Moon of Alabama Brecht quote
November 12, 2022

Prosecution Futures - The Downfall Of FTX And Everything Crypto

I have been in awe this week about the stupidity of the people who had invested in the crypto-'exchange' FTX. I am likewise in awe that anyone would have 'parked' their 'money' in an account of that unregulated entity. How stupid can one be?

Crypto 'currencies' have no real purpose. They ain't money. Their value solely depends on the trust people have in them. When the trust vanishes their values go to zero. That is what happened to FTX and the FTT 'currency' the company had issued:

The 30-year-old had set up Bahamas-based FTX in 2019 and led it to become one of the largest exchanges, accumulating a near $17 billion fortune.

News of the liquidity crunch at FTX – valued in January at $32 billion with investors including SoftBank and BlackRock – sent reverberations through the crypto world.

The price of major coins plummeted, with bitcoin slumping to its lowest in almost two years, heaping further pain on a sector whose value has fallen about two-thirds this year as central banks tightened credit.

When Softbank's Vision Fund invests into something it is a sure sign that its value will soon sink.

There was a lot of criminality involved here. FTX lent its customers' 'money' to Bankman-Fried’s trading firm, Alameda Research, which had invested it in a number of other loss making crypto schemes. The likewise shady crypto 'exchange' Binance had owned a big share of FTX's 'currency'. Last Sunday it announced that had sold all of it. That was the squeeze that toppled its main competitor. The whole scheme came down. The trust was gone. People pulled their 'money' from the FTX 'exchange' accounts. The company no longer had access to enough money to pay out what it owned. Yesterday it went into bankruptcy.

Some of the money that FTX allegedly gave to Alameda Research had vanished on its way:

At least $1 billion of customer funds have vanished from collapsed crypto exchange FTX, according to two people familiar with the matter.

The exchange's founder Sam Bankman-Fried secretly transferred $10 billion of customer funds from FTX to Bankman-Fried's trading company Alameda Research, the people told Reuters.

A large portion of that total has since disappeared, they said. One source put the missing amount at about $1.7 billion. The other said the gap was between $1 billion and $2 billion.

The whole thing was, like about anything crypto, one huge fraud:

The documents showed that between $1 billion and $2 billion of these funds were not accounted for among Alameda's assets, the sources said. The spreadsheets did not indicate where this money was moved, and the sources said they don't know what became of it.

In a subsequent examination, FTX legal and finance teams also learned that Bankman-Fried implemented what the two people described as a "backdoor" in FTX's book-keeping system, which was built using bespoke software.

They said the "backdoor" allowed Bankman-Fried to execute commands that could alter the company's financial records without alerting other people, including external auditors. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.

The guy is now on the run.

There is a different aspect of the story that deserves a lot more scrutiny:

Mr. Whale 🐳 whalechart.org @WhaleChart - 13:53 UTC · Nov 11, 2022

🔸 April 25, 2019: Biden announces his presidential campaign.
🔸 13 days later, Sam Bankman-Fried, son of Barbara Fried (co-founder of political fundraising organizations), launches #FTX crypto exchange.
🔸 The exchange is an overnight success. SBF becomes biggest donor to Biden.

It really makes you think right?
FTX imploded on election day by the way :-(

Sam Bankman-Fried's mother is a "co-founder of the political fundraising organization Mind the Gap, which advocates for progressive political candidates and funds get-out-the-vote groups."

Sam Bankman-Fried put a lot of the money he had 'owned' into Democratic politics:

The 30-year-old Bankman-Fried has been a major force in Democratic politics, ranking as the party’s second-biggest individual donor in the 2021–2022 election cycle, according to Open Secrets, with donations totaling $39.8 million. That ranks only behind George Soros (about $128 million) but ahead of many other big names, including Michael Bloomberg ($28.3 million). What’s more, he had promised to spend far more on Democrats moving forward, predicting in May that he’d fund “north of $100 million” and had a “soft ceiling” of $1 billion for the 2024 elections.
...
Bankman-Fried was a major donor to President Joe Biden in the 2020 election and is the primary donor to the Protect Our Future PAC, the political action committee which endorsed Democratic candidates such as Peter Welch, who this week won his bid to become Vermont’s next senator, and Robert J. Menendez of New Jersey, who secured a House seat.

That was either protection money or a well played scheme by the Democrats to finance their elections. Then again- it may have been both.

The White House was directly involved:

A cryptocurrency billionaire facing federal investigation for mishandling customer funds had high-level White House meetings just months ago, as Congress was debating how to regulate his company—and just weeks before he pledged to donate up to $1 billion to Democrats ahead of the midterm campaign.

Sam Bankman-Fried, the owner of cryptocurrency exchange FTX, met on April 22 and May 12 with top Biden adviser Steve Ricchetti, according to White House visitor logs reviewed by the Washington Free Beacon. At the time, FTX was lobbying Congress and federal agencies to shape regulation of the crypto industry.
...
[Bankman-Fried] gave more than $5 million to Biden’s 2020 presidential campaign, and has given millions more this cycle to the Democratic Party. In early May, between his first two visits to the White House, Bankman-Fried doled out $865,000 to the DNC, according to Federal Election Commission records. Earlier, in March, he cut three checks totaling $66,500 to the Democratic Senate Campaign Committee, and later in June he sent $250,000 to the Democratic Congressional Campaign Committee.

He said in June, weeks after his most recent White House meeting, that he might give up to $1 billion to support Democrats in the midterms, though he backed away from that pledge in September.

Amid the political spending, Bankman-Fried has led an aggressive lobbying campaign in Washington related to cryptocurrency regulation. He met with Ricchetti, the White House counselor, on April 22 and May 12, according to visitor logs. He met on May 13 with Charlotte Butash, a policy adviser to the White House deputy chief of staff.

Bankman-Fried was accompanied in some of the meetings by Mark Wetjen, the head of policy and regulatory strategy at FTX, who served as commissioner on the Commodity Futures Trading Commission under former president Barack Obama. Eliora Katz, FTX’s chief lobbyist, also attended the meetings but did not mention lobbying the White House in disclosures filed with Congress.

Bankman-Fried’s meetings came weeks after White House officials met with his brother, who directs the billionaire’s political operations. Gabe Bankman-Fried visited the White House on March 7 along with Jenna Narayanan, a Democratic strategist who once worked for Tom Steyer and the Democracy Alliance, a network of wealthy liberal donors who fund left-wing causes. Gabe also attended the May 13 meeting with his brother and FTX’s lobbyists.
...
Bankman-Fried has lobbied for a bill proposed by Senate Agriculture Committee chair Debbie Stabenow (D., Mich.) that would put the Commodity Futures Trading Commission in charge of crypto regulation. Bankman-Fried donated $5,800 to Stabenow’s campaign in February, and $20,800 to her joint fundraising committee in January. Bankman-Fried contributed to other Democratic members of the committee amid his lobbying campaign. He sent a combined $31,000 to campaigns and joint fundraising committees tied to Sens. Cory Booker (D., N.J.), Tina Smith (D., Minn.), Dick Durbin (D., Ill.), and Kirsten Gillibrand (D., N.Y.) from October 2021 through June. Bankman-Fried also contributed to top Republicans on the Senate Agriculture Committee. The crypto billionaire gave $5,800 each to ranking member John Boozman (R., Ark.) and Sen. John Hoeven (R., N.D.) in January and June, respectively.

Its one big swamp. Its purpose here was to steal money from those little guys who are prone to fall for such schemes.

This whole crypto stuff was always bad.

I had read the founding bitcoin paper soon after it came out. It was written by an anonymous under the name of one Satoshi Nakamoto. That was the first red light. I suspected and still suspect that some 'western' secret services had come up with the scheme to have a way to secretly move money around.

As I had previously done a bit of banking IT I knew of the difficulties of mass transactions. I found that the blockchain, a public ledger mechanism that preserves a public record of every bitcoin transaction, was way too complicate for a substantial amount of global transactions. It would never reach the speed real money transaction systems, like those for the big credit card issuers, inherently have. I also thought it would be dangerous to have every private transaction recorded in a public ledger everyone could see and analyze. That would make true anonymity of such payments nearly impossible.

