5 stars based on
The story was everywhere last week: The gift comes thanks to an affluent donor and two precocious student entrepreneurs — one a sophomore computer science major, the other a first-year Sloan MBA student and president of the MIT Bitcoin Club. I exaggerate slightly when I say the story was everywhere. The coverage was predictably gee-whiz. Anyway, as far as the IRS is concernedBitcoin is not currency, but taxable property, and therefore a liability. By repeating the lie that Bitcoin is currency, and one that will soon be in the wallets of every nerd-chic MIT undergrad, this seemingly feel-good story serves a hidden agenda: This is where the cut-and-paste coverage disappoints most.
Not one journalist who covered the MIT Bitcoin story last week connected those dots. Dig for just a few minutes, and another storyline emerges. This is a classic story about some Wall Street scoundrels searching for their next epic pump-and-dump scam. Hudson River Trading is one of thirty-nine named defendants in a federal class action lawsuit filed on April 18 by the city of Providence, Rhode Island against high-frequency trading firms.
The alleged victims include taxpayers, public investment funds and individual investors. This fresh court case was not nearly so widely covered as the MIT Bitcoin press release, although the details of the scam are laid out clearly in the sixty-page complaint which even cribs some bar charts from Flash Boys.
Hudson River Trading has also spent hundreds of thousands of dollars on lobbying and campaign contributions. If Wall Street is rigged—and it is, of course—Morcos has been on the winning side. Gox, was allegedly named after the fantasy card game Magic: The GatheringKraken is an improvement.
Or perhaps it is a sly joke. Morcos is certainly not the only mainstream financier engaged in puffing up Bitcoin. Also last week, as the Bitcoin story spread, Bloomberg announced that its shockingly overpriced computer terminals would carry price data on Bitcoin. The data would be provided by the company Morcos invested in, Kraken.
Indeed, it is an indication that Michael Bloomberg himself sees profit potential in, if not Bitcoin itself, at least the idea that other people believe Bitcoin has value. The most prominent of these is CoinBase, which this month moved into posh digs in downtown San Francisco. Like Kraken, CoinBase is in the business of converting Bitcoin, a pretend currency, into real currency. Over the past year the most prominent Bitcoin exchange, Mt. So, to distance themselves from such fiascos, the new, Bloomberg-approved Bitcoin exchanges boast about their relationships with established financial institutions and regulators.
Indeed, if Bitcoin works, these early investors win. And if Bitcoin tanks, which it probably will, then those investors are still first in line to skim gobs of money from desperate suckers with devastated credit thanks to years of legalized usury.
So that scenario is also a win for someone. The safe bet is Wall Streeters are less interested in the long-term potential of cryptocurrencies than in the short-term profit potential of the Bitcoin bubble. What's going on with bland, shoddy architecture in the wake of urban repopulation? Young men with pathological ideas about sex and women are radicalizing each other online. The Bremmer plan is to promote free trade, cut the deficit in the United States, and revive our flagging faith in the private sector to do good: Sheila Heti's Motherhood is indeed a political novel.
But it may not be about motherhood. Some free advice to MIT students: Beware Wall Street traders bearing gifts. You Might Also Enjoy. Condo-Maximum Kyle Paoletta What's going on with bland, shoddy architecture in the wake of urban repopulation? The Beta Rebellion The Baffler.