Which is Incredibly illegal.
Is it? Does the SEC regulste crypto exchanges I'm the Bahamas?
They probably could have kept it going if it wasn't for the $400 million dollar hack that caused a run on their bank.
If customers deposit 3 billion and that goes up to 50 billion. Did they lose 3 billion or 50 billion.
It's illegal to use customers funds for something other than what it is supposed to. (Pretty much)
If ford took deposits for the new truck and they then took those funds and lost them, leaving nothing for the customers (truck or refund), that would be illegal too.
You can't just take money and lose it without giving them what they paid for. If a customer buys stock and it goes to zero, the customer still has the worthless stock they paid for. In this instance, the product they bought didn't go to zero, FTX took payments for products they couldn't/wouldn't fullfil and kept the customers money anyways.
Do you think the SEC of the Bahamas will take action?
From my experience more crypto exchanges have run off with the money then havnt.
You can't just take money and lose it without giving them what they paid for.
Yes you can if it's a crypto exchange. A exchange in Canada the guy stole the money and went to India and faked his death.
They are basically bucket shops.
It doesn't seem like anyone is interested and arresting the criminals behind FtX. They bribed all the right people.
If customers deposit 3 billion and that goes up to 50 billion. Did they lose 3
They purchased an asset. If that asset goes up or down, FTX shouldn't be in financial risk if they're operating honestly. They're only an exchange and/or storage. If i buy a car and it goes up drastically in value, it doesn't effect the dealership at all, because the asset was purchased and the order fulfilled at time of the purchase. It's the customers business at that point. Now what FTX was doing was taking money and not setting aside the assets already purchased by the customers. They figured only a certain percentage of people would take their coins from the exchange at one time. And they figured they could reinvest the customers funds and make a ton more money and no one would be the wiser. The problem is that crypto went down big time and interest rates went up, and this exposed them.
Great explanation thanks.
But it seems like they could have kept spinning the plates if not for the $400 million dollar hack that caused a bank run.