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"Every banker knows that if he has to prove he is worthy of credit, in fact his credit is gone." - Bagehot
They claim to be an exchange, not a bank, not investing user assets. https://twitter.com/SBF_FTX/status/1589598285798707202 The Bagehot quote is not SUPPOSED to apply.
All of these folks need to be in prison along with Andreeson Horowitz. All bloody crooks the lot of them. The largest ponzi scheme in the history of humanity and they wonder why the world is not getting better.
Did AH take money from retail investors? I suppose you can claim they pumped these products. I'm not convinced it's any different than what happens with an IPO that started with VC money. I'm not saying it's good, just that it's as bad as anything that's regulated.
Binance was threatening to dump a huge amount of FTT tokens on the market. FTX has a big+vulnerable position in FTT. FTX asked Binance to sell them the tokens for a fixed price, so as not to crash the FTT token price. Binance declined - this was yesterday/today. Of course the price of FTT crashed today. And now Binance buys FTX to help them out... smells like Binance played 4D chess all along. https://decrypt.co/1136…
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If it's going to happen, better sooner than later.
I mean we are wishing here for an economic catastrophe. What am I missing?
> whatever smidge of trust Turns out the "trustless" in crypto means "you can't trust anyone".
Also turns out that "decentralized" in practice means "centralized"
Why is it apparently so difficult to run a solvent crypto exchange? On the face, it shouldn't be too hard, just take deposits, stick them in a wallet, and swap client balances in a database. Is the temptation to maintain a reserve ratio < 1 just too great? Do operators try to earn small, low-risk return on client funds only to find there are no low-risk, positive-return assets in crypto? Are the extending margin to c…
> Why is it apparently so difficult to run a solvent crypto exchange? Running a stock exchange is a hard business too; you are the market maker, you set the spread, and the most sophisticated investors in the world are trying to arbitrage you. Any mistake can potentially ruin you. If you do you job right you take a tiny sliver of profit from each transaction. Now consider crypto, where your ability to pause the marke…
Normal markets aren’t as centralised as crypto. The exchange and market maker are separate.
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Fractional reserve in the context of banking is completely different because the FDIC backstops runs and the Fed backstops the FDIC. Nobody backstops FTX or any other crypto exchange so its better described here as 'the yolo lifestyle'. A modern day bank run in traditional finance is functionally impossible* (up to the FDIC insurance limits, and often higher in practice - there were no imposed limits at WaMu for inst…
> modern day bank run in traditional finance is functionally impossible Not at all. Bank runs still happen, the backstops just soften the blow with liquidity injections. Every time you see a withdrawal limit, there is no doubt a bank run is occurring.
This is not accurate. Withdrawal limits are there to control fraud.
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Did AH take money from retail investors? I suppose you can claim they pumped these products. I'm not convinced it's any different than what happens with an IPO that started with VC money. I'm not saying it's good, just that it's as bad as anything that's regulated.
Would you consider cashing out pre-ICO tokens for bogus projects to “accredited investors” (ie retails) as “taking money”?
Probably a civil matter anyway - no expectation of jail, which was what the parent commenter referenced.