One year after the spectacular FTX collapse, the collective gaze of the entire crypto space, and the attention of the general public, fixates upon a courtroom drama of unparalleled proportions. The accused, led by the elusive Sam and friends, stand in the harsh spotlight of justice, their every move scrutinized as they face the consequences of a financial deception that rocked the foundations of countless small investors. The air is thick with anticipation, not just for a verdict, but for a scapegoat to bear the weight of shattered dreams and financial ruin.
Amidst the legal theatrics, a peculiar phenomenon unfolds among the spectators—a morbid fascination that extends beyond the pursuit of truth. For these small investors, the trial is not merely a pursuit of justice; it's a desperate bid to shift the weight of responsibility from their own shoulders. As the evidence mounts against Sam and friends, so does the collective hope that by pointing fingers at the accused, they can, in turn, deflect the accusing gaze cast upon their own lapses in judgment.
The intricate web of rationalization becomes a key player in this drama, as individuals grapple with the uncomfortable reality of their own complicity in the financial downfall.
For many small investors, pointing fingers at Sam and friends serves as a lifeline in a sea of remorse. The courtroom, rather than being a stage for pure justice, transforms into a theater of absolution, where the mere act of accusing the fraudsters becomes a form of redemption. It's a subconscious maneuver to distance themselves from the haunting questions: "Could I have seen the signs? Could I have prevented my own losses?"
The human psyche, ever adept at self-preservation, clings to the narrative of external villains. As the evidence against Sam and friends mounts, so does the collective sigh of relief among the onlookers—a communal exhale, that says
“See? It wan’t my fault! Look how evil they were!”
But.
IF YOU LOST MONEY ON FTX IT IS YOUR OWN FAULT.
Yes, if you lost money on FTX, especially if you lost a lot of money there, it is your own fault.
And I tell you why:
First of all, everyone should be familiar with the saying “never put all your eggs in one basket”. This applies not just to FTX, but to any other CEX, to a tradfi broker, to a bank, etc. Do not put all your assets in one place. Or most of them. Never.
So, if you had the bulk of your money on FTX, you immediately failed as a risk manager - of your own funds - you neglected one of the most basic principles in the space, no matter how you judged FTX trustworthy or too big to fail or whatever.
Centralized Exchanges are not Banks. You should keep the absolute minimum for managing your positions and trades, and use leverage to your advantage to reduce risk. Yes, leverage is a tool to reduce risk, not increase. Read “about leverage”.
Second:
Even if you ignored the “funny” accidents constantly occurring at FTX in 2020 and 2021, like liquidations not hitting, manually adjusting MOVE contracts, and even if you ignored that Alameda and FTX were 100% commingled - Hell, the bank wires of my withdrawals in 2021 were sent by Alameda Ltd. Bank account!!! - you could not ignore that in 2022 something changed bigly.
After the Luna collapse, FTX (SBF and Trabucco, mainly) started tweeting and letting press - like their friends at The Block - announce that they were going to perform a series of acquisitions (Voyager, etc.) of distressed crypto entities, supposedly to save the ecosystem and buying bargaign.
If you paid a modicum of attention, in the following days none of the trumpeted acquisitions for fantastillions of dollars were real or went through, it was all marketing and nervous attempts at putting out “bullish news” to keep the market afloat and give an image of FTX being not just solid, but even liquid enough to buy out others. (We now know they were already bust).
Third:
If even all of this was not enough for you, and all summer passed and you went on oblivious like a sheep to what was going on, you could NOT possibly ignore the events and histeric tweets going on in September and October.
If you really had most of your money on FTX, you could not afford to pay attention, and you should not have risked your money just because you thought it was all FUD.
Even if none of the accusations and rumors were true, a “bank rush” could leave FTX dry for withdrawals, even if temporary, so why risk?
There was at least one month, and at minimum one week - when SBF and Caroline started tweet battling with CZ for example - of time to withdraw, even if “just in case”.
So, sorry not sorry, it is entirely your fault if you lost money on FTX.
I am glad I never fully trusted CEX's. I had funds on binance, but removed it when a couple jurisdictions started banning it. With FTX, the signs were all there as you indicated. Most people however are emotionally attached to their positions, including the CEX they might be in. The reality is that in crypto/defi there is no safe harbor to park your boat. Some place might be safe temporarily, but as soon as the winds change you have to be careful. If not a CEX, there is always smart contract risk. DEFI has been plagued with all sorts of exploits. It is like traversing a minefield. As you mentioned not parking everything in the same place mitigates risk, and should be done if you a sizable stack. However most people become complacent and attached to their bag, abd let go of their vigilance once their bets are set. And so theily sail blindfolded, ignoring all warning signs. Essentially, sleepwalking money, ready to be reaped.