Hey everyone,
I thought we should have an open discussion about this, as this has been troubling me for a couple days now since learning about the present situation uphold is in. Firstly, we should begin by understanding what uphold offers to its customers… Formally Bitreserve, Uphold is a financial service where you can do peer-to-peer remittance transfers with a wide range of different options including: USD to GOLD to BITCOIN (many more options avail) with them stating that all deposits that you insert into the platform are fully reserved assets and not subject to fractionalized reserve banking. The concept is awesome, as I can diversify by buying into the wide ranging of different asset classes that they offer, from national currency’s to crypto to commodities in one central spot. But it’s not what it seems…
My curiosity here began when I noticed their new speculative VOX currency was on their balance sheet and counted towards its “Assets” against its “obligations to members”, in fact actually posted it here on Reddit, lots of traction arose from the post because I was just telling the truth.
All I did was subtract the VOX currency from what would actually be accepted on a reserve statement and noticed there was actually a deficiency of $120,000! I didn’t make the post, as an attack on the business I was just telling the truth. As it was some sort of illusion to persuade people from realizing that there deposits were not actually fully reserved, but to upholds credit since my Reddit post they removed the speculative security from the transparency page and injected more cash into the system to run a surplus on customer assets (making it fully reserved) instead of the deficiency I spotted.
*Keep note, after I made the Reddit post their CEO acted completely unprofessional as instead of directly owning up to this sketchy flaw that I found he was on pure defense saying how much of a troll and dishonest I was, when in fact I was correct and they removed the vox from the balance sheet. Lolz.
As I was, catching up on some Saturday reading this morning I decided to check out upholds website for the first time in a while, I have to tell you guys I’m still very troubled. As of 1:15 PM on Saturday March 26, 2016 I looked at their transparency page and ran my eyes through the present figures of how they come to their “assets in reserves” vs “obligations to members”.
But first I just want to clear the air, fully reserve banking is defined as a financial institution that is required to keep the full amount of each depositors funds ready for immediate withdrawal on demand.. Uphold sort of fits the bill for the definition but in a very shady way.
As of 1:15 PM today (Saturday March 26), they have $5,361,958.30 in obligations to members and $5,421,399.19 in reserves resulting in 59,440.89 in equity. So yes, everything seems great as they have more assets in their reserves than they do to the obligations to customers. But is it really fully reserved? As if we go back to what a fully reserve banking system is, it is something that can satisfy demands for customer withdrawals. So I will give you an example on why uphold is extremely shady.
Today the company is LONG the British Pound ($728,323.25 < In Reserves TO $345,650.54 in obligations to members) also the USD ($2,351,714.54 < < In Reserves TO $1,615,814.12 in obligations to members)
Uphold is SHORT the following: Bitcoin ($1,527,733.26 in reserves TO $2,027,827.23 obligations to members) Euro ($310,799.32 in reserves TO $528,088.65 obligations to members)
and not fully backing customers obligations in the following: China Yuan, Silver, Platinum) now let me ask you something, is this a fully reserved financial service or a service taking great risks with customer deposits. What happens if the following scenario happens?
I will just say Bitcoin, due to its volatility it will be a great example.
So say, BTC surges 5% from $416.23 (Current Face Value) > to $436.96, unfortunately if this was to happen uphold would become insolvent.. because if it runs 5% that would mean the $2,027,827.23 in obligations to members turns into 101,391.36 in additional obligations to the btc holders.. their present equity stake is $59,440.89, so if the 5% takes hold the number would turn into a deficiency of $41,950.47 !!
My message is simple, be careful with these type of financial institutions as even though they’re saying your deposits are fully reserved there still very much subject to insolvency due to the fact of very speculative bets by being long and short a variety of national currency’s or cryptos.
*and I wont even get into their strategies of long and short speculative bets of being terrible! Maybe another post for another day. Cheers/ Happy Easter.
Submitted March 27, 2016 at 03:44AM by askwhy10 http://bit.ly/1XVbHEm
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