Is the Crypto Ponzi Scheme Finally Coming to an End?

by Brian Shilhavy
Editor, Health Impact News

Three years ago, in early November of 2022, one of the largest financial scams of all time was unfolding when the equivalent of a “bank run” happened when the crypto exchange FTX saw $6 billion of withdrawals in a 72-hour span.

Many investors, including Blackrock and celebrity athletes such as Stephen Curry and Tom Brady, lost hundreds of millions of dollars almost overnight.

Tony Blair, Bill Clinton and Sam Bankman-Fried on stage at the Crypto Bahamas conference. Source.

Billionaire Sam Bankman-Fried, who was ranked the 41st-richest American in the Forbes 400, saw his fortune evaporate almost overnight, and now sits in a federal prison serving out his 25-year criminal conviction for fraud.

Here is an article about this that I published at that time:

Crypto Currency Billionaire Loses Fortune Almost Overnight as Crypto Ponzi Business Exposed – The Beginning of the Great Reset?

Excerpts:

November 8, 2022 will obviously be remembered in history as the day of the U.S. mid-term elections, but could another event that happened yesterday eclipse even the national elections?

Earlier this year I warned that cryptocurrencies were NOT safe havens to protect financial wealth, when Coinbase, the largest US crypto exchange service, announced that they had cut off 25,000 Russian wallets.

As I noted then, I have never felt comfortable putting major resources into cryptocurrencies for several reasons, the most obvious one being that it is dependent upon “the system,” which requires, among other things, electricity and a working Internet.

New problems with cryptocurrencies were exposed yesterday, when the equivalent of a “bank run” happened when crypto exchange FTX saw $6 billion of withdrawals in a 72-hour span, resulting in them reportedly stopping the process of withdrawals yesterday.

Some big investors, including Blackrock and celebrity athletes including Stephen Curry and Tom Brady, were heavily invested in FTX.

Sam Bankman-Fried, once featured on the cover of Fortune Magazine as potentially the next “Warren Buffet,” and has now reportedly lost 94% of his $16 billion fortune, may be better compared to Bernie Madoff, as ZeroHedge News found an interview he did a few months ago where he admitted that crypto yield farming is basically a Ponzi business.

Full article.

Further reporting about Sam Bankman-Fried and FTX claimed massive corruption with things like money laundering occurring in Ukraine, as well as the lavish lifestyle of Sam Bankman-Fried and his FTX cohorts participating in sexual orgies.

When this happened three years ago, Big Tech was in a free fall laying off hundreds of thousands of employees. Tesla was facing a U.S. criminal probe, and many of the giant automakers, such as Ford and Volkswagen, cut off funding for their “autonomous” self-driving vehicles.

I was calling this major downturn in Big Tech investing back then as the Big Tech Crash of 2022.

But a couple of weeks after the fall of FTX, something happened to direct the public’s attention away from this massive corruption in Crypto Land: the release of OpenAI’s ChatGPT via Microsoft, which quickly became the most downloaded app in history, and launched the current AI Bubble in spending.

There were still what appeared to be some ripple effects of the great FTX crash in November of 2022 in March of 2023, when several Big Tech banks, such as Silicon Valley bank, failed due to bank runs.

But the billionaires who held accounts at these banks complained because their accounts were way north of the FDIC insurance levels of $250k per account, and they would have lost $billions. So the federal government stepped in and backed all of their accounts which temporarily avoided a big crash.

Today, some Wall Street analysts are apparently beginning to see the realities of the crypto financial world, and are sounding the alarm. They are saying that crypto currencies’ best days may now be behind us.

David Weidner of MarketWatch reminds us that many investors today are “are young and inexperienced,” and that they “listen to confident voices” on social media too much.

The whole fear, which I admit I have fed into over the past few years, that the public will be forced into “Central Bank Digital Currencies” (CBDCs) and eliminate cash, may have been way overblown.

As always, the consumer has more power than they realize. And when this market that is heavily dependent on Big Tech and all the insane money being spent on the AI bubble eventually corrects itself, the American consumers who hold financial assets outside of tech products and services (e.g. skilled labor), will potentially increase their financial power in the economy by huge ratios.

Bitcoin’s November crash was no accident

An always-on crypto hype machine lives to goose prices and then blame ‘macro’ when the selloff hits

Excerpts:

They came in by the tens of thousands: young, internet-native, mostly male, lured by the promise of lightning gains and financial freedom.

For many, crypto wasn’t just an asset class — it was a storyline; a chance to get rich quickly and grab outsized returns before the mainstream figured out what was happening.

That story was sold to them constantly through late-night livestreams, hyped Twitter threads, “moon or bust” Discord raids.

Now, after the crash, the crypto bros are showing signs of burnout — drained from margin calls, bag-holding and fading hope that the next “rocket tweet” will ever get them back to the high they were chasing.

The November wreck in bitcoin— from north of $120,000 to the low $80,000s — didn’t come out of nowhere. It was manufactured in plain sight by an always-on hype machine that lives to goose prices and then blame “macro” when gravity returns.

Sure, crypto, including bitcoin, has rallied since falling below $85,000, but its “November to remember” crash wiped out dumb money. The subsequent rally only shows there’s dumber money out there.

We watched the script unfold in real time: chest-thumping year-end calls, retail pile-ins and leverage, a sharp downdraft, and then the postmortems telling the faithful to HODL [hold on for dear life] because the next big rally is imminent.

If this sounds like the oldest game on Wall Street — the pump and dump — that’s because it is. Only the tools have changed. “Finfluencers” and coordinated campaigns can spark short-lived pops that fade once the insiders are out.

Unsuspecting investors are told bitcoin isn’t just a trade — it’s insurance against the dollar — and, any day now, central banks will buy it.

The facts say otherwise.

The BIS, IMF and major central bankers keep drawing the same bright line: crypto is speculative, volatile and unsuitable as reserves; banks’ crypto exposure is tightly capped under global rules.

Switzerland’s central bank publicly rebuffed bitcoin for reserves this year. Yes, you’ll find a headline-grabbing outlier — the Czech governor floated a small reserve allocation — but that remains a lonely view.

Investors aren’t dumb. They’re human. Many of them are young and inexperienced. They listen to confident voices.

But if your due diligence begins and ends on social media and chats, you’re playing a game where the other side writes the rules and the storyline.

November was the reminder that, when an “asset” depends on engagement to work, the product is you.

Ultimately, investors should treat crypto’s influencer economy like any other funnel. When the call is for a year-end moonshot, ask who benefits if you buy that exposure today — and who’s already positioned to sell it back to you tomorrow.

Recognize that the adoption stories (dollar hedge, central banks) remain mostly marketing copy, not monetary policy.

If you still want exposure, size it like a lottery ticket, not a Treasury bill.

And when the next “healthy reset” arrives? Remember November.

Full article. (Emphasis mine.)