right to jail, right away.
FTX tapped into customer accounts to fund risky bets, setting up its downfall
341–350 of 746 posts
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#342Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#343> Alameda’s CEO is Caroline Ellison, a Stanford University graduate who like Mr. Bankman-Fried previously worked for quantitative trading firm Jane Street Capital. Alameda is based in Hong Kong, where FTX was headquartered before relocating to the Bahamas last year. Are the folks at Jane Street making money because they are smart, or because they use that perception to perpetuate some scam? I interact with a lot of H…
Caroline who? What did I miss?
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#344Earlier quoted context omitted.
Initially, he did invest their money, he just didn't get the (I believe it was) +/- 10% that he promised investors (and was getting like clockwork) before the 08 crash. Once he started not being able to make those returns did thing start to unravel. His own kids were in denial right up until the end - almost nobody, even inside Bernie's firm, knew it was fraudulent.
> almost nobody, even inside Bernie's firm, knew it was fraudulent. It’s amazing what you can fail to know when not knowing it keeps you out of jail.
It helps if you sleep in fits on a beanbag and play League of Legends with every spare brain cell.
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#345From the article: "FTX Chief Executive Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, one of the people said." In the FTX International terms of service ( h…
> banks at least tell you they are loaning your deposits out Side not but that’s not really how banking works. Banks create deposits when they originate loans and separately look for the assets they need in order to satisfy any regulatory requirements and net flows of funds for inter bank settlements. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
But that’s the principle of how banking works.
Nobody expects that their money deposited into a savings account is going to sit in a bank vault until it’s time to go pick it up — they know the bank is going to loan it out and pocket the difference between what they charge the borrower and what they pay in interest.
Checking accounts are different in that they should have the money on hand to settle whatever spending the customers get up to but instead they practice fractional reserve deposits with a central bank to bail them out if needed.
The difference here is the crypto bros are practicing fractional reserve without someone to bail them out so depositors just get screwed.
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#346> Alameda’s CEO is Caroline Ellison, a Stanford University graduate who like Mr. Bankman-Fried previously worked for quantitative trading firm Jane Street Capital. Alameda is based in Hong Kong, where FTX was headquartered before relocating to the Bahamas last year. Are the folks at Jane Street making money because they are smart, or because they use that perception to perpetuate some scam? I interact with a lot of H…
This comment, and its posters' subsequent comments, are so filled with anger, much misguided, that it's hard to really respond.
Jane Street has some good people. Harvard has some good people.
Both have some bad people.
I don't know how "scam" is defined, because sometimes people use it for things they just don't like.
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#347Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#348Earlier quoted context omitted.
This is why in regulated securities markets customer assets must be held in segregated accounts. Corzine, who knew better, ended up with an orange suit for not doing this.
Did Corzine actually go to jail? This didn't sound right to me and a quick search suggests no.
He did not go to jail, which prompted a satiric call to "Free the Honorable Jon Corzine." His LinkedIn page describes him as running "an opportunistic macro hedge fund."
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#349Earlier quoted context omitted.
... except in a way that fundamentally prevents the patches and even lauds the defects.
Yes, exactly.. this is the end state for crypto rather than a step towards being a normal market that normal people can use
Yep. One can argue whether or not the whole point of creating it was to enable such schemes, but they certainly are an inevitable result.
Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall
#350> Alameda’s CEO is Caroline Ellison, a Stanford University graduate who like Mr. Bankman-Fried previously worked for quantitative trading firm Jane Street Capital. Alameda is based in Hong Kong, where FTX was headquartered before relocating to the Bahamas last year. Are the folks at Jane Street making money because they are smart, or because they use that perception to perpetuate some scam? I interact with a lot of H…
Caroline who? What did I miss?
Caroline Ellison - CEO of Alameda Research.