Crypto-collapse is the predictable end to a get-rich-quick scheme.
Bankman-Fried said Alameda and FTX operated as two different businesses. Alameda metaphorically worked the mines, while FTZ leased picks and shovels. Playing both sides sounded like hedging your bets, but it was not that simple.
Bankman-Fried said he could pay such high returns because FTX was trading on volatility and disparities in crypto’s global, 24-hour markets. While that was true for a while, it didn’t last. Crypto’s value relies on more money coming in than going out. When central banks began raising interest rates, and stock prices dropped, people started pulling out their money. Exchange rates dropped, and Alameda got into trouble. Bankman-Fried moved the greenhorn’s money into Alameda’s accounts.“Most exchanges did some variant of what we did — just not as big and without the run on the bank,” he said.
Bankman-Fried likes to compare what happened at FTX to the bank runs in the 1930s that worsened the Great Depression.Was Bankman-Fried grifting or selling sub-par shovels?
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