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Comment by fredgrott | Hacker News Reader

I have a question why is what CZ did different from what SBF did? I mean other than SBF getting caught over-extended in downgrading market they both did the same type of fraud.

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FTX took funds from customers and used them to run a hedge fund. When the fund did poorly, the customers' funds were gone, leaving a $8B hole. And they lied to customers about it.

Binance is very different. While it hasn't complied with various securities laws, it's never lied to customers and has kept customers' assets safe. They've also done steps to build confidence and be transparent like verifying proof of reserves:

https://www.binance.com/en/proof-of-reserves

While this report isn't perfect, it does show that wallets they control have as much in assets as they're supposed to, so we know they're not doing what FTX did.

SBF lost customer funds by spending them as if they were his own. CZ isn't accused of spending customer funds, he's accused of letting people trade too freely.

Binance is also accused of commingling funds.

AFAIK, commingling means that customer funds went into the same account as business funds. SBF is accused of then using those customer funds for business expenses, while Binance _seems_ to have stopped at just not separating them properly.

Commingling is not losing or spending. I don't know why you used a "also" with a word that wasn't in the comment you responded to.

If you commingle customer funds, by definition you’re spending some of them when you use that account to pay business expenses, it’s impossible to differentiate them and makes several other types of fraud more likely.

It's the same violation of law but it doesn't quite look like the same kind of fraud. What's illegal is co-mingling funds; but you can co-mingle funds and do at least baseline proper accounting to make sure you're not too in the hole, vs. co-mingle funds and just straight up lie about how you're doing. Y'know, you're just a regular libertarian guy looking to get rich by breaking the law and not some coked-up wunderkind thinking he gets to save or destroy the world.

What countries they hung out in, I think. The Bahamas is not able to hold of US pressure for very long.

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