Notes 12/12: Binance’s Problems Multiply

Over the weekend, the spotlight in cryptocurrencies shifted from FTX’s problems to those for Binance, the world’s biggest cryptocurrency exchange by trading volume. The exchange, which does not have a headquarters, is attempting to take charge of the crypto ecosystem after FTX’s shenanigans have left it without a representative. Binance CEO Changpeng Zhao (CZ) has replaced FTX’s Sam Bankman-Fried as the public face of cryptocurrencies. … Continue reading Notes 12/12: Binance’s Problems Multiply

Notes 12/9: Binance’s PoR Report, FTX, Paxos, and BUSD

During an interview at the Indonesia Fintech Summit in November, Binance CEO Changpeng Zhao (CZ) told audiences that the reason his cryptocurrency exchange wasn’t audited was because firms were “running scared” of them because they (Binance) weren’t regulated. “We also want to educate regulators about the list of things they should look for (while conducting audit checks),” he added and listed a bunch of practices … Continue reading Notes 12/9: Binance’s PoR Report, FTX, Paxos, and BUSD

Notes 12/8: GBTC Discount, Withdrawing Staked Ether

What to make of the action at Grayscale’s Bitcoin Investment Trust (GBTC) and Ethereum Trust (ETH)? Both are trading at deep discounts to the price of their underlying assets. There’s talk that they might be affected by the liquidity crisis afflicting crypto and that they might wind down soon. Why Does GBTC Trade at a Discount? Since their launch (GBTC in 2013 and ETH in … Continue reading Notes 12/8: GBTC Discount, Withdrawing Staked Ether

Notes 12/5: FTX and Alameda, Binance’s BNB Shorts

Recent reports have made clear that the crux of problems at FTX was its relationship with Alameda Research, FTX co-founder Sam Bankman-Fried’s (SBF) other company. The nature of that relationship is still unclear, however. Bankman-Fried has hinted at some aspects of that relationship in his interviews. But details are not forthcoming; Bankman-Fried claims to be an overworked CEO without much knowledge of his company’s financials. … Continue reading Notes 12/5: FTX and Alameda, Binance’s BNB Shorts

Notes 12/2: Benham’s Testimony, Tether Loans

CFTC Chairman Rostin Benham reiterated the case to bring “comprehensive market regulation” to cryptocurrencies and said existing rules are sufficient to rein in hijinks in its ecosystem in his Senate testimony. “We (can) eliminate contagion by applying the same principles of financial regulation that we apply to traditional financial assets,” he said. Benham’s views echo that of SEC Chair Gary Gensler. Media narratives have framed … Continue reading Notes 12/2: Benham’s Testimony, Tether Loans

Notes 12/1: Bitcoin Price, Binance’s Simple Business Model, and Team SBF

Inflation data released this morning came in better than expected. The core personal consumption expenditure (PCE) index rose 0.2%, less than September’s 0.3% increase. The overall PCE figures, which includes volatile food and energy prices, rose by 0.3%. The increase in inflation numbers on a yearly basis was 6%, again less than the 6.3% figure for September. Those numbers mean that the Fed’s aggressive interest … Continue reading Notes 12/1: Bitcoin Price, Binance’s Simple Business Model, and Team SBF

More Of The Same: SBF’s Appearance at The DealBook Conference

For investors and industry observers, former FTX CEO Sam Bankman-Fried’s (SBF) appearance at the New York Times Dealbook conference this evening was an opportunity to make sense of the FTX train wreck. But the interview, which was punctuated by a brief loss of connection with Bahamas-based SBF, must have left them even more confused.   A Changed Persona. But Same Responses. SBF’s interview persona was … Continue reading More Of The Same: SBF’s Appearance at The DealBook Conference

Notes 11/30: Bitcoin Price, Regulation

Bitcoin price is showing signs of life after remaining range-bound for most of last month, amid a widening crisis in the cryptocurrency ecosystem. The premiere cryptocurrency had been trading in the $15,000 to $17,000 price range as the contagion from crypto exchange FTX’s collapse claimed more victims. Inexplicably, it broke past the $17,000 mark this morning. Some analysts attributed the slight jump price jump as … Continue reading Notes 11/30: Bitcoin Price, Regulation

BlockFi Files for Chapter 11 Bankruptcy

Disney veteran Bob Iger became a boomerang CEO last week, two years after he retired from the company. After flirting with a bankruptcy filing earlier this year, crypto lending form BlockFi has also boomeranged right back to towards it. The lending firm filed for Chapter 11 bankruptcy in its home state and Bahamas yesterday. The filing was expected since it had documented exposure to FTX, … Continue reading BlockFi Files for Chapter 11 Bankruptcy

Notes 11/25: Thankless Thanksgiving for Crypto, Binance’s White Knight Act, and FTX Gift Cards

There was not too much to be thankful for this year in cryptocurrencies. The pandemic’s excesses, during which crypto markets set two price records in a single year, are still working their way through the system. A precipitous double-digit decline in crypto prices since the start of this year would be sufficient to generate headlines in ordinary times. But we live in extraordinary times. A … Continue reading Notes 11/25: Thankless Thanksgiving for Crypto, Binance’s White Knight Act, and FTX Gift Cards

Notes 11/24: FTX and Tether, Entrepreneurs Who Lunch (with FT)

