bookmark_borderPowers On… Why Bernie Madoff should be a powerful lesson to stock and crypto memecoin investors

I should know, I helped chase down $1 billion of his fraudulently-obtained cash.

Powers On… is a monthly opinion column from Marc Powers, who spent much of his 40-year legal career working with complex securities-related cases in the United States after a stint with the SEC. He is now an Adjunct Professor at Florida International University School of Law, where he teaches a course on ‘Blockchain, Crypto and Regulatory Considerations.’

I was downstairs at a bar on the Upper East Side of Manhattan that Thursday evening, December 11, 2008, playing a friendly game of Texas Hold ‘em when the calls began. 

One after the other they came, and they continued at the office the next day. The theme was consistent. I was being asked to represent various victims of a fraud by this guy, Bernie Madoff.

At this point I had never heard of him, but in a matter of days, the whole world would come to learn of this evil misanthrope and his fictitious transactions, which would become the world’s largest individual financial fraud and Ponzi scheme. Some calls came directly from the victims themselves; others came from their accountants and non-securities lawyers who, from time to time, referred matters and clients to me.

What I heard was ugly. Many of the callers appeared to have lost millions. For some, it represented their life savings. Others had relied on the monies entrusted to Madoff to pay for their children’s upcoming college education expenses. Many victims had plowed almost all their disposable funds into this man’s“investment fund”, where they had been receiving high investment returns periodically or quarterly for their living expenses.

Madoff’s infinity fraud involving many Jewish communities and charities in New York, Los Angeles, Palm Beach and parts of Minnesota and Michigan, was pernicious. He presented an air of secrecy and exclusivity in his activities, insinuating himself into a circle of “friends and family”. He had obtained prominent positions with exchanges such as NASDAQ and the Cincinnati stock exchanges. His apparent position as a reputable financier caused many victims to fall for this façade of credibility and trustworthiness.

As the national leader of my law firm’s Securities Litigation & SEC Regulatory Enforcement practice, and one with experience in representing victims of Ponzi schemes and internal investigations, I would be invited to participate with a small group of lawyers to meet with Irving Picard, who would become the SIPA court appointed Trustee overseeing the recovery efforts by the SIPC for those who had lost monies through the failed broker-dealer Madoff ran, Bernard L. Madoff Investment Securities, Inc.

Once Irving came on board to Baker Hostetler and was selected by the court to be the SIPA Trustee, our efforts expanded at times to over 250 attorneys throughout the law firm.

For over four years, I was a core member of the Trustee’s effort, and would lead our national efforts to investigate, develop theories of liability, and bring litigation against hedge funds here in the United States to recover the reported $65 billion lost. As it turns out, the number was actually less than $20 billion; still a huge number.

My small team was personally responsible for obtaining the largest settlement to this day against a hedge fund, Tremont, and the second largest cash settlement against anyone, during my firm’s twelve years of recoveries — over $1 billion in cash.

Lessons still to learn from the Madoff scandal

With the death of Madoff on April 14th, I have been thinking about his fraud and how the saga provides some interesting and helpful lessons for those now in and thinking of entering crypto space as investors — particularly with regard to “memecoins” in the age of social media and the rapid dissemination of viral information.

Among these observations is the continuing appeal of the “follow the crowd” mentality and the lack of financial and investment acumen of those investing in the stock and crypto market. The same can be said of a large number of Madoff’s individual victims, and even institutions, which failed to understand and question his trading strategies which purportedly (and astonishingly, on reflection) provided “profits” in both up and down markets. Red flags were prevalent. Especially to the supposedly sophisticated hedge funds that invested in Madoff’s purported investment fund.

Nowadays, we have groups of individuals buying stocks like GameStop, pushing its market cap from under a billion dollars to over $12 billion since the beginning of this year. Many are just following the crowd, which is what some in the Madoff days did. But what do these Reddit pirates really know about the business? Its prospects? Or for that matter, how to analyze a company’s stock price?

I suspect many who followed the crowd that pushed the stock price over $400 and briefly drove GameStop to a market cap of over $20 billion lost a great deal of money, as evidenced by the significant margin calls and liquidity issues the Robinhood exchange experienced during the most frenetic trading periods.

Dogecoin should scare you right now

Let’s also look at Dogecoin, It was created in 2013 as a joke to lampoon all the various altcoins. Until January 26th of this year, it had a value of less than one cent — rightfully so, since at best it had been used as a way to tip others on social media sites.

Yet now it’s one of the largest cryptocurrencies in the world, trading at a high of over 70 cents this week before plunging as its chief booster, Elon Musk, apparently failed to impress the so-called Doge Army with an appearance on Saturday Night Live.

Will this end well for TikTok fans and Musk’s astronomical Twitter following? Social phenomena are often short-lived, and it’s hard to imagine that there’s a sustainable use-case for Dogecoin, no matter how much we may love Shiba Inus.

What about NFTs? For me, I am presently ambivalent on this use case of blockchain technology. On the one hand, I see the appeal of owning a unique digital piece of art, like a physical artist’s proof. On the other, I just don’t quite get the great value here. At least you can hang art on a wall, in a gallery, or donate it to a museum for the public to view. What does one do with a $69 million Beeple? Pull out a 6 inch smartphone or laptop to show off the art you own?