The amount of coins in the system was also inherently limited which brought with it all the problems of gold back currencies. There are reasons why we no longer use those.

The whole system of exchanges and other companies build around it was unregulated, insecure and prone to fraud.

I have therefore always refrained from using bitcoins or other such currencies and have even rejected them when they were offered to me as donations. Finally the hype over last years convinced me that this crypto stuff was just one big Ponzi scheme in which small people put money into unregulated criminal entities which were guaranteed to steal it.

I liked how Yves Smith of Naked Capitalism characterized these 'currencies' and their surrounding as 'prosecution futures'.

It turned out that it is exactly what they are.

Posted by b on November 12, 2022 at 17:26 UTC | Permalink

Comments
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Don't people realise that crypto is nothing more than a pyramid scheme? How gullible can people be? Well, I suppose as gullible as people who put their dosh into pyramid schemes!

Posted by: Barofsky | Nov 12 2022 17:32 utc | 1

fascinating b... thanks... i didn't know the quoted details from Mr. Whale 🐳 whalechart.org @WhaleChart - 13:53 UTC · Nov 11, 2022 that you've provided... the financial world is one big ponzi scheme, but this cryptocurrency realm seems especially prone to manipulation by the wrong people.. prosecution futures, lol...

Posted by: james | Nov 12 2022 17:35 utc | 2

As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron.

We are there. Prosecution futures? There will be no prosecution. These charlatans stood up in the public square and announced they would steal money from suckers. The suckkers applauded.

Posted by: oldhippie | Nov 12 2022 17:38 utc | 3

Matt Levine is required reading for SBF and FTX background.

https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthew-s-levine

How synchronous that SBF's name is literally Bankman-Fried.

Posted by: too scents | Nov 12 2022 17:39 utc | 4

see what happens when you read the Talmud, people? do you see? who else could come up w/this stuff but the Jewish bankers? otherwise, how could i be so easily jewed out of my money?

Job 28 should have added crypto-mining to the list of sparkly things like gold and silver that people will destroy the planet over. how else do they wind up in chains, in a cave, chasing shadows? they think silver is worth something.

Posted by: rjb1.5 | Nov 12 2022 17:41 utc | 5

Noice aptonym:
“Bankman”- “Fried”.
= Your money is toast.

Posted by: Melaleuca | Nov 12 2022 17:41 utc | 6

From Tom Luongo on TG: Kim Dotcom saying that Brandon sent US billions to Ukraine, the dollars got converted to crypto via FTX, then the CEO of FTX donated billions to the Democrat elections back in the US. Two days after the elections FTX melts down and files for bankruptcy and CEO quits. CEO was the 2nd largest donor behind only Soros.

Link from above, I've no idea who Al Turner is:
https://halturnerradioshow.com/index.php/en/news-page/world/breaking-news-ukraine-military-aid-from-usa-was-invested-in-crypto-ftx-by-ukraine

https://www.youtube.com/watch?v=Ow-MN7qJnIY&feature=emb_logo

WSJ
https://www.wsj.com/livecoverage/russia-ukraine-latest-news/card/crypto-exchange-ftx-gives-cash-to-ukrainians-on-its-platform-0kpNhU6rX8Lusu6PgXxu

Posted by: LightYearsFromHome | Nov 12 2022 17:41 utc | 7

Privately issued cryptos are a complete scam. Those who created it can manipulate it at will and award themselves billions while you shmos have to stump up normal fiat cash to buy it. Plus, you can't exchange the shitcoins directly for real world goods and services.

Posted by: Jon | Nov 12 2022 17:42 utc | 8

The companion quote:

No one in this world, so far as I know—and I have researched the records for years, and employed agents to help me—has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.

Posted by: oldhippie | Nov 12 2022 17:43 utc | 9

“The hack is isolated & quarantined to our BTC, ETH and USDC hot wallets,” the company said.

"According to Peckshield, October was a particularly difficult month for crypto platforms, with 53 protocols dealing with about $760.2 million in losses.

An estimated $3 billion has been siphoned from cryptocurrency firms in 2022 so far, and losses have ‘doubled’ compared to last year."

-- https://therecord.media/28-million-stolen-from-cryptocurrency-platform-deribit/

"~44 exploits (53 protocols affected) grabbed ~$760.2M in Oct. 2022, and ~$100M already returned the exploited protocols (Total loss: $657.2M)
As of October 2022, the stolen funds (~$3B) in 2022 “doubled” last year’s loss"

-- https://twitter.com/PeckShieldAlert/status/1587112410082512897?s=20&t=g9Y0DfSK-_2Vm0Adf_v5Jw

All this raises the question of whether there are some severe flaws in many blockchain implementations...

Posted by: JHW | Nov 12 2022 17:43 utc | 10

LightYearsFromHome | Nov 12 2022 17:41 utc | 7
WSJ:
Shoulda known, they’d find RussiaRussiaRussia to blame somehow.

Posted by: Melaleuca | Nov 12 2022 17:48 utc | 11

Few other interesting things gathered from the inter webs:

SEC Chair Gary Gensler’s old boss at MIT was Glenn Ellison. His daughter Caroline Ellison is the CEO of FTX sister-company Alameda Research (and Sam Bankman-Fried’s lover apparently).

The GC of FTX used to be lead counsel to Gary Gensler when he was CFTC Chair.

Sam Bankman-Fried’s mother was Hilary Clinton’s lawyer.

Gabe Bankman-Fried, brother to Sam (also a former Jane Street trader), is founder of “Guarding Against Pandemics”. He was a Legislative Correspondent for the US House of Representatives and an advisor to large political donors in the Democrat party.

The family Aunt Linda Fried is a WEF member on the Global Agenda Council on Aging.

The father, Joseph Bankman, is a Stanford professor who has lobbied on behalf of Hedge Fund managers before Congress before (film records exist).

FTX Head of Ventures & Commercial at FTX Ventures, Amy Wu, started with the Clinton Foundation years ago.

Nishad Singh FTX Director of Engineering has spent over 8 million for Dem candidates.

Obama's Commodity Futures Trading Commissioner, Mark Wetjen, was the head of FTX Policy & Regulation.

Chief regulatory officer of FTX is Dan Friedberg was previously a lawyer at Ultimate bet (a site where they basically cheated against players).

Stuart Hoegner General Counselor at Bitfinex/Tether was previously Director of Compliance at Excapsa which was responsible for the Ultimate bet poker software.

Posted by: Jax | Nov 12 2022 17:48 utc | 12

Sad trombones!

John J. Ray III

Posted by: too scents | Nov 12 2022 17:49 utc | 13

@Jax | Nov 12 2022 17:48 utc | 12

---

Is blood thicker than water?

Posted by: too scents | Nov 12 2022 17:55 utc | 14

In the posting above b wrote
"
Crypto 'currencies' have no real purpose. They ain't money. Their value solely depends on the trust people have in them. When the trust vanishes their values go to zero.
"

That could just as well read

Fiat (US Dollar) currencies' have no real purpose. They ain't money. Their value solely depends on the trust people have in them. When the trust vanishes their values go to zero.


Now there are some prosecution futures we are about to experience! Crypto is just the canary in the coal mine.

Posted by: psychohistorian | Nov 12 2022 17:57 utc | 15

But b it's nothing new and not limited to crypto.

Wall Street and Sillicone Valley have been ripping off the little guy since, well, forevah.

My sympathies to all the people who had money in FTX and got CORZINE'd.
I wonder if SBF will walk away as easily.

Posted by: Battenmountain | Nov 12 2022 17:57 utc | 16

Battenmountain | Nov 12 2022 17:57 utc | 16
Looking at the family tree and Clinton connections.
Sam will either fly away
Or
Be Clintoned.
He won’t be successfully prosecuted.

Bernie “Madoff” tried to “makeoff” with the wrong people’s money. Sam hasn’t made that mistake.

Posted by: Melaleuca | Nov 12 2022 18:05 utc | 17

My preferred term for "crypto-currencies" is still "Dunning-Krugerrands". The perfect investment for people who [think they are] smarter than everyone else. I generally ignore them, except for minor gloating when they collapse.

After reading this, I'm curious about who it was marketed to. If most of the "marks" were Trumpist dingbats, I'm OK with a Democratic operative harvesting some of their spare change, because that's exactly what Trump has been doing all along. Well, maybe this trick is "less moral"; at least Trump is selling entertainment - the feel-good experience of being told that he loves you, and the adrenaline rush of outrage at the people he blames for the stories he tells.

That is, after all, the basic business model that made Rupert Murdoch a Billionaire.

Posted by: elkern | Nov 12 2022 18:05 utc | 18

It's not impossible that Bankman was just the front for a much larger Wall Street bankster scam that either backed him from the beginning or muscled in on his turf when they saw the potential. Given the size $50 f'ing billion and the Ukraine involvement, there is way more here than meets the eye. Madoff meets Zelensky with 10% for the Big Guy.

Isn't $50 billion the hole the UK is in? Maybe Bankman should have just sent the whole lot there in trade for a knighthood? In the end sure you're broke but you can parade around your CBE!

Posted by: LightYearsFromHome | Nov 12 2022 18:07 utc | 19

elkern | Nov 12 2022 18:05 utc | 18
And Murdoch was even smart enough to have a product to cater for Trumpists (Fox and friends).
(Fox….in the hen house)

Posted by: Melaleuca | Nov 12 2022 18:09 utc | 20

Looking at the family tree and Clinton connections.
Posted by: Melaleuca | Nov 12 2022 18:05 utc | 17

---

https://img.nzz.ch/2022/11/10/fe6acded-6a7c-4557-a2ad-cc5be28dfb3c.jpeg

Posted by: too scents | Nov 12 2022 18:11 utc | 21

Oh, and just from a couple decades watching financial frauds they always low ball the number stolen during the "headline phase". Couple weeks later they'll up it a bit, three months down, some more. Two years later once down the memory hole you'll read in the back pages of some paper's financial section that it's actually $100 billion "unaccounted for".

Posted by: LightYearsFromHome | Nov 12 2022 18:19 utc | 22

"Extraordinary Popular Delusions and the Madness of Crowds",
Charles Mackay author
1841
> early study of crowd psychology
>published in three volumes: "National Delusions", "Peculiar Follies", and "Philosophical Delusions".
The subjects of Mackay's debunking include alchemy, crusades, duels, economic bubbles, fortune-telling, haunted houses, the Drummer of Tedworth, the influence of politics and religion on the shapes of beards and hair, magnetisers, murder through poisoning, prophecies, popular admiration of great thieves, popular follies of great cities, and relics.
Present-day writers on economics, such as Michael Lewis and Andrew Tobias, laud the three chapters on economic bubbles .Wikipedia

Posted by: Melaleuca | Nov 12 2022 18:22 utc | 23

Arch Bungle | Nov 12 2022 18:09 utc | 21
i also don't trust black-owned enterprises either. or listen to their jungle music.

gather around the Klan rally. how does a buddhist become an anti-semite? it helps to be an american, that's how. or some other child of Albion.

Posted by: rjb1.5 | Nov 12 2022 18:24 utc | 24

too scents @ 21

That was worth the click.

Posted by: oldhippie | Nov 12 2022 18:25 utc | 25

Let‘s be very clear;

The FTX con was organized/supported by some very VERY powerful people. The kid is simply a front man.

Billions didn‘t vanish - billions went into the pockets of those same very powerful people.

Posted by: Exile | Nov 12 2022 18:30 utc | 26

@ b

Heh, and they blame Russia of having oligarchs with political power.

Posted by: alek_a | Nov 12 2022 18:30 utc | 27

billions
@Exile | Nov 12 2022 18:30 utc | 26

---

Leverage works both ways.

Posted by: too scents | Nov 12 2022 18:33 utc | 28

‘Suckers. Never give them an even break.’

T’is an old saying, popular in the septics’ American Dream - Nightmares.
A sickness spread by the Culture and Media Industrial Complex to the whole of the Collective Waste and wannabe non anglosphere flunkies. It will just hurry along the end of the sick financial controllers.

Many of my middle aged friends, 40-50 year olds, will be sitting on sore loses by Monday morning. My advice to them will be - Hold onto your real wealth if you have any left; If you don’t , be unfraid to go bankrupt and borrow as much unsecured debt as possible from the ravenous bankers.

If you have nothing to lose - why worry?

The end of the Empire has many a Pandora’s box of exploding fairytales revealed as grotesques. Maybe at least us Europeans will return to our social democracy welfare state idyll that protected us for thirty years following the sacrifice and ultimate success of the Great Patriotic War 😉

Posted by: DunGroanin | Nov 12 2022 18:35 utc | 29

I agree with your statement that it was stupid to invest in an unregulated claim.

I strongly disagree with putting all cryptos in the same bag. Or rather, there is Bitcoin, and there is the rest.

One of the features of Bitcoin is that it does not AT ALL depend on trust, in fact it does away with trust. It was designed as such precisely because fiat money itself is based on trust, which is violated each and every single day.

Furthermore, ultimately there will be only 21 million Bitcoins in circulation, and no person, no authority can increase in any way. Even gold, the conventional safe haven against inflation, is still subject to inflation because it keeps getting mined at about 2% per year.

With Bitcoin the mining curve is known, and by about the year 2140 the current level of 19 million Bitcoins mined so far will have reach the ceiling of 21 million.

There are other value factors in Bitcoin, which all add up a system that no one can influence other than buying and selling (no short selling though), which is why the authorities want to regulate it. Not because they care about people but because they want control, and Bitcoin as a currency without any central authority poses a serious risk.

Posted by: Ernesto Che | Nov 12 2022 18:37 utc | 30

I guess the big guy already got his 10% prior to this...

Posted by: leaf | Nov 12 2022 18:39 utc | 31

oldhippie | Nov 12 2022 18:25 utc | 25
That was worth the click.
Yep.
@2cents
Sam looks young and dumb.
>Epstein didn’t kill himself.
>Nor did McAfee
I saw Kari Lake inform HRC on tv that
>she wasn’t suicidal,
>the brakes on her car work.
Sam should probably do the same.

Posted by: Melaleuca | Nov 12 2022 18:40 utc | 32

Bitcoin--and other cryptocurrencies--are the Dutch Tulip Bubble, without the tulips.

--Gaianne

Posted by: Gaianne | Nov 12 2022 18:40 utc | 33

Yeah, I've been waiting for that. 'Crypto' has always been the new world order cult's pilot program for a 'cashless society'. It was supposed to wind up transferring all of the fiat paper money (which is fake anyway since it became nonredeemable for gold or silver) to a digital format which was entirely out of the account holder's even imaginary control, without so much as the courtesy of a written receipt (paper note). I hope every single one of those clowns are drawn and quartered, er..., brought to justice.
What we really need is to return to sound monetary policy. Gold and silver standard along with balancing currency values along gdp gradients should be a good place to start (gdp measured in tangible goods and commodities mostly (not so much 'services')).

Posted by: Josh | Nov 12 2022 18:43 utc | 34

Now that's an interesting story.

Posted by: Orchard1 | Nov 12 2022 18:48 utc | 35

too scents @ 21

Ol' Tony trying to see what's on SBF's screen. LOL

https://img.nzz.ch/2022/11/10/fe6acded-6a7c-4557-a2ad-cc5be28dfb3c.jpeg

Posted by: daffyDuct | Nov 12 2022 18:52 utc | 36

There is more to the expanded list of players:

Wall Street On Parade Got it. Nov.9/10 articles.

Oh the savvy players and celebs:
Blackrock hmmm, But an FDIC Bank with more that half of its deposits tied to crypto !!!

