- The piece discusses the cryptocurrency market and its recent collapses.
- It mentions the downfall of Sam Bankman-Fried's company, FTX, and his arrest for defrauding customers.
- The video also highlights the losses suffered by small investors in the crypto market.
- Three major collapses in the crypto world are examined: Terra, Celsius, and FTX.
- The article emphasizes that every cryptocurrency is based on confidence and belief in its value.
- Terra, founded by Do Kwan, used a complicated system to maintain a stable value but faced a crisis.
- The SEC found that Terra's algorithm did not work as claimed, and the company was saved by a third party's intervention.
- The article concludes by mentioning the panic in the market caused by the destabilization of Terra's price.

- The price of Terra and Luna coins destabilized after big trades, causing panic and their value to drop to essentially 0.
- The founder of Terra, Kwan, faced charges in multiple countries and went on the run before being caught.
- Celsius, a crypto bank, promised high interest rates on deposits but was later found to be making risky loans and using customers' money to pay promised yields.
- Celsius collapsed, leaving customers with trapped digital assets and owing them $4.7 billion.
- FTX, a trading platform, advertised ease of use and attracted celebrities like Steph Curry, but its founder, SBF, engaged in fraudulent practices.
- SBF inflated the price of his own coin, borrowed real money against it, and took money from FTX customers to loan to his hedge fund.
- The collapse of FTX revealed sloppy and poorly run operations, including the use of QuickBooks for record-keeping.

- The piece discusses the incompetence and lack of financial controls in companies like QuickBooks, FTX, and Celsius.
- It highlights the failures and questionable actions of the CEOs and founders of these companies.
- The author mentions other similar scams and warns about the risks of investing in the crypto sector.
- They argue against excessive regulation, as it may give legitimacy to risky investments and expose people to volatility.
- The author suggests being cautious and doing thorough research before investing in crypto.

- The text discusses recent collapses in the cryptocurrency market, including the downfall of FTX and the arrest of its founder.
- It highlights the losses suffered by small investors in the crypto market.
- Three major collapses in the crypto world are examined: Terra, Celsius, and FTX.
- The article emphasizes that confidence and belief in the value of cryptocurrencies are crucial.
- It mentions the crisis faced by Terra and how it was saved by a third party's intervention.
- The panic in the market caused by the destabilization of Terra's price is mentioned.
- The founder of Terra faced charges in multiple countries and was caught after going on the run.
- Celsius collapsed, leaving customers with trapped digital assets and owing them $4.7 billion.
- FTX's fraudulent practices, including inflating the price of its own coin, are discussed.
- The incompetence and lack of financial controls in companies like QuickBooks, FTX, and Celsius are highlighted.
- The author warns about the risks of investing in the crypto sector and suggests caution and thorough research before investing.

John Oliver discusses cryptocurrency, three of the biggest crypto companies to collapse over the past year, and what to do when your office is giving off “crime vibes”. 

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♪♪ Our main story tonight concerns cryptocurrency.

The only word that makes Elon Musk nut immediately.

We first covered crypto 5 years ago when I was 10 years younger.

And since then, a lot has happened, including, unfortunately, this video from just last year promoting the general concept of trading crypto.

Would you like to learn about exchanging cryptocurrency?

-♪ ♪ Because you've got coins from different blockchains and want to do some trading.

I mean, a lot to dislike about that, from her choosing to parody a song by 1 of our greatest singers while having a voice that I can only describe as a no-chair turn, to wearing those earrings which scream, I do my best shopping at airports, to the fact that her name is Randy Zuckerberg, and yes, she is Mark's sister, meaning that, incredibly, she is the cool 1 in that family.

And that wasn't even the only song that she did.

She also did this 1 about how everything with crypto was gonna go great.

We're all gonna make it ♪ Yeah, we're all gonna make it ♪ We're all gonna make it ♪ Everyone

Yep, we're all gonna make it in crypto is a phrase that's aged about as well as, welcome aboard the unsinkable Titanic.

Those videos came out when crypto fever was still near its absolute peak.

Stadiums were getting named after crypto companies.

