As unfortunate as this is, you could replace “cryptocurrency” with pretty much any noun and find a time in history when that was the macguffin in vogue. Today it’s cryptocurrency, as it’s the mysterious new thing that all the young people are getting rich with, say the press.
There will always be confidence scams, as long as there are humans.
To me, this feels a lot more widespread than things like typical pyramid schemes. Celebrities doing cryptocurrency commercials, baseball umpires being sponsored by cyrptocurrency exchanges, crypto machines in the grocery store. It's nuts.
Adjustable rate loans. People lose their life savings and credit over nonsense all the time with those. Now you have al these YouTube "experts" telling eachother to take HELOC loans to buy investment property.
Another examples of a popular modern confidence scams is the refund scammers. They pretend to be from Amazon, McAfee, Norton, Microsoft, etc., and tell you that a charge has been made, offering a refund. Or they claim hackers are on your computer. Then they install remote access software, and trick you into making bank transfers or buying gift cards.
Personally I think these con-artist scams are more widespread than typical pyramid schemes. But perhaps that's just selection bias on my part, because of the folk I know and the media I consume.
Things got pretty crazy in the original dot-com boom. Different for various reasons; you probably didn't have the same religious fervor around dot-com stocks. But there was also a similar vibe of "These stock prices are insane but everyone else is getting rich of them."
> There will always be confidence scams, as long as there are humans.
Maybe, but the question is more about which rate of a population will be exposed to such a risk. With proper politics, you can definitely limit these risks for the general public.
At one point the beanie baby market was up billions as well. I'm not saying there won't be winners, but there is going to be an absolute mountain of losers.
Well ignoring the fact that beanie babies still sell for thousands of dollars today, they also never became a countries legally enforce currency (el salvador) or were utilized by the EIB (europes federal reserve equivalent) to issue bonds.
I think you'll struggle to find many comparisons to short-lived hypes with cryptocurrency as a category.
True, but something being new doesn't make it more worthy. The subprime lending catastrophe was due to a novel, very popular, idea and people got rich off that as well at first.
You're right. Worthy was a bad choice. I simply meant that doesn't mean it would turn out to be useful or stand the test of time as being a good investment just like how for the vast vast majority of people beanie babies weren't and still aren't either.
The people who are still holding, or the people who sold at its height, to people who were hoping for more? If the former then they haven't gained anything yet, if the latter, that's the greater fools.
The top so far. I have no idea about the future. Regardless, when do people sell? When it's at the top? When is that? If it's going up shouldn't you continue to hold? And should you sell when it drops? You haven't. So what's your line in the sand? Should new people be buying in? When should they stop? And then who are you going to sell your coin to? The greater fool.
Comparing bitcoins volatility to fiat is ridiculous but regardless, you haven't made any actual guaranteed monetary gains until you sell.
Ok, sure, avoid the other questions, but to be clear, paying for something with bitcoin is the same as selling it, you're just pretending that there isn't a conversion to fiat somewhere in the chain.
When I buy a house in Dubai with bitcoin, there is no fiat involved. I receive the house, they receive the bitcoin. Simple. You could call this selling your bitcoin, but in the same sense you could say selling your fiat.
You seem to think that fiat currency is somehow a base unit like meters. But it isn't. Maybe you have noticed the inflation all over the world recently, some countries more than others. Like I said before, all asset classes have risks. The statement "cashing out" makes no sense to me. I have various stores of my value. Fiat, crypto, companies, real estate, jewelry, bullets, ...
> When I buy a house in Dubai with bitcoin, there is no fiat involved.
I'll bet you they didn't buy and pay for the materials for said house with bitcoin.
I don't really know what your point is now as you apparently view bullets as an asset class, so I've kind of lost your story. If you think you're going to make a much of money on bitcoin I'm not sure why you'd get rid of it. I invest in securities because I think it'll outperform the default choice, I don't invest in things that I think will under-perform it.
That is the difference between you and me. I can see both your worldview and mine, but you can only see yours. I know your worldview because that's the old me.
Here is a challenge: try to imagine a world where bullets are an asset. A world where an "asset" is:
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. (https://www.investopedia.com/terms/a/asset.asp)
Maybe you should open your worldview a bit to see various ways on how you store value, not only the obvious financial instruments. But if you don't, no problem.
Yes, it's a big bubble that's going to implode quite hard.
There's an implicit phase change in this system: solid to gas. It'll sublime like dry ice in a moment, when bitcoin block is priced at its transaction processing fees.
When this all disappears, nothing of value will remain.
> By 1635, a sale of 40 bulbs for 100,000 florins (also known as Dutch guilders) was recorded. By way of comparison... , a skilled laborer might earn 150–350 florins a year.
What do 40 bitcoins go for now? About 1 mil USD. What's that compared to an average salary? Only 20x. Much less than the 300x of some tulips
The existence of past bubbles is in no way an indicator that something rising quickly with a lot of volatility is a bubble. We're talking about an asset that has national buy-in. When's the last time a national currency went to zero? When's the last time the european bank utilized a financial tool that went to zero?
I wasn't aware that "crypto-bro" was considered an attack of any sort. If you took it as insulting I'll avoid its use in the future (Edit: and I apologize for the inadvertent insult).
Edit: I though "crypto-bro" is just a short hand for "ardent cryptocurrency supporter". Does it have some other negative meaning/connotation that I am not aware of?
no worries, but yeah it's widely considered an insult the top ranked definition on urban dictionary
> A nerd with too much spare time and video cards. Thinks he is smarter than you because he buys and resells burnt forests. Will ignore any meaningful arguments against what he does by repeating something about "serious business" 1000 times.
for that matter, the '-bro' suffix is almost exclusively used as an insult
I guess it depends whether you think people actually starting to use this stuff, as intended, will be a good thing.
I think the more people actually "take the bullshit seriously", it'll be like trying to take the emperor's new clothes and sell them at your local discount store.
Ie., there is no actual use case for any of this. Its only useful insofar as it exists as a ponzi asset (ie., it only has value because other people want it because other people want it... because other people want it...).
It doesnt actually solve any problems.. so the more a recession deflates bubbles, the more that businesses/projects/etc. will need to show actual economic value to survive.
Bitcoin has a "marginal productive value" in something, i'd say, c. 100 USD region. As in, the slow, largely useless, bitcoin transaction network provides the service of "publically, reliably, slowly" processing a block of transactions between parties.
How much value does that have? AS A SERVICE, really... almost none.
You could create a better competitor service tomorrow, and charge much less to use it (hence: all the other coins).
Crypto isnt like gold: there isnt a limited supply. You can just create more coins: doge, eth, etc. THere's an infinite supply of self-liming coin systems. It's trivial to create a competitor service.
So think about bitcoin as an actual product: trivial to out-compete, provides basically no useful service, horrifically slow. As a business model, its DOA.
> Crypto isnt like gold: there isnt a limited supply.
There is a much stronger guarantee that there is limited bitcoin when compared to gold. We have no idea what tech advancements will allow mining gold from comets or neighboring planets. A bit more far fetched, but maybe not impossible in the future would be changing other elements into gold.
Bitcoin has a codified contract that is being upheld socially with vast amounts of resources proving that society agrees on the limited supply. Sure, you can fork the codebase and create another chain. That has happened many times, which just proves a new chain does not do anything to the agreed upon, codified, limited supply of bitcoin.
As for your other points, they're presented constantly as serious arguments and debated ad-nauseam. Either you've just not witnessed it, or you're just trying to present things as uncontested facts which appears disingenuous and does not strike me as an honest argument.
I sincerely have had no reply to any of these points.
Either bitcoin is a deflationary currency, in which case it repeats the servre financial crises of the 19th C. and early 20th C. in which an economy is imprisoned into a rate of inflation set by blind non-economic forces. In which, as an economy, is horrifying: consumer protection is impossible by design, the owners are the controllers (feudalism), it's entirely public (so you're entire economic life is available to be profiled by used by others), etc.
Or its an asset. If it's an asset its a ponzi scheme.
It's clearly mostly being held as an asset, and traded as an asset by criminals and dictators because it has some ponzi-value. This ponzi-value will disappear as soon as anyone actually tries to use this as a serious currency, as with someone planting a tulip bulb for the flowers... no one wants tulip flowers (lol).
No one wants an incredibly deflationary economic system, controlled by the holders of coins, forked on behalf of the landed gentry, with one's private economic history plastered across the whole internet, with incredibly slow transactions, with immutable histories, and so on.
As soon as anyone actually "plants the tulip bulb" crypto is, quite seriously, f*ked. No one wants tulips. If I were holding crypto the last thing I'd do is actually try to get any one to take is seriously as a currency.
The number of delusional far-right libertarians who dream of being feudal lords is the c.5% of young angry men it's always been. And likewise, if they ever achieved anything, the state would put a stop to that immediately. No one wants your tulips. But i'd just love to see you plant them!
Go, run something on bitcoin, you'd wipe crypto off the map over night.
If something is promising you 500% returns or whatever, ask yourself why they aren't investing their marketing budget in their goldmine, ask yourself why are they trying to get you to invest.
This..
"Oh, so you're a millionaire, and you have this opportunity for _ME_ to put my money into to make more money, and you just chose to forego putting your own millions into it out of the goodness of your heart? Right, seems legit."
Without taking a stance on whether crypto is a scam or not, and whether him doing the ad was good or bad, he's an A-list celebrity.
His ability to charge $ for his celebrity comes from his image/reputation. He has access to paid professionals whose job is to safeguard and burnish his reputation.
Right, I understand the idea... but these companies are not out here saying "HEY THIS IS A SCAM EVERYONE" — a lot of them believe their own nonsense. Professionals are fooled all the time. Outside of an email chain that literally says something like "Hey Matt Damon, can you promote our scam" it seems like a legal boondoggle. How would you prove they knew it was a scam? How would you prove that they didn't do sufficient due-diligence in this example?
We might be talking past each other. I was reading "scam" in a general way, versus as a legal term of art indicating a crime had happened. When the OP said celebrities should be "held liable", I didn't read it to mean criminally liable, just, reputationally liable.
Health and wealth, in particular, are sensitive subjects that are often the source of scams. If I type into Google, "is crypto a", the top autosuggest hits include "a ponzi scheme", "a pyramid scheme", "a bubble", "a scam". Clearly some folks have some concerns. There are editorials in mass market papers discussing whether crypto is a scam, and have been for several years.
If a celebrity still wants to lend their name to such a project, that's their choice, of course. And they might well have a good faith rationale to do so. And perhaps crypto is not a scam! But... it still seems to me that it's a risky proposition, and it should be evident to them and their PR team that it's a risky proposition. If it goes poorly, which it seems like it is, it's reasonable that people will conclude that Matt Damon preferred to make a bunch of money at the risk of other people's financial wellbeing. (And that's fine, too -- fortune favours the bold, after all.)
Sure. Both you and the comment you are replying to are talking in the context of "celebrity endorses crypto, man loses pension". This is not the context in the OP. In OP case no celebrity was endorsing the scam, the scammers simply used the likeness of celebrities without permission to advertise their fake trading website that wasn't actually dealing with crypto at all.
So the context of your discussion is misleading in 2 ways:
1) You're implying that OP has something to do with crypto investments. It doesn't.
2) You're implying that OP has something to do with celebrities endorsing crypto investments. It doesn't.
Celebrities are used to being mouthpieces for various questionable products all the time. Their job is literally to sell their name and likeness. I have a far bigger problem with the so-called tech luminaries peddling this junk in various guises, from the likes of Musk, Altman, Dorsey, Thiel, A16Z, Ohanian, etc. on down. These are the people who lend a real air of legitimacy to the whole space, and I ultimately hold them responsible for the suckering of the regular folks. Musk is right about the dangers of mind-viruses. Too bad he and so many "visionaries" have already been infected by one of the worst.
Sure, but that's not related to OP at all. In OP case the scammers merely photoshopped celebrities to give fake endorsements. That's different from celebrities actually endorsing something.
That becomes real nasty real fast when scammers literally just copy photos of people and those people have no idea their face is on the next "coin" promising to take everyone to the moons of mars.
OR when the scammer uses ai to replace their face with Clooney before telling everyone just to hodl.
Fake celebrity endorsements are often used on these scams. Well-known UK finance media guy Martin Lewis constantly has to try to shut down ads using his image.
My bank right now gives something like 0.01% APY interest, so "more than you could earn in a bank" doesn't really scream "worth the risk" to me. But I guess someone fell for it.
Do you mean TARP? That was paid back. The government didn't really make a profit (the revenue generated in addition to the repayments was less than inflation) but there didn't really end up being any free money except in the short term. And that was the point, of course.
W.C. Fields was a comedic genius, and brilliantly hid a lot of biting satire in overly obvious slapstick. He is so unfortunately forgotten today. The film "You Can't Cheat an Honest Man" is 83 years old, and people still don't know what he was saying. I suspect he would have found it hilarious that his line is so thoroughly misunderstood.
Victim blaming is not cool. Everyone is ignorant about something or the other, it just so happens through that man's bad luck that he is ignorant about a technology that scammers found attractive.
Thank your luck but don't blame others for their bad luck.
I think that it's possible to talk about how setting bad examples can have unintended consequences later on, and it's not always "victim blaming". In fact it can be the opposite.
I did? I bought some Apple stock in 2009 and still own it. I got some money for free since then—not just the (considerable) appreciation; AAPL also pays a dividend.
The difference between that and a crypto scam is obvious to me, or at least it has been so far. But that is because I chose to put a lot of work into understanding all this stuff. Not everyone has; that should not cost them their life’s savings.
Half a year ago my mother asked me about crypto and how she could invest since she read about it online somewhere. I strongly opposed and explained to her why it wouldn't be wise.
Most people are just too prone to scam ads and such. It's really concerning.
I think I managed to talk out my mother-in-law from investing into cryptocurrencies a year ago. Her friends were already in big time and she was having a fear of missing out. I told her that the market has been artificially pumped high and will be coming down soon. She's also very eco-concious so I told her the running the crypto system is really bad for the environment.
Her friends are apparently buying their crypto with the help of some "guy" because they don't know how to do it themselves. It sounds a bit scary, but it's their private matter.
personally I think this is a signal that our financial system is too absurd. I strongly doubt anyone would think "this seems reasonable" if we all didn't hear stories of people winning millions on options trades. I personally know a young engineer that went all-in on tesla plays and a few years ago had taken ~100k to >6MM. The guy had never bought a single stock before he got into tesla.
What is the root of all this ridiculous finance? The stock market seems to be the most ridiculous thing that has been around so long that it's considered normal, but is our inflationary, high risk high reward economy really optimal for society? We're in a spot now where the wealth gap is staggering, yet 100% of the american billionaire classes net worth wouldn't even fund the federal government for a year.
Something seems very off about all of this and I suspect that's why we see the symptoms of otherwise intelligent people falling for money scams all the time. We've simply put way too much social energy into making finance complex and I worry that we're continuing down a wrong path by demanding more complex safeguards, insistent that we can solve the problems with policy.
I readily welcome the fact that all of this is so complex that I don't have a strong grasp on it though and with that my intuition isn't worth much, but the few people I've met that claim to have a firm grasp on our economic drivers haven't been able to make predictions worth anything noteworthy and that's worrying to me. If the most educated people you know in finances and markets are markedly under-performing compared to congress members, this complexity does not seem to be something benefiting the people it should be benefiting.
> We've simply put way too much social energy into making finance complex
What does "social energy" mean here? Human intellectual effort? Finance represents the complexity of the economy and societies - it's basically a model for understanding and rationalizing the economic activity going on. It can definitely become unmoored from fundamentals, but then have a correction, though.
