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May 25, 2023 2:39 PM   Subscribe

The money flows at Binance described by Reuters indicate a lack of internal controls to ensure customer funds were clearly identifiable and segregated from company revenues, three former U.S. regulators said. They said the commingling of these funds put client assets at risk by obscuring their whereabouts. Binance customers shouldn’t “need a forensic accountant to find where their money is,” said John Reed Stark, a former chief of the Securities and Exchange Commission’s Office of Internet Enforcement. Reuters found no evidence that Binance client monies were lost or taken. from Crypto giant Binance commingled customer funds and company revenue, former insiders say
posted by chavenet (42 comments total) 9 users marked this as a favorite
 
Ed Zitron covered part of this in his most-recent newsletter.
posted by slogger at 3:01 PM on May 25, 2023 [5 favorites]


This would never have happened at Grayson Moorhead.
posted by The Tensor at 3:18 PM on May 25, 2023 [3 favorites]


Cryptocurrency has become a monument to the absolute worst and most exploitative systems of the internet, where hucksters con rubes into joining get-rich-quick schemes using decades-old internet memes, only to be sued by a law firm representing the corporate entities that exist solely to protect their copyrights.

It is an industry where people mock other people for not owning pictures of monkeys valued at $100,000+, only to be conned out of their own monkey pictures months later. It is an industry where there are so many scams that a cursory glance at Google News shows at least three ranging from $10,000 to several million dollars have taken place in the last week. And those are just the few that attracted any media coverage. Crypto is a convenient vehicle for organized crime to con people at scale.

posted by doctornemo at 4:02 PM on May 25, 2023 [12 favorites]


You know, if I had set up a computer to mine a few Bitcoin right when it was starting, a thing I watched happen but didn't participate in, I'd have bailed out and been happy with what went on for me, probably with little to no grift behind it because I would have done that long before the crypto mania hit. But at this point, crypto is right next to ponzi in the dictionary. I just this week started getting a whole raft of new crypto investment ads in my mobile games. It all feels so 2020 at this point.
posted by hippybear at 4:11 PM on May 25, 2023 [9 favorites]


This is 0% surprising. I would have been shocked if it were otherwise.
posted by lookoutbelow at 4:34 PM on May 25, 2023 [7 favorites]


There’s some evidence that Binance, along with FTX, started the crypto collapse by messing with Terra last year. The idea seems to have been to smash the small fry, but, with things as hollow as crypto exchanges, it’s all small fry.
posted by GenjiandProust at 4:40 PM on May 25, 2023 [3 favorites]


And I'm still left looking at all those celebrities who squandered their good names with advertising for crypto. Are we allowed to put them into the cancel culture machine for them doing this? Because them being paid to use their celebrity glamour to lure the masses into volunteering to give money into these schemes seems like something we should be much more up in arms culturally about.
posted by hippybear at 4:54 PM on May 25, 2023 [12 favorites]


I'm shocked, shocked to find that gambling is going on in here!

And it doesn't seem like that Hippybear, despite shilling for crypto, Steph Curry won the Kareem Abdul-Jabbar Social Justice Champion award.
posted by Carillon at 5:07 PM on May 25, 2023 [3 favorites]


I mean, yes, but at least crypto is young and unproven enough that you could understand actors or other celebrities for not realizing what they're endorsing; "smarter" people than they are talking about how this can democratize this or universalize that.

One of the worst recurring patterns in human society is convincing naive people that their personal enrichment is helping the world. I do not mean this as an excuse for them, just a partial explanation.
posted by Riki tiki at 5:09 PM on May 25, 2023 [7 favorites]


Crypto is pretty well “proven” by now as a vehicle for speculation driven by dumb ideological dreams and an unshakable belief that there is a Greater Idiot. Crypto is fully matured as the bastard offspring of Libertarianism and the Sunk Cost Fallacy. The only good it can ever do is to be the stake driven into the heart of Libertarianism for a generation or two.
posted by GenjiandProust at 5:29 PM on May 25, 2023 [16 favorites]


Crypto giant Binance commingled customer funds and company revenue in a way regulators could easily detect, former insiders say.
FTFY.
posted by Jon_Evil at 5:56 PM on May 25, 2023 [5 favorites]


I mean, yes, but at least crypto is young and unproven enough that you could understand actors or other celebrities for not realizing what they're endorsing; "smarter" people than they are talking about how this can democratize this or universalize that.

