I’m pretty appalled by some of the comments here. If someone scams people it doesn’t matter how complex the scam was or how stupid the victim was. It is a crime. We aren’t talking about robbing a convenience store here. 40 billion dollars - people’s life savings were completely put up in flames in the name of “innovation”. This is out of control. The reason these sentences need to happen is because retail investors need to be properly informed of the risks, and if leaders of crypto companies continue to say it’s stable and safe they should be prosecuted when it turns out not to be the case.
People should be given warnings, financial products should be required to be transparent and explained well with the risks, and scammers should be gone after and placed in prison.
But people should have every right to make terrible investment decisions and lose all their money. There are investments in crypto that are good and bad just as in the stock market. Some people turn anything into gambling and thats a personal issue.
If the atmosphere around crypto makes it easy to scam lots of people out of lots of money (which it does), then I think it's absolutely fair to make this story about crypto, if only so that otherwise-naive people who hear the news will think twice before investing in the next big scam.
It's not necessarily that the technology inherently lends itself to scams, but the culture around it absolutely does. A startlingly large percentage of the biggest players in crypto have turned out to be scams, this isn't a one-off thing.
The main takeaway I see from all of this is how terrible the banks and authorities are at stopping financial crime, even with methods that are so easily traceable and reversible. They can see the transactions and identify the money mules, but law enforcement doesn't take it seriously.
If cryptocurrency-fiat exchanges were banned, alongside better enforcement and monitoring of wire transfers, and more restrictions on giftcard sales - you can basically remove the ability to transfer the illicit funds internationally and remove the incentive for scamming to begin with.
The same goes for following up on domain name registration details, and phone number assignment, to make it impossible to hide behind pseudo-anonymity. I remember a while back there were a load of scam Nintendo Switch sale sites, literally just opening as many as they could to gather credit card details before being shut down. Stuff like that should be tracked down and prosecuted.
Actually, we don't know the identities of everyone who invested. I'm more hesitant to victim-blame than I am to blame the person who intentionally committed a crime.
I agree that it's a buyer beware market, but it's because of people like this guy. The laws are on the books and hopefully will be enforced. Just because it's a new tech doesn't mean it's a lawless frontier even though some people are acting like it is.
Well, if you scam people on crypto you are committing as much the crime of scamming as you are when you scam people IRL so I fail to see a distinction here.
Every good con relies on greed. The fact that the con artist is a criminal doesn’t make the victim of a con any less greedy. I am thinking of the many crypto fanboys here who have been repeatedly told this is a large ponzi scheme. They had plenty of warnings. I don’t have a huge amount of sympathy for them loosing money. Doesn’t mean the con artists shouldn’t face criminal prosecution (if they broke the law, it’s not a crime to sell tulips to people who think the tulip is worth all of their savings).
They put their retirement savings into “insured” accounts with “guaranteed” reasonable returns.
You say they should have known it was scams, but if they were scams why was the news filled with tales of the success of crypto, and tech sites and “influencers” all aggressively pushing crypto.
If these were scams then why wasn’t the news filled with them being shut down?
No these are people who, as far as they understood, were simply storing their savings in a “high” interest rate savings account. They weren’t throwing money around on coin base, or following micro trends. They were doing the right thing, and trying to limit the amount of value their savings were losing to inflation.
Remember the account values of many of these services were reported as still belonging to them. What happened was one morning they woke up to find out that the balance they were seeing was a lie as the companies had sold off their assets, and lost all their money, without their permission, and was refusing to let them withdraw it.
Then some asshole like you comes along and says that it’s their fault.
Yet every example you gave was over 10 years ago and there has been regulation enacted to prevent that kind of exploit. Meanwhile every week some crypto scam blows losing some people billions, hundreds of millions or just tens if it's a good week.
True. And nobody likes fraud. And it should be dealt with.
I just have trouble having sympathy for people that willingly hand over money to obvious scams. Double your Bitcoin is a classic one. Yeah, right, elons going to double your deposit. Greedy stupid people fall for it, lose, why didn’t someone protect me.
Was it marketed to regular people, the financially naive? Were misleading statements and advertising used?
Then people who were told it was a safe way to invest lost significant money, they were defrauded. Some lost life savings, kids college funds, retirement funds, you name it. There are likely thousands of small tragedies here.
Being ripped off due to naivety does not make one as culpable of fraud as SBF. This is pure victim blaming.
