Mike Novogratz promotes crypto regulations as he reflects on the FTX Ponzi scheme scandal, the latest to rattle the crypto market currently valued at $836 B, at the time of writing.
The fallout from the fake crypto exchange, FTX, continues to be felt with BlockFi finance, a crypto lender filing for chapter 11 as it cites exposure to FTX. We noted earlier that the FTX would cause contagion as billions of dollars of liquidity evaporated as central banks transitioned to tightening in 2022, popping multiple speculative bubbles and exposing the FTX Ponzi scandal.
“The fallout from the fake crypto exchange, FTX, continues to be felt with BlockFi finance, a crypto lender filing for chapter 11 as it cites exposure to FTX”
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Mike Novogratz promotes crypto regulations, but what about professional investors doing better due diligence?
Frankly, it is perplexing that a scruffy kid in shorts with a high-pitched voice acting the geek could have swindled so many so-called professional investors.
There were so many red flags that Sam Bankman-Fried FTX was a fraud.
Nonverbal signs of deception SBF’s body language, the stress of lying triggers nervous energy and shaking of legs while talking. Former FBI Agent Explains How to Detect Lying & Deception.
But SBF even gave a verbal sign of deception.
So in an interview, FTX’s CEO SBF described to the unwashed masses what yield farming is, but instead, he defines a Ponzi scheme here.
“You start with a company that builds a box, in practice, this box is probably dressed up to look like a life-changing world-changing protocol going to replace all big banks in 38 days or whatever. But it does nothing. Then, the protocol issues a token called X token, then you vote on what to do with the proceeds. Maybe in your world, a box that makes nothing should not be worth 20 million dollars, but in my world, 20 million minimum.” SBF
SBF was describing the world of a Ponzi scammer, which was a verbal red flag.
“There were so many red flags that Sam Bankman-Fried FTX was a fraud”
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A protocol is valuable because it has utility. Investors should be able to identify various case studies where the protocol was used, in real life and where it facilitated peer-to-peer business, thereby cutting commission costs.
Alternatively, reducing an organization’s administration cost could be another example where a protocol has value. The hashtag rate is a gauge to determine the utility value of the protocol.
But let’s assume that financial professionals do not have the skill set of an ace FBI interrogator, or have the time to watch every SBF interview.
Trading highly volatile cryptocurrencies, similar to high beta technology stocks where investor psychology is in peak euphoria and central bank liquidity has reached peak easing, then leveraging your bet is akin to driving a high-performance sports car blind drunk. Crashing is inevitable.
“I think the money side of crypto, companies like ours, are going to get regulated and should be” – Mike Novogratz
Mike Novogratz promotes crypto regulations but perhaps his ilk should do better due diligence
If there were no Mupett investors, swindlers would not be able to swindle and you’d starve the beast.
Professional investors are very smart at raising money but not so smart at investing it. It is astounding with so many red flags that SBF’s FTX scam even fleeced the Ontario Teachers’ Pension Plan.
Remember the image of Mike Novogratz’s luna tattoo.
Luna was the Terra protocol’s native staking token which also filed for bankruptcy
Mike Novogratz was also busy posting images of gold alongside bitcoin when the latter reached ATH last year.
Mike Novogratz’s pumping and buffoonery aren’t helping crypto to mature.
Cult status and price-pumping fuels crypto scams. Technology adoption expands and evolves where there is a utility.
Cryptos with utility are likely to do well.
Mike Novogratz promotes crypto regulations believing the solution is greater disclosure and transparency
“This is about transparency and disclosure in a lot of ways. Our industry has failed to self-regulate. I think the money side of crypto, companies like ours, are going to get regulated and should be,” he said.
“The tech side of crypto, the on-chain stuff, has its series of regulatory challenges. But that should be kept separately. Right now we’re in a deficit of trust – people think there’s a black swan around every corner,” he added.
“This is not an indictment of crypto, it’s an indictment of FTX and other companies that were poorly run or fraudulently run” – Mike Novogratz
Mike Novogratz promotes crypto regulations and explains why his company was set up.
We are a bridge company to bridge people into this new economy. It accelerates the capital going in, it helps people understand it. All the capital that has moved into crypto has come from centralized companies. But just like a centralized company, they need to build trust…” said Mike Novogratz.
“This is not an indictment of crypto, it’s an indictment of FTX and other companies that were poorly run or fraudulently run,” he continues.
“Do you feel like investors are going to take advantage of any crisis of confidence? Do we have a crisis of confidence in this market?”
“We certainly do have a crisis of confidence in the industry, and we’re not out of the woods yet. FTX was a major player so it’s going to take a few weeks for people to even get their balance back. Bitcoin’s not going away,” he concludes.
“I don’t think it’s going to be a ‘v’ recovery, it’s going to be a grind out of gaining trust.”
But Mike Novogratz’s words are as valuable as Mike Novogratz’s galaxy digital stock price, which
is down more than 70% from ATH, and the market never lies.
