Prof. Roubini, who predicted the Lehman crisis, warns: “Crypto is headed for the end”

Korea Economic Daily

Summary

Prof. Roubini, who predicted the 2008 global financial crisis, said he is warning of the end of crypto, citing structural flaws in the crypto industry and the risk of cascading bankruptcies.
He argued that stronger regulation to protect investors is needed, pointing to BlockFills’ withdrawal suspension, a plunge in Bitcoin prices, and extreme volatility.
He said Bitcoin has become a tool that amplifies risk rather than a hedge, and noted that the GENIUS Act, stablecoin bank-run risk, and the potential return of a crypto winter could heighten market instability.

Fears of a return of “crypto winter”…withdrawal suspensions revisited

Roubini, who foresaw the global financial crisis, warns markets again

Nouriel Roubini, an emeritus professor at New York University known as “Dr. Doom” for predicting the 2008 global financial crisis, has sharply criticized the broader cryptocurrency market in the wake of recent withdrawal suspensions at digital-asset platforms, warning of the “end of crypto.”

According to a recent report by crypto-focused outlet U.Today, BlockFills, a digital-asset trading firm backed by Susquehanna, recently halted customer deposits and withdrawals, citing market volatility and tighter financial conditions. BlockFills is a major player serving roughly 2,000 institutional investors worldwide, and the move sent a significant shock through the market.

In posts on social media (SNS), Roubini said the incident illustrates structural flaws and a lack of transparency in the crypto industry, arguing that the sector is fundamentally fragile and faces the risk of cascading bankruptcies. He stressed the need for stronger investor-protection measures by regulators.

Roubini has made similar arguments in a recent contribution to the international opinion platform Project Syndicate. “The future of money will evolve gradually, but it will not come about through the revolution touted by crypto fraudsters,” he wrote, adding that the recent plunge in prices of cryptocurrencies such as Bitcoin has once again underscored the extreme volatility of these “fake assets.”

He also argued: “Over the past year, amid geopolitical crises, gold rose 60% while Bitcoin fell 6% year on year. Bitcoin has become a tool that amplifies risk rather than a hedge.”

He went on to criticize the Trump administration’s pro-crypto stance and the GENIUS Act as factors that could fuel market instability, and warned that stablecoins are not immune to the risk of a bank run.

Some analysts say the side effects of overheated investment are already emerging in the crypto market. The Financial Times reported that BlockFills’ suspension of withdrawals evokes the 2022 “crypto winter,” when major firms halted withdrawals one after another and 70% of market assets evaporated.

Roubini, who warned in a 2006 speech at the International Monetary Fund (IMF) about a housing-market bubble and the possibility of financial-institution failures, is drawing renewed market attention with his latest warning.

Yoo Ji-hee, Hankyung.com reporter keephee@hankyung.com