FTX, Second Largest Crypto Exchange Halts Withdrawal as Bankruptcy Nears and Justice Department Circles and
The Crypto Billionaire Featured on the Cover of Fortune in August Has Flamed Out in One Week

As Pam Maartens wrote:
(You need to put down any hot liquids you may be holding before you read further.) On August 1, we reported the following about Sivergate Capital:

[...]Another publicly-traded company taking a hit from the FTX fallout yesterday was Silvergate Capital, which fell 12 percent to close at $34.69 on the New York Stock Exchange. (You need to put down any hot liquids you may be holding before you read further.) On August 1, we reported the following about Sivergate Capital:

“FDIC-insured Silvergate Bank is part of the publicly-traded Silvergate Capital Corp., (ticker SI). Silvergate’s website says this about its hot pursuit of crypto: “We began pursuing digital currency customers in 2013 and have been deliberate in our approach to serving this community since then. Today, we have 1,300+ digital currency and fintech customers that are using our platform daily to grow and scale their businesses.”

“Silvergate Capital’s 10-K (annual report) for the year ending Dec 31, 2021 that it filed with the Securities and Exchange Commission acknowledged this about the crypto market that it has so deliberately decided to pursue:

‘The characteristics of digital currency have been, and may in the future continue to be, exploited to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams; if any of our customers do so or are alleged to have done so, it could adversely affect us…’

“Silvergate’s 10-K also states that ‘Deposits from digital currency exchanges represent approximately 58.0% of the Bank’s overall deposits and are held by approximately 94 exchanges.’

Let’s pause for a moment to digest that last statement:

More than half of a federally-insured bank’s deposits are tied to crypto while federal regulators are twiddling their thumbs and letting it happen.
This news comes despite the fact that legendary investor Warren Buffet has called the largest cryptocurrency, Bitcoin, ‘rat poison squared’; global economist, Nouriel Roubini, told the Senate Banking Committee in 2018 that ‘Crypto is the Mother of All Scams and (Now Busted) Bubbles While Blockchain Is The Most Over-Hyped Technology Ever, No Better than a Spreadsheet/Database.’[..]

Link HERE

Posted by: Likklemore | Nov 12 2022 18:52 utc | 37

Melaleuca @ 17 / too scents @ 21

Looking at the family tree and Clinton connections.

The son in law Bill wishes he had!

Posted by: LightYearsFromHome | Nov 12 2022 18:55 utc | 38

Posted by: rjb1.5 | Nov 12 2022 18:24 utc | 24

how does a buddhist become an anti-semite?

Where did you get the notion I'm an anti semite?

Posted by: Arch Bungle | Nov 12 2022 19:01 utc | 39

It's times like these when you are looking at a breaking story of a titan getting sacrificed at the scapegoat altar and when the whole scheme is showing its fissures, that you immediately think to yourself: "I better go check the "early life" wikipedia section on this guy, and, sure enough your suspicions are confirmed.

The rest of us outside the Intelligence Agencies just do not have the impulse to create such breathtakingly-huge pyramid schemes.

Cada. Tiempo. Unico.

Posted by: NemesisCalling | Nov 12 2022 19:03 utc | 40

The son in law Bill wishes he had!
Posted by: LightYearsFromHome | Nov 12 2022 18:55 utc | 40

---

The polycule daughter in law, CEO of Alameda Research, speaks ... "We tend not to have things like 'stop losses' ..." ...


https://redditsave.com/r/wallstreetbets/comments/ys4lmo/she_is_the_ceo_of_ftxalameda_let_that_sink_in/

Posted by: too scents | Nov 12 2022 19:06 utc | 41

Posted by: Jax | Nov 12 2022 17:48 utc | 12

Great info!

Posted by: anon2020 | Nov 12 2022 19:09 utc | 42

Isn't ‘Bankman-Fried’ a clue? Sounds like a slogan.

I just did the crypto puzzle in the Saturday paper. I wonder for how much I can sell this proof of work?

But be careful when you say it is not real money, just confidence.
The exact same thing applies to the dollar and any other currency.

And there's a reason gold-backed money is problematical: There's no way to recover from fraud (leverage, fractional reserves).

Posted by: Webej | Nov 12 2022 19:19 utc | 43

too scents @ 43

Fucking A! You just can't make this shit up! How much insane shit can all be mashed up together? Anyone ever read Oryx and Crake?

Posted by: LightYearsFromHome | Nov 12 2022 19:22 utc | 44

Well, no money is "real".

I suppose the fact that some governments claim to back it makes it "more real"
But when a government is controlled by the mafia (or whatever you want to call it) like the USA is, how does that protect those of us with cash?

I mean, this current round of inflation was engineered by someone. It didn't "just happen".

And the devaluation of the Pound could easily have been predicted by anyone who recognized the EU dependence on Russian gas.

My problem isn't that I don't see these events coming, but that I have no idea what "to do about it".

I suppose I could subscribe to the shills at Reddit's "wallstreetbets". LOL

Posted by: Fiji Refugee | Nov 12 2022 19:25 utc | 45

too scents @ 43

The polycule daughter in law, CEO of Alameda Research, speaks ... "We tend not to have things like 'stop losses' ..."

Of course not, when the plug is pulled the losses are not supposed to stop. And it should properly be called 'stop disappearances'.

Posted by: LightYearsFromHome | Nov 12 2022 19:28 utc | 46

Well, no money is "real".
Posted by: Fiji Refugee | Nov 12 2022 19:25 utc | 47

---

There are options upon which physical delivery is possible.

Posted by: too scents | Nov 12 2022 19:29 utc | 47

Bill sure has a cigar up a lot of twats, doesn't he?

Posted by: LightYearsFromHome | Nov 12 2022 19:30 utc | 48

@psychohistorian (15) ” That could just as well read

Fiat (US Dollar) currencies' have no real purpose. They ain't money. Their value solely depends on the trust people have in them. When the trust vanishes their values go to zero.”

So you need to ask yourself why fiat currencies have such a stellar record of durability. It is, of course, directly attributable to the fact that they are backed by the governments that issue them, whereas cryptocurrencies are backed by blockchain. Everyone who understands and trusts blockchain raise your hand.

Posted by: Rob | Nov 12 2022 19:46 utc | 49

@ Posted by: StrichPlatte | Nov 12 2022 18:42 utc | 34

“What is MONEY" No one of the clowns has ever given me an answer.”

Top question. Which I too have been pursuing for about 10 years now , having spent a career building businesses from scratch and having had Economics as an advanced level school exams at 18. It took me plenty of digging, on the web you need to get past the first 10,000 results to get the gems of real experts and research and most importantly HISTORY of Money. The Bible quote came nearest to the answer ‘let what is Caesars go to Caesar’ said JC to these who objected to Roman TAXES.

Money is how a state ‘spends’ - it is created for State Expenditure. It is created from nearly nothing and given a VALUE. That is used to pay the soldiers ,sailors , candlestick makers etc

It is then ‘un-created’ by the State when collected as TAX.

A states currency, it’s Money, only has value because it demands that Taxes can only be paid by that currency.

Cryptos have ZERO value unless a state will accept its taxes in that tender and is able to make its public spending with that tender. Only a State issued Crypto can have that merit and only in that state.

Does that help?

Rand Paul knew that, every single high banker knows it, every single sovereign government and its Treasury knows it. Everyone who works in Money even these who earn millions still believe the opposite of the truth.
Taxes don’t pay for Public Spending
Public Spending allows for Taxes to be collected.
Magik!

Posted by: DunGroanin | Nov 12 2022 19:48 utc | 50

"The amount of coins in the system was also inherently limited which brought with it all the problems of gold back currencies. There are reasons why we no longer use those."

It is surprising that B does not see the contradiction in his argumentation. The abandonment of the gold standard has turned all currencies into fiat currencies, which, just like cryptocurrencies, are based only on trust, which B points out to be their great disadvantage. The abandonment of the gold standard has also opened the floodgates for the unrestrained expansion of central bank balance sheets. This prevented the system from collapsing for a while, but when a lot of helicopter money was distributed in connection with the pandemic, the basis for the now rampant inflation was created, as the helicopter money flowed into the normal monetary cycle and did not remain in the financial sector as in previous ocasions. Thus the system is on the brink of the abyss, the expansion of the money supply is now counterproductive, purchasing power is falling while at the same time systemic overproduction is increasing.

