From Cathedral to Casino: How Crypto Betrayed the Cypherpunk Dream

There's a Wall Street Journal headline that should haunt everyone who ever believed in what cryptocurrency was supposed to be: "One Generation Runs the Country. The Next Cashed In on Crypto."

The article details what has become the definitive image of crypto in 2026: the children of the powerful leveraging political access to build personal fortunes through token sales, memecoin launches, and opaque deals with foreign governments. A sitting president's family earning billions from a memecoin. A diplomatic envoy's son closing crypto deals in the same countries where his father negotiates on behalf of the United States. An Abu Dhabi royal quietly purchasing a 49% stake in the president's crypto company, and months later, receiving access to America's most advanced AI chips.

This is the public face of crypto now. Not financial liberation. Not privacy. Not freedom. Just another vector for the oldest game in human civilization: those with power converting it into wealth, and those with wealth converting it into power.

The deeper tragedy is that the technology underneath all of it was designed to make this kind of corruption impossible.

The Cathedral: Where It All Started

To understand how deep this betrayal runs, you have to go back to the beginning, not to Bitcoin's 2009 launch, but to the ideas that made Bitcoin conceivable in the first place.

In 1985, a cryptographer named David Chaum published a paper called "Security without Identification: Transaction Systems to Make Big Brother Obsolete." Chaum had been studying the surveillance implications of digital transactions, and he saw what was coming: a world where every purchase, every transfer, every financial interaction would leave a permanent, traceable record in some corporation's database or some government's filing system. He proposed a radical alternative: anonymous digital cash, built on blind signature cryptography, that would preserve the privacy properties of physical cash in the digital realm.

Chaum wasn't a radical. He was a professor. But his work attracted people who were.

By the late 1980s, a retired Intel engineer named Timothy May had taken Chaum's technical insights and welded them to a political manifesto. In 1988, May distributed his Crypto Anarchist Manifesto, predicting that public-key cryptography would "alter the nature of government regulation, the ability to tax and control economic interactions, the ability to keep information secret, and will even alter the nature of trust and reputation." He compared the coming impact to the invention of the printing press: technology that would make certain forms of centralized power structurally impossible.

Then, in late 1992, May, mathematician Eric Hughes, and entrepreneur John Gilmore invited twenty of their closest collaborators (programmers, cryptographers, engineers) to Hughes's house in Oakland. The group that formed there would be christened "cypherpunks" by writer Jude Milhon, a portmanteau of "cipher" and "cyberpunk."

Hughes memorialized the group's philosophy in his 1993 A Cypherpunk's Manifesto. Its central argument was devastatingly simple:

"Privacy is necessary for an open society in the electronic age... We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence... We must defend our own privacy if we expect to have any... Cypherpunks write code."

Not "cypherpunks lobby regulators." Not "cypherpunks launch tokens." Cypherpunks write code. The manifesto was an engineering specification for freedom, not a business plan.

Over the next decade, the cypherpunk mailing list, growing from that initial twenty to over 700 subscribers by 1994, would produce an astonishing body of work. Anonymous remailers. PGP encryption. The /dev/random entropy source in the Linux kernel. And most critically, the theoretical groundwork for decentralized digital currency.

Among the list's active participants: Marc Andreessen, Julian Assange, Adam Back, Bram Cohen, and a quiet, brilliant programmer named Hal Finney.

Hal Finney and the Soul of the Movement

If anyone embodied the cypherpunk ethic at its purest, it was Hal Finney. A Caltech-trained engineer who'd helped Phil Zimmerman develop PGP (the encryption software that would become the global standard for secure email), Finney had been building privacy tools since before most people had an email address.

In 2004, Finney created the first reusable proof-of-work system, extending Adam Back's Hashcash concept into something that could function as a rudimentary digital currency. When Satoshi Nakamoto posted the Bitcoin whitepaper to the Cryptography Mailing List in 2008, most readers were skeptical. Finney was not.

On January 11, 2009, Finney posted two words to Twitter: "Running bitcoin." The next day, he received 10 BTC from Satoshi: the first Bitcoin transaction in history.