All of the above is a way of saying, there are a lot of trends out there in the crypto space, and like any technically-challenging new financial technology it is full of con artists and fraudsters all trying to separate you from your money.

So, know what you are investing in, do your own research, and don’t always follow the crowd.

Updates from Powers On…

In my last column, I railed against the SEC for what seemed to be overreaching in the SEC v. Ripple litigation. The SEC had subpoenaed a half dozen financial institutions and a local Federal Reserve for eight years of personal records of the two Ripple executives named in the lawsuit. Well, I am pleased to report that Magistrate Judge Sarah Netburn agreed with me. She found the requests an improper overreach, and ordered the SEC to withdraw its subpoenas. Let’s hear it for our judiciary!

In my first monthly column back in February, I raised concern about the possible decline of the U.S. dollar dominance worldwide if we did not move faster to accept Central Bank Digital Currencies. I worried about China already developing and embracing a digital yuan, which I saw as a threat to the dollar. Well, I am pleased to report that others, too, are now concerned, including Congress. Last month, GOP House Minority leader Kevin McCarthy sounded a similar alarm.

Marc Powers is currently an adjunct professor at Florida International University School of Law, where he is teaching “Blockchain, Crypto and Regulatory Considerations.” He recently retired from practicing at an Am Law 100 law firm, where he built both its national securities litigation and regulatory enforcement practice team and its hedge fund industry practice. Marc started his legal career in the SEC’s Enforcement Division. During his 40 years in law, he was involved in representations including the Bernie Madoff Ponzi scheme, a recent presidential pardon and the Martha Stewart insider trading trial.

The opinions expressed are the author’s alone and do not necessarily reflect the views of Cointelegraph, nor Florida International University School of Law or its affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

bookmark_border美国国税局选择加密税务工具 TaxBit 作为软件合作伙伴

链闻消息,加密货币税务自动化平台 TaxBit 宣布美国国税局(IRS)选择了 TaxBit 作为软件合作伙伴,由 DPI Inc. 进行分包,为具有加密货币的纳税人提供数据分析和税收计算支持。TaxBit 联合创始人兼首席执行官 Austin Woodward 表示,「这对加密货币行业来说是一个里程碑式的时刻。它表明监管机构正在接受资产类别,但这样做是为了确保用一个简单的方法来符合现有法规。我们相信,这是促成加密货币广泛采用的重要一步。」

公告显示,TaxBit 不会将客户的信息交给美国国税局,而是美国国税局从他们确定的,完全独立于 TaxBit 的纳税人群体向 TaxBit 提供数据。TaxBit 表示,除了税务合规业务,TaxBit 与几个加密货币平台合作,在开发会计 ERP 解决方案,该解决方案将于今年晚些时候公发,并计划在 2021 年进行国际扩张。

原文链接:美国国税局选择加密税务工具 TaxBit 作为软件合作伙伴

bookmark_borderData analytics giant Palantir now accepts Bitcoin payments

The firm added Bitcoin was “definitely on the table” as consideration for a treasury reserve asset.

The $30 billion Colorado-based data analytics company founded by billionaire Peter Thiel now accepts Bitcoin from clients as a form of payment.

According to a CNBC report today, Palantir said during its earnings call for the first quarter of 2021 that it had begun accepting Bitcoin (BTC) payments. In addition, the firm is mulling following in Tesla’s and MicroStrategy’s footsteps by adding BTC to its balance sheet, saying the crypto asset was “definitely on the table.” Palantir likely has more than $2 billion in cash on hand for investments.

MicroStrategy was one of the first major firms to adopt Bitcoin as a reserve asset, making several multimillion dollar crypto purchases in 2020 and 2021. Tesla entered the crypto space in February, announcing it had bought $1.5 billion worth of Bitcoin. The car manufacturer later sold 10% of its crypto holdings “to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”

Thiel also helped found PayPal, which launched crypto trading in late 2020. In April, PayPal-owned payments platform Venmo introduced crypto trading for BTC, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).

bookmark_borderNFT 平台 Wilder World 完成 300 万美元融资,Spartan Group 领投

链闻消息,据科技媒体 VentureBeat 报道,NFT 平台 Wilder World 完成 300 万美元融资,Spartan Group 领投,DCG、Animoca Brands、Republic Realm、Signum Capital 参投。

Wilder World 由 3D 艺术家 Frank Wilder 建立,由技术公司 Zero.Space 开发技术,代币 WILD 是其治理代币,已有 250 多位加密艺术家和收藏家加入该平台。

原文链接:NFT 平台 Wilder World 完成 300 万美元融资,Spartan Group 领投

bookmark_borderBalancer V2 正式上线

链闻消息,Balancer V2 版本今日正式上线,相较于 V1 版本,V2 版本的更新包括:更新了用户界面,大幅降低了 gas 费用、以社区多重签名进行治理、引入 Gauntlet 的动态费用池等。Balancer V2 的合作伙伴包括 Gnosis Protocol、AAVE、Element Finance、Enzyme Finance、Gyroscope、Ocean Protocol、PowerPool、Techemy Capital。Balancer V2 将迁移 V1 的流动性,V2 的流动性提供者将获得 BAL 代币奖励。

原文链接:Balancer V2 正式上线