Implications of the FTX and Alameda Situation for Cryptocurrency and Regulation

[zasad@]

https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732
FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall
FTX’s chief executive told investors this week that an affiliated trading firm owes the crypto exchange about $10 billion

Why hasn't Bankman-Fried been arrested by law enforcement yet?
I understand that everywhere there is a lobby, but there must be a red line.

[jackg]

According to Reuters (I read the article a few hours ago): ftx us is financially unaffected by the investments. If there's enough funds to cover withdrawals in the Bahamas, there's a chance nothing will happen to him (arrest or prosecution wise) - the article I'd want to reference has since been shortened, it was very long and the parts of where ftx still has liquidity and where it doesn't don't seem to be mentioned.

I kinda think he offered for the company to take on those risky holdings to bolster cryptos position and help keep them liquid, if so then it might be considered philanthropic and become hard for a judge to actually prosecute - especially if there was a strategy behind taking those holdings and selling them on fairly quickly which might be something that gets done or would've been soon on the original trajectory (in only a year or two).

[cabron]

https://www.wsj.com/articles/ftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732
FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall
FTX’s chief executive told investors this week that an affiliated trading firm owes the crypto exchange about $10 billion

Why hasn't Bankman-Fried been arrested by law enforcement yet?
I understand that everywhere there is a lobby, but there must be a red line.

The news said SBF is still in Bamahas, it could end up how Karpeles hides back when no regulators want to take action.
But then even today, there are still no clear regulations in crypto, not any finance regulating body willing to regulate crypto seeing the market as a hot potato due to this kind of systematic problem where every bear market there are companies that suddenly declare bankruptcy.

I think he scammed big renowned people like Scaramucci. Using the funds of these people seriously gonna get him in trouble. Probably, thru this incident also a group will step up to bail out and act to regulate the crypto market thru FTX leadership.

[stompix]

The news said SBF is still in Bamahas, it could end up how Karpeles hides back when no regulators want to take action.

How is Karpeles hiding?
He was in Japan when Mt. Gox collapsed, he was arrested by Japanese police forces, and he went to trial there, he was released on bail and required to remain in Japan which he did!

Why hasn't Bankman-Fried been arrested by law enforcement yet?

By what law enforcement and on what base?
What you have there are rumors that there is no actual police investigation if any company goes bankrupt and there are rumors that clients' funds might have been used do you think everyone will get arrested before an investigation, just because someone is pointing fingers?

Crypto exchange FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter said.
FTX Chief Executive Sam Bankman-Fried told an investor this week that Alameda owes FTX about $10 billion, the person said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, according to the person.

So, some guys gives an interview and you think is a base for an arrest!

Let's wait and see if it's even like that, I'm starting to change my opinion on SBF, unlike Alex Mashinsky, which by the way is still free also, he seems more and more like a guy that actually believed in the nonsense he was saying, not that he is not guilty of all this mess but I don't think he did it just for financial gains.

[electronicash]

billionaires like Bankman-Fraud don't get jailed. he was prepared for this since he had donated to politicians long before his scheme was exposed.
but he also made lots of people mad at him who put all their hopes to FTT. lives are destroyed. if someone naked with a hammer breaks in his mansion while he is sleeping, it wouldn't be surprising anymore.

[Sofyanega]

 

[goldkingcoiner]

Why hasn't Bankman-Fried been arrested by law enforcement yet?
I understand that everywhere there is a lobby, but there must be a red line.

If Sam Bankman-Fried has not been arrested and will not be arrested then that only means that the justice system has failed when faced with crypto crime. One may see this either as a good thing or a bad thing, depending if you are for or against regulation of cryptocurrency.

Some people will see the uncontrollable nature of crypto in a bad way: The scammers will obviously see this as a green light to scam even harder, because hey, whos going to stop them?

I myself will try to remain positive and see this as a good thing: This is just more proof that cryptocurrency as well as its crimes are completely unregulatable and out of control of the government and the latest news about FTX as well as LUNA are just providing more evidence for this hypothesis. So we do have a system of freedom, should our governments ever decide to betray us.

