Each story told sang the same sad, true song. Households savings were wiped out, eviscerating the wealth of entire communities. Well-meaning Americans were trying to do the right thing, but predatory adjustable-rate mortgages and home equity loans were a dangerous mirage that promised prosperity while delivering poverty.
History is repeating itself, threatening another massive depletion of personal and community wealth. Back then, it was dangerous and predatory mortgage products. Now it’s cryptocurrency.
Lawmakers and regulators have a chance, right now, to step up and protect communities against the crypto scams and frauds that threaten our economy.
Before New York’s legislative session ends, Albany has the opportunity — and we think the obligation — to pass bills that will address the harms caused by this industry, from its fossil-fuel guzzling energy consumption, to requirements for financial disclosures and regulation, and investigation and prosecution of investment frauds and scams.
Right now, for instance, state senators can pass the two-year moratorium on crypto mining to stop giving out permits to old fossil-fuel power plants that are being converted to crypto-mining server farms.
These facilities, which use huge amounts of dirty energy to mine for cryptocurrencies like Bitcoin, are being used across upstate New York by companies raking billions in crypto while polluting our communities.
The bill has already passed the Assembly, but the crypto lobby has mobilized in full to fight it: The CEO of Coinmint, which has crypto mining servers in New York, gave a $40,000 donation to Gov. Hochul last month, and the crypto industry has been shouting “jobs, jobs, jobs” in a bid to kill environmental concerns.
Hochul herself seems swayed by the lobbying: She said she wanted to “balance” the environment with “the opportunity for jobs” in the area.
That’s why elected officials must reject this crypto lobbying in full. It’s the only hope we have of reining in this dangerous, polluting technology.
That means no more fancy Hollywood parties with Matt Damon. That means flying commercial to Puerto Rico, even when a crypto billionaire is kind enough to offer their private jet.
It’s time to reject the lobbyists and the scammers and fight to protect regular working people.
If they could go back in time, most politicians would want to have protected their communities from the mortgage meltdowns that triggered our last financial crisis. That’s not possible, but they can and should protect us from the next crisis, which anyone with eyes can see.
Crypto boosters claim they’re “correcting the racial wealth gap.” If that surfaces some flashbacks, it’s because we heard it all before. It’s the same greedy people using the same methodology with a different tool. Spike Lee and LeBron James don’t stand to lose their life savings like many in the communities that they come from, but they are being paid big bucks for crypto commercials to suggest otherwise.
The dynamic is the same: Wealthy, white fund managers and corporations use predatory tools to target people of color and cash out big for their own profit. Wildly profitable side bets and speculation in derivatives allow huge profits, all dependent on huge losses for others.
Now crypto is crashing, like the mortgage markets did in 2007 and 2008. But huge fortunes are being made from the misery of those who invested late, most often individual small investors and people of color.
It’s becoming clearer than ever: Crypto is just another scam.
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Federal and state regulation of securities markets does provide a measure of protection for many investors, but it’s entirely absent with cryptocurrencies. The industry and its technologies (like blockchain, smart contracts and decentralized autonomous organizations) are intentionally structured to avoid regulation and maximize exploitation.
Crypto lobbyists, cheerleaders and snake-oil salesmen have successfully sold all kinds of propaganda to the political class, claiming that crypto is a sound investment but providing little or no evidence to back up the hype.
As the value of cryptocurrency evaporates, so do many of the claims of the market’s legitimacy.
The crypto crash is demonstrating to all of us the real danger to the savings of millions from yet another unsafe-at-any-speed financial product from Wall Street titans and the tech bros they finance and employ.
This crash should give us all pause, particularly people of color who are experiencing a compounded catastrophe of living with the economic fallout caused by the pandemic and living in communities that never rebounded from the subprime mortgage crisis.
Our Legislature in Albany must prioritize protecting New Yorkers from this predatory cryptocurrency industry in every way possible — now, before things get even worse.
Khan is organizing director at the Strong Economy For All Coalition. Gilliam is deputy political director at the Action Center on Race and the Economy.