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).

Categories
Crypto News FTX

FTX CEO Sam Bankman-Fried Willing to Spend up to $1 Billion to Stop Trump

Sam Bankman-Fried, the billionaire founder and CEO of FTX, has indicated in a recent podcast that he is prepared to donate up to US$1 billion towards the Democratic Party’s 2024 US presidential election campaign.

Some have viewed the move as more of a “calculated investment”:

Pot of Gold to Block Trump

In a recent episode of Jacob Goldstein’s podcast What’s Your Problem?, Bankman-Fried (widely known as “SBF”) indicated he would likely donate “somewhere” between US$100 million and US$1 billion during the 2024 US presidential election campaign:

The 29-year-old, who recently joined the Forbes Rich List, indicated that donations would likely be “north of US$100 million” and that US$1 billion was a “soft ceiling”:

As for how much more than that [$1 billion], I don’t know. It really does depend on what happens. It’s really dependent on exactly who’s running where for what … Yeah, I think that’s a decent thing to look at, as a sort of … I would hate to say hard ceiling, but at least as sort of a soft ceiling, I would say, yeah.

Sam Bankman-Fried, founder and CEO, FTX

Not SBF’s First Rodeo

While SBF’s political contributions are news to some, those paying attention know he is no stranger to the world of electoral politics. Two years ago, he donated US$5.2 million to Joe Biden’s 2020 campaign, making him the second-largest individual donor.

More recently, he contributed US$10 million in a failed campaign to nominate Carrick Flynn in the Oregon Democratic primaries. And that’s not all – some reports suggest SBF has dropped over US$31.5 million in this election cycle alone.

Buying Influence?

While some on Twitter joked that SBF should just “buy Congress”, others viewed his donations as “the oldest trick in the world” and that “doors would be opened” for the crypto executive with subsidies of that size.

Some praised him for his “altruism”, though others viewed the donations as a mechanism to gain political influence or as a tool to avoid regulatory scrutiny:

Billionaires tend to be polarising, so the pushback is not unexpected. Most placed in a similar position would find it difficult not to use their wealth to curry favours. From a legal perspective, the line between bribery and political donations is clear, and to be sure, SBF is on the right side of that line.

While it is difficult to draw conclusions about the crypto mogul’s intentions, one thing remains clear: SBF is willing to throw some serious capital at blocking Donald Trump’s resurgence.

Categories
Bitcoin Crypto News Regulation Stablecoins

Crypto Updates from the World Economic Forum Conference

Despite previous displays of disdain for the sector, cryptocurrencies have featured prominently in this year’s edition of the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland.

Crypto, Blockchain and a Meeting of the Global Elite

It’s that magical time of year when the world’s political and corporate elite congregate at the WEF’s annual meeting to “shape the future”, according its founder, Klaus Schwab.

Since the last conference in 2020 (the 2021 meeting was deferred due to Covid), crypto has gone mainstream and become an institutional asset class. Unlike years gone by, Davos 2022 has been a veritable crypto-fest with advocates making sure their voice is heard.

Five years ago, we were the only crypto company on Promenade; look at it now.

Sandra Ro, CEO, Global Blockchain Business Council

As attendees alighted from their private planes, they could hardly miss the cacophony of crypto messaging:

CoinDesk - Unknown
Polkadot signage featured prominently nearby. Source: Yahoo

Remarkably, even NFTs featured at the conference:

Hot Button Topics

Given the recent LUNA/UST meltdown, several sessions were held in relation to the safety and regulation of stablecoins.

Representatives from both Circle (USDC) and Ripple (XRP) were present at a panel discussing remittances and digital money entitled “Remittance for Recovery: A New Era of Digital Money”.

CoinDesk - Unknown
Sara Pantuliano, Asif Saleh, Ripple CEO Brad Garlinghouse and Circle CEO Jeremy Allaire discuss remittances. Source: Coindesk

According to Circle CEO Jeremy Allaire, the idea of cross-border remittances will in time disappear:

We don’t think about cross-border emails. We don’t think about having a cross-border web browsing session, it’s absurd to think about that. And I believe we’re on the cusp of that with money. And I think when it comes to remittances, I believe the concept of a remittance will also disappear.

Jeremy Allaire, CEO, Circle

On a WEF congress main stage, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), downplayed the idea of cryptocurrencies such as bitcoin as money, adding that “a prerequisite for something that would be money is to be a stable store of value”.

