• Bankrupt technology: How FTX crushed $40 billion to bits

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    #2503503

    PUBLIC DEFENDER By Brian Livingston The world’s fifth-largest cryptocurrency exchange, FTX, was valued by investors at $40 billion in early 2022 but w
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    • #2503527

      Ye ‘ole pyramid game/scam. I wonder – is Bankman-Fried his real name?

    • #2503568

      This was actually just a money laundering scam, if you look it up…

      Sam Bankman Fried’s (Bank Fraud, lol..) parents have connections to politicians. FTX was launched days after certain events.

      Money is printed at the fed and donated by the US govt to Ukraine in billions.
      Ukraine then “invests” it in FTX.
      FTX owners take a huge chunk, and then donate to certain political parties…
      Rinse and repeat.
      Oh and it was hosted in the Bahamas, lol.

      The problem is they bodged it up and really messed up their investments and went bankrupt. It’s apparently fifth largest and everyone I know in crypto has never heard of / used FTX.

    • #2503589

      I very much appreciate Brian’s and Ask Woody’s interest in providing this information to its audience, a matter of economics I have followed for decades. Allow me to add an additional element to the picture.

      No one has any way of knowing exactly the total global nominal (face) value of the numerous types of derivatives (side-bets, and side-bets on side-bets, etc.), but various banking and other sources on various continents have in recent years placed it in the range of 1.8 to more than 2 quadrillion dollars — a number vastly beyond any possibility of being redeemed. And derivatives can vanish as fast as crypto. Events such as the LTCM disaster in 1998, the dot.com bubble, and the accurately forecast (by some) 2007-08 debacle — which was not just making mere millionaires of the poor, victim billionaires, but suddenly tossed countless individuals and families out of work, out of their homes, and worse. Instead of learning that lesson, we have allowed the top financial institutions to continue doing exactly what they were doing then, making matters more tenuous now than ever, as admitted by leading financial business people (yes, I refuse to call it an industry).

      The problems inevitably resulting from allowing an economic-financial system to be divorced from the physical well-being of the population is not new. For those who don’t know, the U.S. was convinced in August of 1971 — 50 yeas ago — to leave the basis of the (albeit flawed) Bretton-Woods system, which stabilized international currency valuations, allowing long-term planning, in favor of speculator-preferred “floating exchange rates,” and finally legally abandoned the firewall between regular banking and purely speculative operations with the 1999 dis-enactment of the 1933 Glass-Steagall Act, enacted in the wake of the 1920s crash of the speculators’ party. G-S prohibits speculators from gambling with your bank deposits; if you want to speculate, knock yourself out,but not through the regulated commercial banking system.

      Unfortunately, this country has so far been unwilling to put its economic house back in order. Fortunately, as I write this, the majority of the world’s nations (representing about 6.5 billion people) are in some way engaged — some intensively — in establishing a new financial architecture based on mutually beneficial, real, physical development. The sooner our elected representatives decide to join that, the better off we all will be.

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    • #2503630

      Thanks, Brian for staying on top of the Crypto craze from early on to what appears to be impending doom. No bailouts here, since none of this fun and games was ever insured, as the article points out. If this article were not behind our (voluntary) paywall at AskWoody, I would share it with all of my computer user friends and colleagues, as well as friends who know nothing or next to nothing about how tech works.  As it stands, the main points of the story can be backed up from online source materials without violating our paywall, so I can still help spread the word (and of course refer everyone back here and encourage them to subscribe).

       

      -- rc primak

    • #2503678

      Now the question is will stupidity repeat, or is this the end of crypto?!

    • #2503679

      Red flags came up  when this first started. There was no SIPC or FDIC  insurance.

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