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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

#391

Post by [deleted] »

y04nn wrote: post #362
shmatt wrote: post #29

Earlier quoted context omitted.

>The first $10,000 USD value in your deposit wallets will earn 8% APY (This is what FTX was offering customers) And now we know the accounts weren't actually covered by real money (or "value" as they called it). So when person X was asking FTX for their money back, FTX would send person X+1's money to cover Sounds like a Ponzi to me

I find it very ironic that Satoshi created Bitcoin with the objective to be more resilient than banks, with the famous genesis block containing "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". A decade later, the bitcoin creation generated an entire industry of "crypto banks" that are opaque, played with customers money and went bankrupt.

[deleted]

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

#392

Post by roflyear »

fdgsdfogijq wrote: post #173
newfonewhodis wrote: post #156

Earlier quoted context omitted.

I put $100 in my Chase account. Chase goes horse betting with my money and loses it all. My account shows $0. That's basically what happened here.

Why is this getting downvoted? its a plain speech description of what they did

Probably bc all crypto exchanges are doing this, essentially. It is the burden of no regulations.

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

#393

Post by anonporridge »

solotronics wrote: post #273

Probably a good time to mention the original mission statement of Bitcoin was to custody your own money without counterparty risk. Time and time again we have seen altcoin ponzis and exchanges collapse under the weight of their fractional reserve. What is still working? Bitcoin. Greed in this space causes people to act with a more short term view for quick profits while ignoring fundamentals. Over and over again.

The toxic bitcoin maximalists have been waiting patiently for years knowing something like this would inevitably happen again.

Not your keys, not your coins.

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

#394

Post by sytelus »

y04nn wrote: post #362
shmatt wrote: post #29

Earlier quoted context omitted.

>The first $10,000 USD value in your deposit wallets will earn 8% APY (This is what FTX was offering customers) And now we know the accounts weren't actually covered by real money (or "value" as they called it). So when person X was asking FTX for their money back, FTX would send person X+1's money to cover Sounds like a Ponzi to me

I find it very ironic that Satoshi created Bitcoin with the objective to be more resilient than banks, with the famous genesis block containing "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". A decade later, the bitcoin creation generated an entire industry of "crypto banks" that are opaque, played with customers money and went bankrupt.

Bitcoin purists say that we shouldn't be having any "exchanges" or "crypto banks". If we have them and use them then we deserve this fate.

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

#395

Post by JamesianP »

umeshunni wrote: post #203
tootie wrote: post #192

Earlier quoted context omitted.

If FTX were a real company that Tweet would be enough to be put in handcuffs by the SEC.

Why doesn't that apply here?

The article says the SEC is investigating. So the above poster is probably just being cynical at this point.

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

#396

Post by joshxyz »

lotsofpulp wrote: post #279
NovemberWhiskey wrote: post #253

Earlier quoted context omitted.

Ehhh, that's misleading. The SEC often files enforcement actions directly with the DOJ and the SEC attorneys are often dual-hatted as SAUSAs.

Interesting, I did not know that!

can watch netflix series Billions, these agencies work hand in hand haha

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

#397

Post by NovemberWhiskey »

nostrebored wrote: post #357
NovemberWhiskey wrote: post #249

Earlier quoted context omitted.

> We’re doing zero fractional reserve banking now. No; we're not. In fact, banks are positively awash with reserves by historical standards. https://fred.stlouisfed.org/series/TOTRESNS

The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money. We are in ZFRB land right now. Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.

>The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money.

No; again. The Fed moved from a 'scarce reserves' regime for monetary policy to an 'ample reserves' regime; that was announced in 2019. Since the 'ample reserves' approach doesn't depend on bank reserves to implement short-term rate management, there wasn't really a need for an ongoing Fed reserve requirement.

>Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.

Bank reserves increased hugely from 2019 through the middle of 2021, as you can see from the chart I posted. Although they've dropped somewhat since then, they're still like 75x what they were in say 2007.

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

#398

Post by anomaly_ »

tedunangst wrote: post #91
cauthon wrote: post #54

Earlier quoted context omitted.

I largely agree, but what does dim sum have to do with any of this

Dude got pranked and had somebody order chicken feet one time, has been living a life of resentment ever since.

Pranked by one of the “skinny girlfriends”. Nothing like a jealous hn poster who thinks people don’t recognise his brilliance.

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

#399

Post by benlivengood »

UncleEntity wrote: post #345
dools wrote: post #312

Earlier quoted context omitted.

> 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…

U.S. reserve percentages have been 0% across the board since 2020. https://www.federalreserve.gov/monetarypolicy/reservereq.htm

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

#400

Post by jacooper »

ricardou wrote: post #185
Animats wrote: post #170

Trading halt announcement at FTX.US.[1] Announcement says withdrawals still up. But Twitter messages indicate withdrawals are not working. FTX Japan shut down by order of Japan Financial Services Agency.[2] FTX.intl processing some withdrawals, according to blockchain.[3] A few lucky people got to exit. Way too much happening to mention here. Just use Google to search "FTX" and limit search to 1 day. Margin calls all…

SBF tweeted[1] not too long ago that FTX.us was safe and was 100% liquid. I suppose that wasn't the case? [1] https://twitter.com/SBF_FTX/status/1590709195892195329?t=tQR...

Ftx.us is apperantly a totally separate exchange
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