[acdha]

If someone put a big chunk of their savings into a speculative vehicle, they should be having a moment of contemplation about why they ignored basic investment advice. It’s not a happy moment for anyone but at some point you do have to take responsibility for your decisions.

[hirako2000]

If the loss was due to the speculative asset going the unexpected direction sure. But here was fraud.

Would you say the same if a pension fund ran with your retirement, since it is invested in some stock index, most likely in previous metals, and probably a slice in crypto?

[acdha]

Yes, it’s fraud but it was also in a system which intentionally was set up outside of the normal protections against fraud. The relationship between Alameda and FTX wouldn’t have been allowed for a traditional finance company, for example. He’s a crook and I’m not defending him in any way but at some level this is like buying a Rolex off of a guy in Times Square and then being surprised that it’s not real.

[hirako2000]

Enron? I mean we go on and on. Other threads in here went into that circle.

I doubt those who think that in the end victims are partly responsible as there are things they could have done differently, would change their mind.

[acdha]

Enron is an interesting example: first, you had to go back a quarter of a century for the example whereas that kind of thing happens routinely in the cryptocurrency space, and the response wasn’t just to shrug but to pass stricter regulations (Sarbanes-Oxley) to prevent it from happening again.

Remember, the claim isn’t that the traditional finance world is without problems but rather that people who deliberately seek out high-risk investments do share some responsibility when those fail. Someone who trusted Enron’s public audit reports was more comprehensively failed than someone who sought out a company specifically incorporated in the Bahamas to avoid compliance with US regulations!

[rootusrootus]

What does it being a speculative vehicle have to do with FTX stealing the money? These people did not lose money because their speculative investment lost value. On the contrary, it has gone up considerably in the meantime but FTX pocketed all of the gains.

[acdha]

Think about what happened as soon as a grownup entered the room and saw their records? Real financial companies have tons of regulatory and insurance requirements for things like audits, reserves, etc. to prevent things like that from happening but the entire point of his field was “that stuff’s just slowing me down and we don’t need it!” because everyone was focused on getting rich and overrode their judgment.

It’s the next level of risk up from people who buy stocks because the price is going up without checking the fundamentals. If all you do is hang around with other people hyping the same thing, it’s really easy to focus on the “number goes up” part and not want to be the person spoiling the party by asking about value.

[csomar]

Sure because it’s impossible to have another Madoff in the traditional Wall Street system? No. And some people have found themselves in clawback if they made their money back. Imaging someone investing in Madoff for 25 years and finding out that the investment is a scam, losing their capital but also the state is now after them for hundreds of thousands of dollars.