the verge 2nd largest crypto exchange collapsing

[UltraMega]

FTX reportedly used $10 billion of customer funds to prop up its owner’s trading firm

Quote

Sam Bankman-Fried’s trading firm Alameda Research reportedly owes his crypto exchange FTX $10 billion after taking loans funded by deposits from FTX customers, according to The Wall Street Journal.

 

As economist Frances Coppola pointed out to the Journal, exchanges like FTX shouldn’t be investing customers’ money. “It shouldn’t be doing anything with those assets. They should literally be sitting there so people can use them,” said Coppola. That’s especially true for volatile markets like crypto, where collateral could swing in value from one day to the next.

However, FTX reportedly lent over half of its customer funds to Alameda, which then used them to bet on other cryptocurrencies and help out other crypto firms struggling to weather an overall downturn in the market.

FTX reportedly used $10 billion of customer funds to prop up its owner’s trading firm - The Verge

WWW.THEVERGE.COM

---

Alameda reportedly owes the exchange $10 billion.

 

[Andrew]

"Not your keys, not your coins"

 

With the way this is going and the lack of regulations in the crypto currency world, a lot of crypto bros are very quickly going to learn why banking regulations are a thing. I wouldn't trust an exchange to have more than £100 worth of my crypto for more than a couple of weeks. No one should for this exact reason.

 

These people are basically speedrunning banking regulations.

[Sir Beregond]

When I dabbled in crypto I definitely did not keep any of it on the exchanges. You can see why.

[pio]

Exchanges are just that, a place to take your currency to exchange it for another one.  Nothing will ever beat holding your funds in your wallet.  Banking with fiat or crypto.  Yes, banks are more reliable than a crypto exchange, sure....but what's going to keep that bank afloat in hard times?  Banks have failed in the past too.  I dunno, just random musings on my part.  I hold a little crypto still, but I hold it in an offline wallet for in case of a rainy day.  Sucks that all those people lost their money, hopefully it can be recovered.

[bonami2]

1 hour ago, pioneerisloud said:

Exchanges are just that, a place to take your currency to exchange it for another one.  Nothing will ever beat holding your funds in your wallet.  Banking with fiat or crypto.  Yes, banks are more reliable than a crypto exchange, sure....but what's going to keep that bank afloat in hard times?  Banks have failed in the past too.  I dunno, just random musings on my part.  I hold a little crypto still, but I hold it in an offline wallet for in case of a rainy day.  Sucks that all those people lost their money, hopefully it can be recovered.

Canadian bank are mostly bulletproof but yea in some country they stole money and left.

Am keeping my crypto in wallet with Passcode Encrypted 256bit on usb drive + bitlocker.  

[schuck6566]

5 hours ago, pioneerisloud said:

Exchanges are just that, a place to take your currency to exchange it for another one.  Nothing will ever beat holding your funds in your wallet.  Banking with fiat or crypto.  Yes, banks are more reliable than a crypto exchange, sure....but what's going to keep that bank afloat in hard times?  Banks have failed in the past too.  I dunno, just random musings on my part.  I hold a little crypto still, but I hold it in an offline wallet for in case of a rainy day.  Sucks that all those people lost their money, hopefully it can be recovered.

 

3 hours ago, bonami2 said:

Canadian bank are mostly bulletproof but yea in some country they stole money and left.

Am keeping my crypto in wallet with Passcode Encrypted 256bit on usb drive + bitlocker.  

At least here in the US, we have the FDIC which covers each depositor "The FDIC protects the money depositors place in insured banks in the unlikely event of an insured-bank failure. Each depositor is insured to at least $250,000 per insured bank." If you have more to deposit, just split it up over several banks. This is for non crypto,aka,cash,greenbacks,bucks.... 

Edited November 11, 2022 by schuck6566

[UltraMega]

11 hours ago, pioneerisloud said:

but what's going to keep that bank afloat in hard times?  

The government. Citizens are protected from this type of situation by the government. Government doesn't regulate crypto, thus the bank run on FTX. 

[Andrew]

12 hours ago, pioneerisloud said:

Exchanges are just that, a place to take your currency to exchange it for another one.  Nothing will ever beat holding your funds in your wallet.  Banking with fiat or crypto.  Yes, banks are more reliable than a crypto exchange, sure....but what's going to keep that bank afloat in hard times?  Banks have failed in the past too.  I dunno, just random musings on my part.  I hold a little crypto still, but I hold it in an offline wallet for in case of a rainy day.  Sucks that all those people lost their money, hopefully it can be recovered.

If you go with a major bank, they're "too big to fail" so you'd be alright. It's happened before, it will happen again. With the rate things are going now, that will happen sooner rather than later.