Presumably, Georgieva would view stores of value along a spectrum, given the US dollar’s decline since the establishment of the Federal Reserve:

Visualizing the Purchasing Power of the Dollar Over the Last Century
Devaluation of US dollar since 1913. Source: Howmuch

Call for Consumer Education in the Wake of Terra Meltdown

The international lender also commented on the recent Terra collapse, suggesting that regulators should do more in the way of education to make consumers aware of the risks.

Earlier this year, the IMF recommended a common framework for central bank digital currencies (CBDCs) and crypto. Central bankers in attendance at Davos concurred, saying that good design was “crucial” to the success of retail CBDCs.

Overall, it’s evident that the industry has made dramatic strides in the recent past. Even mainstream finance is coming to the realisation that crypto, in one form or another, is here to stay.

Categories
Crypto News Cryptocurrency Law TerraUSD

Terraform Labs Update: South Korean Police Move to Freeze Foundation’s Assets

The Terraform Labs debacle has taken on a new twist as South Korean law enforcement authorities are reportedly moving to seize the remaining assets of the Luna Foundation Guard (LFG).

Since depegging from the US dollar, both UST and LUNA have collapsed in spectacular fashion, despite injections of capital and failed revival plans that were dead on arrival. With a class action lawsuit looming, things appear to be going from bad to worse for Terraform Labs and its formerly outspoken founder, Do Kwon.

The Saga Continues

According to a local report, law enforcement officials in South Korea are taking action to freeze assets tied to the non-profit group LFG (Luna Foundation Guard). The report suggests that the Seoul Metropolitan Police Agency has asked multiple exchanges to block LFG from withdrawing any corporate funds.

Police indicated that their interest was piqued upon hearing that LFG may have embezzled funds, however it is interesting to note that per the report, the exchanges have no obligation to comply with law enforcement officials’ request.

Simultaneously, it was also reported that following the Terra ecosystem collapse, Korean legislators had been meeting with the five biggest crypto exchanges to establish the extent of loss and who should be held accountable.

We will request a quality investor protection policy to be implemented amongst exchanges.

Yoon Chang-hyeon, chairman, People Power Party’s Virtual Assets Special Committee, Facebook post

Worst Yet to Come for Terraform

A few exchanges have elected to delist LUNA, while others have placed an “investment warning” on the now virtually worthless token. From its high of close to US$120 it is now trading at US$0.0001626.

Although it’s still early days, current indications suggest that the worst is yet to come for Terraform Labs and its founders. After mocking detractors for being “poor”, it may ironically be Do Kwon who suffers that fate, or even worse.

Categories
Crypto News TerraUSD

Terraform Update: Tax Authorities Slap Firm With $78 Million Fine

The woes continue to pile on for Terraform Labs following LUNA’s unceremonious collapse and UST completely depegging from the US dollar. Now, a local report suggests that South Korean tax authorities are slapping the firm with a US$78 million fine for tax evasion.

Bad to Worse

Amid the LUNA debacle, the South Korean government is turning up the heat on Terraform Labs as an estimated 200,000 South Koreans lost much of their net wealth, not to mention at least eight people who reportedly committed suicide as a result.

As a class action lawsuit looms in the background, local tax authorities have claimed that Terraform Labs sent LUNA from its Singapore-based entity to the Luna Financial Guard (LFG) in order to avoid taxes. Furthermore, it is alleged that additional taxes are owed in relation to the bitcoin that was acquired and later sold by LFG.

The firm’s controversial co-founder, Do Kwon, is said to hold around 92 percent in Terra Singapore, with the balance belonging to another South Korean national. Authorities relied on South Korean corporate tax laws, which provide that foreign-registered companies are treated as domestic if decision-making and operations are carried out locally:

Image
Do Kwon regularly called critics poor. Source: Twitter

Terraform Labs Used Complex Legal Structures

Terraform Labs reportedly first piqued tax authorities’ interest in June last year on suspicions of income and corporate tax evasion. The investigation into the firm and its subsidiaries revealed that the company was registered in the Virgin Islands, as well as Singapore. Since decisions were being made from South Korea, the firm was fined US$3.6 million in income tax and US$34 million in corporate tax.

Kwon was therefore reportedly unhappy with local crypto taxation laws and since December had been trying to close down Terra’s domestic operations. Sadly for him, as LFG sought to recover losses on the Anchor protocol and defend the UST peg, tax authorities were once again alerted.

Limited Remedies Available

With a congressional hearing on the cards, a lawsuit and a massive tax bill, the future is looking dim for Terraform Labs. For all the talk of decentralisation and building communities, it’s difficult to avoid the conclusion that Terraform was a company centrally controlled by its founder.

