Last week, federal prosecutors arrested a fifty-year-old Long Island man and accused him of defrauding hundreds of investors by offering them gains of five per cent per week—yes, per week—from a fictional crypto-trading platform. “Eddy Alexandre allegedly induced his clients to invest over $59 million with promises of huge passive income returns,” Damian Williams, the U.S. Attorney for the Southern District of New York, said, in announcing the indictment. “In reality, no such technology existed, as Alexandre is alleged to have invested very little of their money—most of which he lost—and transferred most of it to his own personal accounts to pay for luxury items for himself.”
Alexandre is presumed innocent until proved otherwise, of course. In an initial court appearance, a judge freed him to home confinement on a bond of three million dollars. But the indictment came during what is increasingly looking like the unwinding of the great crypto “bezzle.” The term comes from John Kenneth Galbraith’s classic account of the 1929 stock-market crash, and it refers to the “inventory of undiscovered embezzlement” that builds up during speculative booms, when investors become ever more credulous and rising prices create the appearance that real wealth is being created. In this halcyon part of the cycle, Galbraith noted, “the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.”…
