caltrek wrote: ↑Sat Nov 12, 2022 3:08 pm
Any thoughts?
I want to provide some perspective on this as someone in the industry who keeps up with it all, though I don't post about it here much anymore.
FTX itself was a centralized custodial exchange, it's complete failure doesn't have any bearing on the technology itself or how various blockchain protocols do or do not work. Ethereum itself, and it's established protocols are still working and didn't have even a hiccup during this entire event. Makerdao is still providing decentralized loans and minting 1 to 1 backed US dollar denominated stablecoins. Uniswap is now the 2nd largest cryptocurrency exchange globally by volume and is completely decentralized, open source, and hardcoded to prevent glaring flaws like fractional reserve banking. The largest cryptocurrency exchange, Binance is a centralized exchange run out of the Cayman Islands with little oversight, this is a major problem.
https://decrypt.co/114665/uniswap-overt ... reum-today
So now we get into the detail and what regulation has to address in order to prevent this from happening again. Centralized financial cryptocurrency companies require the same level of rigorous regulation that traditional financial companies and banks do. FTX was running a fractional reserve and mixing its customer reserves with a hedge fund. This is completely illegal, a complete conflict of interests, and has been outlawed in traditional finance since the the Great Depression. In fact, current regulation that already exists makes it illegal for cryptocurrency exchanges too within the United States, though this clearly isn't enough. So what happened? Why was FTX not brought under scrutiny by the American government whereas a relatively innocuous and honestly harmless (by capitalist standards) cryptocurrency company like Library has been in a legal battle with the SEC for some time now?
(Library, or LBRY is a decentralized youtube competitor.)
https://www.reuters.com/legal/transacti ... 022-11-07/
https://lbry.com/
The answer like most things in this country is blatant corruption. The CEO of FTX Sam Bankman-Fried and his top Deputy Ryan Salame donated over 63 million dollars to America politicians with Fried's "donations" totaling ~40 million dollars and mostly focused on democratic politicians. Salame's "donations" totaled ~23 million dollars and focused mostly on republican politicians. Like with everything else in this country that goes wrong I repeatedly will point out that America is not even remotely a democratic country, this is legal corruption, and even if this particular case is found illegal, 99% of cases won't be. Elections are a complete fiction until money is removed from politics. Whatever was left of the United States as a country died the moment citizens united determined that political bribes were protected "free speech." No citizen should simply be able to buy laws, legislation, favor, or elections.
Moreover, I highly doubt that any of these politicians will face justice of any kind. The bribes in question are so widespread that they span a significant portion of both major political parties in the United States. Fried was the 2nd largest "donor" to the democratic party, not 2nd largest within the cryptocurrency industry, the 2nd largest within any industry.
https://fortune.com/crypto/2022/11/21/c ... donations/
https://fortune.com/2022/11/10/sam-bank ... est-donor/
And now we get to the "progressive" lying corporate lapdog that is Elizabeth Warren. As if her past acceptance of millions of dollars in bribery doesn't disqualify her completely from commenting on the regulation of the cryptocurrency industry, (
https://www.opensecrets.org/2020-presid ... =N00033492 ) Warren herself has indirect yet intimate ties to Fried!
Here you can find Warren thanking Joe Bankman, Sam Bankman Fried's father for his help in drafting an IRS reform bill.
The legislation has been endorsed by dozens of law professors and economists including… Joe Bankman of Stanford University.
https://www.warren.senate.gov/oversight ... tax-filing
At no point in any of Warren's ramblings on regulation of the cryptocurrency industry does she make mention of Fried's donations or the donations of FTX executives to the democratic party. This is a clear conflict of interests alongside her association with Joe Bankman.
So what's the conclusion? That centralized cryptocurrency exchanges and financial services need to be highly regulated like any financial service. That lawmakers in washington don't understand the industry at all and will likely make sensationalist arguments and legislation that is more likely to harm the industry and risk targeting functioning decentralized protocols that have nothing to do with the collapse, which, will only force Americans overseas where they are even more likely to be harmed. Moreover, the reason they don't understand the industry is because instead of spending time researching it and governing properly they would rather take bribes from complete frauds and look the other way while attacking "harmless" crypto corporations that don't carry any financial risks in the same way that an exchange, hedge fund, or financial service does.
This whole ramble for me is in context of thinking capitalism at large is a failure, as you all know about me. But even with that in context it's still very frustrating to see corrupt politicians running damage control and targeting the wrong things. Library (LBRY) is a problem to for a leftist like myself, but not for the reasons the SEC is purporting, it's no more harmful than any other capitalist business. Whereas something like FTX is Lehman Brothers levels of fraud and danger and it's a complete joke that regulators and politicians were literally working with FTX directly while the corporation stole billions of dollars from everyone they did business with. In any functioning democracy this would just be another reason along with the thousands of others to completely gut every politician involved with either major party and ban both parties from the political system entirely, among other direly needed radical reconstructions of a better political system.