Crypto loves socialism – when it suits
PayPal co-founder and major crypto investor David Sacks (pictured in 2014). David Paul Morris—Bloomberg/Getty Images
Satoshi Nakamoto created Bitcoin as a means for people to trade freely without banks or governments, and ever since, crypto has been defined by a libertarian spirit. This includes a lot of chatter on crypto-Twitter about how regulators are corrupt and incompetent, and the popular “money printer go brrrr meme” mocking government leaks.
So it was more than a little ironic when Silicon Valley Bank collapsed to see many former crypto-libertarians screaming that the government had to ride to its rescue. This included David Sacks, a PayPal co-founder and major crypto investor, who spent the weekend stoking warnings on Twitter of disaster unless the feds helped his startup friends who had money in the bank. This led to The Wall Street Journal labeling Sacks and fellow billionaire Bill Ackman as “spreading financial panic.”
The FBI eventually stepped in, of course, and in a big way. On Sunday evening, the Ministry of Finance and other agencies announced measures to raise the ceiling of 250,000 dollars on deposit insurance and ensure that everyone in SVB gets their money back. So Sacks and his friends got what they wanted, even though they likely contributed to the situation that forced the government’s intervention in the first place.
I’m no expert on systemic risk, but the authorities have probably made the right call. Allowing SVB customers to lose their deposits would have caused massive damage to America’s valuable technology sector, and the risk of contagion throughout the economy was real. Still, it’s hard not to be outraged by the bile and hypocrisy of the Silicon Valley elite. This is the same crowd that for years has extolled the virtues of Ayn Rand and condemned all aid to the likes of student loan borrowers, but then called for collectivism when their friends are in trouble. Socialism for us, but not for you, in other words.
To be fair, not all crypto boosters are cheering the FDIC backstop. Some on social media are saying that the SVB debacle shows that Satoshi was right all along – and that we need Bitcoin more than ever to escape the control of big banks and governments. But for every crypto venture capitalist and startup founder who spent the weekend whining about why the government simply had to help them, now would be a great time to learn some humility.
Jeff John Roberts
Hackers stole around $200 million from the DeFi lending platform Euler Finance. (TechCrunch)
Barney Frank, the former Democratic House leader who lent his name to a 2010 financial reform bill, says crypto is being unfairly scapegoated for the current banking turmoil. (Policy)
However, Frank was also one of the supporters of a measure that removed financial “stress tests” for medium-sized banks that Signature and SVB. (NEW)
The Ministry of Justice investigates the collapse of Terra stablecoin, a likely prelude to criminal charges against its founder, Do Kwon. (WSJ)
Meta scrap the support for NFTs on Instagram and Facebook just six months after its US launch (Fortune)
MEME O’ MOMENT
“Crypto Will Be Completely Bankless”: