Pretty bad article. Author is more interested in detailing their own hunt for the guy and inserting themself into the story (apartment trashed after booking a plane ticket?) than establishing basic facts about the crime.
I’m not even sure about the most important thing after reading the entire article — how much did the guy actually steal? It’s reportedly $2B from 400k people at the time, but the dude claimed in court that there were only 2027 claimants claiming $45m (is that true? Should be easy to establish from court documents), and dude claimed to have paid back $10m to 1000 people, after which “when the cold wallet was empty, he threw it into the Ionian Sea” (wat?). There’s zero comment from the author on this two orders of magnitude discrepancy, wtf.
> Two days later my apartment in Istanbul was ransacked in a way that seemed like a stern message. The wood on my front door was split open by force, and the contents of every drawer and cabinet were tossed around. The lock to a safe was snipped open, its contents—expensive camera equipment and cash—remained untaken. Even a laptop on the entry table appeared untouched. I canceled the trip.
This is a crazy part of this story! Presumably this means Ozer had friends in high places, but he didn't seem to implicate them in the trial?
Not really involved with crypto, but if I had large sums of money in it, I would never store this on an exchange. Seems so risky. Can anyone ELI5 why people do this?
1. Self custody is hard. You need to understand how to setup a wallet. If you lose the keys to that wallet, your money is gone. Opening an account on an exchange is so much easier, and there is usually a way to reset your password if you forget it.
Exchanges provide an online-banking style experience that most people are already familiar and comfortable with.
2. Access to markets. If you hold funds somewhere else, it takes quite a bit of time and effort to move it back onto the exchange so you can sell it later. It only really works for people who want to buy some coins and stuff them under their mattress until later. For anyone who wants to play the markets, you kind of need to keep your coins on the exchange.
Additionally, holding coins on the exchange is free. You don't have to pay the transaction fees to withdraw and deposit, which can add up, especially on congested blockchains like bitcoin and ethereum.
I found that many exchanges/custodial wallets (I've tested Kraken and CashApp) charge fees or imbalanced exchange rates for converting fiat into crypto and sending crypto to another address (often using a bulk transaction exchanging money between the exchange's wallet), so I wouldn't say you avoid transaction fees that way (they may or may not be reduced). I ended up using them anyway because it's easier to purchase crypto as a number on an exchange than to have it sent to your personal address.
Non-KYC exchanges outside the US and sharp deranged claws of the FTC and DoJ typically depend on exchange held crypto if you want near instant clearing for futures and securities trading etc.
In the case of something like bitcoin, lower latency / no confirm time means you are avoiding the very blockchain that is meant to be the bedrock of the currency's value. What's the point?
I think low latency traders don't much care about the value proposition, only that they can gamble on the trades. Much like forex day traders don't give a shit about the value proposition of the dollar
It all just reminds me of Steve Martin's old comedy routine about banks.
I mean, like, take, say you get out college or whatever you're doing. You're gonna go into business; say you're going to open a bank. Now you, just for example, you've got to give it the right name. It's got to be something big and strong like Security First Trust and Federal Reserve. And you have to name a bank that because nobody is going to put their money in Fred's Bank. "Hi, I'm Fred. I have a bank. You got $1,500? I'll put it, I'll put it here, in my white suit. White suit, right-hand pocket. Ok, you gotta remember that."
Legitimate question (I expected this will read poorly).
If you don't trust that seed phrases, which are a fundamental piece of how bitcoin key pairs are designed, will work why would you ever consider investing in bitcoin?
I totally get the stress of self custody. I just don't get why anyone that stressed about it would bother buying bitcoin.
To make money, but it's not that I don't trust the technology. It's more that I don't trust myself. Maybe I wrote them down incorrectly or did some other mistake? I also once lost the paper after moving (but found it again), even though I was sure i had put it in the new safe.
I think this is the key thing I wasn't considering - I think of Bitcoin as primarily way to save currency, whereas a lot of people are treating like an investment for trading.
