As much as one doesn’t want to repeat oneself, there is no escaping the severity, scale and exemplary nature of FTX’s collapse. Weeks after the collapse, disagreement and confusion persist at the beach bar built by Sam Bankman-Fried around an intricate business network. At the first bankruptcy hearing, held on Nov. 22, FTX’s attorneys said a “substantial amount” of the company’s assets were missing or stolen and that the empire was run as a “personal fiefdom” of Bankman-Fried. The bankruptcy trustee himself, who was Enron’s, is puzzled: there is no documentation and it is difficult, if not impossible, to identify and track the assets of the companies that allow customers and creditors to pay.
Bankman-Fried, who has just accepted voluntary extradition from the Bahamas to the United States where he faces charges of defrauding his customers, wanted to clarify what happened to what was left of the workforce. After admitting to losing $51 billion in collateral and apologizing for the group’s rapid demise, he complains that he was forced to file for bankruptcy in a Delaware (always Delaware) court. In his opinion, it could have been avoided: “Once I signed the Chapter 11 documents [el que rige la presentación de quiebra en EEUU] Potential interest in “billions of dollars in funding” to bail out the company has been expressed. It seems one thing for Silicon Valley CEOs to live in a parallel reality where institutions are pouring money into companies that have sucked up everything they received and have no assets with which to respond. Incidentally, nothing is said in his exile letter about the loans made by the company in favor of him and other of its executives.
The damage from FTX’s fall after a bloody year for the crypto cause goes beyond the companies it had relationships with. Sequoia has lost the $150 million it invested, and crypto lender Genesis, which has $175 million left in FTX, has frozen payouts and already hired restructuring experts in what appears to be the prelude to another bankruptcy. But for Sen. Elizabeth Warren, a Massachusetts Democrat and candidate in the past US presidential primary, the damage is much more serious and affects the integrity of the financial system as a whole, which could sink again if crypto assets are not regulated immediately . Paul Krugman believes regulation will end the mirage of crypto finance: “When the government finally decides to regulate companies in the crypto industry, which would, among other things, prevent them from promising unattainable returns, it will be difficult for a Recognizing any advantage they might have.” Offer compared to ordinary banks… there is every reason to hope that the crypto industry, which was so imposing just a few months ago, will be forgotten.”
how did we get here Stephen Diehl, an activist against the crypto asset market, claims in an interview in the Financial Times and in various posts on his blog that crypto is nothing more than the result of the “commodification of populist anger, gambling and crime”. “Cryptocurrency is a gigantic scam, albeit a complicated scam…” he claims. “I’m not going to say if we have a 100 percent answer to that [si el blockchain es útil]. But the answer seems to be no. The interview cites the example of the Australian Stock Exchange, which gave up trying to migrate its clearing house system to a blockchain-based platform, forfeiting A$250 million ($168 million) and seven years of work.
In his work Popping the Crypto Bubble, Diehl traces the history of Bitcoin from its birth during the global financial crisis to the post-2016 crypto rush, which he calls the “age of scammers”. He argues that cryptocurrencies are slow (they rely on the transmission of transactions across decentralized networks) and unreliable (investors are responsible for securing their assets; if they lose passwords or die, there is no way to recover assets). It is clear to Diehl that crypto assets cannot simultaneously be a great investment that keeps growing and a viable currency that offers stable value. In fact, I dare say that it is not only their speculative nature that makes them unviable as a currency, but also the lack of a productive market economy around them. There is no real market for goods or services that can be bought with crypto assets, apart from lab use cases that nobody uses. Perhaps it is because, despite the efforts of many, they are not a currency but a right of credit to a community with no underlying asset or collateral to ensure this. For in its very basic nature there was nothing in the physical world to support it other than consensus and acceptance within the community.
Despite the fact that Satoshi Nakamoto wanted to create a virtual currency that would give a decentralized and libertarian community control over the economy and the issuance of money, the reality has turned it into the exact opposite: a highly speculative asset governed by capitalism. Calling it currency or the Treasury treating it as money for cash purposes leads to the confusion that they are an alternative to a fixed term in a bank and that savers (mostly men, it must be said) consequently believe that they and only They found a way to get rich, accumulate huge capital gains, with controlled risk. The ideological component of the investors, to which Diehl points out, escapes no one.
In case we were missing the gravy, our current Neronian CEO, Elon Musk, mocked the FTX bust on Twitter by saying that his “fuck meter was in the red” when he was dating Sam Bankman-Fried met. What has now emerged is that he has asked him to invest $100 million to buy the social network. If that doesn’t fit the tone of the times, I can’t think of anything.
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