Welcome to Dark Markets’ Tuesday news roundup, and some short thoughts on academic plagiarism. To skip right to the news, scroll down a few screens. For my thoughts on the rot at the heart of academia, scroll to the bottom.
“Let me tell you, it’s an absolute gut-punch to find out that this whole time there was a secret ‘plagiarism threshold’ understood by people at Yale and Harvard that wasn’t passed along to state-school researchers like myself.”
First, some housekeeping:
Scheduling: As part of professionalizing in the new year, Dark Markets will now be on a regular schedule. While it may change based on performance and reader feedback, here’s the plan for now:
Sunday:The Big Read: A longer essay or reported piece. A large share of these for the time being will be work towards my book on Sam Bankman-Fried. This Sunday, we published a deep dive into Barbara Fried’s philosophical work. These posts will almost always be partially paywalled.
Tuesday: News Roundup and Short Essay: A weekly roundup of major events in illicit finance and market malfeasance. These posts will get a design and layout overhaul soon to make them more scan-able and actionable, but will also often include a brief commentary - today, on the academic plagiarism scandal. They’ll arrive earlier in the morning as I dial in my schedule.
Some portion of these emails will be paywalled, but hopefully not all of them.
Thursday: Flex Day: Some Thursdays will feature a third weekly email. This may be a continuation of Sunday’s Big Read, or pretty much anything else This coming Thursday, you’ll get the second half of the Barbara Fried piece.
Biweekly: The Dark Markets Podcast. I don’t have a day in mind here, but I’ll be aiming for biweekly podcast episodes. The first episode, featuring FTX victim and class action lead plaintiff Sunil Kavuri, is out now. The second episode, featuring another major FTX figure, will drop in just a few days. Also in the mix will be audio versions of longer Dark Markets articles. All podcast episodes are free, but Sooner rather than later, I’m hoping to offer additional premium podcast content to paying subscribers.
Dark Markets is a reader-supported publication. To get everything we offer, consider becoming a paid subscriber.
Along with the fundamental case for crypto, the book includes a healthy dose monetary history, the story of medieval cryptographer Johannes Trithemius, and a lot of early crypto gossip and scandal for my SBF fans. Buy it in paperback or Kindle editions.
Dark Markets News for January 9, 2024
Bitcoin Rips
Bitcoin broke $47,000 early Tuesday, levels last seen around March of 2022. Bitcoin’s all-time high of just over $67,000 was in November of 2021. Given current trends we’ll break through that level in mid-February (but see Arthur Hayes’ comments below).
Bitcoin Spot ETF Chaos Ahead of Wednesday Deadline
There were a flurry of filings by prospective Bitcoin spot ETF issuers on Monday, mostly outlining fee structures. Some of these appear to be extremely competitive, with Blackrock planning to launch at 20bps (0.2% annual fee) and Fidelity at 39bps (0.39% annual fee). The SEC quickly responded with notes, and got quick responses, in a back-and-forth that is being described as “unprecedented.” Not in any particularly bad way, though - experts still expect approval soon.
Nic Carter argued that the race to the bottom on fees implies competition for significant expected volume. You might also think it was giving Coinbase executives heartburn, since these rates in many scenarios would undercut their fees … except that Coinbase is the custodian for many of these services. They’re also not that likely, I think, to lose exchange users to the ETF - the bulk of ETF inflows will be new money.
The FBI Is Using Civil Forfeiture to Attack Amazon’s Enemies
Civil forfeiture is pretty high up a long list of brazenly unjust tactics available to, and regularly abused by, the power-mad cadre known collectively as U.S. law enforcement. Broadly, civil forfeiture allows cops to simply steal any property that they *claim* was used in or gained from the commission of a crime, even without an indictment, much less any conviction, for that crime. At what was previously its most absurd extremes, that means things like taking someone’s car because they had sold a few dollars worth of weed.
Those shenanigans are often the province of the hot dog-necked orcs of the LAPD or similar degenerate institutions. But a new story takes that petty bullying to the corporate and federal level: Amazon allegedly leaned on the FBI to seize nearly $1 million belonging to the family of one of its former employees, Carl Nelson. Amazon alleged Nelson had engaged in self-dealing in his role as a real estate purchaser, but no charges have ever been filed.
Even more shamefully, the FBI took cash from Nelson’s wife’s accounts, even though neither she nor that money had anything to do with Carl’s (uncharged) misdeeds. The forfeiture occured in May 2020, but in January 2022, the Feds agreed to return most of the money, seemingly admitting that their initial seizure was baseless.
Arthur Hayes Predicts ‘Vicious Washout of Crypto Tourists’ in March
Arthur Hayes is the Chad of all Chads in the crypto-verse. The former CEO of BitMEX seems to spend most of his time skiing in Hokkaido (which, respect), and occasionally launching nuanced market-conditions roundups. He published one of those roundups over the weekend.
Arthur’s key message? “I am preparing for a vicious washout of all the crypto tourists in March of this year.”More specifically, he expects“Bitcoin to experience a healthy 20% to 30% correction from whatever level it has attained by early March,” assuming certain assumptions hold.
His argument hinges on the Fed’s management of interest rates, and specifically the reverse repo program, a.k.a. the Fed’s short-term, Treasury-bond backed lending facility. Very roughly, Arthur believes that the Fed will run out of liquidity to inject through repos in early March, at the same time that a rate hike is on the table, AND banks who borrowed against lower-yielding, old bonds through the expiring Bank Term Funding Program will be scrambling for cash to close out those positions.
It’s a brutally compelling scenario, and also aligns with my “sell the news” narrative rhythmanalysis of how to play the Bitcoin ETF approval.
DCG Pays back creditors … Or Not?