During the Terra collapse, there was a 2-day period where Terra's price was supported by a massive BTC reserve. Those with Luna on exchanges could quickly exit their positions, but those with Luna in wallets or locked in Anchor Protocol faced hours-long delays for their currency to be confirmed and traded.
By the way, because a lot of people are keeping their crypto on exchange, would it be possible for an exchange to have fractional reserves like for banks? It is probably doable for big exchanges as trades happen on a platform they control anyway and crypto only goes out when a customer sends money to an external address. They may be able to keep only a third of customers account balance and still operate as usual.
Most exchanges are suspected to secretly run fractional reserves.
Binance in particular has its own blockchain and gets to run fractional reserve on most of the assets bridged to that block chain - the bridge keeps the real copies of the assets while only "shadow copies" are "projected" onto the Binance chain and traded.
I often leave up to $1k on my account to pay for occasional stuff that I need to pay for. May be people who leave huge amounts of money there do the same, but they're rich and their stuff is much more expensive?
I'm not sure how is it relevant to crypto. You let someone manage your private keys and they ran away with them. Don't do that?
I had my money in a bank that failed last year. I still can't access my money, I'm probably going to lose some of it, and my mortgage might have to be repaid much sooner than expected. Fiat is a good investment?
Well, sounds like you are trying hard not to draw the connection.
Because pretty much only in crypto is owning a private key the same as permanent irrevocable access to your assets.
Not really different from fiat at all. If you give someone your password to authorize wire transfers, you're going to have the exact same problem as with crypto. Only if they stole the password then you might have a chance to apply for insurance claim.
And unlike crypto, with fiat there is no way to have stuff like multi-signature wallets or smart contracts than only execute if the conditions are met, and safely. If you wire your money to a forex exchange that's actually a scam, you're probably never going to get the money back. If you use a decentralized crypto exchange based on smart contracts, there's no chance of a problem - or everybody relying on cryptography has a big problem.
And of course, there's no way to have fiat money in a hardware wallet. You can have your bank token there but that's really not the same thing. A hardware wallet like Trezor will actually successfully protect your crypto, unlike a fiat bank with a nice MFA token - that just makes it harder to impersonate you, but it can't protect you from the bank itself.
Overall, don't blame "crypto" for something that's happening on a daily basis with fiat too - scam forex/option trading exchanges were a thing much before Bitcoin. Cryptocurrencies are an improvement in this case because while not everybody makes use of the security possibilities, at least they exist and it's not hard to use them.
Alright, let's add "crypto, wire transfers, and forex/options trading" - does that make you happy?
And all of those situations have some corporation you can sue if their mistake facilitated the theft - you think you're going going to get anything out of the crypto exchanges? Suing a bank sucks but its easier than suing nothing at all.
I recently got my money from MtGox. Apparently yes.
Don't get me wrong, you have a point. It's just not about crypto currency at all, and yet you're presenting it as a fault of the technology. The technology is sound, problem is in the humans (ab|mis)using it, or just talking about it.
Notice how in crypto scams there usually isn't any actual crypto currency - they simply make a web UI with nice charts. Why? Because their scam wouldn't work if they created an actual crypto currency.
A scam exchange is the same thing - you essentially sent money to someone on the internet and they ran away with it. The method of transfer is irrelevant, and you have same options if you wired dollars or sent a crypto transaction. It has nothing to do with the many interesting security methods that modern asymmetric cryptography provides, that are utilized to make trustless transactions and smart contracts work on blockchains - you didn't utilize them at all, you simply transferred all your money away.
Fiat is a terrible investment, as advertised. Central banks make it clear they are target inflation and that you should expect the asset to depreciate. I don't think anyone expects to get rich keeping their money under their mattress.
May I ask if this bank was insured? What country was this in? I'm surprised, because this is something "tradfi" is usually very good at. At any rate, that really sucks and I wish you a full and speedy recovery of your money.
