A company giving money to the parents of the owner is fraud.
A company giving money to another company owned by the owner when not in their interests to do so is fraud.
A company giving customer funds out as loans is fraud.
Incompetence is not an excuse and never has been, just as ignorance of the law is not an excuse.
> A company giving customer funds out as loans is fraud.
No, this alone is no where near enough for fraud.
Banks do this all the time. So does anyone company that issues gift cards.
Not sure on the rules for banks but FTX was not a regulated bank!
FTX was not a bank, it was an exchange. People were not giving FTX money to lend out to others in exchange for interest (as they would a bank). People were buying products (cryptocurrencies) from FTX that FTX agreed to hold on their behalf. FTX doing anything with these assets other than holding them on behalf of customers is fraud.
FTX's own Terms of Service explicitly said it was not permitted to lend out customer funds.
SBF himself repeatedly stated that FTX did not lend out customer funds.
Depending on state law, if you put down a deposit for e.g. flowers, the florist is free to spend the cash however they see fit, including loaning it out to someone. Lending customer funds per se does not prove fraud. Bankman-Fried lying about it does.
No, they were accepting customers' cash in exchange for something undefined. Crypto being unregulated, we can conclusively say that something was not "purchasing and holding assets on their customers' behalf."
FTX is, in many respects, more like a florist than a financial firm. Certainly for purposes of this case. (My florist's books are better organized.)
One, it's unclear if that's criminal commingling versus breach of contract by FTX.
Two, that's what I mean--absent additional representations, the lending out of customer deposits on its own does not constitute fraud or even anything illegal. That's the point of the comparison to a florist. In terms of consumer protections, my deposit with my florist is about (albeit not precisely) on par with customers' at FTX's. This is what you get when you stick your finger to the regulated system and put your money outside it.
Which I understand as, it's gota be determined the extent of the lying to determine the extent of the fraud ; some you-didnt-read-the-contract-well-enough responsability may incumb on the customer(s).
holding assets on their customers' behalf
Who said he was, him?
Of course Im playing devil's advocate here to illustrate the logic of the law as presented by our friend here.
Do you know the particulars in this case? It doesn't look like the article covers that specific aspect and I'm not terribly familiar with this case.
None of those points are actually fraud on their own, except potentially one. The companies use of customers funds would likely fit the definition of fraud, this is unlawful gain.
A company can legally give out loans. Companies give out signing bonuses, salaries, gifts etc, the problem comes down to whether it fits the definition of fraud.
This is what banks do though, no?
FTX (excluding FTX USA co) were unregulated - they were not a bank or broker just a plain old LLC.