So many frauds and criminals in the crypto space. I read every crypto story I can find - my interest is personal, as I am now 4.5 years into the financial settlement of my divorce from an early crypto programmer (2013). Despite his decade + involvement in investing and writing code, he has steadfastly maintained that at date of separation, he held only 1.2 bitcoin. He obfuscates and lies constantly, and has been twice sanctioned by the courts to the tune of 34.5K thus far. Divorce is difficult in the "best" circumstances, but to be forced to hire crypto experts, in addition to lawyers is so frustrating and costly. I wish someone would do a deep dive of the plight of ex-wives of crypto crooks.
Thank you for your thoughtful comments. I am very much in sympathy with your thoughts about inflation. What has occurred in Washington DC in the last 15 years since 2008 (Quantitative Easing, e.g., manufacturing “money” via debt) is the very definition of “inflation.”
It is certainly true that inflation steals from the savings of the thrifty and productive; the desperation savers feel about protecting their assets from this theft is highly understandable.
The question before us is whether cryptocurrency offers a solution to the problem of “fiat” currency. I myself think not, for one simple reason: instead of being subject to the whims of the political class as to expansion of the money supply, I would become subject to the whims of a mob of speculators untethered to anything but their baseless speculations about the future price of a cryptocurrency.
My personal distrust of cryptocurrency is of no persuasive value to anyone else. It would be better to look to someone with mathematical skills, investing sophistication, and experience who can address the various claims made for cryptocurrencies. It just so happens that such a person has written on this very subject. His name is Nassim Nicholas Taleb; he is the author of “The Black Swan” and “Fooled by Randomness.”
This paper is a bit technical, but well worth reading. Here is the technical publication:
Nevertheless, I will always be grateful to Michael Lewis for The Big Short—a book that made somewhat accessible for me the complex of financial developments, in the mortgage-backed securities & derivatives, that led to the financial meltdown of 2008.
I apologize for my negativity, but I don't think a book review about what writers may think about crypto or SBF is really of value. I think what is needed is an explanation of why crypto is or isn't a good idea.; only once this is understood will it be possible to avoid further crypto debacles. I am not a financial whiz, but it seems to me that a "currency" whose value deliberately is tied to no store of value, and whose very rationale is to avoid any system of rational valuation, rises and falls purely on speculation by people who haven't a clue about what they are speculating on. By contrast, that notoriously risk-taking group known as "commodities traders" assiduously study the objective factors which are likely to affect the supply of and demand for a given commodity. Even currency arbitrageurs do this. Those who don't get washed out pretty quickly.
“ And the face will tell the old lie: I am nothing like the last guy. ”. True through the ages and as also true there will be big losers and big winners. Most of the time the big losers are the ones least able to afford the loss
Few of us civilians have much understanding of Bitcoin or arbitrage or the Fed or other abstractions of high finance. I don't understand these things either. But I do understand the inherent pitfalls of fiat currencies which can be arbitrarily created, and so I look with interest upon other ways to store value. It's the inherent distrust of paper that led to the historical gold standard, and likewise drives interest in crypto (Bitcoin cannot be arbitrarily expanded like modern dollars are)...and crypto would be, IN THEORY, less vulnerable to theft than physical gold.
The fundamental question here: Is there a way to simply store value, not to make gains but just to avoid losses, without taking on risk? Is that too much to ask for?
With respect to SBF and FTX...here's the brief summary I heard elsewhere, and please correct me if I'm wrong: FTX and Alameda were two separate, and entirely different, funds, both managed by SBF and his associates. Alameda was a hedge fund, inherently risky, with the possibility of major gains or major losses. FTX was a convenient storehouse for crypto, supposedly subject to no disruptions beyond the fluctuations of the specific cryptocurrency. But Alameda messed up catastrophically and the fund was about to go bust. Rather than confess to the disaster, management tapped into the FTX funds in order to shore up the failing Alameda fund. This was the criminal act, the illegal appropriation of secure FTX funds to save the failing hedge fund. And the gamble failed, and Alameda went broke leaving FTX a looted shell. Is that an approximate explanation of what went down?
As someone who was both part of the team at IEX, the company featured in Flash Boys, and a former executive at ErisX, a US-based CFTC regulated crypto derivatives exchange and clearinghouse, I have first-hand knowledge of these stories in reality. Not the second-hand hearsay of friends. Was Flash Boys embellished? Absolutely. Written for accessibility and entertainment over technical accuracy? Certainly. Mostly fiction? Depends on who you ask and their motives. The list of fines and penalties levied for practices illuminated in the book in the aftermath of its publishing are evidence that it was not.
Were there reasons to have questions and concerns about FTX's operations before it collapsed? For someone sufficiently inclined there is a long-read comment letter to the CFTC from ErisX regarding FTX's margin application. For the TL;DR skip to page 9: the Appendix with Open Questions. We now have the answers to a number of those questions. There were, in fact, people raising concerns ahead of the collapse. Theirs were unpopular perspectives when the money was flowing.