Matt Damon and LeBron James did commercials for Crypto.com, and celebrities from Larry David to Tom and Giselle pre-divorce but post-love, hyped a crypto exchange called FTX that was run by a 29-year-old supposed genius named Sam Bankman-Fried, aka SBF.

He was on the cover of Forbes and Fortune, with 1 calling him the next Warren Buffett, and others calling him J.

And Sequoia Capital, 1 of the biggest venture capital firms, had a $213 million investment in the company.

But since then, to put it mildly, there has been an implosion, which really broke through to public consciousness just before last Christmas.

In a span of 24 hours, Sam Bankman-Fried was whisked by federal agents in the Bahamas to New York City, where he faced a judge and walked out of a federal courthouse after posting bail on a 250 million dollar bond, which prosecutors believe is 1 of the largest in U.S.

Right, SPF was arrested for defrauding his customers out of billions of dollars.

And to be honest, it seems like the courtroom sketch artist may have been 1 of them, because this is 1 of the rudest illustrations I've ever seen.

The whole innocent until proven guilty thing clearly doesn't apply to the side of the law with the coloring pencils.

SPF's arrest was a big deal, and as his company imploded, some, like CNBC's Jim Cramer, were furious.

We're talking about nearly 4 years of getting away with financial murder, just because they could.

Those are some harsh words there from the squawking parrot on every pirate's shoulder.

Especially as, just a year earlier, Kramer was saying this.

Tonight, we're going to educate ourselves with Sam Bankman-Fried.

Well, Sam, I gotta tell you, it's an honor to have you because I think you're pretty much a visionary.

Yeah, not great, but also not surprising.

After all, this is the same guy that proclaimed that Bear Stearns is fine, literally days before it folded, told his viewers to buy Netflix right before it lost almost 70 percent in 5 months, and once, and this is true, said that Google, Facebook, and Twitter should hire Kevin Spacey as a spokesperson.

Jim Cramer is the only person who could look you in the eye, say, you are going to die tomorrow, and give you an immediate sense of calm, knowing that you're gonna live for another 50 years.

But FTX has been just 1 of the many dominoes that fell in the crypto world.

Over the past 2 years, the market value of all cryptocurrencies fell from around 3000000000000 in late 2021 to around 1000000000000 last year.

And there are small investors who got badly hurt by all of this.

1 in 5 Americans has invested in, traded, or used cryptocurrency.

And you can find countless stories of people losing most of their life savings in the recent implosions, underscoring that everyone in crypto was never actually going to make it, no matter how much Randy Zuckerberg screamed, sang, otherwise.

So tonight, we thought we'd take a look at what has been happening in the world of crypto by looking at 3 of the biggest collapses over the past year.

Each of these companies was founded on the promise that they would replace some part of our financial system.

There is Terra, a cryptocurrency, Celsius, a crypto bank, and FTX, a crypto trading platform.

In theory, they were supposed to be our next dollar, our next Bank of America, and our next stock exchange.

And before we start, we're not gonna be discussing the merits or the technology of the blockchain.

Not watching this show is always a strong option for you.

But just as a reminder, every single crypto coin is just something someone with a laptop made up.

That is true for all of them, like Dogecoin, Catcoin, PandaCoin, FurryCoin, CumRocket, ElonSperm, and MonkeyJizz.

We were going to come up with a fake 1 as a joke, but then we saw MonkeyJizz, and it felt like a hat on a hat.

To the extent any of these coins have value, it's based on whether people believe they do, which often comes down to their confidence in the person or group who made the coin.

And that basic fact makes the crypto business very attractive to a certain type of person.

1 columnist who's covered this intensively sums it up like this.

If you are running a scam, you will be drawn to crypto.

You are running a confidence game, and crypto offers the most efficient market for turning confidence into money.

And the story for all 3 companies that we're going to look at tonight is 1 of confidence gained and then squandered.

Let's start with Terra, which was a cryptocurrency launched in 2018 by a brash South Korean entrepreneur named Do Kwan.

People had faith in Terra, in part, because Kwan exuded confidence.

Here he is on Twitch responding to a question about the volatility of companies in his space.

