Sam Bankman-Fried trial update: Where’s the money?

The SBF trial finished last week with the boy wonder himself testifying, as his attorney Mark Cohen comfortably led the defendant through a benign & naive narrative they are trying to spin to the judge & jury. Below is a courtroom sketch of Mark Cohen, the completely incompetent, ineffective & overpaid defense lawyer for SBF, as depicted by CoinDesk courtroom artist/reporter Nik De.

The SBF trial was paused Monday through Wednesday last week (Oct 23-25), because Mark Cohen was testifying with lots of press, cameras, reporters, etc, in another Manhattan courtroom– specifically in the Donald Trump v. New York fraud trial. That is a civil trial in its punishment & compensation phase, as Donald Trump has already been found guilty of fraud.

DOJ prosecution cross-examination in the criminal trial of SBF is expected to begin Monday (tomorrow), with the trial possibly ending next week, allowing the jury to deliberate a verdict. If convicted, the judge is going to come down hard on SBF, with an appeal highly unlikely to change anything, meaning SBF will need a Presidential pardon to get out of jail. SBF spread a LOT of money around into dark places and Trump loves NFTs, so it could happen. The other murky, unanswered question is, “Did SBF already cut a secret deal?” Its answer is unknowable to the public, but known in inner ruling circles.

Trump pardoned dozens of criminals (pic above) at the end of his Presidency simply because they paid his under-the-table extortion money, or they pledged their undying loyalty to the Donald.

Over $8 billion in customer funds is still missing from the FTX/Alameda fraud. Everyone in crypto assumes SBF has the stolen crypto stashed away in hidden wallet(s) somewhere in dark cyberspace. SBF was allowed plenty of time to do that– as FTX collapsed last November, as he was extradited back to the US from the Bahamas, and surely after he was allowed more-than-generous bail terms by a lenient Manhattan judge who let SBF stay with his parents in Palo Alto, California and work online, even after repeated violations of his bail terms.

Obviously US intelligence was monitoring & scrutinizing SBF’s online activities, but none of this (or its findings & conclusions) have ever been revealed to the public. What was SBF doing online during those months he was out on bail?

Without question, SBF moved massive crypto transfers from the time he was held by the Bahamian police, up until his bail being revoked after he published the personal diary of key DOJ witness (& former girlfriend) Caroline Ellison, who was SBF’s partner in crime. She pleaded guilty, as did a few others at FTX/Alameda, so their prison sentences will be much lighter. But the question still remains, “Where’s the money, SBF?”

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Financial establishment rules in favor of Grayscale in SEC lawsuit

I’ve characterized this Grayscale vs SEC legal battle on social media in the past weeks as Musk (crypto) vs Buffett (traditional finance), which is an oversimplification. The CIA is also big on bitcoin, and that matters.

Bitcoin is used to funnel funds to ISIS militias (formerly Al Qaeda) in Syria & Iraq for the purpose of regime change in Damascus & Tehran, etc. Since the US-German intelligence-backed Maidan coup of 2013-14, large amounts of crypto have been funneled to leading fascists in Kiev. Those were the ‘greater forces’ in play at Jackson Hole last week, which keeps crypto alive– for now.

Every major bank CEO & financial player at Jackson Hole was consulted & listened to while this legal ruling was being decided. It was intentionally kept airtight from the corporate media, which is why you heard no reporting or analysis from any of them the entire time. Rising interest rates & working class interventions loom large over crypto’s long-term future.

If this was a ‘landmark legal decision’ (and it is), then why was there no serious reporting when policy was being debated during these past weeks? It’s because the ruling elites wanted to conspire in complete privacy on this highly sensitive matter. Elite class forces were battling one another to influence this legal ruling, and the corporate media smokescreened it, keeping the public ignorant– until they were told exactly what to say earlier today.

Sam Bankman-Fried, co-founder of FTX Cryptocurrency Derivatives Exchange, departs from court in New York, US, on Thursday, Dec. 22, 2022. Bankman-Fried was released on a $250 million bail package after making his first US court appearance to face fraud charges over the collapse of FTX, the cryptocurrency exchange he co-founded. Photographer: Stephanie Keith/Bloomberg

A bitcoin exchange trade fund (ETF) has now been US government approved, that’s what all this means. The crypto industry plan is to have a centralized bitcoin exchange, where different wallet holders, blockchains, bridges, etc, can buy/sell bitcoin & convert into dollars, etc; and (eventually) add ‘ether’ & a few top stablecoins to this exchange. That’s the crypto vision. It’s no longer ‘de-fi’, which divides a segment of crypto purists. That’s the latest in crypto news & analysis.

This essay below was published concurrently in response to the Vatican supporting Russian tsarism.

Tsarist Russia was a brutal absolute autocracy, dating back to the mid-9th century. Historically, Napoleon couldn’t conquer Russia, so it remained a backwards, in-bred monarchy, in an era when the rest of Napoleonic Europe formed into bourgeois representative republics, or what we now call nation states. Germany was the last of these 19th century powers, formed in 1871 through wars, revolutions, and finally counter-revolution– like all the rest.

