The 1,400,000,000,000 In Crypto Losses That Crashed the
Economy
Opps! My Bad, 2 Trillion; How about 4 Trillion?
Well, I am no thief, but a man can go wrong
when he's busted
The food that we canned last summer is gone
and I'm busted
The fields are all bare and the cotton won't
grow
Me and my family got to pack up and go
But I'll make a
living, just where I don't know cause I'm busted
— I'm Busted, Ray
Charles, (1963) Composer, Harlan Howard
If the people who pushed the rush into crypto currencies ever faced what
Ray Charles sang about in his great 1963 hit, "I'm Busted," maybe some
sympathy might be in order. That's not the case, though.
Their cotton crop didn't whither away. There fields didn't dry up.
They didn't have to pack and go. Once all the sheep were fleeced,
most of the grifters who ran the exchanges simply disappeared — Except
of course for the Juvenile Delinquents who ran the FTX exchange.
The most frequently cited source for crypto losses comes from
Newsweek, June 13, 2022. Newsweek placed the total
value of losses in Crypto since 2021 at 2 Trillion in US Dollars.
Newsweek cites smaller, lesser known exchanges that have simply gone
belly up.
One coin, Luna, has effectively become worthless in recent weeks, crashing from $87 to zero in May. Coinbase, the crypto exchange, reported a $430 million net loss in the first quarter and a decline of over two million active users.
Immunefi, a company engaged in Bug Bounties and
hiring ethical hackers, says the losses in crypto for 3rd
Quarter 2022 at $428,718,083. According to Immunefi, total losses
for 2022 was 3,900,000,000,000, or 3.9 Trillion dollars.
And just
where did this lost money go? Is the 4 Trillion dollar question.
"Into thin air," is the answer given by the
Canadian Broadcasting Corporation, June 14, 2022.
Most financial experts concur with that conclusion. Furthermore, the CBC put the losses in real money terms. "A
trillion dollars would buy more than 1.3 million Canadian homes."
The effect of those kinds of cash losses inevitably leads to
slow downs in other sectors of the economy. As the CNC reported, Sal Guatieri, a senior economist with the Bank of Montreal,
said:
"When that kind of money evaporates from the economy... it has a
serious slowing effect as people and businesses spend less.
Crypto isn't really money. Crypto is not a thing you can
hold in your hand. Crypto is perceived value. Like when a stock
has collapsed, those people who hold crypto and may want to sell,
are having difficulty finding buyers.
A guy like Mark Cuban can shrug his shoulders, and absorb the
100% erasure of his complete investment in one day.
Most of the fleeced flock, however, can ill afford such
flippancy about being fleeced of a fortune by formula.
Cuban now wants federal intervention to forestall any more of
his financial foolishness.
[ed. note] F words freely fly when
researching this subject.
Certainly, there was fraud.
An example of one exchange is emblematic of the dynamic.
iEarn Bot, favored in Europe, simply locked out investors who
may have wanted to cash out; and then the exchange and its backers
simply vanished. As one victim explained what had
happened to her investment:
I made the request to withdraw and the money just disappeared. The portfolio became zero - but I was never credited on my wallet with any money.
Added to the growing fiscal nightmare is the scourge of our day: hacking of the crypto exchanges and their customers. Investopedia published a summary of losses due to hacking up to November 2022. It is a very long list. A detailed analysis of the losses that came from these hacks can be read here.
Ronin Network: $625 Million; Poly Network: $611 Million; FTX: $600 Million; Binance: $570 million; Coincheck: $534 Million; Mt. Gox: $473 Million; Wormhole: $325 Million; Bitmart: $196 Million; Nomad Bridge: $190 Million; Beanstalk: $182 Million; Wintermute: $162 Million
A in-depth analysis of how the hackers fleeced one flock, Binance, appeared on Investopedia, December 2, 2022. It is all explained in one simple sentence. No knowledge of industry terms are needed to understand how the theft occurred.
The exploit was possible because the attackers minted an infinite amount of aBNBc tokens by leveraging the token’s smart contract.
North Korea, alone, made out like the bandits that that country is. This is according to a report made by the United Nations.
Targeting the networks of global aerospace and defense industries, hackers with ties to North Korea stole crypto assets worth between $630 million and $1 billion last year, the UN report disclosed.
One thing stands out when researching this topic. I expected to
find a more complex and nuanced set of facts surrounding these losses.
Unlike the
Enron Scandal that helped set off the crash of
2000, there is no one Boogey Man, like Ken Lay, to point a finger at.
There ain't no fat cat sprawled out on his yacht sipping Dom Perigon out
of a ruby slipper. At least, there is not one person or group we
can point a finger to, outside of the usual suspects. And those folks
are way out of the reach of law enforcement. There is no real
story here, other than the shocking fact that
4,000,000,000,000 in US dollars has evaporated
like an ice cube left in the bottom of a glass of tea.
So
many of our current social and economic discontents arise from one
central problem.
It's the issue that arises from Section 230.
In the 2000s, the Tech Giants convinced people in positions of responsibility that:
WE ARE THE TITANS OF TECH. WE ARE THE GODS OF THE FUTURE. YOU ARE TOO STUPID TO UNDERSTAND THE FUTURE. SO GET THE f OUT OF OUR WAY.
In the following decade, the Tech Titans implemented all their
lassie-faire principles that time and again are proved to be false; and
the centuries long rules of capitalism had not been repealed.
But the fiddles simply played on while Rome burned. The signs of
today's crash were evident everywhere. Indeed, the clues leading
to the current crash were self-evident.
The technology may evolve, but the laws that govern the ebb and flow of
capital have never changed. Neither has human nature. There
are always humans who can smell the sheep and line up to fleece the
flock.
Technology is not religion. Technology is a certain
set of tools that allow for certain tasks to be done better and faster.
And that statement is too simple for too many people to understand.
The crash of crypto began around 2018. Anyone paying attention could see what was coming. Of course, short attention span coupled with abject apathy is a national disease that afflicts too many people who should otherwise be immune.
Now we will hear all those same people singing the blues. And begging that Gawd Dam Gahbermint to bail them out. In theory, that is us.
Well, I went to my brother to ask for a loan
'Cause I was busted
I hate to beg like a dog without his bone
But I'm busted, I'll tell ya
My brother said, "There ain't a thing I can
do
My wife
and my kids are all down with the flu
And I was just thinking about calling on you
'Cause I'm busted myself"
—
Ibid.