This doesn’t explain why customers who weren’t using the margin lending program lost their money. According to Can Sun, the FTX lawyer who testified[1] today, FTX Digital Markets had the responsibility to ensure the segregation of those customers’ digital assets from FTX’s assets. He testified that if FTX went bankrupt, those customers were supposed to still be able to get all of their digital assets back (because it was theirs, not FTX’s). Customer digital assets were not debt; they were the private property of customers. Since those customers don’t have their money, something must have gone wrong.
Moreover, Sun testified that he only learned that something was amiss at the same time that everybody else in the world did, at which point Sam asked him for a “legal justification” for the missing funds. He had to tell SBF that “there are no justifications but there are some theoretical explanations.” According to his testimony, he listed a few theoretical explanations, including the margin lending program, but explained that this excuse didn’t work, and SBF seemed to acknowledge that. Sun quit on the following day.
This doesn’t explain why customers who weren’t using the margin lending program lost their money. According to Can Sun, the FTX lawyer who testified[1] today, FTX Digital Markets had the responsibility to ensure the segregation of those customers’ digital assets from FTX’s assets. He testified that if FTX went bankrupt, those customers were supposed to still be able to get all of their digital assets back (because it was theirs, not FTX’s). Customer digital assets were not debt; they were the private property of customers. Since those customers don’t have their money, something must have gone wrong.
Moreover, Sun testified that he only learned that something was amiss at the same time that everybody else in the world did, at which point Sam asked him for a “legal justification” for the missing funds. He had to tell SBF that “there are no justifications but there are some theoretical explanations.” According to his testimony, he listed a few theoretical explanations, including the margin lending program, but explained that this excuse didn’t work, and SBF seemed to acknowledge that. Sun quit on the following day.
Supporting sources: https://www.axios.com/2023/10/19/ftx-trial-sun-testimony, https://x.com/innercitypress/status/1714999654989860918?s=20,
https://www.axios.com/2022/11/12/ftx-terms-service-trading-customer-funds (contemporaneous), https://newsletter.mollywhite.net/p/the-ftx-trial-day-twelve, this YouTube vlog