn in aid to Ukraine. It seems like the centralised system is doing significantly better.

Giving my tax dollars to Ukraine without forcing Ukraine to negotiate an end to it is not "doing better".

Why should Ukraine be forced to negotiate? Russia invaded Ukraine.

Then again, a crypto bro blaming the victim makes perfect sense.

You are paying them to protect you and the entire world from unimaginable evil.

Evil was German Nazis. And the Ukraine Nazis which the USA did not pursue after WW2.

NATO pushing closer to Russia the past 30 years didn't protect anything except the paychecks of the war makers.

I see you don't speak of the literal Nazi PMC in Russia (Wanger).

I mean they are so not evil they commit war crimes on camera.

> NATO pushing closer to Russia the past 30 years didn't protect anything except the paychecks of the war makers.

NATO pushed closer to Russia over the past 30 years because of exactly what Russia is doing in Ukraine.

I was able to donate hundreds of dollars to Ukraine using the same credit card I use for everything else. What is special about crypto donations to Ukraine? I suspect that the fees of converting USD->BTC (or other crypto) and then the recipients converting back to UAH are higher than the <2% CC fee I paid. (I used a card with no foreign transaction fee.)

And with credit card, the donation recipient wouldn't be at risk of losing double digit percentages of the value donated if they didn't immediately cash out into fiat currency.

> It also enabled about $60+ million dollars to be donated to Ukraine and that's just one data point

I love how every crypto enthusiast (incl Vitalik) uses this one-off example to justify everything these days.

Maybe they finally realized they looked stupid after a decade of using Venezuela as an example of how crypto can help a country, even though crypto hasn't made anything better there.

>The experiment that is Bitcoin shows that people do not need to rely on a monetary system where a cabal of rich and powerful individuals can arbitrarily modify the money supply without any regard to all the participants in that monetary system.

if this is a stab at the federal reserve, my response would be "democracy" at least in the abstract. either way not much different from the whales that hold disproportionate amounts of influence in the system right?

Celsius = centralised, terra = centralised, FTX = centralised...

The point is stop trusting centralised wolf in sheeps clothing.. same goes for ethereum with Proof Of Stake.. ur just reinventing central banking (but private)..

The only truly decentralised coin is bitcoin..

and bitcoin has exorbitant transaction fees, slow transaction times, massive power usage for relatively little throughput, etc., etc.

time to end the crypto social experiment and go back to using the traditional banking system which has safeguards in place to prevent people from being continuously taken advantage of. oh wait, nobody was really using crypto for anything other than a FOMO investment anyways

Bitcoin transaction fees are ~5 cents right now.

Granted it's still slow...

According to this chart it is showing as still being about $1-$1.4 per transaction on average in the past month which is alot more then 5 cents?


Exchanges pay massive (often 10X required) fees for whatever reason.

Real transactions are much cheaper. Try https://mempool.space/

> bitcoin has exorbitant transaction fees,

Basic transaction cost at this time is est $0.05, or 54 cents for high priority.

> slow transaction times

If by slow you mean ~10 minutes, it turns out this is a strength (Solana is not scalable; Ethereum will also likely grow in an unbounded fashion making individual node-running infeasible); and layer 2 solutions such as Lightning Network enable sub-second Bitcoin transactions.

the transaction fees, the verification and throughput limitations are fundamental technical tradeoffs required for a truly decentralised store of value.

The people and technologies claiming to have "fixed" or "improved" upon bitcoin are often making different trade offs they lie about. This is why I like solana, they make no pretence of being decentralised.

btw fiat is 1000x worse. You don't see it on the news because you're forced through coercen to bail out & insure these bad actors. The current US bank reserve requirement is 10%.. the only reason there isn't a bank run is FDIC. The whole thing is an incestious mess that creates our current world of cantillionaires..

By taken advantage of, you mean like becoming a debt slave paying off mortgage on overvalued house because of a housing bubble they blew out of proportion yet nobody was held accountable for?