All the tsars were hated by the peasants throughout its history, from Russia/Ukraine, all the way to Siberia, where dissidents (industrial workers, revolutionists, etc) were exiled as criminals. This eventually led to the Russian Revolution of October 1917, when the Bolshevik Party galvanized workers in St. Petersburg, the industrial capital of Russia, and led a workers’ revolution which turned a broken 3rd-rate world power (about to be carved-up by imperialism after WW1), and transformed it into a powerful workers’ state!

It also ended the Great War, as each imperialist nation ceased its European-theater hostilities, and turned their militarism on the newly-formed Soviet government in Moscow, along with a propaganda & police campaign targeting perceived revolutionary threats in their own countries– see J Edgar Hoover. US imperialism (& the rest) aided the Whites who were led by tsarist generals, admirals, fascist Black Hundreds & other terrorist/anarchist scum. Trotsky formed and commanded the Red Army, the fighting force of the oppressed workers & peasants, which defeated the tsars reactionary forces backed by imperialism. The political leaders of the Russian Revolution were Lenin & Trotsky, who after this bloody Civil War from 1918-22, were politically isolated and eventually killed by reactionary forces in the apparatus– led by Joseph Stalin.

That is a brief history of the formation & early political degeneration of the USSR. The Vatican unapologetically endorses Russian tsarism because BOTH are remnants of feudalism & the Middle Ages, which makes for sticky politics in 2023.

The intention of Lenin & Trotsky was for this to be the FIRST workers revolution, followed by others in Europe– particularly Germany with its powerful working class & industrial might. Revolutionists, Karl Liebknecht & Rosa Luxemburg, were murdered by Wiemar secret police immediately after WW1, while Adolf Hitler was enabled– even after his failed coup attempt in November 1923. Hitler scribed his racist anti-socialist manifest Mein Kampf in prison, and then on release for good behavior, established the Nazi Party which terrorized Europe, exterminated 6 million Jews, and attempted to annihilate the Soviet Union in WW2. This wasn’t just one madman who got out of control. Hitler, like Trump, is historically cultivated by powerful reactionary forces to do its dirty work in defense of capitalist inequality in times when liberal reforms aren’t possible.

Lenin died in January 1924. It was always Trotsky’s suspicion (which he could never prove), that Stalin poisoned him. Trotsky formed his internationalist Left Opposition in 1923, to counter Stalin’s reactionary ‘socialism in one country’ theory he presented as gospel in 1924– after Lenin’s death. Stalin was better than Trotsky at forming murky alliances with reactionary politicians, since that’s who he was. Bourgeois subterfuge & laying traps was how Stalin hijacked the Bolshevik Party and defeated Trotsky to attain complete political leadership of the Communist Party. Many of the best Bolsheviks had died in the Russian civil war, and by 1929 with his Left Opposition politically isolated by a reactionary bureaucratic apparatus, Trotsky was exiled by Stalin. Trotsky would never return to the Soviet Union. He was murdered by an agent of Stalin (with help from J Edgar Hoover FBI agent, Sylvia Ageloff) in Mexico City in August 1940 at the outset of WW2 in Europe.

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Crypto security & securities

According to The Hash on Coindesk, the next generation of crypto users want wallets that are easier-to-use & safer. Of course, this is impossible.

The risks of self-custody crypto wallets are user-error & hacks. The risk of crypto storage on a centralized exchange is FTX, etc. Do you feel lucky with Binance? The Hash recommends multi-signature cold wallets as best practice for crypto storage. To get into crypto, you need to be tech-savvy and know exactly what you are doing in every area, otherwise you’re a pigeon.

The SEC just announced their long-awaited lawsuit against Binance for (among other things) selling unregistered securities. Is crypto a security, as the SEC alleges? First, a few definitions. Commodities are basic goods produced by human labor which can be bought, traded or exchanged– such as grain, cotton, oil or gold. Securities are corporate wagers on yields & returns, such as stocks, bonds, derivatives, etc.

Crypto is a security with no legitimate use value, as it is a money laundering tool. Intelligence agencies & dictators around the world use crypto to fund their illicit activities, which gives bitcoin its hidden (but powerful) political support.

Warren Buffett represents a faction of US capitalism that sees the danger in crypto, defining it as, “rat poison squared.” Crypto is the most unstable ‘asset class’ because it really isn’t an asset. Venture capitalists poured into this Ponzi scheme for years, and then lost a bundle when FTX/Alameda collapsed last November. The entire crypto industry has essentially been on a knife’s edge since the Terra/Luna collapse of May 2022.

US banks have shut their doors to crypto since Silvergate, Signature & Silicon Valley Bank went under earlier this year, in the wake of the FTX bankruptcy. It is now widely recognized that the entire crypto market, from bitcoin to stable coins, is a fraud. That’s what the world learned in 2022, and it has created a permanent state-of-crisis for the entire crypto industry and the greater financial system.

There are ‘responsible’ old-guard capitalists such as Warren Buffett who advocate banning crypto entirely, and then there is Elon Musk who represents the new-age era of crypto billionaires. How everything works out politically (under capitalism) is that they both remain influential billionaires, while the rest of the world works harder to maintain this fiction.

That is the deeper meaning of all the anti-crypto rhetoric coming from Washington & the SEC these days, and then the hysterical responses from crypto fanatics. If your cyber-widget is listed on exchanges and its price goes up & down (causing people to make & lose money), while providing no use value to the greater population, then it’s a security.

