Bankrupt Voyager gets slapped with a cease-and-desist order from the Fed and the FDIC after it’s way too late.
By Wolf Richter for WOLF STREET.
This evening, the Federal Reserve Board and the FDIC, as banking regulators, sent out a joint press release, advising the world that they sent a joint letter to Voyager Digital today, in which they demand that Voyager “cease and desist from making false and misleading statements regarding its FDIC deposit insurance status.”
Voyager Digital is or was a crypto platform, crypto lender, and crypto broker that lured customers into depositing their crypto and fiat there, and then on July 1 suspended all withdrawals and trading, and then on July 6 filed for bankruptcy, and whoever had any money, fiat, or crypto, or whatever on the platform, is now an unsecured creditor in a bankruptcy case, and they have no idea if they will ever get any of their money, fiat, or crypto back.
Voyager is part of the now collapsing Decentralized Finance (DeFi) creature that was supposed to supersede FDIC-member banks.
The Federal Reserve and the FDIC today said that these false and misleading representations about FDIC insurance by Voyager “likely misled and were relied upon by customers who placed their funds with Voyager.”
“Voyager and certain officers and employees” made representations on its website, mobile app, and social media, “stating or suggesting that”:
- Voyager itself is FDIC-insured;
- Customers who deposited their money or crypto or whatever at Voyager would receive FDIC insurance coverage for all their funds.
- The FDIC would insure customers against the failure of Voyager itself.
The folks that believed those representations of FDIC insurance and were induced by them to send their cryptos and fiat or whatever to Voyager were the same folks who believed and were induced by Voyager’s promise that it would pay interest rates of up to 12% on its yield products. The whole DeFi segment relied on believe. You had to believe in it.
The regulators pointed out:
“Voyager maintains a deposit account for the benefit of its customers at Metropolitan Commercial Bank, which is supervised by the Board.
“Voyager is not itself insured by the FDIC, though, and so customers who invested through its cryptocurrency platform would not receive insurance coverage in the event of Voyager’s failure.”
OK, no FDIC insurance at Voyager, regardless of what Voyager might have said about that. We get that.
And now the big iron-fisted brutal regulatory crackdown, after – I mean like weeks after – everyone got cleaned out and it’s way too late for anything:
“We hereby demand that Voyager cease and desist, and take immediate corrective action to address these false and misleading statements,” the regulators said.
Step one: “Voyager shall immediately remove” any of the offending statements, representations, or references from “Voyager’s websites (including any pop-up, hyperlink, or chat-bot disclosures), Twitter and other social media accounts (including corporate and Voyager senior management’s personal accounts), mobile app, online outlets, and all forms (electronic and hard copy) of marketing, advertising, or consumer-facing materials and communications.”
And step two: “Within two (2) business days from the receipt of this letter, Voyager shall provide written confirmation to the FDIC and Board of Governors that it has fully complied with the requests set forth above.”
And that’s it.
The thing is that regulators don’t step in when the creature is booming and when folks are eagerly depositing their money or cryptos there, thinking they’ll make a risk-free 12% a year, or whatever, plus quadruple their money on their cryptos over the same period, while imagining that the federal government via the FDIC will insure their fiat and cryptos on deposit at the platform.
No, these regulators wait until after the creature collapsed, and then in due time, when the customers are already on the hook and cannot get their funds out, they’ll crack down with a cease-and-desist order, when in fact the company has already ceased to operate, and it’s a bankruptcy judge that decides what, if anything, the company is going to do next.
It would be a total hoot if regulators actually stepped in to protect people from these kinds of outfits and from their founders and executives and all the enablers that made DeFi possible. But that’s not going to happen. Folks are going to have to learn the hard way. And after they’ve learned the hard way and got cleaned out, the regulators come in with a cease-and-desist orders, and then brag about it to let everyone know how tough they are.
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Thank goodness the Fed is as adept a regulator as it is a central bank.
#sarc
“A fool and his money will soon be departed.” However, I saw many folks with decent jobs gambling in cryptos, probably driven by hype, greed and lack of options (share market also looks like a ponzi scheme today, only backed by fed and govt).
So I feel that we need schools to add lessons from both wolfstreet and Austrian Economics. It’s important because, whether we want it or not, when an insolvent government starts manipulating money it affects everyone significantly.
Also it would make the college kids realize that they shouldn’t expect entitlements as government always takes more than they give!
Departed => Parted
I loved for past couple years every time someone commented about being WORSE than fiat $dollar
they would get slammed by woke folk
I don’t recall that, but enjoy your fantasy. And you did get your “woke” in, whatever the hell it means to you or anyone else.
How about “snowoke”…..just typing it makes me terribly upset, and ruins my day…..honest!
This is what FDR called an ‘indifferent government.’ The libertarian ideology which now controls SCOTUS and the Republican Party requires an indifferent government. The private sector, where the individual is sovereign, is ‘off limits’ to the government. Good luck with that fantasy.