No- by taken advantage of I mean like putting your life savings into a 20% APR yield crypto savings account and getting rugpulled the next week. Funny how you reference being taken advantage of in standard financial institutions as having debt but it is just as easy if not easier to take out loans in the crypto space that people have no chance in hell of paying off. Regardless, that's unrelated to what I was talking about, which was about people getting conned day in and day out in the crypto space. At the very least, this is minimized in the regular financial market which has safeguards in place to protect consumers. Is this system perfect? No. Is it 100x better and safer than the current state of crypto because of lessons of the past and the laws put in place because of them? Yes.

If you believe that crypto is in any regard better than the traditional banking system (which it seems you do), please state those claims explicitly.

I definitely don't think crypto is in any way "better" as an investment (you can look at my other comments here), but I definitely think the destruction as misery caused by traditional finance was so much higher.

Crypto is extremely speculative and risky and everyone knows it.

Housing on the other hand, get extremely favorable regulation that's unjustified in my opinion. You got the Fed buying mortgage backed securities.

In my view, what is going on in traditional finance is morally wrong much more than in crypto. Unlike crypto were the bubble doesn't effect me, I need to work and pay higher rent and my freedom is restricted as a direct consequences of the evils of traditional finance wether I'm participating in their bubble directly or not.

Many of the things you call "safeguards" of traditional finance are greater evils than nothing at all. Especially safeguards of collateralization, like mortgage.

(And don't get me wrong - I'm very capitalistic in my world view. You can just hardly call capitalism the way the Fed and mortgage dealers acted, and central banking is the bane of modern capitalism).

Yeah but the collapse of those exchanges drove down the price of the coins. Even if its your keys and your coins those coins become worth less money than they were before.

If u look at the past decade, the real coins survive. Its the venture backed ponzis that die..

Basically no exchange should be holding enough to cause a collapse of the coin. With bitcoin this will never happen, there was multiple collapses at times where liquidity & ramps were non existent.. and bitcoin still survived to go up multiples.

also this is a temporarily problem technical problem. Solutions such as AUMs and DEXs are being built up asap.

The people using those exchanges largely don't care about the alleged original use case for crypto. They're just trying to get rich.

>The only truly decentralised coin is bitcoin..

And Monero IMO

decentralized is an antisocial child's fantasy

a wish against a world that doesnt make sense to them

a desire to turn away from human society

a hoarder's dream

I think it is the last item that motivates the rich folks desire for a store of value that doesn't rest on providing funds for the rest of society to borrow. The rich would keep their wealth out of circulation while the society withers due to lack of investment in the work and inventions of that society.

lol how dare you hoard all that money in your bank account

Monero is a superior currency to btc in every way.

It's not superior; it just makes different tradeoffs [1].

[1] https://phyro.github.io/grinvestigation/why_grin.html

weird how the only currency dnms use is monero, meanwhile everyone knows what grin is winkwink

So the lesson to learn from all of this is "stuff your money under your mattress otherwise it's not safe"?

What a brave new world crypto is bringing us.

> stuff your money under your mattress otherwise it's not safe

This has always been the case with crypto. It's just much harder to successfully execute with crypto than it is with cash.

Or better yet, stay away from crypto completely.

You have the coins, but the current state of affairs means they are not worth anything any more.

To be fair, I have stocks that are not far off that scenario!

It's your keys, and your coins, and most importantly your initial and continuous due diligence... and not just on the asset itself, but on the possible motivations of any asset holder with a sufficient stake to meaningfully affect the price.

Should have done you initial and continuous don't diligence.

If you store your funds in a secure wallet, you will not be able to FOMO in recklessly on shitcoins hoping for a 10-bagger, the facilitation of which is the raison d'etre for most crypto exchanges.

People don't want to buy and hodl, they want to get rich. There's no Benjamin Graham for crypto because crypto has no fundamentals, no underlying value to go long on. The best any crypto advisor can do is to warn you when to hit the ejector seat button.

The whole crypto game is dead without these exchanges.

To hold your own keys etc is just too complicated.