There is no way the US government will protect people from crypto fraud, since its corporate-police-military-intelligence apparatus is so intimately tied into it. It is the working people of the world who must put an end to this crypto fraud. Crypto offers false hope, and is simply another capitalist gambling addiction. It’s message is: “Fuck the world & everything in it. Get as much for yourself by any means.” Does that sound like a future people want? These crypto libertarians just don’t care.

Bitcoin remains at ~$27K, despite the ‘crypto winter’. Crypto winter means it’s now very difficult to find new investors (suckers) of any wallet size. Bitcoin is being propped-up with hidden finance capital, because it is the most recognized crypto brand, with etherium & tether (top ‘stablecoin’) next on that list. These are the ‘assets’ which provides the CIA the means to funnel funds to fascists in Kiev, Al Qaeda in Syria, etc.

The recent US ‘debt ceiling’ debate was a politically stage-managed affair to force the working population to pay for all this militarization & fictionalization of the US economy. Permanent wars of aggression globally are the order of the day, with crypto/big bank bailouts as needed, and US workers & taxpayers are to foot the bill. The question becomes: At what point will the workers & youth revolt and what form will that take politically?

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Crypto contagion triggers global banking crisis

To those who say crypto was just a bystander in this now global banking collapse, they are lying. Crypto is entirely fake, and was the trigger for this banking meltdown. Crypto has been in meltdown mode since Terra/Luna last May, then FTX last November. Banks that were heavily involved in crypto are now the first to go under, which has set off an industry panic and crisis of confidence in big banking.

The greater issue of the insolvency of the big banks, who all hold devalued treasury bonds, has been caused by the same policy that crashed crypto– a decade of free money followed by a sharp interest rate rise by the Federal Reserve. There is a connection there.

The EU (and everyone else) follow from the US Fed, since dollars are the international exchange currency and have been since the end of WW2. But increasingly, dollar dominance is being called into question by many different interests, particularly the government of China, hence the constant US propaganda campaign to demonize China & embolden fascist racist filth.

What we are witnessing now is a complete breakdown of the post-war monetary system. The Bretton Woods system of US dominance was established in 1945, by the winners. Richard Nixon took the US off the gold standard in 1971, because Fort Knox was running out of gold to convert into dollars at $35/ounce. Since then, all currencies float against the US dollar. All international settlements, particularly oil, are done in dollars. This is what makes the US dollar almighty.

Stagflation of the 1970’s, then Fed chairman Paul Volcker’s interest rate hikes in the 1980’s, which reached nearly 20%, enriched banks. Big corporations even started their own lines of credit cards to cash in for themselves. It was the best of times to be rich, as Reagan/Bush are revered for their conservatism on issues like global warming, and their enthusiasm for corporate & banking deregulation, etc.

In 1987, the first stock market crash in America’s post-war era (which took every bourgeois economist by surprise) established the “Fed put”, which ensured a taxpayer bailout for any bank or corporation deemed “too big to fail.” Timeline ahead: Asian tiger crash in 1998, dot com crash in 2001, and then the big one– the sub-prime mortgage collapse in 2008. All caused by corporate criminality. All the big fish got bailed out.

By 2010, the Fed started printing money and gave it away to all its cronies for over a decade. Every other central bank in the world followed suit. By the end of 2021, after a few abortive attempts (Dec 2020 – March 2021, most notably) at quantitative tightening, the Fed has taken a hard line on raising interest rates to induce a recession and quell workers wage demands.

Inflation is caused by massively increasing the supply of money, without having the economic fundamentals to back it. By ‘economic fundamentals’ I mean, actual (real world) use value. The Fed, Wall Street, the White House & US Congress all believe that inflation is caused by workers’ wages going up. That’s the class war that’s always raging underneath the fake news.

With capitalism in its speculative death throes, crypto has emerged as the libertarian answer to the international currency question. As far a being real money, you can buy lots of black market things with bitcoin. Things you can’t do with crypto include: pay rent, pay credit card, pay taxes… pay for a Big Mac. It simply has no value to the vast majority, and therefore must be abolished.

Trotskyists are the only ones who have taken this intolerant policy towards crypto from the start. The SEC, DOJ, & White House have now pivoted to an anti-crypto policy since the Silvergate Bank collapse less than two weeks ago.

Slivergate CEO Alan Lane, second from right, rings the New York Stock Exchange opening bell before his bank’s IPO begins trading, on Nov. 7, 2019.

There’s been lots of talk about making depositors whole, making sure small businesses can make payroll, etc, in the wake of these US bank collapses, triggered by crypto’s meltdown. Everyone knows the FDIC guarantees accounts up to $250,000. For businesses with more than that, there is the Deposit Insurance Fund, which is a privately-owned, industry-sponsored insurance program.

The DIF’s purpose is to 1) insure bank accounts over $250K, and 2) resolve failed banks. If crypto start-ups like Circle ($3.3B in SVB) didn’t hedge with DIF and can’t make their payroll, etc, then the CEOs of these companies need to pay out of their own pockets– or else go bankrupt. Poor risk-management is on the CEO/CFO, and NOT the responsibility of the US taxpayers.

Why didn’t these smart tech companies with million$ & billion$ in venture capital money have a DIF policy to protect against a bank collapse? Corporate Leadership 101– FAIL. NO bank bailouts!