I imagine that in the future, the governments and the people will have each other "by the balls". No more anti-democratic/dictator governments.

[cabron]

Why hasn't Bankman-Fried been arrested by law enforcement yet?
I understand that everywhere there is a lobby, but there must be a red line.

If Sam Bankman-Fried has not been arrested and will not be arrested then that only means that the justice system has failed when faced with crypto crime. One may see this either as a good thing or a bad thing, depending if you are for or against regulation of cryptocurrency.

Some people will see the uncontrollable nature of crypto in a bad way: The scammers will obviously see this as a green light to scam even harder, because hey, whos going to stop them?

I myself will try to remain positive and see this as a good thing: This is just more proof that cryptocurrency as well as its crimes are completely unregulatable and out of control of the government and the latest news about FTX as well as LUNA are just providing more evidence for this hypothesis. So we do have a system of freedom, should our governments ever decide to betray us.

I imagine that in the future, the governments and the people will have each other "by the balls". No more anti-democratic/dictator governments.

The Justice system always failed in a democratic country because the rich can always buy the police, judges, and even the victims. The scambag gets away with the money.

Now news says SBF flew his private jet to Argentina. No shit. Dirty secrets are revealed and he is hiding his ass while the media spreads the news telling the world crypto is a scam.

[zasad@]

Why hasn't Bankman-Fried been arrested by law enforcement yet?

By what law enforcement and on what base?
What you have there are rumors that there is no actual police investigation if any company goes bankrupt and there are rumors that clients' funds might have been used do you think everyone will get arrested before an investigation, just because someone is pointing fingers?

https://www.ft.com/content/c6658ce8-26a3-4580-9e64-6083a7d35eca
"“The commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research,” the announcement said. Alameda is Bankman-Fried’s crypto trading business.
The Bahamas securities regulator has frozen the assets of part of Sam Bankman-Fried’s crypto empire"
https://www.scb.gov.bs/wp-content/uploads/2022/11/Securities-Commission-Statement-on-FTX-101122-Final.pdf

There are 2 dozen special services in the USA, isn't anyone interested in this?
Or should we wait until all the money is stolen and then investigate?
You call it rumors, but I think you are wrong, these are facts.

[stompix]

You call it rumors, but I think you are wrong, these are facts.

Then you're certainly not reading and not understanding the links you're posting yourself:

The Commission is aware of public statements suggesting that clients’ assets were mishandled,
mismanaged and/or transferred to Alameda Research. Based on the Commission’s information, any such
actions would have been contrary to normal governance, without client consent and potentially unlawful.

Is aware of public statements - means it's aware of rumors
Based on the information, any of these actions "would" , would here means possibility.

Since the unfolding of events involving FDM, the Commission has proactively dealt with the situation and continues to do so. The Commission determined that the prudent course of action was to put FDM into provisional liquidation to preserve assets and stabilize the company

Do you see them pointing fingers? Saying anything? No, freezing the accounts so nobody blames them for more money going out and more clients losing, that's all.

There are 2 dozen special services in the USA, isn't anyone interested in this?

There were 4 dozen special services in Russia too, too bad they are wild dogs' food in Herson's fields.
Funny how every time someone is in trouble you need US help.
If US messes with Salvador or Bahamas, then it's dirty colonialism.

[Poker Player]

The title talks about implications for regulation but I don't see it talked about in the OP or the thread.

In this regard I think what we are seeing this year is going to lead to strict regulations, which in principle I don't think is bad if they take care of shitcoins and all these people who have dedicated themselves to create a shitcoin/token out of nothing, sell it to each other to raise the price and the market cap in an artificial way, and to end up setting up a racket like FTX.

What worries me more is regarding Bitcoin, because there is already a European Parliament legislation underway to basically force KYC on all transactions with Bitcoin and cryptocurrencies, of any amount. Can you imagine this type of legislation spreading to the USA and other countries? Or for example, banning hardware wallets.

There will always be a space for freedom and privacy in Bitcoin, but the question is how big. Very negative regulations can stifle the space.....

