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You're assuming there was a bank account called CLIENT FUNDS and another account called EXCHANGE FUNDS and they decided to raid the CLIENT FUNDS one to make bets.
What if there was actually just a gigantic intermingled account and the separation between client funds and exchange funds were records in an accounting system that, when they snapped it to reality, they realized the funds they had left were smaller than what they were liable for in client redemptions?
Someone better at financial accounting than me explain this, because it sounds like he was hiding funds:
This runs all through the bankruptcy filing when parsing the "balance sheets" provided for the various 'silos'. So whatever fund they were keeping as CUSTOMER FUNDS, they sure weren't keeping any separate records of "we took in $50 million of customer money that wanted to buy crypto and bought $X million of crypto with it, and here's a list of the customer accounts with who owns what".
That's going beyond carelessness. But if I'm interpreting it wrongly and there's an honest reason for doing this, go ahead and explain it to me. For instance, this is one of the "balance sheets" where the Customer Custodial Funds are the fiat balances, but whatever crypto assets they might have held aren't anywhere:
So this is showing "We have $102,225,000 in customer funds (paper money) and we owe them that amount back" but nothing about "and we bought such-and-such amount of crypto as instructed by them", if I am interpreting this correctly.
It sounds like when you opened an account at FTX, wired them money, and then bought bitcoin with it, no bitcoin was ever necessarily bought. You just got a bitcoin-denominated claim on FTX assets.
That's where the shazam part comes in. It's not at all clear if (1) they took your money and told you it was invested but they spent it on personal loans and Sam's big nap time beanbag (2) they took your money and issued you their own tokens in magic beans (3) they took your money, bought bitcoin, and then wheeee! gambling! oopsies, lost it! never mind, try again with new monies!
Money was certainly coming in, and it was certainly going out, but the in-between part of whose money where when wasn't being tracked. Or at least, only Bankman-Fried knew where it was going. At least, that's how it seems.
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The fact that all the dollars were sloshing around in a single big pool doesn't negate the fact that many of them weren't FTX'S dollars, but instead customer dollars. Instead, the act of throwing the money into a single big pool itself is evidence that FTX and SBF were extremely reckless with client funds, and didn't care that the money wasn't theirs in the first instance.
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