I've spent almost 25 years building financial exchanges and electronic trading products. I've worked on crypto and blockchain related products and businesses for 10 years, giving me a pretty firm understanding of both traditional financial infrastructure and crypto financial infrastructure. There are a long list of frauds and manipulations and scams in crypto. They tend to be fundamentally the traditional sort that have happened for the past four centuries in traditional financial markets long before crypto was invented. That is unfortunate, but does not diminish the value and capabilities of the new technology, the business models and products that it enables that have historically not been possible. My bet is that it isn't the naysayers that will be vindicated in the long run, but crypto technologies and new modalities of finance, art, business, and gaming that they enable.
I worked on Wall Street for 37 years. Met Bernie, yes that Bernie, and knew immediately he was full of shit. Years later I’m at my daughter’s block party and one of my son in law’s friends approached me. He asked my opinion of cryptocurrency, in its infancy at the time, so I asked how much had he invested. $10k. I told him the minute you make a decent profit sell it before it goes to $0. He just looked at me with a blank stare.
Indeed, the Bitcoin narrative is built on a foundation of half-truths, untruths, Social Darwinism, cynicism, an odd comfort with criminality, and nonchalance about the security provided by the nation-state.
Maybe this isn’t the purpose of the article, but I’m still not seeing the inherent fundamental flaw or lie in crypto. I’m only seeing how some specific people corrupted and exploited it, but isn’t that true of all financial systems?
They make movies out of books that are entertaining...not books that tell the truth. Lewis’ books are entertaining to be sure. Take them at face value and enjoy. 🤷🏻♂️
SBF has deep connections with deep pockets. He might yet go free. His parents, are rapacious sociopaths, the golden products of Silicon Valley, and Stanford U, the intellectual darling of the left. This country has become too corrupt to survive.
I laugh over and over again at those fulminating about Trump being a "fraud" and "con man," when the entire Democrat party is financed by fraudsters and con men such as the Fried Bankman, Zuck and the criminal fabulists who run google. So no surprise that the Dem party is the longest running con job in US history. Now headed, appropriately, by the senile grifter and serial fraud who befouls 1600 Pennsylvania Avenue.
So many frauds and criminals in the crypto space. I read every crypto story I can find - my interest is personal, as I am now 4.5 years into the financial settlement of my divorce from an early crypto programmer (2013). Despite his decade + involvement in investing and writing code, he has steadfastly maintained that at date of separation, he held only 1.2 bitcoin. He obfuscates and lies constantly, and has been twice sanctioned by the courts to the tune of 34.5K thus far. Divorce is difficult in the "best" circumstances, but to be forced to hire crypto experts, in addition to lawyers is so frustrating and costly. I wish someone would do a deep dive of the plight of ex-wives of crypto crooks.
Thank you for your thoughtful comments. I am very much in sympathy with your thoughts about inflation. What has occurred in Washington DC in the last 15 years since 2008 (Quantitative Easing, e.g., manufacturing “money” via debt) is the very definition of “inflation.”
It is certainly true that inflation steals from the savings of the thrifty and productive; the desperation savers feel about protecting their assets from this theft is highly understandable.
The question before us is whether cryptocurrency offers a solution to the problem of “fiat” currency. I myself think not, for one simple reason: instead of being subject to the whims of the political class as to expansion of the money supply, I would become subject to the whims of a mob of speculators untethered to anything but their baseless speculations about the future price of a cryptocurrency.
My personal distrust of cryptocurrency is of no persuasive value to anyone else. It would be better to look to someone with mathematical skills, investing sophistication, and experience who can address the various claims made for cryptocurrencies. It just so happens that such a person has written on this very subject. His name is Nassim Nicholas Taleb; he is the author of “The Black Swan” and “Fooled by Randomness.”
This paper is a bit technical, but well worth reading. Here is the technical publication:
“Bitcoin, Currencies, and Fragility” by Nassim Nicholas Taleb, available online at https://arxiv.org/abs/2106.14204
Taleb’s conclusions are also reported in plain English in several business-related magazines, viewable online.
Nevertheless, I will always be grateful to Michael Lewis for The Big Short—a book that made somewhat accessible for me the complex of financial developments, in the mortgage-backed securities & derivatives, that led to the financial meltdown of 2008.
I apologize for my negativity, but I don't think a book review about what writers may think about crypto or SBF is really of value. I think what is needed is an explanation of why crypto is or isn't a good idea.; only once this is understood will it be possible to avoid further crypto debacles. I am not a financial whiz, but it seems to me that a "currency" whose value deliberately is tied to no store of value, and whose very rationale is to avoid any system of rational valuation, rises and falls purely on speculation by people who haven't a clue about what they are speculating on. By contrast, that notoriously risk-taking group known as "commodities traders" assiduously study the objective factors which are likely to affect the supply of and demand for a given commodity. Even currency arbitrageurs do this. Those who don't get washed out pretty quickly.