What matters about Finney is as much what he didn't do as his technical contributions. He didn't launch a token. He didn't start a foundation. He didn't monetize his proximity to Satoshi. Even after being diagnosed with ALS in 2009, he continued writing code, using eye-tracking software to program from his wheelchair until he could no longer move at all. He died in 2014 at age 58, having helped launch a technology worth hundreds of billions, without ever trying to extract a personal fortune from it.

Hal Finney built tools for human freedom because he believed human freedom was worth building tools for. That's it. That's the whole story.

Compare that to what came after.

The Casino: How the Grifters Moved In

The corruption of crypto didn't happen overnight. It happened in stages, each one normalizing the next.

Stage 1: The Speculation Engine (2013-2017)

Bitcoin's early adopters were largely aligned with cypherpunk values: privacy advocates, libertarians, technologists who understood the protocol's implications. But as the price began to climb, a new population arrived: speculators who didn't care about privacy, decentralization, or censorship resistance. They cared about number-go-up.

The ICO boom of 2017 was the inflection point. Suddenly, anyone could issue a token, attach a whitepaper full of buzzwords to it, and raise millions from people who'd never read a line of code. The cypherpunk mailing list had produced PGP and anonymous remailers. The ICO era produced Bitconnect and a thousand clones of it.

Stage 2: The Institutional Capture (2018-2021)

After the ICO bubble burst, the narrative shifted. Crypto needed to "grow up." It needed "institutional adoption." It needed to be "regulatory-friendly."

Timothy May, watching from retirement, was blunt about what this meant. When asked in 2018 if Bitcoin had stayed true to its cypherpunk roots, he said it was "far, far away."

"I think the greed and hype and nattering about 'to the Moon!' and 'HODL' is the biggest hype wagon I've ever seen," May told CoinDesk. He saved his sharpest contempt for the compliance apparatus: "Attempts to be 'regulatory-friendly' will likely kill the main uses for cryptocurrencies, which are NOT just 'another form of PayPal or Visa.'"

On crypto exchanges requiring KYC, passports, and suspicious activity reporting, May was unsparing: "I think Satoshi would barf."

May died in December 2018. He didn't live to see how right he was.

Stage 3: The Fraud Epoch (2022-2023)

In May 2022, Do Kwon's Terra/Luna algorithmic stablecoin collapsed, vaporizing $40 billion in value. Six months later, Sam Bankman-Fried's FTX imploded, revealing that the exchange had been secretly funneling customer deposits to its affiliated trading firm, Alameda Research, to cover billions in losses.

Bankman-Fried was sentenced to 25 years in federal prison. Do Kwon, after fleeing to Montenegro with a falsified passport, was extradited to the United States and sentenced to 15 years. Together, their cases represented the largest financial frauds in crypto history, and they were hardly alone. The FBI's 2024 Internet Crime Report documented $5.8 billion in cryptocurrency investment fraud losses in a single year.

Stage 4: The Political Capture (2024-2026)

And then came the final stage: the one we're living through now.

The crypto industry spent heavily in the 2024 election cycle. What it bought was extraordinary. A sitting president launched a personal memecoin, $TRUMP, on January 17, 2025, three days before his inauguration. The Trump family and its partners retained 80% of the token supply. Within 24 hours, the aggregate market cap exceeded $27 billion.

The numbers tell the full story: 58 wallets made millions on $TRUMP. 764,000 lost money. A Bloomberg analysis found that 19 of the top 25 holders were likely foreign nationals, including Justin Sun, a Chinese billionaire facing an SEC fraud lawsuit that the Trump administration quietly paused after Sun invested $30 million in another Trump crypto venture.

When the top 220 $TRUMP holders were offered dinner with the president, and the top 25 were offered a White House tour; investors poured $145 million into the token. Some stated explicitly that they were purchasing access to the president of the United States.

Meanwhile, World Liberty Financial (the Trump family's crypto company, co-founded by the son of Trump's Middle East envoy) raked in $1.4 billion in revenue in a single year. An Abu Dhabi royal purchased a 49% stake in the company for $500 million, with $187 million flowing to Trump family entities. Months later, the UAE received access to 500,000 American AI chips per year.

One generation runs the country. The next cashes in on crypto.

The Damage to the Dream

The scale of corruption in crypto today goes beyond political scandal to pose an existential threat to the technology's actual purpose.

