crime

Back in 2021, interest rates had been so low for so long that that seemed to be the new normal. Yields on stable assets like money market funds were around 0.3% (essentially zero, and well below inflation), as I recall. As a yield addict, I scratched around for a way to earn higher interest, while sticking with an asset where (unlike bonds) the dollar value would stay fairly stable.

It was an era of crypto flourishing, and so I latched onto the notion of decentralized finance (DeFi) lending. I found what seemed to be a reputable, honest company called BlockFi, where I could buy stablecoin (constant dollar value) crypto assets which would sit on their platform. They would lend them out into the crypto world, and pay me something like 9 % interest. That was really, really good money back then, compared to 0.3%.

On this blog, I chronicled some of my steps in this journal. First, in signing up for BlockFi, I had to allow the intermediary company Plaid complete access to my bank account. Seriously, I had to give them my username and password, so they could log in as me, and not only be able to withdraw all my funds, but see all my banking transactions and history. That felt really violating, so I ended up setting up a small auxiliary bank account for Plaid to use and snoop to their heart’s content.

I did get up and running with BlockFi, and put in some funds and enjoyed the income, as I happily proclaimed (12/14/2021) on this blog, “ Earning Steady 9% Interest in My New Crypto Account “.

BlockFi assured me that they only loaned my assets out to “Trusted institutional counterparties” with a generous margin of collateral. What could possibly go wrong?

What went wrong is that BlockFi as a company got into some close relationship with Sam Bankman-Fried’s company, FTX. Back in 2021-2022, twenty-something billionaire Sam Bankman-Fried (“SBF”) was the whiz kid, the visionary genius, the white knight savior of the crypto universe. In several cases, when some crypto enterprise was tottering, he would step in and invest funds to stabilize things. This reminded some of the role that J. P. Morgan had played in staving off the financial panics of 1893 and 1907. SBF was feted and lauded and quoted endlessly.

For reasons I never understood, BlockFi as a company was having a hard time turning a profit, so I think the plan was for FTX to acquire them. That process was partway along, when the great expose’ of SBF as a self-serving fraudster occurred at the end of 2022. He effectively gambled with his customers’ money. This would have made him even richer if his bets had paid off, but they went sour, which brought everything crashing down.

FTX quickly declared bankruptcy, which forced BlockFi to go BK as well. SBF was eventually locked up, but so were the funds I had put into BlockFi. The amount was not enough to threaten my lifestyle, but it was enough to be quite annoying.

Sam’s parents are both law professors at Stanford who are now resisting returning to FTX’s creditors the $32 million (!!!) in assets (cash and real estate) that SBF had given them out of FTX’s operations. Some of that $32 million they are hoarding is mine, since BlockFi needs to recover its claims against FTX in order to make BlockFi clients whole. Sam’s mother has denounced the legal judgment against her son as “as “McCarthyite” and a “relentless pursuit of total destruction,” which is enabled by “a credulous public.” One wonders what little Sammy imbibed in the way of practical ethics in that household of idealistic Stanford law professors – the “effective altruism” that the Bankman-Fried family touts is perhaps a gratifying concept, until it actually costs you something you don’t want to part with. But I digress.

BlockFi Assets Begin to Thaw

I got emails from BlockFi every few months, assuring customers that they would do what they could to return our assets. Their bankruptcy proceedings kept things locked, but now they are starting to return some money. A judge ruled in early 2023 that assets held by users in their BlockFi “wallet” belonged to the users and could be withdrawn. However, assets in the interest-bearing account (which is where my stablecoin was) technically still belong to the bankrupt company’s estate, and were not necessarily available for withdrawal. But now, following another legal agreement, BlockFi is returning funds from the interest accounts. The problem is that you will only get some fraction of what you put in. Some YouTube commenters have complained they only got 10-25% of their assets, and no one seems to know if they will ever get more. Ouch.

