Am I crazy? Are we not describing 2 identical problems and classifying 1 of them as fraud?
The soundness of loans in a deregulated environment is no better than the soundness of a self-invented currency.
Few of the crypto clowns publish their balance sheet. FTX, we now know, didn't even have a balance sheet.
1) Regulatory oversight. 2) Relative transparency.
Legit differences between Crypto exchanges and traditional finance. Keep em' coming, I'm learning :)
The reply to that was to explain that regulation was the key to maintaining a stable banking system.
You then ignore all that an conflate unregulated banking and regulated banking as equal.
I hope you understand that this makes your argument dishonest, and that you attempt to avoid this in the future.
I understand that the level of fraud committed specifically by FTX goes far beyond simply misleading lenders and regulators about their collateral which consisted mostly of their own crypto. In general, however, this seems to be the root of the issue and the systemic problem across all centralized crypto exchanges.
From the start and well prior to this conversation I have had the belief that Crypto "scams" like this bear a striking resemblance to the world of traditional finance and specifically the securities market and MBS.
I'm not trying to argue in bad faith or use any kind of argumentative tactic or fallacy (at least not intentionally).
This is not to say the space shouldn't be regulated, but all regulation on the soundness of loans suffers from this. e.g bank leverage limits rest on the same type of assumptions about the value and liquidity of different types of collateral. And if those assumptions are wrong they will fail no matter how solid the regulatory model says the bank is.