> and I worry that we're continuing down a wrong path by demanding more complex safeguards, insistent that we can solve the problems with policy.
What's the alternative? What is the non-policy tool? Let it run without safeguards until it destroys more of the financial security of average people?
That's what's happening in the crypto world now. Perhaps we don't regulate it and the examples in the article serve as warnings to others?
However, if we do that with the broader stock market, I suspect it'll exacerbate the wealth gap issue you lament, unless your idea is to accelerate toward an financial and societal collapse/reset, which comes with arguably worse side effects.
> However, if we do that with the broader stock market, I suspect it'll exacerbate the wealth gap issue you lament
the most widely used cryptos either have fixed inflation or noteably no inflation with bitcoin.
These are merely a ton of correlations, but it's hard to imagine the wealth gap getting worse under a non-inflationary, trickle down economic model. The trickle down model might work with non-inflationary currency, but it seems obvious to me that it doesn't work in our current system where the bankers get the most value from the dollars its allowed to create and it loses value as it moves towards lower income pockets.
> it's hard to imagine the wealth gap getting worse under a non-inflationary, trickle down economic model
Trickle down economics has exacerbated the wealth gap, as demonstrated by large scale international retrospective studies of its effects [1]. Given that, it's hard to imagine how making things more trickle-down would improve the wealth gap.
The paper the article links doesn't seem to address inflationary trickle-down economics. You have to have a theory as to why it doesn't work. Simply showing it doesn't work doesn't really show why it doesn't work.
I think a logical hypothesis is that it doesn't work to lessen wealth inequality is because first movers advantage. In an inflationary economy the first people to touch the money get the most value of it as it loses value over time. In a deflationary economy this would flip and I'd argue that's exactly what we need to happen. There is no such thing as someone who sits around hoarding wealth at a macro scale. This is made obvious by the fact that it takes roughly 3 generations for families to lose their wealth.
Sure, maybe the frugal entrepreneur holds or invests, but that person will die and give it to someone who values money less as they didn't earn it. They will likely spend the money and so-on until the money has been injected back into circulation, with each step of the way that money gains value, which means that money is worth the most when it reaches the producers/workers.
> The paper the article links doesn't seem to address inflationary trickle-down economics.
Inflationary trickle-down (AKA supply side) economic policy is exactly what we've had since the 1980s (even from the parties on the left), so I don't know what else it would be addressing. Before that we had inflationary demand side economics.
We've not had a significant deflationary period in the US, but Japan has, due in no small to their historical resistance to allowing immigration. It's not clear that the US can or should follow their model.
> Most people are just too prone to scam ads and such. It's really concerning.
That really isn’t true. Most people are fairly resistant to scam ads, or ask for and get good advice. But the scam ads are relentless and fast a wide net, they only need to catch a few victims to be profitable.
But then I had to talk my parents out of amway when I was a teenager. A lot of people are easily deluded by a bit of hope backed up by personal connections. That was really powerful stuff, I only hope all of that has moved to much easier to resist scam ads.
The personal connections are huge - and if your personal connections don't mention how something is a scam, or even actively encourage you to get involved with a scam, there's little hope of resisting ads, etc.
And people have fewer personal connections these days, which makes it even worse.
My older brother has lost ten thousand dollars in the past year - I've begged him to stop but he won't listen. It's affecting his relationship with his girlfriend and he can't afford any of this.
He has no experience with computers outside of facebook, but all he does is talk about the next deflationary shitcoin that's gonna make him a millionaire, cause "when the supply shrinks it gets more valuable, like a rare collectible".
He's already asked for money to fill in some gaps.
Americans have a lot of the world's wealth, and at this scale there are more gullible people than any scammer knows what to do with. To most of the World's population that immense wealth is just the right phone call, text message, or email away from becoming yours.
Because the only way anyone can be allowed to do what they want with their money is accepting that you cannot guarantee zero people will get scammed. If you let people buy shares, some will get scammed. Ditto bonds or gold or real estate etc.
So either you give people zero choice or you accept cases like this will happen.
That doesn't mean you don't try to minimise it or don't prosecute people or whatever.
No it doesn't. If you read the article you will see that this is nothing to do with Crypto. Crypto was just an excuse to trick him and he fell for it. The same scam gets run all the time with Gold and Diamonds and Stamps and "Collectable Coins"...
And I didn't say you shouldn't prosecute the scammers. I just said idiots losing money to scams isn't a reason to police what people are allowed to do with their own money.
Also, uBiome was a YC backed scam. As crowdfunding becomes more popular it's possible YC backed companies will lead to retail losses. There are many YC companies that have raised on WeFunder.
It's not true crypto. It's just a scam using the word crypto. That scammer is no true Scotsman. A real Scotsman wouldn't scam people using the word crypto.
I think we can agree that cryptocurrencies are a real thing that exist.
This article is about the usual options/forex/cryptocurrency brokerage scam, where a fake brokerage takes your money to trade on their fake trading platform.
So yeah, the scam doesn't involve actual cryptocurrency purchases.
It's crazy, looking back, how the world has changed. Just a few decades ago, even a scam phone call was nearly unheard of, and it was national news when a few-million-dollar ponzi scheme blew up.
I think we're in a 'perfect storm' of fraud right now.
Firstly, 'Reality TV' has become influencer culture. A lot of social media is you being bombarded with "look how great my life is" pictures. The newest sneakers, handbags, fancy cars, fancy watches. Young people with possessions. "This is what a good life is, this is what you could have." We spend a lot more time on social media than we did watching the TV.
Secondly, we keep being told that 9-5 jobs are for suckers. That's what your parents did. Why work in an office for peanuts when those people you follow on Instagram get paid to dress up and take photos and go on fancy holidays? Every week there's an article about someone making 500k a month on OnlyFans, etc etc.
Thirdly, a bunch of people have got wildly rich from cryptocurrency by being in the right place at the right time. Almost zero effort. You read about these people, and then you talk to your friends. Some of your friends tell you they've made 5 or 6k from a $500 investment in a coin with a dog's head on it and how easy it was.
So now you have a large group of people who spent a long time on social media, don't want to work a 'proper' job but want to be rich and have the life that goes with it. They hear the stories about people who have actually got rich from crypto, quickly get caught up in Cryptotwitter (with the I've got $500 in bitcoin "have fun staying poor" folks telling them to get on the rocketship or miss out) and are now absolutely primed for the 'next Dogecoin' so they can get money for nothing.
Of course the romance or student scams can happen, people will always fall for scams. But right now the crypto scam space has got to be like shooting fish in a barrel. It's like the get-rich-quick schemes we've alway had but on steroids.
> We spend a lot more time on social media than we did watching the TV.
Is this actually true? When I was a kid, the amount of TV time was something of a moral panic; I'd have a hard time believing there were many more hours in the day left to consume. What I would believe is that social media's use of intermittent rewards makes people obsess about it even when they aren't actively using it.
You didn't have TV in your pocket, in bed, at dinner, in the car, the moment you wake up, while waiting in the bathroom, literally every moment you're even approaching the possibility of being slightly bored. You didn't have the opportunity to broadcast yourself and get immediate validation for the broadcast.
The rewards are the icing on an all-inclusive cake.
Ponzi finance in Albania in the late 90's shows that you don't need TV or social media or smartphones for pyramid schemes to take over an entire society.
What you need is widespread magical thinking combined with greed, corruption and an economic shock.
"Albania became one of the most enthusiastic implementers of shock therapy, a set of policies that included the liberalization of markets, strict monetary policy, and privatization of public services and infrastructure."
"Factory closures and unemployment soon followed. Inflation and currency devaluations wiped out savings and welfare entitlements."
"Politically connected businessmen appropriated the profitable parts of state assets in an upward redistribution of wealth of world-historic proportions. Food subsidies were slashed; hunger rose."
My unqualified crackpot theory is the stranger danger panic plus trend towards children later in life compounded in more "kids indoors" time, which translates into media consumption. The generations inheriting that arrived just in time for "social media" to become a zeitgeist.