Not every celebrity:
The lawyer alleged that celebrities didn't do their due diligence to check whether FTX was breaking the law. "The one person I found that did that was Taylor Swift," Moskowitz told The Scoop's Frank Chaparro, adding that Swift pulled out of the deal and never promoted the now-bankrupt exchange.

"In our discovery, Taylor Swift actually asked them: 'Can you tell me that these are not unregistered securities?'" Moskowitz said.
Which is basically asking "is this legal?" with slightly longer words. And sure, not every celebrity knows the jargon but I'd hope more of them have an investment advisor who would. Especially going into a meeting with an investment product.
posted by Superilla at 6:05 PM on May 25, 2023 [31 favorites]


I'm certain there are a lot more celebrities who didn't take offers than the ones that did. We just don't know about most of them. Because you don't advertise that a celebrity turned you down.
posted by hippybear at 6:07 PM on May 25, 2023 [3 favorites]


...literally every single celebrity that has endorsed crypto is someone that does not give a single shit where their money is coming from, as long as there's enough of it. It's nice to have such a tidy list of giant tools.
posted by aramaic at 6:09 PM on May 25, 2023 [4 favorites]


> Superilla: "Which is basically asking "is this legal?" with slightly longer words."

Not just longer words but the specific term of art. While I don't doubt that Taylor has a team of excellent financial advisors, I can't help but think that perhaps having a dad who was a stockbroker for Merrill Lynch might have given her a little better grasp of the danger.
posted by mhum at 6:10 PM on May 25, 2023 [29 favorites]


mhum: I can't help but think that perhaps having a dad who was a stockbroker for Merrill Lynch might have given her a little better grasp of the danger.

Not to mention the international electronic banking message platform bearing her name…
posted by dr_dank at 6:33 PM on May 25, 2023 [25 favorites]


The only good it can ever do is to be the stake driven into the heart of Libertarianism for a generation or two.

GenjiandProust, from your mouth to the universe’s ear.
posted by rrrrrrrrrt at 7:53 PM on May 25, 2023 [3 favorites]


Larry Fucking David
posted by djseafood at 8:14 PM on May 25, 2023 [5 favorites]


Not to mention the international electronic banking message platform bearing her name…

SWIFT = Society for Worldwide Interbank Financial Telecommunications

I can't believe you made me Google that.
posted by Literaryhero at 9:46 PM on May 25, 2023 [11 favorites]


At least Binance admits cryptoscrip is not a currency but a product one buys, much like a "product from Amazon" quote-unquote.

It will be a lovely day when the rest of the scammers admit it, too.
posted by They sucked his brains out! at 10:08 PM on May 25, 2023 [2 favorites]


*surprised Pikachu face*
posted by Pyrogenesis at 10:29 PM on May 25, 2023 [2 favorites]


Is it preachy for me to say that mining bit coins is also bad for the environment ?
It would probably be better if gold was left in the ground as well and we based money value on Dutch tulip bulbs like in the 1600s
posted by Narrative_Historian at 1:25 AM on May 26, 2023 [3 favorites]


It would probably be better if gold was left in the ground as well and we based money value on Dutch tulip bulbs like in the 1600s

Not for the Dutch groundwater nitrate levels.
posted by atrazine at 2:18 AM on May 26, 2023 [2 favorites]


Crypto is pretty well “proven” by now as a vehicle for speculation driven by dumb ideological dreams and an unshakable belief that there is a Greater Idiot.

