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A comment on Major crypto trading firm Alameda Research might be insolvent. Parent comment

Re:Major crypto trading firm Alameda Research might be insol... by zby on Friday November 04, 2022 @10:03AM (#33466842)
> If the liabilities are collateralized by assets on their balance sheet, then the financial risk is not to Alameda but the lender!

What does that mean? How collateralization changes Alameda risk?

https://www.investopedia.com/terms/c/collateral.asp

"In the event that the borrower does default, the lender can seize the collateral and sell it, applying the money it gets to the unpaid portion of the loan. The lender can choose to pursue legal action against the borrower to recoup any balance remaining."

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Re:Major crypto trading firm Alameda Research might be insol... by moomin on Friday November 04, 2022 @10:11AM (#33466981)
I think OP is assuming things work the way US mortgages work, where you can walk away from the house. I think OP is labouring under a misapprehension here.
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Re:Major crypto trading firm Alameda Research might be insol... by guelo on Friday November 04, 2022 @11:33AM (#33468416)
That depends on the terms of the loans. Can be recourse or non-recourse.
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Re:Major crypto trading firm Alameda Research might be insol... by zby on Friday November 04, 2022 @12:56PM (#33469939)
Right - but it looks like an exception not the standard way: https://www.investopedia.com/terms/n/nonrecoursedebt.asp Would you expect the Alameda loans to be non-recourse?
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