I wonder how many of these companies you think are entering the space just because it's hot and there's a lot of funding versus the ones that will still be here, you know, like, 2 to 5 years later.

There's also entertainment in watching companies die, too.

I mean, That's pretty cocky, but I guess he is kind of right.

There can be entertainment in watching a company die.

Incidentally, I believe that's the new slogan for Max.

Hey, do you like HBO, but want ads to the Property Brothers and also don't like HBO?

Max, there's entertainment in watching a company die.

-♪ I'm a bad guy, I'm a bad guy, I'm a bad guy, I'm a bad guy ♪ Kwan's company made something called a stable coin.

The idea of which is that unlike something like Bitcoin, it would always be worth a stable amount.

So, 1 unit of terra, or UST, would always equal 1 US dollar.

And the way they guaranteed this was truly absurd, because rather than simply collecting a dollar for every unit of Terra that it issued, which would make sense, it instead tied its value to a different coin, Luna, which it had also made up, and said that it would turn Luna into Terra and Terra into Luna with a special algorithm.

And if that sounds both complicated and stupid to you, it is.

And just know, you don't need to understand anything that's happening here, because it doesn't make sense.

Let's imagine the entire Terra economy as a pool.

The size of the pool is determined by the total supply of UST.

And if less people want UST, the tide falls.

To bring back the water level to $1, we can expand the pool by introducing a new supply of UST.

At Terra, we've designed a machine that swaps $1 worth of Luna to 1 UST.

Okay, imagine if someone came up to you when you were at the ATM and said, give me that money and instead, I'll give you blorps.

And the reason I can guarantee that is, I'll sell as many fleasles as it takes to make that happen.

But if they then said, I do it with a special algorithm, suddenly, you might think that they know something that you don't.

Well, that's basically what happened here.

And to be fair, some people did see the problem with this.

In 2018, an analyst looked at Terra's business model and said, this is crazy.

And Kwan would shame anyone who dared question his model.

After a financial writer raised questions about the vulnerabilities of crypto, Kwan tweeted, I don't debate the poor on Twitter.

At its height, Luna's total value ballooned to more than $40 billion.

The Washington Nationals entered a partnership with him, Kwan's followers called themselves Lunatics, and 1 of his backers even got a Luna-themed tattoo.

And that is a bold move from Crypto Moby there.

I would say that is the worst tattoo I've ever seen.

Kelly with the words, I don't see nothing wrong.

But we now know, according to the SEC, the algorithm didn't work as they'd claimed.

In fact, at 1 point in 2021, Terra nearly collapsed.

And while Kwan told people that the crisis had been averted thanks to his algorithm, saying it was automatically self-healing, It turns out it was only saved by the deliberate intervention of a third party, which was quietly purchasing large quantities of Terra to restore its value.

But last May, a few big trades destabilized the price of Terra, prompting a panic in which both Terra and Luna holders started selling en masse.

And since they weren't backed by anything but good vibes, both coins' value were trading at essentially 0, and the implosion had raised tens of billions of dollars of value.

As for Kwan, he now faces charges in multiple countries and he actually went on the run for a bit, but before he was caught, managed to find some emotional support on a crypto podcast.

Here he is, mid-thought, getting surprised by an unexpected guest.

You're like, you haven't slept in a while, and like you feel almost, holy shit, is I'm Barton Scrowdy?

Hey, Doe, I just wanted to let you know, jail's not that bad.

So don't fret if that, I hope it doesn't happen, but if it does happen, it's not that bad.

I don't think there's ever been a more cursed Zoom call, and I'm very much including that Celebrity Imagine video.

And quick side note, if you're wondering if Jim Cramer ever saw Martin Shkreli's scandal coming, you should know that Shkreli actually got his start at Jim Cramer's hedge fund, so another ace in the hole for the Cram game.

But it's not just cryptocurrencies that can be built on sand.

The same can happen with crypto banks, which are already a bit of a misnomer, because unlike traditional banks, they are not regulated or indeed insured.

But they are firms that will hold your crypto, pay you interest, and lend it out.

And that brings us to our second company, Celsius.

