Author: Dale Warburton

Dale is a former attorney turned passionate Bitcoiner with an interest in investments, macro, geopolitics, innovation, tech, nature, wildlife, MMA and Bitcoin (of course).

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Bitcoin Crypto News New Zealand

New Zealand Launches First Bitcoin-Only Fund to Attract First-Time Investors

It’s often been said that technical complexities remain one of the main obstacles hampering widespread Bitcoin adoption. In an attempt to provide retail investors exposure to bitcoin without the complexities, one Kiwi fund manager has just launched the country’s first bitcoin-only fund.

A First For New Zealand

The Vault International Bitcoin Fund (Fund) is the first of its type to be established in New Zealand and will be managed by Implemented Investment Solutions, an investment firm with over NZ$4 billion (A$3.8 billion) assets under management. The Fund has a market capitalisation of about NZ$1 million and would invest in international exchange-traded funds (ETFs) that hold positions in bitcoin.

One of the key motivations behind establishing the Fund was to take out the hassle and risk of direct ownership, including some of the tax complexities:

We see this as a great way for people to get that exposure without having to do all the more complicated and technical parts of it themselves.

Janine Grainger, co-founder, Vault Digital Funds

Vinnie Gardiner, Vault chief executive and co-founder, recognised that bitcoin was not necessarily suitable for all investors and recommended that they do their own research:

The reality has always been that if you own digital assets, you are the custodian of your own wallet, which introduces some real risk … Bitcoin isn’t appropriate for everyone. This is something people should not be taking lightly.

Vinnie Gardiner, co-founder and chief executive, Vault Digital Funds

‘Not Your Keys, Not Your Coins’

New Zealand institutions appear to be on the ball and this latest announcement is just another way for ordinary investors to gain exposure to bitcoin. In July, as reported by Crypto News Australia, the Kiwi Saver Pension Fund announced it had bought bitcoin in October 2020 to the tune of 5 percent of investable assets.

It’s no doubt bullish for bitcoin that more retail products are becoming available, making it easier and simpler to buy and hold bitcoin. The downside retail investors ought to be aware of is that ultimately, you are not in control over your bitcoin – “not your keys, not your coins”.

Bitcoin mantra.

Some would argue that having a third party retain custody of your bitcoin negates bitcoin’s raison d’etre – namely that you can be self-sovereign and, ultimately, your own bank.

Of course, holding your own bitcoin comes with risks and it’s not for everyone. Each investor needs to determine their own risk appetite for self-custody and act accordingly.

Categories
Crypto Art NFTs

Gary Vee’s Hand-Drawn Doodles Net $1.2 Million, Outselling Warhol and Pollock

It’s pretty clear that NFT season is well and truly under way, but who would have thought that a handful of childlike doodles from an internet personality and investor could outsell iconic artists including Andy Warhol and Jackson Pollock?

Gary Vaynerchuk (known as Gary Vee) has done just that.

Gary Vee’s Empathetic Elephant hand-drawing sold for US$412,500. Source: Christies

Gary Vee’s “VeeFriends”

In May this year, Gary Vee launched “VeeFriends“, an NFT platform that aimed to offer token owners access to exclusive events “focused around business, marketing, ideas, creativity, entrepreneurship, innovation, competition and of course, fun”.

“VeeFriends” is a 286-piece collection of animals hand-drawn doodles by Vaynerchuk himself which he has turned into a collection of 10,255 NFTs. According to Vee, the animals represent human traits that he most admires and that lead to “happiness and success”.

To date it has been a roaring success, fuelled no doubt by the strength of Vee’s celebrity status. Total sales to date since its mid-year launch exceed US$90 million, with the floor price currently sitting at 14.65 ETH (US$49,300).

Vee Dominates Christie’s Auction

In a Christie’s auction in New York this past week, Vee sold five paper versions of his hand-drawn doodles, each for over US$100,000, bringing in a total of US$1.26 million.

