The victim of crypto crimes are normal clueless people.

I absolutely loved and adored bitcoin as a technology from a technical perspective and all the ways it could change things for better. But what it had become is an abomination.

Also, “engineers hacking on finance” would've been very noble 20 years ago in a world where engineer/hacker was reminiscent of free software, mozilla, gnu, linux, wikipedia, etc.

Yes I also followed BTC from the early days, 2009 or so. Was on the IRC channel, usually lurking but I was very interested in it as a concept. As a college student I thought it was revolutionary, and neat things could be built on top of it. The future and equitable financial system, or so I thought.

Sadly it has fallen far from the tree, as they say, and became another Internet grift.

With its halving block subsidies, the bitcoin emission was never equitable. For that, look for a fixed block subsidy, i.e. pure linear emission, which leaves the majority of supply to later generations.

most DeFi projects are just engineers reading the first paragraph of a finance Wikipedia article and thinking that they can do better.

There's a misplaced belief that all regulations around money just popped out of nowhere.

In reality, all those regulations were built up over time in response to different scams and schemes. And crypto wants to erase all that learned experience and start from scratch.

Novogratz of Galaxy Digital lost billions in the UST collapse as well as having a tattoo of Luna on his arm. He was not a normal clueless person.

There are also clueless people who bought SNAP stock the day before it dropped 45%.

There are also clueless people who paid $200k for degrees from top tier universities and are now in debt up to their eyeballs with no way to repay.

There is simply no way to protect people from cluelessness without banning our freedom.

The goal of a healthy regulatory environment is not to prevent everyone from frittering their money all the time. It's to keep the worst schemes from affecting as many people as possible.

According to this article, Galaxy came out of the whole thing with a pretty nice surplus.

https://www.cnbc.com/2022/05/29/who-got-rich-before-terra-st...

> In its Q1 earnings filing, Galaxy noted that the largest contributor to its net realized gain on digital assets of $355 million was sales of luna.

You can both be rich and clueless. Which is about 99% of the crypto startup universe

> Yet crypto, a very small industry in comparison to other sectors, is despised and singled out as if technology by itself is suspect.

This omits why it's singled out: at current proportions, the sheer amount of fraud in the cryptocurrency space would dwarf everything that we see in conventional finance, were cryptocurrency to grow to the same size.

Minuscule scale is not in itself important (other than being a hallmark of under-delivering); what matters is proportions.

And lest this be used to claim that I think Deutsche Bank's fine is perfectly sufficient: they ought to have paid back every single cent they laundered, plus fines. But I won't let the perfect be the enemy of the good, particularly when the "perfect" in this instance is the same group of tools, just not wearing suits.

But you are not advocating for outlawing banking, which despite the centuries of regulations and oversight, still recently in our modern age conducted crime at vast scale.

Yet crypto should be banned? When we are throwing them in jail?

You're making a false assumption, which is that I don't want to throw a lot of bankers in jail. Or really just prohibit them from doing banking anymore, since I don't really like jails.

Did you read their post? They specifically stated that what’s important is proportion of fraud to useful activity. There’s fraud in banking, but in proportion to the useful activity it’s small.

> One reason I am so intrigued by crypto is that for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc.

False. Anyone has always been allowed to issue their own magic beans, crypto has nothing to do with this.

1989 https://en.m.wikipedia.org/wiki/DigiCash

1996 https://en.m.wikipedia.org/wiki/E-gold

The real difference is that now a lot more gullible people have computers.

It is the same white collar suits pumping up crypto daily on CNBC. That's why I'm skeptical of it, just like people were skeptical of watered stock during the wild west days of finance in the USA.

The wise among us will put their wealth in index funds. The less wise may dabble in options and stock picking. The foolish may buy BTC and ETH. But not everyone who picks stocks and not everyone who bought BTC were foolish. And this is why letting me gamble my money on stocks, options, and crypto (or the casino) is not illegal.

I wouldn’t be opposed to forcing everyone who wants to buy crypto to sign a letter saying (paraphrased) “I’m an idiot and if I lose everything I deserve it”. I’d rather you let the individual gamble rather than ban all speculation and risky endeavors.