The part I don't understand is, where did the stranger-danger thing come from? Was it an early reaction to institutional sexual abuse that was just becoming well-known? Was it a culture-war thing where racism was socially unacceptable, so we had to fear everyone? Was it just that TV became ingrained enough that everybody lived in fiction more than real life?
Television has gone through something of a redefinition in recent decades. Today, TV can be seen as more of an atmospheric decoration - it's "always on" in the same sense as when broadband internet was introduced to the public: TVs can always be used for something, because there is always something available to watch.
Modern consumers tend to use some other screen at least part of the time they're watching television.
Before, TV used to be dependent on the content being broadcast, and so there was something of a hard constraint upon the amount of TV time - especially for children. This has gone completely out the window in recent years.
I think that's a consequence of reruns. My parents use Gilligan's Island or Columbo as background noise, because they know how they all go. The writers intended for each episode to be the focus of the room's attention, but it didn't work out that way later.
Also, the pandemic increased the chance of remote work for highly paid workers that didn't have that option before. And then you have people with far less means trying to do the same thing on a shoe string budget.
I was traveling long before the pandemic and there's a lot of energy that comes with this kind of freedom. It struck me so hard the first time I experienced it. The ability to buy a plane ticket and change your surroundings. I didn't inform my employer. I just did it.
To your point, I think it's easier to compare how good other people have it compared to you. Now I know some people claim it's all fake and not the life one would really want. I agree with that. Traveling can be isolating and depressing. You're away from your family and friends and the local expat population leaves a lot to be desired. But you're still living an exciting life and exploring the world. That's worth something.
Crypto scams don't even need to involve any actual cryptocurrency.
Such as in the case of Onecoin [1] where there was only the illusion of one, used as an excuse for promising great returns.
However, the Old School financial system has had hundreds of years of regulations aimed at making it more difficult to scam people.
Crypto is a fantastic technology for people who want to rid themselves of those regulations, so that they can repeat all those scams that were made impossible for banks or other financial companies.
For instance, when Celsius offers interest rates of 18%, people should understand that something is wrong. My understanding is that regulators had started making demands, but it seems clear that collateral requirements for lending had dramatically underestmated the currency risk.
This is the Morgage Backed Securities scandal of today. If it is too good to be true, it is not true.
He should have invested in legitimate establishment schemes. Like penny stocks. Or become a Lloyds 'name'. Or put his money into a managed commodities portfolio. Or certain hedge funds. Etc, etc.
Or if he wanted 'extraordinary' returns he could have gone with a forex HYIP, or even a commission for helping recover frozen funds for African dignitaries.
Etc, etc.
It’s an insurance thing. The capital for Lloyd’s is provided by presumably wealthy individuals, who are called names. This historically is because they are the names underwriting losses. In the past, it literally meant their names would be written under the names of ships preparing for voyage, along with their lines (the amount of cover). Controversially, the ability of less wealthy individuals to become names has increased, similar to being an accredited investor in the US. Inflation makes the real bar lower every year. Insurance is literally gambling, especially if you know nothing about the risks you are taking in.
Lloyds 'names' are liable for insurance losses, and got wiped out in the early 90's IIRC. It was a financial scandal to some extent at the time, and I believe fraud charges were leveled successfully against some of the brokers who sold these 'investments'.
This person's "lost" wealth should be counted as wealth for any means tested social benefits. otherwise he's just a money mule helping the scammers steal from the government.
"It started just over a year ago. I noticed an ad that was endorsed by two well-known celebrities showing you could earn more money than you could earn in a bank,"
I think we should punish these ads & its associated companies for not indicating that there is risk in investing cryptos. These ads are really powerful, and are made to trap people. If we don't invest, there is fear that we may be left out and social media makes us feel guilty when we hear the success stories. Many people are gullible, and this is one more reason why ads are generally stupid.
I wonder why people think that they can easily earn money out of thin air. May be these influencers & ads are the primary reason? May be we human make irrational decision when we see other people are earning too much wealth on cryptos/stocks? Yes, combination of luck & logic sometimes favor people, and they become successful. But as with everything in this world, people must also realize that 20% people controls maximum wealth.
> I think we should punish these ads & its associated companies for not indicating that there is risk in investing cryptos.
punish who exactly? an ad agency that took the job or influencer that took the job or an llc registered who knows where?
they should have known better is logical, but when you write something into law it's tricky to convey the spirit. Should an ad agency do due diligence on every product they advertise, even if they understand nothing about it?
Before Bitcoin there was 'secret stock trading program that can make you millions!', a few of the scammers literally changed the name from stock trading to crypto trading with the same scam.
For anyone reading you should definitely read up on how these romance scams and finance scams work.
The main thing they try to do is create an emotional connection, because once you're emotionally involved it actually overrides your brains 'logical' side of things, as in emotion is in a different part of the brain and you'll ignore blatant logical issues when you're essentially in love or the deep end. It's interesting to read about at least.
> "As of 2009, non-military cryptography exports from the U.S. are controlled by the Department of Commerce's Bureau of Industry and Security.[9] Some restrictions still exist, even for mass market products; particularly with regards to export to "rogue states" and terrorist organizations." Wikipedia
The Department of Commerce's Bureau of Industry and Security has means to enforce that kind of ban, like it has done in the past, and still does.
True if your goal is to absolutely eliminate cryptocurrency. If you're trying to ban them from the ordinary economy and 99% of retail consumers, enforcement is definitely with its means.
You can ban it, you can ban mining, you can ban and control the on- and off-ramps. People might still use it, but less, and it'll be harder to sell it as a legitimate investment opportunity.
If people want it, it'll be unstoppable. Just look at drugs and sex trafficking. Specifically with sex trafficking the on-ramp is literally kidnapping humans and as far as I'm aware that industry isn't shrinking (granted I know very little about it, so I hope I'm wrong).
Banning it just ensures that law-abiding citizens can't use it for good while you solidify the market belongs to criminals. Who knows what the outcome for that will be, but if the war on drugs is any indicator, I'm not optimistic that would end up as a net positive for society.
Except the only use it has for "law abiding citizens" is specilation.
While banning cryptocurrencies won't eliminate it, it would make it much less attractive for fraud, extortion and money laundering.
The war on drugs turned otherwise law abiding citizens into criminals. A ban on crypto wouldn't have the same effect nor would it have the effect of driving a behavior that should be treated as a mental health issue underground.
I am not sure a ban is the best solution, I am open to alternatives.
People get scammed with telephones and 7-eleven gift cards, should we ban those too? Bans only target the symptoms while ignoring the root cause and hurting the 99.999% of valid use in the process.
And as another pointed out, this scam involved no actual crypto.
While a complete gift card ban is possibly not necessary, I do think there is a strong need to place legal limitations on their use and transferability to reduce or eliminate the degree to which they enable scammers.
Stores have done a little bit to try to combat this at the point of sale but it isn't nearly enough.
On the telephone side, I think we need to start holding phone companies liable if a spoofed number was used in a scam. It is ridiculous that they still haven't been able to solve that issue after years of effort and legistlation.
We also need more "public service" announcements - and not the 30 second boring ads, but actual plot points in movies and TV be centered around these common scams. If (I have no idea what's popular now, but let's say Marvel) a movie had a crypto scam as a central point, it would educate people way more than any number of government warnings.
Education would be a great stop gap, but I still think we need to close the hole thay is being used. One example would be requiring gift cards to be bound to a name on purchase and have IDs checked when it is used.
The way these scams work is they use celebrity names and images without permission. Completely different from the Matt Damon case and similar cases, where the celebrity is actually involved.
We already have laws for this and they work, so no need for hemming and hawing. They’re why ads for stock brokers and such have to say things like “investment carries risk” and “past performance is no indication of future returns”. It’s possible those ads are already in breach of these laws, or possibly the regulations just need to be updated to cover crypto companies.
