back to article Winklevoss twins back in hot water after NY AG sues over $1B cryptocurrency fraud

New York's Attorney General Letitia James is going after cryptocurrency shenanigans and the Gemini Trust Company, set up by the Winklevoss twins who claimed to have inspired Facebook, is one of those in the firing line. Cryptocurrency trading corp Gemini, financial firm Genesis Global Capital, and parent Digital Currency Group …

  1. Eclectic Man Silver badge

    Crypto Currency

    I have never understood what thing of genuine value backed crypto currencies. So although I have not made scullions of dollars investing in them, I've not lost money either. Can anyone explain, in words a simple Pure Mathematics PhD can understand, how they work?

    1. Anonymous Coward
      Anonymous Coward

      Re: Crypto Currency

      Fiat currency is backed by faith in government, cryptocurrency is backed by faith in hucksters.

      1. Ian 55

        Re: Crypto Currency

        Not so much 'faith in government' as 'faith in the ability of government to raise income via taxes, by force if necessary'.

    2. Zack Mollusc

      Re: Crypto Currency

      Something something blockchain something distributed ledger something.

      If that isn't enough for you to invest your life savings, perhaps cryptocurrency is not for you.

      edit spelling

    3. vtcodger Silver badge

      Re: Crypto Currency

      Can anyone explain, in words a simple Pure Mathematics PhD can understand, how they work?

      The Reader's Digest condensed version: They don't work

      The Full Version: "Assume an infinite population of greedy and not especially bright entities known as investors(=Greater Fools--GFs for short) who have a property known as wealth. Assume that some investors can be persuaded to exchange wealth for entities called magic beans(MB for short) based on the premise that MBs (which can be, but are not required to be, tangible) can always be freely interchanged with wealth at an attractive rate. i.e the quantity ((1+MB/W)**time) is continuous, and always greater than one. Or, in lay terms, "There will always be a greater fool who will buy your MBs for more than you paid for them". Doesn't work. The problem? The supply of Greater Fools is large. But it is, everywhere and always, finite.

      1. Michael Wojcik Silver badge

        Re: Crypto Currency

        More importantly, the supply of Greater Fools who still have money is not only finite but sufficiently tightly bounded that the whole thing is likely to collapse before you get out. A lot of broke Greater Fools running around won't help you.

        Obviously some people do get out early and reap the rewards, but in general people have trouble knowing when to quit.

        And, of course, some people have some sort of mysterious reservation about taking a grandmother's life savings, even if she "should know better", and would rather not play the game at all.

    4. Sorry that handle is already taken. Silver badge

      Re: Crypto Currency

      They don't say it much any more but coiners used to like the glib "Backed By Math". It never made any sense, of course.

    5. WayneS

      Re: Crypto Currency

      Fiat currencies are backed by only by trust in the fiat economy - there is no real 'backing value' for a fiat currency. The reserve bank creates currency to buy some kind of bond - often from government treasury, but equally from financial institutions. There is no 'backing' value per se - other than the future promise expressed in a bond.

      The problem is people still think in the original currency value terms - how many <insert currency here> for my crypto-coin? Until we can live a real life, in the real world, using crypto as the value exchange mechanism, this mindset of crypto not having its own inherent usefulness will persist. And people will get burnt as they ride the wild waves of unregulated currency supplies and dependence on exchange rates.

      1. Eclectic Man Silver badge

        Re: Crypto Currency

        So, basically, while everyone believes in it, it works (i.e., has 'value'), but as soon as someone stops believing in it, it stops working and is worthless?

    6. doublelayer Silver badge

      Re: Crypto Currency

      Basic "what backs this currency" chart:

      Specie currency:

      What backs it: Gold or some other rare metal, and the hope that it continues to be rare and desirable.

      What can break it: Someone finds a new richer source of the metal or just finds a lot of it. Other valuable metals are found and people start wanting both gold and platinum, decreasing the price for one.

      Fiat, normal currencies:

      What backs it: The government's willingness to keep the supply of money relatively constrained and only print it when economic conditions justify it, not when they find a use for free money. If they're doing it correctly, its supply should be somewhat based on the ability of the economy to produce stuff of value.

      What can break it: Someone not knowing what they're doing or a government that wants to spend right now at the cost of having a massive economic problem about ten years from now.

      Cryptocurrencies with spec-limited supply:

      What backs it: The fact that there is a finite supply of it around and that the code doesn't allow anyone to easily create more, usually tying some difficult process to creation which may have a limit. Bitcoin is an example of this.

      What can break it: People deciding they don't want to use it, either because they don't think it's worth something or they want to replace it with something else.

      Cryptocurrency without limits in the spec:

      What backs it: Trust in the creator, who you don't know, and by creator I mean the person who wrote the code, not the maybe more famous guy hocking it. In other words, nothing.

      What can break it: It was designed to break when someone has given the creator enough of a real currency to do a runner. If you're lucky, he doesn't manage to complete the runner.

  2. Claverhouse Silver badge
    Meh

    What Becomes of the Broken-Hearted ?

    The complaint cites several victims, including a 73-year-old grandmother who, along with her husband, lost $199,000 invested in Gemini Earn that she had hoped to use to pay for the education of her grandchildren.

    And this only touches the surface. Billions of OAPs in Britain and Europe and All the Russias must have invested their odd $200k's in cryptocurrency naturally trusting in eBrochures.

    1. simonlb Silver badge
      Facepalm

      Re: What Becomes of the Broken-Hearted ?

      "Are you going to be able to give us our money any time soon? I am crying all day. I am 73 years old and without that money I am doomed."

      No sympathy here. Although that is a fair bit of cash, unless someone held a gun to her head to force her to participate, then she needs to accept responsibility for her actions and that she will almost certainly never see that money again. The same as everyone else who got scammed and is now well out of pocket.

      Crypto is a scam pure and simple, but there seems to be no end of idiots who keep throwing money at schemes related to it.

      Never gamble more than you can afford to lose.

      1. Ian 55

        Re: What Becomes of the Broken-Hearted ?

        The usual fault of reporting is to say "invested" when "gambled" would be more accurate, but the regulators allowed companies like these to call it an "investment".

      2. Michael Wojcik Silver badge

        Re: What Becomes of the Broken-Hearted ?

        Nice victim-blaming you have there. Seems a bit harsh for those who, unlike you, are not perfect.

  3. Anonymous Coward
    Anonymous Coward

    What a shame they'll either do no prison time or. If they do, they'll serve it in a country club somewhere

    1. Michael Wojcik Silver badge

      Yes, prison is such a lark. Always fun to see the incarceration-fetishists complaining that prison sentences are too light.

  4. Sceptic Tank Silver badge
    Headmaster

    Should I repeat myself?

    This is 2023. Calling it cryptocurrency fraud is tautology.

  5. Anonymous Coward
    Anonymous Coward

    social media platform then known as Twitter

    Please call it "the social media platform formerly known as Twitter" then let the readers suggest a special symbol for it.

    (with apologies to the Purple One)

    1. simonlb Silver badge
      Pint

      Re: social media platform then known as Twitter

      let the readers suggest a special symbol for it

      Poop emoji anyone?

  6. richdin

    My grandfather always said that there were three kinds of markets

    Bull Market, Bear Market and PIG Market

  7. Anonymous Coward
    Anonymous Coward

    Greed breeds needs

    Stop

    Look

    Listen

    Unless your money is easier to come by than mine

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