There is no categorical difference between 'money' and crypto-money. Or there is - 'money' can be amplified ad infinitum, Bitcoins can't. This is not a bug, it's a crucial feature.

However, that is no reason to get involved with Bitcoins. Under the given circumstances, Bitcoins are also speculative objects, like works of art and football players. Extreme price fluctuations are therefore normal. And when the crisis fully sets in, a lot of 'money' will vanish into thin air and thus the Bitcoin price will also continue to fall, but not to the point of worthlessness. So cryptocurrency is currently only something for people who are obscenely rich.

Posted by: Pnyx | Nov 12 2022 19:55 utc | 51

Cryptos have ZERO value unless a state will accept its taxes in that tender and is able to make its public spending with that tender. Only a State issued Crypto can have that merit and only in that state.

This is exactly the definition of money. It is taxes that define it and “pull” it though the economy. Even gold and silver become worthless before this fact. That’s how British sterling worked its magic of extortion thought its colonies. Whatever goods, gold or silver you had you had to exchange it for British money to pay your taxes. Crypto is just an asset, up to you whether it's a good or bad one.

Public Spending allows for Taxes to be collected. Magik!

Yes, first you must issue the tickets before you can get into the stadium to see the game, you don’t get your ticket on the way out. Not really magic, if there was no systemic top down corruption fiat money wouldn't be a big deal. It's the ultimate corruption the convince the plebs that there is never enough revenue to pay for the public commons. Austerity equals kleptocracy.

Posted by: LightYearsFromHome | Nov 12 2022 20:08 utc | 52

I developed a theory a while back, that crypto in general and Bitcoin in particular would be manipulated as a sponge to soak up all the excess Central Bank liquidity. The beauty of it is there is nothing to dispose of via bankruptcy afterward.

There was even a catchy slogan:

"Bitcoin: The quicker picker upper"

Posted by: Opport Knocks | Nov 12 2022 20:10 utc | 53

Elkern @ 18:

I attended a talk on Bitcoin some years ago at an adult education centre. The talk was a general sketch of what Bitcoin was and how it is supposedly "self-regulating" through the long transaction chains checked by Bitcoin mining exchanges.

There was one fellow of retirement age at the talk who only wanted to know how to invest in Bitcoin and how fast he could profit from it. Even though the speaker had warned that his talk contained no financial advice, and he himself disdained cryptocurrencies, the retirement-age fellow was still dead keen on investing in Bitcoin. People like him - retirees and others who have suddenly got a windfall from inheritance, a superannuation payout or selling a major asset like a property - would be the ideal targets for companies like FTX.

Reading some of the articles in the links supplied in MoA barfly comments above, I see a lot of monies sent to Ukraine by US Congress and through "charities" asking for cash donations around the world ended up being invested in FTX by Ukraine. So we are all linked in some way in this giant pyramid scheme.

I would be curious who helped Sam Bankman-Fried set up his digital backdoor to funnel monies to the Democrats. Somehow the names "Crowdstrike" and "Alperovitch" come floating into my mind.

Posted by: Jen | Nov 12 2022 20:11 utc | 54

Here's a whole Reddit thread on the Stop Loss Chick.
https://old.reddit.com/r/wallstreetbets/comments/ys4lmo/she_is_the_ceo_of_ftxalameda_let_that_sink_in/

I notice no mention of how the elonGATED muskRAT has destroyed Twitter in a manner of 3 days. I particularly liked the Chiquita Banana and Lockheed Martin accounts. LOL

https://i.redd.it/p9f5c8h9ybz91.jpg

There's more:

A blue-checked Twitter account pretending to be Arizona Republican gubernatorial candidate Kari Lake tweeted a fake concession announcement to Democratic challenger Katie Hobbs on Wednesday, even though the race hasn’t been called—the account has since been suspended.

On Thursday night, a fake Lockheed Martin account with the handle @LockheedMartini and a Twitter Blue checkmark tweeted the aerospace and weapons maker will stop sales to Saudi Arabia, Israel and the U.S. “until further investigation into their record of human rights abuses.”

A since-suspended Twitter account made to look like the doll maker American Girl tweeted on Wednesday the company’s colonial Virginia-era doll “owned slaves,” adding, “I’m not even lying.”

Pharmaceutical company Eli Lilly issued an apology on Thursday clarifying it will not provide free insulin after a parody account (which has since been suspended) with a verification check and an image of the brand’s logo tweeted it would—while a separate parody account tweeted a fake apology, writing “We can do this whenever we want and there’s nothing you can do about it.”

On Thursday, another verified account pretending to be British Petroleum (BP) tweeted, “Just cause we killed the planet doesn’t mean we can’t miss it”—the account was also suspended.

A blue-checked parody American Israel Public Affairs Committee (AIPAC) account, which has also been suspended, tweeted, “We (love) apartheid.”

Another parody account pretending to be banana producer Chiquita tweeted, “We have not overthrown a government since 1954”—referencing the U.S.-backed coup in Guatemala, a major banana producer.

A suspended account spoofing Tesla—Twitter CEO Elon Musk’s automotive company—with the handle @TeslaReal tweeted, “BREAKING: A second Tesla has hit the World Trade Center.”

On Wednesday, a parody account of video game giant Nintendo tweeted an image of MarioBros. Character Mario lifting his middle finger.

LMAO

Posted by: Tom_Q_Collins | Nov 12 2022 20:16 utc | 55

Posted by: too scents | Nov 12 2022 19:29 utc | 47

Physical delivery of what?

A piece of paper?
A gold coin?
A bead?
A nut?

Lincoln's Greenbacks come to mind.
Money is nothing more than an IOU that doesn't even have to be documented anywhere.
There's no reason that what happened to crypto can't happen to the dollar.

Posted by: Fiji Refugee | Nov 12 2022 20:24 utc | 56

Pnyx @ 51:

The then US President Richard Nixon took the US dollar off the gold standard in 1971 after years of massive US military expenditures in prosecuting the Vietnam War. MoA barflies, draw your own conclusions from what Nixon's act enabled the US to do once the US dollar became fiat currency.

Posted by: Jen | Nov 12 2022 20:35 utc | 57

When trying to tell what is money or what we can use for exchange in lieu of killing everyone we come across to take what they have, it goes back to rarity or scarcity.

The more rare or scarce, naturally, the more value we assign to it as a "state" or corporation of people.

This is beneficial to us as a people working in and for the "state" because it is an economic-driver that leads to the everyday greasing-of-the-skids of society. Money keeps the engine moving forward. It allows lateral movement without the need for constant bloodshed.

Money is sanctioned by God.

But certainly not fiat. Why don't we just make grains of sand money? That would save us having to cut down trees to create fiat and its availability is just the same.

The current system that is quietly imploding all around us is one that has gone away from sound money where we value what is rarer/scarcer/essential.

BRICS is attempting to offer something more natural than fiat and that is why this war is taking place. What is this alternative? It is old, disgusting relics of a bygone era: food, fertilizer, precious metals.

Everything is fake in this world. Finance, our mechanized franken-food industry, our borders, our culture, our media.

It is all due to fiat and (((their))) willingness to play the dangerous game of printing value.

I disagree where b says that gold hinders an economy.

I would say to b that certain economic arrangements hinder human beings.

Posted by: NemesisCalling | Nov 12 2022 20:36 utc | 58

Posted by: too scents | Nov 12 2022 17:39 utc | 4

Bloomberg articles are paywalled.

Posted by: rjb1.5 | Nov 12 2022 17:41 utc | 5

Well, since you mentioned it, Bankman-Fried looks a lot like a Jewish name.

Posted by: Tom_Q_Collins | Nov 12 2022 20:37 utc | 59

I would say to b that certain economic arrangements hinder human beings.
Posted by: NemesisCalling | Nov 12 2022 20:36 utc | 58

I would say that usurious arrangements definitely do. And there are plenty of non-Jewish bankers and banksters that are happy to give you a line of credit with a 30% interest rate.

Posted by: Tom_Q_Collins | Nov 12 2022 20:39 utc | 60

Great work, B!