According to Chainalysis, crypto scams received at least $14 billion on-chain in 2025, up from $9.9 billion the year before. North Korea's Lazarus Group stole $1.5 billion in Ethereum from Bybit in the largest crypto heist ever. Physical attacks against crypto holders doubled. The average scam payment rose 253% year-over-year.

But the real damage shows up in trust destroyed, not in dollars stolen.

Every headline about a presidential memecoin, every story about a crypto-funded bribe, every collapsed exchange, every pig-butchering scam. Each one makes it harder for the underlying technology to be taken seriously as a tool for human liberation. Each one reinforces the public perception that "crypto" is synonymous with "scam."

And that perception has consequences. Because the technology beneath all of this noise is genuinely revolutionary. Peer-to-peer value transfer without intermediaries. Programmable money. Censorship-resistant communication. Verifiable digital identity without centralized databases. Privacy-preserving transactions that restore the anonymity properties of physical cash to the digital world.

These capabilities matter. They matter for the 1.4 billion people worldwide who are unbanked. They matter for dissidents living under authoritarian regimes. They matter for anyone who believes that financial privacy is a human right, not a feature request. They matter for workers sending remittances across borders who currently lose 3-7% to legacy payment rails.

But none of that matters if the public and the regulators who represent them associate the technology exclusively with fraud, corruption, and memecoins. You cannot build a freedom tool on a foundation of public contempt.

The Ones Who Kept Building

And yet. Not everyone left the cathedral.

Scattered across the wreckage of the casino era, there are communities that never stopped building toward the original vision. They are rare, but they exist. The one I know best is Bittensor, a decentralized network for machine intelligence founded by Jacob Steeves and Ala Shaabana. While the rest of the industry was busy launching memecoins and lobbying politicians, Bittensor was building a protocol for open, permissionless AI, a system where anyone in the world can contribute computational resources and intelligence to a shared network without asking permission from a corporation or a government.

The cypherpunk resonance is hard to miss. Where Chaum and May envisioned cryptographic tools that would make centralized control structurally impossible, Bittensor applies that same logic to artificial intelligence: no single company owns the models, no single entity controls who can train or serve them, and the incentive structure rewards contribution rather than extraction. It is, in the most literal sense, an attempt to prevent AI from becoming the next cathedral.

Steeves, who goes by Const in the community, posted something during a recent market downturn that could have been written by Timothy May himself:

"Zoom out. Bull markets attract the most unsavory of people. They build casinos, ponzis and financial schemes. The market punishes us. Next, those people, those scammers leave. Bitcoin goes back to being real. Crypto takes a breath of fresh air, the builders keep building and cycle begins again. That cycle literally is the technology. A monetary system that reacts and sheds itself."

"When you understand technically what was built with Bitcoin, you'll understand it doesn't matter if Epstein funded the core developers. It doesn't matter if Satan himself runs the nodes. The structure of Bitcoin is itself Good and decentralized, and fair."

Jacob Steeves (@const_reborn) · View on X

That's the cypherpunk position, stated plainly: the structure is the argument. If the protocol is designed correctly, it doesn't matter who shows up to use it, because the mathematics enforce fairness regardless of the participants' intentions. It's the same insight that made Bitcoin revolutionary, now applied to the most consequential technology of the century.

Working alongside the Bittensor community over the past year, I've seen this ethic firsthand. The team at Covenant AI, led by Sam Dare, has been building decentralized infrastructure for AI training, reinforcement learning, and compute across multiple Bittensor subnets. They aren't launching tokens or courting venture capital. They're publishing open research, shipping code, and building tools that let anyone participate in the AI economy without permission from the incumbents. Cypherpunks write code.

They aren't alone. Across the Bittensor ecosystem, dozens of teams are building decentralized storage, inference, data scraping, protein folding, and a dozen other applications that treat open access as a design constraint rather than a marketing slogan. I should be honest: not all of them are noble. Bittensor has its own share of scams, rug pulls, and literal gambling subnets. The permissionless nature that makes the network powerful also means anyone can show up, and plenty of grifters have. But that's the point Steeves was making. The underlying protocol, like Bitcoin's, is designed to shed the extractive and reward the genuine over time. The casino operators arrive in every bull market and leave in every bear. The builders stay. That's not optimism. That's mechanism design.

Bittensor is not the only place this is happening. There are other projects across the broader crypto landscape that have kept faith with the original vision, quietly building tools rather than chasing liquidity events. But the pattern is the same everywhere the cathedral survives: small teams, open code, no permission required.