Up for sale were the hard copy versions of Empathetic Elephant, Gratitude Gorilla, “Diamond Hands” Hen, “You’re Gonna Die” Fly, and Tremendous Tiger. Emphatic Elephant achieved the highest selling price of US$412,500.

Gary Vee’s Tremendous Tiger hand-drawing sold for US$237,500. Source: Christies

I grew up with collectibles, antiques and sports cards … My mom and dad were into that stuff too, and they would have been intimidated even walking into Christie’s two decades ago and now their son is selling stuff in it … It’s the American dream.

Gary Vaynerchuk

An ‘Uncomfortable’ and ‘Humbling’ Experience

Vaynerchuk described the experience as “a paradigm shift” and when asked about his doodles outselling many prominent artists, he responded it was “uncomfortable” and “humbling”.

The real question that remains to be answered is to what extent these prices are a product of mania, strong marketing and/or the celebrity status of the “artist”?

Overall, the auction provided a fascinating account of the inter-relationship between analogue (paper) and digital (NFT) art. For many, analogue is still preferable, as reported by Crypto News Australia in August when a paper-based Steve Jobs job application fetched 15 times the NFT sale price.

Categories
Bitcoin Crypto News Gold

Billionaire Investor Says ‘Bitcoin Has Effectively Replaced Gold’

In an interview with CNBC during its Delivering Alpha conference, outspoken billionaire investor Chamath Palihapitiya suggested he could “pretty confidently say that bitcoin has effectively replaced gold and it would continue to do so … and so that market cap is just going to grow”.

Chamath Palihapitiya. Source: Fortune magazine

Long History of Bitcoin

Palihapitiya, a well-known early investor in Bitcoin, has previously advocated to have at least 1 percent of your assets in something that is totally uncorrelated (ie, Bitcoin) to the current financial system.

Whether you support the fiscal and monetary policy or not, it doesn’t matter. This [bitcoin] is the schmuck insurance you have under your mattress.

Chamath Palihapitiya

In the interview, he suggested that Bitcoin is the most “profound iteration of the internet we’ve seen” and when asked about the risk of government shutting it down, he responded that it would be “very hard to kill”.

Despite standing out from this Silicon Valley peers in his endorsement of Bitcoin, Palihapitiya is in good company with other billionaires across the globe who have also entered the fray.

Dabbling Outside in Broader Crypto Ecosystem

Despite the bulk of his crypto investments being in Bitcoin, Palihapitiya indicated that he had put a small amount of capital into other projects that one day could be worth “tens of millions, hundreds of millions … “. Presumably his version of a “small amount of capital” is somewhat different to that of an ordinary investor.

Overall, he saw the impact of the sector as being enormous:

For the first time, I think we’re seeing the initial versions of the solution that we thought Bitcoin was supposed to be. Smart contracts, better savings accounts, better insurance, better credit scoring.

Chamath Palihapitiya


Looking at the bigger macroeconomic context, he mentioned he was very concerned about inflation and found crypto particularly attractive as a non-correlated asset:

Bitcoin, Solana, DeSo, a lot of the DeFi protocols because it’s a great counterintuitive hedge against all of this stuff.

Chamath Palihapitiya

Tracking Gold

How has Bitcoin performed relative to gold? Across almost all timescales, as at October 1, it’s not even close:

BTC v other assets. Source: Casebitcoin

Michael Saylor is perhaps less diplomatic about gold’s weak performance:

Notwithstanding the advantages of “digital gold”, some have however argued in favour of a small physical gold position to guard against black swan, apocalyptic events. Perhaps, then, it makes plenty sense to have a form of hard money with a 5,000-year track record.

Categories
Stablecoins Tether

Tether Scores Win in Class Action Lawsuit, Calls it a ‘Clumsy Attempt at a Money Grab’

Bitfinex, the company behind stablecoin Tether (USDT), has secured an important win in a class-action lawsuit levelled against the controversial company. Half of the complainants’ claims were summarily dismissed.

