If either the NYT or WSJ says so in an article
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@ersatz
Does using the funds to actually pay debts count as using them as collateral? Or does using them "as collateral" only cover promising clients that they will use the customer funds to pay them back when the loan comes due, if they can't pay another way? Given the previous comment, I'm going to stick a massive bet on 'yes' if the former counts, but I might not place the bet if only the latter does.
@DavidMathers To use them as collateral is to take out a loan with the funds in question explicitly designated as collateral, either directly or as part of a larger pool that is itself designed as collateral, but if they were never intended to be used that way in the first place, then they were never collateral.
@ersatz https://twitter.com/KelseyTuoc/status/1592976714300542977
https://twitter.com/felixsalmon/status/1592987638457405443
It's hard to tell, but it sounds like on the backend Alameda were holding FTX client funds directly. That is, it was in an Alameda bank account and on their balance sheet, and so was probably used as collateral for the loans that Alameda took out.
https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankman-fried-crypto-bankruptcy.html
Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. Ellison explained what had caused the collapse, according to a person familiar with the matter. Her voice shaking, she apologized, saying she had let the group down. Over recent months, she said, Alameda had taken out loans and used the money to make venture capital investments, among other expenditures.
Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
The meeting was previously reported by The Wall Street Journal. Mr. Singh did not respond to a request for comment, and Mr. Wang could not be reached. According to a person familiar with FTX’s finances, the exchange lent as much as $10 billion to Alameda.
@ersatz Your comments have further clarified the issue and no one has claimed that they were confused by this, so I'd say leave it open? Though I'm totally biased because I don't want my NO position to get cancelled 🙂
Not as collateral, but direct loans.
