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Notes -
The legal point, so far as I can make out, is that the customer has to give formal permission to the firm to use their funds to invest. FTX didn't get that, so shovelling money over to Alameda so that it could pay out all the loans that were coming due, thanks to the creditors all going bust, was a big no-no. Customers thought their money was being used for the purpose they intended (buying crypto), but in reality it went to paying off loans to keep Alameda afloat, as well as general "buy luxury houses, give donations, sponsor sports arenas" and so on.
I have money in my bank account, I know and accept that it will be lent out to borrowers who are also customers of the bank and so on. I don't accept that the bank manager or the board of directors can take it and jaunt off on luxury Caribbean holidays with attractive young women to 'escort' them.
And I think the point of the "backdoor" is that it enabled Alameda to secretly divert FTX funds so that no record was being publicly kept of who was taking the money and where it was going. Instead of having to formally apply to borrow the money off FTX and commit to repaying, if the two companies were indeed separate as claimed, Alameda could just tap into FTX funds as though it were a joint account.
But I have to leave all this up to the lawyers and accountants to explain. The trial looks set to be fascinating!
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