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Silvergate Bank now defunct only weeks after getting $4.3B bailout

Silvergate Bank announced Wednesday evening (Mar 8) that it has collapsed, voluntarily entering bankruptcy liquidation after market concerns over its inability to file required tax documents last week. It will not survive. This is the biggest US bank failure since 2008-09. This is not even two months after it was reported that Silvergate Bank’s Q4 tax filings revealed a $4.3 billion bailout loan from the Federal Home Loans Bank (FHLB), a quasi-private consortium of banks & bondholders that are backed by US Congress– meaning the US taxpayers.

Silvergate was the biggest crypto-friendly bank in the US. Founded in 1988, Silvergate Bank got into crypto in 2014, and out of it in 2023. For as much as libertarian crypto fanatics scream about ‘de-fi’ & ‘independence from tradition finance’, these zealots are learning (the hard way) that even bitcoin can’t survive without access to banking services.

Lots of people, from venture capitalists to young kids, have put their money into crypto, but it’s much harder to get their money out. That’s the most valuable service Silvergate Bank provided to it’s crypto customers & clients, until it couldn’t anymore. Silvergate even ran their own crypto exchange (SEN) which has now been turned-off forever.

It’s been known since mid-January that Signature Bank received an $11.3 billion loan from the FHLB. Signature is now facing US regulator scrutiny as it inherits the mantle of crypto industry leader in banking. Signature’s stock is down 10% or so with the news of Silvergate’s collapse. Anyone who has been following developments in crypto knows, there’s trouble in the entire crypto banking sector, with banks facing massive liquidity issues as customers rush to cash out & put their money somewhere safer.

How is US Congress or the SEC going to help with all this? The Fed is raising interest rates, and crypto simply can’t afford that. Crypto needs free money from the Fed & venture capitalists for ‘innovative’ start-ups, and then taxpayer bailouts for when they crash.

Ally Financial bank (founded 1919, HQ Detroit) received $7.2 billion from the FHLB in Q4 2022, so they can been seen as the next disaster after Signature Bank. Provident Bancorp received $80 million from the FHLB in Q4 2022. These were massive (& secret) bailouts to crypto-friendly banks that didn’t help for more than a few months. Now the entire crypto industry needs another bailout to prevent bitcoin from free-falling.

Bitcoin & tether (‘stable coin’) are the top name brands in crypto. Their price must be maintained with massive injections of liquidity to re-inflate the bubble, or else it risks total collapse. This is the existential crisis the crypto industry (& capitalism) is facing now. Since the traditional financial sector is deeply implicated in the crypto mess, none of these pertinent facts are being reported in the corporate media.

Instead we get misinformation on the subjective price of bitcoin, as there is much stupidity posing as intellectualism. For example, Coindesk, the self-proclaimed industry leader in crypto reporting, just published a piece titled, “Price, Not Intrinsic Value, Is the True Measure of Bitcoin’s Success”, a fairly typical example of their muddle-headed libertarian thinking. It pontificates:

“My question is, what is intrinsic value? There is no such thing – value has and will always be subjective based on an individual’s need at the time. Demand drives everything and always has. The idea of intrinsic value is a fool’s errand. The question of whether a Rolls Royce is worth more than a bottle of water is subjective based on where you are and what you need. The demand for water in the desert is certainly going to be higher than that of a Rolls Royce. I exaggerate to make my point, but demand drives value. That’s unchanging over time.”

To clarify & correct the nonsense you just read in the paragraph above, the question of which is worth more, a Rolls Royce or a bottle of water, is NOT subjective. The Rolls is ALWAYS worth MUCH more than the bottle of water, no matter the conditions, because MUCH MORE human labor goes into making a luxury car. In a desert the Rolls can provide shade & shelter, If the RR is gassed-up, it can drive you out of the desert. That has much more value than a bottle of water, Only fools & liars would argue otherwise. There is nothing subjective about this, and there hasn’t been since Karl Marx explained it in Capital (1867).

Of course, libertarians don’t read Marx, they are only concerned with making money for themselves. So they make up stupid stuff, anything to justify their ends. Crypto needs another massive US taxpayer bailout, and it’s getting harder to hide them. That’s the panic in the crypto markets right now, the elephant in the room that no one is mentioning in the fake media.

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Bankrupt crypto bank Silvergate gets $4.3B US taxpayer bailout

It was reported last week that Silvergate Bank, the bankrupt crypto lender with FDIC affiliation (a rarity in the industry), received a $4.3B bailout from the San Francisco-based Federal Home Loan Bank, following the collapse of crypto exchange FTX, according to the firm’s Q4, 2022 filings.

US taxpayers, without their consent, have just bailed out this bankrupt crypto bank– and it barely made the news. Silvergate was the first, of what is to be many bailouts for crypto. As much as the crypto community howls about “de-fi, privacy & freedom”; it needs a bailout even more. Industry players have been angling for this since the FTX collapse.

To review, Silvergate provided banking services to crypto exchanges & investors, with ~90% of its deposits from crypto. Silvergate’s 10 biggest depositors, include bankrupt firms such as: Coinbase, Paxos, Crypto.com, Gemini, Kraken, Bitstamp & Circle. As a result of the FTX collapse in November, Silvergate was bankrupt, as it held worthless deposits for both FTX & Alameda Research.

