The greatest crypto fraud in history is being contained, but for how long? Occasionally there is an article where someone like, Serhii Zhdanov, the CEO of crypto exchange Exmo, admits freely that centralised exchanges simply create fake bitcoins which are dumped on the market and used to crash the market. Real bitcoin can then be bought up cheap.
Centralise exchanges create fake versions of Bitcoin (and other cryptos) that are not minted on the blockchain. They can only exist on exchanges and there is no way to reconcile those fake bitcoins with the bitcoin blockchain as long as they remain on exchanges.
Is the magnitude of this fact too un-nerving to be discussed? Are those who benefit from it, making sure it is not?
Some influencers, such as Crypto Cassie, make mention of it in her Youtube channel, but most stay clear. We talk about Governments turning on the money printers as the evil that crypto is supposed to solve, but why don’t we talk about centralised exchanges creating fake crypto? We can measure how much money the Government has printed at will. We cannot measure how much fake crypto centralised exchanges have created. If there was ever a systemic risk to the global financial system, this is it! No Government can hope to solve a problem it cannot know the extent of.
What if everyone withdrew their crypto from exchanges? Only the fake crypto would remain. It couldn’t be withdrawn and reconciled with any blockchain its purports, fraudulently, to represent.
When scam exchanges go broke, such as Canada’s QuandrigaCX or Turkey’s Thodex, it is the fiat currency that fraudsters make away with. It is not the fake crypto. That still sits on the exchange. It is fake crypto they sell in return for fiat which they then abscond with.
We tend to readily believe that there is a problem with these smaller, scam exchanges.
We find it harder to comprehend and process when it is done by larger, self-asserted “respectable” exchanges. If the lie is big enough, why do we want to hope that it is true?
It is someone trite now to point out to the fake volume on exchanges as they deceive users as to their liquidity and artificial pricing. Again, we are happy to accept the fake accounts, fake volumes and artificially manipulated prices on smaller exchanges. But who dares to process when this is done by larger “respectable” exchanges?
The manipulation by market makers artificially driving up prices whilst dumping on users, crashing the price and then buying up cheap again, is now accepted as routine. Rinse and Repeat, many times a day. Fraudulent yes, prosecuted, no. But what if the market maker and the exchange were owned by same people, such as Sam Bankman-Fried’s (‘SBF’) Alameda and FTX? What if the same person (and his associates) owns many exchanges?
What would be possible where the same person knows, through his exchanges all the buy/sell orders? What stops him front-running to scalp your profits or increase your loss? What if the same person knows all the liquidation tolerance points on all the shorts and longs? What stops him knowing exactly when and how much he could drop the price to cause cascading liquidations and a crash and make a killing for himself by doing so?
We have witnessed a phenomenal bull run and entered a devastating crash.
The indications are that this is only going to deepen. We’ve heard about the billions made in crypto since the start of 2020. Did you get your share? Most of the community has been devastated by losses in this sudden crash. Some however have gone from phenomenal strength to even greater strength, buying up crypto projects, platforms and exchanges on the cheap.
Sam Bankman-Fried (‘SBF’) is said to be worth 24Billion, made by in crypto over the last few years. FTX alone grew 100X. He is of course well supported, with crypto bros Blackrock and Circle for example. No, he did not invent a life-saving medicine, or make a product or perform a service. He calls it arbitrage, profiting from the trading of others.
SBF’s profits from the crash have been poured into lobbying US crypto regulators, polishing his PR image to the point of having himself promoted as the JP Morgan of the crypto world – the white knight that will save us from the abyss. FTX sponsorships are liberally sprinkled to Youtube influencers praising the genius that comes from knowledge and power of being the exchange, market maker and trader. The ability to know everyone’s hand, what the dice will roll, before placing his bet. Did he bet with real or fake crypto on his exchanges?
Some brave influencers, such as Chico Crypto, identified SBF’s moves in de-pegging UST and causing the crash that made SBF billions. There were those two wallets that dumped UST at a huge loss that triggered the crash. But the flood of FTX-sponsored influencer noise has drowned out these revelations. SBF is saving us, or… something like that is the mantra, isn’t it?
The demise of UST, has made SBF’s rival USDC, look much better.
Coincidence, surely. USDC has a proven use-case: it can be used to by-pass ant-CIA governments like Venezuela in order to pay anti-government supporters. You know, a de-facto USD that gives official deniability. No commentary into these matters by the Youtubers who have their FTX sponsorship at stake.
If your sick of being told to “move along, there is nothing to see here” and horrified at the dystopia the opaque crypto space is becoming, there is some hope. Real evidence may emerge. Litigation has been brewing in the NuGenesis community.
According to a couple of NuGenesis miners, NuGenesis is about to sue Alameda and SBF’s Liquid exchange having secured the litigation funding in multiple jurisdictions. The liquidation is rumoured to raise the very issues that plaque the crypto space: market manipulation by market maker and its commonly owned centralised exchange and the use fake crypto created on exchanges.
NuGenesis was asked to comment on the litigation and the issues.
NuGenesis CEO Hussein Faraj, replied only as follows:
“There are sensitive issues involved and all parties are working cooperatively to establish the facts indisputably. There is a bona fide process for resolution in process within the next few weeks. We cannot comment further until then.”
We will certainly keep an eye on this litigation. NuGenesis is aggressive with litigation it seems. From stoushes with Facebook-Meta which opposed the trade mark registration for the meta-realm, a NuGenesis owned project from 1999; to a furious prosecution of Probit exchange; and the funding of Youtuber Atazy defence against Bitboy.