I'm so annoyed at myself that I fell for the Winklevoss's unregistered security [1] Gemini Earn program. It really should have been obvious to me that the 7+% interest they were offering (while every real bank was doing like 0.5%) was unsustainable, but I kept seeing FDIC-backed flashed on their website in regards to GUSD and didn't do the ample due diligence before giving them my money.
Now I'm somewhere about $13,000 poorer, and hopefully slightly wiser. It makes me glad that these douchebags might actually have to pay consequences for their actions.
I lost $11k in Gox, the entire sum of what my father had saved up for me after many years. Feeling the realization of what I’d done was traumatic, and in hindsight $11k was an ok price to pay for such a lesson. It takes many years to get over the self-blame, but once you do, you end up being much more shrewd.
I’d like to say that it made me make better bets, but honestly I never speculated again after that. And it’s easy to imagine me having never learned that lesson and dumping >$40k of savings into TSLA shorts (or other obviously-crazy-in-hindsight plays) and getting hit harder at a time when I can least afford it.
Also watched a friend along with a former coworker both get rich on bitcoin and live the easy life. Last I heard from the friend, he was still trying to find a relationship he liked, and the former coworker seems to spend all his time and energy talking about nothing but bitcoin on Twitter. I’m grateful I channeled that into family and learning ML instead.
I don’t know if any of this is helpful context for you, but the overall point is that it’s entirely possible to view this as a positive event, even though it feels really crummy right now. It’s hard to predict how it will affect your decisions in the long run, and you might end up much happier than you otherwise might’ve been. Obviously there’s a measure of self-deception here, since almost everybody will try to jump through mental hoops to justify any poor decision that causes great harm to their life. But once you stop justifying it and start healing, you’ll start to realize that $14k is a rounding error in the grand scheme of life (and that we’re very fortunate to be able to feel like that about such a sum of money), and that at the very least it’s not worth kicking yourself for too long.
How did you "lose $11k" given the bankruptcy process, bitcoin's rise since, and the vast majority of creditors getting greater than their initial investment back due to appreciation?
Did you choose not to file a claim or sell your claim?
It's not entirely your fault. This is what regulators and regulation are for, which obviously should've moved much faster to avoid consumer and investor harm.
It is unreasonable to expect individuals to be sophisticated capital market participants in the face of fraudulent marketing efforts. There is a reason fiduciaries exist [1], as well as whole piles of capital market licenses [2]. This is a natural outcome of less than honest folks leveraging information asymmetry in a complex system.
Yeah, and you know, I'm a yuppie software engineer with a relatively well-diversified investment portfolio (and a good amount of savings in safe things like T-Bills), so I'll be totally fine, albeit extremely annoyed.
What's really upsetting is this lie that these crypto people push, acting like cryptocurrency is the secret way to leave poverty, and that this is the future of finance, and that investing with "Gemini Earn GUSD pays like 50x more than traditional bank interest", in combination with the FDIC-insurance for GUSD on their site. I think it's possible that people put in more than they could afford to lose into GUSD and Gemini Earn. I think it's also possible that people transferred most of their savings from traditional FDIC-insured banks in order to take advantage of Gemini Earn. And I think it's very possible that this is going to hurt the poorest individuals substantially more than anyone else.
I generally don't advocate for violence, but a large part of me really hopes that the Winklevoss twins each step on a Lego block every morning.
Sure, regulators could have moved faster, but the crypto community was pushing out so much bullshit so quickly that even excellent regulators would be overwhelmed short of an all-out ban which would require enforcement to have any teeth anyway.
And as we are seeing with all the FTX fallout, of course they were giving money to all sides of politicians along the way.
Yes good regulations are needed to prevent this sort of garbage, and I fully support that, but there is still some amount of responsibility on people to distrust "too good to be true" scams especially on new complicated "just trust me bro" schemes. There were tons of people warning against this all along.