Tell me of a teacher that understands basic Economics much Austrian Economics.
I’ve often said that it should be mandatory for high schools to teach a very basic class on money management. Just simple things like savings accounts, checking accounts, credit cards, health insurance, rental agreements etc.
Stuff that the people on this site would think is too basic… but to a 17-18 year old about to graduate from high school, it would be pretty important knowledge.
I’d rather see a course on Union and Political Organizing.
Clearly showing kids how Unilateral Class Warfare makes many many more labor seats on the Board Of Directors and Gov’t absolutely necessary in order to survive…..not become “successful”….to SURVIVE.
Demand good wages and benefits.
Get a Comprehensive Green New Industry going yesterday…on a WAR footing.
Their might be time left, but don’t count on it…but it’s worth a try…..NOTHING to lose……and there is nowhere to hide…..NOWHERE.
No formal schooling will accomplish what you imply. There is no societal cure for a mania.
I disagree. When I was in Junior High, some students were doing a pyramid scheme. They didn’t call it that of course but that is what it was. Eventually the principle caught wind of it and squashed it. It was then that my English teacher explained to us what a pyramid scheme was. I have never forgot that.
A fool with money will soon be deflated.
You can’t have U.S. regulators stopping Capital Accumulation from naive retail customers into the hands of Wall Street/Silicon Valley con artists. It’s just not the American Way.
10-4 SS!!
EVERY person under the age of say 65, who wants to borrow ANY money for anything should have to score at least 90% on the WolfStreet.com financial literacy exam.
That MANDATORY Exam may be taken by challenge only once, but score not 90, then entire course must be taken before final exam taken again,,, etc.
Everyone wants it both ways. Crypto not governed by anyone but when things go wrong please help us because we are stupid and didn’t understand. Horse manure.
This was a get rich quick ponzi scheme. I’m like the transparent ledger system of blockchain but it doesn’t stop fraud. I read everyday my crypto was stolen please help. We don’t need to Fed to chase after another form of theft. We have plenty of it in our system, tax fraud, medicare fraud, financial fraud…..
3rd paragraph from bottom…. “Imagining” was hosed by spell check.
“And that’s it.”
Nice way to encourage the less scrupulous among us. Good grief.
Nancy P enters the chat…
If you crack down on all the companies that you are supposed to be regulating, who will there be to give you your big payday when it’s your turn to defend said companies against your former employer?
Regulatory capture is only bad for everyone else. Works out well for the regulators. Plus, no criminal liability! You just get rich because you are so (not) great at your job. :-D
I think Hanlon’s Razor is more applicable to the situation than corruption and the revolving door.
Stupidity or malice – reasons don’t matter. Results matter.
Fine folks at FDIC (and SEC) get paid quite a bit of tax money. Are you getting quality service for your money?
Would it be OK if I looked at the situation with a little more nuance than the question suggests isn’t there?
@LK
Sure can.
To begin with, this might not not even be in the purview of FDIC.
This is a case of false advertisement. Someone falsely claiming they have FDIC coverage.
If I sell bonds to clueless people claiming I am an authorized agent of Federal reserve, who is supposed to take action? Federal reserve?
Hanlon’s Razor:
Never attribute to malice that which can be adequately explained by ignorance.
So I can take great optimism that there is 1 honest Civil Servant or Politician in Washington DC.
There are many, many who have made fortunes off financializing the decaying/fading Economic Engine that once was the USA.
Hanlon’s Strop:
Never attribute to ignorance what can be adequately explained by malice.
There is no regulatory capture here. How can there be when these companies aren’t regulated yet?
Look at Boards of Directors and principal investors. Regulatory Capture is a spiderweb, spread across the whole swamp.
Also ask how it is that “currencies” are suddenly in lockstep with NASDAQ… who’s been leveraging their tech company shares into “currencies”?
I have heard from some people that defi is going to be the future and along with web3 it is going to replace fed/banks or some activities managed by fed/banks.
I don’t believe they are correct.
What do you think the future of defi is going to be? If any.
“What do you think the future of defi is going to be? If any.”
Bankruptcy. We’re already seeing it. Lawsuits. Frustrated and much poorer customers. Blown illusions. Lots of people laughing all the way to the fiat-bank with the fiat they got out in time. A scam is a scam is a scam, and when it blows up it’s over.
Web3 is going just great. Google tells me so if I search for that exact term.
The only innovation I have seen in recent years from Tech Companies is how to better to part fools from their money or control / monitor behavior on a massive scale to the benefit of certain political factions that don’t include you or me.
Definitely google it, and definitely go there. That is one of the most sarcastic sites on the web.
Most of the scams they uncover are just plain old-fashioned fraud, which use crypto and techno and the future for their cover stories. Then take the money and run.
