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

Can Proof of Reserves Bring Transparency to Crypto?

The barrage of news about FTX’s collapse means that it will take time to disentangle the many narratives emerging from it. But that hasn’t stopped many people from suggesting solutions to ride out the current crisis of confidence in crypto. One of those proposals comes from Binance chief Changpeng Zhao, an instigator of the current crisis in crypto. His suggestion is for cryptocurrency exchanges to … Continue reading Can Proof of Reserves Bring Transparency to Crypto?

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

Reckoning With DAO Governance

As a concept for collective governance, decentralized autonomous organizations (DAO) are replete with hip buzzwords and ideas. Their practical implementation, however, is clunky. The latest example is that of Ooki DAO – a margin lending platform that is being sued by the Commodities Futures Trading Commission (CFTC). The agency contends that Ooki DAO violated investment laws by offering unregistered tokens for sale. It also charges … Continue reading Reckoning With DAO Governance

Notes 10/4: CBDC Development, An Opening for Crypto?

Central bank digital currencies (CBDC) are becoming popular among countries. According to the Atlantic Council’s CBDC tracker, 105 countries, representing 95 percent of the world’s GDP, are developing digital versions of their national currency. Eighty-one countries were exploring the use of CBDCs in their economy last August. CBDC development accelerated in the aftermath of Russia’s invasion of Ukraine. International payment networks like SWIFT reacted swiftly … Continue reading Notes 10/4: CBDC Development, An Opening for Crypto?

What Will October Bring for Bitcoin Markets?

At the beginning of September, bitcoin price, which has crashed by more than 60% since its high last November, was poised for further downward movement. It bucked that script. Except for a brief surge in the middle of this month, bitcoin price mostly traded sideways and stuck to a trading range of around $20,000, its price at the start of the month. As of this … Continue reading What Will October Bring for Bitcoin Markets?

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

Is El Salvador’s Bitcoin Experiment A Failure?

El Salvador’s adoption of Bitcoin as legal tender, a year ago, was considered a watershed moment by crypto advocates hankering for more recognition for the world’s biggest cryptocurrency. The tiny Central American country is the region’s fourth biggest economy and has been a dollarized nation since 2001. Proponents of the move argued that Bitcoin adoption would unshackle its economy from American monetary policy and bring … Continue reading Is El Salvador’s Bitcoin Experiment A Failure?

Notes 9/21: FOMC and Bitcoin Price, Retail CBDCs, and Tether In Trouble Again

It was unthinkable some years ago. Fed Day – a day when the Federal Reserve Open Markets Committee (FOMC) meets – is fast becoming an important ritual in bitcoin’s calendar because it determines the cryptocurrency’s future price trajectory. Cryptocurrency markets are poised in anticipation of Fed Chairman Jerome Powell’s announcement his afternoon regarding interest rate hikes. Last month, Chairman Powell indicated that consumers should be … Continue reading Notes 9/21: FOMC and Bitcoin Price, Retail CBDCs, and Tether In Trouble Again

Notes 9/16: ETHW Crash, ETH As a Security

The effect of Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS) on the price of its native token ether has receded. Investors bid up ether’s price in the weeks leading up to the merge. It remained flat during the actual event. And now, it is in decline. After reaching a high of $2,007 slightly more than a month ago, ether prices … Continue reading Notes 9/16: ETHW Crash, ETH As a Security

Notes 9/15: The Merge, Ether As Wall Street Asset, and Payments Industry Regulation

Ethereum’s Merge – a transition from the Proof of Work consensus mechanism to Proof of Stake – was finalized at 6:59 AM this morning. The Merge has been in the making for many years and was implemented by nine teams and more than 100 developers spread out across the globe. As has been repeated many times across multiple media platforms, the event cuts down the … Continue reading Notes 9/15: The Merge, Ether As Wall Street Asset, and Payments Industry Regulation

Notes 9/14: Ethereum’s Merge

When Bitcoin was launched, it had ambitions to become a peer-to-peer payment system powered by electronic cash. It is yet to fulfill that promise. Ethereum, another monetary system underpinned by blockchain, has much grander ambitions. Released six years after Bitcoin’s, Ethereum’s whitepaper outlines a raft of ambitious applications – a platform for financial derivatives to voting mechanisms to decentralized governance that works across borders – … Continue reading Notes 9/14: Ethereum’s Merge