FTX Tapped into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall

Re:FTX Tapped into Customer Accounts to Fund Risky Bets, Set... by Digory on Thursday November 10, 2022 @05:05PM (#33554156)

But this isn't counterparty risk, it's fraud risk, right? It sounds like "Atrium borrowed a bunch of houses from FX, but FX didn't own the houses." When you check the Recorder (the blockchain for houses), the deeds should all say "John Doe owns 123 Main St."

In the world with a Recorder of Deeds, Atrium is screwed, and FX might be screwed, but John Doe is easily confirmed as the owner of 123 Main.

It sounds like people here gave their coins to FX, so that the "deed" shows FX "owns" the coin. In effect, they destroyed the 'trustless' part of the equation. And then SBF violated the trust.

So, the next innovation seems to be a blockchain that shows an owner and an agent?

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Re:FTX Tapped into Customer Accounts to Fund Risky Bets, Set... by fnordpiglet on Thursday November 10, 2022 @05:18PM (#33554345)

I think technically you would look at this as exchange risk. Securities regulations exist because of precedent, and this isn’t specifically fraud but lack of customer funds segregation from the business risks.

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Re:FTX Tapped into Customer Accounts to Fund Risky Bets, Set... by lupire on Friday November 11, 2022 @01:35AM (#33557927)

"fraud" is a subjective assessment of intent. Empirically, in the marketplace, fraud looks the same as incompetence.

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