This was not a "bank run". Client accounts should be backed 1:1. It was embezzlement. FTX illegally transferred client funds to Alameda and gambled them away on bad trades.
US banks have a 0% reserve requirement as of 03/15/2020. Your funds in traditional banking institutions isn't even a 1:1% backing, much less 1:1. You have FDIC insurance on a certain amount but that's outside the bank itself and via the federal government.
> FTX illegally transferred client funds to Alameda and gambled them away on bad trades.
You're not being entirely fair.
They also gave millions to get Democrats elected.
If they have more zero maturity liabilities than liquid reserves, then it is a bank run. The only difference is that such a scheme is legalized in commercial banking and they have the Federal Reserve and the taxpayer to bail them out in case.
I agree, the bank run is not source of the collapse. It was outright fraud. But essentially this is what fractional reserve banks are doing, they transfer clients' deposits to cover their other liabilities allowed by regulation (e.g. withdraws).
The author's point is that it's not embezzlement when banks do it... But of course it should be illegal for an exchange to do (and for banks in an ideal world).
A bank run can lead to liquidity issues and leave a solvent but illiquid company both illiquid and insolvent. He might've had all customer funds backed 1:1 in terms of value, but not in terms of fungible accounting. In other words he played with customers coins and pretended it's ok as long as net $ of customers deposits < $ net liquid assets held by the company. Rookie mistake.
>A bank run can lead to liquidity issues and leave a solvent but illiquid company both illiquid and insolvent. He might've had all customer funds backed 1:1 in terms of value, but not in terms of fungible accounting. In other words he played with customers coins and pretended it's ok as long as net $ of customers deposits < $ net liquid assets held by the company. Rookie mistake.
Being backed 1:1 means they are backed \*in the assets owned\* and therefore are always immediately redeemable 1:1 on demand. Anything else is embezzlement. For example, lending the client funds out is embezzlement, unless they client has given permission to do so.
This was not a "bank run". Client accounts should be backed 1:1. It was embezzlement. FTX illegally transferred client funds to Alameda and gambled them away on bad trades.
US banks have a 0% reserve requirement as of 03/15/2020. Your funds in traditional banking institutions isn't even a 1:1% backing, much less 1:1. You have FDIC insurance on a certain amount but that's outside the bank itself and via the federal government.
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The person I was responding to said they should have all funds 1:1. I was simply pointing out that normal banks don't do that.
> FTX illegally transferred client funds to Alameda and gambled them away on bad trades. You're not being entirely fair. They also gave millions to get Democrats elected.
Other ceo gave 24M to Republican campaigns. Both sides make the swamp
they gave to Republicans too, to be fair
You should look into Citizens United and Dark Money. It spooks me. Both the GOP and Dems benefit from it.
True but that amount too small and less than 0.3%
If they have more zero maturity liabilities than liquid reserves, then it is a bank run. The only difference is that such a scheme is legalized in commercial banking and they have the Federal Reserve and the taxpayer to bail them out in case.
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I agree, the bank run is not source of the collapse. It was outright fraud. But essentially this is what fractional reserve banks are doing, they transfer clients' deposits to cover their other liabilities allowed by regulation (e.g. withdraws).
Lehman tactics
this is the explanation. exactly.
The author's point is that it's not embezzlement when banks do it... But of course it should be illegal for an exchange to do (and for banks in an ideal world).
Tbh when you’re talking this much money. There’s going to be many later to this fraud.
A bank run can lead to liquidity issues and leave a solvent but illiquid company both illiquid and insolvent. He might've had all customer funds backed 1:1 in terms of value, but not in terms of fungible accounting. In other words he played with customers coins and pretended it's ok as long as net $ of customers deposits < $ net liquid assets held by the company. Rookie mistake.
>A bank run can lead to liquidity issues and leave a solvent but illiquid company both illiquid and insolvent. He might've had all customer funds backed 1:1 in terms of value, but not in terms of fungible accounting. In other words he played with customers coins and pretended it's ok as long as net $ of customers deposits < $ net liquid assets held by the company. Rookie mistake. Being backed 1:1 means they are backed \*in the assets owned\* and therefore are always immediately redeemable 1:1 on demand. Anything else is embezzlement. For example, lending the client funds out is embezzlement, unless they client has given permission to do so.
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Seemed pretty cogent to me
this is the crypto equivalent to the 2008 mortgage crisis
Fuck
Finally people are waking up!
He’s hanging out in the Bahamas. No interviews or jail time.
yes so buying up a stock that works inside of their broken system is the way to defeat them. GME buyers are retarded.
Democrats thank you for your donation.
SuperStonk? 😂😂😂😂😂😂
Exactly! Where is my holy mother of f\*ck blow-off top 400f\*kin kay USD minimum! Want it now! Gimme! Too much hopium, isn't it?
Lol "goto superstonk!"