> Who was on the other side of these losing trades? People need to follow the money trail. Where did the money go?
There doesn’t have to be another side to the losses. If Alameda / FTX was holding assets that depreciate in value, they would book losses along with everyone else holding the same assets.
The point they're making, I think, is that FTX bought various shitcoins from other people in exchange for USD. Value can disappear, but that's not what happened to the actual dollars they spent.
I'm not positive this whole thing was some kind of planned conspiracy, it just seems like idiocy and fraud catching up with them. I don't think any competent fraudster would get caught in such an embarrassing way.
One theory is that it was their users. That is, Alameda lost huge amounts taking the other side of trades on FTX, and then FTX stole customer money and gave it to Alameda to compensate
The block chain shows the bitcoin moving from one address to another. That's about it. It doesn't say what was exchanged for it, be that USD, FTT, or any other token, good, or service.
And those addresses are potentially pseudonymous to boot, at least if the BTC is withdrawn. If it ISN'T withdrawn, it's entirely plausible that the transactions took place off chain in the first place -- simply moving numbers around in an internal database while staying right in the same, FTX owned wallet. What you'd call in the trad fi space "holding assets in street name."
Any time someone loses value, someone else gains it (in the short term), short of destruction of physical or knowledge capital (i.e. WWII bombing raids). We mark things in dollars but real value is measured in resources, physical capital, and intangible capital (rather than USD). Unless any of that was lost, the $ value losses just re-accrue to someone else instead.
This is different from imaginary value inflating and disappearing (i.e. tokens that never had liquidity - where mark to market never made sense, etc). In that case the whole thing is a mirage.
But if $8 billion dollars went into FTX, that money does not just "disappear" from depreciation - someone else's (or many people's) purchasing power increased in relative terms proportional to the losses suffered by FTX's creditors/depositors.
Value can be created and sent back to ether. It’s not a zero sum closed system.
Let’s look at NFTs, they weren’t ever worth anything but some people thought they were, and counted them like they were, and convinced dumb people to pay for them at these prices, but it was all imaginary. The ones that never sold are just as worthless as the ones that did. The entire market collapsed, the “value” is really just gone, no one “has it”.
But no. Those NFTs never had anything but subjective bubble value to begin with and cost next to nothing to create too. The money transferred in exchange for changing ownership of them passed to other hands but didn't disappear. Its much more concrete value wasn't lost and nothing was destroyed in the process except the wispy perceived value of the digital NFT tokens that had (again) cost nothing to create in the first place.
There doesn’t have to be another side to the losses. If Alameda / FTX was holding assets that depreciate in value, they would book losses along with everyone else holding the same assets.