Somebody borrowed $10M from an exchange which they used to buy crypto from the exchange which they sold back to the exchange for $13.5M. To me this looks like an unofficial version of the legitimate deal where, if you know the right people, you can borrow from the FED Primary Credit Program, use the money to buy Treasury bonds, and sell the bonds at a profit through FED Open Market Operations. But that’s backstopped by the FED. The crypto play got it’s $3.5M from investors somewhere.
There seems to have been one real crypto fraud where somebody hacked a smart contract to make the crypto fund just give them money. That’s new.
Wolf.
Don’t hold back.
Tell us how you really feel.
Not really what I “feel” but what I observe happening right in front of us. All of this is already happening.
Narrowly missed being a Charles Keating patsy. Went to the savings and loan with a check for deposit because they advertised higher interest rates than where I was at. Was met there with a beautiful, voluptuous woman, who suggested that I stead of the CD offered, I could get even more interest on a CD that lent the money to the institution itself. When I asked if the account would be FDIC covered she said, but it was still just as safe, that there was no way the saving and loan company was ever going to go broke. She acted as if my question was ridicules. But I held firm, and bought the CD I came for which was FDIC Insured. Not long after, there’s all these people losing their life savings, of whom I could have easily been one except for my paranoid Stubbornness.
Wolf,
The time to reload short positions is now. Bought aapl, msft, amzn Feb/March puts. Just needed this timestamp in newspaper of records :)
You’re not wrong, but I’m stopped out on all my shorts and will refrain from opening new ones until I see bond yields reverse course.
Cyrus, buddy, don’t leave me on this side of the boat all by myself. It’s going to flip over.
Sorry Andy, the market is telling me it wants to go higher still. I’m along for the ride, for now.
Andy, you may be a bit premature in your short positions… MSFT and AMZN are both still under the 200dma.
MSFT today at $279; 200dma at $295.
AMZN today at $136; 200dma at $146.
Both of these stocks, imo, are going to retest the 200dma, so patience is probably required here.
If I was interested in shorting these, I’d wait until they touch the 200dma, especially if the volume on both of these stonks drops off as they approach the 200dma.
Just my opinion.
And AAPL just burst above the 200dma on decent volume; imo it’s going much higher.
You’re not wrong either. It definetly wants to go higher. For my system I just cannot pass on this opportunity. Hoping for tesla to get to 900-950 to pick up some March 500 puts.
HotTub, there is no uniformity, and small caps hesitated this morning. Valid points though.
Wolf, from the very start, I called bullshit on Cryptocurrencies..
I love your website….your in my top 5 websites.
I repost you onto gab…on the ArmchairEconomist channel
Hi Wolf,
I only look at the comments sections of your articles for the replies with a thick black border.
Regards, from an occasional visitor.
I think the entire bitcoin / crypto space is a scam… but what do I know, I am old I don’t have FOMO (Fear if missing out), I have FOGS (Fear of getting screwed).
Who ever invested in these defi and lost money did not do their due diligence. Cryptos are not a currency and these defi are not banks. Silly people who thought such things.
The promised returns seemed to be too good to be true..,..,and that is exact what happened.
Every story i here when people lose money is they thought investing in cryptos would be easy money.
Many years ago journalist Steve Stridh took apart a number of sayings. One of them was: A fool and his money soon part. Stridh’s comment: That would mean there is a shortage of stupid rich people …
PT Barnum originally said it about folks at carnivals.
Let’s add in the DotCom boom and bust too.
Investing in “companies” that had no earnings? Really? From ’96 to ‘2000, it was pretty good. Cryptos have mimicked that era until the year 2021 arrived.
Well, gee, remember how the DotCom era ended? DotBombs!
I’m still uncertain about the status of fiat deposits in Voyager. The SEC seems to acknowledge that Metropolitan Commercial Bank, who Voyager banked with, was FDIC insured. Were customer fiat held in Metropolitan Commercial Bank or not? If they were, were they insured?
Obviously crypto is uninsurable. That’s just bananas that anyone would think otherwise.
Go read the rules on FDIC insurance and how complex it can be if you, as an individual, have more than $250K to park somewhere.
The short answer is no…. they are not insured.
Cyrus,
It’s not hard to explain: Customers didn’t have a relationship with Metropolitan. They had a relationship with Voyager and put their money at Voyager, and Voyager failed, and there is no FDIC insurance because Voyager isn’t covered by the FDIC.
If you give me your money, and I have an FDIC-insured account at a bank, and I fail, then your money is NOT FDIC insured. My account at the bank is FDIC insured, but the bank didn’t fail. I failed. And you become an unsecured creditor in my bankruptcy.
Just did. Definitely not insured. It looks any DeFi or crypto exchange would need SIPC instead, but obviously no one would have provided that to Voyager.
Let’s add in the DotCom boom and bust too.
Investing in “companies” that had no earnings? Really? From ’96 to ‘2000, it was pretty good. Cryptos have mimicked that era until the year 2021 arrived.