@Gaianne (33): Yes, like the tulip frenzy but without the tulips... But also, causing real, massive harm to the planet!

Forbes, here, in May: "It’s estimated that Bitcoin consumes electricity at an annualized rate of 127 terawatt-hours (TWh). That usage exceeds the entire annual electricity consumption of Norway." (And that's just one cryptocurrency.)

Posted by: Helena | Nov 12 2022 20:41 utc | 61

IF the ties to the USG are true (and I'm betting that far more than $25/Ukrainian user went to finance that war) Bankman-Fried will be given the Epstein treatment. I doubt he ever testifies to anything under oath.

Posted by: Tom_Q_Collins | Nov 12 2022 20:49 utc | 62

@60 Tom

I am aware that there is a disgusting contingent of goy who are employed in the Jewish-banking system.

Just keep in mind that these are the underlings of the great wealth managers of the world who are overwhelmingly Jewish.

It's a reversal of the old situation where the Jews were the only ones allowed to collect interest. Now they have the goy doing their fleecing for them.

Speaking of these goy finance officers, my guess is that there will be a great deal of these people unemployed and destitute in the coming years.

Posted by: NemesisCalling | Nov 12 2022 20:50 utc | 63


@ Jen | Nov 12 2022 20:11 utc | 54 quote :

"I would be curious who helped Sam Bankman-Fried set up his digital backdoor to funnel monies to the Democrats. Somehow the names "Crowdstrike" and "Alperovitch" come floating into my mind."

that makes 2 of us, lol...

@ Jen | Nov 12 2022 20:35 utc | 57

exactly... @ Rob | Nov 12 2022 19:46 utc | 49 left that out in his simple equation...

Posted by: james | Nov 12 2022 20:55 utc | 64

Posted by: Pnyx | Nov 12 2022 19:55 utc | 51

You have saved me from a lengthy response to the same effect, but I will add:

If one reads Aristotle in NE book 5 you can see that it has long been known that money belongs to nomos (nomisma is the Gk word for coin) rather than physis, i.e., its value is customary not natural. Quite apart from whether there is a 'natural value' it is clear that money's value has always—even in bullion form—derived from whatever imaginary thing of which money is only the signifier. This is what we mean when we say money is 'backed' by something. The relationship between the money-sign and thing 'over the horizon' that it's standing in for (gold, future promise, 10 year bond, whatever) is always unstable since it belongs to the generalised domain of signs (such as, for example, the strength of the bond between a word and what it refers to).

b's error therefore is to imagine that there is such a thing as 'honest money' whose value is grounded in something 'natural' that can invalidate the universe of 'dishonest money' (fiat money, QE, MBDs, derivatives, crypto, NFTs, etc). In reality all money is 'promissory'—even gold itself since one only holds a precious metal as a less uncertain 'store of value' that can be redeemed in the future for something. In other words, even gold is promissory and one can easily imagine many scenarios where gold's 'value' plummets to zero ('you can't eat it', for example). So in the end gold too 'refers' to something else.

What is this 'something else' to which all money refers via the umbilical tether to its value? Many banknotes are covered in its image: sovereignty, god, the eye of Providence, the King, the head of Athena, the stamp of the issuing 'authority', the Fed, etc. The fraud of BTC, it seems to me, lies in the promise to do away with precisely this 'third party' who 'guarantees' its value in the hope of realizing some kind of philosophical dream—a pure money, transparent and divine, a money god living in the hermetic other world of blockchain, untouchable. But no: digital money, for all the technological promise of an advance away from the olde worlde of paper and coin, must behave regularly as money in order to cater to something very old indeed: human exchange. Digital, schmigital: if it quacks like a duck mate...

Who'd have thought in a world of financialised capitalism that cryptos would turn out to be a latter-day Amsterdam tulip, a speculative commodity like any other stock or bond-paper? To those who think that cryptocurrency holds some Hermetic secret alchemical truth because it's got 'crypto-' in the name, well, do I have a bridge to sell you!

Posted by: Patroklos | Nov 12 2022 21:01 utc | 65

@LightYearsFromHome | Nov 12 2022 20:08 utc | 52

---Not really magic, if there was no systemic top down corruption fiat money wouldn't be a big deal.----

I'm leaning towards education. Not even the economists have learned to understand money. Probably by design.

"The Lost Science of Money" , by Stephen Zarlenga is free on the internet. Read it!


Posted by: Anne B | Nov 12 2022 21:01 utc | 66

Posted by: NemesisCalling | Nov 12 2022 20:36 utc | 58

Sounds like we were all having the same thought: good to see your name btw. Hope you're holding up ok.

Posted by: Patroklos | Nov 12 2022 21:02 utc | 67

I remember hearing Richard Werner, an economist I respect, say that Bitcoin was a tool to surpress precious metals prices, presumably to support the paper market in precious metals.

Posted by: Guy | Nov 12 2022 21:08 utc | 68

@65 Patroklos

The idea of digital money being the sole issuance of a centralized government is the greatest wet dream of all for the elites.

I always come back to what John Berger said that, "Evil hates anything physical."

Coming from a towering essayist/artist like Berger who was disgusted with "how we lived" in the west, moving himself in amongst peasants in the French Alps, and getting dirt under his fingernails for the rest of his life, I am relieved that I happen to know a thing or two about physical labor and have kept my mind clean of any of their prescribed sanitized notions of the good life.

I agree with your thought that even gold can have an intrinsic value of zero. We just have to keep skinning this cat to see what will work and give to us the means to be as honest with each other as we can.

Best to you in the down under!

Posted by: NemesisCalling | Nov 12 2022 21:16 utc | 69

i would say that sam is a dead man walking-he is about to be arkancided-interesting that a ciinton is usually near the big scams of the world, e.g. clinton foundation

Saw a brief report that sam fled to argentina but cannot find the link now.

Posted by: Anonymous | Nov 12 2022 21:19 utc | 70

Isn't ‘Bankman-Fried’ a clue? Sounds like a slogan

More like a proposition.

Come and see Elizabeth Fry
Come and see Captain Cook
Come and see how Robbie Burns
Come and see Bankman Fried

Etc.

Posted by: Gt Stroller | Nov 12 2022 21:20 utc | 71

In response to
"
@psychohistorian (15) ” That could just as well read

Fiat (US Dollar) currencies' have no real purpose. They ain't money. Their value solely depends on the trust people have in them. When the trust vanishes their values go to zero.”

So you need to ask yourself why fiat currencies have such a stellar record of durability. It is, of course, directly attributable to the fact that they are backed by the governments that issue them, whereas cryptocurrencies are backed by blockchain. Everyone who understands and trusts blockchain raise your hand.

Posted by: Rob | Nov 12 2022 19:46 utc | 49
"

Your first sentence/lie about the stellar record of fiat currency durability attempts to cover over the fact that since 1971 the US dollar has lost 86% of it value

Your second sentence/lie is the obfuscation that the 12 US Fed regional banks are privately owned, as have been the tools of finance, since 1913....and cryptocurriencies are instantiated by blockchain but backed by private folks, just like the US Fed

As to the understanding and trust of blockchain technology, I will raise my hand. Perhaps as part of your education about blockchain you can study the difference between permissionless and permissioned blockchain. It is my understanding that China is using permissioned blockchain for its cryptocurrency because it scales.

Posted by: psychohistorian | Nov 12 2022 21:20 utc | 72

Ernesto Che, Josh and PNYX; still defending the con after being conned. Gov't can make war, block chain can't. Progressive income taxes kept money sound; "low taxes" favored finance, lobbyist and well connected professionals over capital intensive producers; who never pay income taxes, but provided all the jobs and the economy. Those who win under "low taxes" are the dead weight, and low taxes expands their role, we go from an economy that produces to off-shoring so the execs can take more gains, we privatize gov't, so more can profiteer, incomes of well connected increase, real work moves off shore where it's not so beset by the sales and property taxes that hit the real producers and retailers, while the paper pushers resent laugh all the way to the bank, with few employees, producing nothing; but the bullshit you gargle and regurgitate. The con is a Wall St con, and you clowns are the mark. You've bought into a too simple economic narrative that appeals to the adolescent mind. Progressive income taxes were formulated by a capitalist, CFO and co-founder of Ford, US Senator James Couzens (R) he debated Andrew Mellon who pushed "Trickle Down" as Will Rodgers called it then. SUCKERS!

