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And to underline the difference: suspending withdrawals can allow a bank's customers to [eventually] get their money back when the bank's creditors get repaid. And the bank never pretended it wasn't making loans in the first place.

If a crypto exchange suspend withdrawals, on the other hand, there's no reason to suspect they're just waiting on a bunch of loans to ordinary people and businesses to come in, especially since it usually means they lied about custody of assets.




Clarification: depositors are considered a banks senior creditors. They get paid before the other creditors.

The reason a bank would suspend withdrawals is so it can be either taken over in an orderly fashion (in the US supervised by the FDIC) or so they can get a liquidity infusion (in the US, depending on their charter, from the fed).

Those regulatory agencies and bankruptcy rules don’t exist for a crypto exchange so there is very little an exchange can be doing when suspending withdrawals that doesn’t end with the exchange going bust.




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