Yeah, SBF was not lying about FTX having the money. It was not totally worthless as many had assumed. it shows how someone can be dishonest in some ways but honest in others. I too thought he was telling the truth. Had FTX not had money, he would have just shut up. I think such a long sentence may have been a miscarriage of justice in this regard.
> Yeah, SBF was not lying about FTX having the money.
Yes, he was.
The reason people are being made whole now is that a couple of years down the line, some of his investments and acquisitions are now worth considerably more than they were at the time of bankruptcy. But at that point t FTX was insolvent and SBF was telling lies all over the place.
It did not help that CZ triggered a run on the assets at the worst time; otherwise it likely would have been fine. When FTX ran out of money, every depositor instantly became a creditor. I doubt this is unique to FTX. many exchanges may have some shortfall between deposits and credits.
That's not how actual regulated exchanges work. No crypto "exchange" is actually an exchange, no matter what their marketing materials tell you.
In the US, a regulated exchange is required to hold your securities in segregated accounts, and cannot play fun games with them. Crypto "exchanges" are a joke.
> It did not help that CZ triggered a run on the assets at the worst time; otherwise it likely would have been fine
I find that unlikely. SBF was doing a bunch of risky things with FTX's assets. If he hadn't been found out, he likely would have done more and more risky things, and as Bitcoin's price recovered, he would have used that higher price to justify doing even more risky things.
I doubt there would have been many (if any) times when FTX could have paid out all its depositor obligations.
No, it didn't help, but FTX should not have ever been in a position where a bank run forced them into bankruptcy and froze customer assets.
They're not a lender, they're just an exchange. Regardless of taking on debt to manage settlement, the fact that people did not own the assets in their FTC accounts is insane.
I mean, they shouldn't, that means they're also running insolvent. Not only is that generally illegal, it's been the end of a long line of crypto exchange businesses like Quadriga, and possibly even going back to MtGox (though they were doing it as a cover for theft, rather than mismanagement, IIRC).
And the FTX token that had a run triggered was something like 90% held by FTX - the value they accounted for was based on a tiny circulating pool of them. It was almost the classic "If I print 10m of these, and sell you one for a dollar, I've got tokens worth $10m now, right?"