Remember how the DotCom era ended? DotBombs!
The hunt for the shiny stuff is on. The real stuff that can not be “frozen” or defaulted on by anybody.
It’s gonna be a stampede.
I feel gold will trade down to $1300. Copper and silver are already at similar level. I may even buy some at that price.
I think you will be waiting a long time for gold to trade down to US$1,300.
The dollar is strong against other currencies.
Don’t forget, gold doesn’t go down, it is the dollar that goes up in value against gold.
Good point.
Gold sure is pretty and makes great trinkets.
But you need like 20K tons of it just for a measly one trillion dollars.
Seems a bit primitive.
It’s a deliberate action on the regulators’ part. Regulated digital coins mean that they are valid alternatives to CBDC (Central Bank Digital Coin), what kind of Central Bank/Government would support something like that.
“…, what kind of Central Bank/Government would support something like that.”
One that is confident its CBDC is better than upstarts such as bitcoin?
You bet! What could possibly go wrong – gov’t has performed wonderfully to date as stewards of the ship of state finances and currency – not to mention the spectacular progress with cybersecurity!
The space is full of scammers.
But the space isn’t ‘a scam’
Just as eBay and Amazon are full of people selling utter rubbish for inflated prices, it doesn’t mean those websites are scams.
Caveat emptor.
But…but…
All those 5 star reviews?
Wait, you are comparing crypto to Amazon? Who do you return crypto to when it turns bad? Does Amazon take your money and refuse to deliver the goods? You are really scraping the bottom here trying to sell this snake oil.
AAPL revenue :
Q4 2021 : 123.945B
Q1 2022 : 97.278B
Q2 2022 : 82.959B
Net Income :
Q4 2021 : 34.630B
Q1 2022 : 25.010B
EPS:
Q4 2021 : 2.1
Q1 2022 : 1.52
Q2 2022 : 1.20 despite buyback.
Since Q4 2021 AAPl performance is down. AAPL scam for wall street whales.
Totally agree mike Engel
AAPL performance goes down consistently from the fourth through the second quarter because of sales patterns. It was still record revenue for the second quarter. That said, I’ve never owned Apple stock.
Rivian
Now, the aftermath in court can be interesting as the legal status is not that clear.
Is a cryptocurrency token money or not? If not, what do the law say about deposit?
And those tokens if not money, where they really deposited or did they happen to be on the now bankrupt company’s property?
If the cryptocurrency tokens are not money and where not deposited, can they be considered to be an item, like a car parked in a parking house when the parking company go bankrupt? In that case there is no deposit and like the car only one rightful owner. Actually, the ownership of contents in a bank’s storage box when a bank go bankrupt may be the a better analogy.
Look forward to this going to the courts and stay there for a long time.
Not unlike what happened to depositors prior to the Great Depression, when there was a run on the bank, aka “bank panics”. All was lost.
Safe deposit box contents? Wouldn’t that be equivalent to a deposit? Maybe there was some language in a bank deposit, prior to the FDIC, such that you’re placing a bet on the solvency of the bank? But maybe not, dunno.
When will the FDIC fail? Well, somehow, it got through the GFC, thanks to the Great Oz.
A paralell, is the cryptocurrency tokens placed in a storage like a lot of americans have a lot of stuff stored in rented storage? What is stored belong to the owner as long as he pay the storage rent.
My grandma small town ,depression hit. Bank president broke into safety deposit boxes cleaned them out . Never seen again BEWARE
Flea, that was about 100 years ago. Today it’s done with computers.
Plenty of laws on Ponzis though…
This could be a NFT… literally what crypto is.
…………………./´¯/)
………………..,/¯../
………………./…./
…………./´¯/’…’/´¯¯`·¸
………./’/…/…./……./¨¯\
……..(‘(…´…´…. ¯~/’…’)
………\……………..’…../
……….”…\………. _.·´
…………\…………..(
…………..\………….\…
LOL! That took some effort.
Well its a highly involved process consisting of 3 steps…. ctrl+c, tab, ctrl+v. :)
You have it all wrong.
The only reason anyone is made whole in a bank failure is because of FDIC “deposit” insurance but no one actually has bank deposits. We’ve actually made a loan to the bank.
Don’t believe me?
Go read your account agreement. Deposit implies a custodial or safekeeping arrangement. No one has that with any bank. If we did, the bank could not legally loan out these funds, no one would ever get paid any interest on their “deposit”, and bank customers would have to pay for these services or else the bank would go broke.
Dan Ives WetBush
Cnbc regular admitted it on tv . Why is he not in jail
I think it’s WedBush.
Regulated digital coins will never happen. Only the US Treasury can print a currency.
Just because some anonymous person said a blockchain file is a currency….it is not. I am amazed at how many people believe it is so.