[zasad@]

You call it rumors, but I think you are wrong, these are facts.

Then you're certainly not reading and not understanding the links you're posting yourself:

The Commission is aware of public statements suggesting that clients’ assets were mishandled,
mismanaged and/or transferred to Alameda Research. Based on the Commission’s information, any such
actions would have been contrary to normal governance, without client consent and potentially unlawful.

Is aware of public statements - means it's aware of rumors
Based on the information, any of these actions "would" , would here means possibility.

Since the unfolding of events involving FDM, the Commission has proactively dealt with the situation and continues to do so. The Commission determined that the prudent course of action was to put FDM into provisional liquidation to preserve assets and stabilize the company

Do you see them pointing fingers? Saying anything? No, freezing the accounts so nobody blames them for more money going out and more clients losing, that's all.

There are 2 dozen special services in the USA, isn't anyone interested in this?

There were 4 dozen special services in Russia too, too bad they are wild dogs' food in Herson's fields.
Funny how every time someone is in trouble you need US help.
If US messes with Salvador or Bahamas, then it's dirty colonialism.

It is very difficult to communicate with you, because you find fault with every word.

FTX has filed for  bankruptcy
https://twitter.com/FTX_Official/status/1591071832823959552
Nov 11, 2022

FTX Has Been Hacked
https://www.coindesk.com/business/2022/11/12/ftx-crypto-wallets-see-mysterious-late-night-outflows-totalling-more-than-380m/
Nov 12, 2022

FTX was valued at $32 billion at the start of the year and now the company is going bankrupt.
https://www.cnbc.com/2022/01/31/crypto-exchange-ftx-valued-at-32-billion-amid-bitcoin-price-plunge.html

I understood you. If a Bahamian company has caused losses to investors, then this is the problems of the Bahamas

__
If we talk about Russia, then thanks to the sanctions, many crypto users were unable to use the FTX exchange and buy its tokens.

https://en.wikipedia.org/wiki/Intelligence_agencies_of_Russia
If there were 40 special services in Russia, it would be possible to live better. But in practice, in the Russian Federation there is one main special service at number 1 on the list. Other intelligence services work abroad or protect important persons of the state, or their activities are related to the army.

[Gozie51]

There will always be a space for freedom and privacy in Bitcoin, but the question is how big. Very negative regulations can stifle the space.....

From the way this has happened and from that there could be strict regulations no doubt on exchange. Freedom and privacy for bitcoin is only if you decide to hodl your coins and not when you send it to exchange. Of course the regulation on the exchange is applicable to every coin therein. The crash is definitely a big one for the industry not only Bahamas. I think more legal actions should be rolled out for CEOs who use customers money.

[zasad@]

There will always be a space for freedom and privacy in Bitcoin, but the question is how big. Very negative regulations can stifle the space.....

From the way this has happened and from that there could be strict regulations no doubt on exchange. Freedom and privacy for bitcoin is only if you decide to hodl your coins and not when you send it to exchange. Of course the regulation on the exchange is applicable to every coin therein. The crash is definitely a big one for the industry not only Bahamas. I think more legal actions should be rolled out for CEOs who use customers money.

Bitcoin has been under a lot of scrutiny by regulators for a long time, and tougher laws will be enacted after these events.
The price of bitcoin has risen because institutional investors have entered this market. If the regulator forbids investing in crypto companies, then there will be a price drop in the crypto market.

[Gozie51]

There will always be a space for freedom and privacy in Bitcoin, but the question is how big. Very negative regulations can stifle the space.....

From the way this has happened and from that there could be strict regulations no doubt on exchange. Freedom and privacy for bitcoin is only if you decide to hodl your coins and not when you send it to exchange. Of course the regulation on the exchange is applicable to every coin therein. The crash is definitely a big one for the industry not only Bahamas. I think more legal actions should be rolled out for CEOs who use customers money.

Bitcoin has been under a lot of scrutiny by regulators for a long time, and tougher laws will be enacted after these events.
The price of bitcoin has risen because institutional investors have entered this market. If the regulator forbids investing in crypto companies, then there will be a price drop in the crypto market.