The crypto sales people were obvious, brazen, proud con artists, and everyone talked about what a scam it was. I'm sure some especially unsophisticated people were unaware of it, but plenty knew and decided to take the risk anyway.
> It really should have been obvious to me that the 7+% interest they were offering (while every real bank was doing like 0.5%) was unsustainable
Gemini may be a victim here too, as TFA explains: it's Genesis that ran the scam (with DCG being Genesis' parent company).
I think the Winklevoss brothers honestly "saw" Bitcoin before most, just like they saw FaceBook before Zuckerberg stole it from them (Zuckerberg lost not just one but two lawsuits against the twins).
They may have been blinded by Genesis/DCG: just like, say, the New-York Times and Forbes got blinded by SBF / FTX.
But I don't think it's fair to say, especially while there's a lawsuit ongoing, that you "fell" for it: they are likely just victims of Genesis (and the lawsuit shall try to determine if that's the case or not).
Now they may have sold unregistered securities, but that's very different compared to downright theft (like Genesis or SBF or so many others did).
That said I'm sorry about the $13 K loss and if it's any consolation I told someone close to GFTO of BlockFi because these 8% were obviously a scam (and I don't think BlockFi was guilty: they fell for the Genesis scam) and he managed to get his 1 BTC out of BlockFi before things went south (not too sure what eventually happened to BlockFi and people who had funds there).
> "But according to the lawsuit, in the summer of 2022, some top Gemini staff became worried enough to withdraw their own funds.
If senior executives traded their own assets based on non-public information, it'll be hard to claim that they are just a victim of Genesis/DCG and had no idea this was happening.
I can agree with most of what you're saying, but there is a sticking point that I take issue with.
> Now they may have sold unregistered securities, but that's very different compared to downright theft (like Genesis or SBF or so many others did).
I mean, is it? They compared it directly to a bank account [1], and mentioned FDIC insurance for GUSD [2]. They might have not meant for my money to be stolen, but I am quite confident that they were playing fast and loose with terms in order for me to believe that there was lower risk in this than there actually was. There's actually a word for "purposefully making someone believe something that's not true", and it's called "lying", and if they're lying then I kind of have to assume some nefarious intent.
That said, I can broadly agree that maybe they're just morons? I'm probably an idiot too, but it's a little different for a software engineer without any financial training vs. two adults trying to start "legitimate" crypto exchange without doing the proper due diligence to make sure their partners are also legitimate?
not sure if due diligence would've helped you. you would've had to foresee the entanglement leading all the way back to FTX and predicting their collapse. really crazy that Gemini can still operate in new york with so many customers jammed up
I definitely should have investigated their FDIC claims more thoroughly, though I do think being misleading about that should have pretty strong consequences.
I'm also kind of surprised NYC hasn't suspended their license yet, at least until the SEC lawsuit comes to a conclusion.
It’s strange to see people argue that the claims about crypto firms being obvious crooks are still not credible in retrospect of them having collapsed.
Crypto tokens are effectively the modern version of penny stocks, the thing you'd see garish ads on MotleyFool.com years ago. It's selling the dream of above average returns to retail investors who don't know any better, a game as old as time.
If films like Boiler Room and Wolf of Wall Street were to be made today, they wouldn't show brokers cold calling retirees, but rather people furiously typing away in Discord rooms, inflating the mirage until the insiders are able to cash out.
The difference is that most penny stocks aren't scams themselves and represent ownership of actual revenue generating businesses. There are some completely fake businesses, and low market capitalization increases the risk of pump-and-dump scams, but those are the minority. Whereas cryptocurrency doesn't generate any revenue: it is always a scam and valuations can only ever be sustained by the greater fool theory.
Depends how far back you go, they banked with the Panamanian money launderer Crypto Capital Corp back in the day.
CCC president Ivan Manuel Molina Lee was arrested in 2019 in Poland and Reginald Fowler (formerly part owner of the Minnesota Vikings) pled guilty last year and is facing 20 years.
