Bitcoin a Ponzi Scheme, Fraud: Marathon’s Richards Feb.25 (Bloomberg) -- Bruce Richards, CEO at Marathon Asset Management, explains why he views Bitcoin as a Ponzi scheme and fraud on Bloomberg Television’s “Market Makers.” Most Recent VideosThe Rise of Cryptocurrency Ponzi Schemes Scammers are making big money off people who want in on the latest digital gold rush but don’t understand how the technology works.Technology Share Tweet … Last month, the technology developer Gnosis sold $12.5 million worth of “GNO,” its in-house digital currency, in 12 minutes.The April 24 sale, intended to fund development of an advanced prediction market, got admiring coverage from Forbes and The Wall Street Journal.On the same day, in an exurb of Mumbai, a company called OneCoin was in the midst of a sales pitch for its own digital currency when financial enforcement officers raided the meeting, jailing 18 OneCoin representatives and ultimately seizing more than $2 million in investor funds.

Multiple national authorities have now described OneCoin, which pitched itself as the next Bitcoin, as a Ponzi scheme; by the time of the Mumbai bust, it had already moved at least $350 million in allegedly scammed funds through a payment processor in Germany.These two projects—one trumpeted as an innovative success, the other targeted as a criminal conspiracy—claimed to be doing essentially the same thing.In the last two months alone, more than two dozen companies building on the “blockchain” technology pioneered by Bitcoin have launched what are known as Initial Coin Offerings to raise operating capital.The hype around blockchain technology is turning ICOs into the next digital gold rush: According to the research firm Smith and Crown, ICOs raised $27.6 million in the first two weeks of May alone.Unlike IPOs, however, ICOs are catnip for scammers.They are not formally regulated by any financial authority, and exist in an ecosystem with few checks and balances.OneCoin loudly trumpeted its use of blockchain technology, but holes in that claim were visible long before international law enforcement took notice.

Whereas Gnosis had experienced engineers, endorsements from known experts, and an operational version of their software, OneCoin was led and promoted by known fraudsters waving fake credentials.According to a respected blockchain engineer who was offered a position as OneCoin’s Chief Technology Officer, OneCoin’s “blockchain” consisted of little more than a glorified Excel spreadsheet and a fugazi portal that displayed demonstrably fake transactions.And yet, OneCoin attracted hundreds of millions of dollars more than Gnosis.The company seems to have targeted a global category of aspirational investors who noticed the breathless coverage and booming valuations of cryptocurrencies and blockchain companies, but weren’t savvy enough to understand the difference between the real thing and a sham.Left unchecked, this growing crypto-mania could be hugely destructive to one of the most promising technologies of the 21st century.* * *This danger exists in large part because grasping even the basics of blockchain technology remains daunting for non-specialists.

In a nutshell, blockchains link together a global swarm of servers that hosts thousands of copies of the system’s transaction records.Server operators constantly monitor one another’s records, meaning that to steal money or otherwise alter the ledger, a hacker would have to compromise many machines across a vast network in one fell swoop.Even as the global banking system faces relentless cyberattacks, the more than $30 billion in value on Bitcoin’s blockchain has proven essentially immune to hacking.That level of security has potential uses far beyond digital money.bitcoin pullbackIntroduced in July of 2015, a platform called Ethereum pioneered the idea of more complex and interactive applications backed by blockchain tech.skt8 bitcoinBecause these systems can’t be altered without the agreement of everyone involved, and maintain incorruptible records of every change, blockchains could eventually streamline sensitive, high-value networks ranging from health records to interbank transfers to remote file storage.bitcoin decimals

Some have called the blockchain “Cloud Computing 3.0.”Using most of these blockchain applications will require owning the digital currencies linked to them—the same digital currencies being sold in all these ICOs.So, for example, to upload your vacation photos to the blockchain cloud-storage service Storj will cost a few Storj tokens.In the long term, demand for services will set the price of each blockchain project’s token.While a traditional stock is a legal claim backed up by regulators and governments, then, the tokens sold in an ICO are deeply embedded in the blockchain software their sale helps create.ethereum stock redditKnowledgeable tech investors are excited by this because, along with the open-source nature of much of the software, it means that ICO-funded projects can, like Bitcoin itself, outlast any single founder or legal entity.bitcoin faucet ios