I'm all for the free market and personal accountability, but there should be some safety measures in place to protect the most vulnerable, naive, etc from being destroyed financially by adverse selection.

Schwab or Ameritrade won't just let you trade forex and commodities futures, futures options, and stock/etf options unless the application has been reviewed and the investor discloses they know the risk. It should be the same for crypto IMHO.

Crypto is just gambling now.

Every day I'm watching my coworker spend all his "the boss is not around" time looking at the black screen of the Binance charts. It's sick.

He'll get tired of it or lose all his money, whichever comes first.

This is really the same argument as "let's legalize heroin, as long as you sign a form saying you know what you're doing."

Maybe that's not a problem for you.

I am a freedom-oriented person. This includes legalizing LBGTQ marriages, interracial marriages, and enabling adults of solid mental state to ingest substances of their choosing.

If all drugs were legal and freely available, why would people even choose to take heroin, if they're not already addicted.

Because the problem is not the access to drugs. Sure, it's illegal, but you can find weed, heroin, cocaine, lsd, shrooms, anything you want provided you know the right sellers.

Only heroin is in the sweet spot of strong kick, immense pain relief and extremely cheap. People take cheap drugs because they're poor, not because they don't want to get their hands on pure colombian coke.

not everyone is a perfectly rational actor or in a sane mental state

I guess the issue is that there's a perception that a large proportion of cryptocurrency ventures are fraudulent from the start, or veer towards fraud shortly thereafter.

I'm not saying if that perception is correct or not, but it's real. Question for people in the cryptocurrency space is a) why and b) how do you fix it?

> One reason I am so intrigued by crypto is that for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc. This may turn out to be a bad thing. But I believe technology is neutral and overall I want to see how this experiment turns out.

A bigger overnight loss for ordinary investors than Madoff's entire scam, and you still want to wait and see how it turns out?

Yes, people should be able to play with this stuff, no it's clearly not in a state where anyone should be able to advertise any of these services to the general public.

Sure, let the space develop, but take action to prevent people being scammed, and certainly take action to prevent, for instance, investment into crypto tokens by the regulated finance industry. Keep pension funds away by force of law.

IMO the bigger scam here was not Anchor but Stablegains. They gave magnitudes more everyday people access to the Anchor scam who had no idea what they were getting in to.

For the people who actually went through the process of opening a Coinbase account, depositing USD, buying UST, transferring to an Ethereum wallet, bridging to a Terra wallet via shuttle bridge, and depositing in Anchor protocol… they knew full well the risks involved.

If you read any crypto forum, the people there know very well that their investment could go to zero.

The SEC’s “accredited investor” laws are often criticized as discriminatory, since they legally restrict some of the best investment opportunities to only the 1%. In the same vein, while the crypto space needs more regulation, I think it would be a mistake to ban all retail investors from buying crypto.

> The SEC’s “accredited investor” laws are often criticized as discriminatory, since they legally restrict some of the best investment opportunities to only the 1%.

Note: the “accredited investor” restrictions are for US persons. I think foreigners don’t have the same restrictions (although the max 500 investors rule is likely to kick in instead if too many small foreign investors). For example[1] “The Investor is: (i) an ‘accredited Investor’ as such term is defined in Rule 501(a) of Regulation D under the Securities Act; or (ii) not a U.S. person within the meaning of Rule 902 of Regulation S under the Securities Act.”

[1] https://www.sec.gov/Archives/edgar/data/1693656/000110465919...

Correct, different countries have different laws in this area, but many/most have some sort of provision about what can and can't be marketed to the public as an investment, and how that marketing looks.

I think we should ban 18 year olds from going $200k in debt for English degrees from our most illustrious universities. An albatross around the neck of incompetent rubes yet this is not outlawed.

I can play this game all day. Why do we let the poor go to casinos? NYC is about to open a massive casino in Manhattan, guaranteed to ruin lives and families.

You may know what’s best for you, but not what’s best for me.

> You may know what’s best for you, but not what’s best for me

Cool, lets remove all laws and regulations around everything then, after all, government is just other people saying they know what's best for you. Job done.

Your argument is also fallacious in its assumptions that I don't think those other things are bad or require action.

