Quote:
Originally Posted by Skallagrim
=What hit FTP hard on BF (it appears at this time - lots of facts are still not clear) seems to be a combination of having a lot of money in the hands of US processors (or supposed to be - the inability to collect deposits plays a large role here too) and the DOJ's surprise (in the sense they had never done it before) ability to freeze FTP's overseas accounts.
Skall,
When you say things like this, even if you make it clear that you're speculating, people take it fairly seriously. I recognize that you're not speaking for the PPA when you post speculation like this, but many people think that you are anyway, and most people at least think that you're speaking with some knowledge of the situation.
In fact, this was actually not the first time that the DOJ froze foreign assets of poker sites. They'd done so at least two years ago.
And, you have absolutely no clue how much money FTP had in processor accounts on BF. All you know is that it was less than $115M minus the various amounts that were already known to be seized over the past two years.
Indeed, the fact that it was significantly less than $115M and that they owe somewhere on the order of $300M to customers shows that what REALLY hit FTP hard on Black Friday was the fact that they didn't have anywhere close to enough money to meet their obligations even before Black Friday, and the domain name seizure caused a "run on the bank"[1] that simply asked for more cash than they had.
[1] I put "run on the bank" in quotes for two reasons:
1) FTP's not a bank. It's infuriating when people pretend otherwise, particularly when it comes from Mike Matusow because he almost certainly heard it from one of the people who ran this site as an incredibly stupid justification for their actions.
Banks are able to keep ~10% of customer assets liquid because they have like 200% of customer assets (or whatever the percent actually) in loans and investments and other things that are easily converted into liquid assets. FTP kept some smallish percentage of customer assets liquid while they paid themselves, paid operating expenses, paid for commercials, paid their buddies outrageous fees to wear a piece of felt, paid absurd payment processing costs to the US in order to (allegedly...) get people to commit bank fraud, loaned players hundreds of millions of dollars without bothering to tell them (the shortfall), paid more absurdly high payment processing fees to try to get some of this money back through more (alleged...) bank fraud, etc.
Even if FTP had put player money in government bonds or secured loans or something and kept some of the profit, that would have been slightly different than FTP acting as a bank. (People agree to that when they deposit in a bank. We didn't agree to that when we deposited on FTP.) What they actually did was not at all like what a bank does.
2) The "run" wasn't really much of a run at all.
At the time, roughly half of their player base (US players) were basically waiting patiently for their money, and they had been for a couple months. The remaining half was cashing out relatively slowly and not freaking out much when they learned that cashouts were "slow because of payment processor problems" (outside of the US... where giant legitimate companies like Moneybookers handle all cashouts with absolutely no problems in almost all countries, and where other sites were having absolutely not trouble at the same time...).