Crypto Pump And Dump Scheme Targeting State Pensions Means End Is Near
Recklessly gambling 10 percent of $6 trillion state and local government pensions in worthless crypto will prove costly to pension stakeholders, including workers, retirees and taxpayers.
Legendary investor Warren Buffett has repeatedly warned investors to steer clear of crypto, calling Bitcoin “probably rat poison squared.” When public pensions, known to Wall Street as “the dumbest investors in the room,” finally jump into crypto with both feet—i.e., secure legislative approval to gamble 10 percent of workers’ retirement savings on a worthless asset, the end is near. The bubble is about to burst, leaving public pension stakeholders, including workers, retirees and taxpayers, footing the bill.
Not-too-long-ago, when pressed, public pensions strenuously denied they invested in cryptocurrencies.
In October 2022—a month before Sam Bankman-Fried’s crypto empire FTX began to unravel—I began writing and speaking about state and local pensions investing in cryptocurrency, both directly and indirectly through alternative investment funds—sometimes knowingly and often cluelessly. I referred readers to a study published by the CFA Institute, their annual Investor Trust Study, indicating that 94 percent of America's state and local government pensions were gambling on cryptocurrencies.
Public pension officials weren’t happy being outed about their secretive crypto investments.
Hank Kim, Executive Director and Counsel for NCPERS, an organization which promotes lavish public pension conferences underwritten by Wall Street and self-proclaimed “Voice for Public Pensions,” swiftly posted on its blog:
Siedle's claim that your US state pension is gambling away a portion of your hard-earned retirement savings on cryptocurrency is simply unfounded.
As policymakers develop regulatory frameworks around digital currencies, perhaps US public pensions will invest as part of their long-term diversification and risk management strategies. Who knows, maybe one day?
Well, it seems the “one day” Kim referred to when public pensions would openly embrace crypto investing has arrived. Policymakers have now developed regulatory frameworks around digital currencies?
Today public pensions are openly embracing crypto.
Across the country, state governments are now openly racing to load-up on crypto. In Ohio, House Republicans have introduced legislation that would allow the State Treasurer to invest up to 10 percent in cryptocurrency. Arizona, Utah, Texas, Wyoming, Florida, Pennsylvania, New Hampshire, Oklahoma, Massachusetts, North Dakota are not far behind.
A reckless crypto bet that used to be kept secret (even a year ago) is now heralded as an opportunity too-good-to-be-missed. Normalized gambling.
A reckless crypto gamble that used to be kept secret (even a year ago) is now heralded as an opportunity too-good-to-be-missed. Normalized gambling.
Says Futurism:
State governments are crawling over each other to be the first to dump their taxpayers' money into the blockchain — a gamble that, depending on the vagaries of the crypto market and the wiles of hackers, either make them a speculative bundle or plunge them into financial ruin.
On Tuesday, the Arizona state Senate Finance Committee passed the "Strategic Bitcoin Reserve Act," also known as SCR1005, up to the Senate Rules Committee for review. This is the last step before it goes to the broader Senate, and then the state House of Representatives.
There's a long way to go. But the act, if passed, would allow the state treasurer, State Retirement System, and Public Safety Retirement System to invest up to 10 percent of Arizona's public fund in digital assets.
Not to be outdone, a Utah house committee quickly passed its own slew of "Blockchain and Digital Innovation Amendments" the next day. That bill works toward creating "authority for the state treasurer to invest public funds in certain digital assets."
That passage came with a favorable recommendation from the Utah Economic Development committee, and would allow the state's treasurer to invest up to 5 percent of its public fund in Bitcoin and some "stablecoins."
A whole herd of state legislators just behind them. Texas, Wyoming and Florida are all in early stages of planning "Strategic Bitcoin Reserves," while representatives in Pennsylvania and New Hampshire have proposed bills allowing state treasurers to invest state funds in digital assets.
Still other states are carving out broader provisions for crypto beyond Bitcoin. Massachusetts recently introduced a bill allowing up to 10 percent of the state's public funds to be invested in a range of digital assets including crypto and NFTs. They're joined by Oklahoma, which places provisions on stablecoins similar to Utah, and North Dakota, which hasn't defined what it considers a digital asset.
If ever there was a time to be scared to death about your state pension, now is that time. State pension officials are not up to the task of selecting and monitoring these complex so-called “investments.” They haven’t a clue about the myriad attendant technologic, legal and investment risks. Not a clue.
When the “dumbest investors in the room,” reach for the riskiest, unproven “investments,” they’re going to lose big.