Barry Silbert over the weekend announced that Digital Currency Group has fully repaid $1 billion that it owed Genesis Global Capital, its own crypto-lending subsidiary. DCG assumed Genesis’ losses from the Summer 2022 collapse of Three Arrows Capital with a laughably-not-arms-length, hilariously non-callablepromissory note, which it subsequently refused to honor at par to Genesis’ creditors. In short, it was more or less an accounting trick.
Then Genesis ultimately blew itself up and halted withdrawals in November of 2022, like an only slightly prettier version of Celsius or BlockFi, leaving customers including the Winklevoss Twins’ Gemini Earn program in the lurch.
(Genesis getting blown up was substantially the reason CoinDesk has been sold for scrap, and why I personally lost my job.)
But here’s a Dark Markets pro tip: *always be suspicious of news announced on a Friday.* In fact, Blockworks reports that a group of DCG creditors are now alleging that DCG hasn’t really paid off its loans from Genesis. Specifically, the creditors claim that DCG is trying to repay USD and BTC obligations using shares of ETH-denominated instruments. That may be splitting hairs, but given the current ETH/BTC pair trend, I would split it too.
Academia is a Marketplace for Nothing
I’ve been mulling whether I, as a former academic, have anything to say about the ongoing “plagiarism scandal” that recently knocked Harvard President Claudine Gay from her perch. On the one hand, I’ve hesitated, because the entire thing is a manufactured controversy that ultimately amounts to right-wingers like Chris Rufo disingenously leveraging of the breakdown of U.S. consensus on Israel to attack their enemies – those enemies including, specifically, institutions of reason, and people of color. The media has gotten incredibly played.
At the same time, the (unambiguous) plagiarism found in the work of Gay and Bill Ackman’s wife Neri Oxman is nothing short of pathetic, and their defenders even more craven. Many of the claims against both Gay and Oxman are along the lines of copying from Wikipedia, or taking non-crucial passages from the work of other scholars. I have been utterly stunned to hear claims to the effect that, while this is pretty clearly ‘technically plagiarism,’ these forms of plagiarism basically don’t count in academia.
Before I dig into why this is such a pathetic condemnation of academic culture as a whole, a refresher on my background: before becoming a journalist, I was a highly accomplished academic. I abandoned the field largely for the reasons that I see manifesting in this controversy - a disregard for craft in favor of CV-padding. I earned my PhD from the University of Iowa in 2010, and published two single-author research papers, in premier journals in my field, in the three years immediately after graduation.
One of these papers was part of a 2014 issue of Technology and Culture that won an MLA award for that year’s best collected issue. That paper, on the history of car audio, was recently featured by JSTOR and is (miraculously) available for free download. I was also offered a book deal with an academic publisher, which I ultimately abandoned as the process’ completely mechanized, anti-creative nature became clear to me.
Not to put too fine a point on it, but that means I was on pace to substantially out-publish Claudine Gay, who had apprently only published 11 journal articles and no books by the time she was named President of Harvard.
So Gay’s unproductivity and plagiarism, and Oxman’s huge stolen blocks of text offend me pretty fucking deeply. I sweated and bled for those publications, and here are people who have been handed piles of wealth and privilege while cutting corners.
But I’m equally disturbed by the worm-like contortions of people who are trying to say all of this is no big deal. The most shocking of many such defenses came from Emily Bazelon of Yale and the New York Times, who in a recent episode of Slate’s Political Gabfest declared that “I feel like we kind of understood that there was a misdemeanor category [of plagiarism], and then you kind of got embarrassed and then you went on … [Gay’s offense was] not idea theft, which is the felony charge.”
Let me tell you, it’s an absolute gut-punch to find out that this whole time there was a secret “plagiarism threshold” understood by people at Yale and Harvard that wasn’t passed along to state-school plebs like myself.
More seriously, this is just unbelievably offensive as someone actually committed to scholarly inquiry, and to the actual work of writing words down on a page. Every word counts, and the idea that anyone could even live with themselves after copying wholesale from Wikipedia is truly baffling to me.
The entire affair affirms my decision to leave academia, because it confirms my assessment, made more than a decade ago, that research universities were places that true inquiry and creativity go to die, based on numerous encounters with crassly mercenary scholars who churned out work based on market demand rather than their own curiosity.
Things have only gotten worse in the decade-plus since. In addition to the corner-cutting plagiarism, Oxman was previously caught trying to conceal donations from Jeffrey Epstein, and those two things share a common, materialist explanation - on brilliantly laid out by Liz Franzcak on the January 8 episode of TrueAnon (a show which I highly recommend).
“Part of this story, about Epstein funding all of these different scientists … is that competition has increased among people in research insttutions and in the academies. Because there has been an increase in precarity, and an increase in demand for blockbuster, career-making discoveries. Because those kinds of career-making discoveries make great headlines, [and] for those institutions, the headlines mean they can market off of that, and get more donors, more prestige, more awards, more money.”
“As that competition has increased, the reliance on private donors has also increased. You need more and more funding for your weird esoteric research projects that you think might lead to some headline discovery that might fill this market demand. And that means that sometimes you have to get into bed with unsavory people, or you have to get into bed with fraudsters.”
In other words, in case you haven’t figured it out already, the rewards being handed out to “researchers” in U.S. universities often have little or nothing to do with their actual “scholarship,” and much more to do with their own marketability. That’s the real common ground between Neri Oxman and Claudine Gay - they managed to succeed, however briefly and fraudulently, in a career that has no objective performance standards.
As the saying goes, academic fights are so bitter because the stakes are so low - except for the society around these frauds, for whom the stakes could not be higher. We are well into an era of profound distrust of institutions. Anyone out there saying that we should lower our intuitive standards for academic integrity doesn’t deserve the privilege of continuing to comment on the issue.
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