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“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”

— Ivan Boesky (1986)

The age of junk equity is upon us

Michael Milken began hosting his annual conference on high-yield bonds in 1978, but it wasn’t until 1985 that it achieved mainstream notoriety as “The Predators’ Ball.”

By then, the junk bond market that Milken had single-handedly willed into existence had grown to a $100 billion market capitalization and was poised to become much bigger: Milken estimated the assembled buying power of his attendees at $3 trillion.

That may understate the conference’s importance, however, because junk bonds were a genuine revolution in finance and Milken was its genuine revolutionary: an anti-establishment outsider funding companies that were historically denied access to the bond market and takeover bids traditionally shunned by Wall Street.

“All the rules of survival in the corporate jungle have been rewritten,” Connie Bruck wrote in her contemporary account of the Milken saga. “The weak could become the strong, and the strong the weak.” 

The Predators’ Ball symbolized this financial upending: “It was an evangelical happening that stirred a mass excitation in its participants,” as Bruck described it, “many of whom felt they were part of a large and unstoppable force destined to change the world.” 

This feels newly relevant to me because, nearly 30 years on, I can’t think of a more fitting description of the Crypto Ball held this past Friday night.

The Predators’ Ball was about junk bonds — high-yield debt issued by the underdogs of corporate America and Wall Street.

The Crypto Ball was about “junk equity” — stock-like crypto tokens issued by absolutely anyone. 

The former was a celebration of a new way to fund high-risk ventures like cable television, oil exploration and leveraged takeover bids. 

The latter was a celebration of a new way to fund…well, I’m not sure what. 

I’d like to tell you that crypto, like junk bonds, will empower upstarts to take on incumbents in both finance and the real economy — and there is some evidence of that, be it in mobile phone services, digital maps, payments or AI.

I might even argue that token launches could someday help cities raise money for public transport, universities for education and companies for new, otherwise uneconomic products.

But the green shoots of productive crypto have been overshadowed by the launch of President Trump’s new memecoin — launched at the very moment the crypto industry elite were gathered in DC to celebrate his inauguration.

The combination of the TRUMP token’s outrageous valuation (as high as $70 billion at one point this weekend) and the seemingly cynical timing (just three days before inauguration), makes it feel like Friday’s Crypto Ball will become the symbol of a new era of anything-goes capitalism. 

This might be unfair because the attendees at the Crypto Ball undoubtedly mean well — but the attendees of the Predators’ Ball also meant well, and history does not remember them kindly.

I’d argue that the maligned pioneers of high-yield debt were eventually vindicated, because in the grand scheme of things, junk bonds have undeniably been a force for good — they democratized access to capital, made the US economy more efficient and offered investors a new way to save for retirement.

But the Predators’ Ball is nonetheless remembered as the symbol of the financial excess that junk bonds contributed to, as captured in the public imagination by the film Wall Street. 

(Fun fact: The Predators’ Ball was held in a Beverly Hills hotel owned by the real-life Gordon Gekko, Ivan Boesky.) 

That era came to an ignominious end on Sept. 7, 1988, when the SEC charged Milken and his employer, Drexel Burnham Lambert, with insider trading and stock fraud.

Milken eventually served prison time after taking a plea deal on some lesser offenses, but he arguably did very little wrong other than making too much money (a reported $550 million in his peak-earning year of 1987 alone).

He also committed the grave sin of making that money in finance, which is popularly considered an unproductive, paper-pushing activity that only extracts money from the “real” economy.

That made Milken a target for an ambitious Southern District of New York prosecutor (the esteemed Rudy Giuliani) who advanced his political career by tapping into public resentment about Wall Street’s excesses.

(Perhaps appropriately, Milken was pardoned by President Trump in 2020.)

As eye-popping as Milken’s compensation was, however, he never could have imagined making $50 billion in a weekend, as President Trump just did (on paper, at least).

Nor could he have imagined making it in an activity as unproductive as memecoins.

Crypto is not just memecoins, of course, and junk equity (a.k.a., tokens) may, like junk bonds, someday prove to be a force for good. 

But Friday’s Crypto Ball seems destined to become a symbol of financial excess, if only because of the sheer size of the TRUMP token money grab.

Even many crypto people see it this way: “This is a horrible look for the industry already trying to make the case that we’re not a bunch of hucksters, scammers and fraudsters,” one industry lobbyist told Politico.

Crypto has been plagued by these hucksters, scammers and fraudsters for some time already, but there may be many more to come. Because more than any executive order possibly could, the launch of TRUMP makes it feel like the rules of finance have changed — or that there are no rules.

It’s admittedly well within the rules to launch a memecoin devoid of utility and investment value (even Gary Gensler’s rules).

But when the president issues a memecoin? Three days before his inauguration?

I can only imagine that people will take that as a green light to do things that are not strictly legal.

If so, we could be on the cusp of a 1980s-like era of cowboy capitalism.

But more cynical.

Instead of a belief in financial Darwinism, the TRUMP memecoin may come to represent a new kind of financial nihilism.

Instead of a Reagan-esque belief that markets create value, Trump’s memecoin fuels a belief that value itself is a meme. 

I’m confident that many crypto tokens will prove to be productive — beneath all the hype, crypto is a technology that offers new ways to form capital.

But every era of financial excess is sparked by some technological advance: Milken himself is said to have attributed the rise of cowboy capitalism to the advent of spreadsheets (because they made company financials easier to study) — and what are blockchains if not decentralized spreadsheets?

Like junk bonds, junk equity issued on blockchains might still prove to be revolutionary.

But whatever their ultimate utility, if we’ve entered a new age of financial excess, this weekend’s events won’t be remembered kindly.

— Byron Gilliam

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Picking Winners Post-Trump Trade

Tune in for a recap of the fallout behind Trump’s memecoin launch. Find out what this means for markets in 2025, who will benefit the most and more. 

Listen to 1000x on Spotify, Apple Podcasts or YouTube.

This March, hear from Matt Hougan, Colleen Sullivan, and Pascal Gauthier as they share their expertise on institutional adoption, asset security, and the evolving crypto landscape. DAS NYC brings together fund managers, allocators, and industry leaders for discussions that matter and insights you can act on.

📅 March 18-20 | NYC

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