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Originally Posted by Ab
This is starting to smell an awful lot like the Terra Labs/LUNA meltdown. Man, Sam Bankman-Fried has lost a lot of powerful people a lot of money. I'd be changing my name and becoming a mute fisherman on a remote island somewhere if I were him.
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That's excellent advice if you were his legal team, but I want to see him in jail, and on proper suicide watch.
It's worse than Terra Labs / LUNA. LUNA's stablecoin was non-fraudulent (as far as I could tell) but its mechanism could be Soros'd and many people publicly pointed it out before someone rich enough executed the exploit. FTX / Alameda OTOH was criminal in that the exchange (FTX) gambled with user funds via secret investment arm (Alameda). Then fixed the balance sheet with it's FTT shitcoin.
It's worse than Mt Gox in scale (2020/21 bullrun newbies both retail and institutions), and FTX proved it did not hold enough reserves in each crypto when people started bank run. Even after lengthy court battles Mt Gox users could get a portion of their Bitcoin back... FTX / Alameda OTOH straight up gambled with exchange reserves, filled the void with FTT. My take is there's bugger all Bitcoin / Ethereum to return to users this time.
As Andreas says: "Crypto exchanges are like public bathrooms. Get in, do your business, then get out."
The worst part is highlighted in the latest Bankless episode where they discuss the cleanup required now. Reiterating the following to clueless regulators who will react to this, and make it all worse:
-DeFi is not CeFi
-FTX is more closely related to Wall Street (everything is a casino), than to crypto
https://www.youtube.com/watch?v=aK8RIYO802w