‘I Am A Trillionaire’: Crypto Red Flags To Watch Out For

I made myself the world’s first trillionaire in 2021 on a boat trip in France. It was easy. If this truth was an asset, it would have very low liquidity but it’s true, nonetheless.

I’ve been calling this crypto crash for months on Seeking Alpha, here is a piece from July: Bitcoin Crash July 2022: You Can’t Escape This Chart Signal

I am saying this so you understand that I’m no Captain Hindsight, piling in after the fact.

Anyway, back to my trillion. I made my first trillion dollars as a joke but also as a demonstration of the power and issues of crypto.

This is how I did it:

I created an Ethereum token called CLEM. I listed it on Uniswap as a Clem/USDC pair with $1000 of USDC on one side and 1000 Clem tokens on the other. It’s still there to this day.

You can buy a Clem token for a dollar or sell one for $1 and I will make sure the token keeps roughly a $1 value, “‘I promise.'” There are one trillion Clem tokens, so the Market Cap of the Clem token is $1Tr and I own almost all of them bar 20 (a mate swapped 20 USDC for 20 Clem tokens as a joke – I mean a super smart investment as the smartest guy in the room on his journey to wealth…… blah blah).

As I own one trillion Clem tokens, this makes me a trillionaire.

See what I did there?

Now with enough billboards with my face on them maybe someone might let me use my Clem coins as collateral and I could borrow dollars and buy things like bright green Lambos or publicly traded companies; mansions in Hollywood would be good too. Let’s say people swap one billion USDC into the Uniswap pair, the remaining 999 billion are worth real money as I control their issuance and, as long as I’m not too greedy or a spendthrift, who will know or care that I’m diluting the pool. After all, banks only hold 10% of their liabilities in cash and get away with that kind of thing just fine, well most of the time anyway apart from when they implode like in 2008.

Perhaps another person might also have made some ‘wonder’ coin and we could swap and promise not to exit these smart investments and instead use it as further collateral to borrow more money and buy more assets. Off I could go and build not only a house of cards, but a gigantic 196 story tower of cards with a downtown business district of cards, several golf courses and a sports stadium with a team wearing my face on their vests, all financed purely on my anti-gravity money machine.

Now we might chuckle if we didn’t get caught in the FTX debacle or the Celsius collapse or the BlockFi freeze (fortunately I dodged those bullets which could have really hurt me) and it would be easy to imagine this process of asset creation and leverage has no value and is by its nature doomed to fail, but this is how money works, be it crypto or US dollars. It is the way economies operate in dollars, euros and yen. It might be accelerated in crypto, but then again talk to the Fed about boosting M2 to the moon during Covid and its QE and reverse repo balances …etc. This is the Money Game.

The only difference between my Clem coin trillions and the Federal Reserve’s Benjamins is credibility and utility. My coin’s utility is like its liquidity: as near to zero as is measurable. The Fed’s money utility is nigh on infinite. Though it might not buy you love, it can be used to do or obtain pretty much everything else.

For example, if by some magic you could add a year of longevity to your life for every 100 Clem coins you owned, ‘oh boy’ would that coin be liquid and valuable. While money can’t buy you love I’m sure being the legitimate owner of a ‘Bored Ape’ might impress sufficient people to get you the next best thing; even after its value has dropped 80%. The house of cards built by the above asset creation and leveraging mechanism is not unique to crypto; it is deeply part of finance in general. You might giggle at a crypto’s market cap, but can you explain Apple’s $2,500,000,000,000 ($300 per human on earth, which is a month’s outgoings for half the world’s population)? You can most certainly use Apple stock to buy a Lambo or use Apple stock as collateral to do so and I’m sure many have and there is nothing wrong or hilarious about that.

The trouble is, ‘where there are resources there are predators.’ The crypto financial feedback loop is powerful and the veldt of crypto has been swamped by such predators. Now the virtuous circle of asset creation has reversed into the vicious circle of deleveraging (and you will see this in ‘real’ financial markets in assets near you. You may have already been hurt by that in stocks). All the schemes of these scammers get revealed just as they were in the ‘dot com’ boom/crash and the credit crunch WFC. So here we are on the last few ignominious laps of that circuit.

The thing to remember is, the survivors of the dot com crash became the world’s biggest companies. The crash flushed out the predators, and the real value added by ‘computers + networking’ and associated technologies turned into vast real wealth. People laugh at ‘Tulip Mania,’ but tulips are still a billion dollar industry in Holland. Hold that thought while you remember Amazon and Apple in 2002.

What we are experiencing in crypto is nothing new. Naming rights for stadiums was the kiss of death in the dot com and probably will remain so forever; all the while companies will jump that shark with abandon in the future.

So how do you dodge the bullets of a crash, avoid losing your funds in the FTX and Celsii of this crash and the next implosions?

Here is a list of 10 red flags for investors in crypto and for that matter in stocks:

1. Billionaires from nowhere
2. Heavy PR of the ‘messiah’ type
3. Deals that look like cash grabs
4. Flashy behaviour in general
5. Asshat behaviour in particular
6. Opaque capital generation
7. No good reason for success on such a scale
8. Circumstantial evidence of wash trading, market manipulation
9. Centralisation
10. Philanthropy (sorry to say it, but it’s often the hallmark of fraudsters trying to buy legitimacy)

You should add to the list yourself and apply the above to your financial exposure in general. Then focus on these two things:

1. “Not your keys, not your crypto”
2. Blockchain and crypto is a technological revolution and the winners will be the giants of tomorrow

Hurry with the first point but take your time with the second.