Come for the politics, stay for the snark.

Petty moves from a petty man.

The media handbook says “controversial” is the most negative description that can be used for a Republican.

They fucked up the fucking up of the fuckup!

We still have time to mess this up!

Sadly, there is no cure for stupid.

America is going up in flames. The NYTimes fawns over MAGA celebrities. No longer a real newspaper.

Republicans are the party of chaos and catastrophe.

Trumpflation is an intolerable hardship for every American, and it’s Trump’s fault.

This must be what justice looks like, not vengeful, just peaceful exuberance.

If you cannot answer whether trump lost the 2020 election, you are unfit for office.

When someone says they “love freedom”, rest assured they don’t mean yours.

Seems like a complicated subject, have you tried yelling at it?

I’m more christian than these people and i’m an atheist.

“I was told there would be no fact checking.”

Marge, god is saying you’re stupid.

Hot air and ill-informed banter

If rights aren’t universal, they are privilege, not rights.

Nothing worth doing is easy.

This chaos was totally avoidable.

Roe is not about choice. It is about freedom.

That’s my take and I am available for criticism at this time.

This really is a full service blog.

This has so much WTF written all over it that it is hard to comprehend.

Within six months Twitter will be fully self-driving.

You are here: Home / Economics / Grifters Gonna Grift / Sunday Evening Open Thread: The Bitcoin (Champagne) Bubble Bursts

Sunday Evening Open Thread: The Bitcoin (Champagne) Bubble Bursts

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It was the spring of 2021, and Miami’s hottest night clubs were inundated with phone calls from cryptocurrency entrepreneurs that no one had heard of. They wanted to reserve lots of tables — or rent an entire venue for a whole evening at a cost of half a million dollars or more.

With the price of bitcoin then at $60,000 and crypto becoming mainstream, its biggest beneficiaries descended on the Florida city to flaunt their wealth at lavish parties…

A little more than a year later, the phones have stopped ringing after the collapse of Bahamas-based exchange FTX roiled the market and cast a pall over the industry. The crypto revellers frequenting Miami’s clubs have “completely disappeared”, Vimercati said.

Those on the dance floor had behaved as though there was no tomorrow. In the event, it turns out they might have been right. “They wanted to show that they didn’t have any limits,” recalled Vimercati. “They were ordering 12 or 24 bottles of the most expensive champagne and just showering themselves without even drinking.” …

The never-ending parties underscored Miami’s status as the epicentre of the US cryptocurrency industry. Florida’s low taxes were a big draw, as were less-onerous Covid-19 restrictions that turned the city into a magnet for revellers.

In March 2021, FTX paid $135mn to secure 19 years of naming rights for the arena where basketball team Miami Heat play. In June 2021, the Bitcoin Conference was held in Miami after relocating from Los Angeles.

Miami’s club operators have always been able to rely on a few big weekends, such as Art Basel, music festival Ultra and New Years Eve. But for the past two years, attendees at bitcoin events have demanded as many tables and in some instances have bought out entire venues to throw private parties.

“On the bigger crypto weekends, the groups coming in for private buyouts were these young tech guys,” said Alan Roth, owner of Rosa Sky rooftop lounge. “A buyout costs anywhere from 20 per cent to 50 per cent more than we would make on a normal night.”

Crypto money had flooded into other parts of Miami’s luxury scene too. “They bought big houses for $25mn plus, they rented big yachts . . . they had money and were spending it lavishly,” said Brett Harris executive director of luxury sales at real estate firm Douglas Elliman. “They were buying big houses in cash, no financing — converting Bitcoin into cash to buy.”…

Roth is hopeful that the latest source of demand for Miami’s luxury lifestyle will return. “I don’t think the crypto market is going to fold and be done. It’s like the regular market — it goes up and down. I don’t get the sense that they’re afraid.”

Not everyone agrees. “We don’t think they’re coming back,” Vimercati said.

