The Platform


People love the potential to get rich quick. FTX and other crypto markets know this and used it to lure in investors.

With the latest multi-billion-dollar Ponzi scheme emerging from the collapse of FTX in the crypto market, those investors who are looking for a “get rich quick” scheme have gotten taken again. From speaking at a 2018 financial conference in New York City to articles I have written since, my observation about too many people “Kramdenizing” when it comes to investments still holds true.

You remember Ralph Kramden of the Honeymooners. He was always looking for that “million-dollar deal” that was going to make him rich. You could always hear him telling his wife, Alice, “This is a sure thing. I’m tellin’ ya, we can’t miss!”
Unfortunately, Ralph got so taken up “Kramdenizing” that he never saw through the scams and frauds until it was too late. The same applies to all those who got caught up in the crypto craze and believed the celebrity shills that Sam Bankman-Fried of FTX paid to endorse his Ponzi scheme. From retired people trying to boost up their retirement savings to young millennials and Gen Z “know-it-alls” who figured they could make a huge score and retire in their 30s – if not sooner.

From a Superbowl ad with Larry David to other celebrities like Tom Brady endorsing FTX, many people took the bait. It looked like a legitimate investment with all its endorsements. So many have failed to realize that all crypto coins are speculative. They are not considered legitimate stores-of-value like gold, silver, bonds, real estate, fine art, and other recognized stores-of-value. Some financial pseudo-experts keep referring to the cryptocurrency market as some type of asset class. It isn’t. It is speculative, just like stocks. Plus, there is no true regulatory framework that structured the cryptocurrency market with clear government oversights, restrictions, or safeguards to protect or insure crypto assets as well as investors.

I was shocked a couple of years ago when I was talking to a woman in her early eighties about investments at a car club meeting and she was telling me to put some money into cryptocurrency. I was surprised someone so old was buying into the hype at the time, but I guess it shows that the allure of “get-rich-quick” schemes affects everyone of all ages. I told her I thought the crypto market was too overridden with fraud and scammers back then. Now, I wonder if she lost all her investments from this latest scam.

Young investors are also susceptible to the attraction of “get rich quick” schemes because they look at this young billionaire who was the CEO and think, “Hey, I should be getting in on this before it’s too late.” You cannot tell them anything because they already “have all the answers” and think they are going surpass their parents and grandparents to get instant gratification and wealth. Sorry, but it doesn’t work that way.

Many investors, both young and old, have learned the hard way that you need to do a high level of due diligence before investing in any cryptocurrency coin offering. And, with over 21,800 different cryptocurrencies offered today, you really need to do your homework because some are tied to the U.S. dollar, and most are not.

Back in 2018, a Boston College study found that only 44% of Initial Coin Offerings survived beyond the first four months of offering the coins. Today, you still need to be leery as to what coins are going to be stable assets. Even with the millions of dollars spent on promotions, FTX was a hollow platform. And of course, now everyone is asking “where was the government?” “Where were all the regulators?”

It has been reported that FTX owes its top 50 creditors over $3 billion. That number does not include all the small investors that got taken on their investments.

The whole story about this collapse has yet to be revealed, but there are already calls for class action lawsuits. There is no “bailout” from the government, no “insured portfolio” values, or anything thing else for any of the victims. They are trying to sue the celebrities who endorsed FTX, but I am not sure they will be successful in pursuing that endeavor.

The big question some financial people have is, “are we seeing the whole collapse and all the players affected, or is this just the tip of the iceberg when it comes to cryptocurrency failures?”

My advice? Go to Las Vegas and play the slots or the roulette wheel. At least you’ll get some free drinks while you lose your money.

James Carlini is a strategist for mission critical networks, technology, and intelligent infrastructure. Since 1986, he has been president of Carlini and Associates. Besides being an author, keynote speaker, and strategic consultant on large mission critical networks including the planning and design for the Chicago 911 center, the Chicago Mercantile Exchange trading floor networks, and the international network for GLOBEX, he has served as an adjunct faculty member at Northwestern University.