Gaslighting Bitcoin

Gaslighting Bitcoin

This is a tweet that John Reed Stark posted about ‘crypto’ (read: bitcoin) and a reply by BrewBitcoin…

A Bitcoin Spot ETF: Say it Ain’t So Gary . . .

For crypto: There’s no inherent value. There’s no cash flow. There’s no yield. There’s no employees. There’s no management. There’s no balance sheet. There’s no product. There’s no service. There’s no history of operations. There’s no analytical valuations. There’s no earnings reports. There’s no proven track record of adoption or reliance. There’s no data of any kind except for analytics relating to crypto speculation, which are inherently suspect.

Crypto prices go up for two reasons: First, because there is no regulatory oversight to prevent market manipulation and Second, because people are able to sell hyped, FOMO’d and overpriced crypto to a “greater fool,” whether or not the crypto is overvalued. That is, of course, until there are no greater fools left, and then it all comes crashing down.

There is only one actual proven utility for crypto: crime, such as terrorism, money laundering, sanctions evasion, ransomware attacks, drug dealing, child pornography peddling, human sex trafficking and espionage.

Along the same lines, crypto has two primary beneficiaries: Grifters, who shill crypto to lure in investors, especially if those investors are the downtrodden and Criminals, who exploit the pseudonymity of crypto to orchestrate globally a vast array of devastating crimes and terrorism.

Yet this coming week, amid a horrifically corrupt and criminal global crypto-marketplace and a crypto-ecosystem formulated into a toxic speculative cocktail of mathematical computational blather, affinity fraud and the “Greater Fool Theory,” the SEC will reportedly approve the offering and inception of a Bitcoin Spot-ETF. What a crock.

The Cataclysm of a Bitcoin Spot ETF

To me, the stark reality is that the approval of a Bitcoin Spot ETF is sadly, tragically and catastrophically:

Yet Another Fee-Suck. Bitcoin Spot ETF applicants are nothing more than an opportunistic cartel of fee-sucking billionaire financial behemoths who have the audacity to design and manufacture a product to allow more investors to experience financial ruin and incalculable risk – just so they can once again line their pockets with fiat (and more fiat).

Yet Another Ponzi Scheme. While Bitcoin Spot ETF promoters preach that crypto bolsters financial inclusion of the unbanked, the truth is the converse. Whether their edict stems from noble cause corruption or the same shameless exploit of payday loans, check-cashing bodegas and subprime lending, either way, it’s all a big lie. Crypto is not only more expensive, more complex and more risky than mainstream finance – it’s also one mammoth Ponzi scheme.

Yet Another Manifest of Predatory Inclusion. Crypto fails as a “financial panacea for the unbanked” because it’s just another exemplar of “Predatory Inclusion” and affinity fraud, sadly peddled to dupe the disadvantaged and disaffected. In fact, crypto fails miserably as a “revolutionary equalizer for the unbanked” because, as the legendary Michelle Singletary recently explained in her award-winning Washington Post financial column, crypto does not cure historical issues of financial inclusion.

In fact, when examined closely, as was done by Tonantzin Carmona for the Brookings Institution, Crypto has also evolved into a dire affinity fraud. Because “crypto’s current capabilities do not match the needs of the groups it purports to serve, it carries a host of risks and drawbacks that undermine its benefits. More alarming, we can observe parallels between crypto and other predatory products, which highlights crypto’s potential to exacerbate unequal financial services to historically excluded groups.” In other words, disadvantaged and disaffected communities get access under the auspices of inclusion, but that access only makes their situations worse.

Yet Another Transparent Big Crypto Masquerade. Bitcoin Spot ETF promoters shill their empty-headed financial product as a means to usher in a new era of technological innovation. What a farce. Shilling crypto as “technologically transformative innovation” is like shilling heroin as a “therapeutic futuristic wonder-drug” or shilling blood diamond mining as “virtuoso engineering genius.” All these predatory, financial behemoths care about is exploiting crypto so they can shamelessly extract as much fee income from their customers as possible.

Yet Another Lexicon of Brazen Hypocrisy. The very idea of a Bitcoin Spot ETF remains a laughable concept, not only because it will create yet another Wall Street investor scam and fee-suck of epic proportions, but also because a Bitcoin Spot ETF is perhaps the most “centralized” crypto contraption conceivable. Wasn’t bitcoin created to disintermediate and liberate people from controlling third parties? Am I the only one who sees the extraordinary irony in that axiom?

