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Roubini says 99% of crypto is a scam – ‘you have to stay away’

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Roubini says 99% of crypto is a scam – ‘you have to stay away’

Roubini says 99% of crypto is a scam – ‘you have to stay away’ Samuel Wan · 10 hours ago · 2 min read

Speaking from Davos, Nouriel Roubini renewed his attack on cryptocurrency and considering the events of 2022, even crypto advocates are starting to agree with him.

2 min read

Updated: January 19, 2023 at 11:34 am

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Cover art/illustration via CryptoSlate

Nouriel Roubini renewed his objections to crypto, warning people to stay away as 99% of it is a scam.

“FTX, SBF are not an exception; they are a rule. Nearly 99% of crypto is a scam, criminal activity, bubble, Ponzi scheme. It’s going bust.”

Roubini has a long history of voicing negative opinions about digital assets. For example, as reported by CryptoSlate over two years ago, the American Economist blasted Bitcoin’s value proposition, saying it had no place in investment portfolios due to its lack of intrinsic value, the prevalence of market manipulation, and extreme price volatility.

Riding on the recent FTX turmoil, Roubini took the opportunity to restate his negativity towards the cryptocurrency sector. But does he have a point?

Crypto is a scam

Speaking to Yahoo Finance from Davos, Roubini explained that millions of disadvantaged individuals, including “young people, people who have lower incomes, or minorities,” were suckered into buying Bitcoin at the top.

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“Most of them got FOMO in 2021 when it skyrocketed to 20, to 30, to 50, to 69 [thousand dollars], and 99% of them bought well above the current market value. So they lost their shirts.”

Continuing, he said, “that’s just Bitcoin alone,” and that altcoins had fared much worse during the bear cycle, with some losing “95%” in value. Further, of the “20,000 ICOs,” “officially, 80% were a scam, and another 17% have gone to zero,” and the people behind them belong in jail.

When pressed on the value of blockchain and Distributed Ledger Technology (DLT) over cryptocurrency, Roubini said he remained skeptical because it is overhyped technology that cannot deliver on its promise of trustlessness without some centralized and accredited input.

Giving the example of using DLT to verify organic tomatoes, Roubini said that the process still needs people to verify the farms are using organic cultivation methods and further verification that the products in the store are the same as what was verified on the farm.

“After you’ve tested it and you’ve made sure the tomatoes are organic, you can put it on a centralized database that is as good and cheaper than DLT. So the idea that DLT can create trust is impossible because, in reality, you always need some credible institution that validates transactions.”

Is Roubini right?

The accuracy of Roubini’s percentage data is questionable, as is his lax use of the term “ICOs,” which faded away in 2019 due to the term’s association with rug pulls.

However, considering the events of 2022, even the most diehard crypto supporters would concede he has a point.

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The most upvoted comment in a cryptocurrency Reddit post discussing the interview agreed with Roubini’s general premise on the prevalence of scams.

“Basically yes. With 100-1000 tokens released every day and rugged a few minutes – hours after it could be more than 90%.”

Most other comments echoed that view, with one saying a 99% scam rate is a conservative estimate.

Legal

Craig Wright loses U.K. case as judge rules Bitcoin file format can’t be copyrighted

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Craig Wright loses U.K. case as judge rules Bitcoin file format can’t be copyrighted

Craig Wright loses U.K. case as judge rules Bitcoin file format can’t be copyrighted Mike Dalton · 7 seconds ago · 2 min read

Wright won’t be able to restrict the operation of Bitcoin and Bitcoin Cash.

2 min read

Updated: February 9, 2023 at 12:48 am

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Craig Wright has lost a case in the U.K. that could have allowed him to prevent the operation of Bitcoin and Bitcoin Cash, as seen in a Feb. 7 court filing.

In his claim, Wright argued that Bitcoin SV — his minority fork of Bitcoin — is the original version of the Bitcoin blockchain. He argued that Bitcoin and Bitcoin Cash re-use elements of Bitcoin to which he owns the rights whenever their software is executed. Wright, therefore, aimed to prevent the operation of those two chains.

Wright additionally claimed that the inclusion of the Bitcoin whitepaper in block 230,009 of Bitcoin and Bitcoin Cash violates his copyright.

Judge James Mellor said that although Wright’s copyright claims over the Bitcoin whitepaper “raise serious issues to be tried,” today’s judgment only concerns whether Wright’s claims over Bitcoin’s file format constitute a serious issue to be tried.

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Judge Mellor recognized Wright’s attempts to apply copyright to the Bitcoin File Format as a literary work. The judge noted that the term “literary work” could include a wide variety of subject matter, including computer software and non-human readable data.

However, it does not apply in this case. Judge Mellor said that, based on the evidence, merely running a Bitcoin node to create a new block in the Bitcoin File Format does not meet fixation or sufficient identifiability requirements. Copyright law cannot be applied to something whose “subject matter which is not expressed or fixed anywhere,” he said.

Judge Mellor said that to prevent default judgments against defendants, amended claims from Wright must remove references to copyright infringement on the Bitcoin File Format. Mellor additionally denied Wright permission to appeal today’s decision; Wright will first need to gain court permission if he wishes to do so.

Wright has repeatedly claimed that he is the creator of Bitcoin and the individual behind the pseudonym Satoshi Nakamoto.

Today’s case (IL-2022-000069) represents one of Wright’s many attempts to assert control over the Bitcoin landscape. It is separate from another case (BL-2021-000313) in which Wright intends to sue various Bitcoin developers on similar grounds. On Feb. 3, Judge Colin Birss in London’s Court of Appeals allowed the latter case to go to trial.