In a 2016 blog post, Joel Monegro, of the venture capital fund Union Square Ventures, compared owning a blockchain-based asset to owning a piece of digital infrastructure as fundamental as the internet’s TCP/IP protocol.Almost all groups launching ICOs reiterate some version of this idea to potential buyers, in part as a kind of incantation to ward off financial regulators.The thinking is that, if they are selling part of a platform, rather than stakes in any company, they’re not subject to oversight by bodies like the U.S.aplikasi bitcoin di androidSecurities and Exchange Commission.bitcoin papa johnsBut in practice, ICOs are constantly traded across a variety of online marketplaces as buyers breathlessly track their fluctuating prices.bitcoin farm calculator

In this light, they look an awful lot like speculative investments.Buyer expectations may matter more to regulators than technical hair-splitting.Todd Kornfeld, a securities specialist at the law firm Pepper Hamilton, finds precedent in the landmark 1946 case SEC v. W.J.Howey, a Florida orange-growing operation, was selling grove plots and accompanying “service contracts” that paid faraway landowners based on the orange harvest’s success.bitcoin rejestracjaWhen the SEC closed in, Howey argued they were selling real estate and services, not a security.But the Supreme Court ultimately disagreed, establishing what’s known as the Howey test: In essence, if you give someone else money in the hope that their activities will generate a profit on your behalf, you’ve just bought a security, no matter what the seller calls it.Knowledgeable observers tend to agree that some form of regulation is inevitable, and that the term ICO itself—so intentionally close to IPO—is a reckless red flag waved in the SEC’s face.

The SEC declined to comment on any prospective moves to regulate ICOs, but the Ontario Securities Commission has issued an advisory that “assets that are tracked and traded as part of a distributed ledger may be securities, even if they do not represent shares of a company or ownership of an entity.”According to Kornfeld, even those who believe they are conducting ICOs in complete good faith could face serious repercussions when regulators do act, especially if prosecutors think they’ve made misleading statements.“If [prosecutors] think that you’re really bad,” he says.“They can say, hey, you deserve 20 years in jail.”* * *While it’s easy to see the lie in OneCoin’s fictional blockchain, entirely sincere claims about such a nascent sector still can strain the limits of mere optimism.Many experts, for instance, believe that Gnosis’s use of the blockchain to aggregate data could become a widespread backbone technology for managing complex systems from traffic to financial markets.

But the $12.5 million worth of GNO sold in the Gnosis ICO represented only 5 percent of the tokens created for the project, implying a total market value of nearly $300 million.Most tech startups at similar stages are valued at under $5 million.That astronomical early valuation alone could become bait for an aggressive regulator.Many founders of legitimate blockchain projects have chosen to remain anonymous because of this fear, in turn creating more opportunities for scams.Much of the money flowing into these offerings is smart, both in that it comes from knowledgeable insiders, and in a more literal sense: Buying into ICOs almost always requires using either Bitcoin or Ethereum tokens (OneCoin, tellingly, accepted payment in standard currency).Jeff Garzik, a longtime Bitcoin developer who now helps organize ICOs through his company Bloq, thinks their momentum is largely driven by recently minted Bitcoin millionaires looking to diversify their gains.Many of these investors are able to do their own due diligence—evaluating a project’s team, examining demo versions of their software, or scrutinizing their blockchain after launch.But as cryptocurrency becomes more mainstream, ICOs will present greater risks to larger numbers of people.

There are few barriers to participation aside from knowing how to conduct a Bitcoin transaction, and the space mostly lacks the robust independent analysis performed by underwriters in the IPO market, which can help tamp down overoptimism.The risk isn’t just to individual investors; many argue that the mania of the late-1990s internet bubble ultimately slowed the entire sector down by making investors skittish for years afterwards.Imagine how much worse things might have been if the whole thing had been entirely unregulated.Careful regulation, then, could protect blockchain projects from a hugely damaging bust.And the model is genuinely utopian enough to deserve nurturing.Cryptographic tokens effectively make all of a platform’s users part-owners.Anyone selling goods for Bitcoin, for example, has had a chance to benefit from its huge price boost over the past year, while Facebook and Google users have not shared in those companies’ growth.The Gnosis team is taking this very long view.

Their token sale was halted after that furious 12 minutes by an Ethereum-based bot that knew exactly what the fundraising goal was.It even returned more than $1 million to eager buyers who missed the cutoff.Gnosis’s co-founder Martin Koppelman says the company wants to use its remaining tokens not to enrich its creators, but to attract developers and users.That’s similar to the way that Uber has used cash subsidies to recruit riders and drivers, except that once those new recruits hold Gnosis tokens, they will have a serious stake in the platform’s future.Andrew Harnik / AP The Kremlin's Investment in Trump Is Paying Off The president’s policies in office have aligned almost perfectly with Vladimir Putin’s goals.Fifty-four years ago this month, former President John F. Kennedy delivered the “Strategy of Peace,” a powerful address that captured America’s indispensable leadership at the height of the Cold War.Kennedy knew that our country could not guard against the Soviet Union alone, for he believed that “genuine peace must be the product of many nations, the sum of many acts.” Incredibly, the man who now leads the United States seems to find himself locked in an alarming and perilous embrace with the Russian government.

