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FTX tapped into customer accounts to fund risky bets, setting up its downfall

wsj.com

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Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#501

Post by alexitorg »

I was reflecting on this recently in the Chinese property bubble. I suspect firms that take customer deposits and use them to speculate of future growth grow much quicker in a boom environment than firms that handle the deposits responsibly. Crowding out responsible firms.

This has lead to Chinese property developers spending all the money they collected to build homes on new parcels of lands and even soccer teams instead of finishing those homes. After all there will always be new money coming in.

In the crypto space this has lead exchange firms that speculate with their customers assets to out compete the safe approach providing exchange services and collecting a commission.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#502

Post by astrange »

2muchcoffeeman wrote: post #499
astrange wrote: post #489

Earlier quoted context omitted.

When that guy hacked the DAO and Ethereum reversed the transaction, did he keep the coins or not?

They forked the blockchain right? So the person still has them on the old chain.

And what are they good for there?

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#504

Post by colechristensen »

vanattab wrote: post #500
colechristensen wrote: post #466

Earlier quoted context omitted.

It is a blockchain failure in that blockchains in general cannot actually support transactions like this. There's too much volume and there are fees. It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US. There is no…

>It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US I wonder if Sam being the 2nd biggest funder of Democrats has anything to due with this...

The SEC has been pretty slow across the board at regulating crypto.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#505

Post by zukzuk »

astrange wrote: post #486
wslh wrote: post #288

Earlier quoted context omitted.

How many years could Sam Bankman-Fried get in jail? It is also interesting to read on his Wikipedia profile [1] about "Bankman-Fried is a supporter of effective altruism and claims to pursue earning to give as an altruistic career. He is a member of Giving What We Can and has claimed that he plans to donate the great majority of his wealth to effective charities over the course of his life.". Having direct access to…

Giving away other people’s money is both effective and altruistic, it seems to me.

I suppose it's easier to justify this to yourself when you know most of the people whose money you're gambling with are also driven by the same greed.

The cryptocurrency bubble was very transparently built on delusion and avarice, and everyone involved knew it. There are very few truly innocent victims here.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#506

Post by forgingahead »

eloff wrote: post #454
wslh wrote: post #288

Earlier quoted context omitted.

How many years could Sam Bankman-Fried get in jail? It is also interesting to read on his Wikipedia profile [1] about "Bankman-Fried is a supporter of effective altruism and claims to pursue earning to give as an altruistic career. He is a member of Giving What We Can and has claimed that he plans to donate the great majority of his wealth to effective charities over the course of his life.". Having direct access to…

It's easy to be altruistic when it's not your money!

Like any politician railing about higher taxes and "eating the rich" - it's always never about their own money!

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#507

Post by tru3_power »

vanattab wrote: post #500
colechristensen wrote: post #466

Earlier quoted context omitted.

It is a blockchain failure in that blockchains in general cannot actually support transactions like this. There's too much volume and there are fees. It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US. There is no…

>It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US I wonder if Sam being the 2nd biggest funder of Democrats has anything to due with this...

Source?

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#508

Post by doorman2 »

PragmaticPulp wrote: post #458
woah wrote: post #317

Earlier quoted context omitted.

This has nothing to do with crypto, it has to do with people sending their money to a con man. If your friend had "his identity tied up in crypto", then why wasn't he holding it himself?

> If your friend had "his identity tied up in crypto", then why wasn't he holding it himself? Some people love day trading crypto. They keep funds on exchanges so they can trade immediately and not deal with constant back and forth transactions with their own wallet.

I'm not too involved with the crypto space, but why have a centralized exchange at all? Like why can't the exchange setup a transaction directly between me and the counterparty that we both sign?

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#509

Post by coffeebeqn »

kreeben wrote: post #371
phas0ruk wrote: post #278

Earlier quoted context omitted.

FTX is a centralised exchange, it is not routing all customer trades on chain. It’s not a blockchain failure, it’s just a lack of client asset segregation by a traditional centralised trading house.

Nothing that a regular Ethereum based crypto exchange wouldn't solve. If that's already been done, hear me out: a decentralized decentralized decentralized exchange! That's bullet proof folks!

Ah yes let me just pay $200 in gas fees to convert my doge to eloncoin. Problem solved

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#510

Post by devalidating »

colechristensen wrote: post #466
phas0ruk wrote: post #278

Earlier quoted context omitted.

FTX is a centralised exchange, it is not routing all customer trades on chain. It’s not a blockchain failure, it’s just a lack of client asset segregation by a traditional centralised trading house.

It is a blockchain failure in that blockchains in general cannot actually support transactions like this. There's too much volume and there are fees. It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US. There is no…

> FTX should not have been reachable by US citizens

Ostensibly this has already been the case. You can't even properly access ftx.com in the US. It just redirects you to the US exchange. FTX US is a distinct company from the international FTX exchange, at least according to Axios. If you still manage to get to ftx.com it gives you a banner saying its read-only, you aren't allowed to use it, and they wont let you.

FTX US is still allowing withdrawals at the moment, unlike FTX proper.

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