Why do people invest in crypto? 'It's partly fraud and partly delusion,' says Charlie Munger. – Morningstar

By Weston Blasi
‘There are people who think they’ve just got to be in on every deal that’s hot. … I think it’s totally crazy,’ Berkshire Hathaway vice chair says in the wake of FTX bankruptcy filing.
Charlie Munger, vice chairman of Berkshire Hathaway (BRKA), is not a fan of cryptocurrency, and he shared some frank thoughts about it in the wake of the FTX bankruptcy filing.
See also: Coinbase CEO Brian Armstrong says it’s ‘baffling’ that Sam Bankman-Fried isn’t in custody yet
"It pains me that in my own country I see people that were once regarded as very reputable people helping this thing exist, promoting [its] use and so forth," he said in a CNBC interview that aired in November. "This is a very bad thing."
Munger spoke to CNBC in the days after the financial collapse of the crypto firm FTX and after its founder, Sam Bankman-Fried, stepped down as CEO of the company.
See also: Tom Brady, Steph Curry and Kevin O’Leary set to lose big from FTX bankruptcy filing
So why do good people make poor investment decisions? Munger believes they’re influenced by a combination of factors.
"It’s partly fraud and partly delusion," Munger said. "That’s a bad combination."
He added: "There are people who think they’ve just got to be in on every deal that’s hot. … I think it’s totally crazy."
See also: Bitcoin in your 401(k)? Senators intensify pressure on Fidelity to reconsider crypto in retirement plans
Munger and Berkshire Hathaway CEO Warren Buffett have been crypto critics in recent years — and Munger has been a vocal critic of bitcoin specifically.
"When you have your own retirement account and your retirement adviser suggests you put all your money in bitcoin, just say no," Munger said at Berkshire Hathaway’s annual meeting in April. He later called the digital assets "stupid" and "evil."
FTX paused withdrawals in November amid a multibillion-dollar liquidity crisis. Rival crypto exchange Binance had announced interest in an FTX takeover prior to the bankruptcy filing but opted against the move and later called the company’s financial issues "beyond our control or ability to help."
Bankman-Fried saw his net worth plummet by billions of dollars after his company’s collapse. Financial groups that had backed FTX include Third Point Ventures, Tiger Global, Sequoia Capital, SoftBank and BlackRock (BLK).
The House Financial Services Committee plans to conduct a hearing surrounding the situation with FTX, and it "expects" to hear from Sam Bankman-Fried. The crypto founder says he is willing to testify in front of Congress, but is not ready to yet.
Bitcoin’s price is down over 70% over the past year, and the price for ether is also down over 70% over the same period.
-Weston Blasi
(END) Dow Jones Newswires
12-05-22 1445ET
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.
© Copyright 2022 Morningstar, Inc. All rights reserved. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.


Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *