Earlier quoted context omitted.
That's just dodging the key question. Obviously the government has some rationale other than that they're taking it because they can. The problem is that they're still taking money that's owned by someone else, even if it's controlled by SBF. I'm sure there are strong international norms if not laws against a sovereign power directing a foreign financial actor to repay some sort of debt by pilfering client deposits,…
I suspect that if you deposit 100 ETH at FTX, legally, you no longer own the 100 ETH. Instead, you own an IOU from FTX stating that FTX owes you 100 ETH. FTX owns the ETH. In an ideal world, an IOU from FTX for the amount of 100 ETH would be worth 100 ETH. Unfortunately, FTX is insolvent and bankrupt. The only thing the bankruptcy court can do is divide up FTX’s assets and distribute whatever FTX does have to their c…
Historically that limit has always been waived during bank collapses, although my inability to remember a specific historical counterexample does not disprove its existence.
edited to add the limit still exists on the books for marketing purposes, in a weird turn of events unregulated non-banks liked to market that they're "as trustworthy as a bank" because they bought a bond policy for the FDIC limit so feel free to write them a check for less than the FDIC limit because they're bonded. The unregulated industries would get REALLY mad if the FDIC limit were doubled legally because then they'd have to pay about twice as much to get their bond. Then the FTC got real mad and I don't recall the outcome of that story although I don't see many references to the FDIC anymore in marketing material from unregulated companies, so that must not have gone well. This all went down in, like, the 80s not like last week or whatever.