Personally, having been a mortgage lender since 23 years of my life, I have observed how similar psychological stimuli that spearheaded penny stock speculation have completely permeated crypto speculation accordingly. Things are frighteningly parallel in the mechanics. In the early 2000s, I used to have clients who would use their houses to trade in penny stocks opportunities. They had perfect good properties that they would refinance on a promise of 1000 returns. The theme was always the same, early in, not many days to go, inside information. Sound familiar? This is the same behavior patterns what I see now with meme coin. Customers come up to me requesting to cash-in refinance their homes and purchase Dogecoin derivatives or the trending token of the week. The words have been altered but the desperation is always there. They are in search of the same dopamine release practiced by penny stock promoters years ago. There has been an upswing in the sophistication. Boiler rooms with phone bank and cold call requirements became the arena of crypto pump-and-dump schemes running on Discord servers and TikTok touts. The extraordinariness of the reach is multiplied by several depending folds, nonetheless, the core trick is the same, i.e. to give these extraordinary returns to ordinary people with their most valuable material as a guarantee. I have refinanced homes of those who lost all in both periods. The human price remains almost the same.
It is an intriguing and crucial issue. Although I am not a securities expert, I can offer a different perspective that connects the digital fraud to the physical, real-world one. I am working at the back end of the technology cycle. My environment is IT Asset Disposition- we run the hardware grave yard that is the by product of corporate and consumer technology fads. We are professionals at telling the difference between perceived value and recoverable value which is the core of your inquiry. Here is the playbook as I see it on my side, A new meme coin or a pump-and-dump scheme ignites a digital gold rush. This generates a colossal, temporary demand of physical hardware, to specialized servers, GPUs, and ASIC miners. Hardware bubble is created, a duplicate of the financial bubble. When the scheme falls apart it is not just the digital asset that will be rendered useless. We witness the result first-hand, thousands of power-hungry, highly-specialized machines, which are frequently used to death, in an instant change into e-waste. Their resale value disappears through the night since their coin that they were designed to mine is dead. These are not figures on a display board, but it is a mountain of unhealthy assets that must be safely and sustainably handled. Although I cannot comment on the complexity of the SEC enforcement, it is possible to comment on the factual boom-and-bust cycle of the fraudulent schemes that these schemes produce in the hardware market and the e-waste disaster they leave behind. I trace the geographical trail of online fraud.
Meme stonks and DeFi summer had one major thing in common: a narrative. The rise of the crypto treasury company has publicly traded corporations taking Michael Saylor's playbook and conviction and is trying to ride the wave. While companies like SharpLink have had success, others, like Windtree Therapeutics, have not. The difference between the two comes down to companies already in the tech or blockchain space vs. struggling companies with bad fundamentals trying to make a last-ditch effort to pump their stock. For investors, if you see a struggling penny stock suddenly deciding to invest in Dogecoin with a massive treasury, beware. As far as meme coins and crypto, the pump and dump has always been a thing. Look at the main crypto projects and you'll see Aave, Lido, EigenLayer, and Uniswap. Almost every other project is just a fork off of one of them. This has been going on for years. Why? It's easier to make money if you're not trying to reinvest the wheel. That's what these developers and projects are trying to do --- make money.
Meme coins haven't really solved anything, right?. But what I do think is that they've actually made fraud a whole lot easier by creating these pseudonymous transaction rails where wallet addresses are just random numbers and letters. This now makes everything even harder to prosecute because you can't really even identify the perpetrators without massive forensic efforts that at present, most regulators can't afford. What's happening is exactly the opposite of transparency. These sophisticated global fraudsters can now manipulate the crypto markets through coordinated wallet clusters and automated trading bots while remaining completely anonymous! Then they just go and cash out through privacy coins or decentralized exchanges, which forces our regulators to focus their limited resources on traditional penny stock IPOs where at least there are actual filing requirements, named executives, and paper trails. It's ridiculous in that it's created a whole new class in our industry, with borrowers whose wealth sources are completely unverifiable, and it's continuing to grow. This is a real problem that needs addressing immediately.