Bitcoin, Blockchain, Battlestar Galactica

The Jitty Slitter · Jan 5, 2023

Rumoured to be a fraud that bank

spejic · Jan 5, 2023

The Jitty Slitter said: ↑

Rumoured to be a fraud that bank
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They even closed down their mortgage business. They bet everything on crypto.

In the immortal words of Jean-Claude Van Damme in Lionheart, "Wrong bet".

The Jitty Slitter · Jan 6, 2023

Dawg who pulled an epic defi scam we discussed here got arrested lol

no bail for Avraham Eisenberg, the hotshot DeFi trader who was arrested just after Xmas for massive market manipulations in DeFi. It turns out laws exist.https://t.co/VLu4Ex81za
— your #1 source for absurdist true crime 🐀 🐍👑 🌷 (@davidgerard) January 5, 2023

spejic · Jan 7, 2023

The Jitty Slitter said: ↑

Rumoured to be a fraud that bank
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Looks like Cathie Wood got wind of something because her ARK fund sold their stake in the bank, which she bought into only last November..

And a day later, we know what that is. Silvergate is being investigated by the SEC and the Feds for shady dealings between them and DCG (the group that owns Genesis, Coindesk, and Greyscale).

Hmm, I wonder how she got that news a day early.

In any case, Silvergate is in real trouble. Their market cap is far less than hard money on hand. That's never a good sign. It means Wall Street thinks that money is going to lawyers and fines. And without Silvergate, crypto is in trouble because the connection between them and real money becomes even more tenuous.

Cascarino's Pizzeria · Jan 7, 2023

Well be seeing a lot of these "it was all a scam that many fell for" articles.

Sam Bankman-Fried (SBF), a 30-year-old nobody, makes Bernie Madoff, the disgraced money manager who perpetrated the biggest Ponzi scheme ever, look like an amateur. What took Madoff decades, SBF accomplished in just a handful of years.

By agreeing that zeros and ones stored in a decentralized database may constitute a currency, our society has normalized something that has no intrinsic value, as crypto has no cash flows and limited utility. Yes, the words we use matter, and just because something is limited in quantity does not automatically make it valuable and turn it into a medium of exchange for goods and services (that is, a currency) or a valuable work of art (referring to NFTs here)...

...Unfortunately, many everyday people were infatuated by the prospect of getting rich fast, and predictably lost their life savings. Some venture capitalists will lose other people’s money and their own reputations. The crypto decline will reduce the demand for microchips that were used to produce crypto garbage, as well as demand for the digital advertising that was used to spread the lie. There will be some other second- and third-order effects that will become obvious in hindsight. The collapse of FTX may have been a “Lehman moment” for the crypto universe, but it is unlikely to have a significant impact on our financial system. It will spill into the real world, but only on the margins.

https://www.marketwatch.com/amp/sto...ernie-madoff-look-like-an-amateur-11673085722

The Jitty Slitter · Jan 9, 2023

This post has lots of gory details on the Genesis/Gemini/DCG collapse

short version, the 3AC collapse meant they are out 2.4bn and have been trying to stay afloat ever since.

Crypto collapse: DCG’s problem is Grayscale, FTX Bahamas agreement, DeFi trading arrest, Silvergate Bank, Huobi, Binance — by me and @davidgerard https://t.co/mOx6b1Ljek
— Amy Castor (@ahcastor) January 9, 2023

spejic · Jan 9, 2023

Amy Castor and David Gerard are the best. If you want to keep up with what's going on in crypto and have explanations as to why it's terrible, follow their blogs.

Cascarino's Pizzeria · Jan 9, 2023

The Jitty Slitter said: ↑

This post has lots of gory details on the Genesis/Gemini/DCG collapse

short version, the 3AC collapse meant they are out 2.4bn and have been trying to stay afloat ever since.

Crypto collapse: DCG’s problem is Grayscale, FTX Bahamas agreement, DeFi trading arrest, Silvergate Bank, Huobi, Binance — by me and @davidgerard https://t.co/mOx6b1Ljek
— Amy Castor (@ahcastor) January 9, 2023

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Seems like Larry Summers is always at the forefront of economic dickery:

Amidst all of this, Larry Summers, the former US Treasury Secretary and World Bank Chief Economist, has quietly left DCG — going so far as to remove all mention of DCG from his own website. Summers joined DCG as a senior advisor in 2016, a year after the company’s founding.

spejic · Jan 9, 2023

In the last month, a number of banks in Europe, especially in England, have stopped letting customers deal in crypto or strongly limited the amounts. Now its starting in the US - Metropolitan Bank has stopped dealing with people who do crypto, closing the accounts of people that move money in or out of exchanges. The thing is, they were doing a little dabbling in crypto before, being the bank that backed the crypto.com credit cards. You had to stake the propritary coins of crypto.com to get those cards, more staking getting you more rewards (up to $400,000, but I don't know if anyone went that high). But the coins being staked have lost most of their value, and the cards don't work any more.

So basically, everyone staking coins for one of those cards has lost their money for a small rectangle of polyvinyl chloride acetate.

