The billionaire and owner of the NBA team Dallas Mavericks believes that the bankruptcy of the FTX exchange was caused by violations of the classic financial rules applicable to the banking business.
Speaking about the reasons that led to the destruction of Sam Bankman-Fried’s cryptocurrency empire, Mark Cuban said that he did not consider the collapse of FTX to be something exceptional. According to the businessman, the process has signs of violating traditional rules that affect the stability of any financial organization.
“Look at the level of capital adequacy, the savings-to-leverage ratio, and the number of subprime loans made to borrowers with bad credit. Lending to the wrong people, misjudgment of collateral, poor-quality arbitrage, followed by loss of liquidity and flight of depositors. The collapse of FTX or any bank are different versions of the same story, ”says Mark Cuban.
The businessman said that the conversation with Sam Bankman-Freed made a positive impression on him, but if he were in the place of the former CEO of FTX, he would have long ago begun to be afraid of going to jail.
“I was talking to this guy and I thought he was smart… I had no idea he was going to take other people’s money and use it for his own purposes,” Cuban says.
American crypto investors sued Bankman-Fried and celebrities whom he attracted to advertise the services of the FTX exchange. The class-action lawsuit alleges that FTX was aimed at attracting “unsophisticated investors from across the country” and that its income accounts were unregistered securities traded illegally in the US, where investors suffered $11 billion in damages.
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