Posted by: scottindallas | Nov 12 2022 21:20 utc | 73

You got "corzined". MF Global all over again. Not the first fraud, not the last. Has nothing todo with crypto currencies.

Posted by: C | Nov 12 2022 21:24 utc | 74

(((Bankman-Fried)))
Every. Single. Fkking. Time.

The real question is, did he commit the Ultimate Sin, and Defraud any of his fellow (((tribesmen))). If So, he'll get the Bernie Maddoff treatment. If he Skates, that means that bigger fish, like (((blackrock))) are a part of the Scam.

Posted by: Gryphon | Nov 12 2022 21:24 utc | 75

Is the downfall of FTX and Ukraine synonymous? That would be like the snake swallowing its tail. (or its tale) Biden, Empire, et al.

Posted by: Copeland | Nov 12 2022 21:25 utc | 76

@NemesisCalling (58) ” Money is sanctioned by God.”

Hey, I just got a message from God. He/she/they/it hates crypto, says it’s the devil’s work.

Posted by: Rob | Nov 12 2022 21:25 utc | 77

Didn't take long for the place to turn into 8Chan, did it?

Posted by: Tom_Q_Collins | Nov 12 2022 21:34 utc | 78


Wondering if there will be a Lehman moment. From "Wall Street On Parade":

Another publicly-traded company taking a hit from the FTX fallout yesterday was Silvergate Capital, which fell 12 percent to close at $34.69 on the New York Stock Exchange. (You need to put down any hot liquids you may be holding before you read further.) On August 1 we reported the following about Sivergate Capital:

“FDIC-insured Silvergate Bank is part of the publicly-traded Silvergate Capital Corp., (ticker SI). Silvergate’s website says this about its hot pursuit of crypto: “We began pursuing digital currency customers in 2013 and have been deliberate in our approach to serving this community since then. Today, we have 1,300+ digital currency and fintech customers that are using our platform daily to grow and scale their businesses.”

“Silvergate Capital’s 10-K (annual report) for the year ending Dec 31, 2021 that it filed with the Securities and Exchange Commission acknowledged this about the crypto market that it has so deliberately decided to pursue:

‘The characteristics of digital currency have been, and may in the future continue to be, exploited to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams; if any of our customers do so or are alleged to have done so, it could adversely affect us…’

“Silvergate’s 10-K also states that ‘Deposits from digital currency exchanges represent approximately 58.0% of the Bank’s overall deposits and are held by approximately 94 exchanges.’

“Let’s pause for a moment to digest that last statement: More than half of a federally-insured bank’s deposits are tied to crypto while federal regulators are twiddling their thumbs and letting it happen.

https://wallstreetonparade.com/2022/11/ftx-second-largest-crypto-exchange-halts-withdrawals-as-bankruptcy-nears-and-justice-department-circles/

Posted by: daffyDuct | Nov 12 2022 21:43 utc | 79

«Under the given circumstances, Bitcoins are also speculative objects, like works of art and football players.»

That is one of the few arguments that gets close to the nature of the thing, because most people misunderstand the nature of crypto tokens: they are "collectibles", like rare stamps, gold, paintings, ancient books, ...

All collectibles have almost no usefulness, but for some reason or another some people want to hoard them, usually for entertainment or prestige purposes, so they are prepare to buy them instead of useful things.

So called "money" in a "temple"/"chartalist" system is actually not a collectible, but a record of a transaction, an "IOU", not a self-standing collectible.
A set of IOUs can however be used as a store of value, if they are "frozen" in time, and that creates a lot of problems by making a confusion between transactions and assets.

Posted by: Blissex | Nov 12 2022 21:49 utc | 80

What do we need money for?

A convenient form of value exchange for day to day transactions.
A reliable store of surplus wealth as a hedge against an uncertain future.

Crypto doesn't look so good for either of these purposes, so what's it about?

A speculative punt to make a profit
A thumbing of the nose at the state and it's fiscal fun and games.

Good luck, and,,, Place bets now!

Posted by: Gt Stroller | Nov 12 2022 21:51 utc | 81

Was Bankman-Fried behind the fortifying of "our" democracy? It this part of the reason why it takes so damn long to count "our" votes? Is this the event-horizon of the Biden Administration's obsession with all things Ukrainian? Will cannibals on Wall Street reduce Europe's industrial economy and sovereignty to a piles of bones? Maybe the Ship of Empire will be torn to pieces on the Clashing Rocks. Maybe this also explains why so much obsolete military inventory is fobbed off on the expendables in Kiev.

Posted by: Copeland | Nov 12 2022 21:57 utc | 82

...the 12 US Fed regional banks are privately owned, as have been the tools of finance, since 1913

Actually, in The US, it goes back further than that as The Fed is the THIRD privately owned central bank of The US. It’s predecessors were The First Bank of The United States and The Second Bank of The United States. Both only had a charter of 20 years that we’re not renewed due to widespread opposition.

Regarding the first bank, this opposition was led by none other than founding fathers Thomas Jefferson and James Madison as they believed it was unconstitutional and were acutely aware of the danger of the country’s money being issued by private interests.

The Second Bank of The United States was opposed by President Andrew Jackson who vetoed it’s re-charter and stood for re-election on an anti-bank platform. He won re-election. Years later, when asked what his greatest achievement was as President, Jackson is said to have replied 'I killed the Bank'.

Posted by: Jax | Nov 12 2022 21:57 utc | 83

I have always thought crypto was stupid, given the massive usage of energy that they require, but I have always had one question that nobody could ever answer: Once the supply of bitcoin reaches it's limit, why on earth would anyone process bitcoin transactions? Miners do their work because they are rewarded with coins. Once there are no more coins that can be issued, there is no incentive to mine/process payments. This shit is a joke. That flaw aside, it looks like miners are already up against economic limits. The energy they are using to process payments seems to now have a higher cost than the value of the coins they are being paid in some jurisdictions.
This colossal waste of resources is yet one more example of the lack of ethics among those at the top for allowing this nonsense to continue.

Posted by: Arkady Bogdanov | Nov 12 2022 22:13 utc | 84

Posted by: Patroklos | Nov 12 2022 21:01 utc | 65
«If one reads Aristotle in NE book 5 you can see that it has long been known that money belongs to nomos (nomisma is the Gk word for coin) rather than physis, i.e., its value is customary not natural. [...] derived from whatever imaginary thing of which money is only the signifier. This is what we mean when we say money is 'backed' by something. The relationship between the money-sign and thing 'over the horizon' that it's standing in for»

I like your reference to the western ancients who also thought about these issues, and your post is way above the average for knowledge and insight, but this particular argument seems to me incomplete:

* It applies only to "money" as currency, as medium of transactions.

* It does not apply to "collectibles" like bitcoin or gold or rare stamps, because each bitcoin (which is number),or gram of gold, or rare stamp is not a signifier of anything,

«What is this 'something else' to which all money refers via the umbilical tether to its value? Many banknotes are covered in its image: sovereignty, god, the eye of Providence, the King, the head of Athena, the stamp of the issuing 'authority', the Fed, etc. The fraud of BTC, it seems to me, lies in the promise to do away with precisely this 'third party' who 'guarantees' its value»

That does not matter much: plenty of "money" is nearly pointless (e.g. the cambodian rial) even if "backed" by an authority that "guarantees" its "value".

Posted by: Blissex | Nov 12 2022 22:28 utc | 85

Posted by: Patroklos | Nov 12 2022 21:01 utc | 65
«must behave regularly as money in order to cater to something very old indeed: human exchange.»

"Money" as currency for exchange has only one property that matters, purchasing power, that is acceptance by sellers, as Hyman Minsky wrote:

an economy has a number of different types of money: everyone can create money; the problem is to get it accepted

Sellers accept as "money" those IOUs that they reckon are liquid, that is creditworthy, that is can be "cashed" in for useful stuff.

