SBF Arrested In The Bahamas |
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| Yesterday was quite the day for the SBF / FTX saga as two important events occurred.
First, the disgraced exchange criminal was finally arrested in the Bahamas on a laundry list of charges.
Then, Congress held a four-hour-long hearing with FTX's new CEO: John Jay Ray III.
The Arrest
The arrest came after the U.S. attorney’s office for the Southern District of New York formally charged SBF with eight counts of fraud and conspiracy.
Furthermore, the SEC and the CFTC sued Mr. Bankman-Fried for fraud. To put it simply, the man is in a lot of trouble. Having to face simultaneous charges from the SDNY, the SEC, and the CFTC is pretty low on anybody’s bucket list.
If the government fully pursues the wire fraud charges, SBF may never see the light of day again.
It’s a severe punishment, but not one without precedent. Bernie Madoff, who many compare SBF to, received 150 years for his Ponzi scheme. Ouch.
We don’t think SBF’s media apology tour will help him get out of this one.
John Ray Hearing
Separately, new FTX CEO John J. Ray III testified in front of Congress on Tuesday, and let’s just say it doesn’t sound good for FTX creditors.
Ray painted a picture of incompetence that boggles the mind. Invoices and expenses over Slack and QuickBooks for accounting. YOLO’d customer funds. Horrible venture investments. Insider loans.
All at a company that at its peak was worth $32 billion…
This is all to say that the FTX bankruptcy proceedings will take a long time. For context, the infamous exchange Mt. Gox went bankrupt in 2014, and creditors still haven’t been reimbursed.
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Power Company CEO fesses up, Boston is screwed |
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| On October 27, the CEO of New England’s largest energy company sent a desperate letter to the White House.
"This represents a serious public health and safety threat," Eversource CEO Joe Nolan wrote in a letter to President Joe Biden. He then begged Joe Biden to use the federal government's emergency powers to make sure natural gas will be available in New England this winter.
There’s only one problem.
There’s nothing Biden or anyone can do at this point. All available natural gas is on its way to Europe. When large parts of New England go dark and freeze this winter, a lot of people will call it a shocking natural disaster. Or they’ll say it was because Russia invaded Ukraine.
But cities don’t go dark and freeze in the wealthiest country in the world by accident.
The sometimes controversial, and always thought-provoking and entertaining, Porter Stansberry spent the past two years researching this story. And what he's uncovered will astound you.
So do yourself a favor. Before it’s taken offline (which could happen at any time), check out this shocking video.
A major energy crisis could spread from Europe to New England this winter. It could wreak even more havoc on the economy and markets and create a once-in-a-generation opportunity for energy investors.
Click here to watch now >>
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Binance Pauses USDC Withdrawals Causing Fear Amongst Crypto Investors |
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| If you’re thirsty for new exchange drama, you’ve come to the right place.
That’s because the Binance fear reached new highs on Tuesday as the exchange temporarily paused USDC withdrawals.
Let’s recap everything that led up to this point.
A Sketchy Report
The troubles for Binance began last week when the exchange released a proof-of-reserves and proof-of-liabilities report done by auditing firm Mazars. The report's goal was to show investors and customers that Binance was not at risk of succumbing to the same fate as FTX.
Unfortunately for Binance, all the report did was sow fear.
The report has what many experts called “red flags”, as it lacked information on the exchange’s quality of internal controls, its ability to liquidate margin-called assets, and its corporate structure.
For example, competitor exchange Kraken’s CEO Jesse Powell, criticized Binance’s proof-of-reserves report last week.
TLDR: Not the most reassuring audit.
Criminal Charges?
The questionable report was followed up by more bad news: possible U.S. money-laundering charges against Binance and its executives in a case that’s been building since 2018.
Binance immediately disputed the report, but the damage was done.
A Wave of Withdrawals
What do investors do when they are spooked?
They withdraw their money. In Binance’s case, they did so in droves.
