Book Review: Zeke Faux observes the vanity and weakness that inflated the cryptocurrency bubble
Pride goes before a fall, says the conventional wisdom - and Zeke Faux' Number Go Up surveys some very proud people indeed.
- Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall
- Zeke Faux
- Weidenfeld and Nicolson, hb £25.00
It’s nearly four decades since Ireland experienced the summer of moving statues, and fleets of busses ferried the agitated faithful to see concrete statues shimmy in the evening light, but it’s hard to think of another example of a primeval and irrational craving so freely expressed.
The “it’s-different-this-time” trap that led so many otherwise prudent, sober people to invest life savings in Anglo Irish Bank shares — or other once-reliable banks — may come close, but they seem of a different, less hysterical calibre of optimism.
Hysterical optimism is the constant dynamic in Zeke Faux’s — and what a serendipitous surname for the author of a book about one of the great scams of our time.
This often funny, often tragic analysis of the rise and fall of cryptocurrencies and their champions shows human vanity and weakness at their most destructive.
That energy was not, in the case of the great majority of those who took a punt on a crypto “currency” informed by any real understanding of how these tokens created wealth beyond the momentum generated by the me-me-me-too imperative of acquisition.
Just like the Dutch Tulip Market bubble of the early- to mid-1600s it made a minority very rich but beggared far more. The more things change…
This get-on-the-gravy-train-quick imperative was encouraged by a litany of hired-gun celebrities whose integrity seemed all too easily bought.
Figures like American footballer Tom Brady and Slick Willie himself, Bill Clinton, spoke at conferences that were little more than sales pitches with very good parties and lots of cocaine.
Tony Blair had a bit part and the supermodel Gisele Bündchen also encouraged investors to believe in cryptocurrencies, though why anyone should take financial advice from a fashion icon from yesterday is not explained, probably because it can’t be.
This September the Comparitech website recorded that this momentum has in part led to over 106,000 Americans losing more than €6bn to investment scams last year alone.
Online investing/gambling/punting has become so easy, so casual and unregulated that this seems an inevitable vulnerability — and how that vulnerability was and is exploited by the pirates and Ponzi scheme grifters who populate this book.
If Ireland was once described as the Wild West of European finance, then the crypto and scams built around it must be described as the Wild West of recent global finance.
It is hard to think of any book or film with as cast as odious, as indifferent to the consequences of their shakedowns, as arrogant, or as voracious as the hustlers launching one Initial Coin Offering “opportunity” after another.
The relentless and self-destroying feral addiction to accumulation animate so many of Faux’s cast that it is impossible not to hope that they represent just a tiny minority of humanity — though by the end of this sobering book that wish may seem hysterical optimism.
One of the senior crypto figures admits that his job title, were it accurate, would describe him as Ponzi Scheme Chief.
Another global figure in the crypto community, an infamous “crypto bro”, kept a selection of pink leather bondage restraints to hand in case he might find a willing and adventurous partner dazzled by his accumulation of gazillions in the form of digital images of apes.
These appetites and evasions are not without consequences. Just last month, bail for Alex Mashinsky, founder and former CEO of bankrupt crypto lender Celsius, was set at $40 million by a US District Judge.
Mashinsky pleaded not guilty to seven counts, relating to misleading investors and manipulating the price of his CEL token. His trial is awaited but funds entrusted to him are apparently beyond the reach of authorities.
Faux describes South Korean crypto dealer Do Kwon as “obnoxious” — a view shared partially at least by a court in Montenegro that in June sentenced him to four months in jail for his part in the $40bn collapse of the terraUSD and Luna tokens.
Kwon was found guilty of forging official documents and was arrested in March as he tried to board a flight to Dubai at Podgorica Airport. Mr Kwon also faces charges in America and South Korea over the collapse of the two digital tokens last year.
However, these misadventures, where millions are thrown around like promises at an election rally, pale when compared to the adventures and faux expressions of save-the-world idealism of Sam Bankman-Fried, an early contender for the Icarus of the Century title.
According to Reuters Bankman-Fried, once known as "The King of Crypto" is struggling to prepare for his New York fraud trial because of poor prison food. The allegation came as Mr Bankman-Fried, the founder of collapsed FTX, pleaded not guilty to seven criminal charges contained in an indictment.
His bail was recently revoked. Adding spice to the drama, the judge said: "There is probable cause to believe that the defendant has attempted to tamper with witnesses at least twice."
The sharpness of James Shirley’s great warning ...
... cuts to the quick one more time. However, Bankman-Fried used money he stole from customers of his FTX exchange to make more than $100m in political campaign contributions before America’s 2022 US midterm elections, according to federal prosecutors in August.
He was buying leverage with other people’s money, yet he still insists he did nothing wrong. Despite that insistence his parents, both Stanford professors, are being sued for money they allegedly received improperly from the crypto firm ahead of its collapse.
The couple have been accused of holding millions of "fraudulently transferred" dollars and of turning a blind eye to misconduct at their son’s company. Essentially laundering money, is one of the primary functions of a cryptocurrency according to Faux.
This well-written, pacey book is difficult to put down because you wonder how the swizz of the previous chapter might be surpassed — as it nearly always is.
offers many lessons but the overriding one seems to be that investment in the regulation and supervision of financial institutions, no matter how novel, must be as inventive and as relentless, as the shamans behind myriad cryptocurrencies.
