Small Investors Who Jumped into Crypto on FTX Say, Now What?

https://www.nytimes.com/2022/12/05/business/cryptocurrency-investors-ftx-blockfi.html

by lxm • 4 years ago

23 58 4 years ago

In early November, Adrian Butkus, a 43-year-old father of two, put $600,000 — much of his life savings — into an account at BlockFi, a cryptocurrency trading firm. BlockFi had marketed the account as risk free, yielding 6.5 percent interest, more than Mr. Butkus could get anywhere else.

I'm glad he lost his money. It's like the Madoff people, people get greedy and somehow just assume they are smarter than everybody else. If it continued to go up, they'd be gloating about the returns they were getting and how great they were doing. They are basically criminals whose crime caught up with them. Just losing their money (which was mostly imaginary anyway) is the least punishment they deserve

[This was a serious reply but apparently not well received. The only other time I got voted to -4 this fast was when I poked fun at Rust users :) ]

philosopher12344• 4 years ago

Seems like you’re focusing your anger on the wrong target. Wouldn’t it be better to live in a world where you could be a bit foolish and not lose your life savings at a crucial time?

version_five4• 4 years ago

That doesn't make sense to me. If I took my life savings and bet it on a roulette system where I kept doubling down, and then lost and complained that i didn't know it was risky, should someone feel bad for me? A greedy ignoramus (lots of them) put their money into a ponzi scheme and lost it. That's not something that should be encouraged, or softened. People should learn that their actions have consequences.

texasbigdata3• 4 years ago

You could argue the opposite. The accredited investor rule excluded a significant portion of the American population from participating in economic growth over a 20 year period. They are consenting intelligent adults, why does the government need to police their prowess over what asset classes they can participate in?

Note, I’m not arguing for wild Wild West rules, but it goes both ways.

thr0wawayf00• 4 years ago

It's hard to have sympathy when their "foolishness" involves undermining the existing financial system because they don't like the government and they believe taxation is theft.

The irony is that they now have no problem going to the government (specifically the courts) and asking for help to get their money back. It's only government waste if it's not directly helping them.

umeshunni• 4 years ago

For most of history, being a bit foolish would have got you killed.

kabdib• 4 years ago

Mixed feelings.

Sucks to lose that much money (though he's likely young enough to recover from this loss -- I had to very nearly start over, for different reasons, at about that age).

Contrariwise, he was an idiot to make that "investment".

coffeebeqn2• 4 years ago

6.5% isn’t totally out of this world. He got scammed basically. Index funds are sold to us at 8% “guaranteed” return by the wise and conservative investors. I certainly hope he can recover some of the funds from these ponzi “entrepreneurs”

Edit: also as a reminder they had plenty of big backers lending them credibility in addition to funding https://blockfi.com/investors

jandrese2• 4 years ago

BlockFi had marketed the account as risk free, yielding 6.5 percent interest

If you ever see someone selling a product with these features they are outright lying to you and are probably going to rip you off.

version_five4• 4 years ago

That's my point - greedy people ignored this, and now are whining when their too good to be true "investment" was too good to be true

sigstoat• 4 years ago

legitimate financial products have offered that rate and higher in the last 40 years.

look up historical CD rates.

coredog64• 4 years ago

I-series bonds from the US Treasury are at 8-9 percent, and that’s about ask risk free as “risk free” gets.

factsarelolz• 4 years ago

Is there really no sanity checks before wiring half a million dollars to a random account provided by a site on the internet?

texasbigdata3• 4 years ago

Play stupid games, win stupid prizes.

As they say.

ch4s33• 4 years ago

You're catching down votes because your comment comes across as mean spirited. Yeah, this guy was greedy and dumb, but it really sucks for his kids. Others might also ask, if not for BlockFi, would he have pissed away his life savings?

Moreover, your comment shows the kind of hubris of someone who thinks they could never fall for any scam.

notch656a• 4 years ago

"Investing" in BlockFi was dumb, but it's funny in the year 2022 seeking negative real interest rates (roughly -2%) is supposed to be the obvious tip it must be a scam.

The fiscal policies at the fed and federal government really sent people chasing wild risk just to almost (but not even) break even.

ktta2• 4 years ago

Others might also ask, if not for BlockFi, would he have pissed away his life savings?

Wild comment to make about someone who saved up $600k. You don't save up that much if you are the kind to "piss away" money. Expecting 6.5% return is not greedy. S&P 500's average return is around that

jeffbee• 4 years ago

Upvoted. Adrian Butkus had near a million bucks in liquid assets, plus, one imagines, a house and all that, and is therefore near the top of the top of world wealth, and he pissed it away like an idiot. Let's not write any more sentences about this clown. Let's write things about honest poor people who could use some help.

notwhereyouare• 4 years ago

He had the money because he sold his house. Was looking to grow it before buying.

It’s mentioned in the article

cactusplant7374• 4 years ago

I have compassion for these people because I personally have lost a lot of money. It weakens your spirit and makes you feel vulnerable.

geekpowa• 4 years ago

Ordinarily this would be victim shaming / blaming. Though the endgame of crypto is dystopian. A reversion to centralized command economies where the gatekeepers of economic activity are early adopters.

Understand what you are putting your resources into, and how it measures against Kantian categorical imperative. It is difficult to be sympathetic to someone harmed by something that is harmful when universal.

ilamont• 4 years ago

One of the people interviewed portrays himself as a "seasoned investor."

Seasoned investors don't place all of their chips on high-risk schemes, whether it's trading penny stocks or crypto.

Another man who dumped $600k onto the bonfire said he did so in November, months after the dominoes started to fall. Did people actually believe anonymous Internet people claiming that "now is a great time to buy" or the "flight to quality" advice?

jandrese2• 4 years ago

Buy the dip!

cromka• 4 years ago

Yes! Go long on the garlic one, it’s the best.

nova22033• 4 years ago

"Have fun staying poor"

https://www.coindesk.com/markets/2021/03/03/the-decoder-have...

simonw• 4 years ago

It sounds to me like they believed the Super Bowl ads.

Spooky23• 4 years ago

People get caught up in the market. Try being the guy who bought Amazon @ $135 in 1999 in 2000/1.

The market was signaling to many folks that this was legit. Known investors like AnderseenHorowitz were investing. Deloitte has a practice around it. Talk if ETFs entering the market are bad. FTX is attaching itself with branding relationships with Major League Baseball.

To people not getting it, it looked sort of like porn to VHS tapes back in the day. Crypto was built on Russian hackers and drug dealers, and going legit with Wall St.

I was surrounded by a bunch of people who made a lot of money on crypto. I still feel like an ass for losing much of and failing to capitalize on my $100 buy back in 2010. I netted a few thousand bucks instead of.. a lot more. But on the flip side, I think I’d feel guilty for profiting over the exploitation of others had I been able to cash in.

jasonmarks_• 4 years ago

I have a SaaS that you can invest in ? Double your money ASAP or within 3 years

pizlonator2• 4 years ago

Maybe they can get their money back from the EA and longtermism funds that SBF “donated” to.

Animatronio3• 4 years ago

You jest but I recall some of Madoff's beneficiaries were forced to give back the money to pay back the claimants.

pizlonator2• 4 years ago

I wasn’t jesting - I was hoping. So your comment sparks joy.

bcrosby95• 4 years ago

Much of the money that Mr. Butkus, a self-employed businessman, invested came from the recent sale of his home in Plainfield, Ill.

Ugh. Why? There's a difference between risking savings, retirement funds, and money you will need for shelter.

yarg• 4 years ago

Lick your wounds, stop being so greedy, and learn not to fall for scams?

epolanski2• 4 years ago

I "love" how most of them knew it was risky but speculated anyway with money they really needed.

Really show how limitless is human greed.

croes• 4 years ago

I don't if this is greed or desperation, especially in the US without a proper a social security system.

alphabettsy• 4 years ago

Maybe desperation for some, but the people who tossed in $500k or more?

epolanski2• 4 years ago

I assume that being desperate means needing to increase your money fast, crypto isn't really that kind of market unless you're in a highly volatile period which no one can really know or time.

Also, I would assume people speculating tens or hundreds of thousands aren't really desperate, they could just...keep the cash and insure themselves e.g.

toddm• 4 years ago

Market participation is voluntary and the individual has every opportunity to allocate their money in any way they want.

The stories are sad but should be educational and not reinforce moral hazard: your money, your investment, your risk tolerance.

neonate• 4 years ago

https://archive.ph/BKFs4

Small Investors Who Jumped into Crypto on FTX Say, Now What?

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