That's touchingly innocent. As an example, take Bernie Madoff. He took in people's cash and then sent them regular statements about how much money they had. Bu

That's touchingly innocent. As an example, take Bernie Madoff. He took in people's cash and then sent them regular statements about how much money they had. But they were just statements doctored to look good. When some people withdrew money, he just gave them money that was handy. At some point, the difference between the numbers on the statements and the actual assets was over $50 billion. More details here: https://en.wikipedia.org/wiki/Madoff_investment_scandal https://en.wikipedia.org/wiki/Madoff_investment_scandal None of the Madoff investors "allowed" it. I don't know anything about Crypto.com, but the same thing is surely happening with other "crypto" companies. It doesn't even have to be malice; often a failure starts out with some event like a sudden loss to theft. Insiders believe they can make the money back, so they just keep on operating and hope nobody notices. This opportunity for divergence between reported and actual funds is one of the big reasons US banks are highly regulated. The FDIC is on the hook for large sums in the event of failures, so they're quite vigorous in making making sure that doesn't happen too often.