> Why do we let the poor go to casinos? NYC is about to open a massive casino in Manhattan, guaranteed to ruin lives and families

We shouldn't. Many other countries don't allow that. Putting profits above human wellbeing is how the US got to this place. The US even allowed open MLMs like Amway. The people shilling these scams have immense amount of lobbying against any kind of financial regulations, which is exactly what crypto is doing

Not to mention that trillions of fiat can disappear without fanfare: https://www.bloomberg.com/news/articles/2020-01-22/pentagon-...

"Our financial systems are decades old. According to some estimates, we cannot track $2.3 trillion in transactions." -Donald Rumsfeld, 9/10/2001 https://web.archive.org/web/20100301161721/http://www.defens...

I feel like I'm going to be fighting the fight to dispel this idiotic headline for the rest of my life. You posted a link to subscriber-only content that isn't currently searchable on archive.is, but I'm going to guess it's the thing about inter-LOA transfers not being fully auditable within GFEBS.

I was in the 1st CAV Comptroller's office as a budget officer when this headline first started circulating. It was during the initial GFEBS onboarding, and the push to produce GAAP-compliant auditable financial statements was coming out for the first time in the DoD. You have to understand what that entails. Historically, before GFEBS existed, all purchases and funds transfers were recorded in one of many distinct information systems that were independently procured and not interoperable. Many of those were just "receipts in a filing cabinet somewhere."

The effort to get records from all of these disparate legacy systems into GFEBS, which is the government's custom version of an SAP ERP procured from Oracle, involved manual export of records into a human readable form, then that human typing them into GFEBS. For paper records, it involved digging into filing cabinets and doing the same thing, manually transcribing records into GFEBS. We were asked to do all of this in the same year the sequester happened, which involved having the entire civilian budget office staff furloughed. That meant soldiers had to do it. Except those soldiers also had to do stuff like train to be soldiers and deploy to Afghanistan.

So yeah, we didn't meet the deadline. I'm very sorry that the three-person staff I had couldn't find and transcribe every record from a universe of legacy systems that largely may not even be accessible without special hardware, plus filing cabinets in the attic of the division headquarters, while also being asked to do their normal job, too.

It's not that the records don't exist. It's not that no one actually knows where that money went. It's that transcribing into the current system of record involves probably millions of labor hours that Congress doesn't want to fund, but wants us to do anyway. Rumsfeld isn't wrong here. It's inefficient and stupid and shameful that we have this universe of legacy record-keeping systems that don't use any kind of standard format and don't interoperate with each other digitally. But fixing that involves more than just paying Oracle a bunch of money to produce one ERP to rule them all. The existing records still need to be transcribed, and there is no way to get around the human labor that requires.

But it's quite a far cry from "receipts and approval records for transactions only exist in a complex web of outdated information systems that don't interoperate and require manual human labor to transcribe between" to saying $X trillion "disappeared." The money wasn't lost.

Here you go: https://archive.ph/Pt2Ef.

Clearly you know more than me about this so I think I'll let you read it and you tell me if anything changes. Then I'll see about reading the rest of your comment.

so suppose there was some impropriety in the fund movement, who would be able to audit this?

on the blockchain, it's anyone who knows how to use a block explorer.

For context, OP is CTO of an NFT company. Doesn't determine which way intent goes in this post, but you've gotta believe this to take such a strong financial stake in the space.

Of course he is. I mean, I hadn't checked, but I assumed that someone who writes like that has an interest.

> But crypto is a technology and financial crime existed well before the advent of crypto and will continue to exist whether crypto keeps existing or not.

Sure. The difference is, crypto has no other useful use except crime.

> for the first time engineers can hack on finance without any permission, licenses, approvals, regulations, borders, etc.

Regulations exist for a reason. Even beyond regulations, one of the (many) appalling aspects of crypto is it's rediscovering rules that have been extremely well known and documented for decades, or centuries. Terra-Luna is a perfect example of a death spiral, for example.

> I want to see how this experiment turns out.

Isn't it clear already how this experiment is turning out? How many more time do we need?

Whataboutism isn't going to excuse shitty behavior. Crypto will continue to get deserved criticism while scams and greedy people are allowed to exist. Same with the banking industry. Do folks (beside the wealthy, and financial media) love what banks are doing? No.