At no point did he admit to investing customer deposits in defi or similar schemes without their consent in that interview. FTX’s terms even state that they would never do that.
His actions since Alameda blew up were not rational, even if we assume that he was operating a Ponzi scheme the entire time.
He bailed out as many failed projects as he could and attempted to make investments with funds he did not have after the collapse of his ponzi started.
A ponzi operator who sees their house of cards collapsing is going to look for ways to get more money into the ponzi unencumbered with the hope that they can make back the losses before anyone notices.
They are not going to allocate what precious little capital they still have to investments that do not contribute more capital to the ponzi.
Yet this is exactly what SBF did.
It doesn’t make any sense.
Yet the regulation authorities are considering (that SBF literally authored) does very little to address the root causes of centralized exchange collapse, and is more or less designed to give power to regulators first and protect investors as a distant second.
What is needed are proof of reserves that include both assets and liabilities for centralized exchanges.
Centralized exchanges shouldn’t be able to lock up 100mm USD worth in customer Ethereum deposits for staking, when their exchange allows someone to buy that 100mm USD in ETH and withdraw it from the exchange before they can unlock the ETH and use it to fund the withdrawal without delay. If the exchange is going to allow customers to stake ETH on their exchange, the actual customers' ETH must be staked, and shouldn't be accounted for separately than the staked ETH deposit.
That is the core of the issue with centralized exchanges that play shell games with customer funds. They create financial risk if customer deposits are not backed 1:1 and mirroring the financial decisions of the depositor. Anything less is a ponzi, no matter how much window dressing is applied.
It's worth noting that banks are ponzi schemes, but they can borrow funds at the discount rate at will, and must meet capital requirements, so the damage their ponzi schemes can cause is limited. There is no lender of last resort in crypto. Centralized exchanges cannot behave like banks!
His actions since Alameda blew up were not rational, even if we assume that he was operating a Ponzi scheme the entire time.
He bailed out as many failed projects as he could and attempted to make investments with funds he did not have after the collapse of his ponzi started.
A ponzi operator who sees their house of cards collapsing is going to look for ways to get more money into the ponzi unencumbered with the hope that they can make back the losses before anyone notices.
They are not going to allocate what precious little capital they still have to investments that do not contribute more capital to the ponzi.
Yet this is exactly what SBF did.
It doesn’t make any sense.
Yet the regulation authorities are considering (that SBF literally authored) does very little to address the root causes of centralized exchange collapse, and is more or less designed to give power to regulators first and protect investors as a distant second.
What is needed are proof of reserves that include both assets and liabilities for centralized exchanges.
Centralized exchanges shouldn’t be able to lock up 100mm USD worth in customer Ethereum deposits for staking, when their exchange allows someone to buy that 100mm USD in ETH and withdraw it from the exchange before they can unlock the ETH and use it to fund the withdrawal without delay. If the exchange is going to allow customers to stake ETH on their exchange, the actual customers' ETH must be staked, and shouldn't be accounted for separately than the staked ETH deposit.
That is the core of the issue with centralized exchanges that play shell games with customer funds. They create financial risk if customer deposits are not backed 1:1 and mirroring the financial decisions of the depositor. Anything less is a ponzi, no matter how much window dressing is applied.
It's worth noting that banks are ponzi schemes, but they can borrow funds at the discount rate at will, and must meet capital requirements, so the damage their ponzi schemes can cause is limited. There is no lender of last resort in crypto. Centralized exchanges cannot behave like banks!