Why do people call blockchains cryptos currency when it never could be a currency. It would be like printing my own paper monopoly money and saying it is a new currency. It is prettier and more fun than real currencies. Then maybe I could convince elon musk to accept it as payment fir a car. I am pretty sure the government would never allow that to happen.
I am still surprised tge Government did not crack down these defi companies calling blockchain a currency or coins( alt coins). Because they keep allowing it then we keep seeing people get scammed because they think cryptos have the same type of regulation as US dollars.
By doing so they have allowed so many scammers to steal money from people because people really think cryptos are a valid currency. Yes, maybe now in Venezuela but not in the US,
Well, there are a few shades of currency and issuing a “private” currency.
A few of them from recent history, casino tokens, pre-paid telephone cards, mail stamps, “cashless” cards/tokens on concerts and fairs and airline tickets.
Due to high inflation pre-paid telephone cards circulated as currency in Israel for a while. They were valued in call minutes, after purchase they did not depreciate. Better with a phone card than central bank bill in your wallet then.
Around here the post services did change to stamps marked “A” for letters. After purchase they don’t depreciate as they are always valid for sending a letter. Could be used as a currency as good as any paper note from the central bank.
Regulations or not, what is valid currencies is what people accept as currency. The government fiat currency have not necessarily been one of them at all times.
@Sams. What you say is partly true. I get what your saying but your stretching it a bit. With most of those things you listed, I would not be able to go to my local grocery store or walmart and buy food or cloths.
What if the calling card company went bankrupt, the calling card balance is worthless.
A US dollar is worth a dollar at any store in the U.S. Sure, it is deflating but it is guaranteed to be worth $1. I can put the US collar in my mattress and in 10 or 20 years, pull it out and spend it. Is the calling card someone bought 20 years ago still good? Is the company still around? Will some of these cryptos be around in 20 years?
If I put the money under my mattress or in a FDIC bank, I do not have to worry that it will not be there in 20 years. Well, I know stuff can happen but they are the best odds of any other forms of currency.
I cannot tell you how many places I have been in the past 20 year in other countries and they want U.S. dollars.
Even the word Ponzi came from Charles Ponzi buying discounted postal reply coupons in other countries and redeeming them at face value in the U.S. as a form of arbitrage.
It must be some vestige of the “free market” fantasy. If someone will pay for an NFT, or a used postage stamp, or a pair of panties from a blonde celebrity, who’s to say there needs to be a “crack down”. Let the buyer be wear.
I hope I’m not chuckling at your saying ‘pair of panties from a blonde celebrity’ and ‘Let the buyer be wear’ for all the wrong reasons.
Yes, you are.
(I didn’t want that comment to be too un-seemly.)
In real terms, what’s the difference between crypto and worthless US fiat money?
It’s just different people (sometimes) doing the stealing.
Can you explain how dollars are worthless?
They’re not “worthless” per se, but our leaders are not making a good faith effort in maintaining the worth of them.
When they are converted to items like 100-year Argentina bonds.
The collateral for the dollar is the entire US economy. So it is secured. Cryptos are unsecured and uninsureable.
The answer should be obvious. the power of the nation state. That’s what “backs” any fiat currency.
Whose backing crypto?
If I’m not mistaken the Secret Service was actually created to combat that sort of thing.
I think the government should stay out if it and let it sort out by itself… government gets involved, now my tax dollars are being used to help these suckers that wanted to get rich quick. People will do anything these days except hard work to earn a living… tired of this. Whoever got burnt in crypto deserved it. And people that are still selling it and more importantly buying it even after seeing what’s going on, deserve what’s coming. Government needs to concentrate on things like insider trading, stock buybacks etc. The system is setup just fine, its a few greedy bastards ruining it for everyone.
I understand what you are saying/feeling, but it isn’t just individuals… It could be pension funds where people have no idea that their pensions are being invested/gambled in crypto. That could be catastrophic.
“now my tax dollars are being used to help these suckers that wanted to get rich quick. People will do anything these days except hard work to earn a living”
Absolutely…. and in that case the financial company that manages the pension fund and the leaders at the pension fund that decided to work with that financial company need to fix it. They got paid to make those decisions, they need to be held accountable. Top management is like street thugs when they are robbing the coffers and pretend like they are special Olympics contenders when caught.
Maybe, just maybe, some of these grifters need to go to the gray bar hotel for a decade or so rather than pay a fine. It might change their behavior.
This once was a country ruled by law. Now, it seems, the laws only apply to the “little people”. Hat tip to Leona Helmsley (who actually did do time).
Only reason she Leona went to jail is because she opened her mouth,and stated rich don’t pay taxes BIGGEST NONO
There called whales for a reason
Quit clowning around Wolf… this is a serious site for serious people.
A private company would have immediately filed infringement, false advertising, and other legal terms that i have no idea what they are yet this FDIC did nothing as u say. The crypto scam was front and center worldwide though I personally had no idea crypto banks were offering interest on deposits. I understand crypto concept therefore I am staying clear but crypto has not gone away and has a valuation similar to other assets that flashes across computer screens and other media outlets. Amazing to me the bitcoin is alive.
