Their terms of service had explicit clauses about using customer funds “as belonging to FTX trading”. Unsure if it also applied to using customer funds as loan collateral but that would make sense.
(B) None of the Digital Assets in your Account are the property of, or shall or may be loaned to, FTX Trading; FTX Trading does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading.
That an exchange doesn’t go play poker on the stock market with client money is so far beyond a thing needing to be promised. It’s like asking whether or not a garage had “made a promise” to you that they wouldn’t total your car in a drag race over the weekend. SBF secretly and without customer knowledge used their funds to finance trades, which is theft.
In addition to the terms of service issue Kerkko mentioned in a neighbouring comment, Will MacAskell claims in this thread on Twitter there was a “(later deleted) tweet from Sam claiming customer deposits are never invested.”
They weren’t a bank. They were an exchange.
Did they have a document where they described the promise they made about what they did?
I think how bad what they did happened to be depends a lot on the specific promises they made.
Their terms of service had explicit clauses about using customer funds “as belonging to FTX trading”. Unsure if it also applied to using customer funds as loan collateral but that would make sense.
(B) None of the Digital Assets in your Account are the property of, or shall or may be loaned to, FTX Trading; FTX Trading does not represent or treat Digital Assets in User’s Accounts as belonging to FTX Trading.
(Terms of service PDF available here https://help.ftx.com/hc/en-us/articles/360024788391-FTX-Terms-of-Service )
Okay, in that case it seems they clearly broke them.
That an exchange doesn’t go play poker on the stock market with client money is so far beyond a thing needing to be promised. It’s like asking whether or not a garage had “made a promise” to you that they wouldn’t total your car in a drag race over the weekend. SBF secretly and without customer knowledge used their funds to finance trades, which is theft.
In addition to the terms of service issue Kerkko mentioned in a neighbouring comment, Will MacAskell claims in this thread on Twitter there was a “(later deleted) tweet from Sam claiming customer deposits are never invested.”