He took demand deposits and invested them. That's banking, whether you do it as a regulated bank or not. There were banks before the current banking charter regime and there will be banks after it.

Note that FTX told their customers that they would not invest their deposits. Customers who opted in to margin lending could lend money to other customers but even in that case FTX went far beyond what they promised to their customers. It would be more accurate IMO to say that FTX embezzled (or just plain stole) customer deposits.

Huh. That makes it even worse. Every cryptocurrency exchange I've ever seen offers literal savings accounts, it's obvious to anyone who knows how banks work they're loaning out customer funds. You're saying FTX didn't do that? That's even worse...

Yeah. Celsius, BlockFi, Voyager, Gemini Earn, etc. were structured like savings accounts but FTX was not. FTX was supposed to be "your money is your money". What happened wasn't a mistake; it was theft.

Jesus. You're right then. It's even worse than I thought.

If it does fractional reserve banking, it's a bank. If you can deposit currency in it and collect some "interest" from those holdings, it's pretty much a bank. Every cryptocurrency exchange you can find does that. They even offer loans and everything. Therefore they are banks.