Reminds me of a game I used to play when I was young. Watch some clouds on a nice spring day. Find a really small wispy cloud and “force it to disappear”. Presto! My magnetic superpower destroyed the cloud!
But in reality I’m glad the “regulators” are doing it this way.
Experience is the ONLY teacher, and an unregulated crash produces a lot of sensible and frugal people.
A cushioned or bailouted crash teaches the wrong lesson.
Yes, the best way to learn to look after your money is to lose some. You’re unlikely to learn if some body always steps to get it back for you.
The likes of bitcoin teaches that lesson well – as there is no one who can get it back for you. It’s true digital cash and, like physical cash of old, you learn not to let go of both ends at the same time. That’s not true of fiat, as you can run to your bank and demand they sort things out (at least that’s how it is here in the UK).
Oh well now, that recurring lesson still hasn’t been learned… since at least 1720.
These DEFI promoters AND their investors/speculators willfully built outside of regulations. That was half the marketing point, the draw of it. Well, that involves legal risk, and is nothing new. Much of their work was in fact unregulated securities. That means there is a lot of possible litigation, criminal charges and civil cases, even from laws on the books. Investors have to be their own enforcers for much of that. Nothing new.
But the laws themselves have to develop alongside these things, they do not spring fully into existence the minute there is a new can-opener, drone, etc. And they are being developed, in reasonable time. Meanwhile investors brimming with greed and hope and whatever, went “offshore” by just sending money on the Internet.
Financially and legally ignorant people here leap to blame the cops outright and entirely for the behavior of the speeders, because they always blame the cops. It’s a cheap shot to make, alongside the DEFI cheerleaders’ conspiracy theories about the establishment they mythologize so much about (and sell to dumber money on the basis of). These commenters never take the time to learn about either side, before spouting off. That’s a feature of our modern Internet, though not as bad here as elsewhere.
There is meanwhile a rough justice that brave and foolish people rushed in, and lost money. That’s risk and innovation. Sometimes it fails. It is not supposed to simply always work perfectly (and regulation does not in the real world, either, and never has). But every ignorant person has a voice and an amplifier, which I guess is good.
Ahem… our fearless leader was blaming the regulators for laxity. How about the perpetrators?
I know a good place for caramelized crow.
Well said. Also,, almost all defi did not want regulation otherwise they could not make the promises they made. It is like Tether not having to disclose if they really have 1 USD for each Tether they issue. Because they don’t even though they say they do or at least make that assumption.
Now when people say, hey it was not too good to be true and I lost money (Saylor), they are saying we want regulation.
Once they start regulating this space, the returns will also be like CDs at a bank. 1or 2%. Where do you think people will put their money. In a defi earning 1% or a FDIC bank earning 1 %
If you really dig into who they earn their 8%, it is such a scam.
Despite all of the apocalyptic occurrences at Celsius, Voyager, TerraLuna, Three Arrows, etc., Bitcoin has still risen from $18,000 to $24,000 these past few weeks.
Bitcoin was less than $4,000 as recently as 2019.
I look at this price resiliency as a skeptical and dismayed no-coiner, wondering how many more years this will go on.
Right now, Bitcoin, bonds, and tech stocks are all the same. They’re going up and down in lockstep based on whether or not the “market” believes the Fed is serious about getting inflation under control.
Right now, it doesn’t believe that.
Can you explain why Bitcoin has any value?
Imagine a digital token that (1) only you own.
(2) That you can send[1] to someone else without going through a trusted third party.
(3) Once sent you no longer have the token only the person you sent it to does.
(4) They can send it on to someone else in the same manner.
Do you see any value in such a digital token? If not then you’ll likely not get Bitcoin (in either sense of the word).
[1] Via internet or phone or smoke signals if you like. Or even via semiphore using tulips for flags.
Block Chain is cool. But somebody needs to explain why I need to pay 65k…. I mean 23k for this digital token.
For grin and giggles, a year ago I downloaded some code and watched a YouTube video and in 3 days created my own digital token that I can do exactly as you mentioned above.
It is not that hard.
Bitcoin was useful to avoid capital controls.
If you are a Chjinese citizen and have Chinese renminbi and wanted to get money out of China, you would convert that money into Bitcoin.
Then travel to the UK, USA etc and open a bank account and then convert your Bitcoin into GB pounds, US dollars, Swiss Francs etc.
Okay, I get that. What caused it’s value to fluctuate so much?
The parable of the monkeys.
Once upon a time, a man appeared at a village and announced that he would buy monkeys for $10 each.
The villagers, seeing that there were monkeys around, went out to the forest and started catching them.
The man bought monkeys at $10 and as supply started to diminish the villagers stopped catching monkeys, so he announced that he would now buy monkeys at $20. The villagers started catching monkeys again.