I dont want to put 100k onto a USB drive where I may forget the PW to.

Crypto is just not going to hit mainstream if you cant get exchanges "banks" to stop selfimploding.

Coinbase, which happen to be a Y Combinator unicorn, is saying they're totally fine. Credit where it's due: Coinbase never ever dealt with Tether/USDT. They say the $42 billion of USDC they minted are all backed and that all the clients' assets on their site (USDC/coins/EUR/USD/etc.) are all backed 1:1.

I hope Coinbase is and stays an honest (and regulated) player in that crazy space:


What good are the keys to something worthless?

creating 20,000 new currencies isnt really an economy, or rather its a purely entertainment based economy like Las Vegas or Macau. Those things I guess are valuable but is this the best use of our computing power and our Human Resources?

The thing is non-centralized cryptos never worked as a currency.

I'm just spitballing, but we don't yet know the full effects of FTX folding. We don't know who holds what where.

I would say bitcoin crashing 12.5% today is one effect.

The day is not over yet. I wish I had popcorn.

12% isn't an unusual day for cryptocurrency.

80% is newsworthy.

I have no idea if this is a frank and earnest assessment or baseless hyperbole, how many times has the price of bitcoin moved >=12% in 24 hours? Has it ever moved 80% in one day?

edit: What I want to run an analysis of the actual data but I did the "next best thing" which is googleing around and reading arbitrary articles, and what I've found is

-22% on 15 January 2015

+28% on a single unspecified day in July 2017

+~25% on 7 December 2017

+~20% on 1st April 2019

I'm sure I've missed some, and there are other, possibly more dramatic spikes and crashes, that happen over longer periods, but this is enough for me to say that a 12% swing in one day is newsworthy, but not frontpage newsworthy

I count 21 occurances with 12%+ rise and 19 with 12%+ drop

Popcorn meaning you enjoy this? Did you have popcorn in 2008 when the economy was freefalling? Popcorn when people are financially harmed in other ways?

You can be a bitter anti-crypto person without _enjoying_ people's pain wtf.

I've said to friends: the pin's out of the grenade.

We'll see what happens next.

And there goes 16k.

We're seeing the dominoes fall before our eyes.


Thats still too high.

What is fascinating is that The S&P 500 is up around 10% since Feb 2020 (pre covid) while BTC is up 50% since.

The S&P 500 is obviously superior even though BTC did well pre-2013. BTC is more like a commodity than an equity, so the long-term returns are expected to be worse compared to index funds.

Nov 13th, 2020 was around when BTC was last at this price.

What a wild ride it's been.

I didn’t buy it at £400 once because it had fallen so much from £1,000. I wouldn’t be surprised if it goes up again when people look to alternative sources of income to offset inflation.

Yeah, smart move - lose 15% a day, rather than 9% a year through inflation.

Negative sum games need new suckers to prop up returns. I doubt there is that many people willing to jump in that haven’t already been burned.

People bought cryptocoins in 2021 to "offset inflation". That did not go well for them.

I think we can safely put the claims about crypto offsetting inflation to rest.

Rationally yes, but people are irrational and things like r/wsb show you irrational can get momentum. I’m probably 80% sure there will be another bull run in the coming years. Even if it’s as trivial as crypto being 5% of its all time high and people decide it’s worth a go just in case, creating its own run.

The past year has demonstrated pretty clearly that BTC is not an inflation hedge.

It’s fine Solana guys can always just centrally restart their blockchain

WindowsCoin - Just reboot it.

Another crypto crash? I'm surprised anyone would have serious money still in crypto after the last megacrash, which came after the previous crypto crash.

Nothing but crashes. Bitcoin crashed to $2 in 2011, then it crashed to $250 in 2015, then it crashed to $3000 in 2019, and now it's crashed again to $15000. Smart money knows to stay away and avoid the crashes.

This is a joke, but it also misses the point: a volatile asset doesn’t have to crash to any particular baseline. It only has to crash below the stake price for its investors.