It’s not the ad agencies or spokespeople that are liable if those disclaimers are removed — it’s the primary company. The ad agency gets paid to produce the ad and help place it on media channels. If there is a legally required warning, that’s up to the customer to provide. The celebrity endorser is a paid performer and nothing more. Their reputation could take a hit from being involved in the ads, but that’s not a legal concern. That said, I do wish them luck in trying to market anything else.
In this case, the customer doesn’t think they are covered by SEC rules because they aren’t trading in securities. The claim being that crypto isn’t a security but rather a commodity, which have fewer regulatory restrictions. However, that’s all about to be tested in court at a massive scale.
Sounds awesome! Punish the people benefitting most from the fraud (the actual fraudsters as opposed to the people being paid a commission to advertise) and provide an incentive for them to police their ad agencies and influencers to not let it happen in the future!
Crypto companies are absolutely securities companies, so it’s just a a matter of time until the hammer comes down. I’m often cynical about the ability of government to crack down on businesses, but in this case it really feels like a lot of crypto folks are miles out over their skis in terms of the kinds of “mind games” they think they can play on the justice system.
It's possible but seems unlikely. The taxes would be very painful. I find it likely that he did sell but maybe slowly, over a period of time while working with tax lawyers to limit liability
When US citizens are paid in an asset they taxed on both income and when sold or spent they are taxed on the price differences from when the income was received
Selling over time would not mitigate any part of the income tax liability
Because of the way progressive income taxation works, splitting over tax years can save some in taxes (though, unless Damon has been very good at structuring his other income streams, that probably doesn't matter for him); because of the way capital gains taxes work, selling some 1 year + 1 day on after receiving it saves additional taxes beyond what is saved by splitting it across tax years, and this works even if you are stuck in the highest tax bracket from other income so that splitting across tax years is immaterial, too.
Why? If you get paid in bitcoin, the easiest for taxes is to sell immediately.
The value of the bitcoin at the time you receive them has to be declared as income anyway. If you sell little by little over time, you need to declare the income anyway + keep track of transactions for capital gains taxes.
> "It started just over a year ago. I noticed an ad that was endorsed by two well-known celebrities showing you could earn more money than you could earn in a bank," he said.
If you'd like to hear the incredible story of the OneCoin scam, the biggest cryptocurrency scam in history to date (estimated over 14 billion USD), Jamie Bartlett created a fantastic podcast, The Missing Cryptoqueen. An 9-episode series investigating Dr. Ruja Ignatova and OneCoin. Soon-to-be released book as well.
I would rather have a book showcasing the absurdity and informing people than to not have a book. It also doesn't have to be linked to capitalism, the podcast is free and can be listened by anyone. I'm sure the e-book won't cost that much either.
To be clear, I didn’t mean to devalue the specific book or the effort behind it. It’s just the general thought that came to my mind about the ironical mechanism behind the endeavor.
If the initial event was some odious abuses of, say some dictatorial regime, you would certainly not see a book about the event, produced by the said regime, and reinforcing its own pervasiveness on social structures.
It’s the reinforcing feedback loop that I found striking.
I meant, it’s unlikely that dictatorial regime will let publication about the faulty behaviors it produces be released, let alone generate reinforcement of its system through such a release.
The problem is not crypto. The problem is (the lack of) diversification of his investments. Putting your life-savings in a single stock is equally bad. Putting your life-savings in tech stocks is almost as bad. Diversifying it over multiple industries, exposure to different markets, and other assets than just stock - now we are talking.
It is not the same kind potential lottery win as stock picking the winner, but you also will not bit hit as hard.
This is the lesson that must be learned, not only with investing in crypto, but investing in anything.
Indeed. "Crypto" has very much gone the way of "hashtag" (which is, amongst non-technical people I know, overwhelmingly used to refer to the hash symbol).
It wasn't a single cryptocurrency/stock he put his money in, it was a scam trading platform - this is more like putting all his money with ETrade, Robin Hood, except this was some kind of celebrity endorsed scam.
Diversification has nothing to do with this case. Who knows how "diversified" the fake portfolio was on the fake web page? If your stock broker steals all your money, your problem was giving money to that dude in the first place, nothing to do with how diversified the stock picks were.
Completely agree, but I think this case is a bit more subtle than that. £250 is a gambler's punt - "I don't understand this, but I can afford to lose £250 to see what happens." When that seems to be going well and people are explaining how your £250 is now worth £450 because X, Y and Z has happened, I suspect it's fairly easy to start thinking you understand enough to invest more without it feeling like a punt anymore.
99.9% of crypto investors don't know how crypto works. my brother (who is a cop and has no clue) bought my dad (who is close to 80 and was a construction worker with no clue) for fathers day a year or two back and hardware wallet. said he's making bank with crypto investing in alts that the cops discuss. he had me set it up and i kept saying "please please don't invest a lot". luckily he capped himself at 5k. i don't want to ask what he has now....
I honestly don't understand much big company finance at all and yet that's where my money effectively is, with a smattering of companies that I don't really understand.
> If you don’t like the financial system making leveraged speculative bets with your deposits, you might find yourself putting your money in some entirely unregulated crypto bank whose entire purpose is to make leveraged speculative bets with your money
I hope there's a lot of court cases that ensures the morons that started these companies and peddled BS to the public don't have anything more to do with other peoples money.
Ridiculous that this has a crypto label. It's the same game as all of the senior people I know who have been hit with fake anti virus, fake software updates, fake banking apps etc.
Start small and harmless, take a small payment, request higher access, get a screen share or account password. Game over.
I think he was at retirement age and opted to take it as a lump sum
not an annuity. Which is a questionable thing to do unless you are a sophisticated investor.
A tale as old as time: don't invest what you aren't willing to lose 100% of. People never learn that lesson. From cryptocurrency, to stocks, to gambling (not those trash slot machines though - those solely exist to defraud you).
I think your looking at this via your own sircumstatnce. I know of a lot of refugees here in Berlin who carry their life savings with them. They also need to travel for weeks if they lose paperwork. Normally back to Italy.
I don't think that's the problem described in the article / an entirely different story / doesn't make any sense to dismiss the story because someone might lose a lot of cash.
I don't get it. People lose their life savings on non-crypto brokerage scams exactly like this one. The people running these scams are criminals who do not care about any rules you might have around finance.
Cryptocurrencies aren't used to work around any regulations here, but just as an alternative lure instead of "FOREX" or "binary options".
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[ 4.3 ms ] story [ 66.8 ms ] threadThere will always be confidence scams, as long as there are humans.
To me, this feels a lot more widespread than things like typical pyramid schemes. Celebrities doing cryptocurrency commercials, baseball umpires being sponsored by cyrptocurrency exchanges, crypto machines in the grocery store. It's nuts.
Personally I think these con-artist scams are more widespread than typical pyramid schemes. But perhaps that's just selection bias on my part, because of the folk I know and the media I consume.
Maybe, but the question is more about which rate of a population will be exposed to such a risk. With proper politics, you can definitely limit these risks for the general public.
I think you'll struggle to find many comparisons to short-lived hypes with cryptocurrency as a category.
A few do, most are completely worthless.
That really doesn't make cryptocurrencies look any better.
or any worse.
> If the former then they haven't gained anything yet
Any asset has risk, including fiat. So no, they did gain already. Or do you expect them to cash out to Bolivar?
Comparing bitcoins volatility to fiat is ridiculous but regardless, you haven't made any actual guaranteed monetary gains until you sell.
When I buy a house in Dubai with bitcoin, there is no fiat involved. I receive the house, they receive the bitcoin. Simple. You could call this selling your bitcoin, but in the same sense you could say selling your fiat.
You seem to think that fiat currency is somehow a base unit like meters. But it isn't. Maybe you have noticed the inflation all over the world recently, some countries more than others. Like I said before, all asset classes have risks. The statement "cashing out" makes no sense to me. I have various stores of my value. Fiat, crypto, companies, real estate, jewelry, bullets, ...
