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Its been very interesting to watch all of this play out. FTX going under feels somehow bigger than Gox, bigger than the DAO. Gox looked like it was held together by bits of string, the DAO was always something new and had the potential to be a risk, but FTX seeemed safe as houses. For crypto to exist in the regular world, its always seemed like more regulation of some sort is inevitable. Particularly for a company like FTX with US ties, and it looked like SBF was starting to cosy up to the regulators and fit himself in among the powers that be in the US. His big political donations, sports sponsorships, philanthropic funds. It looked to me like a person who believed in the idealism of crypto was fitting himself into the old world, and all of this lended credence to FTX being trustworthy. In the end his views on regulation went too far for many and this was strangely the thing that led exposing the dodgy things going on behind the curtain (with the leak of the balance sheet, and CZ saying he would exit his FTT). That said, Alameda Research, the trading arm, were clearly no slouches, they used to be up there on the Bitmex leaderboard and it seems so hard to grok that they couldn't have modelled all of this risk properly. Accounting for who is holding large amounts of FTT and the price impact that could have. I sort of feel there must be more to it, or maybe, then again, it just comes down to the same thing that's caused many other crypto funds to blow up - simple greed. The collateral is sitting there, so why use it. What's the worst that can happen? |
I think they did, but their management got greedy and overly hopeful that Bitcoin was going to break 100k last year. This is a trend in crypto for quite a while now: companies get big when the price increases, then get overly complacent and greedy when the market turns.
Remember, you can have perfectly simulated risk assessments, only to have your boss say: "but we want to risk it anyway" and just ignore your protests.