Three weeks ago – before Consensus 2022, before the Federal Reserve put the fear of God into crypto traders, before the Celsius meltdown sent bitcoin on a downward spiral toward $20,000 – I wrote a column about the challenges quantum computing poses to blockchains.
Like clockwork came the cries of “FUD” from the Crypto Twitterati.
You’re reading Money Reimagined, a weekly look at the technological, economic and social events and trends that are redefining our relationship with money and transforming the global financial system. Subscribe to get the full newsletter here.
FUD, for those who don’t know, stands for “fear, uncertainty and doubt.” The crypto community has long used the pejorative to describe what they see as falsehoods or exaggerations spread by opponents of cryptocurrencies and blockchain technology to scare off investors, regulators and the general public.
And that’s fine, I suppose, if you’re talking about deliberate attempts to spread ill will. But the knee-jerk way in which supporters of crypto resort to the “FUD” cry and other dismissive responses to any critique or expressions of concern about the space also reveal a worrisome immaturity in this space.
Too often, journalists, especially my team at CoinDesk, are targets of these responses when those reporters are simply asking the tough questions that any good media organization must ask to get to the facts.
Now, with the failings of two key systemically risky enterprises - Celsius and the Terra-Luna project – roiling the crypto markets, it’s my hope that people in this industry can finally appreciate the value of asking questions and finding failings. Kicking the tires on projects and holding people accountable for flaws within them is how the industry will improve and grow.
That’s true, whether it’s to explore what, if anything, must be done to upgrade blockchains to post-quantum proofs or whether it’s to expose the serious, vital questions that smart analysts are asking about the viability of Terraform Labs’ UST stablecoin or Celsius’ high-yield returns.
Attacking the messenger
Without wanting to pile on or indulge in “told you sos,” it’s worth pointing out how, over the past three years, CoinDesk reporters have covered Terraform Labs and Celsius and the responses they’ve received. The hard-hitting coverage has been relentless, as have the efforts to dismiss our line of questioning as FUD. Here are but a couple of examples:
- In July 2020, former CoinDesk reporter Nate DiCamillo published a piece entitled “What Crypto Lender Celsius Isn’t Telling Its Depositors” about how the company may have been taking on “more risk than its depositors realize.” The reporter described the company’s operation in straightforward terms that made the risks clear: “Like a bank, Celsius Network borrows from one set of clients, lends to other customers and pockets the difference in interest. Unlike a bank, it only borrows and mainly lends cryptocurrency, and it does not have government deposit insurance.” Retweets of the story were met with cries of “fake news.” Celsius CEO and founder Alex Mashinsky was quoted in the piece telling a YouTube audience of “Celsians” - as the company’s users are known – “Don’t listen to the FUD-ers, look at the facts.” Mashinsky went to assure those same listeners “that the company is prudently deploying their crypto deposits,” DiCamillo wrote. FUD or prescient warning? You decide.
- And then there’s Terraform Labs high-profile founder Do Kwon. In December, CoinDesk selected Kwon as one of its “Most Influential” for 2021. But acknowledging a person’s influence in an industry will never preclude our journalists from asking tough questions. At that time, with Terraform Labs under investigation by the U.S. Securities and Exchange Commission and the company having taken the dramatic step of filing a lawsuit against the SEC to challenge its subpoenas, our CoinDesk TV “First Mover” anchor Christine Lee asked Do Kwon for his thoughts on the U.S. regulatory situation. His response was surprising, given the situation: “In the U.S.? I have very little interest.” When Christine pressed him, Kwon claimed that because he was of Asian descent he had an interest in global affairs and wasn’t “obsessed with American policies and American regulations.” What ensued after that was a Twitter attack against Christine, in which Kwon stirred up a horde of “LUNAtics”against her. A few brave souls sprung to her defense, including one who pointed out that Kwon’s “I’m Asian” defense – as if he was indifferent to regulatory issues – was shallow, because he had not set up his company in his native South Korea but in the more lax regulatory jurisdiction of Singapore. But, of course, these defenders were immediately accused of FUD.
The point here is that as journalists struggle to get to the truth, the people they are seeking answers from too often abuse the emotional connection their community of token holders have with their projects. They stir up the tribe to obfuscate and intimidate. It is ugly behavior and it looks bad for the industry.
More importantly, this lack of appreciation for fact-finding runs counter to the antifragile ethos of open-source systems. Crypto is supposed to be constantly improving and advancing, precisely because the bugs and flaws in its code and design are exposed and are subject to discussion and debate. Out of that process comes progress.
Now that the flaws of the Terra-Luna and Celsius projects have been exposed in the most painful way, let’s hope the community uses this opportunity for some of its own introspection.
Let’s assign “FUD” to the dustbin of history.