Crypto is an unregulated casino, where criminality runs riot

Crypto is an unregulated casino, where criminality runs riot, by Nouriel Roubini, a prominent economist.

Cryptocurrencies are routinely launched and traded outside the domain of official financial oversight, where avoidance of compliance costs is advertised as a source of efficiency. …

Some of the biggest crypto players may be openly involved in systematic illegality.

Consider BitMEX, an unregulated trillion-dollar exchange of crypto derivatives that is domiciled in the Seychelles but active globally. Its CEO, Arthur Hayes, boasted openly that the BitMEX business model involves peddling to “degenerate gamblers” (meaning clueless retail investors) crypto derivatives with 100-to-one leverage. … It is little wonder that, according to one independent researcher’s estimates, liquidations at times account for up to half of BitMEX’s revenue. …

BitMEX insiders revealed to me that this exchange is also used daily for money laundering on a massive scale by terrorists and other criminals from Russia, Iran, and elsewhere; the exchange does nothing to stop this, as it profits from these transactions.

As if that were not enough, BitMEX also has an internal for-profit trading desk (supposedly for the purpose of market making) that has been accused of front running its own clients. Hayes has denied this, but because BitMEX is totally unregulated, there are no independent audits of its accounts, and thus no way of knowing what happens behind the scenes. …

Price manipulation is rampant across all the crypto exchanges, owing to pump-and-dump schemes, wash trading, spoofing, front running, and other forms of manipulation. According to one study, up to 95% of all transactions in bitcoin BTCUSD are fake, indicating that fraud is not the exception but the rule. …

According to one study, 80% of initial coin offerings in 2017 were scams.

It has degenerated.

Still, the world wants — needs — a currency outside of the control any government that can be sent over the web. Gold is outside the control of government and has a great pedigree as money, but is fabulously immobile and unwieldy.