1) Following up on yesterday’s e-mail, in which I warned my readers (again!) that bitcoin and other cryptocurrencies are a techno-libertarian pump-and-dump scheme, here are two articles about the massive amount of fraud in the sector and how countless innocent people are being sucked in… and losing their shirts!
When Canadian blockchain whiz Gerald Cotten died unexpectedly last year, hundreds of millions of dollars in investor funds vanished into the crypto ether. But when the banks, the law, and the forces of Reddit tried to track down the cash, it turned out the young mogul may not have been who he purported to be.
2) And… Cryptoqueen: How this woman scammed the world, then vanished. Excerpt:
Ruja Ignatova called herself the Cryptoqueen. She told people she had invented a cryptocurrency to rival Bitcoin, and persuaded them to invest billions. Then, two years ago, she disappeared…
But it seems it’s not just the promise of riches that keeps people believing. After Jen McAdam invested into OneCoin she was constantly told she was part of the OneCoin “family.” She was entered into a WhatsApp group, with its own “leader” who disseminated information from the headquarters in Sofia. And McAdam’s leader prepared her carefully for conversations with OneCoin sceptics. “You’re told not to believe anything from the ‘outside world,'” she recalls. “That’s what they call it. ‘Haters’ – Bitcoiners are ‘haters.’ Even Google – ‘Don’t listen to Google!'” Any criticism or awkward questions were actively discouraged. “If you have any negativity you should not be in this group,” she was told.
Prof. Eileen Barker of the London School of Economics, who has spent years studying groups like the Moonies and Scientologists, says there are similarities between OneCoin and messianic millennium cults, where people believe they are part of something big that is going to change the world – and no matter what the evidence, once they’ve signed up, it’s very hard for them to admit they are wrong.
“When prophecy fails they believe more strongly,” she says. “Particularly if you have invested something, not only money, but belief, reputation, intelligence. You think, ‘Wait a bit longer.'”
Money might push people to invest in the first place, but the sense of belonging, of doing something, of achieving something, is why they stay, Barker says. “And in that sense it’s cultic.”
In an ideal world, regulators would take action to protect consumers from scams like OneCoin. But the authorities all over the world have been slow to react, partly because the whole area of cryptocurrencies is relatively new…
The inescapable conclusion was that those rising numbers on the OneCoin website were meaningless – they were just numbers typed into a computer by a OneCoin employee. Far from putting an end to their financial worries, she and her friends and family had thrown a quarter of a million euros away.
The article’s conclusion is spot on:
OneCoin was a familiar scam with a digital twist – a new and hugely successful take on the old pyramid scheme.
But to me it symbolizes something else too.
It represents the dark side of rapid technological change – the way that every new technology creates amazing new opportunities and possibilities for people who understand it, but also the chance to exploit the people who don’t.
Dr. Ruja identified several of society’s weak spots and exploited them. She knew there would be enough people either desperate enough, or greedy enough, or confused enough to take a bet on OneCoin. She understood that truth and lies are getting harder to tell apart when there is so much contradictory information online. She spotted that society’s defense against OneCoin – the lawmakers, the police, and also us in the media would struggle to understand what was happening.
And, most frustratingly of all, she correctly guessed that by the time we realized it, she’d be gone, along with the money.
3) The only corporate job I’ve had in the 30 years since I finished college was two years right afterward at the Boston Consulting Group. It was a great experience for me, though I’m not sure I “added value” to any client…
So I can say with some authority that it’s hard for me to think of a worse idea than hiring a bunch of snot-nosed MBAs (or pre-MBAs) to come into New York City’s notorious Rikers Island jail and give advice on how to stem violence! New York City Paid McKinsey Millions to Stem Jail Violence. Instead, Violence Soared. Excerpt:
The corporate consulting firm reported bogus numbers and flailed in a project at Rikers Island. Today, assaults and other attacks there are up almost 50%.
You really can’t make this stuff up…
4) Question No. 2 to ask before you marry someone:
If you weren’t romantically interested in each other, would you be close friends? Do you make each other better?
Over time, when the passion and romance fade, there had better be a solid foundation of friendship… or you’re in trouble. And you definitely want to be with someone who gives you frank feedback and smooths your rough edges – as my wife Susan regularly does with me!