As Matt Levine mentioned in his article today, no responsible bank would allow you to borrow money and give them shares of their own stock as collateral. In some cases it's illegal to do so, but even when it's legal, banks would not want the risk.

FTX, on the other hand, pretty much did just that.

Does that make FTX a scam? No. But when they told their customers they don't gamble with customer deposits, that was at least incomplete and misleading, and may have crossed the line into being intentionally deceptive.

Of course, even if people knew about this, they probably would have used FTX anyway because people do crazy things in a bubble market.