Cryptocurrency bubble
[1][2] Some economists and prominent investors have expressed the view that the entire cryptocurrency market constitutes a speculative bubble.
Adherents of this view include Berkshire Hathaway board member Warren Buffett and several laureates of the Nobel Memorial Prize in Economic Sciences, central bankers, and investors.
[10] A January 2018 article by CBS cautioned about possible fraud, citing the case of BitConnect, a British company which received a cease-and-desist order from the Texas State Securities Board.
[25] Some investors bought ICOs in hopes of participating in the financial gains similar to those enjoyed by early Bitcoin or Ethereum speculators.
On 11 January, the UK Financial Conduct Authority warned investors against lending or investments in cryptoassets, that they should be prepared "to lose all their money".
[40] Major cryptocurrency exchange Binance went down amid a market-wide price crash and traders are now seeking justice for their losses.
In December 2022, The Washington Post reported that there was "the sense that the crypto bubble has definitively popped, taking with it billions of dollars of investments made by regular people, pension funds, venture capitalists, and traditional companies".
[101][102] Kwon Do-hyung, the founder of Terra-Luna, is wanted by South Korea and the US for his role as the creator of the cryptocurrency stablecoin which was guaranteed by an algorithm rather than with appropriate funds, after the loss of 40 billion dollars by investors.
[103] On 7 January 2022, a class-action lawsuit was filed against EthereumMax alleging it to be a pump and dump scheme with media personality Kim Kardashian, former professional boxer Floyd Mayweather Jr., former NBA player Paul Pierce, and other celebrities also being named in the lawsuit for promoting the Ether cryptocurrency on their social media accounts.
[104][105] On 18 February, the United States Court of Appeals for the Eleventh Circuit ruled in a lawsuit against Bitconnect that the Securities Act of 1933 extends to targeted solicitation using social media.
[106] On the same day, a class-action lawsuit was filed against SafeMoon alleging it to also be a pump and dump scheme with professional boxer Jake Paul, musician Nick Carter, rappers Soulja Boy and Lil Yachty, and social media personality Ben Phillips also being named in the lawsuit for promoting the SafeMoon cryptocurrency with misleading information on their social media accounts.
[107][108] On 1 April, a class-action lawsuit was filed in Florida against the LGBcoin cryptocurrency company, NASCAR, professional stock car racing driver Brandon Brown, and political commentator Candace Owens alleging that the defendants made false or misleading statements about the LGBcoin and that the founders of the company had engaged in a pump and dump scheme.
[110] On 13 June, Binance received a class-action lawsuit from more than 2,000 investors accusing the company of false advertising in promoting TerraUSD.
[112] On 7 July, Celsius Network received a lawsuit from a former cryptocurrency investment manager alleging the company failed to implement adequate risk management strategies or accounting practices to hedge the firm against cryptocurrency price fluctuations and protect its ability to repay its depositors, and that the company was operating an effective Ponzi scheme.
This announcement came shortly after article surfaced stating that Alameda Research, a trading firm affiliated with FTX held a significant amount of FTT.
The following day, however, Binance immediately withdrew its offer causing Bitcoin and Ether to plummet another 14% and 16%, respectively, to their lowest levels since November 2020.
[79] Bitcoin has been characterized as a speculative bubble by eight winners of the Nobel Memorial Prize in Economic Sciences: Paul Krugman,[118][119] Robert J. Shiller,[120] Joseph Stiglitz,[121] Richard Thaler,[122] James Heckman,[123] Thomas Sargent,[123] Angus Deaton,[123] and Oliver Hart;[123] and by central bank officials including Alan Greenspan,[124] Agustín Carstens,[125] Vítor Constâncio,[126] and Nout Wellink.
[132] Other notable skeptics are Bill Gates, Microsoft co-founder and philanthropist;[133] Bruce Schneier, cryptographer, computer security expert, and public policy lecturer at Harvard University;[134] and Molly White, author of the Web3 Is Going Just Great website.
