Facebook’s Giant Cryptocurrency Scam
For many years Facebook, Google, Visa, J.P. Morgan and virtually all the too-big-to-fail banks have used their monopolistic market power to block competition from real cryptocurrencies while secretly building their own so-called "cryptocurrencies". Then they launch their franken-coins (e.g., Facebook/Libra and JPM Coin) and expect humanity to forget what they did (and continue to do) to prevent the emergence of truly decentralized, open source economic platforms.
Monopolistic Companies Block Truth & Innovation. For example, Facebook banned cryptocurrency advertising on their platform at precisely the time when they started planning to launch their own cryptocurrency. Of course, they said to the general public the reason for the ban was to protect consumers. More examples:
- J.P. Morgan's CEO claimed Bitcoin was a fraud while JPM was secretly allocating USD millions to their internal Bitcoin trading operations.
- Google censored our previous Broken Capitalism book and banned crypto ads while developing their own crypto strategies.
- Visa and Mastercard prevent merchants from accepting crypto, yet they have no problem paying $10 million each to join Facebook's Libra cryptocurrency cartel, which is already falling apart (as we predicted) for the reasons discussed below.
- Bank of America, Goldman Sachs and several members of the banking cartel are now rushing to patent their own cryptocurrency/blockchain "inventions". Of course, they have been spreading lies and fear about other legitimate cryptocurrencies for a decade to stifle competition until the banks figure out how to exploit cryptocurrencies themselves. (Kudos to American Banker for reporting this truthfully.)
Lies & Double-Speak. The same hypocritical, bad-faith behavior has occurred over and over as giant corporate cannibals have publicly ridiculed legitimate open source cryptocurrencies to suppress their adoption. Meanwhile, the giant cannibals secretly build their own pseudo-cryptocurrencies and blockchain-based exploitation platforms.
All "Cryptocurrencies" Are Not Equal. The hypocrisy and monopolistic behavior of the giant corporate cannibals is blatant, but the worst part is their "cryptocurrencies" (or "CartelCoins") have virtually no resemblance to a true cryptocurrency. Specifically:
- They are not immutable, which means their "blockchains" are just glorified SQL databases that have no integrity because they can be modified by giant cannibals at any time.
- They are not private or anonymous in any meaningful sense.
- They are centralized and/or federated between the banking cartel members and/or totally controlled by Facebook, Google, etc.
- They can be controlled and censored by any corrupt government.
- They are created primarily as exploitation platforms to enrich giant monopolistic for-profit corporate cannibals.
There's No Comparison Between CartelCoins and Genuine Cryptocurrencies. Those characteristics above are literally the opposite of how a genuine, decentralized open source cryptocurrency is supposed to work. This is why the so-called "cryptocurrencies" spawned by the Facebook/Libra and banking cartels are not cryptocurrencies at all. They are exploitation platforms; and they should never be compared or confused with Gini, Bitcoin or any other legitimate, decentralized open source cryptocurrency.
Scams Hurt Legit Cryptocurrencies & Delay Widespread Adoption. Despite their shallow humanitarian platitudes, the giant cannibals are simply trying to jump on the cryptocurrency bandwagon and deceive billions of humans who don’t have enough knowledge about cryptocurrencies to distinguish between scams and bona fide open source cryptocurrencies. The deceptive scams of these trusted giant for-profit cannibals hurts the cryptocurrency industry just as much as the smaller-scale scams that have unfairly tarnished the reputation of the cryptocurrency industry over the past 10 years.
The Facebook Libra Scam
We don't use the word "scam" very often, but the Facebook CartelCoin is among the most egregious scams that we have ever seen. To appreciate the depth and scope of this scam, let's begin with some highlights from the 2.5-hour congressional investigation into Facebook's CartelCoin.
- "I don’t trust Facebook and it’s because of the repeated violations of your users privacy, [and] repeated deceit." – Senator Martha McSally
- "Mr. Marcus, it’s clear from this hearing, distrust of Facebook is pretty universal." – Senator Sherrod Brown
- "Now Facebook asks people to trust them with their hard earned paychecks . . . a breathtaking amount of arrogance." – Senator Sherrod Brown
- "Facebook is dangerous . . . like a toddler who has got their hands on a book of matches and burned the house down over and over." – Senator Sherrod Brown
- "You really think people should trust you with their bank accounts and economy, that’s delusional." – Senator Sherrod Brown
- "Explain how paying dividends makes Libra a not-for-profit." – Senator Pat Tomey (Note: This comment was about how Facebook and the Libra cartel exploit their CartelCoin to extract income from the platform; the end-users don't get paid any dividends.)
- "There’s lots of comments brought up about Facebook that haven’t been meritorious, and I’m being generous." – Senator Jon Tester
Trust, Trust, Trust. The word "trust" was mentioned 69 times during that congressional hearing. This validates the principles that we covered in "Who Has the Right Cryptocurrency Incentives?" which was published long before the Facebook CartelCoin scam was launched.
The "Banking the Unbanked" Delusion. The Facebook/Libra website talks about "banking the unbanked" as if that's a new idea. That has been one of the goals for Bitcoin and virtually all other cryptocurrencies since Bitcoin was invented in 2008. Facebook/Libra essentially claims there are 1.7 billion unbanked humans on Earth because moving money is hard, as if it's simply a technical problem that Facebook can swoop in to fix. In reality, 1.7 billion humans are unbanked because of deep political and economic systemic corruption in countries where high wealth concentration enables corporate cannibals and politicians to use their wealth-derived power to dominate their economies and political systems. This is what prevents reliable, trustworthy banking in those countries.
