[zebogen]

I think it is similar in that it is possible for a fund to become insolvent, but consumers are protected by the Investment Company Act of 1940. This requires the companies that run mutual funds to rely on a custodian bank to hold their assets. This way, if the fund does go bankrupt, the company operating it cannot access them to ensure that investors are paid out instead of being rug pulled. It limits the amount of leverage the fund can have, requires them to maintain a cash buffer, and required them to report regularly on their financial condition.

Fraud is still possible, of course, but consumers have WAY more protections with fiat investments.

https://www.sec.gov/investment/laws-and-rules

[tarsinge]

Sure I understand regarding the protections. But regarding the nature of the investments by themselves in don't find the difference meaningful enough to earn the label "truly degenerate trading strategies with investor funds." compared with what we currently see in non-crypto Finance, which is equally degenerate for me in that case.