The Jitty Slitter · Jan 10, 2023

spejic said: ↑

Amy Castor and David Gerard are the best. If you want to keep up with what's going on in crypto and have explanations as to why it's terrible, follow their blogs.
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What I found so interesting is how all these crypto players are all indebted to each other, so contagion is mega.

Gemini Earn is revealed to be a pass through (ponzi) for Genesis. i.e. it's only way to pay 8% yield is by lending the money to Genesis. It has no investment skills.

In turn, Genesis (owned by DCG) loaned billions to 3AC. 3AC was using a lot of that money originally to invest in Grayscale (owned by DCG)

When 3AC went down following Terra/Luna, it has basically taken down Genesis and thus Gemini with it. Except DCG pulled a scam to create fake solvency which came unstuck when they lost more money with FTX

It's all a scam.

The Jitty Slitter · Jan 10, 2023

So more explanation now, courtesy of Winkelvoss

It seems to have been a giant fraud by DCG to 'stuff' Grayscale, allowing them to earn huge fees on the locked up AUM

If you want to geek out - this thread has all the details. Of course Winkelvoss must have known all this - why did he allow Gemini to lend Genesis 900m with no diligence?

Then when the scam collapsed, DCG did some new fraud stuff to pretend to fix Genesis's balance sheet

The confusing way in which this is all worded is partly a result of a lawyer's rewording, but from what I can tell, 3 Arrows Capital would buy GBTC (Grayscale, owned by DCG), and then give that to Genesis as collateral to borrow money from Genesis, a company owned by DCG pic.twitter.com/5wD8HowlPj
— Ed Zitron (@edzitron) January 10, 2023

Q*bert Jones III · Jan 10, 2023

Late stage capitalism is increasingly hilarious.

The Jitty Slitter · Jan 12, 2023

In case you were worried about a lack of digital entertainment, one of the last major crypto lending firms NEXO appears to be trading while insolvent - shocking!

DIRTY BUBBLE MEDIA: 4
PONZI SCAMS: 0https://t.co/txt1kOS0o9
— DIRTY BUBBLE MEDIA: GOOD LUCK, GOOD BYE. (@MikeBurgersburg) January 12, 2023

spejic · Jan 12, 2023

The rumor is Nexo is strongly connected to Bulgarian organized crime. I wouldn't want to be them if a run starts to happen.

spejic · Jan 12, 2023

Talk about timing - guess what just happened in Bulgaria?

News Article in Bulgarian

An international operation against a large-scale scheme for financial crimes, money laundering and violations of international sanctions against Russia is currently underway in Sofia, "24 Chasa" has learned.

Prosecutors, investigators from the National Investigation and DANS officials, together with foreign agents, have begun searches of the Bulgarian offices of a company that trades cryptocurrencies worldwide.

According to unofficial information, it is the company Nexo.

[..]
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Raided by police. How delicious. This was reputed to be one of the most stable and trustworthy crypto sites.

bigredfutbol · Jan 12, 2023

spejic said: ↑

Talk about timing - guess what just happened in Bulgaria?

News Article in Bulgarian

Raided by police. How delicious. This was reputed to be one of the most stable and trustworthy crypto sites.
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Just an aside--"chasa" means "hours" in Bulgarian. It is/was (not sure if the print edition is still a thing) the main daily newspaper in Sofia.

superdave · Jan 12, 2023

I guess this is the stage of the crypto collapse where the relevant TV series isnt Silicon Valley, now it’s The Blacklist.

To me, the biggest upside of the collapse is that my prior beliefs on reality and economics and all the rest seem to have held. Up is still up and down is still down. So many smart people were pushing this, I hit a point personally where I started to wonder if the world really was different and all my knowledge and experience was irrelevant now.

The Jitty Slitter · Jan 13, 2023

Gemini has now been charged by the SEC with selling unregistered securities

Gemini, the Winklevoss’ crypto exchange, and Genesis, a broker under the heavyweight conglomerate Digital Currency Group, together raised “billions of dollars’ worth of crypto assets from hundreds of thousands of investors” for Gemini Earn, a program that promised investors high interest on the assets they lent to Genesis.

Earn was billed to customers as a way to passively grow their crypto holdings, with advertised annual returns as high as 7.4 percent. The set-up was simple: customers would deposit their funds into the program, and the money would then be lent out to a third-party, generating interest.
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Former Gemini employees told The Beast that Gemini Earn’s terms and conditions were highly dubious from the outset. One staffer recalled reading the fine print for the first time, saying, “[We] were like, ‘Holy shit, are you f––ing kidding me?’” https://t.co/egTAJvcG4P
— The Daily Beast (@thedailybeast) January 12, 2023

Q*bert Jones III · Jan 13, 2023

superdave said: ↑

To me, the biggest upside of the collapse is that my prior beliefs on reality and economics and all the rest seem to have held. Up is still up and down is still down. So many smart people were pushing this, I hit a point personally where I started to wonder if the world really was different and all my knowledge and experience was irrelevant now.
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I'm not quite there yet.

