Gary Gensler is the sheriff of Wall Street. So why couldn't he stop the fraud revealed by the blow-up of Sam Bankman-Fried?
Great Piece, Matt! Thank you!
Readers, look at the history of Brooksley Born, who attempted to regulate the derivatives markets in the Clinton years. She was decimated by Summers, Rubin, Greenspan, and Clinton.
Only to be proven right all along.
Great Nova piece on her: "the Warning" video.pbs.org/video/1302794657/
12+ years ago, a friend, whispered in my ears about the IQD, The Iraq Dinar. How it was super undervalued, and was going to "RV" (revalue), ad I could be an overnight millionaire. 12+ years later, lulz, jack shit. I learned in that moment, to be cautious. I learned get rich quick is almost always, just like MLMs, BS.
a few years later, BTC brought to my radar. Luckily, I retained a new found skepticism. Then another friend told me about One Coin. 5 seconds research showed it was a raw scam. I told that friend, they were already emotionally attached, and blew it off. after One Coin blew up, I tried to reach out, not to boast, but be kind, but they had blocked me.
the entire crypto space is bs. ponzi. tulips. there will be CBDC, but it will NOT be BTC. it will be central Bank created and managed.
while I have friends that are losing money right now, there is a piece of me, laughing my ass off.
what a mess. Thanks Matt!
Those of us in Pennsylvania will be relieved to see Toomey go. Always pretends to be the voice of reason and sanity, but votes for big business at the expense of consumers (who also happen to be voters). He shouldn't let the door hit him on the way out.
Thanks Matt. Enlightening. If it seems to good to be true then it is likely to be a Ponzi scheme.
I wrote back in 2018 in a refereed academic paper that the accounts filed by the UK subsidiaries of Coinbase were unsatisfactory, and asked the relevant regulator, the Payment Services Regulator, to apply the law and ban them. Her response was that she wasn't allowed to regulate a payment network unless the Financial Conduct Authority asked her to. The FCA was at that time led by Andrew Bailey who was eager to become the next Governor or the Bank of England. He was not prepared to cross a small gang of two dozen right-wing conservative MPs who held that bitcoin trading was the great hope for the City of London after Brexit. So the Ponzi scheme continued, Bailey became Governor, and one of those right-wing MPs is now Prime Minister. Oh Lord, why do the wicked prosper?
You're a joy to read. Lena Kahn is a Goddess!! You're really great too.
Crypto, schmytco... IDGAF (other than wishing Max Kaiser was still on the air to watch him go mental, just for the entertainment! Wonder how Ecuador's doin'?)
My big question is can there be an appeal to the DC court decision handed down re that 'special dividend'? I'm way more interested in the outcome of this case.
In some ways we're simply lucky crypto is so obviously a fraudulent scam that it can't hold itself up under its own weight long enough to get entangled in real business and finance.
It is endlessly frustrating how legal challenges can endlessly hold up the normal course of regulators doing their job. Is there any way to combat that more effectively? Because time matters in these things.
The first reason is total greed! The public, politicians just looking and hoping to make a killing. Politicians love it when they have an inside edge. Second it the failure of greedy individuals to understand that the only thing backing their purchase was the absolute requirement for other individuals to buy. Greed beats critical thinking. History has shown that if something looks to good, it is not. Government is aways late to the game when money is on the table!
I'm so glad I learned from my grandmother. A little cynicism is like a storm coat.
Interesting about Omarova - I thought she was keen on the controlling powers of CBDCs. Perhaps that drove her anti-crypto stance. No surprise the swamp creatures were at work preventing the famous American Rule of Law to function. I apologise for blaming Gensler.
You’d also think a guy worth a billion would invest a little in his appearance - that photo alone should make would-be investors run - if one doesn’t mind his own person, how’s he going to mind your money? 😉
A quibble--there was a lot of illegal stock trading in 1920s, but it did not "foster the crisis" we know as the 1929 crash with the Great Depression following hot on its heels. The crash was a reaction to Fed policy, and as the tide ran out all the scalpers and scammers were exposed. FDR was every bit the demagogue as is Biden, but FDR's IQ was in the triple digits and knew better.
As for crypto, isn't it ironic that a primary feature of crypto was lack of Fed regulation, and now these speculators are crying that the government didn't protect them from themselves.
So let's update that old phrase to "Bad money (crypto) drives good money out".
It still is the outcome to expect even after all of this.
No surprise to me that the usual politicos are in the picture, and the sheriff's got no bullets.
This seems to be badly conflating two different things. How is crypto itself a ponzi scheme? Crypto is a concept - used for a bunch of different things by a bunch of different people in a bunch of different ways. Referring to the entire concept as a ponzi scheme seems to inherently misunderstand the concept. Their are crypto currencies that exist only for gaming. Are those ponzi schemes?
While I genuinely disagree with almost everything Matt writes, there's hints of reality in here. He rightly at least touches on that there is zero difference between what happened here and what happened with Bear Sterns in '08. Once used crypto as the foundation for its ponzi scheme, one used synthetic CDO's, and I'm not sure I understand the difference? There will always be asset classes that powerful bankers, who know there will be no recourse, (because, as you highlight, then run away from, regulators exist to protect them, not to regulate them) leverage with the singular objective of bowering against that asset to create investments off fractional reserve principles. That this particular fund happened to use crypto isn't actually relevant to the narrative. Once they "regulate" "crypto," (however you define both those terms) the next set of geniuses praised by every financial media entity that exists will create the next new asset class they can over leverage to defraud.
Until their is accountability for the crimes committed, and the crimes ignored, by the perpetrators and the regulators we'll continue to blame the asset class itself (SOOOOO lazy) and this will just keep happening over and over and over again. If you don't punish murderers, murder goes up. It's not that complicated. We don't punish financial fraud in any meaningful way, and so the juice continues to be well worth the squeeze.
Sam paid off all the right people, the only thing matters, so you can guarantee he'll go free just as everyone involved in the synthetic CDO crisis walked away completely unscathed as well... and most of them received GIANT bonuses the following year as reward for garnering bailout money. Sounds like CA claiming to run a fiscal surplus because they received billions on COVID funds for no reason other than getting to pretend to be good at politics. If our government is exactly as corrupt as our financial institutions, what do we expect? But yes, keep blaming the asset - that's the problem.
The government stops scams?
Can ya sneak a peek into your Krystal Ball (sp!) and let me know how you think this dividend is going to turn out? There's the 2nd case still on the burner, right? Are those punks going to get away w/ their briefcase wielding smash and grab?
I’ve been thinking about how Meta (Instagram, specifically) has helped crypto fraudsters operate & why they haven’t been more aggressive in shutting down hackers who steal IG accounts & then use the accounts to dupe others into “investing” in crypto. I have watched other friends’ accounts get hacked over the years & when mine was in March 2022 I was shocked that Meta had no way to stop the hackers. If they were held liable for the fraud, I bet they’d develop tools. I suspect it is easy to tell when an account suddenly starts acting fraudulently - asking for money to invest in crypto would be step 1.
I wonder how many people had their accounts hacked & then how many gave money to the fraudsters? There was also a cottage fraud industry of people offering to get your account back for an upfront fee.
This also further indicates that crypto is a scam - it brings out the scammers like turning off a light brings out cockroaches.