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  • ....which is why I won't go near that stuff. The bad guys can ALREADY do lots of damage using "old fashioned" tools. We've all read, too, by now, that N. Korea's punk regime VOLUNTEERED to say they'd raided and stolen crypto stuff to be able to grow their missile program. I wonder if someone could "take out" Kim, whether NK would change its stripes as a society?
  • an account labeled “Benjamin Choe'' began withdrawing bitcoin, ether and U.S. dollars from user accounts. One user said he lost 13 ETH, 1 BTC and thousands of dollars in a matter of minutes
    Crypto may have been the bait, but the theft wasn't crypto-specific.

    Self directed IRAs are already a wild west environment. They're structured to give investors nearly unlimited control over what types of investments are put into the IRA. Contrast that with a brokerage which limits you to stocks, bonds, derivatives, mutual funds, ETFs, and the like.

    Also unlike brokerages, self directed IRA custodians don't have SIPC insurance to protect you against theft. The custodian, IRA Financial has "reason to believe that there are some bad actors posing as IRA Financial employees looking for crypto account-related information." Good luck recovering losses.

    https://www.nerdwallet.com/article/investing/self-directed-ira

  • edited February 15
    Risk of crypto theft is applicable to any type of financial account whether SD IRA or not. Coinbase account holders can also lose money if Coinbase goofs up on security best practices.

    Setting aside the crypto aspect, risk of assets being stolen from a SD IRA account is quite remote. Other risks as called out in linked article I agree with.

    Cash in an SD IRA account can have FDIC protection depending on how the SD IRA custodian is set up. For example see footer at https://www.goldstartrust.com
  • @msf & @stayCalm : Did you happen to read crypto hack 2016 I posted in OT ?
  • msf
    edited February 15
    As with fintechs, there's a window between the time cash goes into the account and it is swept into an insured bank when it is not insured.

    For example, here's a long piece from DepositAccounts.com quoting WealthFront:
    While funds are at Wealthfront, before they are swept to the program banks, they are subject to SIPC’s protection limit of $250,000 for cash
    https://www.depositaccounts.com/blog/banking-fintechs-safety-money.html

    The risk of assets being stolen from a brokerage are quite remote. Would you use a brokerage without SIPC insurance? The other risks in the article are entirely under your control; the risk of assets being stolen out of an account are not.

  • Derf said:

    msf & stayCalm : Did you happen to read crypto hack 2016 I posted in OT ?

    I've stayed away from OT for quite some time. The Yahoo article says that the exchange (Gemini) was not hacked while the self directed IRA custodian acknowledged that "an incident occurred". That distinguishes it from 2016 where it was the exchange (Bitfinex) that was hacked.
  • edited February 16
    @Derf -- I don't know what OT stands for

    @msf -- I don't think the vulnerability window you called out for fintechs is applicable to Goldstar Trust. Goldstar Trust is a subsidiary of a bank that has FDIC protection. I see the below statement as cash being protected because the uninvested cash of a Goldstar Trust customer is sitting in the parent company(Happy State Bank) account. There isn't any uninsured fintech middleman between the consumer and Goldstar/Happy State Bank

    FDIC NOTICE: IRA and/or Bond investments represented on this website are not FDIC-insured, are not guaranteed by GoldStar Trust Company, and involve risk including possible loss of principal. If held in a GoldStar IRA or GAMMA account, the un-invested cash portion is FDIC insured up to $250,000.
  • @stayCalm- "OT" refers to the "Off-Topic" MFO discussion section. It's the designated section for commentary which has either very limited or no direct connection to financial matters. msf's unwarranted snub notwithstanding, some of the oldest if not finest MFO posters may be found there. It's accessed via a link at the top left of each MFO page.

