Crypto DeFined Recap: Author David Gerard Warns Of More Pain In Crypto World
By Kathy Chu, TruthDAO
Crypto skeptic David Gerard has been warning for years about how excesses in the industry could wreck investors.
Some of these excesses were apparent this week when DeFi lending platform Celsius Network — which promised yields as high as 18.63% in return for deposits — froze withdrawals for its 1.7 million customers. Celsius’ troubles come a month after the meltdown of the TerraUSD algorithmic stablecoin, which de-pegged from the U.S. dollar and dragged down sister currency Luna.
Gerard is the author of “Attack of the 50-Foot Blockchain” and “Libra Shrugged: How Facebook Tried to Take Over the Money.” He also has a blog named after his book, Attack of the 50-Foot Blockchain. He spoke with TruthDAO's "Crypto DeFined” on June 16 about why he expects more crypto firms to falter and why he believes regulators failed investors.
Gerard’s top five quotes (edited for clarity):
Crypto troubles reminiscent of 2008 financial crisis. “The Terra Luna crash was very much like the 2008 financial crisis except on a smaller scale, in crypto. We had a token priced in dollars. That’s exactly what collapsed in 2008. Money market funds had pseudo dollars which they’d constructed out of investments in houses…the moment the housing market went down even slightly, the whole house of cards collapsed.”
More crypto firms will collapse. “Everyone is just wondering which systemic player is going to collapse next, because smaller players are already getting blown away.”
Bitcoin investors are out of luck. “When you bought bitcoin, that's when your money took wings and flew over the horizon, never to be seen again.”
Ignore get-rich pitches. “The thing about crypto, the big marketing promise… has been, get into crypto, you can get rich without working for it. I’m over here saying there’s no such thing as a get rich scheme. Two and 2 make 4. It doesn’t make 5 or 10 or a million.”
Regulators, step up. “If regulators are at fault, they’re at fault for not shutting these systems down a year ago, and for not taking action for so long. Celsius ran as a shadow bank investment firm hedge fund sort of thing where investors had no protections whatsoever.”
You can watch a replay of the full interview here.