Parent Company Succeeds in Court

Court documents suggest that iFinex (Bitfinex’s parent company) was successful in its application to dismiss claims that it had manipulated the crypto market. In total, the court dismissed five claims and part of one. Six other claims, however, remain in play. Importantly for Bitfinex, all claims under the Racketeer Influenced and Corrupt Organisations Act (RICO) were dismissed.

The initial complaint was made in 2019 and claimed that the firm had manipulated the crypto market by issuing unbacked USDT “in an effort to signal to the market that there was enormous, organic demand for cryptocommodities”. The argument was that Bitfinex sought to inflate crypto prices “thereby creating and sustaining a ‘bubble’ in the cryptocommodity market”.

Tether took to its website to announce the victory:

With half their case now dismissed, their primary expert debunked, and their lead law firm embroiled in its own internecine war – with its partners and former partners trading allegations of fraud and ethics violations – this case is doomed … Litigation will expose this case for what it is: a clumsy attempt at a money grab, which recklessly harms the whole cryptocurrency ecosystem.

Tether blogpost

Tether – No Stranger to Controversy

Aside from the latest court case, Tether has often made headlines for the wrong reasons. In what has become known as “Tether FUD”, one of the persistent criticisms out there is that USDT artificially props up the crypto market and that its eventual demise will see all of crypto collapse. The argument suggests that USDT isn’t backed by real dollars and that it is simply printed out of thin air. One of the strongest arguments against this is that you can actually redeem USDT for US dollars. Historically, Bitfinex has done itself no favours by refusing to disclose its reserves.

In February, Bitfinex and Tether had a case settled with the Office of the New York Attorney General over mismanagement of USDT reserve funds following civil action by a group of crypto investors. A sum of US$18.5 million was agreed for settling the case in exchange for submitting to periodic reporting of their reserves.

In the following month, Bitfinex confirmed that an independent audit firm had verified that all USDT circulation was fully backed. Even then, the actual reserve composition remained somewhat opaque and, just earlier this month, Bitfinex tried to block an information request from CoinDesk attempting to verify its current reserve composition, citing “harm to its competitive position”.

For now, Tether is out of the woods, but not for long.

Categories
Crypto News Markets Regulation Trading

Crypto Twitter Slams Fed Hypocrisy as Two Members Resign Amid Insider Trading Allegations

Earlier this week, two of the 12 regional Federal Reserve Bank (Fed) presidents resigned following disclosures about insider trading activity in 2020, a year characterised by a waft of sweeping economic policies driven largely by the Fed. The irony of the situation was not lost on crypto Twitter.

Insider Trading Allegations

Those claiming insider trading argue that both officials helped implement policies which which they are likely to have known would benefit themselves.

In an official press release, the Boston Federal Reserve noted that president, Eric Rosengren, would retire. Interestingly, it cited health reasons. Hours later, the Dallas Federal Reserve Bank issued a notice saying that its president, Robert Kaplan, was leaving to “eliminate any distraction” relating to his personal investment activities.

As per official disclosures, both officials traded in securities while determining the nation’s monetary policy. Rosengren was active in the real estate sector which raised suspicion, particularly after some of his comments relating to the overheated housing market. Kaplan it appears was more brazen, making multiple million-dollar trades in individual equities in 2020 including Apple, Amazon and Delta Airlines.

Sven Henrich, an outspoken market commentator, pulled no punches:

Crypto Twitter Responds

If you are tuned into the macroeconomic environment, you’ll know that crypto is often on the receiving end of persistent fear, uncertainty and doubt (FUD) promulgated by those in power who stand to lose the most from its global adoption. The response to this scandal within the Fed was therefore predictable:

Reddit users had similar feelings on the matter, mostly entirely predictable:

Crypto users would probably be the first to admit that insider trading is not limited to traditional markets. Recently, OpenSea confirmed that a product manager was frontrunning NFT launches to flip them for a tidy profit.

