> I understood everyone would be made whole at some point
That is only true if you define 'made whole' as giving back each customer the amount of money denominated in USD that they deposited with FTX. That is super convenient for FTX, which has benefited from the spike in BTC value, but not for the customer. To really be made whole, they would need to get back exactly what they deposited. 1 BTC in? 1 BTC out.
When you invest in monopoly money where the main feature is eliminating institutional protections, don't be surprised that institutions refuse to protect the value you pretend it has. The US government has no obligation to recognize BTC as a measure of fungible value.
Finally a take I agree with. The victims here are IMHO victims of their own greed. They wanted all the reward of putting money into unprotected and unregulated schemes and now many cry that the risks didn't go their way.
It doesn't make SBF less of a criminal but it does make the victims less victimised.
> They wanted all the reward of putting money into unprotected and unregulated schemes and now many cry that the risks didn't go their way.
Is that not just victim blaming? This was not an investment gone bad, this was stolen funds. It would be one thing if they lost all their money because BTC value dropped to zero. But SBF stole the money.
I really dislike the term "victim blaming", as too often it's used to shut down rational discussion about the facts of what happened. Not saying that's what you're trying to do here, but...
Often a victim of a crime could have taken different actions that would have prevented their victimization. That doesn't necessarily make it their fault, or even assign some portion of the blame to them. It's just a fact of circumstance.
A decade or so ago I was mugged by three men while walking home from a bar on a deserted, poorly-lit stretch of street at 2am on a Tuesday morning. It wasn't my fault that it happened, but I could have made other -- better -- choices leading up to that which would have prevented it from happening to me. We can argue whether or not it would have been reasonable to expect me to make those better decisions given my circumstances before getting mugged, but those are still the facts on the ground. I did not need to be walking home; I could have called a car or taken a bus instead. I did not need to be there, at that time, with my judgment, reaction time, and situational awareness impaired. This is about outcomes, not blame.
If I were looking to make some money and had a choice between buying conventional stocks or buying crypto, I'd hopefully consider the risks beforehand. By now I think it's fair to assume that most people who might buy crypto should have heard about a variety of scams, fraud, and outright theft that have occurred in the crypto space. All other things being equal (they're not, but let's say they are), a decision to buy stocks vs. crypto should take into account the expectation that there's a higher risk of losing the money to a scam when buying crypto. Again, that doesn't make it the crypto-buyer's fault when the person/company holding the crypto wallet for them steals it. But it's true that the crypto-buyer could have made different -- better -- decisions up front to avoid the possibility of that outcome.
I'm not blaming the victims, I'm blaming everyone involved, at any level. You consider them victims, I consider them to have discovered the "find out" half after "fuck about".
If I run about in the road and someone runs me down, I may be the victim of driver, but also my own stupidity.
Suffering the consequences of one's own decisions doesn't automatically infer victim hood by someone else entirely.
> The US government has no obligation to recognize BTC as a measure of fungible value.
And the very next reply says these are unregulated schemes. So what does the USG's opinion on BTC have to do with FTX's obligation to return the assets deposited with it, or whether their renumeration constitutes 'making customers whole'?
> So what does the USG's opinion on BTC have to do with FTX's obligation to return the assets deposited with it, or whether their renumeration constitutes 'making customers whole'?
Given that the USG is the only entity that could legally require these customers be made whole, it has everything to do with it. Depositing US dollars into a FTX account is easy: the government believes in the value of the dollar and will want customers to get back the same number of dollars they put in. A court can and might order FTX's current custodians to do their best to make that happen.
But if a customer didn't give FTX any dollars, but gave them BTC? The USG has no obligation to recognize those Bitcoins as having any particular value, or even any value whatsoever. In fact the government may be incentivized to value BTC deposited at zero, because doing so might free up more dollars to compensate people who deposited dollars, assuming there isn't enough to compensate everyone fully.
I feel like I'm experiencing whiplash. When it's convenient, crypto is unregulated and unprotected. But for this argument it is convenient to refer to it the matter as fiduciary, which implies trust, and declare that the only amount which matters is USD.
You might expect to only get the USD equivalent back, but not for one minute does that make you whole. A lot of money was in fact stolen.
I don't think there's any one definition of being made whole here, and people could reasonably disagree on what that means.
Ignoring bitcoin entirely for a second, I might deposit $1000 in an (unregulated, let's say) investment account. Later that amount -- unrealized, of course -- goes up to $2000. But it turns out it was all a scam and the investment manager ran away with the money. I might think I'm entitled to the full $2000, even though that may have just been a number the fraudster typed into a database, not representing anything real. Or I might argue that making me whole means also compensating me for the lost opportunity cost of keeping the money somewhere else where I could have made, say, 10% in that time. Or I might just recognize that I was duped, there was no investment, my $1000 never actually grew, and that's all I'm entitled to getting back.
I'm not sure that's how I would characterize the situation. The government can certainly treat it as a security, and try to regulate it. But if you participate in an unregulated scheme, you get to keep the pieces when it breaks.
The USD equivalent would still be higher than before due to the USD value of the asset that FTX systems would be reporting - if they hadn't been taken down in a criminal investigation, through no fault of the client.
That is only true if you define 'made whole' as giving back each customer the amount of money denominated in USD that they deposited with FTX. That is super convenient for FTX, which has benefited from the spike in BTC value, but not for the customer. To really be made whole, they would need to get back exactly what they deposited. 1 BTC in? 1 BTC out.