Fintech Is a Scam — A Listicle in Eight Parts

$91.5b per year, doubling every year

Cory Doctorow
Published in
7 min readDec 1, 2021


Bosch’s painting ‘The Conjurer,’ in which a fast-fingered magician bamboozles a bunch of gawping rubes with a shell game. In the original, the conjurer holds a pea from under a shell; in this one, he holds a Bitcoin logo.

The world’s economy ground to a halt during the pandemic as millions died, production slowed or stopped altogether, and the resulting supply chain disruptions made many essential products and services impossible to deliver. And yet, the world’s billionaires added $5.5t to their net worth during that time.

Thank “financialization,” the subordination of the real economy — the economy that makes and delivers the things we need — to the financial economy, a global high-stakes casino where wanton destruction of businesses and lives can be a path to unimaginable wealth and power.

Financialization has infected every sector of our economy. No matter who you are, there’s a casino game for you. But as with every casino, the only way to win is to own the casino, not to play the games. We’re all the proverbial suckers at the table.

Take the investor class. They are piling into “fintech” startups, with 2021’s fintech investments cresting $91.5b, more than double the eye-popping 2020 figure. What’s “fintech,” then?

Writing for Naked Capitalism, Satyajit Das — an ex-financier turned critic — calls fintech “the untidy agglomeration of finance and technology.”

Das divides fintech into four buckets:

i. Payments (e.g. Stripe and Square)

ii. Lending (including the spectacular fraud of ‘supply chain finance’ epitomized by Greensill Capital)

iii. Buy now/pay later (BNPL) — short term consumer loans

iv. Deposit taking (online banking startups)

All follow the same simple formula: “take a function, digitise it, toss in a little jargon — ‘financial engineering,’ ‘technological disruption.’ Season generously with mystique; add some high profile spruikers or fawning media endorsements.”

Fintech uses some combination of the following eight tactics to transfer money from investors and users to the finance sector:

I. Disguise the true function. For example, supply-chain finance exploits disclosure rules so it can treat debts as accounts payable, disguising unsecured personal finance as a secure business, leading to spectacular losses.

II. Mask the true economics. How do you make a 26% APR look reasonable? Both BNPL and supply-chain finance manage it. They pay the seller immediately, at a 4% discount, then the buyer pays them back in installments over two months — 26% per year! Yes, this is borne by sellers, not buyers, but of course, sellers then charge more to cover it, so cash buyers end up subsidizing BNPL users.

III. Find an attractive demographic. Supply-chain finance and peer-to-peer lending prey on weaker borrowers who lack the economic power to demand better deals. BNPL uses high-minded talk of “democratizing capital” to extract huge returns from young and financially illiterate clients.

IV. Exploit and expand regulatory blind-spots. Fintech boosters have convinced regulators that they need “regulatory sandboxes” to “innovate in.” These are free-for-all zones that allow companies to act as banks…without being regulated like them.

V. Increase risk. To bring fresh suckers to the table, you need to make increasingly risky bets with sky-high returns. Ignore profitability, and make up your own benchmarks to dazzle investors with, based on how much you’re losing, and insist that this is the price of growth, which will eventually produce profits.

VI. Obscure risks. Use “soft credit checks.” Lend money to your shareholders. Borrow against non-existent future revenues. Use short-term funding mechanisms (like supply-chain finance) for long-term capital expenditures. Engage in large, “related party” transactions, where two closely related entities trade money back and forth.

VII. Target frightened, technologically ignorant investors. Find people who made money in non-digital realms and use FOMO to convince them that they’re going to miss the next big thing because they don’t understand how their phones work. Banking automation is a boring, low-return business, but call it “fintech” and suckers will beat a path to your door.

VIII. Use investor cash to fund short-term growth. Sell products at a loss. Pay for celebrity endorsements. Fake your automation, simply paying an army of low-waged workers to do repetitive tasks that you can’t figure out how to computerize, but pretend it’s “AI.” And of course, spend a fortune on marketing:

That’s financialization for traditional investors, but like I said, the casino’s got a game for every player. Stephen Diehl is consistently the best-informed critic of bitcoin and blockchain, and his essay, “The Token Disconnect,” is a must-read:

Cryptocurrencies aren’t currencies. They suck as stores of value, units of account, and units of exchange. Imagine if your house was denominated in bitcoin instead of US dollars: a two-emoji tweet from Elon Musk could cause your home to lose 80% of its value. “This is a dystopia.”