Market manipulation is what is driving the current bitcoin bounce. This, along with venture capital, is what is sustaining the crypto industry on life support. Market manipulation through wash trading, and other pump & dump tactics are the rule in crypto. Wash trading is when a firm trades with itself to artificially boost prices, to give the illusion of liquidity & generate interest from investors. A recent paper from the National Bureau of Economic Research found that wash trades accounted for 50-70% of all crypto transactions, suggesting most trades on these platforms are fraudulent.

For example: bitcoin’s price had been languishing at ~$17K for weeks, but as of last week it has slowly been going up. Bitcoin currently sits at over $21K, and no one can explain why, as investors are leaving the industry in droves, lay-offs are everywhere, and hardly a day goes by without some news of another crypto firm, exchange, bank, etc, having liquidity issues. So where is all this money coming from? As it turns out, it’s now coming from the taxpayers.

Update: Sat 21 Jan 2023 5:50 AM CST

Silvergate Bank ($4.3B), Signature Bank ($11.3B), Provident Bancorp ($80M), and Ally Financial ($7.2B) have been bailed out by the Federal Home Loan Banks program, which is ostensibly meant to fund home loans. This is surely the tip of the iceberg as there are many others we don’t know about– yet. US taxpayers support FHLB financing, as their bonds are implicitly backed by Congress, which would not allow a default, hence their AAA rating from Moody. Should one of these crypto-friendly banks fail, FDIC accounts would be second in line, after the FHLB, in claims resolution. Banks always get bailed out first. Bloggers are the only ones reporting this story, as the corporate media is maintaining silence on this massive & secret crypto bailout scheme.

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Crypto mining report

Mining bitcoin became less profitable in 2022 as hashrate (the electrical cost of mining bitcoin) increased, while bitcoin tumbled from an all-time high of $69K in November 2021 to under $17K at present. Crypto is being propped-up with everything the US financial system has left. There are a lot of billionaires & multi-millionaires who are VERY upset at the prospect of losing a massive chunk of the portfolio invested in crypto.

In 2022, the stock prices of the five biggest public crypto miners by hashrate: Core Scientific ($CORZ), Riot Blockchain ($RIOT), Bitfarms ($BITF), Iris Energy ($IREN), and CleanSpark ($CLSK) traded down 99%, 85%, 91%, 92% and 79%, according to CoinDesk. What’s going on in the crypto industry is a massive restructuring, with a few big fish eating all the little fish. New rationalizations are needed to reassure venture capitalists in their support for the flagging crypto industry. If investors stop giving crypto money, then it’s lights out– literally.

Miners are hardcore crypto fanatics, so they tried to hold onto the bitcoin they mined, often electing to finance operations with low-interest debt, venture capital, blank check companies, etc. Perhaps pitch the idea on Shark Tank, which coincidentally appeared around the same time as bitcoin. The point is that bitcoin mining companies, who are in the business of mining bitcoin, weren’t making the BIG money in crypto.

Miners were contracted to make money for whales, who financed the mining of bitcoin. For instance, if Elon Musk contracted a massive amount of bitcoin to be mined from various bitcoin mining companies, the bitcoin would be delivered to him while he paid the consortium of miners for the service, presumably in bitcoin. This would support the industry as long as the price of crypto went up and money was cheap from the Federal Reserve.

Elon Musk’s financial Waterloo was his commitment to buy Twitter for $44B last spring. When his bitcoin empire crashed, soon after his takeover announcement, he began to back-off on buying Twitter. By summer, when Twitter shareholders threatened to sue & win in court, Musk was beaten. Elon Musk was heralded as the wealthiest man in the world by Forbes, with a value of $264B as of 2021. So here’s a modern economic question: Why couldn’t Elon Musk just buy Twitter for $44B, and be secure w/ $200+B remaining in personal wealth? Answer: Because his wealth was never real. It was mostly inflated crypto, and you can’t buy a publicly-traded company with bitcoin. Forbes is a central player in this fictitious accounting.

Elon Musk’s choices to finance his Twitter acquisition were to A) liquidate bitcoin; or B) liquidate Tesla. Tesla is WAY overvalued, and Musk knows this better than anyone, so him selling huge shares of his flagship electric car company tells the story there. If bitcoin recovers, Elon Musk is king again. If crypto goes to zero (which it must), then Musk is dust. When the stock value of Tesla collapses, as it must, Elon Musk won’t have any real money left. The more Tesla stock Musk sells, the sooner this will happen.

As poorly as Musk has run Tesla, his short reign as Twitter CEO has been qualitatively worse. Maybe Twitter was worth only a quarter of what Musk paid for it, say $10B. But that’s still an asset, and the second-largest social media platform on the internet. At least manage it decently for awhile, then take it public again, or sell it & eat the loss. That would be a rational business strategy after making a big mistake. But instead, Musk destroyed Twitter through a series of tirades, boneheaded ideas & tantrums. Now, Twitter isn’t worth $2B. These new-age millennial entrepreneurs have trouble producing value in the real world. They always need more money.

Turning to the unending crypto saga of Sam Bankman-Fried, the Securities Commission of the Bahamas has taken custody of FTX deposits valued at more than $3.5B as of November 12, according to a media release published last week. The November 12 date is significant, because the murky, murky $383M FTX hack, live-streamed in this video, happened during the evening of November 11, while SBF was in Bahamian custody. So where is the money?