While government has the tools at its disposal to collect what is owed, users caught up in the fiasco are left with few remedies, if any:

Categories
Bitcoin Crypto News Cryptocurrency Law Regulation Terra TerraUSD

UST Meltdown Spurs Global Warnings of Crypto Regulation

Unsurprisingly, the UST depegging fiasco has triggered regulators around the world to accelerate their efforts. While some persist in being hostile towards any regulation, others have expected it from the outset:


Regulators Seize the Opportunity Amid LUNA Debacle

When history is written, this past week may well be regarded as a watershed moment for the crypto sector as LUNA plunged 97 percent overnight.

To illustrate the extent of the carnage, consider that LUNA plummeted from an all-time high of US$119 in April to US$0.000143 at the time of writing. In addition, its sister not-so-stablecoin UST has completely depegged from the US dollar since May 9, currently trading at US$0.0901.

The LUNA collapse alone saw US$50 billion in market capitalisation erased in a week, leading crypto-sceptic regulators around the world to seize the opportunity to capture the narrative.

Regulations Incoming

With the market down US$500 billion in the past two weeks and with UST completely depegging from the US dollar, regulators’ initial focus has been on stablecoins.

In addition, crypto regulation has been placed on the agenda for the upcoming G7 summit in Germany, with French central banker Francois Villeroy de Galhau commenting:

What happened in the recent past [UST meltdown] is a wake-up call for the urgent need for global regulation.

Francois Villeroy de Galhau, governor, Bank of France

In the US, Securities and Exchange Commission chair Gary Gensler said on May 16 that “a lot [needs] to be done here, and in the meantime, the investing public is not that well-protected”, adding: “We’re going to continue to be a cop on the beat.”

Treasury secretary Janet Yellen also told told lawmakers last week that UST’s fate underscored the need for bank-like regulations to be imposed on stablecoin issuers. An anonymous official familiar with the matter added: “In the absence of congressional action, last week’s volatility will put regulators and stakeholders on a stronger footing if they feel the need to act alone to mitigate the risks.”

Shortly after, a non-partisan report by the Congressional Research Service echoed Washington’s sentiments, arguing that the stablecoin industry lacks the regulations found in traditional finance systems to safeguard investors. The overarching theme of the policy recommendations relates to transparency and disclosure.

Separating the Wheat from the Chaff

While regulation is not welcome by many, it appears all but inevitable that it will play an increased role going forward. It’s difficult to envision how a parallel system (ie, crypto) with little to no disclosure obligations can persist for long.

As exchanges like Coinbase face class action lawsuits for selling “unregistered securities”, it’s likely that most cryptocurrencies will find themselves falling within the parameters of increased regulation.

Not everyone is concerned, however, as Bitcoiners like Michael Saylor believe that everything outside of Bitcoin is an unregistered security.

Categories
Bitcoin Crypto News Markets MetaMask

Robinhood Announces Web3 Wallet to Rival MetaMask

Robinhood is diving into the world of Web3 with the announcement of a non-custodial wallet, allowing customers to access NFTs, decentralised exchanges and swap tokens through a new interface.

Digging Deeper into Crypto

According to the announcement made at the Permissionless Web3 conference, the newly launched non-custodial wallet will operate much like rival MetaMask, which remains the wallet of choice in the world of Web3 despite recent issues concerning phishing attacks and user downtime:

The wallet will operate separately from Robinhood’s existing stock platform, and has been specifically optimised for user experience. This was apparently done in order to provide beginners with a simple and intuitive design to easily navigate a space that can be complex.

Co-founder and chief executive Vlad Tenev confirmed as much, saying:

With our Web3 wallet, we’re building a product that will satisfy the most advanced DeFi believers while creating a secure on-ramp for those who are just starting out in crypto to go deeper into the ecosystem.

Vlad Tenev, co-founder and CEO, Robinhood

Robinhood’s crypto CTO Johann Kerbrat reiterated the importance of being user-friendly to beginners, adding: “We’re [Robinhood] making it [the wallet] not scary, [but] easy to use.”

Aside from providing a newbie-friendly interface, users may also be pleased to hear that the company intends on subsidising gas fees, elevated levels of which have plagued the sector of late.

Shift in Public Perception

Robinhood has been making news since inception, more often for the wrong reasons – from revelations that “free trades” came at the expense of selling users’ order flow, to its role in the infamous GameStop short squeeze.

With its stock down 80 percent from its all-time high, Robinhood is clearly looking to turn the tide with its new product. Last month, it revealed plans to integrate with Bitcoin layer 2, the Lightning Network, however the company was later mocked after the CEO claimed that DOGE could “become the currency of the internet”.

