FTX Collapse The Deathnell For Crypto?

FTX's bankruptcy proceedings have become a family affair, with Sam Bankman-Fried's parents and brother being entangled in the case. Bankman-Fried's father is a professor at Stanford University and was a former FTX employee. Bankman-Fried's mother is a professor emerita at Stanford who resigned as chairwoman of her political advocacy network in November. Bankman-Fried's brother was described in the court filing as his political advisor and has a non-profit that received funding from Bankman-Fried. According to the court filing, Bankman-Fried's family members have not cooperated with FTX's lawyers in providing information for the bankruptcy proceedings.

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Okay, now you say clearly FTX did not play by the rules. that is unclear to me not because I am disputing any of this. it's just like I I don't I don't even follow. like so they're people who are buying crypto there. but then there's also like all these different sorts of like like you say derivative ways in which to buy it so that I can leverage crypto I don't have to buy more crypto. and this encourages what like like I heard stories of I I know somebody whose brother was walking his dog in L. A and somebody just came up and here's like 50 000 US dollars worth of crypto to make the crypto valuable. A. is stuff like that true? and B like why was there something about FTX that was trying to create value in currencies in crypto coins that didn't exist. like they were trying to create it from Whole cloth. yeah, so a couple Dynamics going on there. The first is it's true there was more risky trading happening on FTX of the platform's design. but that's not really where things went wrong. like you said what FTX was doing and what a lot of crypto companies do was this really sneaky type of accounting where they basically create their own token for FTX it was called ftt. and it's almost like stock in the company where the value of it increases as the overall value or perceived value of the company increases. but FTX was using this token as collateral and accepting it as collateral. An example of that would be for example if you made margin trading on TD Ameritrade so you were trading with money you didn't have. and then as collateral, you're putting up stock for TD Ameritrade itself. obviously, it doesn't really make sense. The other thing that FTX was doing was it wasn't only FTX, they were also basically pumping up the prices of other more obscure tokens that they're investing in. and worst of all they had this Affiliated proprietary trading fund or a hedge fund called Alameda. which was basically all Sam Beckman Freed's money. He owned 90 percent of it. and Alameda was allowed to do whatever it wanted on FTX with no limits in what's called what type of God mode. and that's basically where this eight billion dollar hole happened. where all of this customer money just disappeared.