Luckily for cryptocurrency exchanges, recent decreases in market prices for tokens mean that …exchangehaslostmorethan100million.com doesn't need an update due to: wsj.com/articles/crypt…
"Why does this keep happening?"
Because the market is clownshoes, top to bottom.
Users are clownshoes: they are gambling, and so they overvalue ability to move money ~instantly in and out of exchanges. This results in exchanges competing on custodial risk. The winners lose.
Because the market is clownshoes, top to bottom.
Users are clownshoes: they are gambling, and so they overvalue ability to move money ~instantly in and out of exchanges. This results in exchanges competing on custodial risk. The winners lose.
There is a well-known triangle in accounting to separate controls and thereby prevent embezzlement: authority to move funds, physical custody of funds, recordkeeping. Anyone who has all three can steal all the money.
Root any computer at a Bitcoin exchange. Get all three.
Root any computer at a Bitcoin exchange. Get all three.
The Bitcoin community's sole compensating control, the hot wallet / cold wallet distinction, is clownshoes. If it actually worked …exchangehaslostmorethan100million.com would not need to be a domain name. It's easy to eff up and the SUCCESSFUL case is that you lose only 5~20% of all AUM.
The exchanges are clownshoes. Probably one in the world has the security team required to secure a Bitcoin exchange. I had previously estimated that at $10 million a year but that actually might not get you there, particularly since market pressure is expanding attack surface.
Regulators are clownshoes. In what functioning regulated market is it OK for retail to lose hundreds of millions of dollars to operational error multiple times per year?!
"People knew about the risk."
See that's the thing about regulated markets: you're allowed to sell *products* which are risky but the *system* risk should be close to zero.
Do you know when the last time a bank or brokerage has lost $50 million in customer money was?
See that's the thing about regulated markets: you're allowed to sell *products* which are risky but the *system* risk should be close to zero.
Do you know when the last time a bank or brokerage has lost $50 million in customer money was?