Yeah, I knew I’d seen these guys before! Back in April, Fast Company was not impressed…

… All over Miami Beach and the hip Wynwood neighborhood, crypto-themed pop-ups try to create some cohesive sense that the city is the home for the Bitcoin cultural movement, but it all feels a bit wonky. And that’s equally true for the conference, housed at a big convention center a few blocks from the water. There’s also a real sense of desperation for some kind of star power that can elevate Bitcoin from digital gold for the techno-libertarian set to the true mainstream cultural movement it needs to be in order to actually catch on. The conference’s expo center features a big fake volcano and a mechanical bull (the latter of which offers a chance at winning one whole Bitcoin), but there’s not a ton to do beyond that…

And so this cultural spotlight on Ethereum has left Bitcoin feeling a little stale. That’s led to a palpable void in Miami this week—one that conference organizer BTC Media and the various sponsors and vendors are hell-bent on filling with a bizarre mix of fairly prominent voices from the world of finance and random celebrities. The end result is an event that feels like a low-level comic convention that’s being held in the same event space as an economic forum. It’s confusing and disjointed: There are presentations on the Federal Reserve and economic theory, but also personal sovereignty and cancel culture.

Bitcoin 2022’s highest-profile guests include Jordan B. Peterson, the controversial right-wing psychologist; former presidential candidate Andrew Yang; Shark Tank‘s Kevin O’Leary; Paypal and Palantir co-founder Peter Thiel; a handful of well-known athletes; and, of course, a bevy of homegrown crypto influencers like entrepreneur Anthony Pompliano. (El Salvador’s crypto-loving president Nayib Bukelele was supposed to appear, but dropped out at the last minute.) The guest with the largest selfie line in the conference’s showroom on Thursday was Barstool Sports founder, Dave Portnoy, the controversial self-described “baron of Bitcoin,” whose pandemic-era trading livestreams made him a popular figure in the crypto world…

Up with the [firework] rocket and down with the stick, as my Nana used to say.

Reader Interactions

82Comments

  3. 3.

    patrick II

    Wait a minute — Jane Adams is at iLoveJaneAdams?  I may change my twitter handle to something a little more self-congratulatory.

  5. 5.

    karen marie

    In March 2021, FTX paid $135mn to secure 19 years of naming rights for the arena where basketball team Miami Heat play.

    The arena is now a monument to hubris.

    If I thought any of these people had an ability to feel shame, whoever was involved in the sale of the naming rights should be deeply ashamed

    @patrick II:  I’ve never heard of her.  Is she someone that anyone outside of crypto crankers would have heard of?

  6. 6.

    Ken

    The recent crypto collapse was a con orchestrated by the Federal Reserve, CIA, academia, establishment politicians, and legacy media.

    Needs moar Bavarian Illuminati.

    Also, regarding the thread title, you can find any number of people reassuring everyone that bitcoin is nothing like the failing crypto tokens, and there’s absolutely no way the price could collapse.

  8. 8.

    Dangerman

    Kinda hard to believe Folks bought into such risky propositions as opposed to the safety of NFT’s.

    ETA: Damn, beaten by 1.

  10. 10.

    Chetan Murthy

    Dean Baker FTW!: https://cepr.net/sam-bankman-frieds-truly-effective-philanthropy-teaching/

    We should all recognize that Sam Bankman-Fried is much smarter than the rest of us. After all, outwardly he looks to be one of the biggest frauds of all time. By the age of 30 he amassed a fortune that dwarfs that of your average billionaire. He did it by running a crypto Ponzi-scheme. While claiming to be using his wealth to support philanthropies that were carefully selected to maximize human welfare, he was actually living a high life-style with his friends.

    Now that the Ponzi has collapsed, the investors who trusted him look to be out of luck. And, of course there is no money for the philanthropies that he supported, many of which will are now struggling because they won’t get contributions they had been counting on.

    That all looks pretty reprehensible, but maybe that’s the point. See, Sam Bankman-Fried was so committed to his philosophy of effective philanthropy that he was prepared to make himself appear to be the epitome of a despicable human being, and spend many years in prison, all to teach us that finance is a wasteful cesspool that needs to be reined in for the good of humanity. And, the place to start is his particular corner of the cesspool: crypto.

    The snark is strong in this one.

