I find it interesting how history tends to repeat itself so rapidly. Investors piling into Bitcoin derivatives so soon after derivatives took a devastating toll on the economy is nothing short of total madness. I read an article this morning about a guy who shares my first name and founded a company called BitMEX (The full Bloomberg article is linked at the bottom of the page). BitMEX sells cryptocurrency derivatives and will let you leverage a bet at 100 to 1. Get-rich-quick schemes like this tend to backfire on everyone involved. The company trades out of Hong Kong but is headquartered in Seychelles. Seychelles has a population of around 80,000 people and does not require firms to maintain a certain amount of capital, pay income taxes, or be independently audited. In other words: "trust us we'll pay you." When Banks got in trouble with derivatives, governments bailed them out. I don't think Seychelles is capable of, or likely to cover the losses when financial engineering goes wrong...

It's probably a good idea to stay away from anything a founder doesn't have his own money in. This founder doesn't own Bitcoin; he keeps his money in good old US dollars. He got into the business because working at an investment bank wasn't exciting enough anymore.

His story is strikingly close to the Wolf of Wall Street, Jordan Belfort's. Both were bounced out of traditional places in the financial industry after crashes and then started businesses on the fringe of it. You might say, "But BitMEX made 21 million dollars last month." How did it end for Jordan?

Bored With Banking, This Former Citi Trader Went Full Crypto