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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]People are confusing the question of whether decentralized cryptoassets like bitcoin are a worthwhile store of value or investment with what happened with FTX.

You can buy or sell crypto without an exchange as it was down in the earlier years of bitcoin and you can store it offline on a hard drive that you guard like a bar of gold.

An exchange, however, makes it much easier to buy and sell and, in principle, you don't have to worry about safeguarding the bitcoin you buy there because the exchange safeguards it for you.  In highly regulated exchange arrangements, this safeguarding is generally done through an arrangement with a highly regulated bank or broker dealer.

This did not happen with FTX because, as an exchange, it was very lightly regulated and it, not a bank or broker dealer, was the custodian of customer assets.  The owners of the exchange lent customer assets to a struggling trading affiliate, which immediately lost them on their bets and could not recover sufficiently to return the customer assets to the exchange.

The problem here is what the owners of the exchange did with customers' cryptoassets, not the cryptoassets themselves. It is a repeat of a crime we have seen over and over again over the decades in which a trustee pilfers the assets they are supposed to be protecting.

Whether decentralized cryptoassets like bitcoin et al are worthwhile stores of value or investments is a completely separate question, the answers to which shed no light on what happened in the FTX blow up, which just as well could have involved stocks, or foreign currencies, or pork bellies.

If you believe it does, you will miss the real lessons of FTX.[/quote]

How do you buy crypto without an exchange?  The only way I know is to mine it or buy with fiat thru exchange? Someday if crypto stabilizes and you use it to purchase goods or get paid for work than that would be an option. But it’s hard to do without trust — like if I sell my car for crypto, I have to see it enter my wallet before handing over the keys. Of course the swings in value make that uncertain, I could end up with far less return if price of crypto plummets right after I sell it.  [/quote]

This, plus there is a long list of previously respectable crypto exchanges that have recently failed. There is no SPIC and there are no separate accounts in the case of bankruptcy- it's just one big pool and the account holders are unsecured creditors. If you want the non-fradulent version of FFX, look at the Celsius bankruptcy [/quote]

It’s been mentioned above that people left their assets in FTX because the US exchange was supposedly unaffected & then their account balances disappeared last Friday. It sounds like they were seized by the bankruptcy management team. As you point out, those people are now screwed because those assets are now part of the pool and will be distributed to secured creditors. [/quote]

He was head quartered and operating out of the Bahamas. Originally he operated out of Honk Kong but oversight is looser in the Bahamas. I don't see how the US is even involved.[/quote]

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