I first wrote about Bitcoin in 2013:

Bitcoin is an asset class, not a currency

Since then I did not have much to contribute while the crypto keeners pushed crypto. I am not sure when Bitcoin and Blockchain converged and became crypto but this was dangerous. I watched those dumb ads wherein crypto owners proposed it as the future of money.

Typically they would talk about the problems with fiat currency (money) being solved by Crypto.

I summarised in this post earlier in 2022.

It is time to start holding Blockchain proponents to account

The false promise generally lies with free money movement, privacy and freedom from regulation … hmmm

This weeks FT has been all about FTT and the crooked owner Sam Bankman Fried. Tony Blair and Bill Clinton must regret their support so much.

The FTT corporate structure is so complex no legitimate bank would ever open their bank account because it is impossible to track the ownership across hundreds of entities. That is why he moved to the Bahamas where little things like Anti Money Laundering will hardly be allowed get in the way.

Imagine this example: FTT issued its own coins; those coins were loaned to other companies within the FTT universe and these other companies borrowed fiat currency and used it to purchase more FTT coins. Classic Ponzi, dumb lenders.

The risks of fraud associated with Bitcoin and lack of practical scalability with Blockchain make the entire Crypto ecosystem high risk.

The immediate worry is with what the Market politely calls contagion. Companies such as Micro Strategy and Tesla went all in on coins, mainly Bitcoin but also coins on the FTT exchange. What are the balance sheet impacts?

Relevance to Bankwatch

• Know your customer.
• Know and understand your business customers corporate structure, ownership structure and contingent liabilities.
• Lend against real hard assets, not balance sheet numbers.
• If in doubt, walk away but only after filing with the Government AML agency (Canada = FINTRAC)