If tokens aren’t money, what are they? For venture capitalists, cryptos are a change to “arbitrage securities regulation” — that is, to do finance without being subject to financial rules, especially rules about whose money they’re allowed to spend.

The median return on a given VC investment is zero. So securities regs limit who can invest with VCs, because the amount of technical knowledge you need to distinguish good VC investments from doomed scams is formidable, setting up a lot of everyday people to lose their life’s savings.

But tokens let VCs bypass those rules: “an asset class that you can buy from your portfolio companies that looks like a security, swims like a security, and quacks like a security, but is not regulated as a security. In fact it’s not regulated at all.”

This is the true meaning of “financial engineering” and “financial innovation” — a way to do an end-run around investor protection rules. It’s a way to let sophisticated investors unload their bad bets on the public without filing an S-1 or even producing a prospectus detailing a business model. Tokens — unlike shares — can be liquidated at any time, including the moment just before the company craters.

If fintech is the high-roller section of the casino, tokens are the regular tables, where everyday people can get fleeced.

But anyone who’s been to Vegas knows that the games aren’t limited to high-roller tables and regular games — casinos give over vast amounts of real-estate to nickel slots and other chances for working stiffs to enrich billionaire casino-owners.

Financialization’s nickel-slot is the multi-level marketing scheme (MLM), lately reinvented as a Gen-Z, influencer-driven powerhouse that uses the same old providential horseshit (poor people are poor because of their “mindsets” — change your mindset, manifest a fortune and grow rich).

Writing in The Atlantic, Kaitlyn Tiffany offers a fascinating dissection of the Breakaway Movement, a sales-cult that markets scientifically incoherent “functional water” filters with a mystical blend of “ethical consumption,” Instagram filters, and vibes.

If “functional water” sounds like a stupid thing to build a fortune on, don’t worry. It’s incidental to Breakaway’s business — the point isn’t to sell people magic water filters, it’s to recruit people to recruit people to recruit people to sell magic water filters…maybe.

Breakaway, like other contemporary MLM cults, prey primarily on young women, urging them to commodify the social support network — family and friends — that they depend on, eschewing mutual aid for predatory transactionalism. Other examples include Lularue, Doterra, Beachbody, It Works, etc).

But as Tiffany writes, young women are wising up ahead of the wealthier, “more sophisticated” people who are sinking money into tokens and NFTs and fintech investments. Reddit’s r/antiMLM has grown from 1,000 members in 2017 to 740,000 today. There’s a whole new anti-MLM influencer movement, who use their social power to warn their followers away from these scams. And of course, there’s FTC Chair Lina Khan, whom Social Selling News — a trade rag for MLM — called a “progressive millennial” (like that’s a bad thing?!).

MLM con-artists are privately fretting that they’ve run out of suckers. People are wising up. This week, Microsoft announced that it would integrate a predatory Buy Now/Pay Later app into its Edge browser, only to face a user uprising:

The real economy may have been swallowed by the financial economy, but reality has a well-known anti-finance bias. You can’t eat financial products, or live in them, or heat your home with them.

Well, not unless you’re harnessing exhaust heat from an environmentally devastating Bitcoin-mining rig:

Real people need the real economy. Every bubble eventually pops. We are currently living through “the bezzle,” which JK Galbraith defined as, “the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it.”

Young women are wising up. The rest of us will eventually follow their lead. While I’m waiting, I’m going to read Das’s latest book, A Banquet of Consequences RELOADED, an update of his 2015 book on “How we got into the mess we’re in, and why we need to act now”:

Cory Doctorow ( is a science fiction author, activist, and blogger. He has a podcast, a newsletter, a Twitter feed, a Mastodon feed, and a Tumblr feed. He was born in Canada, became a British citizen and now lives in Burbank, California. His latest nonfiction book is How to Destroy Surveillance Capitalism. His latest novel for adults is Attack Surface. His latest short story collection is Radicalized. His latest picture book is Poesy the Monster Slayer. His latest YA novel is Pirate Cinema. His latest graphic novel is In Real Life. His forthcoming books include The Shakedown (with Rebecca Giblin), a book about artistic labor market and excessive buyer power; Red Team Blues, a noir thriller about cryptocurrency, corruption and money-laundering (Tor, 2023); and The Lost Cause, a utopian post-GND novel about truth and reconciliation with white nationalist militias (Tor, 2023).