I’d speculate if the government dug around they could rustle up some wire possible fraud. It’s my understanding the shadiness of CCC was not a secret.
That was partly Gemini's appeal as well, that they were working with regulators to legitimize crypto. That might have been their intent but it's certainly not the result.
> a retired 73-year-old grandmother among the 232,000 investors who were victims of the alleged fraud.
Why/how did she come to that decision is my only question from this whole article. Perhaps I am too dumb to understand why people invest into shaky things(cryptocurrencies, MLM scams and what nots) or perhaps people just allow others to control their assets.
In a bit of fairness, I kind of blame the "investing media". If you watched CNBC from ~2019 until about 2022, they were listing $BTC like it was any other ticker on the stock market.
I cannot speak for this grandmother, but I cannot blame someone who doesn't really understand what cryptocurrency is for just assuming it's "some techy version of a stock", especially as more traditional brokers like Venmo and CashApp and PayPal start handling crypto as well.
There are lots of people who see a website say "You will make free money" and their brain just skips over the part where you normally would go "that doesn't make any damn sense". They are usually the same people who spread rumors as "I know a guy who knows a guy who definitely knows a guy at a school where they had a litterbox for furry kids". It's no different to how some people just REALLY REALLY suck at basic arithmetic, or others can read the same page of a book ten times and struggle to pick out what happened.
We ALL have some semblance of this. We are ALL fallible bags of chemistry following really dumb patterns that evolved around surviving the wilderness, where being "correct" was not nearly as important as surviving until tomorrow. It's why I just don't understand the willingness to let people suffer "because why should I help them".
We need strong regulations, strong consumer protections, strong medical systems, and strong education systems because being born really really freaking stupid should doom you to a bad life.
Echo chambers are very, very real and it’s easy to get caught up when everyone around you is drinking the kool-aid.
I moved to a new city a couple years ago and met up with some other devs as a way to make new friends. There were 4 or 5 of us going out for beers and the discussion inevitably turned to crypto. I’ve been a skeptic for many years and when asked about my crypto holdings, I politely said that I wasn’t invested or interested.
One guy in particular kept telling me that I was going to get left behind and that I really needed to buy in before it was too late. I told him that I didn’t trust the market and he went on about how corrupt the Fed is. He was really awkward, and at times, emotional about it.
Needless to say, friends were not made that night and I’m glad that the peer pressure aspect doesn’t bother me because a lot of people would cave in that situation.
Calling run-of-the-mill pump and dump schemers "smart money" offends the sensibilities. It's "smart" only in the most anti-social sense of the word, like believing it's "smart" to act in bad faith as long as you get some benefit from it.
Coca Cola, Nike and Pizza Hut are products that everyone buys. It makes sense they would advertise during the Superbowl. But I don't personally know anybody non-techy who knows anything about crypto, never mind has any use for it (although I did have one friend who almost fell victim to an Internet scam that mentioned crypto). So it makes less sense why they would be advertising it on such a huge scale, before most average people had even come into contact with it (in a non-criminal context, anyways).
What I never got was why I would want to use these things as currency. Cryptographically write down everything I ever do financially? I am going to go with no on that one. I do not really care I bought a stick of gum 20 years ago...
Readit News
Now I'm somewhere about $13,000 poorer, and hopefully slightly wiser. It makes me glad that these douchebags might actually have to pay consequences for their actions.
[1] Not my opinion, but the SEC's https://www.sec.gov/news/press-release/2023-7
I’d like to say that it made me make better bets, but honestly I never speculated again after that. And it’s easy to imagine me having never learned that lesson and dumping >$40k of savings into TSLA shorts (or other obviously-crazy-in-hindsight plays) and getting hit harder at a time when I can least afford it.
