A Second Bitcoin Exchange Collapses In Turkey Amid Crackdown On Cryptocurrencies (cnbc.com) 52
An anonymous reader quotes a report from CNBC: A second cryptocurrency exchange has collapsed in Turkey amid a crackdown on the industry. The platform, Vebitcoin, said in a brief statement on its website that it has ceased all activities after facing financial strain and that it would update clients on the situation as soon as possible. Days earlier, Thodex, went offline with its CEO reportedly leaving the country. Local media reports say Thodex founder Faruk Fatih Ozer flew to Albania, taking $2 billion of investors' funds with him. Turkey has issued an international arrest warrant for Ozer, while 62 people were detained in connection with complaints filed against Thodex.
Turkish authorities have blocked Vebitcoin's domestic bank accounts and detained four people as part of a probe into the exchange, Reuters reported Saturday. According to CoinGecko data, Vebitcoin had almost $60 million in daily trading volumes prior to its collapse. Some Turks have turned to crypto as a way to protect their savings from skyrocketing inflation and the weakening of its currency, the lira. But there have been growing calls for regulation of the market due to concerns around fraudulent activity. Earlier this month, Turkey's central bank banned the use of digital assets for payments. And President Recep Tayyip Erdogan has called for swift regulation, warning of pyramid schemes emerging in the crypto markets.
Turkish authorities have blocked Vebitcoin's domestic bank accounts and detained four people as part of a probe into the exchange, Reuters reported Saturday. According to CoinGecko data, Vebitcoin had almost $60 million in daily trading volumes prior to its collapse. Some Turks have turned to crypto as a way to protect their savings from skyrocketing inflation and the weakening of its currency, the lira. But there have been growing calls for regulation of the market due to concerns around fraudulent activity. Earlier this month, Turkey's central bank banned the use of digital assets for payments. And President Recep Tayyip Erdogan has called for swift regulation, warning of pyramid schemes emerging in the crypto markets.
False given motive (Score:5, Insightful)
" President Recep Tayyip Erdogan has called for swift regulation, warning of pyramid schemes emerging in the crypto markets."
I am sure Erdogan stays awake at night worrying about pyramid schemes... more like the collapse of the countries phony currency.
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There can only be 1 phony currency in the country and they don't want it to be bitcoin.
Re:False given motive (Score:4, Funny)
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There's nothing phony about the Lira. It's a very real currency which very really has declined massively in value due to Turkey's poor economic and geopolitical policies.
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Can't stop the crypto (Score:2)
They may have shut down the exchanges but the people who had accounts there, if they backed up wallet key info can still access accounts...
If anything like that happened in a place I had crypto, I would immediately transfer everything to a wallet only you control. It is not unthinkable a government could seize all of those wallets and transfer all money to itself. Can't do that if you beat them to it..
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Not your keys, not your coins.
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If anything like that happened in a place I had crypto, I would immediately transfer everything to a wallet only you control.
“Uh, yeah hi Mr. SuperCraig? This Amir over at Coinfuckers Inc. I’m just calling to let you know that our CEO will be going rogue and skipping the country with all our customers’ coins at approximately 2PM eastern US time tomorrow, so you might want to transfer your cryptocurrency to your own wallet before then. As always, we appreciate your business here at Coinfucker Inc. and hope you enjoy the rest of your day!”
and when you can't cash out? / get an big tax bill (Score:2)
and when you can't cash out? / get an big tax bill on gains?
What do you mean? (Score:1)
and when you can't cash out?
You buy other stuff with the crypto from your wallet and sell that, or sell crypto to people overseas who send you money.
Or you move out of country to somewhere that has working exchanges and is happy to have a new citizen rich with crypto...
get an big tax bill on gains?
How are you going to get a big tax bill if you can't sell anything at an exchange? In theory it's a capital loss..
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Organised crime in the new host country are happy to hunt down an individual and pay them a visit with tommy toe cutter and a pair of blot cutters. 2 Billion dollars and all you need is a file, the password and the person who knows the password. That guy should be on the run from every single criminal on the planet, not just the criminals they stole from. A lot of the times those big time crypto thieves just disappear, I don't think they are in hiding, so much as bits of them are in a shallow grave, how man
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1) Newer investors have no interest in the technology and managing their own keys, this is just Robinhood for them, and even most of those people who had their have long since lost them to the laundry machine or trash cans of the world as evidenced by most wallets having no transactions on them in years. Maybe 5% of users have keys backed up in a way that wasn't lost or stolen, I'm being very generous there.
