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QuadrigaCX Allegedly Traded Against Its Own Customers Without Assets To Back Them (ambcrypto.com)
geoskd writes: QuadrigaCX, the Canadian crypto exchange that made news recently with the passing of its CEO, Gerald Cotten, has been alleged to have been buying cryptocurrency from traders on its platform without having actual assets to perform the transactions. The transactions showed credit to the customers accounts, but when the customer tried to withdraw cash, they had to wait until other customers deposited cash before the funds became available. There is also an accusation that this behavior exists at many other crypto exchanges as well. Perhaps it is time to take a fresh look at Tether...
Except your money in a bank account is protected by the CDIC (if you're in Canada, or the FDIC if you're in the US), and there are all sorts of regulations to make sure that banks have enough money on hand to cover withdrawals under normal circumstances.
No. It's not the same. Your bank is earning interest on the money it loans out.. i.e. there is always some positive cash flow.. Well, assuming it's not 2008 and they aren't loaning gobs of money to assholes with a credit score of 400.
These morons were buying coins with money they did not have. If your bank runs out of cash, they make a phone call and have more delivered via armored truck. Your bank can also sell assets or loans to generate cash. i.e. they can sell real property or debt obligations that are backed by real property.
I feel like I shouldn't have to explain this. Gonna have to assume you're a product of our (USA) public school system and have never been taught financial responsibility and how the banking system actually works. Mostly this, probably, isn't your fault. Well, unless you're an adult.. Then you should have sought out the knowledge.. You can't be expected to be spoon fed every bit of information you need to navigate life.
Fiscal education should be absolutely mandatory.. Knowing how to manage your money and how the whole damn system works is information that is critical to a person's financial well being and stability.
Exactly this! Many of the banking regulations were put into place in the wake of a disastrous series of bank failures during the depression. These include the FDIC and minimum reserve requirements. the depression era failures are where we get the stereotype of grandma or grandpa stuffing their money in the mattress.
Crypto currencies bypass those regulations, so it should be no surprise that some "bank like" institutions dealing in crypto currencies are no safer than the pre-regulation banks.
This SHOULD serve as a warning to the deregulate all the things crowd, but I doubt very much it will sink in.