I'll bet you they didn't buy and pay for the materials for said house with bitcoin.
I don't really know what your point is now as you apparently view bullets as an asset class, so I've kind of lost your story. If you think you're going to make a much of money on bitcoin I'm not sure why you'd get rid of it. I invest in securities because I think it'll outperform the default choice, I don't invest in things that I think will under-perform it.
If you don't view bullets as an asset, you are definitely lost.
Here is a challenge: try to imagine a world where bullets are an asset. A world where an "asset" is:
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. (https://www.investopedia.com/terms/a/asset.asp)
Maybe you should open your worldview a bit to see various ways on how you store value, not only the obvious financial instruments. But if you don't, no problem.
There's an implicit phase change in this system: solid to gas. It'll sublime like dry ice in a moment, when bitcoin block is priced at its transaction processing fees.
When this all disappears, nothing of value will remain.
> By 1635, a sale of 40 bulbs for 100,000 florins (also known as Dutch guilders) was recorded. By way of comparison... , a skilled laborer might earn 150–350 florins a year.
What do 40 bitcoins go for now? About 1 mil USD. What's that compared to an average salary? Only 20x. Much less than the 300x of some tulips
That's an odd argument for a crypto-bro. A bunch of national currencies have failed due to poor financial policies.
let's all do our best not to turn hacker news into yet another platform for ad-hominem flamewars
Edit: I though "crypto-bro" is just a short hand for "ardent cryptocurrency supporter". Does it have some other negative meaning/connotation that I am not aware of?
> A nerd with too much spare time and video cards. Thinks he is smarter than you because he buys and resells burnt forests. Will ignore any meaningful arguments against what he does by repeating something about "serious business" 1000 times.
for that matter, the '-bro' suffix is almost exclusively used as an insult
I think the more people actually "take the bullshit seriously", it'll be like trying to take the emperor's new clothes and sell them at your local discount store.
Ie., there is no actual use case for any of this. Its only useful insofar as it exists as a ponzi asset (ie., it only has value because other people want it because other people want it... because other people want it...).
It doesnt actually solve any problems.. so the more a recession deflates bubbles, the more that businesses/projects/etc. will need to show actual economic value to survive.
Bitcoin has a "marginal productive value" in something, i'd say, c. 100 USD region. As in, the slow, largely useless, bitcoin transaction network provides the service of "publically, reliably, slowly" processing a block of transactions between parties.
How much value does that have? AS A SERVICE, really... almost none.
You could create a better competitor service tomorrow, and charge much less to use it (hence: all the other coins).
Crypto isnt like gold: there isnt a limited supply. You can just create more coins: doge, eth, etc. THere's an infinite supply of self-liming coin systems. It's trivial to create a competitor service.
So think about bitcoin as an actual product: trivial to out-compete, provides basically no useful service, horrifically slow. As a business model, its DOA.
There is a much stronger guarantee that there is limited bitcoin when compared to gold. We have no idea what tech advancements will allow mining gold from comets or neighboring planets. A bit more far fetched, but maybe not impossible in the future would be changing other elements into gold.
Bitcoin has a codified contract that is being upheld socially with vast amounts of resources proving that society agrees on the limited supply. Sure, you can fork the codebase and create another chain. That has happened many times, which just proves a new chain does not do anything to the agreed upon, codified, limited supply of bitcoin.
As for your other points, they're presented constantly as serious arguments and debated ad-nauseam. Either you've just not witnessed it, or you're just trying to present things as uncontested facts which appears disingenuous and does not strike me as an honest argument.
Either bitcoin is a deflationary currency, in which case it repeats the servre financial crises of the 19th C. and early 20th C. in which an economy is imprisoned into a rate of inflation set by blind non-economic forces. In which, as an economy, is horrifying: consumer protection is impossible by design, the owners are the controllers (feudalism), it's entirely public (so you're entire economic life is available to be profiled by used by others), etc.
Or its an asset. If it's an asset its a ponzi scheme.
It's clearly mostly being held as an asset, and traded as an asset by criminals and dictators because it has some ponzi-value. This ponzi-value will disappear as soon as anyone actually tries to use this as a serious currency, as with someone planting a tulip bulb for the flowers... no one wants tulip flowers (lol).
No one wants an incredibly deflationary economic system, controlled by the holders of coins, forked on behalf of the landed gentry, with one's private economic history plastered across the whole internet, with incredibly slow transactions, with immutable histories, and so on.
As soon as anyone actually "plants the tulip bulb" crypto is, quite seriously, f*ked. No one wants tulips. If I were holding crypto the last thing I'd do is actually try to get any one to take is seriously as a currency.
The number of delusional far-right libertarians who dream of being feudal lords is the c.5% of young angry men it's always been. And likewise, if they ever achieved anything, the state would put a stop to that immediately. No one wants your tulips. But i'd just love to see you plant them!
Go, run something on bitcoin, you'd wipe crypto off the map over night.
Are you willing to say by which date it will happen?
I can't even.
If something is promising you 500% returns or whatever, ask yourself why they aren't investing their marketing budget in their goldmine, ask yourself why are they trying to get you to invest.
Hard to call him a victim with a payday like that, but I think he'd be closer to victim than a charlatan.
His ability to charge $ for his celebrity comes from his image/reputation. He has access to paid professionals whose job is to safeguard and burnish his reputation.
Health and wealth, in particular, are sensitive subjects that are often the source of scams. If I type into Google, "is crypto a", the top autosuggest hits include "a ponzi scheme", "a pyramid scheme", "a bubble", "a scam". Clearly some folks have some concerns. There are editorials in mass market papers discussing whether crypto is a scam, and have been for several years.
If a celebrity still wants to lend their name to such a project, that's their choice, of course. And they might well have a good faith rationale to do so. And perhaps crypto is not a scam! But... it still seems to me that it's a risky proposition, and it should be evident to them and their PR team that it's a risky proposition. If it goes poorly, which it seems like it is, it's reasonable that people will conclude that Matt Damon preferred to make a bunch of money at the risk of other people's financial wellbeing. (And that's fine, too -- fortune favours the bold, after all.)
So the context of your discussion is misleading in 2 ways:
1) You're implying that OP has something to do with crypto investments. It doesn't.
2) You're implying that OP has something to do with celebrities endorsing crypto investments. It doesn't.
Addiction (or jail, depending on methods) favors the brave gamblers who pursuit "easy" fortunes. [1]
[1] https://www.bbc.com/future/article/20160721-the-buzz-that-ke...
[2] https://theconversation.com/get-rich-or-die-trying-when-gamb...
Some were conned into thinking that this time, the grift would work for them.
This is why they say "you can't cheat an honest man"
W. C. Fields was joking when he wrote that line. His con man character, when caught, was attempting to blame his mark for having been cheated.
https://www.quora.com/What-does-you-cant-cheat-an-honest-man...
> Grifters/con men often prey on people who want to make a quick/easy buck
Thank your luck but don't blame others for their bad luck.
The difference between that and a crypto scam is obvious to me, or at least it has been so far. But that is because I chose to put a lot of work into understanding all this stuff. Not everyone has; that should not cost them their life’s savings.
Half a year ago my mother asked me about crypto and how she could invest since she read about it online somewhere. I strongly opposed and explained to her why it wouldn't be wise.
Most people are just too prone to scam ads and such. It's really concerning.
Her friends are apparently buying their crypto with the help of some "guy" because they don't know how to do it themselves. It sounds a bit scary, but it's their private matter.
What is the root of all this ridiculous finance? The stock market seems to be the most ridiculous thing that has been around so long that it's considered normal, but is our inflationary, high risk high reward economy really optimal for society? We're in a spot now where the wealth gap is staggering, yet 100% of the american billionaire classes net worth wouldn't even fund the federal government for a year.