Judging by reactions to the news, Robinhood has a public relations problem that even a best-in-class wallet may not solve:

Categories
Bitcoin Crypto News Nayib Bukele

El Salvador’s President Bukele Hosts 44 Countries to Discuss Bitcoin Adoption

Since El Salvador adopted bitcoin as legal tender, President Nayib Bukele has been a vocal proponent, citing its adoption as a benefit for all Salvadoreans.

This week, the charismatic leader continued his efforts, attempting to orange-pill central bankers and financial ministers from 44 countries:

Meeting to Discuss Bitcoin

According to a tweet from Bukele, who regularly buys the dip, the president hosted a meeting this week with 32 central banks and 12 financial authorities “to discuss financial inclusion, [the] digital economy, banking the unbanked, the Bitcoin rollout and its benefits in our country”.

The meeting involved representatives from Paraguay, Nigeria, Angola, Ghana, Namibia, Uganda, Republic of Guinea, Madagascar, Haiti, Burundi, Gambia, Honduras, Madagascar, Bangladesh and Maldives.

Image
Attendees of meeting with Nayib Bukele. Source: Nayib Bukele via Twitter

‘Gradually, Then Suddenly’

An opt-repeated hypothesis for global Bitcoin adoption is how Ernest Hemingway described going bankrupt – “gradually, then suddenly”.

Noting that attendees to the meeting were those who seemingly benefited least from the current financial system, commentators quickly started speculating as to how things could play out.

Derek Ross of Swan Bitcoin envisioned the possibility of bitcoin-denominated trade:

Others zoomed out, looking at the potential impact on US dollar hegemony, and how supranationals such as the International Monetary Fund would take to the news (hint – badly):

In response to the news, OG Bitcoiner Simon Dixon put out an “emergency broadcast” to his subscribers to share his thoughts. After providing a compelling account of financial history and how we arrived at the modern fiat monetary system, Dixon went on to describe the El Salvador meeting as a potential “Bretton Woods of Bitcoin” moment:

At this early stage, it’s too soon to tell what the policy ramifications from the meeting are likely to be. Chances are, however, that they will be significant.

Categories
Crypto News Terra TerraUSD

Heartbroken Luna Founder Do Kwon Proposes Terra Revival Plan

Earlier this month, Do Kwon, the outspoken founder of Terraform Labs, said that 95 percent of projects in the crypto space would die, adding that there was also “entertainment in watching companies die”.

As it turns out, his creation may be next:

Do Kwon ‘Heartbroken’

In a tweet thread, Do Kwon has said that he was “devastated” about the much-publicised UST depegging and LUNA collapse, adding he was “heartbroken” about the pain his creations has caused investors.

Not one to go down without a fight, he continued, saying:

I still believe that decentralised economies deserve decentralised money – but it is clear that $UST in its current form will not be that money.

Do Kwon, Terraform Labs

He then pointed to a “revival plan“, begging the question as to how decentralised the ecosystem truly is. Quite expectedly, the crypto community remained highly sceptical:

A Plan to Resuscitate UST and LUNA

Kwon’s plan amounts to a restart of the entire Terra blockchain, with network ownership getting distributed entirely to UST and LUNA holders through 1 billion new tokens as follows:

  • 400 million (40 percent) to LUNA holders before the depegging event;
  • 400 million (40 percent) to UST holders pro-rata at the time of the new network upgrade;
  • 100 million (10 percent) to LUNA holders at the final moment of the chain halt; and
  • 100 million (10 percent) to the Community Pool to fund future development.

While a decentralised economy does need decentralised money, UST has lost too much trust with its users to play the role. The blockchain underpinning LUNA and UST was shut down twice by validators over the past day.

Do Kwon, Terraform Labs

UST Debt Holders ‘Deserve to be Compensated’

Kwon added that he did not sell any of his LUNA or UST during the “incident”, continuing: “Even if the [UST] peg were to eventually restore after the last marginal buyers and sellers have capitulated, the holders of Luna have so severely been liquidated and diluted that we will lack the ecosystem to build back up from the ashes.

“UST holders need to own a large share of the network; as the network’s debt holders, they deserve to be compensated for the tokens they have been holding to the end.”

At this juncture, it doesn’t appear as if the market is onboard with the plan. At the time of writing, UST had collapsed to US$0.15, erasing US$30 billion, not to mention LUNA, which has tanked from US$120 in April to $0.0001896.