1 of the biggest crypto banks, founded by this guy, Alex Mashinsky.

Now, his wholesale pitch, as you can see from his cool T-shirt, was, banks are not your friends, which is clearly true, but he really doubled down on that message in ads like this.

Banks are not your friends, we all know that.

And we decided to create a replacement for the banking system, right?

Something that acts in your best interest, a place where you can actually have your money work for you, not just you work for your money.

And basically, 3 years since we launched the product, we've paid a billion dollars back to the community.

Now, despite the fact that he sounds exactly like Tommy Wiseau in the room, Mashinsky built 1 of the biggest crypto lenders with more than 12 billion dollars in deposits.

And 1 of the ways that he did this was by promising customers would get up to 18% interest rates on their deposits.

That first is the average of .06% then being offered by traditional banks.

And he liked to say that banks could actually pay those sorts of rates if they wanted to, adding, somebody is lying, either the bank is lying or Celsius is lying.

Like how Frankie Mooney's can be both 37 years old and 12 at the same time.

Or how The Rock can be 1 of the highest paid actors in Hollywood despite never actually acting.

Mashinsky went out of his way to build trust among customers, holding weekly live stream AMAs, sometimes featuring dumb stunts like when he started 1 wearing a Mandalorian mask.

And on these calls, he would brag about all the great things that his company was doing for people while occasionally engaging in the single worst attempt at a dab I have ever seen.

The beauty of what Chelsea has managed to do is that we deliver a yield, we pay it to the people who would never be able to do it themselves, we take it from the rich, and we beat the index.

Let's start going to the Olympics and getting 15 medals in 15 different fields.

It's not 2015, and you're not a guest on Ellen.

That demonstrates a lack of judgment, frankly, terrifying in someone supposedly running a financial institution.

And yet, Machinsky insisted, we are probably 1 of the least risky businesses that regulators worldwide have ever seen.

A court-appointed examiner later found that he was making incredibly risky loans, and was also using customers' money to pay the high yields that he promised, which sure sounds like the textbook definition of a Ponzi scheme.

Eventually, Celsius started minting its own coin to inflate its balance sheet, a coin that its own employees said was worthless and that its price should be 0.

What even said that the whole thing was very Ponzi-like, and at 1 point, the company's former finance chief said, we are doing something possibly illegal and definitely not compliant.

And what an office that must have been to work in.

Finding yourself wandering over to Cheryl's desk like, hey girl, great top.

Quick question, are we, like, doing crimes?

Because I'm getting, like, major crime vibes in here.

And when Celsius inevitably collapsed, people got hurt.

Especially because in the fine print, the company's terms of use stated that customers transferred all rights of ownership in their crypto assets by depositing them in a Celsius account.

Meaning that when people tried to withdraw their money, they found out it legally wasn't theirs anymore.

And while Celsius Machinsky have not been criminally charged, tens of thousands of customers still have digital assets trapped on the platform, and Celsius has reported that it owes them $4.7 billion.

All of which is enough to make you think that while banks are not your friends, this guy may actually be your enemy.

So, we've got bullshit money and a bullshit bank, which brings us back to Sam Bankman Freed and FTX.

It was basically a whole bullshit trading platform.

The pitch was that FTX was an exchange where you could buy and sell cryptocurrencies just like stocks, and its ease was emphasised in ads like this 1 with Steph Curry, to play in hindsight like a bit of a red flag.

This is Steph Curry, the world's leading expert on cryptocurrency.

Okay, quit messing around man, give me some tips on crypto.

No, I'm not an expert and I don't need to be.

With FTX I have everything I need to buy, sell, and trade crypto safely.

Yeah, you don't even have to understand it, just use it.

Their pitch for a major money app was basically the same as the attitude that we all have towards semicolons.

You're never 100% using 1 of those, are you?

Although, I will say, it kind of makes sense that they get Steph Curry for that ad, considering that he's already a spokesperson for Subway, a restaurant whose slogan is officially, eat fresh, but spiritually, trust us, it's tuna.

And again, for a while, that pitch worked pretty well.

