The crypto market is “the biggest Ponzi scheme in history,” actor turned crypto critic Ben McKenzie said Wednesday.
McKenzie, who co-authored a book on cryptography, testified before the Senate Banking Committee about FTX's death.
Millions of Americans who invest in cryptocurrencies are "selling their own bills of lading," he said.
The fall of FTX underscores the damage done to millions of people around the world who have invested in the cryptocurrency market, an industry that relies on "hype" and "scams", a Washington report said on Wednesday.
"The collapse of FTX and Alameda was the most dramatic corporate collapse since the collapse of Bernie Madoff's Ponzi scheme following the Great Financial Crisis," McKenzie said during a Senate committee hearing as the bank witnessed the crypto-related collapses of FTX and Alameda. . in a study reviewed last month. trading company.
McKenzie was referring to financier Madoff, who was convicted in 2009 of running a decade-long Ponzi scheme that defrauded investors of $65 billion and collapsed during the 2008 financial crisis.
Founder and former CEO of FTX Sam Bankman-Fried was arrested in the Bahamas this week and is facing multiple civil and criminal charges in the US. Meanwhile, FTX filed for bankruptcy protection.
McKenzie, who rose to fame on the TV show The OC in the early 2000s, was asked to testify at a Senate trial because he wrote a book about cryptocurrencies and was an outspoken skeptic.
"When I analyzed the cryptocurrency craze last summer, I came to a dire conclusion: the multi-trillion dollar industry should be nothing more than a giant bubble destined to burst," he told lawmakers. Worse, he has "a number of reasons" to believe the crypto bubble was built on fraud, he said.
“Effectively worthless investment contracts are often referred to as pyramid schemes, which are regulated under US law by the Securities and Exchange Commission. In my opinion, the cryptocurrency industry is the biggest pyramid scheme in history,” said McKenzie, co-author of Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Scams. The book will be published in July 2023.
"In fact, by the time the dust settles, crypto could be at least 10 times the size of the Madoff scam," he said. Madoff was sentenced to 150 years in prison and died in April 2021.
Tens of millions of Americans are "excluded" from the crypto market, worrying lawmakers, said McKenzie, who earned a degree in economics and foreign affairs from the University of Virginia.
He further said that FTX investors around the world had lost access to the money they entrusted to FTX and it was unclear whether they would get it back.
"I believe they and some 40 million other Americans who have invested in cryptocurrencies have sold the accounts," McKenzie said. "You have been duped by a seemingly powerful crypto industry that actually depends for its existence on misinformation, hype and, yes, fraud."
The first lie is that cryptocurrencies are currency "without a reasonable economic definition," McKenzie told an audience led by Ohio Democrat Sherrod Brown.
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