> Normally you wouldn't be able to lose more than you've left as collateral, but they weren't like other customers Market prices aren't continuous, so you cann

> Normally you wouldn't be able to lose more than you've left as collateral, but they weren't like other customers Market prices aren't continuous, so you cannot guarantee that you can close the customers position at the point where they are wiped out. So a cryptocurrency casino that offers margin to users cannot guarantee that they won't just suddenly be insolvent. They also accepted magic beans as collateral no just their own FTT but all manner of other dogshit where there couldn't be a realistic realtime market price. The key point is that these bucketshops end up as the counterparty to their customers trades the net result was that FTX itself was essentially long all manner of illiquid scamcoins and massively short Bitcoin. This complicates accounting for the total loss-- if you deposit $1000 but then turn it into $100k worth of "bitcoin" using trades with 100x leverage-- though the bitcoin never existed it was just an entry on FTX's books-- and then FTX implodes what the amount lost? Arguably closer to $1000, but right now the figures about FTX all use the highest number. But the customer didn't actually lose that full amount-- it was just a fantasy. A lot of the dialog about the fraud at FTX centers on diverting company assets for personal/family use-- which indeed doesn't appear to be good, but so far that doesn't appear to have happened at a scale that they couldn't have operated out of if not for the fact that the entire business itself-- basically selling people paper assets which weren't even backed by meaningful collateral-- was fraudulent. And this is an important distinction because it changes what risk people should be looking for... The 'crypto' ecosystem is highly volitile at best-- full of garbage that is sure to fail. Business offerings that aren't provably implosion proof will almost all eventually implode. Compare to your typical US retail brokerage-- margin is available, but 2x leverage at the absolute most, highly controlled, regulated, and risk managed, riskier assets either can't be used as collateral or count far less. The assets and customers are diversified (and when they become less so, leverage is further reduced), and there is industry provided insurance mechanisms to backstop. In the crypto space things are massively more correlated, unregulated, customer are all over the world so there is seldom any recourse against them, no one has every (AFAIK) gotten in trouble for manipulating a cryptocurrency market, and instead of 2x leverage _20x_ is common at these casino services (and 20x isn't even the limit).