Yet Another Anticlimax. I just can’t seem to get over the notion that the approval of a Bitcoin Spot ETF may actually become a primary talking point of SEC Chair Gary Gensler legacy. It reminds me of when Nixon went from the 1969 bombing of Cambodia and “Operation Menu” to shaking hands with Chinese Premier Zhou Enlai at Beijing Capital International Airport in 1972. It reminds me of when The Grateful Dead went from recording “Shakedown Street” at Club Le Front in 1978 to promoting “Touch of Grey” (the Dead’s first music video) on MTV in 1987. It reminds me of when Robert DeNiro went from playing “Travis Bickle” in “Taxi Driver” in 1976 to playing “Fearless Leader” in “The Adventures of Rocky and Bullwinkle” in 2000.

The Current (and Bogus) Bitcoin Rally

Promoters of the SEC approval of a Bitcoin Spot ETF cite the current bitcoin rally as evidence that bitcoin is a critical investment and everyday investors should be given easy access to it. But this is all a calculated and orchestrated ruse to dissemble.

So, what is causing the current bitcoin rally? (Hint: It is not merely the absurdist marketing theater of the imminent possibility of the US SEC approval of a Bitcoin Spot ETF.)

Consider the following 4 crypto-axioms — bitcoin bankruptcies, tether minting, whale grift and the Walking Dead-Like post-apocalyptic anarchy of the crypto ecosystem — which have banded together to create the perfect bitcoin-storm of hype, flex and FOMO:

Bitcoin Bankruptcies. The myriad of major crypto bankruptcies of the past several years, including FTX and Three Arrow Capital, have tied up the supply of bitcoin and caused a significant decrease in bitcoin supply. “This has created a demand-supply imbalance leading to the rise in the value of bitcoin . . . At some point all these bitcoins will be dumped on to the market by the bankruptcy liquidators and it will depress the value of bitcoin. The bankruptcies seem to be a more likely reason for the recent increase in the price of bitcoin and can also explain the volatility, since nobody knows when the liquidators will dump the bitcoin.”

Tether Minting. Tether has printed five billion USDT stablecoins in the past month out of thin air as “loans” — backed in the Tether reserve only by the “loans” themselves. “This is Tether issuing loans to some of its biggest customers — printing pseudo-dollars out of thin air, with the only “backing” being the loan itself, counted as an asset. The loans are secured by cryptos held as collateral — not as reserves. No actual dollars flow into the system this way” ( It’s a simple method of lather, rinse, repeat. Crypto institutions — exchanges, hedge funds — can use the tethers to increase leverage and pump the price of crypto. They then post their inflated crypto as collateral to borrow more USDT and keep pumping.

To me, the tether machinations defy common sense, and the tether backing cannot possibly be supported with real fiat of any kind. As legendary technologist David Gerard and ace journalist Amy Castor thoughtfully explain: “If Tether had billions of real dollars backing its tethers — as it claims — then the folks running Tether could also make a ton of money simply by putting the reserve into Treasury bills. They do not need to be making loans.”

Whale Grift and Criminal Chicanery. In the cryptoverse, market manipulation is not only rampant and tolerated, but also encouraged. Fraud is not only rewarded, but also taught.

For example, about 10,000 people own approximately 30 per cent of bitcoin. Around 100,000 people own about 50 per cent of the bitcoin. It is a highly illiquid market where insiders do not disclose their trades, where trading transparency does not exist and where no regulatory exams, audits or examinations ever take place. It is not surprising that market manipulation flourishes.

“In the crypto market, whales can manipulate prices through large buy or sell orders. Such actions trigger a domino effect across the market, influencing sentiments and reactions of traders and investors. Hence, crypto whales mold market sentiments, creating the responses they seek by driving the price and supply of coins. In addition, the whales significantly impact liquidity and price stability within the cryptocurrency realm. Their substantial holdings give them power over the amount of liquidity available. Through their strategic trading tactics, crypto whales influence price stability, fostering an environment conducive to trading and investment.”

Modus operandi for controlling the bitcoin marketplace are countless and include wash trading, matched trades, spoofing and other manipulative trading schemes on unregulated crypto exchanges, which could fraudulently inflate or deflate the price and volume of bitcoin.