2) The company is storing the keys, you may have a backup, but they could send a few thousand transfe
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2) The company is storing the keys, you may have a backup, but they could send a few thousand transfers to Faruk Fatih Ozer's personal
That's why I personally prefer not to leave any crypto actually parked an an exchange like Coinbase, I transfer it to sit in wallet under my control. I can easily transfer back to Coinbase to sell (or convert). That's also why buying BCH is better than BTC, as you don't lose much doing the transfer to an offsite wallet as you would with BTC.
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2) The company is storing the keys, you may have a backup
Nope, it doesn’t work like that. When you send your cryptocurrency to an exchange, it ends up in a wallet with everyone else’s coins and the exchange maintains their own ledger. This is done because actual blockchain transactions are expensive and slow, making running an exchange directly on the blockchain infeasible.
Now, having an exchange hold your coins isn’t functionally much different than when you put money in a bank (they don’t put your dollar bills in a little box with your
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Oh, that's an even worse system. So we have a bitcoin wallet backed by a blockchain and all transactions are probably handled by an SQL database that has 1% of the scrutiny of a traditional bank's ledger and given the failures we've already seen in backup systems could just as easily vanish.
But let's just print more money. (Score:2)
Inflation will always fix itself.
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Yes, these are exactly the same.
The value of a dollar today will be going from $1.00 to about $0.95 next year with high inflation.
The value of these wallets went from $1.00 to a few months back, to $5.00 last week, and will likely $0.00 now.
Excellent system.
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The more people buying crypto the more stable it will become given it has a finite amount available.
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I would like for new countries to form, free from the currrent situation where the governments shits on those who pay for everything.
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Actually it's good news for bitcoin that this guy skipped the country with $2 billion's worth.
Never mind, you just can't parody the insanity of inflation doomers.
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None of them are optimum solutions. There was one, but it took a few nations to destroy it in the last world war.
Only way to get rich with Cryptocurrency now (Score:5, Insightful)
https://www.cnbc.com/2021/04/2... [cnbc.com]
Seem this is the reason. CEO of a popular exchange took the money, 2B and split. This of course is the current way that people get rich with crypto. Talk someone else in to letting you hold theirs, then vanishing with it.
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Coinbase must lose their shit worrying about insider attacks like this.
I am sure they have as strong internal controls as is feasible but when the incentive is just fucking off with billions of dollars of cryptocurrency for injecting a few lines of malicious code in just the right spot...just seems like a temptation that will be unavoidable over a long enough time frame.
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I sometimes wonder how easy this would be to get away with. I read where Turkey issued a international arrest warrant for this guy, but seem to me that some countries wouldn't take this so seriously. Some of them dont' recognize crypto currency at all. Seems to me its just as simple as putting all of it in a wallet on a thumb drive and then get on a plane to the Cayman Islands. Then your home free.
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That's not the real problem here.
The problem is that in order to do basic stuff with bitcoin, like buying it from people you don't know, you need to trust something a lot like a bank.
But this thing you have to trust, doesn't have the usual safeguards which regulated banks have against the owner just grabbing everything and making a run for it.
Coming soon to the US (Score:1)
Now that ransomware is starting to target the federal government, it in turn is starting to care about the anonymity of cryptocurrency.
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Cryptocurrencies aren't anonymous. That people think they are is a critical failing of logic.
The ledger is PUBLIC. Every transaction is linked and can be traced from account to account. Every "coin" can be tracked through every transaction from the day it was mined to today.
And much more importantly, it's conversion to real currency that you can use without the standard 8% transaction fee is completely traceable. It would be incredibly easy for any government to track the transactions if they wanted and the
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If crypto transactions weren't anonymous, the ransomware business would not exist. It exists because it is easy to 'tumble' crypto to make it impossible to trace the provenance of a given coin.
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Sure it is. I expect at some point in the future everybody who's associated with a wallet that's ever made a transaction to or from a laundering service is going to get a nice visit from their not-so-local policeman.
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Regular money is even easier to hide the provenance of. You know how government deals with that?
By making it a crime to hide the provenance. It's not on them to prove that your money came from a bank robbery, it's on you to prove you got it legitimately, because even having money you can't explain how you got is a crime.
Money laundering legislation does not fool around.
For bitcoin and similar I expect the fungibility illusion to break. Bitcoin is fungible by convention, but not technologically - if you want
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KIdnapping for ransom fell out of favor as a crime because given the technology of today's surveillance, it is impossible to make a cash drop without being seen by authorities. It is because cryptocurrencies have made anonymous transactions possible again that ransomware exists. Kidnapping for ransom will come back into style for the same reason.
Have you ever heard of a ransomware case - just one single case - of a ransom in physical cash?
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Kidnapping for cryptocurrency is equally out of fashion. Every case I know of, it's highly suspected of being false (e.g, a rich guy's wife disappeared, crypto ransom demand turned up and was paid, but now police think the rich guy killed his wife, arranged the whole thing and just paid the "ransom" between his own accounts).