You're talking about MVRV (Market Value to Realized Value). If it's below 1, it means the average investor is carrying a loss, and > 1 means carrying profit. Historically every halving it has spent some time below 1, and we are right on schedule.


Crypto (esp BTC) is a well defined zero or negative sum game. How do you propose /most/ people make a profit?

I didn't propose that. I just linked a relevant indicator. If you'd like me to predict the future, I predict that eventually BTC will fill a similar niche as gold - it will outperform cash under the mattress, but underperform index funds. You'll be able to spot the transition when the MVRV starts to center around 1.0 instead of its current ~1.5. But I couldn't begin to guess when that will happen. Maybe this crash is the catalyst, or maybe it will happen a decade from now. ¯\_(ツ)_/¯

Please elaborate, how is it a negative sum game?

For every person taking money out someone else has to put money in (which would be zero-sum) plus the miners taking their cut.

By that definition, which financial instruments aren't negative sum? E.g. stocks trade hands in a very similar way, and companies can always issue new shares.

Company sells stock.

The money builds a new factory. Or in the case of Google, a data center, or other such item that allows the company to make more money.

Later, when the company is worth more, the shareholder sells the stock back and/or gets a dividend (aka, a slice of the profits).

Everyone wins.


In contrast, the BTC you bought was likely made using stolen electricity. So we're already negative sum to the start.

The same thing could happen with crypto. A smart contract developer sells crypto to fund development of a smart contract. That smart contract can provide new utility and drive demand for the currency.

This time it's different. There's no giant pool of FOMOing suckers to drive the next wave.

They said that last time. And the time before. And the time before that.

An actual difference is that current inflation levels make another round of stimulus checks highly unlikely. And the current nominal rates for risk free treasuries are high enough to keep large scale cash parked outside as well.

Another key difference is, IMO, crypto has reached peak saturation.

During the previous run ups, we didn't have institutional investors buying billions of Bitcoin, we didn't have public companies (TSLA) buying a billion dollars of BTC for fun, we didn't have sports stadiums with the name "crypto.com", or ads on TV.

BTC achieved mass adoption during 2020/2021/2022. It's available in 401k funds, derivatives on the stock market, etc.

The only catalyst I can think of that could truly catapult BTC back to the heights of 2020/2021 is if we get to a point at some point in the future where BTC is actually useful for something other than asset speculation and people trying to get rich quick. This could take years.

It's sorta useful for illicit goods and as payment for decrypting people's computers which they hadn't consented to being encrypted.

> useful for illicit goods

a purchase traceable down to the KYC’d buyer dumb enough to put their purchase on a public, immutable ledger

We're still not into an actual recession as well either, and BTC has never been tested by a properly bad recession (2020 doesn't really count due to how sharp the recovery was).

It is this bad for crypto right now, and there's going to be no cheap cash coming to rescue it for quite some time.

I think it is still possible that there might be a floor down at $4k or so where all the True Believer billionaires may still step in to buy it up and rescue it. If the billionaires themselves are net sellers though needing to raise cash because everything else is in flames (e.g. Elon+Twitter) then it may just fail.

The true believer billionaires hold only BTC so they won’t be billionaires at that point any longer

I'd consider Musk to be a true believer.

The pyramid found its base and can't expand into any more gullible markets.

Every couple of years they groom a new generation, a new hype cycle of pump and dump starts anew. Some get hooked, some homeless, some are dreaming to get their money back one day…

there is a finite amount of capital , probably half a trillion if I had to guess. It cannot keep going up forever.

You’re way off. Crypto market cap has fallen more than that just today.

You're both right. The market cap doesn't represent the amount of capital in crypto, e.g. liquidation value, investment capital, etc. The systems have always been relatively shallow in volume, with lots of trades being washes and speculation. In fact, wash trades are like the most commonly offered explanation of crypto's value. (Poor farmer in Afghanistan buys crypto to move money to his summer home in Venezuela and cashes out there.)

Just because your cryptocurrency just lost 90% of its value today, doesn't mean it can't also lose 90% of its value tomorrow too.

