Opinion: Michael Saylor Faces Huge Tax Evasion Indictment, But Bitcoin Investors Needn't Panic

As cryptocurrency investors know, markets evolve in cycles. We were in an upcycle when Bitcoin and Ethereum hit new all-time highs, and now the bears are back.

This week, Washington, D.C. Attorney General Karl Racine sued MicroStrategy founder and executive chairman Michael Saylor , alleging it owes $25 million in unpaid taxes . Shares of MicroStrategy have fallen more than 13% on the news, from $251 on Aug. 29 to less than $220 on Sept. 1.

Still, this is not the time for investors to panic. It's been about three months since the Terra ecosystem collapsed (ending the greatest bull party known to man), and the sky still hasn't fallen. The crypto world is not over, blockchain is as unchanged as ever.

Does this mean industry leaders should no longer view market downturns as an existential threat to cryptocurrency as a business? Considering that $2 trillion was wiped off the market cap of cryptocurrencies following Terra’s crash, perhaps not. We cannot treat such extreme market events as volatility that should be expected in the future. Not all influencing factors are healthy.

If previous down cycles had precedents such as the 2017-2018 ICO (Initial Coin Offering) scam or the 2016 Decentralized Autonomous Organization (DAO) hack, this time, too, has a story to tell. This time around, relying too heavily on leverage won't do you any good. Companies that tried to go too far too fast ended up overextending and now face a moment of reckoning.

Many cryptocurrency projects tend to condemn traditional finance in favor of a new path forward. This mentality should be applauded. Platforms including Celsius offer the prospect of lenders earning high yields on their loans without going through a bank as an intermediary. This idea will not and should not go away.

Still, snubbing traditional ways doesn’t mean crypto companies can ignore the laws of gravity. Failure to assess the risk of default and develop a strategy when default occurs - because default will occur at some point - does not count as innovation.

This principle applies to the entire crypto industry, far beyond the decentralized finance (DeFi) space. When hundreds of crypto projects include "Metaverse" and related terms in their messaging after Facebook's rebranding to Meta, serious business people understand that this is usually another way for certain NFT projects to capitalize on the hype. a marketing strategy. In fact, in January, OpenSea, the largest NFT marketplace, claimed that 80% of free NFTs minted on its platform were fraudulent or spam.

In the early days of the ICO wild west, we can accept a degree of this frenzy as the normal early stages of a new technology. But this cannot be the status quo in the future.

Exchanges like OpenSea don't have to become as prosperous as Robinhood, but they must employ the same mechanisms used by legitimate trading platforms to prevent fraud from occurring. Likewise, the law of gravity still applies to metaverses, NFT projects, and platforms offering token transactions.

OpenSea users, transaction volume and transaction count statistics source: DappRadar

This isn’t the only burden on exchanges, and it doesn’t minimize what I and others believe to be the responsibility of the projects themselves to undertake responsible behavior. Having an actual product is necessary before launching yet another aimless token sale and marketing campaign.

In fact, memecoins may play a major role in the industry. However, projects that do not intend to be the next Dogecoin should not employ Shiba Inu marketing tactics. Some projects are doing well in this regard, and they are the ones that have a chance to succeed in the next bull market.

Another hurdle the industry has to overcome is the launch of crypto platforms purely to allow investors to trade other digital currencies. We already have many crypto platforms. Projects that can find other ways to spend cryptocurrencies will move the industry beyond speculation.

Of course, even these projects must base their innovative drive on a realistic business plan. When we start seeing more of this, perhaps the great cryptocurrency experiment can finally overcome the fear of extinction with every crash.

Saylor is one of Bitcoin's biggest supporters and an icon for cryptocurrency enthusiasts. The allegations against him are a public relations nightmare in a bear market. But cryptocurrency investors aren't leaving. Now is the time for projects that are better at product development than marketing to play to their strengths.