  11. 11.

    Glidwrith

    All of it reads like a thorough mix of grifting, lies and the right-wing remoras that feed on this shit.

  12. 12.

    Another Scott

    Mt Gox was founded in 2010 and blew up 4 years later.

    FTX was founded in May 2019 and blew up a little over 3 years later.

    I assume the next “nobody could have predicted” crypto implosion company will be founded in 2024 and will “mysteriously lose eleventy billion dollars” before 2027.

    Hmm…  Maybe I should start an exchange to short such things.

    Be ready to get in on the ground floor on the implosion of the hottest new investment!!1ONE

    Cheers,
    Scott.

  14. 14.

    patrick II

    @karen marie:

    I have never heard of Jane Adams either.  She wrote a Twitter comment that was used at the beginning of this post.  Perhaps she has just been to one too many Tony Robbins lectures.

  15. 15.

    ColoradoGuy

    Magic beans without the beans. Or tulip bulbs. Or anything, except an array of computer servers grinding away in Outer Mongolia.

    A epitaph to guys with way too much money.

    Here’s hoping the crypto collapse takes down Twitter, Tesla, and Elmo.

  18. 18.

    West of the Rockies

    ShitCoin harms the environment. To hell with it and it’s greedy, fake-money-for-nothing worshippers.

  20. 20.

    Skepticat

    I just finished proofreading a client alert from a successful but sensible financial adviser who referenced the FTX debacle but pointedly refused to use the jerk’s name. This adviser usually gives us pretty clean copy, but this job was a tad different. His basic message was DON’T BE AN IDIOT AND SPECULATE ON STUPID THINGS, but he obviously was so furious (not with his clients but with scammers like these) that it is was word salad worthy of Herschel Walker or tRump. Sadly, we know that even usually sophisticated investors sometimes go off the deep end. I simply hope they all are Rethuglicants.

  21. 21.

    SFAW

    @David 🦃The Establishment🥧 Koch:

    CIA just caused the Raiders to fumble

    The perfidy! They also caused Jets “QB” Zach Wilson to play (last week) as if he was trying to shoot 3s, or maybe looking to provide an “alley-oop” pass for an easy dunk, instead of being a QB. Fortunately, Mike White is (so far) immune to their nefarious tactics and technology.

  23. 23.

    Gin & Tonic

    @karen marie: Why should that person feel ashamed? They sold something intangible for $135 million. Now that FTX is bankrupt, they can sell the same thing again to someone else.

  24. 24.

    No One You Know

    Anything too cryptic to understand is too cryptic to trust.

    Anything that wants FDIC protection requires FDIC regulation.

    Funny, how trust and regulation often go together. It’s as if published rules had something to do with the fairness and confidence that confidence-men weren’t just making it up as they went.

  25. 25.

    Dan B

    A group of what look to be Incels are trying to promote their  “Elon GOAT tokens” by shipping a 12,000 pound statue of  goat with Elon’s head riding a rocket to Tesla Giga factory Austin. The rocket shoots flames.  They were hoping to attract Elon’s attention with this thing that looks like beastiality, or goat sex with a rocket plus Elon’s mug.  Added bonus: Elon’s wearing a doge coin necklace.

  26. 26.

    SFAW

    Erik Loomis at LGM has been promoting/pumping/flogging his “LoomCoin.” Of course, Erik has stated more than a few times that his LoomCoin is a grift, telling people to send him money in exchange for … nothing.
    I’m getting the idea that he does not think highly of cryptocurrency.

  29. 29.

    Amir Khalid

    These guys are nothing but currency speculators. They speculate in cryptocurrency rather than real, government-backed currencies, but they’re not doing anything else that’s different. Sooner rather than later the crypto bubble will burst, the last of the crypto bros will see their wealth evaporate, and the Miami club scene will have to start looking for a new source of rich boys.

  30. 30.

    Falling Diphthong

    @Dan B: Credit where it’s rarely due: Elon’s refusal to so much as glance sideways at these dudes is the right response. They are desperate for him to tweet about them and thus promote their currency.

