The collapse of FTX or the commodification of anger

As much as one does not want to repeat oneself, it is impossible to avoid the seriousness, extent and exemplary nature of the collapse of FTX.

Weeks after the collapse, in the beach bar set up by Sam Bankman-Fried around a complicated business network, disagreement and confusion continue to reign.

At the first bankruptcy hearing, held on November 22, FTX's lawyers said a "substantial amount" of the company's assets were missing or stolen, and that the empire was run as the "personal fief." from Bankman-Fried.

The bankruptcy administrator himself, who was that of Enron, is astonished: 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 be paid. .

Bankman-Fried, whose whereabouts are unknown like the funds, wanted to clarify what happened to what is 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 bankruptcy in a Delaware (always Delaware) court.

According to him, it could have been avoided: "As soon as I signed the Chapter 11 documents [the one that governs the filing of bankruptcy in the US] a potential interest of billions of dollars of financing was manifested" to save the company.

It seems to be a thing for Silicon Valley CEOs to live in a parallel reality in which institutions put money in companies that have sucked up all the money received and no assets with which to respond.

The damage from the fall of FTX, after a bloody year for the crypto thing, extends beyond the companies with which it had relationships.

Sequoia has lost the 150 million dollars it invested, and the crypto lender Genesis, which has left 175 million dollars in FTX, has frozen withdrawals and has already hired restructuring experts, which seems the prelude to yet another bankruptcy .

But for Senator Elizabeth Warren, a Democrat from Massachusetts and candidate in the last US presidential primaries, the damage is much more serious and affects the integrity of the financial system as a whole, which could fall again if the financial system is not regulated. crypto assets immediately.

Paul Krugman Believes Regulation Will Kill Crypto-Financial Mirage:

How did we get here?

Stephen Diehi, an activist against the crypto asset market, maintains 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 maintains.

“I'm not going to say if we have a 100% answer on [if the blockchain is useful].

But the answer seems to be no.

The interview cites the example of the Australian Stock Exchange which has abandoned the attempt to transfer its clearing house system to a blockchain-based platform, forfeiting A$250 million ($168 million) and seven years of worked.

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 refers to as the “Age of Scammers.”

He argues that cryptocurrencies are slow (they rely on transmitting transactions through decentralized networks) and unreliable (investors are responsible for securing their assets; when they lose passwords or die, there is no way to recover assets).

For Diehl it is clear and evident that crypto assets cannot be both a great investment, which goes up and up, and a viable currency, which offers a stable value.

In fact, I would venture to say that it is not only their speculative nature that does not make them viable as currency, but also the absence of a productive market economy around them.

There is no real market for goods or services, beyond lab use cases that nobody uses, that can be bought with crypto assets.

Perhaps it is because, despite the efforts of many, they are not a currency but a credit right against a community without an underlying or collateral to ensure it.

Because, precisely, in its foundational nature there was nothing in the physical world to support it apart from consensus and recognition within the community.

Despite the fact that Satoshi Nakamoto wanted to create a virtual currency that would give control of the economy and the issuance of money to a decentralized and libertarian community, reality has turned it into precisely the opposite: a highly speculative asset subject to capitalism. wilder.

Calling it currency or that the Treasury considers it money for the purposes of cash payments leads to the confusion of thinking that they are an alternative to the fixed term in a bank and that savers (mostly men, it must be said) believe, consequently, that they and only they have found a way to get rich, to collect huge capital gains, with controlled risk.

The ideological component of those who invest and that Diehl points out does not escape anyone.

In case we lacked sauce, our Neronian CEO of the moment, Elon Musk, mocked the FTX bankruptcy on Twitter by saying that his “shit meter was in the red” when he met with the Sam Bankman-Fried.

What has now been revealed is that he asked her to invest 100 million dollars in the purchase of the social network.

If this doesn't fit the tone of the times, I can't think of what.

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