Frog Boiling For Beginners

It only just occurred to me. We have heard lots of descriptions of crypto 101 - scam, crazy libertarian conspiracy theory, the future of money, to name but three. However, I now realize the rise of Bitcoin as the Ford Model T of crypto and the infrastructure it has accelerated to fruition leaves us with the greatest frog boiling experiment in history.

As we know, a frog dropped into boiling water will jump out, a frog in water which is gradually turned up will stay inside and get boiled…

That surely must be crypto V1? The whole underpinning of the market is broadly rotten (and before you write and say “ah-but our app / custody thingie / platform / exchange / CSD changes all that” let me just add that B2B exchanges, a much more fundamentally sound economic idea perished because of - just - Enron. One bad apple where crypto is struggling to name a single sweet juicy golden delicious. Moreover, those Enron dudes in their criminal heyday would have made it into the upper quartile of all the folks we spend so much time writing about in Bitcarnage had they but been around for crypto V1.0. Sorry to bubble burst but it has to be said…and as we know the only innocent thing about Enron was Ken Lay who died before he was imprisoned thus leaving an epitaph as an innocent man. 

I am certainly not alone in shouting loudly and finding that the room is full of somnolent frogs happily (presumably) having their brains boiled. Read this: Statement Of CFTC Division of Enforcement Director Ian McGinley On The Ooki DAO Litigation Victory (CFTC) and cast your mind back - when did you ever hear any regulator make such brutal remarks? (and this coming on top of GG’s “in a market rife with fraud, abuse, and noncompliance…The crypto securities markets should not be allowed to undermine the well-earned trust the public has in the capital markets” at the final Rich-fest last week).

Anyway, CFTC enforcement director McGinley notes: “The founders created the Ooki DAO with an evasive purpose, and with the explicit goal of operating an illegal trading platform without legal accountability, This decision should serve as a wake-up call to anyone who believes they can circumvent the law by adopting a DAO structure, intending to insulate themselves from law enforcement and ultimately putting the public at risk.”

Wow. I mean they can get a bit puffed up in CFTC / SEC enforcement when they want to remind errant coin dealers that they can’t be full on investment brokers and they slapdown unlicensed funds et al but I really am struggling to remember a statement which was more brutal. Actually I am not convinced Ooki DAO set out to be a criminal enterprise per se…but they were youthful, hubristic, arrogant, stupid and abysmally ignorant as well as stubborn which clearly didn’t please the CFTC. However with the LBRY precedent plus Ooki DAO to name but 2, US regulators can now disassemble the childish notion of DeFi - as EI / Bitcarnage has always noted was inevitable.

Former SEC lawyer John Reed Stark has meanwhile upped the volume of his attacks on crypto to a level that surely would waken even the most somnolent of frogs: Ex-SEC Lawyer Calls For Everyone To “Get Out Of Crypto Platforms Now” (The Deep Dive).

Yet here we are - loadsa folk sitting around and thinking “crypto winter gotta end soon and if these regulatory types would just shut up we can hype BTC to a billion dollars thanks to our new regulatory nirvana in EU, the land of MICA.” Dunno about you but I am bracketing that thinking in the “wishful” bucket.

Additionally John Reed Stark takes a pop at Brian Armstrong Inc: Former SEC Official Says Coinbase Is Committing ‘Criminal Offense’ In Its Defense Against SEC (The Daily Hodl) but then a pithy headline is JRS noting what we all know, that the SEC approving your prospectus is not actually carte blanche to do whatever you want… Even if you are Brian Armstrong.

At least we now apparently know who hacked Mt Gox: Russian Nationals Charged With Hacking One Cryptocurrency Exchange And Illicitly Operating Another (HS Today) / DOJ Unseals Indictments Against Alleged Mt Gox Attackers (The Register): 

“According to court documents, Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, both Russian nationals, are charged with laundering approximately 647,000 bitcoins from their hack of Mt. Gox. Bilyuchenko is also charged with conspiring with Alexander Vinnik to operate BTC-e from 2011 to 2017.” So there you go, BTC can settle in about 450 seconds. The DOJ has finally arrested somebody for the Mt Gox hack with a latency of about 378 million seconds.