Crypto is crashing. Have The Crypto Bosses Learned Anything At All? – Tech Tribune France

Last Monday marked one of the biggest television events of June, Game 5 of the NBA Finals. So, naturally, crypto exchange Coinbase took the opportunity to run an ad mocking the more crypto-enthusiastic pessimists. A series of tweets declaring “Crypto is dead” — some new, some nearly a decade old — fade to a rendition of Chopin’s funeral march. Then a new tagline appears in a harsh blue font: “Long live crypto.”

The very next day, Coinbase laid off 1,100 employees, about a fifth of its workforce. Perhaps the pessimists were onto something: the prices of Bitcoin and Ethereum, the two most popular coins, fell more than 70% from pandemic highs; the NFT market collapsed; and optimism is lacking. Everywhere you look, the dominoes are falling: a top company, Three Arrows Capital, is reportedly on the verge of collapse, while other companies are desperate for bailouts to stay afloat. Over the past three months, the crypto market has lost over $1 trillion. (A Coinbase spokesperson explained the timing of the announcement by saying it was “part of a pre-arranged package that came with our NBA sponsorship.”)

And yet, the prevailing sentiment among many of these companies, even when bleeding, is that crypto isn’t really dead at all. Across the industry, you can spot the rhetorical gesture of this Coinbase ad — an insistence that investors and onlookers alike are taking all of the recent downtrends a bit too seriously. You would think that a crash of this magnitude – the first since crypto fully entered the mainstream – would be a humbling moment for the industry, one that would force some of the movement’s biggest proponents to retreat and build more robust systems. But at this point, many crypto kings refuse to think at all.

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It’s no coincidence that the companies that think the least are the ones with the deepest hands in the cookie jar. Part of what spurred the current crash was a cryptocurrency called TerraUSD, a type of so-called stablecoin designed to more or less match the value of the US dollar. The whole point of stablecoins is that they are supposed to be less volatile than other cryptocurrencies, a way to protect your money while keeping your chips in the casino. At least that was the idea: TerraUSD was pegged to another cryptocurrency called Luna, and when its value plummeted in early May, investors quickly dumped their TerraUSD. Tokens intended to sell for $1 a pop were suddenly trading for next to nothing and, according to Bloomberg$60 billion of investors’ money was zapped.

Do Kwon, the 30-year-old co-founder of the company that created Terra, responded to the chaos with a simple proposition: Terra 2.0. It would be like Bear Stearns launching “Bear Stearns 2.0” in 2008, an act of hubris so extreme it almost defies belief. Kwon, who did not respond to a request for comment, relaunched the new tokens with a slightly modified battle plan, and Luna holders approved the reboot. As the rest of the world waits for more concrete answers about that $60 billion, Kwon doubled down on Terra 2.0 with a series of Twitter Feeds. But of course, the confidence is not there – after an initial rally, the price has steadily fallen.

As the broader crypto market crashed in the weeks following Terra’s collapse, other struggling companies also refused to publicly reflect on the damage. Crypto lender Celsius Network has succeeded by promising returns well above traditional bank accounts. This approach generated tons of money when crypto was booming, but apparently it didn’t work so well during the recession. As rumors began to circulate about Celsius’ financial troubles, company founder Alex Mashinsky dismissed it all as “FUD,” crypto shorthand for “fear, uncertainty, and doubt.” “Do you even know a person who has trouble withdrawing from Celsius?” he tweeted. Just over 24 hours later, the company froze all withdrawals, excluding customers from their accounts. (The gel stays put nearly two weeks later.)

Mashinsky, whose Twitter profile picture depicts him as a Roman emperor, laurel wreath and all, has gone dark on social media and interrupted the company’s regular “Ask Me Anything” sessions. A memo from the company, released a week ago, did not shed any light on the situation: no word on the whereabouts of investors’ funds, or ongoing investigations into the company’s operations by regulators in at least five states. (Celsius and Mashinksy did not respond to a request for comment.)

Although the company now displays a dark banner on its website referring to the freeze and has posted a short FAQ about it, Celsius also still touts a product with “military-grade security, next-level transparency, and versatile application.” designed to help you achieve your financial goals, whether you’re HODLing long-term or trading daily. (HODL is an intentionally misspelled call to “hold” your coins, even if the value of your investment drops.) The unspoken message is that customers should continue to trust Celsius, even when the walls start to close in.

Across the industry, the biggest crypto players feel that if we all keep the faith, traders can indeed emerge from the crisis. Cameron Winklevoss, the billionaire co-founder of crypto exchange Gemini, recently tweeted that Bitcoin’s decline seems “irrational” because “the underlying fundamentals, adoption, and infrastructure have never been stronger.” It’s not about fundamentals, though; asking people to take a closer look at technology will not end the bear market. A few days ago, Michael Saylor, whose software company, MicroStrategy, spent billions of dollars acquiring Bitcoin, called the cryptocurrency “a lifeboat, thrown into a stormy sea, offering hope to anyone in the world who needs to get off their sinking ship.” But right now Bitcoin is the sinking ship.

I don’t pretend to know how best to react to a situation like this, but if you’re a leader hoping to regain your reputation after losing billions of dollars of other people’s money, it’s probably ideal to drop the idea that everything is going to be okay. No one expects crypto firms to criticize crypto, but the guiltiest players could at least tone down that “buy the dip” philosophy as everyone’s wallets start to crash. Sometimes it’s actually safe to admit defeat; at least in 2008, we weren’t subjected to a deluge of defensive antics on Twitter from bankers asleep at the wheel.

It’s not just numbers on a screen, after all. It’s easy to feel complacent about the crypto crash if you’ve been wary of the whole subculture, but something of a sanity crisis has unfolded on the crypto-centric Reddit forums as traders find community in commiseration. (Suicide hotlines were at one point pinned at the top of a forum for Terra enthusiasts.) People who took out loans from Celsius are on the verge of losing their homes. And as the contagion begins to infect other businesses, like the crumbling Three Arrows Capital, those with the least to lose will be hit the hardest.

But while double down is a tricky decision, it fits neatly into the larger framework of free-market libertarianism that dates back to Bitcoin’s origins: the idea that market corrections should help shake off fraudsters and give investors more robust options going forward. . It’s up to traders to “DYOR” (“Do your own research”) and to make careful investments, it is thought; the government shouldn’t have to bail you out if things go wrong. It doesn’t help that the industry still feels like it has a chip on its shoulder, Rohan Grey, a Willamette University law professor who studies cryptography, told me, in part because of his historically difficult relationship with the traditional banking system. Crypto companies are “always trying to prove that not only are you pro-market and pro-profit, all those things that the rest of Wall Street loves,” he said, “but you’re also doing it with this big middle finger up. to traditional elites.

And yet people like Kwon and Mashinsky are the elite. The riches of the industry are creating a new set of rules in real time: newly minted cryptobillionaires are already pumping money into media and politics, aiming to create new institutions more respectful of their ambitions. The crypto project is in a way about avoiding the protections and guardrails that we have come to associate with traditional finance. Maybe it worked in 2013 when bitcoin was more of a niche curiosity, but it’s different now that crypto has grown by leaps and bounds. When the numbers rise again (and they almost certainly will rise again), you can expect a fair amount of I told you so from that same crowd. But if there is no sense of responsibility on the part of these giant corporations, we could end up where we started.



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Crypto is crashing. Have The Crypto Bosses Learned Anything At All? – Tech Tribune France


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