Also watched a friend along with a former coworker both get rich on bitcoin and live the easy life. Last I heard from the friend, he was still trying to find a relationship he liked, and the former coworker seems to spend all his time and energy talking about nothing but bitcoin on Twitter. I’m grateful I channeled that into family and learning ML instead.
I don’t know if any of this is helpful context for you, but the overall point is that it’s entirely possible to view this as a positive event, even though it feels really crummy right now. It’s hard to predict how it will affect your decisions in the long run, and you might end up much happier than you otherwise might’ve been. Obviously there’s a measure of self-deception here, since almost everybody will try to jump through mental hoops to justify any poor decision that causes great harm to their life. But once you stop justifying it and start healing, you’ll start to realize that $14k is a rounding error in the grand scheme of life (and that we’re very fortunate to be able to feel like that about such a sum of money), and that at the very least it’s not worth kicking yourself for too long.
And what do they pay for all their rich-person-lifestyle stuff with? USD (or the fiat of whatever nation they reside in).
Did you choose not to file a claim or sell your claim?
It is unreasonable to expect individuals to be sophisticated capital market participants in the face of fraudulent marketing efforts. There is a reason fiduciaries exist [1], as well as whole piles of capital market licenses [2]. This is a natural outcome of less than honest folks leveraging information asymmetry in a complex system.
[1] https://www.consumerfinance.gov/ask-cfpb/what-is-a-fiduciary...
[2] https://www.finra.org/registration-exams-ce/qualification-ex...
What's really upsetting is this lie that these crypto people push, acting like cryptocurrency is the secret way to leave poverty, and that this is the future of finance, and that investing with "Gemini Earn GUSD pays like 50x more than traditional bank interest", in combination with the FDIC-insurance for GUSD on their site. I think it's possible that people put in more than they could afford to lose into GUSD and Gemini Earn. I think it's also possible that people transferred most of their savings from traditional FDIC-insured banks in order to take advantage of Gemini Earn. And I think it's very possible that this is going to hurt the poorest individuals substantially more than anyone else.
I generally don't advocate for violence, but a large part of me really hopes that the Winklevoss twins each step on a Lego block every morning.
And as we are seeing with all the FTX fallout, of course they were giving money to all sides of politicians along the way.
Yes good regulations are needed to prevent this sort of garbage, and I fully support that, but there is still some amount of responsibility on people to distrust "too good to be true" scams especially on new complicated "just trust me bro" schemes. There were tons of people warning against this all along.
Gemini may be a victim here too, as TFA explains: it's Genesis that ran the scam (with DCG being Genesis' parent company).
I think the Winklevoss brothers honestly "saw" Bitcoin before most, just like they saw FaceBook before Zuckerberg stole it from them (Zuckerberg lost not just one but two lawsuits against the twins).
They may have been blinded by Genesis/DCG: just like, say, the New-York Times and Forbes got blinded by SBF / FTX.
But I don't think it's fair to say, especially while there's a lawsuit ongoing, that you "fell" for it: they are likely just victims of Genesis (and the lawsuit shall try to determine if that's the case or not).
Now they may have sold unregistered securities, but that's very different compared to downright theft (like Genesis or SBF or so many others did).
That said I'm sorry about the $13 K loss and if it's any consolation I told someone close to GFTO of BlockFi because these 8% were obviously a scam (and I don't think BlockFi was guilty: they fell for the Genesis scam) and he managed to get his 1 BTC out of BlockFi before things went south (not too sure what eventually happened to BlockFi and people who had funds there).
> "But according to the lawsuit, in the summer of 2022, some top Gemini staff became worried enough to withdraw their own funds.
If senior executives traded their own assets based on non-public information, it'll be hard to claim that they are just a victim of Genesis/DCG and had no idea this was happening.
> Now they may have sold unregistered securities, but that's very different compared to downright theft (like Genesis or SBF or so many others did).
