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smoke0o7 t1_ixkimve wrote

They traded you monopoly money for your real money and moved the real cash into a different account, giving you IOUs like in dumb and dumber. IOUs, just as good as the real thing!

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SpeakerClassic4418 t1_ixkiipb wrote

They were an exchange. They don't set the price of anything. They make the exchange. They spent other people's money/lost other people's money

That is my understanding, which is very limited

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VisualMod t1_ixki4tf wrote

>It's simple, really. The exchanges create their own currencies that have no value outside of the exchange. They're essentially worthless pieces of paper (or digital bits).

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Baby_Hippos_Swimming t1_ixkk109 wrote

You have to have liquidity in USD for anyone cashing out their crypto. When people started to realize liquidity dried up, a bank run ensued, and many or most people weren't able to get their money back out. If they had not transfered the money to Alameda they might still be solvent.

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SFCPepe t1_ixkjl6a wrote

Biggest thing was they made people think what they were holding(FTX coins/stock) was valuable. That it would later be worth a large amount of money and according to SBF people were "sitting on a goldmine of opportunity" LOL.

But it wasn't tied to anything like other major coins. No country had backed this with their own fiat currency,(I know the Bahamas but lol not a top 25 currency) at least Bitcoin got backed by El Salvador. It was pretty obvious to see FTX would fail from an expert's viewpoint. The real question is how they managed to convince major sports promotions and celebs to all peddle their bs..that's the impressive part.

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FriendlyDeers OP t1_ixko5e2 wrote

But what are the other major coins tied to? I don’t think there’s any gold backing Bitcoin.

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SFCPepe t1_ixkorvl wrote

Currently a few countries recognize it officially, and it is used all around the world for transactions everyday. That gives it a lot of utility. It doesn't have to be tied to gold.

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[deleted] t1_ixkmg5i wrote

What went wrong? Nothing...this turned out exactly as planned. The rubes got scammed and lost their money in a crypto ponzi scheme.

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Mike_Walter t1_ixkju2f wrote

Lie, Cheat and Steal. Also bribed a bunch of democrats with large donations.

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VisualMod t1_ixki4b7 wrote

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1

Baby_Hippos_Swimming t1_ixkkvlt wrote

You should read about wildcat banking, the parallels between that and these crypto exchanges are quite interesting. People think this completely new thing but it's not. Crypto is basically the wild wild west, just like wildcat banks from almost 200 years ago.

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floppy_panoos t1_ixkmd2t wrote

Make up their coin’s value.

I think you answered your own question. FTX didn’t do anything wrong IMO, but when SHTF and people lose money, someone’s head always has to roll.

0