I recently had the pleasure of reading the review of the new Netflix dramatization of the Madoff saga at Banker On Wheels.

It is a brilliantly written piece on the takeaways for investors from the perspective that they keep their greed & envy in check, and seek out more information on their investments all the while never letting their guard down in the comfort that the regulatory landscape works to protect them.

The author goes a step further and compares the Madoff situation with the high-profile bust-ups that Crypto saw in 2022. It is remarkable how human psychology has changed so little despite a lapse of almost 15 years.

Coming back to Madoff, I was intrigued as to how could the future model of the asset management business be molded to ensure greater transparency.

One thought is an enterprise-level blockchain that is accessible to the public. Madoff kept the money, untouched except for paying himself a lifestyle or running his Ponzi, in a Bank account. He never made any trades instead conjuring them out of thin air in his records. If the movement of the funds was on-chain, he would have never dared to go the lengths that he did. The lack of movement would have sold him short in his case.

Another thought is infusing the social investment landscape with technology — specifically the advancements made in API connectivity. Zignaly is a great example of this where you can invest with a manager while having custody of the funds with your Crypto exchange. In essence, you co-invest with the manager instead of letting him invest on your behalf. They have plans to completely decentralize the process and that should see us do away with the exchange requirement completely. So it’s entirely possible for self-custody to exist while taking advantage of enhanced trading & investment strategies.

Traditional finance has responded to fraud by primarily tightening regulation & asking investors to be careful. About time they looked at a technologically driven solution. DeFi is miles ahead in this regard.