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United States Technology

US House Committee To Hold Hearing on FTX Collapse and Crypto Fall Out (theblock.co) 75

Posted by msmash from the time-to-face-the-music dept.
The House Financial Services Committee will hold a hearing next month on FTX's collapse and the broader implications for the digital asset industry. From a report: The committee says it expects to hear from "the companies and individuals involved, the companies and individuals involved, including Sam Bankman-Fried, Alameda Research, Binance, FTX, and related entities, among others," for a hearing to take place in December. "Oversight is one of Congress' most critical functions and we must get to the bottom of this for FTX's customers and the American people," said Rep. Patrick McHenry, R-N.C., the top committee Republican, in a statement. "It's essential that we hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system." Rep. Maxine Waters, D-Calif., the current but likely outgoing chair of the House Financial Services Committee, added: "The fall of FTX has posed tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned savings into the FTX cryptocurrency exchange, only to watch it all disappear within a matter of seconds. Unfortunately, this event is just one out of many examples of cryptocurrency platforms that have collapsed just this past year."
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US House Committee To Hold Hearing on FTX Collapse and Crypto Fall Out More

US House Committee To Hold Hearing on FTX Collapse and Crypto Fall Out

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  • "Digital Asset Industry" is the problem. (Score:5, Insightful)

    by waspleg ( 316038 ) on Wednesday November 16, 2022 @04:42PM (#63056476) Journal

    Industry does something useful, this is not an industry, it's mountain of Ponzi schemes.

  • Innocent victims they weren't (Score:5, Insightful)

    by Rosco P. Coltrane ( 209368 ) on Wednesday November 16, 2022 @05:01PM (#63056518)

    tremendous harm to over one million users, many of whom were everyday people who invested their hard-earned

    I could believe that 5 years ago - maybe 3 years ago tops if I'm being really generous - that ordinary people with honest intentions could still be suckered into investing in play money. But since then, you'd have to be living under a particularly large rock to not know that cryptocurrencies are a get-rich-quick scheme that border on a Ponzi scheme, that will collapse under its own weight of utter bullshit sooner or later.

    So I don't buy it. FTX was founded in 2019, well after financially cautious people had learned to stay clear the fuck away from the bullshit. Therefore, the victims of the FTX debacle are bound to be people who wanted to get rich quick, knew the risks, gambled and lost. And I have zero sympathy for them.

    • Re:Innocent victims they weren't (Score:5, Insightful)

      by rsilvergun ( 571051 ) on Wednesday November 16, 2022 @05:07PM (#63056534)
      Dude there was a multi-million dollar ad campaign to convince people to crypto was safe. I get that it was blindingly obvious that it wasn't but here's the thing, you live in the same society as everyone else and want a bunch of stupid people crash the economy you suffer too.

      You have to protect the stupid from themselves or they'll drag you down with them. You're not wealthy enough to stand on your own. I don't think there's anyone here bothering with this forum who qualifies as independently wealthy. Fortunately it looks like crypto is going to get nipped in the bud before it causes a 2008 style market crash.

      • I'm fairly certain the collapse of the cryptocurrency ecosystem has minimal impact on the real economy, precisely because the true value of their holdings was entirely fictional. Even relatively poor people will not be affected by the idiots who lost their money in crypto.

        • if you let it get it's hooks into the broader economy they'd have started doing crypto backed securities.

          Remember Mortgage Backed Securities? Remember 2008? Now imagine that, but instead of houses as the underlining asset it was bits on a thumbdrive.

          • I think we dodged a bullet with that one. Had crypto stayed buoyant for a few more years, we likely would have seen derivatives and other securities related to currencies and exchanges... so when crypto did implode, it wasn't just something that is something to watch from afar with a big of popcorn, but something that would take a bunch of banks with it, forcing the Federal government to have to do another TARP bailout.

            Funny thing, reading Slashdot topics on this, there seemed to be a lot of people who tho

        • I'm fairly certain the collapse of the cryptocurrency ecosystem has minimal impact on the real economy, precisely because the true value of their holdings was entirely fictional

          Sadly that's not at all the case (the lack of impact on the real economy) because LOTS of the modern financial industry is tied up with crypto at this point - including a lot of exposure by every major bank.

          There are going to be a lot of ripple effects from the crypto fraud implosion, we've only just seen the start of it.

      • You have to protect the stupid from themselves or they'll drag you down with them.

        No, you have to handle cryptocurrency like we do with reclaimed water. Keep the reclaimed shit water in differently colored pipes, make absolutely sure it's never cross-connected to the regular municipal water supply, and put big signs next to anything the water comes out of warning that it's not for drinking. If people want to use the shit water for its intended purpose to irrigate their lawns, or drink it because they're stupid, that's on them.

        • That is an excellent explanation of crypto.
          Thanks, I'm going to steal it.
        • we never do that. We never keep high risk securities separate from low risk ones because when high risk securities are allowed to spread the people pushing them buy off enough congressmen to make sure that doesn't happen. Crypto bros tried that and failed, but had they succeeded then we'd be looking at another 2008 in a few years.

    • Therefore, the victims of the FTX debacle are bound to be people who wanted to get rich quick, knew the risks, gambled and lost. And I have zero sympathy for them.

      But when you're wealthy and cry "foul!" to a politician, they tend to listen. However, if your water is contaminated with lead but you're poor, forget it.

    • At first I thought the FTX collapse was just the normal stupidity, but the more I learn, the worse it seems.

