2 min readCarl Sagan, never the least poetic among us, once wrote in The Demon-Haunted World: “It is far better to grasp the Universe as it really is than to persist in delusion, however satisfying and reassuring.”
It might be time to follow his advice and stop pretending the crypto industry is truly maturing. I’ll admit it, I’ve probably been delusional about that myself.
This past week has been particularly frustrating, mostly because of the same familiar names and companies. First, we saw Paxos — the issuer behind PayPal’s stablecoin — accidentally mint $300 trillion worth of PYUSD, more than twice the size of the global GDP. The company, of course, acknowledged the error and burned the tokens, but such a rookie mistake hardly inspires confidence, especially from an industry that constantly insists its assets are fully backed by “real” U.S. dollars.
Then came another episode of public drama. Leaders from Binance (CZ and Yi He), Coinbase’s Base network (Jesse Pollak), and MEXC (Cecilia Hsueh) argued on social media over listing fees and requirements, after Limitless founder CJ Hetherington revealed Binance’s excessive demands for project listings. It was an open secret finally dragged into the light, yet another reminder that transparency is still not part of crypto’s culture, even though the technology itself is built on openness.
A new arc for Sam Bankman-Fried
As if that weren’t enough, the week also saw the start of a PR campaign to rehabilitate Sam Bankman-Fried, nearly three years after FTX’s collapse. The disgraced founder is preparing an appeal, now claiming the exchange was actually solvent. Several figures, including Laura Loomer and former FTX general counsel Ryne Miller, have pushed back. Miller was clear on X:
“That week in November 2022, assets on hand were nowhere near adequate, and the founders were fabricating asset lists while desperately chasing new investors. The coins were gone, folks. Your coins were gone. That’s why bankruptcy happened.”
Unfortunately, real-life events are not recorded on blockchain and crypto’s memory tends to be short. The industry offers not only second chances for its bad actors, but third, fourth, and sometimes more. Founders can launch token after token, with little concern for sustainability or accountability.
Finally, the memecoin platform Pump.fun found itself featured on Fox News, reportedly “under scrutiny” for promoting pump-and-dump schemes. The site even hosts a livestream where users try to go viral, usually by being outrageous, to boost their tokens. Despite this circus atmosphere, the platform has raised $1.2 billion through private rounds and a public token sale.
In some ways, it’s astonishing to see major crypto players still behaving as if it were the Wild West, while traditional finance, for all its flaws, endures exhausting yet necessary layers of compliance to protect investors. Perhaps the recent wave of liquidations will help flush out some of the more careless actors: some crypto-native exchanges, for instance, are under scrutiny amid suspicions they may be trading against their own customers. These same players list dozens of new coins each week with almost no due diligence, while far stricter rules apply to the launch of new ETPs. Hidden behind an image of innovation, many of these actors operate in remarkably primitive ways. Fortunately, it won’t last. As we’ve seen with the arrival of BlackRock and Fidelity — and soon Amundi, and perhaps even Vanguard — the adults are finally entering the room. That’s a welcome development: Bitcoin and crypto are remarkable innovations that deserve better than to be tainted by what increasingly resembles a new generation of bootleg operators.