Ransomware is popular because it can be automated, not because cryptocurrency is so effective. It's because it can be automated, like spam, that it doesn't matter that only a minuscule
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That's true for most but not all crypto currencies.
PirateChain for instance only allow hidden transactions after the coins are first mined.
https://pirate.black/about-pir... [pirate.black]
And it is not the only one, Monero is the biggest privacy focused coin.
ZCash and Verus both support hidden transaction aswell but don't mandate them.
all these cryptocurrencies seem 1337 (Score:2)
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I imagine law enforcement loves cryptocurrency. The criminals are going to keep detailed financial records, AND they're going to e-mail them to every cop on the planet?
If it gets big enough to actually interfere with monetary policy then they'll regretfully have to shut it down.
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If it gets big enough to take an actual bite out of the business of the major money laundries like Citicorp and Credit Suisse it would be shut down even quicker.
"Bank run" (Score:3)
The problem with all exchanges is that they would never have the cash to pay off all the accounts. They only have enough to cover day to day operations.
Think about it, you buy $1,000 in bitcoin on coinbase, the next day BTC doubled, and your account balance shows $2,000. Happy for your gains you decide to hold on (HODL in their terminology).
But if you decide to cash out that day, coinbase needs to find the extra $1,000 to pay for your imaginary "gains". Unless somebody else bought bitcoin at $2,000, they would be short.
The same thing happened in Turkey. One weekend night the president (El Presidente) released a decree banning crypto as a currency. What did they expect, other than people trying to cash out like crazy? The only way they could have avoided this run, if they coordinated with the exchanges, and exchange only paid out in BTC which they had, not Turkish Lira, or USD, which they were short.
Re: "Bank run" (Score:2)
Adding to stikves observation about these crypto exchanges not having the funds to cover withdrawals, it is not clear to me exactly what Faruk Ozer ran off with.
Did he empty the customers crypto wallets?
Or did he clean out the bank accounts that held the currency used to buy the crypto coins? i.e.the lire or dollars used to purchase coins?
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Customers' crypto wallets? That's not how exchanges work. The numbers that represent cryptocurrency are in the exchange's wallet. They sell you some other numbers that they make up themselves that are theoretically exchangeable (thus the name) for the cryptocurrency numbers, or even some numbers representing dollars/pounds/yen/lira.
I'm sure he ran away with the exchange's cryptocurrency reserve. I doubt very much they had any actual cash laying around, and there's not a lot of point trying to run away with
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Yes, it seems to be the case.
I think as soon as he realized the government would be shutting down exchanges, and there would be a run on deposits, he just booked a flight with their master crypto wallet. My understanding is there was $800 million of original purchases, which currently was held in a $2 billion worth of bitcoin.
The problem is, why would any organization allow a single person to access all the funds, even if he was the CEO?
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It's a bitcoin exchange. You could probably set one up on your PC. To look more legit, you hire some of your buddies, and once someone gives you some money you maybe rent a shop or something. You've got access to everything because you set it up, or hired some nerd to do it for you.
Why anyone would give $800 million to such an organization, that's the real question. Especially since cleaning out the exchange wallets and doing a runner is basically the exit strategy for all the exchanges. It's not like these
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if you decide to cash out that day, coinbase needs to find the extra $1,000 to pay for your imaginary "gains". Unless somebody else bought bitcoin at $2,000, they would be short.
Coinbase is not buying your Bitcoin. As an exchange it merely facilitates transactions between their users. You offer your $2,000 worth of Bitcoin on their market, and another user may then buy it for your asking price. That user already has USD deposited on Coinbase, or they wouldn't be allowed to trade. Therefore you will get their money and should be able to withdraw that.
Now there is a grain of truth to your reasoning: Sometimes exchanges pay their ongoing losses from client funds, hoping there won't be
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I gave the coinbase as an example, and as you said they would be held to much stricter rules.
But the Turkish mentality is a bit different, and those exchanges were not under any supervision, so all bets were off.
Look at this guy:
https://www.youtube.com/watch?... [youtube.com]
He has gone on a rampage since "bitcoin" has conned him, and he wants his money back. If the exchanges were unable to provide liquidity at those "paper" values, I think there could very well be blood on their hands.
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A sleazy X is sleazy. But there is nothing intrinsic to an exchange that says it must be sleazy or vulnerable like that. Gambling with the clients money is not a necessary (or even legal) part of being an exchange.
The only reason a well run exchange will ever buy your currency is because they have reason to be confident that they can make a sure profit by buying at whatever price they gave you a quote for. You do not have $1000 of Bitcoin that turns into $2000 of Bitcoin the next day. You have the same
why do I keep seing this post for days? (Score:1)
that's not even what happened....
Nothing to see here!/Downfall parody videos (Score:1)