The cypherpunk dream didn't die. It migrated. And the builders who carried it are still writing code.

The Fork in the Road

So how does crypto shed this perception? How does the cathedral get rebuilt after the casino has burned through its credibility?

There are no easy answers, but there are honest ones.

1. Acknowledge the Rot

The crypto community's reflexive response to scandal has been deflection. "Not all crypto." "That's CeFi, not DeFi." "The technology is neutral."

The technology is neutral. A knife is neutral. But when an industry produces more fraud than innovation for five consecutive years, neutrality functions as a confession rather than a defense.

The first step toward rebuilding credibility is admitting, clearly and without equivocation, that the industry has a corruption problem. Not a perception problem. A corruption problem.

2. Divorce the Technology from the Token Casino

The cypherpunks didn't dream of token launches and yield farming. They dreamed of tools that would make surveillance structurally impossible. The conflation of "crypto technology" with "crypto speculation" has been catastrophic for the movement.

Projects that are actually building toward the original vision still exist. Zcash, built by Zooko Wilcox (an original cypherpunk who worked on David Chaum's DigiCash in the 1990s), uses zero-knowledge proofs to enable fully private transactions where the sender, receiver, and amount are cryptographically hidden. Monero continues to offer mandatory privacy through ring signatures and stealth addresses. The Signal Protocol uses end-to-end encryption derived directly from cypherpunk research.

These projects don't make headlines because they don't make people rich overnight. That's the point. They're tools, not investments.

3. Build Things That Actually Matter

The crypto industry has produced approximately 11.9 million new tokens in 2025 alone, more than 32,000 per day. In that same year, 11.6 million crypto projects died. When token issuance becomes an industry, what's being produced is noise, not value.

What the world needs from cryptographic technology isn't another memecoin or another yield aggregator. It needs:

• Censorship-resistant payment rails for people living under authoritarian financial systems
• Privacy-preserving identity systems that let people prove who they are without surrendering their data to centralized honeypots
• Low-cost remittance infrastructure that doesn't extract 7% from workers sending money home
• Decentralized communication tools that can't be shut down by a government or a corporation

These aren't speculative dreams. The cryptographic primitives to build all of them already exist. What's missing is an industry that prioritizes building them over launching the next token.

4. Accept That Regulation Isn't the Enemy: Corruption Is

Timothy May was right that compliance-obsessed exchanges are antithetical to the cypherpunk vision. But May was also writing from a position of ideological purity that the industry has long since abandoned. In 2026, the real choice is between regulation that protects users and regulation that protects incumbents, not between cypherpunk anarchism and regulatory capture.

When a president can launch a personal memecoin and invite top holders to dinner at the White House, the failure is one of basic ethics dressed up as financial innovation, not of regulation. When a convicted criminal can donate $46 million in Bitcoin to a government ministry and trigger a national scandal (as happened in the Czech Republic). The answer is "less corruption," not "less regulation."

The crypto industry can either help design regulatory frameworks that preserve privacy and decentralization while preventing outright fraud, or it can continue to resist all oversight and watch as governments impose blunt, privacy-destroying regulations in response to the next scandal. There is no third option.

5. Remember What This Was Supposed to Be For

Eric Hughes closed his manifesto with a vision that feels almost alien in the context of today's crypto landscape:

"We must come together and create systems which allow anonymous transactions to take place... Privacy only extends so far as the cooperation of one's fellows in society."

The cypherpunks understood something that the crypto industry has forgotten: privacy technology is a collective project. It doesn't work if it's built for individual enrichment. It only works if it's built for everyone.

Hal Finney understood this. He spent his career building tools (PGP, RPOW, Bitcoin itself) and gave them away. He didn't hold a token launch. He didn't hire a lobbyist. He wrote code, and he ran it, and he shared it with the world.

The question for crypto in 2026 isn't whether the technology works. It does. The question is whether an industry built on speculation, corruption, and political influence can be transformed into one that actually serves the original mission: giving ordinary people the cryptographic tools to protect their privacy, control their money, and resist surveillance.

The cypherpunks wrote code. The industry built casinos.

Maybe we should take some time during this bear market to start writing code again. Let the chips fall where they may.