Soon the supply of monkeys diminished even further and people started going back to their farms. The offer increased to $25 each and monkeys became so scarce that it was an effort to even see a monkey, let alone catch it.
The man now announced that he would pay $50 for monkeys. However, since he had to go to the city on some business, his assistant would now buy monkeys for him.
After the man left, the assistant told the villagers, “Look at all these monkeys in the cage that the man has collected. I will sell them to you for $35 and when he returns from the city you can sell them to him for $50 each.”
The villagers rounded up with all their savings and bought all the monkeys.
They never saw the man or his assistant again.
Now you understand how the cryptocurrency market works.
Bravo to the lesson that monkey parable brings.
A more sophisticated villager would have asked to borrow some monkeys and pay the assistant $40 ($5 for interest) after making the $50 sale to the boss later.
Just as one might offer to pay back $129.95 from future earnings to the infomercial/seminar promoter offering a new way to make thousands of dollars per day, there are usually no takers for such proposals.
Usually this ends with villagers breeding Monkeys in secret.
A pox on said monkeys!
Or breeding them in public with Stars upon Thars.
That is the parable of Ethereum and DogeCoin.
There’s a place right across town, whenever you’re ready…
:) Bitcoin = monkey, or bunkey.
A wonderful analogy of a crypto rug pull.
Expectations about competence continue to astound. Enabling the PTB to enrich themselves is always rewarded. E.g., see Redfield and Birx’s earlier HIV vaccine fraud.
“Would be a Hoot If Regulators Cracked Down on Companies BEFORE They Freeze Customer Deposits & Cryptos and File for Bankruptcy”
Sorry, but that would reduce civilian sector job prospects after working for the government “regulator.”
They couldn’t stop time sharing condos either.
Caveat emptor. Latin for, “Buyer beware.”
There is no metal in bitcoins, only a drain on the electric power supply.
Unlike everything else digital?
“big iron-fisted brutal regulatory crackdown, after – I mean like weeks after – everyone got cleaned out ”
Wolf – the corrupt regulators just made a mistake. Usually they act earlier when there are still funds to steal via a “penalty”.
Now they will have a mess doing civil forfeiture on the principles houses, cars, and jewelry and fighting with the IRS over the spoils.
Doesn’t matter to the “investors”. They get nothing either way. But they do get to pay the salaries of the regulators.
Heck yeah!! Just look at the current Tmobile case where an inept company lost millions of subscribers personal information. Tmobile will pay $350 million, most of which will be siphoed off by the ambulance chasers. Government will get a pretty good sizable cut I am sure, which they will piss away on entitlements, my bloody SSN was leaked and I will get 10 bucks. So I say, no more regulation, if you dont learn you perish. People need to take matters in their own hands, crappy companies and their leech management need to be purged for good. I will never use Tmobile again. If Tmobile was the last provider left, I will switch to carrier pigeons.
SCO 2022 in Tashkent gang against US :
members : China, India, Kazakhstan, Kyrgyzstan, Kazakhstan, Pakistan.
Russia, Tajikistan and Uzbekistan.
partners : Armenia, Azerbaijan, Cambodia, Nepal, Sri Lanka, Turkey.
Observers : Afghanistan, Belarus, Iran, Mongolia.
Digital beanie baby boom and bust.
Not going to be enough real money to buy the energy to keep mining the Blockchains.
LoL
Government regulators have always been underfunded and understaffed. The people who speculated in bitcoin were probably trying to avoid government scrutiny.
What do you think of these virtual “real estate , art and so forth” companies. You know META? I hear a lot of these companies lately. Also Terra Zero? It’s seems crazy and unsubstantiated type of hype…just my opinion…
This is an old scam. I knew Lou Pearlman and many people who invested in his ponzi. I never could understand how he got 8% (yes, that was only 8%, not the 20% plus some of these crypto guys promise) guaranteed returns on his customers investment accounts. I never got a straight answer for any question I posed, so I never invested.
Anyway, he would show them a certificate and paperwork from the FDIC declaring his accounts were insured, all phony naturally, but I am sure it sucked in many who were on the fence.
I only found out about the FDIC scam extra inducement after the ponzi collapsed. I never saw the papers myself.
FDIC, SEC, CFTC are all so called regulators. Why does a guy like Gary Gensler get to have run 2 of them ? He’s at SEC now. Where’s Blythe Masters now and what is she involved in?
Safety Deposit boxes 🤪💸😬🤡👍🤪😂😂
Blythe Masters – Wikipedia
Blythe Masters (born 22 March 1969) is a British former executive at JPMorgan Chase, where she was widely credited as the creator of the credit default swap as a financial instrument. She is founding partner of FinTech private equity firm Motive Partners, an advisory board member of the US Chamber of Digital Commerce, and a board member of A.P. Møller – Maersk, GCM Grosvenor, and Credit Suisse Group.
https://en.wikipedia.org/wiki/Blythe_Masters
I think one reason why the U.S. markets are doing well compared to other countries like China (which dropped out of bed this morning), is all the oil and nat gas. We are starting to export a lot and that is bringing a lot of money into the U.S.
