FTX Crypto Crises

Long before the FTX Crypto Crises, a group of entrepreneurs approached us about a great idea involving a gold-backed cryptocurrency. The conversations persisted over a couple of years, and the project gained steam with business plans and projections. Numbers were thrown back and forth of the great fortune possible in the endeavor. A decision was made on our part to end these conversations, as we decided cryptocurrencies contradicted our mission of serving the public in gold and silver bullion ownership.


Last month, Texas officials reported they were investigating FTX for selling unregistered securities. FTX is a cryptocurrency exchange headquartered in the Bahamas and was founded by Sam Bankman-Fried (SBF) and Gary Wang in 2019. In 2017, SBF and an accomplice formed Alameda Research, a quantitative trading company. In a nutshell, quantitative trading involves derivatives and high-risk portfolio management. It is alleged that FTX was funneling billions of its customers’ funds into Alameda Research to prop it up. FTX and Alameda Research have filed CH 11 bankruptcy, leaving millions worldwide with billions in losses. Our question is this: Where does this leave other sweetheart cryptos like Tether and Bitcoin?

Central Bank Digital Currency (CBDC)

On March 9th, 2022, President Joe Biden signed Executive Order 14067. The official title of the order: Ensuring Responsible Development of Digital Assets. The order is designed to protect consumers and investors, decrease national financial security risks, and the development of a Central Bank Digital Currency (CBDC). This is the US Government`s first real move into regulating and enforcing digital assets. At this point, it feels convenient on many fronts…is this action the canary in the coal mine? Our country is currently 30 trillion dollars in debt, with inflation at a 40-year high. Politically speaking, the policies that created the current economic storm will remain intact, per President Biden’s post-midterm election statement. 

If history has taught us anything, executive orders usually work against and not for the people. The government will argue differently, but let’s consider Executive Order 6102. On April 5th, 1933, President Franklin D. Roosevelt declared a national emergency. His edict EO 6102 made owning gold privately illegal for US citizens. The citizens were forced to sell their gold to the government at an outrageously low price or face a fine and up to 10 years in prison. Years later FDR was credited with saving the US dollar because of EO 6102, but at the expense of those who sought to protect their assets from inflation.

Whats next?

The question here is could the US government confiscate gold again? The answer is a resounding yes! The US dollar is once again in serious danger. But facing 30 trillion in debt our belief is gold confiscation would do little good. And if you are lucky enough to have 20% of your net worth privately held in gold bullion when the price per ounce skyrockets to 10K or higher, and you want to cash it in, never forget the Crude Oil Windfall Profit Tax of 1980. Could these same laws apply to gold? At the end of the day, the US government will find a way to take what they feel is their fair share…for the good of the government and the people of course. 

Best Regards,
Scott Hage
Monetary Specialist


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