What channels other than Alameda? If this was entirely about Alameda, how is FTT adding anything to the story above saying that they stole to give to Alameda? Who are they fooling other than their own internal accounts? The Coindesk article is very late in the story because no one saw the accounts before they tried to get a bailout from Binance, who wasn’t fooled.
If a customer puts up FTT as collateral to short bitcoin, then FTX is confused about how much collateral it has. But this is the customer exploiting FTX, not vice versa! This is FTX exploiting all the other customers by falsely claiming that it has hedged risk. But this isn’t what took it down. It did manage to largely liquidate shorts before they ran out of collateral.
The problem is that Alameda then used that FTT as collateral for other loans from external parties, while of course presenting the FTT as an uncorrelated asset!
We were borrowing billions of dollars from Genesis using FTT as collateral on our loans,
I agree that if Alameda had just borrowed from FTX, then only FTX would have been fooled. But given that Alameda loaned billions of dollars from Genesis using the FTT as collateral means external parties were fooled in the way I am trying to describe in this post!
What channels other than Alameda? If this was entirely about Alameda, how is FTT adding anything to the story above saying that they stole to give to Alameda? Who are they fooling other than their own internal accounts? The Coindesk article is very late in the story because no one saw the accounts before they tried to get a bailout from Binance, who wasn’t fooled.
If a customer puts up FTT as collateral to short bitcoin, then FTX is confused about how much collateral it has. But this is the customer exploiting FTX, not vice versa! This is FTX exploiting all the other customers by falsely claiming that it has hedged risk. But this isn’t what took it down. It did manage to largely liquidate shorts before they ran out of collateral.
The problem is that Alameda then used that FTT as collateral for other loans from external parties, while of course presenting the FTT as an uncorrelated asset!
Caroline said directly:
I agree that if Alameda had just borrowed from FTX, then only FTX would have been fooled. But given that Alameda loaned billions of dollars from Genesis using the FTT as collateral means external parties were fooled in the way I am trying to describe in this post!