My article in the New York Times describes the common practice throughout the cryptocurrency industry that can lead to death spirals like the one at FTX.
Great article. I worked as an actuary in the reinsurance market over 20 years ago. Financial shenanigans get repackaged and repurposed year after year. New products, new faces, new deceptions, but not really new. It is all just pass the parcel hoping you do not get stuck holding the loss. Thanks for explaining.
One of the things I like best about Molly's reporting is that it's short and to the point, ideal for folks like me with short attention spans. The practice in question is easy enough to understand, but I had no idea that it was so prevalent, especially given that the huge potential for abuse is not exactly surprising. I have to believe that Molly, through W3GJG, played a pretty big role in shining a much needed brighter light on this kind of thievery.
I wonder if it would be wise to regulate this out of the market for certain crypto biz models. I have a book on my reading list about the history of US banks issuing their own currencies and now I’m very curious to see the historical comparison to the contemporary crypto collapses. I don’t have a specific regulatory approach to recommend. But either an outright ban on exchange tokens or requirement that they can’t hold their own token should be considered. That or some form of publicly disclosed financial statements if they do issue a token (ie like a publicly traded company). I’m eager to read the article and now I have some motivation to read that book 📚
outstanding article Molly and a definite upgrade to NYT’s reporting on crypto.
using language like ‘tokens’ and ‘coins’ gives these teeny weenie electronic files - produced by a surprisingly small amount of actual code that can generate billions more in nanoseconds - an opportunity to sit at the same table with real assets. they have no intrinsic value and can only claim fame based on their last trade ... which might very well have been by the owner of that little code machine. wall street LOVES this and can’t wait to stuff your retirement portfolio with all sorts of ‘coins’ and ‘tokens’. buyer beware!
A friend just brought to my attention an article published earlier this week by Joan Westenberg, 'Sam Bankman-Fried is a feature of effective altruism, not a bug'. It came to HIS attention thru Medium, but it's also available on youtube: https://joanwestenberg.com/blog/sam-bankman-fried-is-a-feature-not-a-bug. I think Molly and most of her followers will agree, her (Joan's) main point is that EA allows people to justify minor obstacles to their lofty goals by claiming the moral high ground, and 'greater good'. Right, what could possibly go wrong?
I've long had concerns about EA, it kind'a sounds good in theory, if you totally ignore the realities of the real world. How do you identify what 'the most worthy causes' are? And identify how best to address them? And deliver those solutions with a minimum of administrative overhead (I'm sure you're all aware of how much of your charitable contributions go to those)?
A recent example of how that 'altruism' thing can be a bit tricky was social media influencer Mr. Beast's (I never heard of him before this) recent project where he raised / spent over $50 million to improve water infrastructure & sanitation in sub-Saharan Africa, building 100 water wells to provide fresh, clean drinking water to over 1/2 million people. That's certainly a worthy cause, who could possibly criticize something like that? You know the answer, an 'aspiring Kenyan politician' claims that 'it just perpetuates the stereotype that Africa is dependent on handouts'. There were many others expressing essentially the same idea....but wouldn't that complaint apply to just about ANY beneficiary of EA?
I have another comment, on SBF in particular saving the world by using FTX to fund EA, but my attention span is waning, and I need a nap right now. Maybe later.
New York Times: Crypto's fragile foundations
I know Molly provided the link to the internet archive, but here's a link that I have gifted from my subscription: https://www.nytimes.com/2023/11/08/opinion/fraud-crypto-ftx-trial.html?unlocked_article_code=1.80w.kygK.l48iF4d3FNkV&smid=url-share
"When the next company in its position falls, the only surprise should be that people expected any other outcome."
Savage
I enjoyed reading your analysis in the NY Times this morning. It upped the quality of their coverage of crypto.
Your writing is fun to read and easy to understand. I look forward to your newsletters.
Great article. I worked as an actuary in the reinsurance market over 20 years ago. Financial shenanigans get repackaged and repurposed year after year. New products, new faces, new deceptions, but not really new. It is all just pass the parcel hoping you do not get stuck holding the loss. Thanks for explaining.
I wonder if there’s a federal investigation into Tether
One of the things I like best about Molly's reporting is that it's short and to the point, ideal for folks like me with short attention spans. The practice in question is easy enough to understand, but I had no idea that it was so prevalent, especially given that the huge potential for abuse is not exactly surprising. I have to believe that Molly, through W3GJG, played a pretty big role in shining a much needed brighter light on this kind of thievery.
Whenever I think about canceling the NYT because of Douhat, Bret Stephens, etc. they publish gems like this column.
Great piece! So satisfying to see the NYT publish the unvarnished truth about crypto. Perhaps this is a turning point—Molly White in the NYT!
I wonder if it would be wise to regulate this out of the market for certain crypto biz models. I have a book on my reading list about the history of US banks issuing their own currencies and now I’m very curious to see the historical comparison to the contemporary crypto collapses. I don’t have a specific regulatory approach to recommend. But either an outright ban on exchange tokens or requirement that they can’t hold their own token should be considered. That or some form of publicly disclosed financial statements if they do issue a token (ie like a publicly traded company). I’m eager to read the article and now I have some motivation to read that book 📚
outstanding article Molly and a definite upgrade to NYT’s reporting on crypto.
using language like ‘tokens’ and ‘coins’ gives these teeny weenie electronic files - produced by a surprisingly small amount of actual code that can generate billions more in nanoseconds - an opportunity to sit at the same table with real assets. they have no intrinsic value and can only claim fame based on their last trade ... which might very well have been by the owner of that little code machine. wall street LOVES this and can’t wait to stuff your retirement portfolio with all sorts of ‘coins’ and ‘tokens’. buyer beware!
A friend just brought to my attention an article published earlier this week by Joan Westenberg, 'Sam Bankman-Fried is a feature of effective altruism, not a bug'. It came to HIS attention thru Medium, but it's also available on youtube: https://joanwestenberg.com/blog/sam-bankman-fried-is-a-feature-not-a-bug. I think Molly and most of her followers will agree, her (Joan's) main point is that EA allows people to justify minor obstacles to their lofty goals by claiming the moral high ground, and 'greater good'. Right, what could possibly go wrong?
I've long had concerns about EA, it kind'a sounds good in theory, if you totally ignore the realities of the real world. How do you identify what 'the most worthy causes' are? And identify how best to address them? And deliver those solutions with a minimum of administrative overhead (I'm sure you're all aware of how much of your charitable contributions go to those)?
A recent example of how that 'altruism' thing can be a bit tricky was social media influencer Mr. Beast's (I never heard of him before this) recent project where he raised / spent over $50 million to improve water infrastructure & sanitation in sub-Saharan Africa, building 100 water wells to provide fresh, clean drinking water to over 1/2 million people. That's certainly a worthy cause, who could possibly criticize something like that? You know the answer, an 'aspiring Kenyan politician' claims that 'it just perpetuates the stereotype that Africa is dependent on handouts'. There were many others expressing essentially the same idea....but wouldn't that complaint apply to just about ANY beneficiary of EA?
I have another comment, on SBF in particular saving the world by using FTX to fund EA, but my attention span is waning, and I need a nap right now. Maybe later.
Congrats on getting onto the NYT
Great article. I learnt something new!
Hope you saw this one:
https://www.theverge.com/2023/11/6/23948464/bored-ape-nft-event-eye-injury-sunburn-uv-exposure