RT @phil_geiger: Did you know that with the @unchainedcap OTC desk, you can buy $50k+ of #bitcoin direct to cold storage multisig with keys you control? This means that there's no way for a single person at Unchained to prevent you from accessing your BTC. Eliminate single points of failure! https://t.co/HmSBH8vnP4
They'll use their assets to borrow money from up the chain to the discount window in order to satisfy those withdrawals. That bank isn't even balance sheet insolvent and the FDIC doesn't need to get involved. They just won't be able to loan money unless they get more deposits. All you've done is discover liquid and illiquid assets.
They literally aren't. They only hold a small percentage in assets of the actual deposit balances. For example, in Cypress a banking crisis resulted in the banks having to slash the balances of account holders so they could remain open.
The "Full Faith and Credit" of the US Government is behind the FDIC. It is explicitly stated.
It essentially cannot fail. In the worst case the US would just print money to give to you.
The existence of this backing basically means that they may never have to pay out because selling a bank to another bank at a discount requires less capital (up to and including none) than repaying lost money.
I just had to wonder, who will be the Terry Childs of the crypto world? Most would bet on Craig Wright, but I think he would crumble under pressure in a cell.
Childs sat in jail for years, refusing to divulge his password to a San Francisco government computer. He had related charges, but his refusal enhanced his sentence. I always thought I would gladly give the password up to get out of jail. Maybe Childs really took Henry Thoreau to heart.
It's OK, the key holder has merely been arrested. I'm sure they'll get out eventually. It's not like they've died suddenly in India. It's a perfectly reasonable business continuity plan that if a single individual in your organisation is incapacitated, you just wait for them to return.