FTX, LUNA, Celsius, et al – a post-mortem
Making something illegal doesn’t prevent bad actors from breaking the law. It does not stop businesses such as FTX, LUNA, and Celsius from existing. It only stops good businesses from providing the public with better alternatives since it hinders the free market’s ability to make bad businesses unprofitable.
Meanwhile, criminals can break the law. This has been the case in many areas such as the laws on drugs, sex, airport security, and financial crimes.
Bureaucrats and lawmakers enable bad actors. US regulators initially made crypto derivatives illegal for crypto on the premise that investors could wipe themselves out due to leverage. Yet outside of derivatives, many investors got wiped out in 2015 and 2018 in crypto due to bear markets where alt coins lost typically 98% or more of their value. Similar happened with stocks during major black swan events such as in 2000-2002 or Mar-2020 or late 2008 which was born from stacking bad investments that were within the law. #GoldmanSachsetal
As a consequence of the US initially having made crypto derivatives illegal, larger investors who wish to trade with liquidity have had no choice but to deal with questionable unregulated entities outside the US rather than with regulated and insured entities.
Meanwhile, SBF’s fraud was enabled due to his large political donations and close bonds with key US regulators such as SEC Chair Gary Gensler, Federal Reserve Chair Jerome Powell, and Maxine Waters, who chairs the House Committee on Financial Services, all who looked the other way. Regulators indirectly forced citizens to trade cryptocurrencies offshore as it was believed that FTX was the safest bet for liquidity and solvency.
But some think SBF was a plant. Whether or not this is true, regulators and the mainstream media will use FTX’s fraud as an excuse to enact onerous anti-crypto laws rather than acknowledge their own role that contributed to the fraud. Crackdowns will do nothing to stop billions in capital from flowing out of any government that tries to stop crypto and into more welcoming jurisdictions including the unregulated underworld. Countless jobs and tax revenue would be driven offshore by such policies. We have seen this happen in China and Russia, two countries who have banned various aspects of crypto.
Given crypto’s immense utility, any government that cripples crypto will cut itself off from the massive efficiencies and cost reductions crypto offers across the metaverse, DeFi, gaming, DAOs, and NFTs to name a few.
Regulators’ allegiance to whom?
Binance alone exchanged more than $7.7 trillion in trade volume in 2021 while if one includes all offshore exchanges, the total likely is over $10 trillion annually. If US regulators were more permissive towards crypto derivatives trading, regulated exchanges would generate tons of additional tax revenue.
The exchanges would follow a list of rules while offshore exchanges would see their customer base fall. But regulators may have their allegiances with offshore exchange owners who also happen to be large contributors to the political campaigns supported by the regulators.
Justice systems can be unjust
Ultimately, while many would like to believe the law is fair, it has always been and will continue to be about relationships until decentralisation via a Web3 DAO blockchain driven metaversal world levels the playing field by creating more trust-less platforms where people have the freedom to exchange value and create without having their assets frozen, their communication censored or cancelled, or your reputation ruined.
These two freedoms are the gateway to all other freedoms. The Web3 metaverse drives ownership to the creator. Bitcoin enables value to be transacted in a peer-to-peer manner. While many have not been barred, censored, or cancelled, such remains unimportant until it becomes important.
History is littered with examples of dictatorial nation-states controlling its population by such means. The slow creep of authoritarianism across most all governments eventually makes the unimportant, important. We saw how a handful of people at the top used COVID:
- to control our freedom of movement by way of forced quarantines
- to indirectly force vaccinations or lose our job or lose our right to shop for basic necessities let alone have any normal sort of life
- to control our ability to communicate about controversial topics such as COVID, politics, and voting via social networks whom were shown to be influenced by those who work or worked for the government including the CIA: https://childrenshealthdefense.org/defender/censorship-facebook-cia-fbi-cola/
Of course, it makes sense that if your platform attracts billions of eyeballs, the government will make sure you are under its control. While some say this is done to keep peace, governments have a longstanding track record when it comes to inciting war based on economic reasons. Money always drives war.
Excuses such as the control of communism, terrorism, money laundering etc are always used as justifications. As one of countless examples across history, pages of declassified documents show how the Gulf of Tonkin was carefully orchestrated by the NSA to trigger the public’s outcry against Vietnam so war would be inevitable. But while the US instigated this, no nation is innocent across the historical timeline. History is littered with bad actors across all countries.
At any rate, second and third order effects from COVID lockdowns and quarantines and global warming are being felt in the form of:
- Inflation partly due to onerous and bureaucratic laws to “save the planet” via ESG where uneconomic laws are enacted
- Many students’ developmental social skills hampered from the lockdowns
- Soaring rates of depression and suicide especially among younger
- Stress, lost livelihoods, bankruptcies, mortgage foreclosures, and spiking homelessness
Cost/benefit analysis seems no longer relevant because in the case of Covid, “one person dying is too many”. Yet, in recent years, an average of nearly 60 million people die every year from various causes. But that doesn’t sell newspapers.
Orwell’s timely novel 1984 has never rang more true. The Web3 metaverse is beautifully inevitable.
(͡:B ͜ʖ ͡:B)
Dr Chris Kacher, PhD nuclear physics UC Berkeley/record breaking KPMG audited accts in stocks & crypto/bestselling author/top 40 charted musician/blockchain fintech specialist. Co-founder of Virtue of Selfish Investing, TriQuantum Technologies, and Hanse Digital Access. Dr Kacher bought his first Bitcoin at just over $10 in January-2013 and contributed to early Ethereum dev meetings in London hosted by Vitalik Buterin. His metrics have called every major top & bottom in Bitcoin since 2011 to within a few weeks. He was up in 2018 vs the avg performing crypto hedge fund (-54%) [PwC] and is up well ahead of Bitcoin & alt coins over the cycles as capital is force fed into the top performing alt coins while weaker ones are sold.
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