The Gini Index Reveals the Truth. The Gini Index chart below illustrates the truth by color-coding the very strong correlation between income inequality and dysfunctional economic and political systems. Not coincidentally, these are precisely the regions that have the highest concentration of unbanked and under-banked humans.
This is Exactly Why the Gini Foundation Exists. Giant corporate cannibals like Facebook and the Libra cartel spread false and misleading information about what causes wealth/income inequality around the world, then they launch scams and exploitation platforms as solutions to problems that they themselves are creating. Indeed, a Facebook-dominated shadow banking system does absolutely nothing to fix any of the fundamental causes of corruption-spawned wealth/income inequality; it will simply replace one corrupt, cartel-dominated system with another.
Can Facebook be Trusted?
Many people are deeply suspicious of Facebook's track record on privacy (including hundreds of millions of exposed user accounts and 50 million here and 87 million there), election manipulation, large-scale sociological manipulation and repeated lies, deceptions and refusal to respond to government inquiries. Facebook/Libra explicitly states on their website that their goal is “to shape a regulatory environment”, which obviously means: Capture regulators to "shape" regulations for Facebook's own self-serving profit motives. Governments and citizens alike have good reasons to react negatively to Facebook's CartelCoin, which has nothing to do with Gini, Bitcoin or any other legitimate cryptocurrency.
The CartelCoin Whitepaper. In the Facebook/Libra whitepaper, they make many dubious claims. Given everything we know about Facebook today, these claims are laughable. Below are a few of their claims followed in red by the implicit message that every rational human on Earth should be able to infer from each claim.
- "We believe that many more people should have access to financial services and to cheap capital." ("Services" and "cheap capital" provided by the Facebook Shadow Bank.)
- "We believe that people have an inherent right to control the fruit of their legal labor." (So that Facebook can extract the fruits of their labor.)
- "We believe that global, open, instant, and low-cost movement of money will create immense economic opportunity and more commerce across the world." ("Immense economic opportunity" for Facebook to extract your wealth and monetize your private information.)
- "We believe that people will increasingly trust decentralized forms of governance." (Ignore the fact that Facebook's bastardized blockchain and for-profit corporate governance are not decentralized in any meaningful sense. And ignore the fact that Facebook has an atrocious track record of unethical business practices and privacy violations, which is why Facebook is one of the least trustworthy organizations on Earth.)
- "We believe that a global currency and financial infrastructure should be designed and governed as a public good." ("Public good" means good for Facebook.)
- "We believe that we all have a responsibility to help advance financial inclusion, support ethical actors, and continuously uphold the integrity of the ecosystem." ("Advance financial inclusion" means accelerate Facebook's profits. "Support ethical actors" means support entities that submit to Facebook's profit-seeking agenda. "Uphold the integrity of the ecosystem" means do everything possible to secretly extract wealth from the ecosystem without getting caught like Facebook has done so many times in the past.)
The Facebook Shadow Bank. Unlike Gini, Bitcoin and other legitimate open source cryptocurrencies that are intended to function as truly decentralized currencies, Facebook's CartelCoin is a synthetic currency derivative, which is synthesized from a basket of national currencies. This creates a veneer of legitimacy to conceal Facebook's actual agenda: Facebook wants to operate as a global shadow bank and create CartelCoin-denominated debt liabilities that masquerade as crypto-money within a Facebook-controlled ecosystem. In other words, they want to create a centralized shadow banking system based on dysfunctional and corrupt fiat currencies to extract more wealth from humanity. (See the Fiat Currency Graveyard.)
The Cartel Behind the Shadow Bank. In response to one of Facebook's CartelCoin announcements, Sarah Jamie Lewis from the Open Privacy organization succinctly captured the essence of what's wrong with CartelCoin: "Can't wait for a cryptocurrency with the ethics of Uber, the censorship resistance of Paypal, and the centralization of Visa, all tied together under the proven privacy of Facebook." (source) For those who don't detect the subtle sarcasm in her comment: Uber is notorious for unethical business practices; PayPal is notorious for shutting down accounts without giving any reason; Visa is a notorious, centralized payment system monopoly; and of course Facebook is a notorious exploitation platform on many levels.
Absolute Power Makes Cannibals Tone-Deaf & Blind. Facebook is despised by hundreds of millions of people; yet, Zuckerberg and his colleagues still think they can launch a cryptocurrency that would be trusted by a critical mass of humanity to make it viable. The "digital gangsters" at Facebook don't seem to understand a basic principle in economics: Currencies are fundamentally about trust. (We explore why this is true in The Gini Trust Protocol.)
This is Why We Predicted the Failure of CartelCoin. Even if it was technically credible (it's not), Facebook/Libra's CartelCoin will never succeed because it's already dominated by a cartel of giant corporate cannibals and nearly all of them are universally hated collectively by billions of humans. No matter how many casual "users" Facebook and the despised cartel members claim to have, there will never be a critical mass of humans, organizations and governments that trust Facebook with their valuable and confidential economic assets.
In fact, there is no rational reason to use CartelCoin when there is a nonprofit, decentralized, open source alternative like Gini with truly aligned humanitarian incentives, superior technology with built-in ecosystem sustainability mechanisms, and a much more authentic and meaningful purpose.
See also: Weaponized Wealth Concentration Destroys Economies
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