The Custody Problem

When the ETH merge happened and the price was not only lackluster, but sank, I knew something was up. Crypto Casey (on YT) dug in and explained some potential factors. What has been leaked out has been that some of the exchanges have a custody problem. That's a serious problem. I mean, when we buy crypto, we expect that a crypto node or miner was actually utilized and we draw from a pool reserve, and when that pool reserve is down, the nodes and miners are utilized again. Without that, you're basically creating an artificial supply, and thus the price will only go down unless some significant insider buzz such as a huge technological advantage brings that price up. When an exchange just updates their database and says you have crypto when you don't, that's a huge gamble they're doing. It's a ponzi scheme. It's often the number one reason we've seen why exchanges collapse -- they're committing fraud by not really having that crypto on hand and they're gambling that not everyone will want to cash out or go cold wallet on their crypto holdings.

The exchanges need to wake up and realize that if they don't form a governance board among them, and utilize real auditors like KPMG and the like, then they're just asking for draconian government control from multiple governments, which no one really wants. It's also harder for these exchanges to right this ship and get that custody issue fixed when the price keeps sinking.