People invest in things they don’t understand every day, and we have regulations to prevent predatory fraudsters taking their money. The crypto space needs to be regulated the same way. Preferably regulated right into the dirt.
No one claimed there weren't scammers in crypto, this is a phoney argument. The existence of scammers using fiat currency doesn't stop you from supporting fiat currency. This is about as legit an argument as the usual "pedos/terrorists/drug-dealers/mafia use the internet/encrypted messaging therefore internet/encrypted messaging BAD".
Maybe we're defining 'scam' differently. I take it to mean a premeditated act of defrauding people by embezzling funds that were received under the pretenses of being spent on development.
I think 90% of projects are poorly planned and reckless expenditures of capital, and will fail. But none of those qualities make them scams. The people organizing said token sales will destroy their own reputation, and no amount of money is worth a person's reputation. A portion of these people will end up attempting to run away with the cryptocurrency they received from investors, and these people, and only these people, should be pursued by legal authorities.
In terms of regulations, I wouldn't mind some generic disclosure requirements for token sale websites, like a simple warning about the highly experimental nature of cryptocurrency and speculative nature of investments in them, but a blanket ban, or a blanket prior restraint type restriction on anything unregistered and unapproved by a centralized gatekeeper? It would be terrible for basic internet rights IMHO, will create a largely counterproductive witch hunt against token sale promoters that will push them further underground where they're less accountable, and will prevent innovation that will produce orders of magnitude more value than the value lost on poor token investments.
It's bad for society to let scam artists operate unfettered. It doesn't just harm the scammed. For one, you've given terrible people more money to run bigger scams. Two, it misdirects resources to negative-sum activity. Third and most broadly, it reduces trust in anything that looks vaguely similar, which increases transactional friction and reduces available investment capital, making society poorer as a whole.
And that's before we even get to your illusion that you are safe from being scammed because only stupid people get suckered and you're one of the smart ones. There are scams for everybody. The whole "crypto" space is proof of that.
The only reason this is news-worthy is because it's tied to the current hot button issue (cryptocurrency). Scams like these happen all the time during bull markets and the crypto investment maxims (never invest what you're not willing to lose, do your own research and if it sounds too good to be real, it usually is the case) apply just as well in any other kinds of speculative investments.
Increasing regulation and adopting that sort of paternalistic attitudes will do nothing except harbor further dissent and widen the divide between the rich and poor, as it always has.
Well, I would not state that "those people" are immoral or stupid. Even academics or highly moral people fell for these scams. The big problem is that "those people" are blind to the signs of the scam, which seem obvious to people who know the matter - in this case the blockchain and the crypto-world.
In case of OneCoin, people were told they could earn some money by simply buying some fancy, technical crypto-thinghy. It's just the human nature to react positively to possible contracts or actions which likely return something positive for them.
This is the same issue for all other "scams", i. e. like some insurance-salespersons, which obviously sell overpriced or needless contracts, just to earn more money with their victims. Or car mechanics who tell the car owner the suspension arm needs to be replaced even if it's in perfect condition.
It's always the same: some greedy, immoral people exploiting the inexperience or missing knowledge or other people.
You are both going around my very simple argument that these mind-blowingly huge piles of money poured into crypto scams, don't undermine the undeniable reality of crypto that is not a scam.
Yes, people pouring their savings in tulips, fake railroad companies, and beanie babies is absurd. Does it follow that tulips, railroad companies, and baby plushies are scams and criminal in nature? The grifters and their victims moved on, and the underlying objects of speculation seem to exist and do their respective jobs just fine now.
Crypto is doing its job just fine of being a trustless and permissionless way of transferring value. It doesn't care if grifters hype, pump, and dump its tokens. The few actual decentralized networks in existence just keep running and securing their immutable ledgers. The few actual peer-to-peer researchers and developers keep improving them.
I have never scammed anyone. Just as there are scams in traditional finance (see Wolf of Wall Street, Nikola, Enron) there are scams in crypto. At this point far more in crypto however.
I think people need to know that no one is going to help them - caveat emptor. If the goal of crypto is to rebuild finance, eliminating taxpayer funded bailouts is a top priority.
Scams are everywhere, though. Millions are scammed through shitty toolbars, and personal data is brokered to the highest bidders. Cryptocurrency has issues, but generalizing it as the problem isn't necessarily constructive to society.
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