Crypto lending teeters on brink of extinction after Genesis collapse

seattle times ^ | 1/20/23 | Emily Nicolle

[catnipman]

The bankruptcy of crypto’s marquee lender, Genesis Global Capital, may be one more blow than the industry can withstand, at least in its current form.

The list of bull-market stars laid low now includes nearly every major player to have captured the public’s attention by offering market-beating returns for the simple act of depositing tokens.

Genesis joins BlockFi, Celsius Network and Voyager Digital among firms whose collapse have left countless clients angry and unlikely to risk more money on their daredevil exploits.

Acting as de facto banks, these firms took in assets which they then lent out freely across the market, often to hedge funds who used the extra cash to leverage their bets on iffy tokens. Genesis dished out $130.6 billion of loans in 2021 alone, part of a complex web of interconnected risky trades and toxic loans that helped turbocharge the market, only to spark a cascade of collapses when crypto prices started plummeting last year.

Everyday investors around the world have also been left nursing billions of dollars in cumulative losses.

“Genesis going belly up is further highlighting the contagion that is spreading through the crypto lending industry, as a result of its risks becoming a reality domino effect,”

[catnipman]

(full article: https://archive.ph/GcHE4 )

Crypto is inherently worthless ... its apparent “value” accrues solely from ignorant and greedy greater fools who’ve been scammed with FOMO (fear-of-missing-out) generated by paid celeb endorsements and massive fraudulent wash trading that gives the faked impression of a large trading volume, that is, faked numbers that indicate lots of other folks are trading lots of crypto, so you better jump in too before it’s too late ...

crypto also inherently offers zero return, unlike USD denominated assets such as mortgages, auto loans, bonds, CDs, dividend-yielding securities, etc. ...

therefore ANY entity that CLAIMS to offer “interest” on crypto “deposits” is automatically fraudulent on its face and WILL implode sooner or later ... which is EXACTLY what's been happening since June of 2022, and has little to do with FTX imploding per se ...

outfits claiming to offer “interest” are usually just gambling their client “deposits” on the belief that crypto prices will rise indefinitely via the crypto perpetual futures market or some other gambling scheme and/or they are outright Ponzi schemes in which the “interest” is derived from new money “deposited” by new fools ... (a variation on the above is for one fraudulent outfit to hand its client “deposits” to some OTHER fraudulent outfit that claims to be paying an even higher “interest” rate with even riskier gambling mechanisms [so-called yield farming]) ...

Crypto started off as a fun toy, and that’s where crypto will end up again when all of the implosion dust eventually settles: a fun toy ... a couple kids in their moms’ basements will be sufficient to provide the computing power to maintain the blockchain ledgers ...

in the mean time, a few EXTREMELY wealthy con artists will have redistributed hundreds of billions of dollars of real wealth to themselves from hundreds of millions of stupid, greedy people who can least afford to lose their paltry savings ... as usual, poor folk, people of color and women most affected ...

to paraphrase a Seinfeld line, “Crypto is an idea about nothing” ...

at least with Tulips, one has pretty flowers to look at ...

[catnipman]

full article link: https://archive.ph/GcHE4

[EEGator]

At least tulips have beauty.

2023+ will be in future textbooks.

[Theoria]

BTC is the tallest midget compared to the other crypto of late. Small rise with btc over the past few weeks. I wouldn't be surprised if mara and riot pump as well.

[crusty old prospector]

How dare you point out that the emperor has no clothes?

[Bernard]

It's easier to fool somebody than it is to convince them that they have been fooled. Right now, there is probably still a cadre of true believers who are convinced that when a faithful implementation of crypto-currency happens, it will work.

Right after everybody buys an electric car and abandons their internal combustion vehicles.

[blackdog]

As if crypto currency isn’t enough of a scam, now the loaning of nothing for something has been figured out?

[desertfreedom765]

The value of crypto is its ability to provide privacy in monetary transactions (from government) and portability in wealth transfer (ex: you can’t take 100k overseas).

I’ve just never been sold that the government can’t ultimately track crypto or outright outlaw it. So to me its long term value has been dubious.

Kudos to those who made a lot of money on it but I suspect that its time is passing.

[ByteMercenary]

OK then, after the crypto scammers collected billions from millions of folks and then the market collapsed, where did the money go? Who ultimately benefited from the scam? Real money was put into the system and despite being represented digitally for a while, real money went somewhere. Somebody somewhere has received the real money and all you have is a paper receipt stating the amount of your investment.

[Portnoy001]

Crpyto just isn’t ‘private’ unless you really work at it. If anything it is more tracked (entire blockchain concept) than regular currency.

Using an exchange totally defeats the purpose. About the only way to make it private is to buy a gift card with cash and put that on a private offline wallet. It’s just too much trouble to deal with, to me.