Are you saying bitcoin itself is under scrutiny by regulators and who are they ? Or how are they able to regulate bitcoin itself ? No I don't think that is likely. The regulators can only go as far as restricting the people under them. I mean the government can restrict her people from the use of bitcoin and we know how far that has been so far. Hence, such regulators can regulate exchanges but not bitcoin.

[Poker Player]

If the regulator forbids investing in crypto companies, then there will be a price drop in the crypto market.

Why would they do that? To me they would be more likely to ban cryptocurrencies than to ban institutions from investing in them.

And anyway, this cycle that was known as the one of institutional adoption, I would rather call it the one of "institutional disappointment", because in the cycle in which more institutions have invested than ever before, we are having the worst return of all cycles by far.

Leverage, championed by the greatest institutional investor and the most media-acclaimed: Michael Saylor, is largely to blame for this.

So I'm not so much concerned about institutions investing as I am about what regulations the public authorities are going to come up with now that CBDCs are in the pipeline.

[zasad@]

There will always be a space for freedom and privacy in Bitcoin, but the question is how big. Very negative regulations can stifle the space.....

From the way this has happened and from that there could be strict regulations no doubt on exchange. Freedom and privacy for bitcoin is only if you decide to hodl your coins and not when you send it to exchange. Of course the regulation on the exchange is applicable to every coin therein. The crash is definitely a big one for the industry not only Bahamas. I think more legal actions should be rolled out for CEOs who use customers money.

Bitcoin has been under a lot of scrutiny by regulators for a long time, and tougher laws will be enacted after these events.
The price of bitcoin has risen because institutional investors have entered this market. If the regulator forbids investing in crypto companies, then there will be a price drop in the crypto market.

Are you saying bitcoin itself is under scrutiny by regulators and who are they ? Or how are they able to regulate bitcoin itself ? No I don't think that is likely. The regulators can only go as far as restricting the people under them. I mean the government can restrict her people from the use of bitcoin and we know how far that has been so far. Hence, such regulators can regulate exchanges but not bitcoin.

Why did bitcoin and other coins grow on the crypto market? Institutional investors entered the market, who lost a lot of money as a result of the collapse of the FTX exchange of other funds.
The government cannot ban transactions on the bitcoin blockchain, but it can make investing in bitcoin illegal for many companies.

[yhiaali3]

I wouldn't be surprised if this was intentional by the authorities, meaning they ignored the arrest of Bankman-Fried to make people lose faith in Crypto, we all know the recent attempts that have been made to discredit the crypto market and break the trust of major investors in Crypto, I think they want to send a message to people that your money It is not safe to invest in Crypto.
They are very successful at it nowadays and this incident and the incidents before it have caused a huge loss of confidence in Crypto. But the good news is that these incidents have cleaned up the crypto market and increased people's trust in Bitcoin in particular, and soon people will regain their trust in Crypto in general.

[ajochems]

By this people losing their hope in crypto currency. Many investors since 2017 had stop their trading by this fact. Many new investors in this year 2002 may heard about FTX for now with no doubt. This disable their faith in the crypto currency. Since crypto currency is decentralised platform, it’s hard to do that control over a crypto currency. Only way to eliminate this one is you can investigate before the investment. Binance future trading also make the people to lose their hope in crypto currency.

[zasad@]

By this people losing their hope in crypto currency.Many investors since 2017 had stop their trading by this fact. Many new investors in this year 2002 may heard about FTX for now with no doubt. This disable their faith in the crypto currency. Since crypto currency is decentralised platform,it’s hard to do that control over a crypto currency. Only way to eliminate this one is you can investigate before the investment.

Cryptocurrency should only be stored on your own hardware or cold wallet.
Another potential scam client.
If a large fund with such capabilities cannot store bitcoin in its wallet, then its investors may face big losses.
https://finance.yahoo.com/news/coinbase-custody-holds-635-000-152904175.html?
Coinbase Custody holds 635,000 BTC on behalf of Grayscale that refuses to share proof of reserves