    @msf- just kidding! :)
  • According to the account disclosure, cash gets FDIC coverage when it is swept into Happy State Bank, which happens on a daily basis:
    you authorize and direct GoldStar Trust Company (“GoldStar”) to deposit any uninvested cash held in your IRA/ESA into an omnibus demand deposit account maintained by Happy State Bank, an affiliate of GoldStar (the “Deposit Account”). On a daily basis, any cash in your IRA/ESA, for which GoldStar has not received an investment or other direction as to its disposition, will be deposited into the Deposit Account. Such uninvested cash will remain in the Deposit Account until you direct GoldStar as to the investment or other disposition of such uninvested cash, and such direction is implemented. The Deposit Account is insured by the Federal Deposit Insurance Corporation (“FDIC”)), up to the maximum amount per depositor, which is currently $250,000.
    https://www.goldstartrust.com/PDFforms/Traditional_IRA_Simplifier.pdf

    One wonders a bit about the choice of the term "affiliate". "Affiliated companies are companies that are related through ownership, either with one owning the other as a minority shareholder or with multiple companies being owned by a third party." Is Goldstar Trust a subsidiary of Happy State Bank as you write, or merely an affiliate? Merrill is an affiliate of Bank of America, it has FDIC-insured sweep accounts, but it doesn't say that cash is insured before it is swept into the bank.
    https://corporatefinanceinstitute.com/resources/knowledge/strategy/affiliated-companies/


  • >> They joined IRA Financial Trust eager to build a nest egg in crypto.

    what could go wrong?

    >> IRA Financial Trust has acknowledged an incident occurred and is investigating it, telling CoinDesk in an emailed statement the “suspicious activity” affected “a limited subset of our customers with accounts on the Gemini cryptocurrency exchange.”

    ah
  • edited February 16
    Goldstar is the trust business arm of Happy State Bank

    https://www.goldstartrust.com/about/

    Anything I guess can happen when disaster strikes but I do not believe that Goldstar can get off the hook if somebody hacks into Goldstar systems and siphons $ out of Goldstar customer accounts.
  • I saw that already. I prefer to trust (no pun intended) legal documents over marketing literature.

    In any case, there's a difference between handing money over to a bank and having that money sit in an insured account. If the money is in an individual insured bank account waiting to be swept into an omnibus account, what type of bank account is it in? Is it in a savings account or a demand deposit account? Either way, where's the bank disclosure statement that must go along with that bank account?

    What appears to be happening, and one must say "appears" because nothing is disclosed, is that the bank is merely holding your money for a day before moving it to an account (the Deposit Account). It's as if you went into a bank, handed the teller your cash, and before the teller did anything with it, gunmen with six-shooters a-blazin' grabbed the money out of the teller's hand.

    Sure, the bank would likely still be on the hook for that cash. But the FDIC wouldn't be. It insures accounts, not banks. If a bank goes bust, the FDIC isn't going to cover its electric bill.
    FDIC deposit insurance coverage depends on two things: (1) whether your chosen financial product is a deposit product; and (2) whether your bank is FDIC-insured.
    https://www.fdic.gov/resources/deposit-insurance/brochures/deposits-at-a-glance/index.html
  • WELL , Think I'll stick my stash under the mattress !! LOL
    Enjoy your day, Derf
  • edited February 16
    @msf
    I agree with the scenario you sketched out. How is that any different with any of the brokerages such as Vanguard, Schwab, Fidelity, etc?
  • edited February 16
    Old_Joe said:

    @stayCalm- "OT" refers to the "Off-Topic" MFO discussion section. It's the designated section for commentary which has either very limited or no direct connection to financial matters. msf's unwarranted snub notwithstanding, some of the oldest if not finest MFO posters may be found there. It's accessed via a link at the top left of each MFO page.

    @msf- just kidding! :)

    Let us hope no misdirected “newbies” accidentally stumble into OT on their first visit.
    They’d surely wonder what the the board is about. I understand the reason for OT’s existence (I think).

    Yet, it’s hard sometimes to draw a clear distinction between financial and non-financial issues. The many posts after two 737 Max disasters might be an example - as there were repercussions for the airline and aircraft industry which did impact some peoples’ investments and portfolio positioning. And who can argue that Covid-19 (stimulus checks, border closings, business closings, online shopping, near 0 short term interest rates, liquidity issues) wasn’t an economic event?
  • So, what is the title of the post reporting that everyone with personal business with the US government is now subject to bankruptcy as soon as the Putin pundits get finished with the data stolen from ID.me, a universal data base of most US citizens with SS numbers, fingerprints, face scans, mother's grandmother's maiden name and whatever gets added for "security"? And, after all this information is public, what gets used for security in cyberspace?
  • msf
    edited February 16
    stayCalm said:

    @msf
    I agree with the scenario you sketched out. How is that any different with any of the brokerages such as Vanguard, Schwab, Fidelity, etc?

    Those brokerages have SIPC insurance to cover uninvested cash. There is no window where the cash is uninsured.

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