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The latter case alleges that developers owe Wright an amount of Bitcoin — currently 111,000 BTC or $2.5 billion. No reference to any sum was made in today’s judgment.

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People

Korean authorities confirm search for Do Kwon

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Korean authorities confirm search for Do Kwon

Korean authorities confirm search for Do Kwon Samuel Wan · 9 seconds ago · 2 min read

Korean authorities confirmed traveling to Serbia in search of Do Kwon last week, but did not comment further.

2 min read

Updated: February 8, 2023 at 10:52 am

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Cover art/illustration via CryptoSlate

Korean officials traveled to Serbia last week in search of Do Kwon, according to Bloomberg.

The Prosecutor’s Office in Seoul confirmed that a delegation — including a member of the Justice Ministry — had made the trip, according to the Bloomberg report.

Authorities are seeking Do Kwon over the $60 billion collapse of the Terra ecosystem, according to the report. The co-founder of Terraform Labs faces multiple allegations of wrongdoing, including siphoning users’ funds and using shell companies to evade taxes.

Speaking to the Unchained Podcast in October 2022, Do Kwon said cryptocurrencies are not securities and fall outside authorities’ jurisdiction.

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During the interview, he neither confirmed nor denied residing in Singapore — where Terraform Labs is incorporated. When pushed further on his whereabouts, Kwon refused to answer the question.

Intelligence points to Serbian location

In September 2022, Korean officials issued an arrest warrant for Do Kwon on charges of breaching the Capital Markets Act (CMA). Rumors were that he was on the run and had already fled Singapore at that time.

On Nov. 3, 2022, Kwon shot down talk of hiding by tweeting about an up-and-coming meetup. He signed off by inviting cops to join. In a follow-up tweet, Do Kwon said he would pay for attendees’ plane tickets. “Show up if you dare,” he wrote.

“Alright ill throw a meetup/conference soon to get over this in hiding bs

Cops from world over welcome to attend”

It was thought Do Kwon had traveled to Dubai from Singapore, then to Serbia.

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South Korea and Serbia do not have an extradition treaty. However, the two countries have cooperated in the past under the European Convention on Extradition.

Is the net closing in on Do Kwon?

The frequency of Do Kwon’s tweets has reached a noticeable low.

His most recent tweet — dated Feb. 1 — was a response to the founder of BlockTower Capital, Ari Paul, who asked if the stolen money had been returned.

Do Kwon replied:

I find that Twitter is a good place for rumors but poor place to get facts

I’ve stolen no money and never had “secret cashouts” – happy to address specific allegations

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In any case, good day to you

Do Kwon’s rumored location in Serbia has been public knowledge since December 2022. Questions arise as to why the Korean delegation made the trip last week.

Other than confirming that a party arrived in Serbia, officials declined to comment further.

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Legal

Elon Musk cleared in trial over Tesla tweets

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Elon Musk cleared in trial over Tesla tweets

Elon Musk cleared in trial over Tesla tweets Mike Dalton · 5 hours ago · 2 min read

The Tesla CEO was found not liable in a case that accused him of securities fraud.

2 min read

Updated: February 4, 2023 at 12:26 am

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Cover art/illustration via CryptoSlate

Members of a jury have cleared Tesla CEO Elon Musk in a case that accused him of securities fraud, according to a report from CNBC on Feb. 3.

Jury declares Musk not liable

Shareholders initially sued Musk over several tweets dating back to August 2018. At that time, Musk said that he had secured funding to take Tesla private at $420 per share and said investor support was confirmed. Public trading for Tesla stock was temporarily suspended, seemingly confirming Musk’s plans.

Musk also published a letter on the official Tesla website. In that letter (and in his original tweets), Musk said the deal was not final but stated that he was considering it.

Musk’s attorney said that the Tesla CEO did not think ahead and realize how his comments could be interpreted. He analyzed Musk’s statements today, stating:

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“You have to assess this in context – he’s considering taking it private and the issue is will it actually take it forward … No fraud has ever been built on the back of a consideration.”

According to earlier reports from Reuters, Musk said during the trial that he believed his tweets were honest. He said that he had arranged a verbal commitment with Saudi Arabia’s sovereign wealth fund and that the fund backed out of the deal.

Shareholders alleged that, because Musk ultimately did not take the company private, they made investment decisions based on false information. This supposedly cost them significant money due to changes in Tesla’s stock value.

Members of the jury disagreed that this constituted securities fraud, as they declared Musk not liable after two hours of discussion today.

Tesla shares (TSLA) are up 0.91% today.

Musk’s controversial impact on crypto

Musk’s lawyer highlighted the CEO’s controversial reputation by stating during the trial that his client is not a “tweeting monster.”

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Musk’s presence on Twitter has become similarly divisive within the cryptocurrency community. Musk and his companies were sued for $258 billion in 2022 over his alleged role in propping up Dogecoin in his tweets. That lawsuit has yet not concluded. It expanded to include more members in September.

Musk has not faced any lawsuits over his influence on the price of Bitcoin — which he only influences to a non-significant degree, according to recent studies.

Today’s news comes days after Tesla’s investor report revealed that the company saw a $140 million loss on its Bitcoin investments in 2022.

Tesla invested $1.5 billion into Bitcoin in 2021 and sold off 75% of its holdings last year. It now holds $184 million of Bitcoin due to that sell-off and due to price changes.

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