The government of the Bahamas is in complete control of $3.5B in crypto, which the US government wants for itself. Bankruptcy trials take a long time, and this is largely a jurisdictional battle for the spoils which is to be hashed-out by lawyers, financial officials, opportunists, etc, on both sides until all the money is divvied-up to the right people. This is how governments steal for themselves in the name of their people & democracy.

The crypto community is facing an existential crisis. The vast majority, who have worked to build this industry, in mining, computer programming, sales & promotion, etc, have been shucked & jived by modern-day shysters. Calls in the fake media for regulation are a smokescreen, as crypto will never be regulated by US Congress. A few years back, during the Trump administration, Facebook CEO Mark Zuckerberg was compelled to testify before the US Senate for a regulatory hearing. The most memorable moment was when a crusty septuagenarian senator asked Zuckerberg how Facebook made money? The Facebook CEO smiled to himself & replied, removing as much condescension from his voice as possible, “We sell ads, sir.”

That’s typical of the level of fundamental cluelessness in elite politics. Crypto with its blockchains, decentralized finance, off-shore shell companies, etc, is much more complex than the nuts & bolts of social media. Not only is regulation unwanted by the industry (and Republicans), it’s unthinkable because no one in bourgeois politics has a clue how to deal with this mess. No politician wants to be seen as “impeding the free market,” and no politician wants to get dragged into these crypto scandals any further. You know it’s really bad when you see corrupt politicians insisting there are returning FTX money.

Calls for “regulation” in articles discussing crypto should be always interpreted as “bailout.” Eventually this crypto bubble will burst, and unlike the sub-prime crisis of 2007-08, there are no assets to recoup here. Millions of homes with defaulted mortgages were transferred into bank ownership in the wake of the 2008 financial meltdown. This was done to make bankers & hedge fund investors (who caused the meltdown) whole again. They were too big to fail. But the soon-to-come crypto crash will leave nothing to be recouped, because it’s been a fake asset from the start. US & Bahamian regulators are fighting over custody of $3.5B in fake money, and who winds up with it is beside the point because it’s worthless.

Meanwhile, Sam Bankman-Fried is out on bond, living with his parents who are co-conspirators in the $32B FTX/Alameda swindle. The effectively altruistic boy genius came up with a better way to mine crypto. Instead of having a series of supercomputers mining the crypto by solving complex mathematical equations, SBF just made up his proprietary FTT tokens out of thin air. This saved energy costs, and the expense of contracting crypto miners. This way, SBF made super-profits! Crypto skeptics point to Binance’s native BNB token, and ask if Changpeng Zhao created them by the same process.

Sam Bankman-Fried has surely violated the terms of his bail by moving large amounts of crypto from hidden Alameda wallets after his release on bond last week. SBF denies this, of course, as his parents are there to punish him if he does anything wrong again. The problem with crypto isn’t SBF, per se, it’s capitalism & the flawed idea that you can create value from nothing.

Update: Wed Jan 4, ~8:45AM CST

SBF was allowed to be free on bond, and violate those terms by moving large amounts of crypto out of Alameda wallets to unknown accounts. Unknown to the public that is. The US government knows where the crypto is, because undoubtedly they have been monitoring his computer, but they aren’t revealing anything they know to the public which is normal. SBF is acting as a personal tutor for US intelligence agencies, etc, in how to move crypto. Notice how names are always redacted when his legal team requests it, etc. Since when has such a swindler been allowed such clout in a DOJ prosecution case? Normally, targets of the DOJ receive no mercy, unless they plead guilty– or cut a secret deal. SBF pled not guilty, yesterday, as expected. SBF should now be considered as an agent of the US state. It’s the only way he can save himself.

Final thoughts: Thu 05 Jan 2023 6:43 AM CST

The crypto community is learning the hard way, that BIGGER interests (such as the US-provoked war in Ukraine) override any claims of crypto theft. The most logical explanation for SBF’s ‘not guilty’ plea is that he made a secret deal with US intelligence to save himself. These demoralized libertarians are in WAY over their heads here.

Crypto believers have hyped bitcoin with an impressive amount of enthusiasm & bravado, but never answered any fundamental questions posed to them over the years. They display a staggering level of naivety & ignorance in the fields of economics & politics. And yet, in their collective moment of stunned disbelief over the reality of how quickly dreams can evaporate, they maintain they are correct. The Federal Reserve & US Intelligence are the primary forces keeping crypto alive. Crypto is a money-laundering tool, that’s it’s only use value.

Any talk of SBF being an asset of US intelligence will now be branded as “conspiracy theory” in the fake media.That’s the Big Lie playbook they run on the public. This conspiracy theory is backed by the facts and the events as they are unfolding, which strongly implies that it is correct. US Intelligence always lies & evades to minimize exposure of an asset, especially a big fish like SBF, who is teaching them new & better ways to move crypto. This helps Joe Biden work with Republicans in funneling funds to the neo-Nazis in Kiev in the name of fighting Russian aggression which keeps us safe from terrorism.

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Crypto Crash

The problem with crypto currency is that it has no material backing, unlike fiat currency which has gold & a national economy behind it. Whatever DCA (dollar cost average) you apply to crypto, it is simply a made-up value. Pegging it to the dollar, or backing it with Treasury notes (so-called “stable coins”) doesn’t add any real value to the crypto itself. In economics this is known as an asset bubble or a Ponzi scheme.