There is a very important detail here that is very rarely discussed:

* In "mainstream" Economics transactions are symmetric, and buying a pizza paying with dollars is exactly the same transaction as buying dollars paying with a pizza, and the "buyer" of the dollars is also the "seller" of the pizza.

* But nearly all transactions are not symmetrical, and there is a difference between buying and selling: buying means becoming less liquid, selling means becoming more liquid.

That's why the essence of "money" as a currency is liquidity that is acceptance by sellers: sellers are unlikely to accept payment for a pizza with a hammer, even if they reckon it has the same "value", because the hammer is not more liquid than the pizza.

Posted by: Blissex | Nov 12 2022 22:29 utc | 86

yesterday was the first time any of us plebs ever heard of Sam Bankman-Fried.
However, it seems a lot of politicians (Tony Blair, Bill Clinton et al) are all quite well acquainted with him.
and you are quite right wrt to cryptoexchanges, but not necessarily all, yet.
but then again the same could be said of banks and any other financial institution.

Kim Dotcom says
" Never ever give any third party power over your crypto. Satoshi designed crypto to be under your control. You don't need a custodian or a bank. Stop speculating with crypto, use it to pay for things, that's how crypto will change the world.."

so Dont quite agree with your overall take on Bitcoin.

ps if Sam Bankman-Fried is the future of the Democrats, then perhaps Elon Musk will be likewise for the Republicans

Posted by: chris m | Nov 12 2022 23:09 utc | 87

Very nice article, nice research, thank you!

Posted by: Tim | Nov 12 2022 23:34 utc | 88

btw one small quibble. Bitcoin for one had some very sounds reasons behind it

1. It was created, design and promoted specifically in order to take the pressure off gold. It worked very well and achieved this objective

2. It was a ponzi scheme that raked in billions for the banking cartel that created it. Also very successful

As an additional bonus it has provided a great marketing tool for so called "digital currencies".

Posted by: Tim | Nov 12 2022 23:39 utc | 89

The OP forgets one motive for cryptocurrency was hiding criminal transactions. Perhaps our host is correct the blockchain is hackable so that it can't deliver, but the desire to hide transactions from prosecutors was always a selling point even if it was a dishonest or incompetent one.

The conspiracy mongering fails miserably on two points: Bill Clinton is not president. It was bad enough when the Trumpers rewrote history so that neither Bush nor Obama served their two terms each, but this is getting even more ridiculous. The other thing is, the corruption is not so they can fund the party. That's the same kind of cheap cynicism that pretends a government salary is the source of tyranny. It's why the Framers put the emoluments clause (which by the way Trump violated, which would be deemed an impeachable offense if "originalism" or other Constitution-thumpers were honest. But of course, no president ever managed to turn patronage into a political party that could win re-election, try as they might. The any dark forces behind FTX were in it for the money for themselves, not to give away to the Democratic Party.

And by the way, the law basically is that there has to be an explicit agreement between donors and politicians for specific favors in return for donations. That doesn't mean it's not corrupt, which is a political/moral concept. But it does mean that there's no evidence as yet it's criminal. The corruption of the system should be measured by what's legal, in my view. But in practice, the conservatives just use a double standard. (If you're a conservative, double standards are the only moral standards.)

There are also some really peculiar notions of left and liberal floating around in the quotations.

Also, the notion that DNA in the maternal line determines political commitments is simply nuts.

Posted by: steven t johnson | Nov 12 2022 23:56 utc | 90

Dear one say it, but perhaps SBF was just the front man for a money-laundering operation run by the Democratic party.
that would just make him small fry (fried) for some bigger fish

Posted by: chris m | Nov 13 2022 0:02 utc | 91

Barofsky @1

All financial "investments" are pyramid schemes…

Posted by: paulmeli | Nov 13 2022 0:13 utc | 92

Posted by: Blissex | Nov 12 2022 22:29 utc | 86

It is a joy to be responded to with such civility and tact. I agree with your identification of the blind spots of my argument, and that I was oversimplifying the complexity of money's multifarious functions, not least its fungibility.

Posted by: Patroklos | Nov 13 2022 0:19 utc | 93

i think many of the large bitcoin transactions may have been used by state actors who wished to evade sanctions and penalties for selling and purchasing oil and other commodities.

Posted by: Perimetr | Nov 13 2022 0:35 utc | 94

Bitcoin is the hardest money ever created. It is a purely digital store of value that is impossible to counterfeit or to inflate by money printing. It is a stunning human achievement, an invention that could ultimately be as significant as the printing press. The collapse of this or that “crypto” exchange and/or this or that “crypto” currency scheme has NOTHING to do with the inherent value of bitcoin, although it can impact its speculative value in the near term. The initial post by the local oracle here “Mr. b” and all of these comments reflect a shocking level of ignorance about the nature of money and the value of bitcoin as a technology. “Too complicated, blah, blah, blah.” Ever heard of the lightning network? Probably not. Enjoy your fun dunking on bitcoin while you can. Bitcoin (not you dinosaurs) will have the last laugh in the fullness of time. Remember my annoying comment when you someday realize, as you all eventually will, that you were completely wrong about this. Educate yourselves. Unless we change the way money works, we will change nothing. All the trollers who will jump on this comment with silly snark can f*** off in advance. Thanks for listening.

Posted by: Andrew | Nov 13 2022 0:39 utc | 95

@Psychohistorian. And what is happening to the value of cryptocurrencies these days? Bitcoin has fallen approximately 75% from its all-time dollar price high on Nov. 8, 2021. It could yet fall more than 90% once the panic starts. The truth is that only thing that almost anyone cares about with Bitcoin is its price in dollars, euros or some other fiat currency. That’s because cryptocurrencies do not function as currencies in the real world, except in exceptional circumstances (e.g. drug sales, weapons sales, human trafficking etc). They are vehicles for speculation and storing (often ill-gotten) value and are prone to sudden, sharp collapses. Caveat emptor.

Posted by: Rob | Nov 13 2022 0:40 utc | 96

@Andrew (95) It’s crypto-evangelists like you who will be the ruin of a huge number of wannabes. The references you make to super high-tech “miracles” are the tip-off that you are full of crap.

Posted by: Rob | Nov 13 2022 0:54 utc | 97

@ Rob | Nov 13 2022 0:40 utc | 96 who doesn't know his Bitcoin from his blockchain from his cryptocurrency

You are showing more ignorance here

Bitcoin and other privately owned/operated permissionless blockchain cryptocurrencies have no intrinsic value and are not the creation of sovereign nations.....similar to the US dollar after 1971.

There are uses of permissioned blockchain by sovereign nations that are also called cryptocurrencies but the permissioned gives it scalability and if it is issued by a sovereign nation then it has the backing of that nation.

To Andrew | Nov 13 2022 0:39 utc | 95 with the Bitcoin religion....Bitcoin is not a store of energy and what energy was used to create it instead of doing something positive for our species is lost....and who owns Bitcoin? Not sovereign nations it would seem....another God of Mammon religion it looks like to me.

Posted by: psychohistorian | Nov 13 2022 1:05 utc | 98

Posted by: Arkady Bogdanov | Nov 12 2022 22:13 utc | 84


Once the supply of bitcoin reaches it's limit, why on earth would anyone process bitcoin transactions? Miners do their work because they are rewarded with coins. Once there are no more coins that can be issued, there is no incentive to mine/process payments.

Well, you’ve overlooked something here. Miners receive transaction fees in addition to the newly minted coins. So, even when all the coins have been minted and supply has reached the limit, they’ll still receive the transaction fees for their troubles.

I agree with your point about energy costs etc.

Posted by: Jax | Nov 13 2022 1:08 utc | 99

Heh, and they blame Russia of having oligarchs with political power.

Posted by: alek_a | Nov 12 2022 18:30 utc | 27

I've often wondered why American billionaires (Bezos, Buffett, etc.) and other rich/powerful people are never called oligarchs (from what I've read anyways).

Like it implies bad or something.

Posted by: Michigan Dude | Nov 13 2022 1:09 utc | 100

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