One week ago, as cryptocurrency prices plummeted, Celsius Network – an experimental cryptocurrency bank with more than one million customers that has emerged as a leader in the murky world of decentralized finance, or DeFi – announced it was freezing withdrawals “due to extreme market conditions”.
Earlier this past week, Bitcoin dropped 15% over 24 hours to its lowest value since December 2020. Last month, TerraUSD, a stablecoin – a system that was supposed to perform a lot like a conventional bank account but was backed only by a cryptocurrency called Luna – collapsed, losing 97% of its value in just 24 hours, apparently destroying some investors’ life savings.
Eighty-nine years ago, Franklin D Roosevelt signed into law the Banking Act of 1933 – also known as the Glass-Steagall Act. It separated commercial banking from investment banking – Main Street from Wall Street – to protect people who entrusted their savings to commercial banks from having their money gambled away.
Glass-Steagall’s larger purpose was to put an end to the giant Ponzi scheme that had overtaken the American economy in the 1920s and led to the Great Crash of 1929…
Which brings us to the crypto crash.
I know a few folks who’ve been gambling in crypto since the advent of Bitcoin. I hope they’ve they’ve “taken the money and run”! I know a little bit about Ponzi schemes and 1929. RTFA for the beginning of the discussions coming up in the near future.