I mean, is it? They compared it directly to a bank account [1], and mentioned FDIC insurance for GUSD [2]. They might have not meant for my money to be stolen, but I am quite confident that they were playing fast and loose with terms in order for me to believe that there was lower risk in this than there actually was. There's actually a word for "purposefully making someone believe something that's not true", and it's called "lying", and if they're lying then I kind of have to assume some nefarious intent.
That said, I can broadly agree that maybe they're just morons? I'm probably an idiot too, but it's a little different for a software engineer without any financial training vs. two adults trying to start "legitimate" crypto exchange without doing the proper due diligence to make sure their partners are also legitimate?
[1] https://pbs.twimg.com/media/F1lMbFqWIAAcpKc?format=jpg&name=... [2] https://web.archive.org/web/20211201224824/https://www.gemin...
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I'm also kind of surprised NYC hasn't suspended their license yet, at least until the SEC lawsuit comes to a conclusion.
If films like Boiler Room and Wolf of Wall Street were to be made today, they wouldn't show brokers cold calling retirees, but rather people furiously typing away in Discord rooms, inflating the mirage until the insiders are able to cash out.
https://www.investopedia.com/terms/g/greaterfooltheory.asp
They're trying to be as by the book as possible, even though the SEC and other entities aren't making it easy.
CCC president Ivan Manuel Molina Lee was arrested in 2019 in Poland and Reginald Fowler (formerly part owner of the Minnesota Vikings) pled guilty last year and is facing 20 years.
I’d speculate if the government dug around they could rustle up some wire possible fraud. It’s my understanding the shadiness of CCC was not a secret.
https://decrypt.co/collections/the-crypto-capital-scandal
That was partly Gemini's appeal as well, that they were working with regulators to legitimize crypto. That might have been their intent but it's certainly not the result.
Why/how did she come to that decision is my only question from this whole article. Perhaps I am too dumb to understand why people invest into shaky things(cryptocurrencies, MLM scams and what nots) or perhaps people just allow others to control their assets.
I cannot speak for this grandmother, but I cannot blame someone who doesn't really understand what cryptocurrency is for just assuming it's "some techy version of a stock", especially as more traditional brokers like Venmo and CashApp and PayPal start handling crypto as well.
There are lots of people who see a website say "You will make free money" and their brain just skips over the part where you normally would go "that doesn't make any damn sense". They are usually the same people who spread rumors as "I know a guy who knows a guy who definitely knows a guy at a school where they had a litterbox for furry kids". It's no different to how some people just REALLY REALLY suck at basic arithmetic, or others can read the same page of a book ten times and struggle to pick out what happened.
We ALL have some semblance of this. We are ALL fallible bags of chemistry following really dumb patterns that evolved around surviving the wilderness, where being "correct" was not nearly as important as surviving until tomorrow. It's why I just don't understand the willingness to let people suffer "because why should I help them".
We need strong regulations, strong consumer protections, strong medical systems, and strong education systems because being born really really freaking stupid should doom you to a bad life.
I moved to a new city a couple years ago and met up with some other devs as a way to make new friends. There were 4 or 5 of us going out for beers and the discussion inevitably turned to crypto. I’ve been a skeptic for many years and when asked about my crypto holdings, I politely said that I wasn’t invested or interested.
One guy in particular kept telling me that I was going to get left behind and that I really needed to buy in before it was too late. I told him that I didn’t trust the market and he went on about how corrupt the Fed is. He was really awkward, and at times, emotional about it.
Needless to say, friends were not made that night and I’m glad that the peer pressure aspect doesn’t bother me because a lot of people would cave in that situation.
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The crypto SuperBowl ads were a signal that it was about to come crashing down.
Basically, the smart money was looking for naive suckers so they could cash out.
Should we short Coca Cola, Nike and Pizza Hut because they too had superbowl ads?
“Has a superbowl ad” doesn’t seem like a great signal to me, other than in retrospect when it’s easy to spot a loser.
These things strike me as a privacy nightmare.
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