Only massive speculation by interested investors keeps the entire crypto market from going to zero. On top of this, there is massive energy waste that is unaccounted for with crypto. Eventually, all this fictitious capital will get wiped-out, and that’s where crypto is going. That is a Marxist assessment.

Everyone in the crypto industry now knows Elon Musk is the Bitcoin whale. That explains why he just backed-out of buying Twitter for $43B, after planning its takeover for months and putting it into motion. His supposed $240B is mostly a giant asset bubble, built on fictitious capital in the form of crypto currency. The rest of Elon Musk’s wealth is stolen from super-exploited workers. With what he owes to banks, he’s probably bankrupt when the crypto market implodes.

Tesla’s valuation is a joke, and SpaceX is a boondoggle. I lived in Central FL, so I know all about what goes on at Cape Canaveral. It’s always on the local news. NASA has been privatized and contracted to Elon Musk’s SpaceX. His mad vision is to colonize Mars and commercialize space travel, but the problem is Musk can’t get a reusable rocket to land without exploding. Billions & trillions of dollars are being wasted on all this, with no progress & no end in sight.

SpaceX controls many of the satellites which have communication & military value. This is how the class war is being fought. We’re talking about the supposed richest man in the world being bankrupt in terms of real value. There couldn’t be a more damning indictment of capitalism than that. Everyone one of these billionaire tyrants must be exposed as a fraud and their wealth expropriated for public use on an international scale.

This all started on Wednesday, May 11 and has been a panic since Thursday, May 12. This is Bitcoin as of this publication on Saturday:

Elon Musk now has to put all his cash into Bitcoin to weather the storm and eventually re-inflate the crypto bubble. That’s his plan. How much longer can Bitcoin hold out? That depends of Musk’s support in the market, with working class awareness & resistance looming on the other side. If investors still trust him with their money, then Bitcoin will be made to look legitimate again. If the money dries up, Musk is toast.

The tendency of fascism is to maintain any useful demagogues, in case a fuhrer is needed. Donald Trump & Elon Musk are of the same kind– ignorant, ego maniacal mad men. They both personify the madness of capitalism in its death throes, and must be dealt with by the working masses of the world in order to prevent nuclear annihilation.

This is the realpolitik being discussed by elites privately. Once they are completely defeated ideologically, the elites resort to provocation, intimation & outright violence. The Proud Boys, etc, are their right wing paramilitary forces which are to be unleashed upon the working masses to maintain this ruling class madness.

If Elon Musk’s wealth can’t be maintained as believable, then fascism must step in to crush the masses, because a crypto market crash will bring down the entire global financial system. The notoriously corrupt US-backed dictatorship of El Salvador just officially adopted cryptocurrency as legal tender. This crypto crash affects that rollout.

It’s now apparent to many that there are serious issues of legitimacy & sustainability with Bitcoin and the crypto market. How long can this fiction be maintained to the masses? That’s the question no one in the industry can answer.

Money managers bankers, hedge fund investors, etc, found a way to make a lot of money off of crypto in terms of fees, commissions, charges, etc; but nothing productive was ever made from it. It’s been such a horrible waste. It’s fool’s gold in cyberspace that produces even more global warming.

What happens when every nation goes to war and you can’t connect to the internet or grid because fascist forces in every country control all of them? What is Bitcoin worth then? These are questions to be considered as the entire US establishment led by the Democrats & Joe Biden provoke the Russia-Ukraine conflict, threatening a world wide conflagration which ends in mutually assured destruction.

People need to start thinking in these terms because this is what’s going on. The Coronavirus War is the war to prevent WW3. It can only be won by the international working masses united under the banner of Trotskyism. Read the World Socialist Web Site and become a member/supporter, etc.

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#MeToo vs. Joe Biden

The #MeToo Democrats have hit a snag with Joe Biden. His creepy behavior towards young women doesn’t play with his 2020 Democratic front-runner status.

Yeah, this is creepy behavior, a US VP abusing his power– no question. But that’s what he is, so what did you expect? Of course, no feminist said anything at the time, but now it’s an issue for them.

The contradictions & hypocrisy of the #MeToo witch-hunt are coming into sharper focus. The #MeToo campaign forever diminished itself during the Kavanaugh Hearings last summer, when much of the already skeptical public saw through the #MeToo lies, which served to promote an arch-reactionary judge to the US Supreme Court– giving it a permanent 5-4 hard right-wing majority.

This reactionary form of feminism is also how Donald Trump became US President, to his surprise on November 8, 2016. Today, the #MeToo campaign’s coordination with “Russiagate,” is best personified in Rachael Maddow. I admit, this video below is painful to watch, but it is instructive.

Maddow has lost over 500,000 viewers since this broadcast on March 22, 2019. That was when the Mueller Report was released, exonerating Donald Trump from any charges of “collusion with Russia.” Yet, this MSNBC air-head still holds her longstanding position on “Trump’s ties to the Kremlin.”

Both these campaigns (#MeToo & Russiagate) are linked to censorship of the internet & blacklisting of socialists, which fascists (Republicans/Trump) approve.