Something seems very off about all of this and I suspect that's why we see the symptoms of otherwise intelligent people falling for money scams all the time. We've simply put way too much social energy into making finance complex and I worry that we're continuing down a wrong path by demanding more complex safeguards, insistent that we can solve the problems with policy.
I readily welcome the fact that all of this is so complex that I don't have a strong grasp on it though and with that my intuition isn't worth much, but the few people I've met that claim to have a firm grasp on our economic drivers haven't been able to make predictions worth anything noteworthy and that's worrying to me. If the most educated people you know in finances and markets are markedly under-performing compared to congress members, this complexity does not seem to be something benefiting the people it should be benefiting.
What does "social energy" mean here? Human intellectual effort? Finance represents the complexity of the economy and societies - it's basically a model for understanding and rationalizing the economic activity going on. It can definitely become unmoored from fundamentals, but then have a correction, though.
> and I worry that we're continuing down a wrong path by demanding more complex safeguards, insistent that we can solve the problems with policy.
What's the alternative? What is the non-policy tool? Let it run without safeguards until it destroys more of the financial security of average people?
That's what's happening in the crypto world now. Perhaps we don't regulate it and the examples in the article serve as warnings to others?
However, if we do that with the broader stock market, I suspect it'll exacerbate the wealth gap issue you lament, unless your idea is to accelerate toward an financial and societal collapse/reset, which comes with arguably worse side effects.
the most widely used cryptos either have fixed inflation or noteably no inflation with bitcoin.
These are merely a ton of correlations, but it's hard to imagine the wealth gap getting worse under a non-inflationary, trickle down economic model. The trickle down model might work with non-inflationary currency, but it seems obvious to me that it doesn't work in our current system where the bankers get the most value from the dollars its allowed to create and it loses value as it moves towards lower income pockets.
https://wtfhappenedin1971.com/
Trickle down economics has exacerbated the wealth gap, as demonstrated by large scale international retrospective studies of its effects [1]. Given that, it's hard to imagine how making things more trickle-down would improve the wealth gap.
1. https://thehill.com/changing-america/respect/poverty/530731-...
I think a logical hypothesis is that it doesn't work to lessen wealth inequality is because first movers advantage. In an inflationary economy the first people to touch the money get the most value of it as it loses value over time. In a deflationary economy this would flip and I'd argue that's exactly what we need to happen. There is no such thing as someone who sits around hoarding wealth at a macro scale. This is made obvious by the fact that it takes roughly 3 generations for families to lose their wealth.
Sure, maybe the frugal entrepreneur holds or invests, but that person will die and give it to someone who values money less as they didn't earn it. They will likely spend the money and so-on until the money has been injected back into circulation, with each step of the way that money gains value, which means that money is worth the most when it reaches the producers/workers.
Inflationary trickle-down (AKA supply side) economic policy is exactly what we've had since the 1980s (even from the parties on the left), so I don't know what else it would be addressing. Before that we had inflationary demand side economics.
We've not had a significant deflationary period in the US, but Japan has, due in no small to their historical resistance to allowing immigration. It's not clear that the US can or should follow their model.
It seems like maybe a datapoint in favor of the hypothesis I presented, at least. I can't get past the WSJ paywall, though, unfortunately.
That really isn’t true. Most people are fairly resistant to scam ads, or ask for and get good advice. But the scam ads are relentless and fast a wide net, they only need to catch a few victims to be profitable.
But then I had to talk my parents out of amway when I was a teenager. A lot of people are easily deluded by a bit of hope backed up by personal connections. That was really powerful stuff, I only hope all of that has moved to much easier to resist scam ads.
And people have fewer personal connections these days, which makes it even worse.
My older brother has lost ten thousand dollars in the past year - I've begged him to stop but he won't listen. It's affecting his relationship with his girlfriend and he can't afford any of this.
He has no experience with computers outside of facebook, but all he does is talk about the next deflationary shitcoin that's gonna make him a millionaire, cause "when the supply shrinks it gets more valuable, like a rare collectible".
He's already asked for money to fill in some gaps.
Americans have a lot of the world's wealth, and at this scale there are more gullible people than any scammer knows what to do with. To most of the World's population that immense wealth is just the right phone call, text message, or email away from becoming yours.
https://londonlovesbusiness.com/60-per-cent-of-uk-investors-...
ding
So either you give people zero choice or you accept cases like this will happen.
That doesn't mean you don't try to minimise it or don't prosecute people or whatever.
Crypto should be the same.
Though I’m interested, what is the value we gain in return for not prosecuting scammers?
And I didn't say you shouldn't prosecute the scammers. I just said idiots losing money to scams isn't a reason to police what people are allowed to do with their own money.
That's a redundancy.
buzzfeednews.com/article/richardnieva/worldcoin-crypto-eyeball-scanning-orb-problems
Also, uBiome was a YC backed scam. As crowdfunding becomes more popular it's possible YC backed companies will lead to retail losses. There are many YC companies that have raised on WeFunder.
Everyone is vulnerable. It's not just crypto.
This article is about the usual options/forex/cryptocurrency brokerage scam, where a fake brokerage takes your money to trade on their fake trading platform.
So yeah, the scam doesn't involve actual cryptocurrency purchases.
That's the truly educational take.
Many will jump the crypto hate wagon. I hate fraud and fraudsters. But the reality is crypto is just another excuse for the to defraud people.
Interestingly, the same BBC article features links to other two frauds in contexts totally unrelated to crypto:
Romance scam: NI woman swindled out of £112,000 life savings [1]
International students in NI scammed out of £105,000 [2]
[1] https://www.bbc.com/news/uk-northern-ireland-61241596
[2] https://www.bbc.com/news/uk-northern-ireland-61378430
https://www.pcmag.com/news/ftc-sues-dating-site-over-fake-pr...
https://www.ftc.gov/news-events/news/press-releases/2019/09/...
Now? We're all playing Eve Online IRL: https://wiki.eveuniversity.org/Scams_in_EVE_Online
Firstly, 'Reality TV' has become influencer culture. A lot of social media is you being bombarded with "look how great my life is" pictures. The newest sneakers, handbags, fancy cars, fancy watches. Young people with possessions. "This is what a good life is, this is what you could have." We spend a lot more time on social media than we did watching the TV.
Secondly, we keep being told that 9-5 jobs are for suckers. That's what your parents did. Why work in an office for peanuts when those people you follow on Instagram get paid to dress up and take photos and go on fancy holidays? Every week there's an article about someone making 500k a month on OnlyFans, etc etc.
Thirdly, a bunch of people have got wildly rich from cryptocurrency by being in the right place at the right time. Almost zero effort. You read about these people, and then you talk to your friends. Some of your friends tell you they've made 5 or 6k from a $500 investment in a coin with a dog's head on it and how easy it was.
So now you have a large group of people who spent a long time on social media, don't want to work a 'proper' job but want to be rich and have the life that goes with it. They hear the stories about people who have actually got rich from crypto, quickly get caught up in Cryptotwitter (with the I've got $500 in bitcoin "have fun staying poor" folks telling them to get on the rocketship or miss out) and are now absolutely primed for the 'next Dogecoin' so they can get money for nothing.
Of course the romance or student scams can happen, people will always fall for scams. But right now the crypto scam space has got to be like shooting fish in a barrel. It's like the get-rich-quick schemes we've alway had but on steroids.
Is this actually true? When I was a kid, the amount of TV time was something of a moral panic; I'd have a hard time believing there were many more hours in the day left to consume. What I would believe is that social media's use of intermittent rewards makes people obsess about it even when they aren't actively using it.
The rewards are the icing on an all-inclusive cake.
What you need is widespread magical thinking combined with greed, corruption and an economic shock.
"Albania became one of the most enthusiastic implementers of shock therapy, a set of policies that included the liberalization of markets, strict monetary policy, and privatization of public services and infrastructure."
"Factory closures and unemployment soon followed. Inflation and currency devaluations wiped out savings and welfare entitlements."
"Politically connected businessmen appropriated the profitable parts of state assets in an upward redistribution of wealth of world-historic proportions. Food subsidies were slashed; hunger rose."
