“There’s a sucker born every minute.”

— Phineas Taylor Barnum
The Prince of Humbugs

I confess I don’t understand cryptocurrency.

That’s not entirely true. When I was working with Jennifer Robertson to help write her 2022 memoir, Bitcoin Widow, I wasted far more hours than I will ever see again trying to understand this odd, ethereal, decentralized digital currency you can transfer between virtual and real money on a peer-to-peer network whose transactions are safe, verified by a ledger known as a blockchain… and yada yada yada. I dipped my toe into bitcoin’s origin story — a 2008 white paper written by its inventor, Satoshi Nakamoto, who may be one person, or many, or no one at all. I submerged myself in the intricacies of hot wallets, cold wallets, bitcoin exchanges and all the rest.

But as soon as the book was finished, I erased all that useless knowledge from my personal mental memory bank and replaced it with the latest sports scores and other information that mattered.

That’s not entirely true either. There were some revelations I couldn’t unlearn.

Starting with the stunning, stunned eagerness of so many otherwise sensible people to invest in a currency they not only couldn’t hold in their hands but a currency that was also — and this has always been one of its key selling points — beyond the control of governments or regulators to govern or regulate.

And then, their equally rabid eagerness to blame anyone but themselves when their life savings disappeared — as they so often did — into a black hole peopled by greedy incompetents, criminal gangs and nefarious scam artists.

Jennifer Robertson, for example, was vilified and had her life threatened in vile ways by angry investors when Quadriga CX, her husband’s new-fangled, get rich, can’t miss, magic beans on the internet investment opportunity turned out to be an old-fashioned Ponzi scheme.

After Gerald Cotton, then just 30, died unexpectedly from complications of Crohn’s Disease while on honeymoon with Robertson in India in December 2018, the scam collapsed. More than 100,000 investors lost a collective total of more than $400 million.

Perhaps not surprisingly, few blamed themselves for not doing their own due diligence before investing in a company run by a young man with a history of scamming in an industry overseen by no one.

Instead, many quickly connected all their own discontent and disconnected dots back to the widow.

Although Robertson and Cotton had been living together for four years, they only got married a few months before his “death,” and had left on their honeymoon almost immediately after signing their wills…

Suspicious…

They’d lived the lavish life of the nouveau rich, buying houses and real estate, spending on ever more expensive cars, boats, planes, baubles, traveling to exotic destinations, fueling it all with cash and more cash.

How could she have not known?

How could he have “died” from a manageable disease at such a young age? …

He wasn’t dead! He’d disappeared with his investors’ money and was hanging out on a beach on some extradition-free island somewhere.

She was in on it and was planning to join him there.

No, wait, she killed him. She knows where the money is. She deserves to die…

Gerald Cotton died — no quotation marks — four years ago this month. He hasn’t magically resurrected or washed up on a beach somewhere with bags of cash and a triumphant smile.

For her part, Jennifer Robertson voluntarily agreed to turn over to Quadriga’s bankruptcy trustee assets she belatedly realized were the ill-gotten gains of her late husband’s scams, including her own engagement ring. She moved into her father’s attic, went back to school, earned her education degree and is now a single mother raising a child on her own.

The reality for the Quadriga conspiracy theorists — though many still refuse to accept it — is that there was never any there there.

I couldn’t help thinking about that — and the need for villains other than themselves — as I read about last month’s even more spectacular collapse of FTX, yet another cryptocurrency exchange run by yet another thirty-year-old wunderkind named Sam Bankman-Fried that suckered more than a million investors.

In less than three years, FTX — perhaps not surprisingly incorporated in Antigua and Barbuda, headquartered in the Bahamas — became one of the biggest cryptocurrency exchanges in the world.

SBF, as Bankman-Fried himself liked to be known, almost instantly became a celebrated philanthropist, a Democratic donor fixture in Washington and “a billionaire refreshingly unimpressed by the glitz and pomp of a typical billionaire’s lifestyle.” At one point, he had apparently even advocated for a crypto regulatory framework to oversee the cyrpto industry.

Until…

Last month, the Wall Street Journal reported Bankman-Fried may have illegally taken about $10 billion in FTX customers’ funds for his trading firm, Alameda Research, another card in his collapsing financial house.

“In less than a week,” reported the New York Times…

… the cryptocurrency billionaire Sam Bankman-Fried went from industry leader to industry villain, lost most of his fortune, saw his $32 billion company plunge into bankruptcy and became the target of investigations by the Securities and Exchange Commission and the Justice Department…

The empire built by Mr. Bankman-Fried, who was once compared to titans of finance like John Pierpont Morgan and Warren Buffett, collapsed last week after a run on deposits left his crypto exchange, FTX, with an $8 billion shortfall, forcing the firm to file for bankruptcy. The damage has rippled across the industry, destabilizing other crypto companies and sowing widespread distrust of the technology.

John Ray III, a lawyer with over 40 years of legal and corporate restructuring experience who’d been appointed to shepherd  FTX through its bankruptcy, reported he had:

“never in my career… seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Except it has happened before.

As happened after the collapse of Quadriga and other crypto calamities, there have been calls, including now from US Treasury Secretary Janet Yellen, to regulate the wild west crypto market. (Bankman-Fried, by the way, confessed to Vox his own support for crypto regulation was “just PR” and his discussions on ethics within the industry were at least partly a front.) The problem, of course, is that that lack of regulation continues to be a key part of crypto’s allure.

Investors will continue to dream big and fail bigger. And then look for others to blame.

***

A version of this column originally appeared in the Halifax Examiner. 

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