Based on some of the follow-up questions, I decided to share this specific example of my thinking at the time (which didn’t prevent me from losing some of my savings in the bankruptcy):
Do you recall what your conception of a possible customer loss resulting “from bankruptcy” was, and in particular whether it was (at least largely) limited to “monies lent out for margin trading”? Although I haven’t done any research, if user accounts had been appropriately segregated and safeguarded, FTX’s creditors (in a hypothetical “normal” bankruptcy scenario) shouldn’t have been able to make claims against them. There might have been an exception for those involved in margin trading
I recall feeling most worried about hacks resulting in loss of customer funds, including funds not lent out for margin trading. I was also worried about risky investments or trades resulting in depleting cash reservers that could be used to make up for hacking losses.
I don’t think I ever generated the thought “customer monies need to be segregated, and they might not be”, primarily because at the time I wasn’t familiar with financial regulations.
E.g. in 2023 I ran across an article written in ~2018 that commented an SIPC payout in a case of a broker co-mingling customer funds with an associated trading firm. If I had read that article in 2021, I would have probably suspected FTX of doing this.
Based on some of the follow-up questions, I decided to share this specific example of my thinking at the time (which didn’t prevent me from losing some of my savings in the bankruptcy):
Do you recall what your conception of a possible customer loss resulting “from bankruptcy” was, and in particular whether it was (at least largely) limited to “monies lent out for margin trading”? Although I haven’t done any research, if user accounts had been appropriately segregated and safeguarded, FTX’s creditors (in a hypothetical “normal” bankruptcy scenario) shouldn’t have been able to make claims against them. There might have been an exception for those involved in margin trading
I recall feeling most worried about hacks resulting in loss of customer funds, including funds not lent out for margin trading. I was also worried about risky investments or trades resulting in depleting cash reservers that could be used to make up for hacking losses.
I don’t think I ever generated the thought “customer monies need to be segregated, and they might not be”, primarily because at the time I wasn’t familiar with financial regulations.
E.g. in 2023 I ran across an article written in ~2018 that commented an SIPC payout in a case of a broker co-mingling customer funds with an associated trading firm. If I had read that article in 2021, I would have probably suspected FTX of doing this.