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!
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!