I feel sorry for the retail investors caught up in yet another crypto scam. Let me try to articulate my view of what’s actually going on with these seemingly endless scams, in hopes of saving future retail investors some pain:
Prominent venture capital firms like A16Z, Sequoia, etc have discovered a new get rich quick scheme: they raise a fund and invest it in a some shitcoin like FTX, SOL, etc. the shitcoin founders use the cash to market and shill the coin, hiring public figures like famous NFL players. Retail investors FOMO into these tokens, boosting prices and attracting more retail investors. Once the market cap of the shitcoin exceeds the VC/investor cost basis, they cash out and let the rest ride. Eventually the shitcoin implodes, but by this time the firms are already onto their next fund and another token. A16Z is on their 4th fund now and it’s $4.5B[0]. There’s an entire political strategy at play as well, where shitcoins are employing folks in DC and lining pockets to further the scam.
All of this is possible because there is no regulation on crypto tokens. In reality these are unregulated securities and these large VC firms are exploiting a loop hole for profit. This goes for literally every token starting at ETH and below.
In this scheme, VCs are cleverly exploiting the fact that US securities law is designed to protect investors foremost.
They are investors in these web3 shitcoins, so it’s complicated to prosecute them for anything when the law sees them as the victims.
In reality these VCs are co-conspirators in creating these unregulated securities, and hopefully the SEC will eventually make an example out of someone like a16z. Their Coinbase pipeline has been an absolute sham because they’ve had board-level influence on Coinbase which they’ve used to make the crypto exchange list all the shitcoins that a16z just happened to buy six months earlier. This shouldn’t be legal.
Just look at their portfolio on their front page for a list of "future scam revelations" and implosions.
E.g.: Chia coin is down -98% since its inception, -76% just this year and heading downwards. What does it do other than soak up excessive hard drive inventory? I dunno! I doubt anyone has a use for it.
Prominent venture capital firms like A16Z, Sequoia, etc have discovered a new get rich quick scheme: they raise a fund and invest it in a some shitcoin like FTX, SOL, etc. the shitcoin founders use the cash to market and shill the coin, hiring public figures like famous NFL players. Retail investors FOMO into these tokens, boosting prices and attracting more retail investors. Once the market cap of the shitcoin exceeds the VC/investor cost basis, they cash out and let the rest ride. Eventually the shitcoin implodes, but by this time the firms are already onto their next fund and another token. A16Z is on their 4th fund now and it’s $4.5B[0]. There’s an entire political strategy at play as well, where shitcoins are employing folks in DC and lining pockets to further the scam.
All of this is possible because there is no regulation on crypto tokens. In reality these are unregulated securities and these large VC firms are exploiting a loop hole for profit. This goes for literally every token starting at ETH and below.
[0]: https://a16zcrypto.com/