Meanwhile, other malevolent actors, who, given the lack of enforced or mandated cybersecurity standards for crypto-trading platforms, could hack into customer accounts or gain malicious control of bitcoin-related networks. Along the same lines, crypto platform insiders, can trade based on material, nonpublic information and can disseminate false and misleading information to orchestrate schemes to create bogus new sources of demand for bitcoin. Similarly, bitcoin-based investment vehicles, which, when responding to a “fork” in the bitcoin blockchain, can wreak havoc by creating two different, non-interchangeable types of bitcoin.

The Walking Dead-Like Post-Apocalyptic Anarchy of the Crypto-Ecosystem. With traditional SEC-registered financial firms, the SEC has absolute and instantaneous visibility into every aspect of operations. But in the Bitcoin marketplace, the SEC lacks that sort of oversight and access — and has scant ability to detect, investigate and deter fraudulent conduct. As a result, the bitcoin marketplace (like all Web3 marketplaces) operates in a regulatory vacuum amid a den of thieves, without adult supervision. For instance, the bitcoin marketplace lacks:

— The hallmarks of a traditional transparent surveillance program, so the SEC can’t analyze or verify market trading and clearing activity, customer identities and other critical data for risk and fraud;

— The licensure of individuals involved in bitcoin’s trading, operation, promotion, etc., so the SEC can’t detect individual misconduct and enforce violations;

— “Routine” or “for cause” SEC or FINRA examinations, inspections and audits, so the SEC and FINRA cannot patrol, supervise or verify critical customer protections and compliance mechanisms;

— Traditional accountability structures and fiduciaries, so the SEC can’t ensure that every customer’s interest is protected and held sacrosanct; and

— Compliance systems, personnel and infrastructure, so the SEC can’t know where bitcoin came from or who holds most of it.

Looking Ahead

A January 5, 2024, letter written from the independent, nonpartisan, nonprofit and highly respected Think-Tank @BetterMarkets
, summarizes the dangers of a Bitcoin Spot ETF perfectly:

“The approval of spot bitcoin ETPs would be a historic mistake almost certainly leading to massive investor harm. The immense and unrelenting fraud and manipulation in the bitcoin market means that approving these products would expose millions of American investors and retirees to the very harms that the SEC exists to prevent. It would also undoubtedly lead the crypto industry to claim or imply that their products are now approved by the United States government. The crypto industry will almost certainly flood Americans with marketing propaganda suggesting that the SEC’s action legitimized crypto, giving false comfort to retail investors. The SEC must not facilitate the financial carnage that will follow if the crypto industry is allowed to repackage, add a veneer of legitimacy to, and widely disseminate a financial product that is little more than a socially worthless gambling chip.”

“Denying the proposed rule changes is required under the law. The statute clearly provides that the rules of an exchange must be designed to prevent fraudulent and manipulative acts and practices and protect investors and the public interest. The potential for fraud and manipulation in the spot bitcoin market is so great that an exchange cannot permit the listing and trading of a spot bitcoin ETP and still comply with those requirements. Moreover, the surveillance-sharing agreements proposed by the exchanges amount to window-dressing that cannot adequately detect or address the rampant fraud and manipulation in the bitcoin market.”

“As a result, it would be a profound legal error and a policy travesty for the SEC to approve the proposed rule changes. It would expose countless hardworking Americans to the risks inherent in investing in bitcoin. Those risks have not only been obvious over the last three years but have materialized repeatedly, resulting in billions of dollars of losses. The fact that the investment vehicle will be an ETP will not protect investors; if anything, the supposed protections related to the ETP will also provide false comfort to unsuspecting investors who fall for marketers’ claims that the SEC has approved if not endorsed the product. The value of their investment will be subject to the same risks of fraud and manipulation in the bitcoin market as investors who hold bitcoin directly. The SEC must not subject investors to these risks.”

Chair Gensler kicked off his SEC reign with a fierce commitment to protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation. But now, suddenly, the former Wall Street banker seems to have re-discovered his roots and may end his reign with a dramatic and ill-fated U-turn. Say it ain’t so Gary . . .

My Response – BrewsBitcoin:

Sadly, you know your self. Tongue-in-cheek, you called yourself an idiot. There is a saying that if someone tells you what they are, believe them.