“ And the face will tell the old lie: I am nothing like the last guy. ”. True through the ages and as also true there will be big losers and big winners. Most of the time the big losers are the ones least able to afford the loss
Few of us civilians have much understanding of Bitcoin or arbitrage or the Fed or other abstractions of high finance. I don't understand these things either. But I do understand the inherent pitfalls of fiat currencies which can be arbitrarily created, and so I look with interest upon other ways to store value. It's the inherent distrust of paper that led to the historical gold standard, and likewise drives interest in crypto (Bitcoin cannot be arbitrarily expanded like modern dollars are)...and crypto would be, IN THEORY, less vulnerable to theft than physical gold.
The fundamental question here: Is there a way to simply store value, not to make gains but just to avoid losses, without taking on risk? Is that too much to ask for?
With respect to SBF and FTX...here's the brief summary I heard elsewhere, and please correct me if I'm wrong: FTX and Alameda were two separate, and entirely different, funds, both managed by SBF and his associates. Alameda was a hedge fund, inherently risky, with the possibility of major gains or major losses. FTX was a convenient storehouse for crypto, supposedly subject to no disruptions beyond the fluctuations of the specific cryptocurrency. But Alameda messed up catastrophically and the fund was about to go bust. Rather than confess to the disaster, management tapped into the FTX funds in order to shore up the failing Alameda fund. This was the criminal act, the illegal appropriation of secure FTX funds to save the failing hedge fund. And the gamble failed, and Alameda went broke leaving FTX a looted shell. Is that an approximate explanation of what went down?
As someone who was both part of the team at IEX, the company featured in Flash Boys, and a former executive at ErisX, a US-based CFTC regulated crypto derivatives exchange and clearinghouse, I have first-hand knowledge of these stories in reality. Not the second-hand hearsay of friends. Was Flash Boys embellished? Absolutely. Written for accessibility and entertainment over technical accuracy? Certainly. Mostly fiction? Depends on who you ask and their motives. The list of fines and penalties levied for practices illuminated in the book in the aftermath of its publishing are evidence that it was not.
Were there reasons to have questions and concerns about FTX's operations before it collapsed? For someone sufficiently inclined there is a long-read comment letter to the CFTC from ErisX regarding FTX's margin application. For the TL;DR skip to page 9: the Appendix with Open Questions. We now have the answers to a number of those questions. There were, in fact, people raising concerns ahead of the collapse. Theirs were unpopular perspectives when the money was flowing.
https://cdn.cboe.com/resources/government_relations/comment_letters/CFTC_Margin_Final.pdf
I've spent almost 25 years building financial exchanges and electronic trading products. I've worked on crypto and blockchain related products and businesses for 10 years, giving me a pretty firm understanding of both traditional financial infrastructure and crypto financial infrastructure. There are a long list of frauds and manipulations and scams in crypto. They tend to be fundamentally the traditional sort that have happened for the past four centuries in traditional financial markets long before crypto was invented. That is unfortunate, but does not diminish the value and capabilities of the new technology, the business models and products that it enables that have historically not been possible. My bet is that it isn't the naysayers that will be vindicated in the long run, but crypto technologies and new modalities of finance, art, business, and gaming that they enable.
I worked on Wall Street for 37 years. Met Bernie, yes that Bernie, and knew immediately he was full of shit. Years later I’m at my daughter’s block party and one of my son in law’s friends approached me. He asked my opinion of cryptocurrency, in its infancy at the time, so I asked how much had he invested. $10k. I told him the minute you make a decent profit sell it before it goes to $0. He just looked at me with a blank stare.
Indeed, the Bitcoin narrative is built on a foundation of half-truths, untruths, Social Darwinism, cynicism, an odd comfort with criminality, and nonchalance about the security provided by the nation-state.
--Michael W. Green, May 14 2021
SBF fraud is “okay” because he is a leftist. Pure political bullshit as usual.
Maybe this isn’t the purpose of the article, but I’m still not seeing the inherent fundamental flaw or lie in crypto. I’m only seeing how some specific people corrupted and exploited it, but isn’t that true of all financial systems?
They make movies out of books that are entertaining...not books that tell the truth. Lewis’ books are entertaining to be sure. Take them at face value and enjoy. 🤷🏻♂️
SBF has deep connections with deep pockets. He might yet go free. His parents, are rapacious sociopaths, the golden products of Silicon Valley, and Stanford U, the intellectual darling of the left. This country has become too corrupt to survive.
Michael Lewis excels at "putting lipstick on pigs" - read his work more like fiction not investigative journalism.
Looking at bankman and his girlfriend, you have to wonder who could take them seriously
In tech, not looking the part is a serious advantage.
I laugh over and over again at those fulminating about Trump being a "fraud" and "con man," when the entire Democrat party is financed by fraudsters and con men such as the Fried Bankman, Zuck and the criminal fabulists who run google. So no surprise that the Dem party is the longest running con job in US history. Now headed, appropriately, by the senile grifter and serial fraud who befouls 1600 Pennsylvania Avenue.