Cryptocurrencies are still a casino, says John Oliver 2023

After several high-profile and costly busts, John Oliver revisited cryptocurrency on Sunday’s Last Week Tonight. FTX, a cryptocurrency exchange promoted by superstars including Steph Curry and “pre-divorce but post-love” Tom Brady and Gisele Bündchen, crashed in 2022, losing billions.

Oliver called the arrest of FTX millionaire founder Sam Bankman-Fried on charges of scamming investors “a big deal” but “one of the many dominoes that fell in the crypto world”. All cryptocurrencies declined from $3tn to $1tn from late 2021 to June 2022.

One in five Americans has invested in, traded, or used bitcoin, and many have lost their cash in numerous meltdowns, Oliver continued.

Last Week Tonight host discusses sector volatility and hazards through Terra, Celsius, and FTX crashes.

Oliver examined three startups “founded on the promise that they would replace some part of our financial system” that failed. Terra, Celsius, and FTX were cryptos. Oliver stated they were supposed to be our next dollar, Bank of America, and stock exchange. “They’re disasters.”

“Every single crypto coin is just something that someone with a laptop made up,” Oliver said. People’s belief in the coin’s maker determines its worth. All three companies “gained and then squandered confidence”.

He started with Terra, launched in 2018 by South Korean entrepreneur Do Kwan as a stable cryptocurrency that was guaranteed to always equal one US dollar by Terra’s Luna cryptocurrency, which was converted using the company’s “special algorithm”.

“If that sounds complicated and stupid to you, it is,” Oliver added. “Imagine if someone approached you at the ATM and said, ‘Give me that money, and I’ll give you blorps. I guarantee $1 each blorp by selling as many fleasles as needed. I also make fleas.” Most would reply no, “but if they then said ‘I do it with a special algorithm,’ suddenly you might think that they know something that you don’t. That happened here.”

Kwon yelled off critics (“I don’t debate the poor on Twitter”) as Luna’s worth rose to $40bn. In 2022, numerous large deals destabilized the price as people hurried to sell Terra and Luna at nearly zero. Kwon was caught last month in Montenegro on international fraud allegations after months on the run.

Alex Mashinsky launched Celsius, a crypto bank, to build confidence as a customer-friendly crypto bank. He claimed: “We are probably one of the least risky businesses that regulators worldwide have ever seen.”

“Which was flagrantly untrue,” Oliver remarked. Mashinsky made unsafe loans and used customer funds to pay high yields, “which sure sounds like the textbook definition of a Ponzi scheme,” investigators determined.

Mashinky and Celsius have not been charged, but tens of thousands of users still have digital assets on the site, and the corporation owes customers $4.7bn.

Thus, “bullshit money and banks” with Sam Bankman-Fried and FTX as a “bullshit trading platform”. Oliver called Bankman-Fried a “shy, self-effacing genius”. “It’s why he dressed like every day was laundry day and combed his hair with a balloon.”

Bankman-Fried, who pressed Congress for stronger crypto market regulation, marketed FTX as a solid platform analogous to the new stock exchange, but he actually propped up the company with a currency he dreamed up, related to his hedge fund filled with the same coin.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” said the new CEO, “which is really saying something, given that his career includes overseeing the bankruptcy of Enron,” Oliver said.

Oliver claimed all three organizations were “confidently projecting a veneer of expertise even as, beneath the surface, they were a complete shitshow.”

“The thing is, there are still companies making all the same claims that you’ve seen tonight,” he continued. “I’m not saying they’re all scams. “Maybe these three are the exceptions,” he said. Scammers thrive in a financial system where confidence is the sole currency.

Oliver wasn’t sure about supporting additional regulation, which would legitimize volatile, dangerous enterprises, or disavowing cryptocurrency. “But we should recognize that right now, the main thing you can really do with crypto is gamble with more crypto,” he added. “This remains a casino.”

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About the Author: Sanjh Vishwakarma

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