But you just don’t get #bitcoin.

And that’s ok, “because bitcoin don’t care”.
You haven’t taken the time to learn that Bitcoin’s inherent value is time and energy. Cash flow? It’s a bearer asset – when you transact it, it’s an immutable asset that cannot be charged back on a whim or by fraud – that’s pretty positive cash flow to me as the recipient.
There’s no yield? And? What’s your point? There are other asset classes for yields if that’s your bag.
There’s no employee’s. Thank God for that – they’d screw it up. Consensus is a better way.
There’s no management. Wrong – the core software and it’s consensus model is the manager – the miner’s are the enforcers, and the nodes are the validators.
There’s no balance sheet? WTF? Now you are just lying to your base. Bitcoin is a very public ledger with accountability all the way to the very first transaction back in 2009.
No product, no service? Wrong again ser. You just don’t see the point – Bitcoin is not a product, but it’s definitely a service. People transact in Bitcoin everyday safely and securely with it.
No history of operations? Again, wrong ser. This outright fallacy can be proven thousands of times by each transaction of the blockchain, again, public ledger since January 3, 2009.
Analytical Valuations? Earnings Report? Bitcoin is a commodity – it’s not a business such as those regulated by the stock market – like Gold, like FCOJ 🙂 and so it doesn’t require filing valuations and earnings reports. Again, shows that you are either purposefully spreading misinformation or outright lying, or you really haven’t read anything on Bitcoin and decided to prejudge and make it the bogeyman.
No proven track record of adoption or reliance? Again, straight out wrong. See above re: the bitcoin blockchain being a very public ledger with all of its history out there in the open for all to see including you, and @PeterSchiff , and @SenWarren , if they were so inclined.
No data of any kind except analytics to crypto speculation? Now regarding crypto speculation, the data is out there, but I am not a speculator any longer and will not speak out to this other than say that speculation is an immoral transaction as you are betting against someone else to lose, but so is the options market.
I agree with you generally about the crypto price going up due to fomo, manipulation, bad programming, fraud, scammers – but Bitcoin does not equal crypto. Bitcoin has a well-known economic structure that creates scarcity (unlike our mighty dollar with 34 trillion in debt). Scarcity creates higher prices too, not just fomo.
One actual proven utility for crypto? LOLOLOLOL, omg, I can’t stop laughing at how this makes you sound like someone scared of his own reflection. Yes, the four horsemen of the infocalypse: terrorists, pedophiles, drug dealers, and money launderers. This has been debunked time and time again and is actually a grossly exaggerated and hypocritical viewpoint when CASH IS KING, and is by far like 95% more likely to be used in crime than any other medium. You’re coming off as a boor with the outright knee-jerk garbage you put out as fact. Fascinatingly, Bitcoin is one of the worst tools to use for crime as it is pseudonymous, not anonymous. You ever wonder how these news-leading criminals that extort or steal via bitcoin get caught by the feds – because it’s trackable.
Utility of Bitcoin is seen everyday when legitimate businesses accept bitcoin as payment – and they pay their taxes; by those that are unbanked/underbanked by a sometimes corrupt and sometimes racist banking system and being able to spend Bitcoin without their banks permission; by those in abusive financial relationships that found a way to save a little in bitcoin instead of easily confiscated cash; by being able to spend bitcoin when a tyrannical government labeled peaceful Canadian truckers as terrorists and froze their bank accounts; or how about an inflation hedge where the mighty US Dollar has lost 97% of its purchasing power since coming off the gold standard completely in 1971, wow, I could go on and on with examples.
Grifters and Criminals – they are everywhere and in every industry AND IN EVERY ASSET CLASS – you can’t just lump Bitcoin in that pile of crap – there are predators out there. Beware.

Now to the good points:
The ETF Fee Suck – I completely and totally agree with you. They smell money and piles of it. Knowledgeable Bitcoiners don’t approve of the ETF’s. They’d prefer a person hold their keys to their stack. But the @federalreserve and the aforesaid corrupt banking system has trained people over 100 years that third party risk is acceptable – except when banks fail, defraud their customers, or mismanage funds (all of which I document in my blog on One Reason I Hate Banks (there are a lot of reasons btw)). But the reality is most people aren’t comfortable holding their wealth as a bearer asset. It’s scary. I get it. And so these institutional banks will do it for them and charge a fee for the service. But I totally agree with you – it’s a money grab.