You don't need to put that in scare quotes, there's 's plenty of empirical analysis out there.
posted by mhoye at 4:45 AM on May 26, 2023 [5 favorites]


Crypto is pretty well “proven” by now as a vehicle for speculation driven by dumb ideological dreams and an unshakable belief that there is a Greater Idiot. Crypto is fully matured as the bastard offspring of Libertarianism and the Sunk Cost Fallacy. The only good it can ever do is to be the stake driven into the heart of Libertarianism for a generation or two.

“Proven” to those of us who follow such stuff. Crypto is only now reaching its tentacles out to the wider, general consumer world, largely via “investment” apps being sold as convenient ways to start growing wealth via a “portfolio” that quietly includes crypto, along with the usual investment products. People are going to be fleeced.
posted by Thorzdad at 4:52 AM on May 26, 2023 [2 favorites]


You know, if I had set up a computer to mine a few Bitcoin right when it was starting, a thing I watched happen but didn't participate in, I'd have
lost the password, or lost the hard drive it was on, or just deleted it, or eventually had it stolen. This is what happens to all crypto over time, and that’s lead to these scammy crypto exchanges that let you speculate on the stuff without having to hold any of it.
posted by chrchr at 7:16 AM on May 26, 2023 [4 favorites]


The quotes around proven were a reaction to

I mean, yes, but at least crypto is young and unproven enough that you could understand actors or other celebrities for not realizing what they're endorsing;

Really, crypto has been obviously bad to anyone who does even modest research since before 2016; anyone who had to wait until the entire infrastructure began to disintegrate and people started going to jail, getting extradited, etc was not ignorant, they were pointedly failing to understand. Or got really bad advice.
posted by GenjiandProust at 7:40 AM on May 26, 2023 [2 favorites]


my understanding is that until a few years ago blockchain token manipulation had a solid foundation as the currency of choice for the purchase and sale of drugs banned by nation-states, that it's lost that role due to law enforcement agencies realizing that blockchain transactions are necessarily and unavoidably traceable, and that as a result blockchain tokens these days really are the pure media for speculation that they've always dreamed of being.

this understanding may be wrong, though, since like most people i don't know anything about how post-silk-road blockchain token drug purchase works.

upon further speculation (yes, pun intended): regardless of whether or not they're still useful for purchasing state-suppressed drugs, blockchain tokens are nevertheless still the form of payment preferred by blackmailers, data hostage-takers, and other similar extorters. i have no idea, though, even more than i have no idea about anything else, whether or not there's enough extortion-induced mandatory blockchain token purchasing to really serve as anything like a foundation for value for blockchain tokens more generally.
posted by bombastic lowercase pronouncements at 7:49 AM on May 26, 2023 [2 favorites]


Reuters asked Binance if it ever told users that it considered their dollar deposits as constituting “purchases.” Binance did not provide any evidence of this, and said “the term ‘deposit’ is a communication term, it’s not an indication of the technical treatment of the funds.”

Yeah, that's not how banking regulations work my dudes.
posted by mandolin conspiracy at 8:05 AM on May 26, 2023 [6 favorites]



"In our discovery, Taylor Swift actually asked them: 'Can you tell me that these are not unregistered securities?'" Moskowitz said.


and if you are wondering where this savvy came from Taylor Swift's parents worked in finance. Pops was a stockbroker and mom worked for a mutual fund.
posted by srboisvert at 2:28 PM on May 26, 2023 [3 favorites]


Reuters asked Binance if it ever told users that it considered their dollar deposits as constituting “purchases.” Binance did not provide any evidence of this, and said “the term ‘deposit’ is a communication term, it’s not an indication of the technical treatment of the funds.”

Yeah, that's not how banking regulations work my dudes.


It's only a deposit if it comes from the Deposit region of France my man dolin.
posted by srboisvert at 2:29 PM on May 26, 2023 [5 favorites]


Also, y’know, Taylor Swift is an adult with considerable business acumen who has acquired skills her parents never demonstrated at all.
posted by clew at 3:13 PM on May 26, 2023 [5 favorites]


Also, y’know, Taylor Swift is an adult with considerable business acumen who has acquired skills her parents never demonstrated at all.