You didn't note the bitcoin high water mark was nearly exactly one year ago at $64,400, versus today at $15,696.

So, future crash to $75000 in 2026?

because everyone following the best practices is unscathed.

everyone had a choice to just never touch TerraLuna.

everyone had a choice to not keep their funds on exchanges.

I'll give some sympathy to custodial smart contracts being drained and advertised as non-custodial, a legal distinction that has little practical distinction for the user except unlimited amounts and no permission needed to use. But you didn't have to use those either.

and overcollateralized stablecoins type fiat are still fine (for now)

and overcollateralized stablecoins type crypto are still fine with redemptions functioning smoothly through pretty amazing stress tests

other kinds of stablecoins are the ones that actually have implosions and make the news, with the notable exception and danger of Tether which still have passed every stress test despite such a large attack surface being consistently attacked by state actors very publicly

regardless, it has been entirely possible to have stable value in crypto the whole time, and in fact that's where a majority of the capital is, far beyond any hacks, exploits and exchange implosions. overcollateralized stablecoins are still $120bn and has been a steady amount for the past year. redemptions go well when desired, people just don't desire.

and then for the people that actually have the risk profile for volatile assets and self-custody those assets? they're fine too. let the VC and bankruptcy trustees fire-sale, let everything trade for another 90% discount, that's not controversial, commodities trade like that, digital commodities are trading similarly.

You're cute. In the end of the day this entire shenanigan is a game of musical chairs and as every chair is taken out, you should be more anxious to sit down quickly before the music stops. The actual details hardly matter, this is a game played only by investors, and money is slowly draining. Nobody is inserting new chairs into your musical game, only new participants with their own chairs. Unlike musical chairs, you can leave right now.

> The actual details hardly matter, this is a game played only by investors, and money is slowly draining.

and that's not controversial, I'm perfectly fine with that and everyone in the space should be just as objective about their risk profile. We both agree that any other sales pitch for crypto was grifter bingo.

I don't consider this platform for investors to be perfect yet, for example I don't consider any stablecoin overcollateralized by fiat to be 'good' and I don't consider any of the stablecoins overcollateralized by crypto to be great yet, there is a lot to build and a lot of value to extract building.

> regardless, it has been entirely possible to have stable value in crypto the whole time

Where? Which crypto investments would have resulted in that during the "whole time"? Or even just the last few years?

the point was about storing value in the crypto ecosystem without losing it, after 4 references to stablecoins, so stablecoins. USDC would have been fine. USDT would have been as well, with fluctutations in notional value for brief periods mitigated by redemptions remaining at 100% when redeemed through the issuer

in direct contrast to storing on exchanges, or non-stablecoin crypto assets

What good is a "stablecoin" if the exchange can simply halt withdrawals? If the answer is that they need to be kept in air gapped hardware wallets like all other crypto, then how do you convert from USDT/C to USD? Assuming you can't find someone off exchange to buy it from you.

yes you keep them in the same kind of wallets as other cryptos

you can convert them on DEX’s to other cryptos

you can sell them on OTC desks

you can redeem them for their underlying collateral if using onchain collateral, or with the issuer

stop using exchanges. in crypto they are occasionally part of the journey but people act like they are the destination.

> stop using exchanges. in crypto they are occasionally part of the journey but people act like they are the destination.

If you ever want normal people to use crypto, exchanges or banks or something similar have to be part of it. Securely storing crypto is just too hard for normal people.

Its accurate that storing crypto is hard for a lot of people

Its also accurate that I don’t care about that and I’m never one of the people pushing for “mainstream adoption”. The alpha exists while it is hard. The Venture Capital exists to bring capital to a place where it is hard. Most of the platforms are financial services. Traditional finance has many obscure financial services that mainstream never directly interacts with and its the same here. In both, there are nuances in having access. You need special hardware and special accounts to be a merchant or payment processor, you need special permission and infrastructure to trade credit default swaps, you have to jump through many hoops to self-custody any paper-claim to an asset. These arent games for mainstream. If you want to jump through those hoops you can.