European Union, yes the bank was insured, but the related court case is huge and moves slowly. No, I wouldn't say this is something that traditional finance are good at.
CTRL+F “AS “WANTED” FLIERS with Özer’s picture went up” if you actually want to continue what the headline was about
This is long form essay has completely unnecessary exposition. Turkey has high inflation and alot of people buy crypto to escape it, one sentence. Next.
“Money is an agreement between a government and its society in terms of national unity. But on the other side of the medallion, if everyone leaves the fiat—if everyone leaves the social agreement of their nation—it could derail the world.”
The sooner everyone actually learns what money is, the sooner we can stop with all of this foolishness.
Money is a tax credit. It is a token that the sovereign who imposed the tax in the first place will accept back in payment of taxes.
That's it. Without taxes, there's no money. The "social contract" part is more about resources than money. By imposing the tax, the sovereign creates unemployment in terms of a currency only it can issue, and thus is able to provision itself.
Seriously, though, I had this exact conversation with him when I first launched Intercoin back in 2018 and reached out about advising us on economics (I had interviewed many economists since then). He said he never saw any currency that was in use that wasn’t accepted for taxes. I asked what about Bitcoin and all those other cryptos.
Actually, money doesn’t require government. It simply requires a network effect, same as language, religion and culture (which also don’t require government force). Money is just the most liquid asset in a specific network. Its value comes from others accepting it for goods and services.
You may want to watch some of my discussions with economists of different schools:
Hard disagree, even if you are quoting someone famous.
Money is a fungible form of exchange so that I can sell widgets and can buy foobars later. Many of my Bedouin neighbors pay no taxes, but they use the same money I do - both accepting it and paying in it.
> Many of my Bedouin neighbors pay no taxes, but they use the same money I do - both accepting it and paying in it.
The demand for that currency traces back to the willingness of the issuer to accept it back in payment of taxes.
People use the USD in all sorts of places where taxes aren't due in USD, but if the US government said "you can't pay your taxes in USD anymore" then it wouldn't take long for the USD to have no value.
Even when money is constructed from a commodity, its value is derived mostly from the nominal value ascribed to it by the sovereign.
It seems to me that you are conflating two issues: fungibility of currency with pegging that currency to a commodity.
The US government is not the only entity that sees value in USD. So long as other bodies, especially commercial bodies, see value in USD, it will continue to be used as an exchange medium. Same for any other currency - just look to South America for examples where people have stopped trusting in the value of a currency and that currency failing, despite being able to pay taxes with it.
> It seems to me that you are conflating two issues: fungibility of currency with pegging that currency to a commodity.
Nope.
> The US government is not the only entity that sees value in USD
The US government doesn't see value in the USD at all. It sees value in the resources it wants to divert to the public sector by spending the USD, which it creates.
> So long as other bodies, especially commercial bodies, see value in USD, it will continue to be used as an exchange medium
The sole reason that the USD has value is because people in the US must pay taxes in USD.
> Same for any other currency - just look to South America for examples where people have stopped trusting in the value of a currency and that currency failing, despite being able to pay taxes with it.
It's different depending on the specific nation you're talking about but when a nation issues debt in a currency other than its own (in which of course it is logically impossible for it to borrow since the currency is already a liability of the issuer) and if a country relies on imports then it loses the ability to control its interest rate and price stability.
In a sense this is like the liabilities being imposed by the foreign sector exceeding the domestic tax base, or another way of looking at it is that the resources required to provision government are not available for sale in the currency it issues.
There's also issues like corruption in the tax system itself to contend with in some circumstances.
No, taxes are not the only reason anyone ever uses USD. People use gold - which country accepts taxes in gold? Which country accepts them in bitcoin? (El Salvador doesn't)
I believe the argument goes like this: "fiat" depends on a declaration by a government that something has value. The way a government does that is by declaring something legal tender and accepting taxes denominated in that currency.