    Apparently they have been ignored for a year or so? And asked “Who could ignore a giant beastiality rocket with Elon’s head cruising through Austin?”

  34. 34.

    Enhanced Voting Techniques

    The recent crypto collapse was a con orchestrated by the Federal Reserve, CIA, academia, establishment politicians, and legacy media.

    I thought one of the selling points of Cyrpto as it set up by genius and oh so cool tech bros so it was unpossible for the government and it’s evil fiat currency to undermine?

    And wasn’t it the CCP who banned crypto first? So, we have Finical Tankies now.

  35. 35.

    Kent

    The most impressive thing about Crypto is that it manages to encompass all kinds of financial scams simultaneously.   It is a pyramid scheme, but also identity theft, and also an affinity scam and a Ponzi scheme.  There are also tax scams, advance-fee scams, fraudulent charities, exchange-fee fraud, and I don’t know what all else.

    You gotta just stand there in awe at how much fraud they have managed to package into a single imaginary token.

  36. 36.

    ColoradoGuy

    On a more serious note, the worldwide collapse of crypto might squeeze a bit of inflation out of the system. Scams aimed at rich people are the classic sign of overheated markets, as loose cash chases ever more improbable and unlikely schemes.

    Extra bonus: Russian and Chinese billionaires have gone into crypto in a big way. Can’t think of a nicer group of people to deflate.

  37. 37.

    Kent

    @ColoradoGuy:Extra bonus: Russian and Chinese billionaires have gone into crypto in a big way. Can’t think of a nicer group of people to deflate.

    Is that true?  Heh heh.

  38. 38.

    bjacques

    And this is why I can’t quit Twitter just yet.

     

    For all the love Tulipmania gets, it was just a blip, a brief mania in the winter of 1636-1637 among Amsterdam merchants who went nuts over a catalog of Holy Roman Emperor Rudolf II’s garden in Prague. (To be fair, the pictures were very pretty.)

    Far more Jackalesque were the South Sea Bubble cartoons by William Hogarth in 1720, and especially those inspired by Dutch “bubble companies”. The texts were of course in Dutch, but some cartoons need no translation.

    https://www.flickr.com/gp/bjacques/P6s1132TQP

  40. 40.

    Chetan Murthy

    @bjacques: I’m sure many jackals know of  this already, but The Way We Live Now (by Anthony Trollope) is the chronicle of a great financial crime, along with all the hangers-on who are involved in it, even if only in some very peripheral way.  It’s lovely reading, and I remember reading it around the time of the Financial Crisis, and thinking that Mozilo, Bartiromo, and so many others were in the book, only with the names changed.  A lovely, lovely book.

    P.S. I’ve never checked, but wouldn’t be surprised that Trollope drew inspiration from the South Sea Bubble.  Though (heh) maybe his book predates it for all I know (I’m not going to check and ruin it ;-)

  44. 44.

    A Man for All Seaonings (formerly Geeno)

    This all reminds me of an old Monty Python skit that ends with the announcer telling you how to purchase whatever it was and says “or better still send us 2 pounds 5 and 6* at <some address> and we will send you nothing in return”

    * 2 pounds, 5 shillings and 6 pence written £2 5/6 back in the day.

  48. 48.

    SpaceUnit

    Actually there are way worse investments than crypto.  The Denver Broncos paid 245 million for Russell Wilson.

  54. 54.

    bjacques

    @Chetan Murthy: Ooh, this is relevant to my interests!

    (And I really need to finish Money For Nothing. It’s sitting on my nightstand, but social media is a helluva drug…)

  55. 55.

    Ken

    @ColoradoGuy:  Russian and Chinese billionaires have gone into crypto in a big way.

    As someone said when the frauds and scams started being revealed*, what sort of idiot sees a currency and market where 95% of the users are drug traffickers, money launderers, and terrorist states, and says “those are the people I’m going to defraud”?

    * Which was a couple of years ago, long before FTX.

  57. 57.

    ColoradoGuy

    @Kent: Money laundering. Not that easy to get big money out of Russia or China. Even Deutsch Bank has its limits, and the Swiss banks are very picky these days.

