REMEMBER FIRST FINANCIAL INSIGHTS WARNED EVERYONE ABOUT THESE HOAXES FIVE YEARS AGO
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The Crypto Dominoes Are Still Falling
The bankruptcy of Genesis shows the need for regulators to have teeth.
After the highs of 2021, cryptocurrency crashed to the ground in 2022. One by one, multiple large crypto firms toppled, dragging many minor firms down along with them in a small-scale replay of the 2008 financial crisis. It’s a collapse that has taken out fortunes, or supposed fortunes, worldwide—and it isn’t over yet.
BUFFET'S WISDOM WAS RIGHT
TerraUSD, a “stablecoin” token used in place of real dollars, which had reached a supposed value of $18 billion, collapsed in May. Its failure took out crypto hedge fund Three Arrows Capital (3AC) in June. Lending platforms Celsius and Voyager followed in July. FTX, one of the largest crypto exchanges, fell in November. Its founder and two top executives have been charged with fraud.
All of these firms relied on a modern-day form of check kiting to make themselves appear solvent when they were not. Only instead of writing checks between different accounts to temporarily inflate them with non-existent funds, they were making loans to each other and counting each loan as an asset. FTX was both borrowing from and lending money to crypto lender BlockFi, which also went bust. In his bankruptcy documents detailing how Celsius became insolvent, CEO Alex Mashinsky doesn’t clearly spell out who the loans are to or from.
NOBEL PRIZE ECONOMIST CONFIRMS BITCOIN WORTHLESS
The cryptocurrency lobby attempts to confuse users and regulators with claims that “technology” makes everything different. This is false. Crypto tokens have all been new forms of existing financial instruments used in the service of old shenanigans—whether it’s money laundering, overleveraged trading, asset inflation with nonfungible tokens (NFTs), or pump-and-dumps, using decentralized finance tokens as penny stocks.