Ponzi scheme – there may be a lot of cryptos out there that are ponzi schemes. Thankfully Bitcoin isn’t one of them. Read @saifedean The Bitcoin Standard to learn more.

The financial panacea to the unbanked – holy crap if you didn’t just gaslight for this article – this Washington Post link has nothing to do with the “Unbanked” but is specifically about Black people and poor people speculating in crypto – that is not Banking or being banked. That is people trying to get ahead of a fiat dollar system inflating away their purchasing power by gambling on speculative plays. This one paragraph just blew your street cred with me. Unbanked actually means not having a bank account or being able to transact as you or I might with a legit credit or debit card, not playing the candle charts. 13% of Americans are unbanked per the @federalreserve – it’s much higher in my home state of South Carolina. Yet, the unbanked don’t need permission to create a Bitcoin wallet. They just need to know how to use it. And that takes time, of which the Bitcoin community is willing to provide the educational resources to teach people to be self-sovereign with their money.

And yet again more gaslighting as this Brookings Institute T Carmona article – same thing – conflating crypto speculation and banking – they are not the same animal. Bitcoin circular economies that are flourishing right now around the world such as @Bitcoinbeach or @BitcoinEkasi have seen that communities that are cash only that move into a Bitcoin standard start saving money where they never had the ability to before – they spent their cash on hard goods to hold their wealth.

Crypto Masquerade = high fees for the institutions pushing them. See above, I already agreed with you.

You’re one to talk of brazen hypocrisy, amirite? But believe me when I say that most of the Bitcoin world isn’t in bed with these institutions. But the institutions holding some #bitcoin isn’t centralizing bitcoin nor is it controlling miners or nodes – you know (or maybe you don’t), the creators and validators of Bitcoin transactions.

You forgot to mention the Nixon legacy of taking us off the gold standard in 1971. That precipitated the need for Bitcoin in the first place, along with the failed banking and inflationary policies over the past 50 years. No one likes @GaryGensler so you can have him back. My favorite SEC Commish is @HesterPeirce btw. She’s pro free-market. But alas she is also just one of five.

The 4-crypto-axioms: this is too early to tell the reverberations of massive fraud by idiots such as @SBF_FTX – but don’t let the politicians off the hook from putting idiots like this on a pedestal. There were plenty in the Bitcoin community that knew that massive leveraging against already leveraged positions was a bad move and would come crashing down. Black swan events happen, and they suck when they do. But that freed up Bitcoin you talk about will be absorbed again by the market. That is part of the inherent volatility and why the price fluctuates. Buyer beware. But there is also the reality that a lot of the frozen assets are mixed – not just bitcoin – there’s a lot ethereum, tether and other altcoins frozen too – and the time horizon for when this stash hits the market is spread out. Point being, not all of it is Bitcoin nor will all the bitcoin from all the failed businesses go on the market at the same time.

Regarding Tether – I’m not saying much as I don’t really care about it – but Tether is a company – they can do what they want with their companies assets and decision making.
But the next paragraph is talking about making money on Treasury’s. Are you freaking kidding me? Even China is winding down off those pieces of paper. They aren’t an inflation hedge, they aren’t even close.

Whales control markets – a tale as old as time itself. Have you seen that JP Morgan was fined $920 Million for manipulating the silver market? Or how about mortgage bankers and hedge funds pushing subprime mortgages that ends up collapsing the world’s banking system in 2008? This is not new, don’t pretend that it is new or special only to the crypto industry.

Your negatives on the “bitcoin marketplace” are exactly why the SEC has denied the ETF’s previously, but what is different now is that they were forced to give reasons for denying the ETF so that an appeal can be made with altered resolutions in place. Now we wait and see what the SEC has decided on the next batch of applications.

As a wrap-up, you’re an attorney. You don’t know any better. You were trained this way – to go for the jugular, but in this case, you are trying to bite with milk teeth. It’s clear you have an agenda without having insight on the facts. I’d start by reading the following:
A good primer, The Little Bitcoin Book by @jimmysong et al.
A bit more depth with Layered Money by @timevalueofmoney
College level reading, The Bitcoin Standard by @saifedean


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