“Counterargument: There are things that are illegal but which people don’t really consider immoral, like stealing a notepad from your office. Taking depositor funds as a “loan” is worse than this, but of a similar status. There’s a notion that “if you win, it’s not unethical”—like the story (celebrated in business circles) of Fedex gambling their last $6,000 of investor funds in a casino, without which the company would’ve failed. It seems okay because of social context—the majority of cryptocurrency funds do this sort of thing.”
The analogy here doesn’t work. FTX wasn’t a crypto fund but a broker. Unlike funds brokers are supposed to never invest the money they keep in custody. And it was even explicitly against FTX’s terms and conditions, as well as SBF’s lie where he said they didn’t invest customer deposits all, not even in assets as safe as treasuries.
FTX is more like a bank taking the contents of their customers’ safe deposit boxes, pawning them off and going to a casino to play with the money, and, in the most charitable interpretation, hoping to win enough to buy back the stuff before their customers notice.
I think most non-experts still have only a vague understanding of what cryptocurrency actually is, and just mentally lump together all related enterprises into one big category—which is reinforced by the fact that people involved in one kind of business will tend to get involved in others as well. FTX is an exchange, Alameda is a fund, and FTT is a currency, and each of these things could theoretically exist apart from the others, but a layperson will point at all of them and say “FTX” in the same way as one might refer to a PlayStation console as “the Nintendo.”
Legally speaking this is nonsense, but when we’re talking about “social context,” a lack of clarity in the common understanding of what exactly these businesses do might provide an opening for self-deception on the part of the people running them, regarding what illegal activities are “socially acceptable” in their field.
“Counterargument: There are things that are illegal but which people don’t really consider immoral, like stealing a notepad from your office. Taking depositor funds as a “loan” is worse than this, but of a similar status. There’s a notion that “if you win, it’s not unethical”—like the story (celebrated in business circles) of Fedex gambling their last $6,000 of investor funds in a casino, without which the company would’ve failed. It seems okay because of social context—the majority of cryptocurrency funds do this sort of thing.”
The analogy here doesn’t work. FTX wasn’t a crypto fund but a broker. Unlike funds brokers are supposed to never invest the money they keep in custody. And it was even explicitly against FTX’s terms and conditions, as well as SBF’s lie where he said they didn’t invest customer deposits all, not even in assets as safe as treasuries.
FTX is more like a bank taking the contents of their customers’ safe deposit boxes, pawning them off and going to a casino to play with the money, and, in the most charitable interpretation, hoping to win enough to buy back the stuff before their customers notice.
I think most non-experts still have only a vague understanding of what cryptocurrency actually is, and just mentally lump together all related enterprises into one big category—which is reinforced by the fact that people involved in one kind of business will tend to get involved in others as well. FTX is an exchange, Alameda is a fund, and FTT is a currency, and each of these things could theoretically exist apart from the others, but a layperson will point at all of them and say “FTX” in the same way as one might refer to a PlayStation console as “the Nintendo.”
Legally speaking this is nonsense, but when we’re talking about “social context,” a lack of clarity in the common understanding of what exactly these businesses do might provide an opening for self-deception on the part of the people running them, regarding what illegal activities are “socially acceptable” in their field.