Contrast with a time when currency was pegged to a physical asset like gold and GBP so no depreciation in something like 300 years. Savings actually had meaning.
The government imposes a tax, the tax is due in the state's unit of account. The government can then spend its unit of account into circulation, and later accepts it back in payment of taxes.
> Contrast with a time when currency was pegged to a physical asset like gold
Even when a currency is constructed from a commodity, it is not the commidity that is the money. It is a commodity that bears the stamp of the sovereign.
> and GBP so no depreciation in something like 300 years. Savings actually had meaning.
When money was constructed from a commodity there was a terrible shortage of coin to support the economy and it was a horror show for almost everyone.
It's certainly possible to have price stability and full employment, but if you're going to choose, a bit of inflation is much, much better than deflation.
Nope, it's not. Accounting is the first writing, and the earliest form of "taxation" as an obligation to the group was fines imposed upon people as penance.
> and the earliest form of "taxation" as an obligation to the group was fines imposed upon people as penance.
This is a strange thing for you to believe. There is no evidence for it, nor any suggestion that it's likely.
Taxation in money is a recent phenomenon, well within the historical period, pretty much everywhere; before that, you have taxation in kind. (And, often treated separately, taxation in conscripted labor.) Penalties are generally the same. Monetary penalties do show up before monetary taxation does, but they apply to people who have money, not to everyone in general.
What would drive a currency with no demand? Money almost always ends up as a commodity itself (gold/silver/ramen packets/cigarettes), commodity backed, or as a token to prevent the state from tossing me in a tiny cage.
In most crypto, the commodity isn't very clear. I attribute it's rise largely to the tax authorities and the FATF snuffing out anonymous banking and bearer shares and most high denomination notes around that time, creating massive demand for an alternative that crypto largely fills.
Those people only take dollars because every transaction has a third guy with a club demanding dollars from the other two, that makes it incredibly challenging for the currency to shift to something else.
Without the third guy standing there with a club it's not clear if or why they would demand dollars.
I agree with the "taxes make the fiat currency" argument, but what you said isn't a good justification for it, because that third guy with the club probably isn't paying any taxes!
Well, maybe sales taxes when he spends his ill-gotten gains, but that's indirect and if he's effective at intimidation with his club, he arguably doesn't need the money in the first place as he can acquire goods through other means.
The more compelling argument is that we pay taxes primarily to enforce peaceful law and order, primarily through control of force - at home through the police and abroad through the army - so that our stuff isn't just taken by "someone with a club" and making it worth being part of a larger society.
The third person in the analogy is the government, who demands payment specifically in dollars and who can use a remarkable amount of force if you don't pay.
Hehe, I interpreted the comment as being in the absence of government, and in terms of how older societies used to pay a third party protection money (effectively a tax) to protect them from thefts etc from others, but who would intimidate, steal or destroy property if the money wasn't paid.
You could argue that government isn't much different to a mafia, except that modern taxation is generally more transparent, fairer, impartial, and perhaps more considerate to the people with the least money. Also, they generally don't use force to enforce taxation, only the threat of a prison sentence.
This is a great illustration of how it works. The people who sell me food, utilities, housing, all also need to pay their taxes, and that's why they take it as tender.
It can be a useful metaphor to visualize the economy as a web of interconnected loops of cashflows with "the government" on one side and the rest of the economy the other. By raising taxes it pulls some of its inbound ends of the loops tighter and by issuing subsidies/grants/credits and loosens up the slack on its outbound ends. It doesn't actually matter how much money "the government" has, because it's the final arbiter of how much money is actually in circulation, it only exists because it issues it. In theory it can play this game to achieve good social outcomes. In practice it's more difficult to predict far-reaching consequences of some economic action.
It's also worth noting that the other resource a nation can require payment in it's own currency for is land - i.e. for both farming and mining purposes, both of which attract taxes denominated in local currency.
You open say, a hard rock mine somewhere in the US, you have to get mining permits to do so which are paid in...local currency.
