FTX wasn't a scam either. Their business was a licence to print money but, as so often happens in finance, managed to spin shit from gold.
If they were serious they would have hired portfolio managers with decades of experience.
Its the same thing as three arrows capital, random people ending up with a bunch of capital, overestimating their intelligence due to a bull market run, and ending up with nothing
so "If they wanted you, they got in touch." seems true to me
you make it sound like a prestigious elite club. it was a scam, and it should be called out as such.
also again i personally know two people that received stingy offers from them
Debate old as time. I agree with you but this happens every cycle. RenTech doesn't have "real finance people" either. Maybe the problem was that they just had the wrong people, not their level of realness.
And Alameda seemed to be mainly people from Jane Street? There is a difference between trading firms with good tech (Jane Street) and firms taking prop risk (DE Shaw)...just based on what has been released, I agree that they didn't seem to know what they were doing. Unfortunately, the market doesn't know you went to MIT.
And they wouldn't have hired PMs with decades of experience, because no PM with decades of experience would have worked there.
What do you mean by this? What is DE Shaw doing that Jane Street isn't?
Run by people with 1-2 years experience in shops that run a market neutral profile , in an environment where they believed the underlying asset goes up every single day.
Is NYSE a scam? Is Euronext a scam? The exchange was a legit business that was profitable...outside of fixed costs, it isn't possible to lose money with an exchange. But they were doing other stuff (broking) that did lose them money. These are two completely distinct operations though (in real finance, they are largely distinct).
FTX, on the other hand, pretty much did just that.
Does that make FTX a scam? No. But when they told their customers they don't gamble with customer deposits, that was at least incomplete and misleading, and may have crossed the line into being intentionally deceptive.
Of course, even if people knew about this, they probably would have used FTX anyway because people do crazy things in a bubble market.
And whether they are gambling with your money or not, they were a mix of a bank and an exchange...so the comparison with a bank isn't complete. They were booking derivatives trades so your money is 100% at-risk, irregardless of what they do with customer deposits. This is what prime brokers do (as Levine says in that article).
The reason you don't lend against your own shares is because you won't be able to get financing and are exposed to runs. It is unrelated to the point about customers who were already at risk because they were trading derivatives issued by FTX.
It is, e.g., if the fees on the average transaction are lower than your variable costs. It is just extremely improbable for that to occur accidentally.
Only on HN.