"Reject illiquid tokens as loan collateral Shin explained the structural fraud embedded in using self-issued tokens as collateral. She noted that "using illiquid tokens you created as collateral for loans is fundamentally deceptive" because "the paper value can never be recovered on the open market, making the collateral essentially worthless." The lesson extends beyond crypto: any collateral whose market liquidity depends on the borrower's continued solvency is circular and worthless in a crisis. Source: Laura Shin, Unchained, Sam Bankman-Fried: The Full Interview Before FTX Collapse"