It's not hard to imagine a world where artists are being paid for NFTs, where the blockchain stores carbon credits, and we grocery shop in the metaverse. But to get there, we have to end the Web3 grift. And right now, 99% of it is a grift.

The Jitty Slitter · Jan 13, 2023

Q*bert Jones III said: ↑

I'm not quite there yet.

It's not hard to imagine a world where artists are being paid for NFTs, where the blockchain stores carbon credits, and we grocery shop in the metaverse. But to get there, we have to end the Web3 grift. And right now, 99% of it is a grift.
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Agreed. Like it would be cool to have digital money that worked seamlessly on an API - but payments is hard for a reason.

It's interesting that in recent years payments has actually got more frictionless

The Jitty Slitter · Jan 13, 2023

superdave said: ↑

I guess this is the stage of the crypto collapse where the relevant TV series isnt Silicon Valley, now it’s The Blacklist.

To me, the biggest upside of the collapse is that my prior beliefs on reality and economics and all the rest seem to have held. Up is still up and down is still down. So many smart people were pushing this, I hit a point personally where I started to wonder if the world really was different and all my knowledge and experience was irrelevant now.
Click to expand...

A number of commentators held the view that with so many smart people going in to crypto, there must be something there - but so far the true believers haven't delivered anything that adds any value. This is why all the mainstream blockchain type projects have collapsed - e.g the Australian Stock Exchange.

Kazuma · Jan 13, 2023

superdave said: ↑

I guess this is the stage of the crypto collapse where the relevant TV series isnt Silicon Valley, now it’s The Blacklist.

To me, the biggest upside of the collapse is that my prior beliefs on reality and economics and all the rest seem to have held. Up is still up and down is still down. So many smart people were pushing this, I hit a point personally where I started to wonder if the world really was different and all my knowledge and experience was irrelevant now.
Click to expand...

I've had a simple rule that I've held that's helped me along for a while now.

Anytime something is deemed as, "The future," "the next big thing," and so on, it's likely going to fizzle out after a certain amount of time. And it's usually never going to offer a solution to anything.

A lot of times hype is just that, hype (The amount of Barca youth products that get hyped for instance only to be insignificant). And that's the way I've been seeing crypto since it came about.

Cascarino's Pizzeria · Jan 13, 2023

Kazuma said: ↑

I've had a simple rule that I've held that's helped me along for a while now.

Anytime something is deemed as, "The future," "the next big thing," and so on, it's likely going to fizzle out after a certain amount of time. And it's usually never going to offer a solution to anything.

A lot of times hype is just that, hype (The amount of Barca youth products that get hyped for instance only to be insignificant). And that's the way I've been seeing crypto since it came about.
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Well I've taken the Newark Airport monorail many times and that baby's going nowhere!

spejic · Jan 18, 2023

Silvergate bank is worse off than we thought, and we already thought they were in a world of hurt. They didn't lose $740 million in the last quarter - they actually lost $1.01 billion. And that's only up to the end of 2022 - outflows have been continuing this month.

Silvergate serves two purposes in crypto - they are the bank for many crypto companies, and they run something called SEM. Just like there is a network that allows you to move money between banks and other financial organizations, SEM is a network that allows you to move money and crypto between crypto companies. It's based off of Libra code - Libra was Facebook's aborted attempt to make new money for the world. Without a way to take in, hold, or shift money around the whole crypto field would be crippled.

The only other bank that does what (west coast) Silvergate does is (east coast) Signature. They also have their own (based on Libra) network called SigNet. They are not in Silvergate's precarious position. At least not today.

The Jitty Slitter · Jan 18, 2023

Tortoise media has a new podcast series about Tether - the first real scrutiny in the mainstream media IMO. It's obviously fraudulent and got in trouble with New York Attorney General for false claims.

For a year at Tortoise we’ve been investigating one cryptocurrency, Tether. It has a particular, enormous role in the crypto world. It’s meant to be an endless piece of string, tying itself to the physical world of cash through the apparently simple device of keeping a dollar, or a dollar equivalent, in the bank for every dollar’s-worth of Tether it issues. It’s pegged – tethered – one-to-one and, because of that, it’s become the on-ramp for people getting on board the crypto rocket and the off-ramp for cashing out.

Only, like so much else in the crypto world – as we discovered when Sam Bankman-Fried’s FTX/Alameda empire collapsed – it has so far failed, or refused, to abide by established financial rules. It’s never been audited, never issued a proper set of accounts. In a world which often describes itself as trustless (you don’t have to trust governments, you don’t have to trust banks if you’re an investor in cryptocurrencies) you do, apparently, have to trust Tether – blindly.

But can we? Why would we? We’ve been investigating the people who set up Tether and talked to the people who run it now. We’ve checked in with their bankers past and present and their critics, all in an attempt to trace the cash Tether should have in the bank. There’s nothing orthodox about the people who run Tether or the way that it’s run, and that rings alarm bells. Because if, one day, that distant flash high in the sky is the sight of Tether exploding it really could be the death-knell for the dream of exploring a new financial world.

https://www.tortoisemedia.com/listen/real-money/