I got an email from BlockFi saying that I have assets to claim, but I need to set up an actual independent crypto wallet to receive them. BlockFi will only transfer the actual coin, not the dollar values. So, I am in the middle of this process. It’s one thing to open a wallet, where you can transfer crypto coins in and out. It is another to exchange or monetize your coin; for that you seem to need an exchange.

I have chosen to go with Coinbase. It is not the cheapest alternative, but it seems to be the most solid U.S. based crypto exchange. I have opened a Coinbase account now. As with BlockFi, I had to go through Plaid (ugh) for the connection to my bank account.

Next thing I need to do is to open a Coinbase wallet, and try to connect with BlockFi, and see what I get back. I will post later on what happens there.

Update: I got scammed in this process, see here . My bad for clicking on a link in an email, instead of going to the official website for the link…

A lot of people think New York City is an especially high-crime city. Including some US Senators. Here’s senior Senator from Alabama:

Hope @JoeBiden enjoyed going out for ice cream in NYC while the rest of the city is afraid of crime and migrants.
— Coach Tommy Tuberville (@SenTuberville) February 27, 2024

Ignore the weird obsession with Biden’s ice cream habit. The Senator is concerned that NYC is not safe.

But what’s the reality? Here’s a map showing the homicide rate in each state, and its relative position to NYC (data is from the CDC for 2022, the most recent complete year available right now).

The light-colored states have a lower homicide rate than NYC (5.2 deaths per 100,000). There’s 18 of those states. But most states have higher homicide rates than NYC. Some are a lot higher, even triple NYC in a few states (colored purple). Alabama’s homicide rate of 13.9 deaths per 100,000 people is about 2.5 times as high as New York City.

But perhaps the homicide rates in these states are being driven by high homicide rates in cities in those states? Comparing a city to a state is perhaps a little strange to do, but I also often hear this retort: well, it’s those cities, especially “Democrat-controlled” cities, that are driving the high homicide rate in Alabama and elsewhere. And while this is true to a certain extent, comparing rural counties to New York City doesn’t make Alabama and the South look much better:

For this map I combined 2021 and 2022 data, because the CDC doesn’t report very small numbers (usually under 10 deaths), so grouping two years is needed to get more data. Even so, there are still a handful of states that don’t have enough homicides for CDC to report them over that two-year period, and they are shown in gray on the map (as well as states that have no rural counties: Delaware, Rhode Island, and New Jersey).

Notice that even focusing on just the rural counties, there are almost 20 states with higher murder rates than New York City. Again, some are double or even triple. Rural Alabama, at 11 deaths per 100,000 people, is exactly double NYC. Notably, the entirety of the rural South is higher than NYC.

If this is all true, why might New York City feel less safe? There are a number of possible explanations, but I’ll offer a few. First, homicide isn’t the only kind of crime. While it does correlate with other crimes, it’s not a 1:1 relationship, so it’s likely that some places with higher homicide rates than NYC have lower levels of assault, rape, or property crimes. These are even more challenging to compare across jurisdictions, but it’s a possible explanation. Related, NYC is a relatively safe big city! Other big cities wouldn’t compare as favorably to Alabama. But folks just seem to love NYC as a punching bag.

The other explanation is just the sheer number of people, and therefore homicides. According to the CDC, NYC had 434 homicides in 2022, that’s an average of more than one per day. You could literally turn on the news every single day and hear about a murder, and perhaps you had even been in the neighborhood where it happened recently. Contrast rural Alabama, which had 65 homicides in 2022. That’s only about one per week. And it might be happening in a completely different part of the state from you, so you either don’t hear about it or think “that’s somewhere else.”

But rural Alabama only has about 600,000 people. NYC has fourteen times as many people. So if we are trying to answer the question “What are the odds that a random person is murdered in a given year?”, we need to take population into account. That’s the logic of reporting homicide rates. Indeed it may feel like NYC is less safe, and that’s a natural human reaction. But that’s why the data is so important, to give us a sense of proportion.