      It's like if someone offered to buy lottery tickets for you (which is dumb in and of itself) but instead of buying the lottery tickets, they lent your money to a friend who spent it on hookers and blow.
      And then on top of that, they lied about loaning money to their friend, and covered up the loans in the hopes that auditors wouldn't catch on.

    • Re: (Score:2)

      by gweihir ( 88907 )

      Some people can always be suckered into magic money making schemes. There apparently is a personality type that thinks they are smarter than everybody else with regards to money (while being more below average) and that is an ideal victim. These people also have a very hard time learning from mistakes (because they would then have to first acknowledge their limits) and some fall for pretty much the same scam multiple times. I do not remember the numbers, but it was more than 1%. So there are always plenty o

    • Re: (Score:2)

      by cstacy ( 534252 )

      Had dinner with some friends who are 70+ years old, about three months ago. They were going on and on about crypto, and were thinking they ought to get in on it. I tried to tell them the facts, but they did not want to hear it. Their son (or was it their grandson?) had recently invested heavily in (I forget, ETH or BTC) and said he was making a killing and looking forward to being rich soon.

      Typical middle class ordinary people, highly educated. Retired from professional jobs in engineering and finance. I th

      • When I talk with people about crypto, I ask them to hold their horses, and tell me how they have invested:

        Oh, an account with an exchange? That's not a bank. Your funds can gox [sic] at any time into someone else's pocket.

        An app on a phone? Phones have innate security, but so do cars. They are not rated, vetted, nor certified for high value transactions where compromise can mean incredible losses.

        A hardware wallet? That's cute, and at least offers a semblance of protection... but you start getting into

    • This is blindingly obvious to *you*. You read /. and, I imagine, any number of other news sources that cover exactly what is going on with the latest TulipCoin. Most people don't. They hear about the future of money through ads and fluff news stories that leave them with the impression that this is an actual asset, then fall into rabbit holes of hype that convince them it's Apple in 1977. I'm not saying that these people shouldn't be putting in more research before dumping money into this particular hole, b

  • "It's essential that we hold bad actors accountable so responsible players can harness technology to build a more inclusive financial system."

    This just goes to show how truly out of touch our representatives are with reality. The reason the financial system isn't more inclusive is because the average American doesn't have money to gamble on high-risk investments. No amount of fancy technology or regulation can solve the issue of an idiot who absolutely insists on spending his rent money on a JPEG of a bored ape.

    If it wasn't crypto, these people would've just lost their money investing in something equally stupid that they believed would lead to

    • Re: (Score:2)

      by taustin ( 171655 )

      If it wasn't crypto, these people would've just lost their money investing in something equally stupid that they believed would lead to a large return.

      Yeah, but you see, the government doesn't like crypto because it competes with their own lotteries for stupid people's money, and they won't be having that.

  • Is positively salivating over the prospect of going after these guys. The sheer number of potential criminal charges and lawsuits is almost overwhelming. And you know a lot of those cops and FBI agents and prosecutors and attorneys general are going to miss out on the Bonanza and go looking for another Target.

    Giving this amount of electricity and electronics these nincompoops waste it couldn't happen to a nicer bunch.

  • Upper Echelon has a great video [slashdot.org] discussing how FTX collapsed. The red flags where there all along, just no one paid any attention to them.

  • "Dammit!" said the House member. "This is costing good Americans many billions of dollars! We need investigation and punishment!"

    "Compared to trillions lost due to high inflation?"

    "That's the American People's fault for electing us!"

    • Re: (Score:3)

      by ljw1004 ( 764174 )

      "Compared to trillions lost due to high inflation?" -- "That's the American People's fault for electing us!"

      I'm a bit lost here. Is the high UK inflation due to the American People electing Biden? Or is it completely unrelated, and instead due to the UK people electing Boris Johnson? And the high German inflation? And French inflation? And ...

    • Inflation didn't come from the politicos. It came from businesses with the JIT model who realized that as soon as they couldn't make stuff, just jack up prices and assume demand is inelastic. Supply chain chokepoints combined with pent-up demand from 2020, coupled with record high quarterly profits for companies across the board is what spiked inflation.

      • Re: (Score:2)

        by sjames ( 1099 )

        This. Perhaps what we need is a windfall profits tax and pump that money back into the economy at the bottom, since otherwise those who profited will do their damndest to make sure the money stops flowing when it gets to them.

        • Some European countries are enacting taxes on windfalls and stock buy-backs. At least when companies do this, it can at least help the government provide for more infrastructure.

  • Comment removed (Score:4, Insightful)

    by account_deleted ( 4530225 ) on Wednesday November 16, 2022 @06:12PM (#63056702)
    Comment removed based on user account deletion
  • there is report of in-server malware that empties user account into a 1B$ mixer, that can't be good

  • No, they can't regulate crypto! It's the stick-it-to-tha-man investment! No regulation! All self-regulated! The market will sort it out, leave your hands off crypto!

    Don't you fucking dare throw tax money at saving these idiots!

  • What FTX did is almost 100% fungible with what MF Global did in the stonk market years ago when it was run by former Sen Jon Corzine. That is, bill itself as a brokerage and then take client funds and use them in the same way an investment fund would. That's highly illegal (but MF Global AFAIK never received real punishment) already. It's just simple fraud. SBF should be going to prison for a very long time under **existing** law, and anyone arguing otherwise without a JD and saying they know the law and it

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