These ties threaten to weaken a system of alliances that have held Russia—and countless other threats to the international community—at bay since the conclusion of the Second World War.Continue Reading Carlos Barria / Reuters What Happens When a Presidency Loses Its Legitimacy?Mounting evidence that Trump’s election was aided by Russian interference presents a challenge to the American system of government—with lasting consequences for democracy.Day by day, revelation after revelation, the legitimacy of the Trump presidency is seeping away.The question of what to do about this loss is becoming ever more urgent and frightening.The already thick cloud of discredit over the Trump presidency thickened deeper Friday, June 23.The Washington Post reported that the CIA told President Obama last year that Vladimir Putin had personally and specifically instructed his intelligence agencies to intervene in the U.S.presidential election to hurt Hillary Clinton and help Donald Trump.

Whether the Trump campaign knowingly coordinated its activities with the Russians remains uncertain.The Trump campaign may have been a wholly passive and unwitting beneficiary.Yes, it’s curious that the Russians allegedly directed their resources to the Rust Belt states also targeted by the Trump campaign.But it’s conceivable they were all just reading the same polls on FiveThirtyEight and RealClearPolitics.Continue Reading AP Watergate Lawyer: I Witnessed Nixon's Downfall—and I've Got a Warning for Trump Richard Ben-Veniste on the uncanny parallels between the scandal he investigated and the controversy over the White House’s alleged links to Russia Watching the national controversy over the White House and Russia unfold, I’m reminded of Karl Marx’s oft-quoted observation: “History repeats itself: first as tragedy, second as farce.” I was a close witness to the national tragedy that was Richard Nixon’s self-inflicted downfall as president, and I’ve recently contemplated whether a repeat of his “Saturday Night Massacre” may already be in the offing.

Given how that incident doomed one president, Trump would do well to resist repeating his predecessor’s mistakes—and avoid his presidency’s descent into a quasi-Watergate parody.The massacre began when Nixon gave the order to fire Watergate Special Prosecutor Archibald Cox, a desperate effort to prevent him from hearing tape-recorded evidence that proved the White House’s involvement in a conspiracy to obstruct the investigation of a break-in at Democratic National Committee headquarters.Nixon’s misuse of executive power backfired, immediately costing him two highly respected members of his administration: Attorney General Elliot Richardson and his deputy William Ruckelshaus, who both resigned rather than follow Nixon’s directive.Third in command at the Justice Department was Solicitor General Robert Bork, who agreed to do the dirty deed and fired Cox.Continue Reading Gene J. Puskar / AP Teenagers Have Stopped Getting Summer Jobs—Why?Most used to work in July and August.

Now the vast majority don’t.Are they being lazy, or strategic?The summer job is considered a rite of passage for the American Teenager.It is a time when tossing newspaper bundles and bussing restaurant tables acts as a rehearsal for weightier adult responsibilities, like bundling investments and bussing dinner-party plates.But in the last few decades, the summer job has been disappearing.In the summer of 1978, 60 percent of teens were working or looking for work.Last summer, just 35 percent were.Why did American teens stop trying to get summer jobs?One typical answer is: They’re just kids, and kids are getting lazier.One can rule out that hypothesis pretty quickly.The number of teens in the workforce has collapsed since 2000, as the graph below shows.But the share of NEETs—young people who are “Neither in Education, Employment, or Training”—has been extraordinarily steady.In fact, it has not budged more than 0.1 percentage point since the late 1990s.Just 7 percent of American teens are NEETs, which is lower than France and about the same as the mean of all advanced economies in the OECD.

The supposed laziness of American teenagers is unchanging and, literally, average.Continue Reading Joe Raedle / Getty Images Why Do Democrats Keep Losing in 2017?The party has made gains in special elections, but continues to fall short of outright victory.A string of special election defeats in each state, and with each one, a missed opportunity to take over a Republican House seat, has left Democrats facing the question: Why does the party keep losing elections, and when will that change?The most obvious reason that Democrats fell short is that the special elections have taken place in conservative strongholds.In each case, Democratic candidates were vying to replace Republicans tapped by the president to serve in his administration, and in districts that Trump won.Despite the unfavorable terrain, Democrats improved on Hillary Clinton’s margin in every district except in Georgia.But if the party wants to take control of the House in 2018, it needs more than just a strong showing in Republican districts.

