Mohacsy's Safe Portfolio Member Forum

[jbsliverer]

That's traditionally true, and margin on the "coin" trading is very limited. At least that is what I've read and heard, haven't really spent a whole lot of time on research on it. What I've heard and the little I've read about it, the margin is with the futures or options with the underlying being mostly bitcoin.

That's with the actual "coin" and mostly with general retail, but there has been a lot of big money involved with lending in this space, with untraditional (not sure what "traditional" means in crypto though) forms of "margin" or lending of funds based on certain assets that is in risk of being called in. So I've read anyway, I'm definitely not any expert or even an amateur when it comes to this, nor want to be either.

There are many articles such as this one that discusses the risk of margin or lending that has taken place.

.......Earlier on Tuesday, FTX had halted withdrawals from its platform, after spooked investors attempted to pull their funds — in a move that resembled the collapse of other crypto firms this year, including Celsius, Voyager Digital and Three Arrows Capital.

News on FTT sparked concern about Alameda Research, Bankman-Fried’s trading firm and sister company to FTX. A report last week on the state of Alameda’s finances showed a large portion of its balance sheet is concentrated in FTT and its various activities leveraged the token as collateral. Alameda has disputed that claim, saying FTT represents only part of its total balance sheet.

“If the price of FTT goes way down, then Alameda could face margin calls and all kinds of pressure,” said Jeff Dorman, chief investment officer at digital asset firm Arca. “If FTX is the lender to Alameda then everyone’s going to be in trouble.”

https://www.cnbc.com/2022/11/08/ftxs-ftt-token-plunges-80percent-wiping-out-over-2-billion-in-value.html