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> When loans were recalled in early 2022, an emergency decision was made to use FTX users’ deposits to repay creditors. Just so you know, this is a clear and o

> When loans were recalled in early 2022, an emergency decision was made to use FTX users’ deposits to repay creditors. Just so you know, this is a clear and obvious prison sentence in normal finance. Also FTX itself was trading with customer deposits instead of just keeping them like an exchange is supposed to do, which is also prison in normal finance. Matt Levine wrote a good piece on this debacle, and will probably write more. It is simply breathtaking, every paragraph evokes a massive "wat".

onlyrealcuzzo 4y ago
FTX supposedly collected 0.1% commission on $100B+ volume per day. Why couldn't they just get a loan to cover their losses?
- vgatherps 4y ago
  Neither of these numbers are correct, they imply 100M of profit a day. Volume is heavily weighted towards the highest tiers which on ftx were paying 0.015% to take and receiving 0.01% to make (given, alameda would receive no rebate). They've also never claimed to do 100B+ a day. They published stats about their volume as well as some other exchanges here: https://ftx.com/volume-monitor https://ftx.com/volume-monitor. It's stale since the collapse but they're claiming 16bn, and usually were claiming 5-10bn a day in the last month. Give some fudge factor for various traders at various tiers and this backs out to 1m a day order of magnitude. Not covering a multi billion dollar hole with that anytime soon.
  - onlyrealcuzzo 4y ago
    Okay - so even 0.01% on $10Bn = $1M per day = $365M per year, and - at the time - growing. One would think they should've been able to get a loan (if those numbers were real).
    - HDThoreaun 4y ago
      365 million against 10 billion isn't so great
    - vgatherps 4y ago
      Those numbers were likely real. Any serious MM firm can quickly get an idea if the books/volumes on an exchange are legitimate and leaves if not (high theft risk on fake venues). Aside from 365mm on 10bn being a bad trade, the volume will 100% drop off drastically after the loss of trust. That 365mm would be fortunate to stay above 36mm in my opinion
      - onlyrealcuzzo 4y ago
        > Aside from 365mm on 10bn being a bad trade, the volume will 100% drop off drastically after the loss of trust. That 365mm would be fortunate to stay above 36mm in my opinion You wouldn't have had a loss of trust because the loan would've allowed FTX NOT to transfer customer deposits to Alameda, and instead use borrowed money (on their future earnings).
- H8crilA 4y ago
  No one in their right mind wants to lend to scammers. They took customers money and used it for their own goals (unsuccessful trading). I cannot express how fucked up that is.

onlyrealcuzzo 4y ago

FTX supposedly collected 0.1% commission on $100B+ volume per day. Why couldn't they just get a loan to cover their losses?

vgatherps 4y ago
Neither of these numbers are correct, they imply 100M of profit a day. Volume is heavily weighted towards the highest tiers which on ftx were paying 0.015% to take and receiving 0.01% to make (given, alameda would receive no rebate). They've also never claimed to do 100B+ a day. They published stats about their volume as well as some other exchanges here: https://ftx.com/volume-monitor https://ftx.com/volume-monitor. It's stale since the collapse but they're claiming 16bn, and usually were claiming 5-10bn a day in the last month. Give some fudge factor for various traders at various tiers and this backs out to 1m a day order of magnitude. Not covering a multi billion dollar hole with that anytime soon.
- onlyrealcuzzo 4y ago
  Okay - so even 0.01% on $10Bn = $1M per day = $365M per year, and - at the time - growing. One would think they should've been able to get a loan (if those numbers were real).
  - HDThoreaun 4y ago
    365 million against 10 billion isn't so great
  - vgatherps 4y ago
    Those numbers were likely real. Any serious MM firm can quickly get an idea if the books/volumes on an exchange are legitimate and leaves if not (high theft risk on fake venues). Aside from 365mm on 10bn being a bad trade, the volume will 100% drop off drastically after the loss of trust. That 365mm would be fortunate to stay above 36mm in my opinion
    - onlyrealcuzzo 4y ago
      > Aside from 365mm on 10bn being a bad trade, the volume will 100% drop off drastically after the loss of trust. That 365mm would be fortunate to stay above 36mm in my opinion You wouldn't have had a loss of trust because the loan would've allowed FTX NOT to transfer customer deposits to Alameda, and instead use borrowed money (on their future earnings).
H8crilA 4y ago
No one in their right mind wants to lend to scammers. They took customers money and used it for their own goals (unsuccessful trading). I cannot express how fucked up that is.