> Its also accurate that I don’t care about that and I’m never one of the people pushing for “mainstream adoption”.

And you think the value is going to rise without increased adoption? Or that actually using your Crypto to purchase goods and services is going to become easier without increased adoption?

No, I don’t think those things.

> redemptions go well when desired, people just don't desire

Why hold stables? I’m confused why you’re interested in coin pegged to inflationary fiat. The yield accounts are all scams, so that’s definitely not a good idea.

the answer entirely depends on if you are asking from a crypto user perspective or a crypto skeptic perspective

for users its just a convenience for staying onchain and having stable value while awaiting other opportunities, if you have the risk profile to hold something else then do that. Its just a trade and a few months of single digit inflationary pressures really is a non-issue

When FTX and Crypto.com have to give up their sports arena naming rights it will be great PR to the population at large to stay away from crypto.

The old saying goes, when you are getting stock tips from your cab driver, get out of the market. Maybe the same should be true for arena's. When your local arena is named after a crypto site, sell your coins.

I'm also thinking to Super Bowl commercials. Pets.com and Crypto ones.

there better not be any government bailouts...people/companies need to accept the risks/rewards for using DeFi

Bitcoin and it's technology isn't going anywhere. The rest of the world is too invested in it for it to disappear. Just wait it out. It will be fine.

"Many shall be restored that now are fallen and many shall fall that now are in honor" -Horace

"When the gamblers have their fortunes fall apart in front of their eyes, they will come out with the biggest copes." - Michael Scott

Why both deposits and withdrawals? They risk spooking their customers by preventing withdrawals. If you wanted to mitigate risk, wouldn't you just prevent deposits/buys?

Trying to prevent a bank run, most likely. And/or they don't have the cash to survive even a small selloff.

Because what their customers are afraid of might be true, they don't have the assets.

What I really wonder a lot is who will left with the money when the music stops and the tide goes out. Early adopters? Crypto mining hardware manufacturers? Electricity companies? Generation machinery manufacturers?

Lambos and mansions and even jets of lucky crypto bros are just a small change on how much dough was buried in all the crypto schemes of the world.

Traditionally this foreshadows an exchange going bust, is that what is happening here?

Crypto.com are not long for this world but I don't think this is their demise, rather, this is specifically the Solana blockchain, which is... well, it's not a traditional blockchain. More a reflection on Solana (and it's vulnerability to the demise of FTX) than Crypto.com.

It's absolutely more of a reflection on crypto.com than the solana blockchain (which is functioning normally).

> More a reflection on Solana (and it's vulnerability to the demise of FTX) than Crypto.com.

Citation definitely needed. I'd say the opposite. From a few days ago... https://decrypt.co/113632/google-cloud-just-became-a-solana-...

the price of Solana is going to crater due to a massive increase in supply*, and crypto.com is hedging their bets.

* https://u.today/320-million-in-solana-will-hit-market-in-24-...*

This turned out to be incorrect. I think the actual number is closer to 1/10th of that. Solana's main Twitter page has the story.

Yeah but they did that by preventing the tokens from being unstaked. It's not clear that's a good thing, but here we are.

USDC and USDT prices have nothing to do with the SOL price

The exchange is going bust. Well the coin is going bust unable to maintain the peg. Think the end of Bretonwoods but for crypto.

I’ve never understood stablecoins it’s as dumb as a USD ETF

Stablecoins simplify cryptotrading as there is no involvement of cash anymore.

understanding stablecoins is really simple.

"how do i convert crypto assets into USD without triggering a taxable event?"

the answer was create a stablecoin where you for sure have $1 for each coin so you can always exchange your crypto for dollars.

the problem is all these shady crypto finance people are busy making money off of stablecoins and hoping nobody catches them without enough cash on hand since they invested the USD into assets instead of just holding cash, or when the value went up they minted more stablecoin to sell off and now that the price of the stablecoin is down they don't have the ability to cover their liabilities.