FTX held a conference in the Bahamas less than a year ago that included a panel with Tony Blair and Bill Clinton and appearances by Orlando Bloom and Katy Perry.

Tom Brady was even there in person too, making videos like this.

We're gonna start the day, we're gonna do some TikToks for you guys, and it's gonna be an amazing day.

We'll get started, we'll do a, get ready with me.

Look, Sam, Sam, from 1 Ohio 6 to another, never stand that close to Tom Brady.

There is a reason that I've never been photographed with Chris Hemsworth, no matter how much he begs for it.

Now, the joke there was that Sam was a shy, self-effacing genius.

And that's the general vibe that he went for.

It's why he dressed like every day was laundry day and combed his hair with a balloon.

Obviously, we now know that things came crashing down, but even after they did, SBF was still defensive about what he'd built.

A lot of people look at you and see Bernie Madoff.

I mean, I don't think that's who I am at all, but I understand why they're saying that.

When you look at the classic Bernie Madoff story, there was no real business there.

The whole thing, as I understand it, I think, was just 1 big Ponzi scheme, right?

Because I understand that no 1 wants to admit that their business was a scam.

It's the same reason no parent wants to admit that their child sucks.

Saying it out loud makes it real, doesn't it?

Some kids are, just to put it nicely, not a fun hang.

You still love them, of course, but do you like them?

But it is worth understanding just what SBF's real business consisted of, because it turns out that In addition to FTX, he had a hedge fund called Alameda.

And he also produced his own coin, because of course he did, called FTT.

And very basically, according to authorities, what he did was filled up his hedge fund's books with the coin that he produced, using his exchange to inflate that coin's price.

And once his hedge fund had a giant stash of his own coin, it used that as collateral to take out several loans.

Essentially, the Fed say that he created fake money, inflated its price, and then borrowed real money against that.

Because he was also taking money from actual FTX customers.

The ones, remember, who were putting money into FTX because Steph Curry told them it was safe, and then loaning it back to his hedge fund.

The whole thing was honestly pretty blatant.

After everything collapsed, a new CEO came in to handle the bankruptcy.

He told Congress he was shocked at just how sloppy and poorly run everything was.

This is really old-fashioned embezzlement.

Literally, you know, there's no record keeping whatsoever.

A multi-billion dollar company using QuickBooks.

I look like my most formative childhood memories were in an H&R block.

I look like I fell into a vat of radioactive itemized receipts.

I look like what appears if you say Microsoft Excel into the mirror 3 times.

But I'm actually not an accountant, and yet even I know that using QuickBooks for a company of that size is absurd.

That man also revealed that FTX let thousands of uncashed deposit checks sit around like junk mail, and approved millions of dollars of expense reports via emoji on Slack.

And I'm dying to know which emoji they used, because we all know emojis on Slack have very specific meanings.

For instance, thumbs up means, I'm done with this conversation.

This means, I'm too lazy to type thank you.

This means, I'm dying inside, don't talk to me.

And this 1 means, look at me, I'm Italian.

But I've yet to discover which emoji means, go ahead, spend millions of dollars of company funds.

But if I had to guess, I'd say it's probably money bath.

But it is no wonder that that new CEO has said, never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.

Which is really saying something, given his career includes overseeing the bankruptcy of Enron.

And if you don't remember how bad Enron was, Google it, I can't do everything for you.

The through line in all 3 companies I've talked about tonight is them confidently presenting a veneer of expertise, even as beneath the surface, they were a complete shit show.

And it kind of says something, that even as they imploded, all 3 of the men behind them were still trying to bluster their way out of it.

That interview where SBF insisted his company was a real business came after it had declared Chapter 11.

As for Do Kwon, he spent time pushing a new Terra 2.0 coin and was finally arrested last month after a lengthy pursuit, including at 1 point him tweeting that he wasn't on the run from South Korean authorities, to which they responded that he was obviously on the run.

And as for Mashinsky, here is audio of him trying to buck up his team at an all-hands meeting, even as his company was crumbling around him.

Okay, but that's not the same thing, is it?

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Cryptocurrencies II: Last Week Tonight with John Oliver (HBO)