But still, for the average person, it is likely far more concerning that those in charge of a nation’s monetary policy are front running retail investors. Events like these erode what little trust is left in traditional institutions such as the Fed. It’s no wonder that so many have turned to crypto, particularly when faced with record inflation despite persistent claims that it is “transient”.

Categories
Bitcoin Crypto News Investing

JPMorgan CEO Still Doesn’t Like Bitcoin But Admits it May 10x Within 5 Years

Jamie Dimon, JPMorgan’s headstrong CEO, is well known to be a Bitcoin sceptic. His latest pronouncement, however, may be his most positive yet. According to a recent interview, he now believes that the blue chip digital asset could grow by up to 10 times within the next five years.

A Trip Down Memory Lane

With a market cap of around US$465 billion, JPMorgan is the world’s largest investment bank. When the chief executive speaks, financial markets listen. So what has he historically had to say about Bitcoin?

In 2017, Dimon did not mince his words when asked about what he would do if JPMorgan traders started trading bitcoin:

I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.

Jamie Dimon, CEO, JPMorgan

He went further to say that it “won’t end well” and famously declared: “It’s a fraud … and worse than tulip bulbs.”

I couldn’t care less what bitcoin trades for, how it trades, why it trades, who trades it, if you’re stupid enough to buy you’ll pay the price for it one day. I’ve also told people it could trade at $100,000 before it trades to zero. Tulip bulbs traded for $75,000 or something like that … the only value in bitcoin is what the other guy will pay for it.

Jamie Dimon, CEO, JPMorgan
Bitcoin vs other bubbles. Source: Coindesk

The following year, Dimon expressed regret about calling it a fraud but remained sceptical that it could exist without state oversight. He claimed that he saw value in blockchain but that bitcoin had extremely limited use, save for rogue nations or criminals.

JPMorgan Embraces Bitcoin

Fast-forward to 2021 and the banking giant appears to have made some significant internal policy changes.

In January, one of the bank’s analysts appeared to embrace the “digital gold thesis”, saying that bitcoin could in the long run be valued at US$146,000. Later, the bank noted that retail traders outbid institutions in Q1 of 2021.

In July, it was announced that JPMorgan would be granting its wealth management clients access to cryptocurrency funds, becoming the first major US bank to do so. And just last month, it was revealed that it had launched an in-house Bitcoin fund for private bank clients in partnership with NYDIG.

Much of these changes no doubt are driven by demand from clients who could just as easily shift their allegiance to a more bitcoin-friendly bank. In the end, despite any personal misgivings, Dimon appears to have conceded that bitcoin is here to stay, for better or worse, and his company may as well make hay while the sun shines.

Categories
China Crypto News Regulation

Crypto Market Rocked by China Ban, But This is Nothing New

On Friday, September 24, the People’s Bank of China (PBOC) issued a notice effectively banning a host of crypto-related activities, including trading. For those keeping count, this is now the 19th occasion that China has either banned or restricted crypto. Chances are it won’t be last.

The Latest Ban

The PBOC claims that “virtual currency trading hype activities have risen, disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering”.

The latest ban is therefore being put in place to “effectively maintain national security and social stability”. Given that smart contracts are being built into the nation’s CBDC, financial surveillance is likely the true motivation. Some civil servants are already receiving their wages in digital yuan as part of a trial.

Activities that are prohibited include: running an exchange, trading coins and tokens (including overseas exchanges), issuing tokens, and providing financial services to businesses that use virtual currencies.

Tellingly, the notice euphemistically speaks of strengthening “management of Internet information content and access related to virtual currency”. Others call that censorship.  