Up until now, the fallout from FTX’s bankruptcy has largely remained manageable. Its casualties have been limited inside crypto and outside it. But a story in the New York Times yesterday is an omen that the exchange’s collapse will bring down bigger players. According to The Times, Alameda Research – the crypto trading firm cofounded by FTX CEO Sam Bankman-Fried, invested in Farmington State Bank, … Continue reading Notes 11/24: FTX and Tether, Entrepreneurs Who Lunch (with FT)

Notes 11/23: DCG and Genesis, An Irrepressible CEO, and Huobi’s Mystery

The Digital Currency Group (DCG), a crypto conglomerate with interests in media, trading, and lending, is estimating a 20 percent decline in its revenue to $800 million this year due to the crypto contagion, according to a report in the Wall Street Journal. DCG owns Genesis Global Capital, a lending firm, that is supposed to be in talks for an emergency loan of $1 billion … Continue reading Notes 11/23: DCG and Genesis, An Irrepressible CEO, and Huobi’s Mystery

Notes 11/22: Bitcoin Price, $1.2 Billion Everywhere, and Ticking Time Bombs

Bitcoin price fell to a new two-year low of $15,480 amid talk of a possible bankruptcy for lending firm Genesis. The New York company was said to be in talks with crypto exchange Binance and investment firm Apollo Global Management for a loan of $1 billion. The firm had expanded operations and its loan volume surged during last year’s boom in crypto markets. This year’s … Continue reading Notes 11/22: Bitcoin Price, $1.2 Billion Everywhere, and Ticking Time Bombs

FTX’s Mysterious Transfers and Tether

One of the most interesting pieces of news to come out from FTX’s collapse in recent days is the exchange’s transfer of $250 million – one-fourth of its total revenue figure for last year – to an “unnamed related party” for “software royalties”. That party, according to the Wall Street Journal, is the primary shareholder in “several related entities who do business with the exchange” … Continue reading FTX’s Mysterious Transfers and Tether

Notes 11/21: GBTC Discount, FTX Customers

The Proof of Reserves (PoR) train – a supposed panacea to crypto’s transparency problem – has gathered momentum among cryptocurrency exchanges in recent times. But it seems to have run out of steam at the Grayscale Bitcoin Trust (GBTC). The world’s biggest bitcoin trading vehicle cited “security concerns” and refused to divulge the contents of its trust in a Proof of Reserves report. Discounts to … Continue reading Notes 11/21: GBTC Discount, FTX Customers

Notes 11/17: Collateral Damage and Derivatives

As Sam Bankman-Fried’s make-believe empire crumbles, other crypto firms are becoming collateral damage. The lending arm of Genesis Global Trading, a funding Goliath in crypto, might become the latest domino to fall. The parent company of Genesis Global Capital, as the unit is called, announced yesterday that it was suspending redemptions and new loan originations. Genesis had already disclosed toxic exposure to 3AC, the bankrupt … Continue reading Notes 11/17: Collateral Damage and Derivatives

Notes 11/16: Bitcoin Price, Liquidity Gaps, and DeFi

Even as reverberations of FTX’s collapse continue to echo through the crypto ecosystem, it seems to be having less of an effect on crypto prices. Many expected bitcoin price to bottom out in the aftermath of a crash of a major crypto institution. That didn’t happen. There was a blip in crypto markets after news of FTX’s troubles came out. But they avoided a steep … Continue reading Notes 11/16: Bitcoin Price, Liquidity Gaps, and DeFi

Notes 11/15: FTX Tremors, GBTC Discount, and An Industry Fund

In a now famous Rolling Stone description of Goldman Sachs after the 2008 financial crisis, journalist Matt Taibbi compared the Wall Street titan to a “giant vampire squid wrapped around the face of humanity.” FTX may not have the same footprint as Goldman Sachs but its high profile within crypto has ensured that tremors of its collapse are still being felt in the crypto ecosystem. … Continue reading Notes 11/15: FTX Tremors, GBTC Discount, and An Industry Fund

Notes 11/10: FTX Crashes

Regulation can’t come soon enough to cryptocurrencies. The asset class, which surpassed $1 trillion in market capitalization during the pandemic, seems to be imploding under its own bloated valuations. FTX, the world’s fourth largest (or third largest, depending on the source) cryptocurrency exchange, has become the latest crypto entity to fall by the wayside. The value of its native token FTT has plunged and the … Continue reading Notes 11/10: FTX Crashes

Notes 10/10: BNB Hack, MakerDAO Invests in Treasuries

A bridge connecting the BNB Beacon Chain, home to Binance’s native token BNB, to the Binance smart chain, was hacked last Friday. The hacker did not steal funds; In fact, they minted $570 million worth of BNB and, reportedly, got away with $100 million worth of tokens. BNB validators – systems responsible for approving transactions and creating new blocks – shut down in response to … Continue reading Notes 10/10: BNB Hack, MakerDAO Invests in Treasuries

Notes 9/27: Bitcoin Price, Ethereum PoW Hash Rate

Bitcoin price rose in tandem with equities this morning. The cryptocurrency, which had traded below $20,000 most of last week, breached that mark and climbed to a high of $20,356.87 at 8:57 EDT. It has retrenched those gains, since, and is currently trading at $18,878, down almost 1.47% from its price the same time a day ago. In explaining the price movements of cryptocurrencies, analysts … Continue reading Notes 9/27: Bitcoin Price, Ethereum PoW Hash Rate