    Never forget that Putin and Xi are very, very rich.

  58. 58.

    Enhanced Voting Techniques

    @Baud: because it sounds like something DougJ  would come up with to mock Musk too his face. I mean look at the pictures that statue;.  The artist literally is depicting Musk as a the Worm-Man-Thing God Emperor  Leoto II from the Dune series.  Hebert wasn’t exactly coy about making it clear that Leoto II was some narcissist asshat on an epic self abuse binge. Maybe the crpto dolts who commissioned think it’s awesome because a Tech Bro never reads any book,  but,  I am  sure the artist who made it is laughing when they think no one is looking.

  59. 59.

    Chetan Murthy

    John Kenneth Galbraith’s “the bezzle”: https://carnegieendowment.org/chinafinancialmarkets/85179

    Alone among the various forms of larceny [embezzlement] has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in—or more precisely not in—the country’s business and banks.
    […]
    This inventory—it should perhaps be called the bezzle—amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times, people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances, the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression, all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.

    I remember someone likening economic cycles to the tide: when the water goes out, is when you find out who’s wearing trunks, and who’s naked.

  63. 63.

    billcinsd

    @Ken: a period in which they went to 10 championship games winning 7 and only having 2 losing seasons to match their 2 perfect seasons

  65. 65.

    Matt McIrvin

    It’s like the time Grunkle Stan invented an entirely new type of crime called “burgle-bezzlement”.

  68. 68.

    Matt McIrvin

    @No One You Know: I see so many people still going “I’m dumb, I can’t comprehend this crypto stuff at all” and I just want to tell them there’s basically nothing to get–behind all the fancy mathematics and computer science details, they can’t understand what the product is because there’s no product. Just a speculative bubble founded on the Greater Fool Theory.

  69. 69.

    FelonyGovt

    The arena where the Lakers, Kings and Clippers play, formerly known as Staples Center, is now Crypto.com Arena as of about a year ago. We were joking today that by the time we go to the Kings game we have tickets for in February, it might be the Naming Rights Available Arena.

  71. 71.

    patrick II

    @SFAW: ​

    I shouldn’t be surprised if someone tries to cross out information about the cadre. So, you are part of it?

  73. 73.

    Matt McIrvin

    @Enhanced Voting Techniques: There’s always been this element of self-consciously ridiculous nerd humor to everything Musk does: referencing “Spaceballs” in the Tesla user interface, naming his rocket barges goofy things like “Of Course I Still Love You” after spaceships in Iain Banks novels, etc. It has a disarming effect of making it all seem like a lighthearted, harmless romp and identifying him as an insider to techie culture. It’s similar to alt-right “meme magic,” slinging around Pepe the Frog and such to make it all seem cute and silly. Of course when the joke goes sour it goes REALLY sour.

  77. 77.

    Matt McIrvin

    @Baud: Trump’s conscious use of humor was always outward-directed and bullying–that’s a bit different (though Musk does this too). But I do think his persistence in simply looking ridiculous helped turn him into this sideshow-like attraction.

  78. 78.

    Chetan Murthy

    @Matt McIrvin: dKos’ Mark Sumner had a take on this: https://www.dailykos.com/stories/2022/11/25/2130490/-The-Federation-The-Culture-and-Elon-Musk

    [IIUC] he argues that Musk wants to be the kind of guy who is building the future, building The Culture (from Banks) but …. he just doesn’t manage to be that guy, and ends up falling closer to Trump.  It’s kinda tragic (except that it’s not: he’s the richest man in the world and needs to grow the fuck up).

  79. 79.

    Queen of Lurkers

    @Chetan Murthy: Trollope was a Victorian; The Way We Live Now was published (after it appeared in serial form) in 1875. So a long time after the South Sea Bubble.

    The BBC did a pretty good mini-series based on the novel about 20 years ago.

  82. 82.

    Ruckus

    @Matt McIrvin:

    But I do think his persistence in simply looking ridiculous…

    It’s not that SFB is trying to look ridiculous, it is that he IS ridiculous. He is the epitome of fucking idiotic ridiculous.

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