The ‘China Bans Crypto’ Meme

Each time that China bans crypto, it appears to have an increasingly reductive effect. So much so that it has become somewhat of a meme:

China banning crypto. Source: Medium

With the latest news, close to US$200 billion was wiped off the crypto market though most of the losses have since been regained as at the time of publication. Interestingly, decentralised exchange tokens proved to be beneficiaries of the ban with UNI’s 20 percent gain leading the charge.

Crypto market cap illustrating the drop and recovery. Source: Coinmarketcap

Experienced crypto investors have however seen this movie before and aren’t selling.

Rather than viewing this latest ban as a systemic risk, most investors are considering it as an opportunity to buy the dip as historically that has proven to be a rewarding strategy in the long run.

Participating in the world of crypto is a vote for freedom. China has voluntarily opted out, which over time is likely to be viewed as its loss.

Don’t be surprised if you hear that China bans crypto once more in 2021. These days, anything is possible.

Categories
Australia Banking Bitcoin Crypto Exchange Crypto News Regulation

Bitcoin Trader Faces Off With Aussie Banks Over ‘Crypto Discrimination’

Allan Flynn, a trader and owner of local exchange BitcoinCanberra, is claiming A$250,000 from two of Australia’s biggest banks after they terminated banking services with him on the basis that he operated a crypto trading platform.

Allan Flynn. Source: AFR

Banking a Human Right? Perhaps …

According to the Sydney Morning Herald, Flynn will now have his day in court so to speak. His matter has been scheduled for next month before the ACT Civil and Administration Tribunal’s Discrimination Tribunal where he will argue that both ANZ and Westpac breached his human rights and discriminated against him on the basis that he was a crypto trader and offered trading services to his clients.

Flynn, as the applicant, seeks compensation from the respondent (the banks) for discrimination by reason of his occupation or profession, contrary to the Act, and claims that the respondent(s) refused to provide banking services to him because he is a cryptocurrency dealer or exchanger, in direct violation of his human rights

The applicant holds a ‘protected attribute’ within the meaning of …the Act because he is a cryptocurrency trader; and cryptocurrency trading is a ‘profession, trade, occupation or calling’.

Richard McGilvray, Flynn’s solicitor, from law firm Lexmerca

A successful claim is likely to have implications not only for the crypto sector, but also those that have routinely suffered debanking, specifically those in the adult entertainment industry.

Regulatory Clarity Needed

The timing of Flynn’s case is opportune, considering the recent hearings before the Select Committee on Australia as a Technology and Financial Centre where it was revealed that Australian crypto businesses were being ‘debanked’ by written notice without the ability to appeal.

As Australia increasingly moves towards becoming a cashless society, there may be growing arguments in favour of including banking as a human right. While this may appear counter-intuitive at face value, how does one expect citizens to operate within an economy if they are denied access to banking or cash?

Some would say crypto is the solution. However, as long as digital assets are considered by the ATO as property (and not cash), the punitive tax consequences, accounting administration and inconvenience of using crypto far outweigh any potential transactional benefits.

Australia cash payments. Source: RBA

Much like the experiences of crypto brokerage businesses such as Bitcoin Babe, Flynn says he has been debanked more than 60 times. Remarkably, the banks have gone as far as terminating financial services of his relatives:

Another bank closed my brother’s term deposit account without warning only for the fact that I was a signatory, for family oversight purposes.

Allan Flynn

While banks have a legitimate interest in complying with their statutory anti-money laundering (AML) and counter-terrorism financing (CTF) obligations, there is a growing sense that alternative forces such as hindering competition may be in play.

Flynn’s case is scheduled to be heard in late October. The Senate Committee’s final report is also due around that time. Hopefully, by the end of 2021, we’ll have a coherent and sensible regulatory framework.

Categories
Bitcoin Blockchain Crypto News ICP

ICP Token Soars 13% Amid News of Bitcoin Integration

DFINITY Foundation, the not-for-profit organisation behind Internet Computer (ICP), has announced that it will leverage new cryptography techniques to integrate with the Bitcoin network, resulting in smart contracts that directly operate on bitcoin balances for the first time.