On the bright side, some have reflected on the potential lessons investors can take away from the whole UST/LUNA saga:

Categories
Australia Bitcoin ETFs Ethereum

Australia’s First Bitcoin and Ethereum ETFs Go Live

Today marks a historic day for the Australian investment landscape as retail and institutional investors are now able to invest in the newly launched Bitcoin and Ethereum exchange traded funds (ETFs) listed on Cboe Australia (“Cboe”):

Off the Ground, Despite False Starts

For market participants, the road to Australia’s first spot-based crypto ETF has been a long and, at times, painful journey. Some two weeks ago, regulators gave the green light but within days the launch was delayed due to an issue relating to the prime dealer.

With that out of the way and more ETFs likely on the horizon, Australians now have a choice to invest directly in three ETFs through two providers, becoming only the eighth country to do so.

21 Shares will offer both an ETH and BTC ETF, whereas Cosmos will list only an ETH ETF, at least for now. Each of the ETFs will hold the crypto assets offshore in cold storage, and track the spot price of each in Australian dollars.

The news elicited much excitement, with some indicating that they expected significant capital inflows:

ETF Securities chairman Graham Tuckwell, who earlier criticised regulators for dragging their heels, commented: “Today is an exciting day for our team, a culmination of months of hard work to bring these ETFs to the Australian market. EBTC and EETH are true firsts for Australia, and we are excited to be launching with Cboe Australia.”

ETF Securities head of distribution Kanish Chugh recognised that while current market conditions were not ideal, they did provide a good entry point for new investors:

Australian investor interest in cryptocurrencies has not waned in recent months even as we have seen underperformance, and with Bitcoin’s recent sell-off as well, it may present an opportunity for investors who have been looking for attractive entry points into this new asset class.

Kanish Chugh, head of distribution, ETF Securities

Cboe Australia CEO Vic Jokovic expressed delight at the “breakthrough products”, saying they paved the way for “more Australians to expose their portfolios to cryptocurrency in a regulated manner”.

Although the caveat “not your keys, not your coins” holds true, the listings provide clear evidence of growing mainstream adoption, a trend that is only likely to accelerate.

Zero Chance of BTC Going to Zero

One wonders how local fund managers such as Hamish Douglass have taken the news, particularly since he thinks bitcoin will go to zero. Australian podcaster Mission Bitcoin suggests that those who believe it will be worth zero are simply not paying attention:

Given Bitcoin’s fundamentals and increased role in the global economic landscape, it’s difficult to disagree with that sentiment.

Categories
Coinbase Cryptocurrencies Markets

Coinbase Sinks to Record All-Time Low Amid $430 Million Loss

Nasdaq-listed Coinbase has endured a torrid time of late. Most recently, its share price tanked over 20 percent following a distinct shift in tone away from risk-on assets, sinking the preeminent exchange’s share price to a record all-time low and surpassing the unenviable milestone it reached just two weeks ago:

Disappointing Earnings

The sharp downward move was precipitated by Coinbase’s recently released earnings for Q1 2022, and unfortunately for shareholders it wasn’t good news.

The company revealed that despite generating over US$1.17 billion in revenue, it remained significantly shy of the US$2.5 billion it took in Q4 2021. In addition, the business reported quarterly losses of US$430 million, and even analysts were left scratching their heads since consensus opinion was that Coinbase would, at the very least, break even.

Perhaps most concerning is the fact that active monthly users dropped from 11.2 million to 9.2 million over the past quarter, reflecting in part the dour mood in crypto markets.

The market responded predictably to the weak results as Coinbase shares plummeted by more than 20 percent, touching as low as US$62. At the time of publication it had somewhat recovered, trading at US$78, albeit still 79 percent lower than its IPO. Youthful on-chain wizard Will Clemente saw the funny side of it all:

Upside is Lipstick on a Pig

Despite the disappointing results, Coinbase sought to temper the bad news with an upbeat tone, saying:

The first quarter of 2022 continued a trend of both lower crypto asset prices and volatility that began in late 2021. These market conditions directly impacted our Q1 results. [However], we entered these market conditions with foresight and preparation, and remain as excited as ever about the future of crypto #wagmi.

Coinbase shareholder letter

Anil Gupta, Coinbase’s VP of Investor Relations, noted that the company was well positioned to weather current conditions, saying: “We don’t have infinite runway, but we have plenty of gas in the tank.”

The company is no doubt on the back foot, amid ongoing criticism of its custody arrangements as well as the unsuccessful launch of an NFT marketplace. With the market in turmoil, Coinbase will need something special to turn the ship around, as investors are unlikely to tolerate such dramatic and prolonged declines since inception.