Quote (ferdia @ Mar 24 2023 12:06pm)
They had so much money (not theirs, their customers). They had no one looking for Loans, so instead they decided the best way to use the money was to invest, or in their case, go to the casino. Their board of directors (12?) had 1 person with banking credentials. They went to a casino with all of their money and bet it all. A professional typically bets 5%, and accepts that he may win or lose that 5%. W/E people might think about gambling there is a reason why the same people are still at the highest level - because they dont go broke. they win and lose, with the critical point being that they are able to lose and try again.
They put all of other peoples money on a coin toss and lost. And they will do it again somewhere else tomorrow.
this is just banking. no bank holds a significant amount of the money saved with them. you dont make money holding money, you make it by lending it out for interest or investing it to gain a percent back.
this is an outrageously positive business model in the upswings of economy, no investing firm or bank was having issues in the post-2008 recovery or 2016-2020 bubble. it's once the economy takes a downturn that they can lose money, its nearly impossible in an upswing to lose money. all you have to do is throw a dart at a stock list, buy that, hold, sell. almost nothing went down for decades.
this is the same case with FTX and Sam Fried. he got massive investments, kept almost none of it, invested people's money into his own phony currency, and it all looked like a free money printer. then crypto crashed and people realized that FTX was just like a bank, and your money is their money only without a federal guarantee of cash. and class action lawsuits will see larger investors paid out first.