What is ICP?

ICP is a blockchain-based open-source computing platform designed to address some of the major issues with today’s internet – weak system security, monopolisation of internet services, and misuse of personal user data.

Through a multi-layered proof-of-stake consensus mechanism, DFINITY aims to create a modern decentralised internet capable of hosting practically any applications, big and small, including smart contracts and DeFi. Unlike the traditional internet, applications and data are hosted on-chain, rather than relying on centralised infrastructure.

DFINITY Launches Bitcoin Smart Contracts

With an overwhelming 96.55 percent support from the ICP community, the resolution to launch Bitcoin smart contracts was passed.

According to DFINITY, “bringing smart contracts to the Bitcoin network will enable developers to build all manner of exciting new systems and Web 3.0 services that process bitcoins and run entirely from the blockchain, creating a foundation for immense new value creation on both networks”.

The Internet Computer is powered by novel ‘chain key cryptography’ that allows it to sign transactions for other blockchains such as Bitcoin. This capability will be used to provide smart contracts hosted on the Internet Computer with native bitcoin addresses via a direct integration of the networks. Internet Computer smart contracts will gain access to bitcoin liquidity, and Bitcoin will gain powerful new smart contract functionality, without the need for insecure and cumbersome trusted bridging services. This will help realise Satoshi’s vision by allowing bitcoin to power a new generation of Web 3.0 internet services.

Dominic Williams, founder and chief scientist, DFINITY Foundation

In short, the integration will allow for the creation of smart contracts to enable lending, yield farming, derivatives, and other DeFi applications for Bitcoin.

Williams goes further in outlining the benefits of the integration:

This means it will be possible to create a Bitcoin wallet using Internet Computer smart contracts that is directly served from the blockchain into a web browser, which then allows the user to securely, conveniently and anonymously authenticate themselves using, say, the fingerprint sensor on their laptop, or face recognition on their phone, in order to send bitcoins to another user, without need for the key management typically involved in self-hosting crypto.

Dominic Williams, founder and chief scientist, DFINITY Foundation

Earlier this year, ICP crashed some 95 percent on news that the developers had sold their holdings. However, the token was trading 13 percent higher on the recent announcement, following a rather tumultuous 48 hours where US$2.5 billion was wiped off the crypto markets.

Categories
Bitcoin Crypto News Crypto Wallets

Satoshi-Era 2012 Wallet With 616 BTC Has Been Activated, Triggering Speculation

For a host of reasons, Satoshi-era wallets tend to have extremely low levels of activity. It was therefore unsurprising that a recent transaction of 616 bitcoins to another wallet triggered widespread speculation as to the identity of the wallet owner.

Wallet’s Value Skyrocketed

After showing absolutely no activity since 2012, on September 9 the wallet containing 616 bitcoins shifted the entire stash to a new wallet. Since then, the bitcoins have again been moved and currently appear to be located within a previously unused, empty wallet.

BTC price chart since 2012

At the time of the bitcoins being deposited, the wallet’s value was US$8,195, or approximately US$13 per BTC. Some nine years later, the wallet had swelled to US$29.4 million, providing its owner with a rather generous return in excess of 358,000 percent.

Speculation Runs Rife

Given Bitcoin’s elusive and mysterious founder, speculation is unavoidable on each occasion that Satoshi-era transactions like this spring up.

In July this year, Crypto News Australia reported that a wallet which had been dormant for close to a decade had transferred US$21 million worth of bitcoin.

On this occasion, speculation was rife and varied: from suggestions that it was someone involved in the infamous Silk Road who had got out of jail to Satoshi himself.

Whatever the reality, the prospect of establishing the true identity behind the transaction is slim to none.

Bitcoiners tend to be private, particularly those with significant holdings. The one exception of course is the widely discredited Dr Craig Wright, an Australian with a penchant for the limelight who famously declared that he is Satoshi.