[GanjaSMK]

I like the behind the scenes in this story and hope that it actually gains more widespread attention and attrition.

 

The fact that they sold IOU's for bitcoin and eth without even having any to back with, let alone not having anywhere near the amount of capital needed for payouts (regardless of the coins), is the biggest most important point of the story. 

 

If you leave your crypto in someone else's hands (eg; exchange company), that's on you when this kinda ish happens.  However, I doubt anyone thought they wouldn't be able to get a payout as they had faith in the company holding enough capital to cover - which of course they didn't - because they weren't actually exchanging crypto. Much like how Wallstreet will sell you fractional IOU's, fake shares, and (likely) a whole giant host of other insanely nefarious financial mischief we haven't uncovered yet. 

 

When, just WHEN will this kind of - dare I say - SCAM..... finally see the blackest dead of dark instead of the brilliant light of day it's seeing now?

Just wait until pension funds plummet.  Just wait.  If you think it's crazy now, just wait until the police union funds dry up because some schmuck dark pooled the ish outta them.  

 

[schuck6566]

6 hours ago, GanjaSMK said:

I like the behind the scenes in this story and hope that it actually gains more widespread attention and attrition.

 

The fact that they sold IOU's for bitcoin and eth without even having any to back with, let alone not having anywhere near the amount of capital needed for payouts (regardless of the coins), is the biggest most important point of the story. 

 

If you leave your crypto in someone else's hands (eg; exchange company), that's on you when this kinda ish happens.  However, I doubt anyone thought they wouldn't be able to get a payout as they had faith in the company holding enough capital to cover - which of course they didn't - because they weren't actually exchanging crypto. Much like how Wallstreet will sell you fractional IOU's, fake shares, and (likely) a whole giant host of other insanely nefarious financial mischief we haven't uncovered yet. 

 

When, just WHEN will this kind of - dare I say - SCAM..... finally see the blackest dead of dark instead of the brilliant light of day it's seeing now?

Just wait until pension funds plummet.  Just wait.  If you think it's crazy now, just wait until the police union funds dry up because some schmuck dark pooled the ish outta them.  

 

"Just wait until pension funds plummet.  Just wait.  If you think it's crazy now, just wait until the police union funds dry up because some schmuck dark pooled the ish outta them. "

How many are gonna see a major loss because they put their retirement in something like whats found here?

Best Bitcoin IRA Companies

WWW.INVESTOPEDIA.COM

---

Bitcoin IRAs can diversify your retirement portfolio and eliminate capital gains taxes. Here are the best companies based on expertise...

 

[bwalker36]

4 hours ago, schuck6566 said:

"Just wait until pension funds plummet.  Just wait.  If you think it's crazy now, just wait until the police union funds dry up because some schmuck dark pooled the ish outta them. "

How many are gonna see a major loss because they put their retirement in something like whats found here?

Best Bitcoin IRA Companies

WWW.INVESTOPEDIA.COM

---

Bitcoin IRAs can diversify your retirement portfolio and eliminate capital gains taxes. Here are the best companies based on expertise...

 

Not the USPS pension.  For some reason theirs by law had to be fully funded.  Its one of the main reasons their profitability sucks so badly.  But most are severely underfunded and the government will have to print money to pay them out.  

[UltraMega]

5 hours ago, schuck6566 said:

"Just wait until pension funds plummet.  Just wait.  If you think it's crazy now, just wait until the police union funds dry up because some schmuck dark pooled the ish outta them. "

How many are gonna see a major loss because they put their retirement in something like whats found here?

Best Bitcoin IRA Companies

WWW.INVESTOPEDIA.COM

---

Bitcoin IRAs can diversify your retirement portfolio and eliminate capital gains taxes. Here are the best companies based on expertise...

 

I can't imagine there are very many old people who put their retirement into crypto, and if they had an investment plan that included crypto by default, it was probably a very small percentage of their portfolio. The vast majority of people thinking about their retirement plan have no idea what crypto is, so they just ignore it, and perhaps for good reason since lot of them are probably old enough to have lived through a bank run or two. 

[GanjaSMK]

5 hours ago, schuck6566 said:

"Just wait until pension funds plummet.  Just wait.  If you think it's crazy now, just wait until the police union funds dry up because some schmuck dark pooled the ish outta them. "

How many are gonna see a major loss because they put their retirement in something like whats found here?

Best Bitcoin IRA Companies

WWW.INVESTOPEDIA.COM

---

Bitcoin IRAs can diversify your retirement portfolio and eliminate capital gains taxes. Here are the best companies based on expertise...

 

 

Oh dear god it gets worse.  Oh my...