18. Distrust in the Crypto market

During the last decade, the new asset class of crypto currency has multiplied the opportunity to scam and take advantage of the investing user through deceitful pyramid schemes. The vulnerable demographic affected by these frauds is the middle/lower class in third world countries with political instability and weak monetary and fiscal policies. The outcome is the debasement of the local currency and eradication of generations of savings. The lack of regulation in this new asset class has led to massive market manipulation. The handful of exchange platforms that control the market encourage high risk trading by enticing users with appealing and irresponsible leverage options. This “get rich overnight” dream has led to major losses and is a key role in the current distrust in the crypto market.

Unfortunately, technology does not always guarantee fairness, and the most vulnerable end up being the less fortunate. When markets and economies crashed in the past, before the introduction of the digital era, the small investors and lower income individuals have suffered the largest losses. Large institutions are privileged enough to be bailed out of crisis situations and are salvaged from the consequences of economical predicaments while most of the smaller investors are left unprotected. Fortunately, decentralization offer a solution for this defenseless silent majority, especially third world and emerging countries where technology is their only exposure to first world investments opportunities and assets beyond their borders. It is important to highlight that even if these modern technologies allow citizens to bypass the corruption and economical failures that results in hyper-devaluation, digital assets are reliant on the ethical and moral standards of the investment platforms. Like traditional markets, we witness market manipulation and rug pulls in emerging digital platforms as well, and again, consequences affect mostly small investors. The infamous ONE-COIN Ponzi scheme orchestrated by Dr.Ruja, aka Crypto Queen, who told investors OneCoin could be mined and had actual value, but in fact, it did not exist on a blockchain and its value was manipulated by the automatic generation of new coins. Most of the investment came from low-income individuals from third world countries who were promised a better future and high returns. A more recent example is the overnight collapse of the stable coin LUNA, from TerraLabs in Singapore. The coin lost 30 billion dollars’ worth of investment money, everyone involved with the coin saw their life savings wiped out. These market manipulations are only possible because of the power large coin holders, known as whales, have within the current trading platforms. The power of few has control over the fate of all in today’s digital investment spaces.

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