This is the government fishing for a law to prosecute unrelated behavior that is insufficiently regulated or completely legal. This was not a ponzi scheme as many others have commented. They kept enough cash to pay more than enough of the anticipated withdrawals, and had an operating business that could quickly earn any need for more funds should withdrawals spike. This is standard practice in banking and insurance. I hear Warren Buffet heads a big ponzi scheme too.
If FTP did not segregate finds as advertised, perhaps they committed some sort of fraud, but theft and ponzi this is not.
No, they were clearly trading while insolvent. Saying you can cover liabilities from notional future profits is illegal. As this is hacker news, recommend you dont run a startup while you do not understand this.
"Saying you can cover liabilities from notional future profits is illegal"
Almost every business does this, so I suppose they should all be prosecuted and we should send our financial system back to the Middle Ages. If I take out $1M loan and invest it in my business, my intent is to pay that liability with notional future profits. If I purchase something Net 90 and don't have the money in the bank, I'm apparently violating the law. Off to jail I go.
If FTP did not segregate finds as advertised, perhaps they committed some sort of fraud, but theft and ponzi this is not.