It needs to win.Continue Reading Lisk Feng What Mormon Family Trees Tell Us About Cancer By searching the church's famed family trees, scientists have tracked down a cancer-causing mutation that came west with a pioneer couple—just in time to save the lives of their great-great-great-great grandchildren.Nobody knew it then, but the genetic mutation came to Utah by wagon with the Hinman family.Lyman Hinman found the Mormon faith in 1840.Amid a surge of religious fervor, he persuaded his wife, Aurelia, and five children to abandon their 21-room Massachusetts house in search of Zion.They went first to Nauvoo, Illinois, where the faith’s prophet and founder, Joseph Smith, was holding forth—until Smith was murdered by a mob and his followers were run out of town.They kept going west and west until there were no towns to be run out of.They boiled elk horns.The children’s mouths erupted in sores from scurvy.Aurelia lost all her teeth.And so did the mutation.Continue Reading All photos courtesy of Alex Tizon and his family My Family’s Slave She lived with us for 56 years.

She raised me and my siblings without pay.I was 11, a typical American kid, before I realized who she was.The ashes filled a black plastic box about the size of a toaster.It weighed three and a half pounds.I put it in a canvas tote bag and packed it in my suitcase this past July for the transpacific flight to Manila.From there I would travel by car to a rural village.When I arrived, I would hand over all that was left of the woman who had spent 56 years as a slave in my family’s household.Continue Reading Kevin Lamarque / Reuters It Took Two to Make Russian Meddling Effective A Washington Post report on 2016 election interference raises the question: What could Obama have done differently?If there is one thing The Washington Post’s story on the Obama administration’s anemic response to Russian meddling in the 2016 election makes clear, it’s that it took two to make the meddling effective.There is a reason the tactics Russia used on the American elections—which are similar to things they’ve done in former Soviet republics and in Europe—are referred to as “asymmetric warfare”: They embody the art of leverage, of doing a lot with a little.

As former Director of National Intelligence James Clapper told Congress in May, the Russians “succeeded beyond their wildest dreams and at minimal cost.” The whole operation, according to Clapper, cost a mere $200 million—a pittance in military spending terms.But the Russians used that money not the way a conventional army would, but the way a band of guerrillas would, feeling around for pressure points, and pressing—or not.Though, as Bloomberg reported this month, the Russians were clearly exploring ways to attack voting infrastructure in parts of the country, it still appears they ultimately decided not to pull the trigger, sticking instead with the hack-and-dump and the manufacturing of fake news.“It was ad hoc,” an Obama administration official told me shortly after the inauguration.“They were kind of throwing spaghetti at the wall and seeing what would stick.” Continue Reading J. Scott Applewhite / AP How the Senate's Health-Care Bill Would Cause Financial Ruin for People With Preexisting Conditions Republicans are going to insist otherwise, but that’s simply not the case.

If there was one goal Senate Republicans had set out to achieve in developing their health bill to show they were less “mean” than their colleagues in the House, it was to take away the House Republicans’ green light for insurers to once again discriminate against those with pre-existing health conditions.Senate Republicans were willing to drive up deductibles and co-pays and be more draconian on Medicaid cuts, but on the one issue of pre-existing conditions they were intent on being less “mean,” as President Trump termed the House bill.Now that the text of the bill has been released, it’s clear that they have failed to achieve that.As they argue for the bill, Republicans are going to claim that it will not allow insurance plans to discriminate against people because they have a pre-existing condition.But that just isn’t the case.The Republican plan may not allow insurers to discriminate against a pre-existing condition through the front door, but they’ve created a backdoor way in.

Continue Reading Justin Renteria Power Causes Brain Damage How leaders lose mental capacities—most notably for reading other people—that were essential to their rise If power were a prescription drug, it would come with a long list of known side effects.It can even make Henry Kissinger believe that he’s sexually magnetic.But can it cause brain damage?When various lawmakers lit into John Stumpf at a congressional hearing last fall, each seemed to find a fresh way to flay the now-former CEO of Wells Fargo for failing to stop some 5,000 employees from setting up phony accounts for customers.But it was Stumpf’s performance that stood out.Here was a man who had risen to the top of the world’s most valuable bank, yet he seemed utterly unable to read a room.Although he apologized, he didn’t appear chastened or remorseful.Nor did he seem defiant or smug or even insincere.He looked disoriented, like a jet-lagged space traveler just arrived from Planet Stumpf, where deference to him is a natural law and 5,000 a commendably small number.