J.P. Morgan chief Jamie Dimon has earned his fair share of criticism in the bitcoin space over the last couple of months and rightly so – his suggestion that bitcoin is a fraud compounded action seen on the back of Chinese regulatory action and sent the price of bitcoin tumbling throughout September.
Bitcoin has now recovered – Dimon has not.
In an investigation reported on by The Nation, Dimon and J.P. Morgan are at the center of a huge fraud based scandal that dates back to the global financial collapse between 2007 and 2011.
Subsequent to said collapse, a number of financial institutions in the US were fined billions of dollars for their role in the situation, one of which was J.P. Morgan, which received a $5.3 billion fine. Of this fine, however, $4.2 billion was set aside for financial relief for those who lost their homes and jobs. In other words, J.P. Morgan was supposed to forgive debts and mortgages to the tune of $4.2 billion in an attempt to help the economy recover.
It did, but it turns out that the $4.2 billion in mortgages and loans that it wrote off weren’t actually its own to write off.
Instead, the bank had documents put together by an entity called Nationwide Title Clearing, which is closely linked to the Church of Scientology, proving ownership (albeit falsely) of the mortgages it was forgiving when in reality the mortgages had been bought a few years earlier by a consortium of 23 investors.
These investors are now taking J.P. Morgan to court and the outcome of the situation is pending. It’s unlikely that someone like Dimon will end up paying personally, be that through a prison sentence or financially or both, since the social situations are generally resolved with fines – something that J.P. Morgan won’t have any problem with paying. It’s also not totally clear whether he knew what was going on (although that he didn’t seems unlikely).
Regardless, these sorts of situations are what caused the global financial collapse in the first place and they are what are going to contribute to the next one. With any luck, however, when it happens, people will rush to bitcoin as a risk-off asset and push the price up way beyond current levels.
This is a situation to watch unfold…
Image courtesy of Gideon Benari via Flickr