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Money Matters


By MARY LYNNE DAHL , Certified Financial Planner ™ Retired


December 04, 2022


jpg Money Matters by Mary Lynn Dahl

Mary Lynn Dahl

(SitNews) Ketchikan, Alaska - Cyber money, or crypto, as it is more commonly called, has finally fallen from grace. It is no longer the darling of daring and innovative geniuses whose techno expertise wowed Silicon Valley venture capitalists and greed motivated investors alike. In November of last year, crypto skyrocketed to a value of almost 3 trillion dollars and has now crashed to a low of a little more than 800 billion dollars. That is 2 billion, 200 million dollars that has vanished into thin air in less than a year. Where did that much money disappear to? For more than a million investors and dozens of crypto trading firms, that money is gone for good.

In August of this year, I wrote an article for Sitnews titled “Is Now the Time to Invest in Cyber Currencies?” If you read it (see Sitnews August 2022 archives) you may recall that the answer was no, that was not the time to invest in cyber currencies/crypto. If fact, the time to invest in crypto is never. Crypto currencies are nothing more than a complex, high-tech way to gamble. They appeal to greed, first and foremost. They also appeal to criminal activities because they are unregulated, unsupervised, below the tax radar and promise secrecy. In the November 2022 issue of The Economist, a highly respected journal of all things economic, as well as other subject matters, refers to crypto as “a casino, high octane, shiny and tempting”.

Over the last few years, with a big increase in the demand for crypto investments, exchanges and firms providing crypto funds and investment services to investors have developed. The biggest firms are the exchanges, which are how an investor gains access to buy or sell in their crypto funds and accounts. These exchanges are similar to the other exchanges that operate regular stock and bond investments, like the New York Stock Exchange or the NASDAQ over-the-counter exchange (a broad electronic exchange), but there are critical differences as well.

Crypto exchanges are not held to the same high standards of a regulated exchange like those listed above and they are not transparent in their financial reporting, among other things. For this reason, the crypto exchanges were the first to fall. The largest of the crypto exchanges was FTX, which has now started a chain reaction of failures by its own sudden collapse. It appears that FTX was cooking the books, with phony accounting and illegal lending among related companies, as well as creating new crypto currency as collateral for its questionable lending and borrowing practices. All of this financial malfeasance was done to build a house of cards that has crashed, bringing down countless investor’s accounts with the collapse.

How did this happen? It happened the same way any scam happens. It appeals to basic greed and builds a story that sounds too good to be true but still manages to ensnare enough people initially to get a big shiny ball rolling faster and faster. Eventually it crashed down to earth and crumbles into pieces. Sometimes, but not often enough, the innovative geniuses who dream up the scams go to jail. In all cases, almost all investors lose all their invested money. Every scam is different in how they are made appealing but they all operate in similar ways. Crypto, with the advantage of being born during a tech boom of social media, cleverly used social media to hype the concept of block chain as the financial wave of the future and had a strong appeal to young, smart and technically savvy investors with excess income.

In November of this year, one year after reaching an astonishing peak value, FTX, filed for bankruptcy protection from creditors. This firm which was only born in 2019, handled a huge percentage of crypto buy and sell transaction for investors. It was the darling of the industry, king of the hill. At the peak of its power, it was valued at about 32 billion dollars. In less than a month, that value has slumped to a value of approximately 15 billion dollars and is still falling. The details are not clear yet, but what is clear is that FTX borrowed heavily, more than it could repay, so it used investors dollars to shore up the shortfall on their financial statements. A more complex scam than the usual Ponzi scheme, but doomed to failure regardless. The first victims are the individual investors, as usual.

The death of FTX will likely only be the first in a domino effect of more failures to come. Other crypto transactional businesses are facing heavy withdrawals from investors who fear the loss of their own money. Other firms all already seeing their reputations ruined by the fast-moving disaster in crypto. Investors are pulling their funds, if they can, and lenders are calling in debt; if they can. The money these firms need to operate and grow is drying up, fast. Even those crypto firms who have solid financial backing and clean balance sheets are facing difficult times. Whether or not they can survive the crash of an entire industry is yet to be seen.

That is unfortunate, but it may open other opportunities. Crypto is based on a technology that does have enormous potential, but not as an alternative to cash money. It could be the key to other applications, like security for cloud-based data, among other uses. Based on the basic concept of block chain as the technology, this is an interesting and promising area of interest for innovators not motivated simply by greed. So, while crypto may be dead, block chain is not.

I do not have a crystal ball, so I cannot predict with certainty that crypto is dead, but from my point of view and years of experience, I would say that it is pretty sick. If it does not die, I will be surprised and probably disappointed. I would much rather see this technology put to better uses than as an unregulated currency that causes so much loss and damage to people who just want to invest their money and build wealth, albeit too fast and with unrealistic expectations.

Perhaps the death of crypto will be a lesson in patience, which is not related to greed and therefor essential to a sound investment strategy, as opposed to the get- rich- quick scams that periodically rob countless people of money and hope. Time will tell the end of this sad story, either way.

On the Web:

Money Matters Columns (Archives) by Mary Lynn Dahl


©2022 Mary Lynne Dahl, CFP®

Mary Lynne Dahl is a retired Certified Financial Planner  TM . She is a partner and founder of Otter Creek Partners, a fee-only financial planning and investment advisor firm in Alaska. These articles are generic in nature and are accepted general guidelines for investment or financial planning and are intended for educational and financial literacy purposes only.  

Mary Lynn Dahl can be reached at

 Representations of fact and opinions in comments posted are solely those of the individual posters and do not represent the opinions of Sitnews.



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