[EnderWiggin1970]

Government fiat is inherently worthless. The timestamping capabilities of the bitcoin blockchain alone are worth billions, so your comment is ignorant.

If you can’t see the advantages of private cryptographically secured money free of government manipulation/inflation, money that cannot be counterfeited, I’m sorry for you. The rest of the world is seeing it, which is why it has grown from nothing to a trillion dollar asset class (the first new asset class in centuries) in a few years. Not bad for an “inherently worthless” asset.

Ironically, as usual it is the malevolence and/or incompetence of government that is behind all the losses investors are suffering from these crypto lending collapses. I’ve been mining/investing since Jan. 2014. There are lots of ways to lose money in crypto but margin lending wasn’t one of them. It offered good yields with minimal risk. I can’t even think of an example of someone suffering a loss; in the few cases where market circuit-breakers were inadequate the exchange covered the loss since no exchange wanted to be known as the first to lose a customers’ money. And for whatever reason the exchanges offering margin lending weren’t the ones being hacked or exit-scamming.

Then along comes the US government, banning citizens from making their own choice to lend to margin traders. Overnight firms like Cred, Celsius and Blockfi sprang up. Only they weren’t lending to margin traders, serving as a middle-man to skirt the government rules like we naturally assumed. No, thanks to the complete lack of oversight and transparency engendered by the US government, they were doing things like lending money to Chinese loan shark operations that couldn’t get regular banking access. Thanks, US government. I lost more on that crap than most people earn in their life, before wising up and pulling out. Ironically, the “sketchy” offshore crypto operations are still doing just fine. It’s anything connected with or subservient to the USG that keeps turning rotten on us.

[PAR35]

Except with tulips, there were not pretty flowers. Just before the collapse, they were buying and selling bulbs that didn’t exist.

Made flowers = made up crypto ‘currency’.

[Chode]

it was NEVER designed as an investment...

it’s a covert way to make transactions across platforms, domains and countries, illegal and legal, living off transaction fees, nothing more

the only designed profit was from mining

[catnipman]

“there is probably still a cadre of true believers who are convinced that when a faithful implementation of crypto-currency happens, it will work.”

EXACTLY like socialism: “THEY didn’t do it right, but THIS time WE will do it right and it’ll work great!”

[catnipman]

“As if crypto currency isn’t enough of a scam, now the loaning of nothing for something has been figured out?”

exactly, crypto lending is a crypto scam brought to the next level ... and crypto lending is the scam that is going to be a scam too far and will bring the whole rotten edifice crashing to the ground ... and the sooner the better ... too many poor ignorant people have already been scammed out of their paltry life’s savings ...

[catnipman]

“Real money was put into the system and despite being represented digitally for a while, real money went somewhere. Somebody somewhere has received the real money “

that’s exactly right ... that REAL money that went into the system went into the pockets of anyone who cashed out ... early-birds in any Ponzi scheme make money IF they cash out early ... the problem there is that MOST folks are too greedy to cash out, because they think the good times will just keep on rolling ... it’s pretty much like putting a chip on 23-red and letting it ride over and over again until sooner or later you lose it all ... that greedy gambling mentality built Las Vegas and all the rest of the world’s gambling meccas ... and crypto is EXACTLY like that: it’s nothing but gambling, because crypto has an inherent value equal to 23-read, that is it has no real value at all ...

[catnipman]

actually, crypto wasn’t really designed for any particular purpose at all ... the idea got popularized 15 years ago by an anonymous white paper, and pretty much was nothing more than an intellectual curiosity for nerds until a whole slew of con artists figured out it could be the next big thing for scamming people out of real money ...

the Big Con started with a whole panoply of claims, everyone of which has proved to be completely bogus, e.g., crypto is private and untrackable, crypto is the currency of the future, crypto will obsolete conventional currencies, crypto will hold its value counter to the trends in traditional securities, crypto’s value is independent of events that affect traditional finance, crypto is a great hedge against inflation, crypto is a great store of value, blockchain will revolutionize [fill in the blank] ...

[Graybeard58]

Of course, all wise FR members who were investors got out of crypto just “in the nick of time” and made a ton of money.

[I want the USA back]

Big laugh here. How can anyone think that it’s possible to set up a website, include “crypto” in the name, and generate value? All it does is some mumbo-jumbo (”Mining”) and spits out “currency”.

Only the government is authorized to order a federal bank to pronounce some mumbo-jumbo and to spit out legal tender currency that is based on nothing but the “full faith and trust in the government”. (I’m guffawing here as this is nothing but sarcasm).

[Chode]

curiosity for nerds doesn’t change the fact “it’s a covert way to make transactions across platforms, domains and countries, illegal and legal, living off transaction fees, nothing more”

i dint say illegal transactions was it’s intended purpose.

i said it was never intended as an investment...