A year after crypto’s crash, Philly Bitcoin believers hold on to hope

At age 73, Yoav Zohar is an outlier among the Millennials and Gen Z who make up most of the cryptocurrency community.

While many were still in grade school, Zohar learned about the booms and busts of new technology during the dot-com explosion of the early 2000s.

So when it comes to crypto — digital money that isn’t tied to a central bank — Zohar won’t hold more than $5 worth.

“I don’t want to invest in it, because I think my money’s more important than doing experiments,” laughed Zohar at DeFi Philly, a meeting for decentralized finance enthusiasts in Northern Liberties.

If 2022 was any indicator, his prudence paid off.

It was a particularly brutal year for Bitcoin, which swelled in valuation last spring before plummeting in May. What would follow was blow after blow for the highly volatile industry.

» READ MORE: South Philadelphia crypto company hit with more lawsuits, detailing a pyramidlike rewards system

Bitcoin’s price fell by over 60%, and around $2 trillion disappeared from the market overall, as wealthy investors pulled out while the little guy was left in the red. Then came high-profile scandals, including the downfall of the exchange FTX and its billionaire-turned-fraudster CEO Sam Bankman-Fried. In a domino-like effect, crypto hedge funds shuttered, and President Joe Biden’s administration — which had been hesitant to get involved — began a sweeping attempt to regulate the industry.

Crypto’s fall has particularly affected Black and brown Americans who, feeling shut out of traditional financial markets, were more likely to invest — and ultimately lose.

Zohar read the headlines. So he comes to DeFi mainly for the pizza, drinks, and passionate talk about what was perhaps prematurely crowned the future of finance.

Among the 15 or so other attendees, this conservative outlook was rare. While some agreed that Bitcoin has had its day — for now — there was the sense that something bigger and better was on the horizon.

“PolyDoge, that’s the one that popped off for me,” said a member who asked to go by Tom “T-Bytes” so employers don’t know about his investments.

He’s talking about an altcoin — there are thousands of cryptocurrencies besides Bitcoin — that’s worth $0.000000008299. It’s an offshoot of Dogecoin, the widely memed crypto that’s periodically resurfaced by Twitter owner Elon Musk.

T-Bytes claimed he turned a profit on the risky investment and is now looking to other coins. But not all of his investments have pumped.

Wearing a tie-dye purple shirt, T-Bytes is not the only member to admit facing losses after last year’s downturn (they’re reluctant to call it a crash).

Kaseem Dodson became crypto curious early last year, just before prices went south. Dodson, 33, sees Bitcoin’s hibernation as just another bear market. Rumor of a coming rebound keeps him vested in the industry.

Dodson also likes that crypto has, so far, been resistant to government regulation. But that feature has led a myriad of hucksters to take advantage of rosy-eyed investors with little knowledge of how crypto functions.

This month alone, the U.S. Justice Department recovered over $112 million in “pig butchering” schemes, where scammers contact victims through messaging apps with enticing offers on high-return investments. Once the Bitcoin is transferred, you can guess what happens next.

And in Philadelphia, it remains to be seen whether victims of VBit Technologies will ever see the $11 million-plus frozen in their virtual accounts after the Washington Avenue-based company folded last summer. After VBit’s lawyers dropped the embroiled company this month citing silence from its elusive CEO, the outcomes of the mounting federal lawsuits against it are hazy.

Those are the scams. Other initiatives, while aboveboard, have yet to fully transform Philly into a crypto-forward hot spot like Miami or San Francisco.

Soon after announcing a plan to incorporate crypto into city funding, City Hall nixed the idea. Meanwhile, scores of collectible NFTs from regional names like Wawa and the 76ers either remain unsold or are being hawked for ridiculous sums. And while a West Philadelphia house that advertised a built-in crypto miner initially made a splash, a publicly available ledger shows that today it reaps just around $14 per month.

None of this fazes 30-year-old Michael Ghen, a computer engineer and DeFi’s leader, though he’s frustrated at the public’s perception of crypto as a back-alley market. Sympathetic to stories of losses to fraudsters, he created a guide for newcomers that outlines the mechanisms behind popular scams.

“It’s buyer beware,” Ghen said.

Minimizing the public’s risk is a Herculean task, exemplified by the nearly 100 Bitcoin ATMs scattered throughout Philadelphia — ones that law enforcement warn are highly efficient vehicles for fraud, often in low-income communities.

Ghen said foreign hackers give crypto a bad name. Still, the industry is grappling with the recklessness of its former darlings like Bankman-Fried, who was arrested and faces multiple charges for mismanaging customer funds after his Bahamas-based trading company imploded in November.

One group had an idea, printing the disgraced 31-year-old’s face across toilet paper at a recent crypto conference.

How larger financial institutions — including Pennsylvania billionaire Jeff Yass and his Bala Cynwyd-based Susquehanna International Group — are handling their crypto hedges is unclear, though the trend of big players pulling out of the market is on the rise.

Like the statue of Don Quixote that towers over Girard Avenue, maybe you’ve just got to believe. It’s a block away from where Ghen and DeFi Philly are keeping the faith.

It’s also near where the tech entrepreneur Thomas Jay Rush led a talk called “What the Mennonites Can Teach us About Blockchains,” a reference to the systems that record crypto transactions.

Whether the neo-Luddite cousins of the Amish are invested in Bitcoin was never mentioned. Instead, Rush lauded their ability to stay tight-knit and quickly raise a barn, a metaphor for how decentralized finance can weather the future.

“All communities come together,” Rush said with all the optimism of a Crypto.com Super Bowl advertisement circa 2022. “They do things individuals cannot possibly do.”