Citizens regarded capitalism "with childlike naivete—and grown-up greed"
Albania "became a playground for Moonies, Mormons, and Jehovah’s Witnesses."
In Albania a vicious civil war followed the collapse of the pyramids.
Many parallels to the United States in 2022 (and this is far bigger than just crypto).
Source: https://www.dissentmagazine.org/online_articles/pyramids-eve...
They could have been doing research into all the actual non-stranger cases of abuse that were going on but secret, but no, that doesn't sell as well.
Modern consumers tend to use some other screen at least part of the time they're watching television.
Before, TV used to be dependent on the content being broadcast, and so there was something of a hard constraint upon the amount of TV time - especially for children. This has gone completely out the window in recent years.
I was traveling long before the pandemic and there's a lot of energy that comes with this kind of freedom. It struck me so hard the first time I experienced it. The ability to buy a plane ticket and change your surroundings. I didn't inform my employer. I just did it.
To your point, I think it's easier to compare how good other people have it compared to you. Now I know some people claim it's all fake and not the life one would really want. I agree with that. Traveling can be isolating and depressing. You're away from your family and friends and the local expat population leaves a lot to be desired. But you're still living an exciting life and exploring the world. That's worth something.
[1] https://en.wikipedia.org/wiki/OneCoin
They intentionally did the harder thing that made it the illegal thing!
Crypto is a fantastic technology for people who want to rid themselves of those regulations, so that they can repeat all those scams that were made impossible for banks or other financial companies.
For instance, when Celsius offers interest rates of 18%, people should understand that something is wrong. My understanding is that regulators had started making demands, but it seems clear that collateral requirements for lending had dramatically underestmated the currency risk.
This is the Morgage Backed Securities scandal of today. If it is too good to be true, it is not true.
Someone casually reading this thread might think Sam Altman had something to do with the scam reported in OP. Please stop spreading disinformation.
He should have invested in legitimate establishment schemes. Like penny stocks. Or become a Lloyds 'name'. Or put his money into a managed commodities portfolio. Or certain hedge funds. Etc, etc.
Or if he wanted 'extraordinary' returns he could have gone with a forex HYIP, or even a commission for helping recover frozen funds for African dignitaries. Etc, etc.
Six figures "invested" in cryptocurrency speculation without even informing his partner?
I have real trouble relating to these kinds of people.
> The company had asked him for extra money as an insurance on his investment.
This person is beyond stupid.
I think we should punish these ads & its associated companies for not indicating that there is risk in investing cryptos. These ads are really powerful, and are made to trap people. If we don't invest, there is fear that we may be left out and social media makes us feel guilty when we hear the success stories. Many people are gullible, and this is one more reason why ads are generally stupid.
I wonder why people think that they can easily earn money out of thin air. May be these influencers & ads are the primary reason? May be we human make irrational decision when we see other people are earning too much wealth on cryptos/stocks? Yes, combination of luck & logic sometimes favor people, and they become successful. But as with everything in this world, people must also realize that 20% people controls maximum wealth.
punish who exactly? an ad agency that took the job or influencer that took the job or an llc registered who knows where?
they should have known better is logical, but when you write something into law it's tricky to convey the spirit. Should an ad agency do due diligence on every product they advertise, even if they understand nothing about it?
Before Bitcoin there was 'secret stock trading program that can make you millions!', a few of the scammers literally changed the name from stock trading to crypto trading with the same scam.
For anyone reading you should definitely read up on how these romance scams and finance scams work.
The main thing they try to do is create an emotional connection, because once you're emotionally involved it actually overrides your brains 'logical' side of things, as in emotion is in a different part of the brain and you'll ignore blatant logical issues when you're essentially in love or the deep end. It's interesting to read about at least.
The Department of Commerce's Bureau of Industry and Security has means to enforce that kind of ban, like it has done in the past, and still does.
Banning it just ensures that law-abiding citizens can't use it for good while you solidify the market belongs to criminals. Who knows what the outcome for that will be, but if the war on drugs is any indicator, I'm not optimistic that would end up as a net positive for society.
While banning cryptocurrencies won't eliminate it, it would make it much less attractive for fraud, extortion and money laundering.
The war on drugs turned otherwise law abiding citizens into criminals. A ban on crypto wouldn't have the same effect nor would it have the effect of driving a behavior that should be treated as a mental health issue underground.
I am not sure a ban is the best solution, I am open to alternatives.
And as another pointed out, this scam involved no actual crypto.
Yes, actually.
While a complete gift card ban is possibly not necessary, I do think there is a strong need to place legal limitations on their use and transferability to reduce or eliminate the degree to which they enable scammers.
Stores have done a little bit to try to combat this at the point of sale but it isn't nearly enough.
On the telephone side, I think we need to start holding phone companies liable if a spoofed number was used in a scam. It is ridiculous that they still haven't been able to solve that issue after years of effort and legistlation.
I can only think of Matt Damon's somewhat notorious Crypto.com commercial, which has been lampooned so many times. There are others, I'm sure.
In this case, the customer doesn’t think they are covered by SEC rules because they aren’t trading in securities. The claim being that crypto isn’t a security but rather a commodity, which have fewer regulatory restrictions. However, that’s all about to be tested in court at a massive scale.
Crypto companies are absolutely securities companies, so it’s just a a matter of time until the hammer comes down. I’m often cynical about the ability of government to crack down on businesses, but in this case it really feels like a lot of crypto folks are miles out over their skis in terms of the kinds of “mind games” they think they can play on the justice system.
Why not? This will cut down on scams and dubious products dramatically, a good thing in my opinion.
Selling over time would not mitigate any part of the income tax liability
1) Progressive tax bracket caps out at ~500k. I expect Damon would be above this every year, rendering structuring irrelevant
2) capital gains tax would be zero upon receipt, so selling immediately should not trigger any new tax.
Why? If you get paid in bitcoin, the easiest for taxes is to sell immediately.
The value of the bitcoin at the time you receive them has to be declared as income anyway. If you sell little by little over time, you need to declare the income anyway + keep track of transactions for capital gains taxes.
Didn't he know that telling people to invest in these volatile is irresponsible?
Not so Will Hunting now - is it?
Wonder what he thinks now - that his name was used to scam people.
The adds, at least the Matt Damon one, did have fine print disclaimers.
> "It started just over a year ago. I noticed an ad that was endorsed by two well-known celebrities showing you could earn more money than you could earn in a bank," he said.
God damn it, capitalism strikes again!
It’s the reinforcing feedback loop that I found striking.
It is not the same kind potential lottery win as stock picking the winner, but you also will not bit hit as hard.
This is the lesson that must be learned, not only with investing in crypto, but investing in anything.
Don't invest in something you don't understand.
https://www.marketplace.org/2022/06/09/when-a-cryptocurrency...
And
https://www.theguardian.com/technology/2022/may/22/ukrainian...
Matt Levine put in succinctly: https://www.bloomberg.com/opinion/articles/2022-06-13/merger...
> If you don’t like the financial system making leveraged speculative bets with your deposits, you might find yourself putting your money in some entirely unregulated crypto bank whose entire purpose is to make leveraged speculative bets with your money
I hope there's a lot of court cases that ensures the morons that started these companies and peddled BS to the public don't have anything more to do with other peoples money.
Start small and harmless, take a small payment, request higher access, get a screen share or account password. Game over.
HN: bridges are a scam!
Currently:
-50% in a company paid insurance where, from the options I have a available, it is placed in an index fund investing primarily in my own country.
-20% in a generic global index fund
-15% in a commodity-indexed fund
-15% in cash, as liquidity and in case the stock market crashes completely
Cryptocurrencies aren't used to work around any regulations here, but just as an alternative lure instead of "FOREX" or "binary options".
"rules around finance" can do nothing to protect people from outright scams like this https://www.cpomagazine.com/cyber-security/fake-broker-deale...