I expect the U.S. stock market to do relatively better than countries that need to import oil and build things.
According to CNBC, China Shanghai composite declined .89% today. It’s not a big move.
China has a bigger debt mania (proportionately) versus the US, but the primary difference is the destination. In China, its mostly real estate, not the stock market.
Gotcha. I was tracking the FXI which is similar to the DOW. It is down 3.63%. That is a pretty decent move. That would be like the DOW down over 1000 points.
“Fools and their money are easily parted.”
It’s like some sort of natural law that no Federal Agency, or anyone else, can abrogate. It’s been the case for eons and will continue until humans are gone from the universe.
There is no free lunch (unless you’re a Primary Dealer, etc., and can front-run the Fed), and those foolish enough to believe such nonsense as “risk-free” Crypto at 12% would most likely give their hard-earned dough to a TV Preacher or some other barker anyway. C’est la vie or So ist das Leben!
Thanks, Wolf, as always.
Wolf said: “It would be a total hoot if regulators actually stepped in to protect people from these kinds of outfits and from their founders and executives and all the enablers that made DeFi possible.”
—————————————–
It would be a total hoot if all fraudsters were put in jail for the fraud they committed.
But doubtful that will ever happen because a lot of regulators, FED/bankers, lobbyists, politicians and well-connected would be in jail.
Please no. Crypto is an attempt to get away from these regulators ‘protecting’ us. Let us take our risks, let dumb projects going under with dumb money be the tiny price paid for rapid crypto development.
The problem is the people in crypto who defraud investors. You call it “dumb money” but how can the individual investor distinguish an honest investment from a fraud? At its most basic level, regulators are meant to ensure investors get honest information on which to make investment decisions. Sure regulators fail all the time, but it’s a necessary function. Do think fraud should be tolerated in the crypto industry? If not, how do you propose to police fraud without regulations?
The invisible hand will take care of things.
Is that asking if fraud should be tolerated in an “industry” created as a fraud? or for fraudulent purposes, or for purposes of separating adopters from their cash? Of course to separate those adopters from their cash, you must have a story.
What honor is there among thieves and fellow pumpers hoping for a bigger fool?
Is it morally acceptable to participate in a fool’s game as long as you think you are in early and see an exit?
I was giving Cytotoxic the benefit of the doubt that there are some honest people in crypto trying to accomplish something of tangible value. Assuming that’s the case fraud is still an obvious problem and needs to be policed in some manner. I’m open to an argument on how that can be done. In my experience though, the people most opposed to financial regulations are the ones doing the fleecing.
Most of your questions are better answered by Cytotoxic, since I don’t believe “rapid crypto development” serves any useful purpose.
If half of the funds seized for financial malfeasance was deposited into a Tontine retirement annuity account we would all be much better off. In order to qualify for the payments all you have to do is pay your taxes and fill out a simple form declaring that you made a specific due diligence error, name it precisely with a date, state what you learned, and then agree to have that error published. This is a teaching tool as well as a financial buffer. The untaxed annuity only is payable while you are alive and after you reach age 75. (It must remain in an account walled off from Congress and if borrowed by the government the above prime interest is payable back to the fund.)
Offer a bounty to supplement SS. If you catch a thief, you can earn $11,950, a suitable bounty limit.
In other news a preacher was robbed of million+ dollars of jewelry. Now he has the right idea, fleece the unsuspecting flock and walk around with the bling right in front of them. Pretty sure some of the flock has a hard time putting food on the table but willingly put money in the collection bucket. Talk about a ponzi scheme!! Google it, it’s been a headline in the last week.
Do you happen to know a rich flock that needs a spiritual leader?
Wolf – I am hearing that the democrats are passing a bill that spends a ton of money and is labeled as an inflation fighting bill. Would love to see you shred those jerks into oblivion!
So the QT was only a facade so that the politicians could now go on a reckless spending spree again. Actually, the Republicans joined them on that reckless spending on the technology bill that will hand over more taxpayer money to large companies. What a crock.
Re: crypto… I learned my (costly) lesson 20 years ago thanks to WorldCom, Global Crossing, and especially Enron. Slow and steady wins the race.
Yup, I got bit. But I invested a bit (enough to hurt, not enough to impact my future retirement) in many of the largest 40-50 tokens and am willing to accept a 70-80% drop and hold it long term.
Well, I’ve been down a max 66% and recently down 55%. It’s an experiment that I don’t think I’ll repeat unless there’s a mainstream use for these tokens. I’ll continue to hold to see whether this sector plays out like in previous events. Maybe there will be a diamond that arises from this manure heap? Probably not. :-)