Over the weekend, another unregulated Crypto Currency Firm, BlockFI filed for bankruptcy, with over 100,000 creditors, and with potential liabilities between One Billion to Ten Billion Dollars.
Now joining the growing ranks of other unregulated firms such as FTX and its sister trading house, Alameda Research, and other firms like Voyager, Celsius, and Three Arrow Capital which all seem to have desolved overnight, leaving their investors with empty Holiday Stockings.
How can firms like BlockFi and FTX go from recent valuations of $4.8 Billion to zippo, overnight? I can understand how the general public was sucked into these money cesspools, but how did they attract the money and prestige of very sophisticated investors, who claimed that they had done a thorough “due dilligence” study before investing?
How many times do investors have to be reminded of that old maxim, “If it sounds to good to be true, it probably is.”
Now many readers, who have avoided investing in these probable frauds and Ponzi schemes, are asking could these financial explosions in the crypto world impact their retirement funds?
I hope not, but reading of stock market history suggests to me that there could be a degree of contagen as the politicians have constantly refused to address the growing imbalances between Wall Street’s desire for new products, and profits, and less regulation, has probably worn down many of the safeguards that use to protect the public.
To think that billions of dollars of so-called assets can vaporize in days should be a warning to all. Do you know what your hedge fund, or ETF, or Money Manager is doing to produce those above average returns?
Personally I think we will see more dominoes fall over the coming weeks. So I continue to believe short term Treasury Bills, or cash, or both is a good portfolio option. Maybe, this is a good time to let your money rest, not working to get maximum returns.
As the comedian Jerry Seinfeld once reminded us: “It is the Return Of your money that is more important than the Return On your money”.
Of course this is one observer’s unfiltered opinions, and is not investment advice. I leave that to the “professionals” you have hired to help you manage your money.