The basic idea to protect against taxes, the extended idea is to enrich every grifter around.

> "how do i convert crypto assets into USD without triggering a taxable event?"

You don’t: “Taxable gain or loss may result from transactions including, but not limited to: [...] Exchange or trade of one digital asset for another digital asset.” [0]

You can't hack around taxable events by avoiding exchange into fiat.

[0] https://www.irs.gov/individuals/international-taxpayers/freq...

but you're trading $100 worth of Crypto A into $100 worth of USDT or whatever other 'stablecoin' ostensibly backed dollar for dollar with USD, thus there are no gains but you still ostensibly have 'converted' Crypto A to the closest thing you can convert it to that isn't actual USD.

That's the purpose. If you sell a crypto for USD you may get taxed. If you convert it to equal amounts of a different crypto there are no gains and no tax.

> but you're trading $100 worth of Crypto A into $100 worth of USDT or whatever other 'stablecoin' ostensibly backed dollar for dollar with USD, thus there are no gains.

If your basis (purchase) value—irrespective of the current value—of Crypto A is $100, sure. But that would be the same if you converted into actual USD.

But if you actually had gains on Crypto A, say the purchase price was $50 and you sold for $100 worth of USDT, you would have a $50 taxable gain.

“A16. [...] If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. [...]

“A17. Your gain or loss is the difference between the fair market value of the property you received and your adjusted basis in the virtual currency exchanged. [...]” [0]

> If you sell a crypto for USD you may get taxed. If you convert it to equal amounts of a different crypto there are no gains and no tax.

No, you will owe taxes in exactly the same situations as you would if you exchanged the crypto for USD: if the value of what you sold it for exceeds the basis (not current) value of what you sold.

Now, its possible that you can find a crypto exchange that doesn’t deal in US currency or with US banks and is less likely to report information to the IRS, so that trading into stablecoins or other crypto helps you evade taxes that are legally due. But it is not a hack around actually having a taxable event. (In fact, it potentially, if the stablecoin isn’t perfectly stable, makes the purchase with the stablecoin as well as the sale into it a taxable event, which would not be the case with actual USD.)

[0] https://www.irs.gov/individuals/international-taxpayers/freq...

If I own a house in the clear and make a private transaction to trade my house for someone else's boat, I still own capital gains on the difference between what I bought the house for and what the boat is valued at. So if I bought the house for $250k and I wind up with a boat valued at $1M then I owe taxes on $750k in capital gains.

There's no "if it doesn't touch USD it doesn't trigger taxes" law because that would be instantly gamed and exploited.

When you sell stock A and buy stock B, if you had capital gains on stock A, it is a taxable event.

Crypto is the same.

Why do you think converting from BTC to USDT is not a taxable event?

Your stock example is not what was described though.

You're not selling Bitcoin and then buying USDT. You're buying USDT with Bitcoin.

With your stock example, you can't buy shares of Apple stock using your Google stock. It has to go to fiat first which is a taxable event.

And swapping BTC for USDT still a taxable event. Just as if I bartered my Apple stock for some Google stock of yours: for both of us, there's a capital gain or loss, and it's a taxable event. You don't have to go through actual cash money for it to be a taxable event.


Your interpretation of the law was potentially correct before the Tax Cuts and Jobs Act (this was debated but was never taken to court) but is now not correct and crypto-crypto swaps are taxable and you use the dollar value as reference price. This may not be the case in other countries.

But when each Velodyne Lidar share is exchanged for 0.8204 shares of Ouster (in the near future), it won't be a taxable event.

When you sold stock A, you got dollars for it.

The point of stablecoins is having an USD equivalent currency that isn't subject to US financial regulations.

As said by sibling, trading crypto for crypto is still a taxable event in a lot of jurisdictions.

Not exactly, since it's a very specific suspension.

Not just an exchange, all of bitcoin.

What do you mean by "all of bitcoin" ? It is working at its steady transaction rate of a few kilobytes per second like it always has.

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