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Matt Levine’s Money Stuff: FTX’s BlockFi Rescue Didn’t Work (1)

Nov. 28, 2022, 10:54 PM

BlockFiles

One lesson of traditional finance that crypto is learning these days is: “If you’ve got a bazooka, and people know you’ve got it, you may not have to take it out.” For instance:


  1. There is a small opaque crypto lending platform that is rumored to be in trouble.


  • 2. Its depositors want their money back.


  • 3. It doesn’t have their money, either because the money is locked up in long-term loans or because it lost the money or some combination or otherwise.


  • 4. There is a “run on the bank.”


  • 5. To solve the problem, the lending platform agrees ...