ICE raids that violate the human & constitutional rights of those who have immigrated to America are also systematically ignored, as are US foreign wars-of-aggression. There is no longer any hard news coming from Iraq, Afghanistan, Syria, Yemen, etc.

Saudi Crown Prince Mohammed bin Salman ordered a brutal murder & dismemberment of a dissident journalist, Jamal Khashoggi, on October 2, 2018.

Khashoggi even wrote for the Washington Post, but events that shock & horrify the world get buried in the US media, as Saudi oil must keep flowing, and always remain traded in US dollars. Saudi Arabia is the world’s leading oil exporter, and linking crude to the US dollar makes the US-Saudi relationship “special.”

Like Israel, Saudi Arabia can commit any war crime it pleases, short of nuclear war, and not be sanctioned internationally– due to US support. This assistance from Uncle Sam comes militarily, economically & politically. These are the deep state interests, which make up the centrist faction of the Democratic Party.

The Democrats have split themselves with this #MeToo Frankenstein they created. The “progressive” faction of the Democrats are insisting on a woman presidential candidate for 2020– in Elizabeth Warren. The centrists prefer Biden.

In earnest, both factions are fascist, and offer nothing for working people & disenfranchised youth. This ideological battle among powerful Democrats promises to get ugly, in the media and behind-closed-doors. All of this reactionary filth plays into the hands of the Trump team, which is why Marxist analysis is so important.

Another critical issue that is never honestly discussed in the corporate news, is the ongoing financial crisis for ~85% of Americans. The stock & bond markets are booming for the ultra wealthy, but the real economy has stagnated. There are fewer good-paying jobs than ever, despite the great need for qualified workers everywhere.

Ailments of US capitalism include an obesity epidemic, an opioid crisis, and a lack of access to basic health care. Health care is now run by insurance conglomerates, hospital chains & big pharmaceuticals. Privatization & equity capital have gutted work forces in every industry, taking all the profits for themselves in the forms of stock options, buybacks & exorbitant bonuses. Today, per capita, fewer Americans than ever are defined as healthy.

On the macro-economic level, global debt is now $244 trillion. Global GDP in 2016 (latest figure) was $75.4 trillion. Global debt is now over 3 times global GDP, which signals a bankrupt global economy. There is no way this level of global indebtedness can ever be paid off.

Interest rates have been kept ultra-low for ten years now, so there only one direction they can move significantly. When rates rise, the interest payments of this massive mountain of debt will be unpayable. That is why the Fed, US government & big banks had to intervene in late December 2018, with its plunge-protection team which reportedly pumped over $500 billion into the markets to prevent a collapse that had started when the Fed began raising interest rates. The US dollar overnight bank lending rate is now at 2.25-2.5%, and can’t go any higher without precipitating another crisis.

The derivatives market are the best example of this giant Ponzi scheme. Derivatives are bets on future earnings of a tradeable asset. They are used in every industry, with some going 20 years into the future, or more. Most of this estimated $1.2 quadrillion market has made bets that are going to fail, yet are still being counted as assets. This is so traders (and everyone else involved including: bankers, investors & insurers) get their bonuses.

When this derivative market crashes, the world economy will instantly collapse. Such massive amounts of toxic assets can’t be covered by any of the central banks (US, EU, etc.) because they are already leveraged to the hilt. Credit will dry up, and there will be no liquidity. What’s about to happen came to be through 10 years of quantitative easing (QE), which is money printing for the rich, who then speculate in derivatives and stock buybacks to further enrich themselves at the expense of everybody else.

That’s capitalism in it’s death throes, and its contradictions are everywhere. We now have a global economy which is capable of being more productive than ever, but barely moves because: 1) there is no (very little) innovation, and 2) fewer consumers than ever can afford to buy– because of their indebtedness. Only the super-rich & big banks get bailouts and free money to waste

The most recent orgy of speculation has been in cryptocurrency, as Bitcoin trading recently went from ~$3,600 to now over $5,000– for no explainable reason. Bitcoin/crypto is likely the final frontier of bubbles before the next economic crash. Wealthy investors are looking for alternatives to fiat money, which has become devalued through inflation by money printing under QE capitalism.

Bitcoin (and any cryptocurrency) have no legitimate use value, and are massive energy wasters. They are all Ponzi schemes, marketed as the future of global currency, by Libertarian cyber-capitalists who are rabid anti-socialists.

To summarize, QE was the US Federal Reserve buying up toxic (worthless) derivatives, which have now ballooned into a $1.2 quadrillion market– meaning they’re entirely fake, and big enough to crash the global economy.

Instead of a debt jubilee for the indebted masses, which would have stimulated a real economy back in 2008-09, it’s been more easy money for the rich to speculate in fake assets. Our options now are: 1) more of the same, until world war breaks out; or 2) revolutionary socialism.

Today’s world is still shaped by the key social, political & economic world events that occurred around 1990, which were: 1) the Tienanmen Square massacre of June 1989, 2) the fall of the Berlin Wall on November 9, 1989, and most importantly 3) the dissolution of the Soviet Union on December 26, 1991.

These events shook & shocked the world, as new markets were being opened for capitalist exploitation. This is when (& why) Wall Street speculation & US militarism started going really crazy, as they saw an open playing field. In Iraq & Serbia, for instance. The only way we can get out of this mess, is to understand how we got into it.

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