Her father was a security trader and she asked about if Binance was trading securities. I wasn't saying her father wrote her songs!
posted by srboisvert at 3:50 PM on May 26, 2023 [5 favorites]


and if you are wondering where this savvy came from Taylor Swift's parents worked in finance. Pops was a stockbroker and mom worked for a mutual fund.

Sure, this is true, but Kim Kardashian's father was famously a lawyer. Tom Brady Sr. is the CEO of his own financial advising firm. Lindsay Lohan's father, Michael, was a commodities trader who has detailed experiential knowledge of SEC investigations. Gisele Bundchen's mom worked for Banco do Brasil. Sure, Akon's parents are a musician and a dancer, but the guy has founded two record labels; seems weird that you'd do that without ever meeting a lawyer or a finance person.

Who knows exactly, but I find it baffling to think that a bunch of people with tens of millions of dollars, hundreds of millions of dollars or even billions of dollars would never talk to a stockbroker or investment adviser if they didn't grow up sitting around the dinner table with one.
posted by Superilla at 5:17 PM on May 26, 2023 [6 favorites]


It's only a deposit if it comes from the Deposit region of France my man dolin.

And only in certain caisses.
posted by mandolin conspiracy at 5:31 PM on May 26, 2023 [4 favorites]


Who knows exactly, but I find it baffling to think that a bunch of people with tens of millions of dollars, hundreds of millions of dollars or even billions of dollars would never talk to a stockbroker or investment adviser if they didn't grow up sitting around the dinner table with one.

Of course they do and many of them are robbed blind by those very people. There is a difference between growing up where investment talk would happen at the dinner table in a household with a WSJ subscription and being a talented artist with no financial acumen trusting semi-random people who often have different misaligned incentives.

I don't mean to minimize Taylor Swift's judgement. She made a good choice and it was her choice. Her background likely gave her the tools needed to make the good choice even when clearly some professionals on her financial team let Binance in the door. So many other celebs' professional financial teams did the same thing and now they are listed in the lawsuit.
posted by srboisvert at 6:20 PM on May 26, 2023 [1 favorite]


I came here for crypto scum bag talk. Take Taylor Swift to another thread.
posted by Don.Kinsayder at 6:32 PM on May 26, 2023 [3 favorites]


Reuters asked Binance if it ever told users that it considered their dollar deposits as constituting “purchases.” Binance did not provide any evidence of this, and said “the term ‘deposit’ is a communication term, it’s not an indication of the technical treatment of the funds.”

Yeah, that's not how banking regulations work my dudes
.

Nor is it an example of the meaning of the word “communication”.
posted by GeorgeBickham at 11:22 PM on May 26, 2023 [2 favorites]


my understanding is that until a few years ago blockchain token manipulation had a solid foundation as the currency of choice for the purchase and sale of drugs banned by nation-states, that it's lost that role due to law enforcement agencies realizing that blockchain transactions are necessarily and unavoidably traceable, and that as a result blockchain tokens these days really are the pure media for speculation that they've always dreamed of being.

people definitely still use it for black market stuff they just have more sophisticated ways to try to hide it (or have switched to variants that are supposed to be inherently less trackable) you know how this stuff goes

But this is another answer as to what would have actually happened to your crypto fortune had you been an early adopter - you would have spent it on drugs when you could not possibly imagine that it would ever be worth more than a couple hundred bucks. A few people I know could say they did that.
posted by atoxyl at 1:05 AM on May 27, 2023 [2 favorites]



I came here for crypto scum bag talk. Take Taylor Swift to another thread.

Too late. It's on the blockchain now.
posted by srboisvert at 9:36 AM on May 27, 2023 [4 favorites]


But this is another answer as to what would have actually happened to your crypto fortune had you been an early adopter - you would have spent it on drugs when you could not possibly imagine that it would ever be worth more than a couple hundred bucks. A few people I know could say they did that.

Yeah, I spent a few hundred of them on weed back in the day... I mean that's all they'd be good for right?!
posted by jaymzjulian at 4:02 PM on May 28, 2023 [2 favorites]




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