$902 million of withdrawals on Monday alone, a peak net outflow on Tuesday of $2.5 billion, and $3.8 billion in the last week.
All of this money exiting the exchange in such a short period prompted Binance to temporarily pause USDC stablecoin withdrawals while waiting for a USDC refill.
Withdrawals are now back on, and Binance CEO, CZ, says it was nothing more than a routine “stress test”.
Crisis averted. Right?
...maybe 🤷.
Look, we don’t know for sure what’s going on with Binance. It’s possible that everything turns out fine, and we look back on this laughing. But for whatever it's worth, many people are beginning to lose faith in the exchange. And as history has shown us time and again, a rush of withdrawals and distrust is never a good sign.
Also, Speaking of Stablecoins...
USDC, USDT, BUSD…
There are a lot of similar-sounding stablecoins that all seem to do the same thing.
And with Binance temporarily pausing USDC withdrawals, USDT on the cover of the WSJ this morning, reports that large hedge funds are shorting USDT, and Coinbase asking users to exchange their USDT for USDC, we have received an inflow of inquiries wondering just how safe stablecoins are.
Although a lot of FUD is justified right now in the crypto ecosystem, overall, stablecoins seem to be standing on solid footing.
But we’ll admit, it’s very difficult for a lay person to understand what is going on.
So put it this way...
There is still somewhat of a stablecoin war going on between exchanges and market makers... and, for safes, we're urging investors not to get caught in the crossfire.
As we have been suggesting for years now, your best bet is to play it safe and (1) only invest in things you understand, (2), take your assets off of centralized exchanges, or at a very minimum, put them onto western, regulated exchanges with proof of reserves, and (3), if you do need to use stablecoins, use them only for swapping in and out of positions as there is really no use case for allocating your capital into stablecoins for a long period of time.
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What We Learned at Benzinga’s Future of Crypto Conference |
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| Editor’s Note: Last week, CoinSnacks writer, Stephen Flanders, attended Benzinga’s Future of Crypto Conference. The following are his insights:
I had the honor of attending the Benzinga Future of Crypto Conference last Wednesday in New York, and it was an interesting experience.
Before anything else, let me say that Benzinga did a great job. The venue was great, the speakers were all on time, the food was top-notch, and the Benzinga workers were lovely. Benzinga’s professionalism was evident throughout the day.
However, the event itself left something to be desired.
Perhaps I was being naive, but I expected to feel extra bullish on crypto after an event focused on the “Future of Crypto”. In reality, I left more bearish on the space than I have been in quite some time.
This is because there was a lack of speakers with visions beyond “how do I pump my bags”. Unfortunately, for many speakers, this means making crypto less like crypto and more like traditional finance, mainly as it pertains to regulation.
There was almost zero mention of decentralization, censorship-resistance, and credible neutrality, the core of crypto’s ethos. Likewise, there was minimal talk about the innovations happening in DeFi. But there was a whole lot of talk about regulation and the need for simpler onboarding.
Look, I understand the desire to make money. Right now, it’s the biggest draw into the space. And I understand the need to talk about it at an event with a hefty amount of traditional finance people. But for the speakers to have no ideas for advancing crypto beyond friendly regulation and cleaner UI/UX was very disappointing.
If that’s the best our leaders can think of, then we are in big trouble.
In many ways, the conference represents a larger debate within crypto right now. There is a divide between those primarily concerned about prices and those whose main concern is decentralization. The Benzinga speakers who showed up, by and large, were price people, which is why they desperately want regulation that will entice institutions to inject liquidity into the space.
To me, this is a short-sighted approach. The beauty of crypto is that it’s different from everything that came before it. Its value comes from it being an escape from the system. Regulating it might lead to a short-term pump, but if we do so at the expense of decentralization, what is crypto’s unique value prop? What, besides higher prices, would keep the institutions invested?
The answer is not much. This is the crypto that is often criticized for being a solution looking for a problem. We don’t need the world on the blockchain. We need a form of money that is free from government mismanagement. That is something with long-term value, especially as the ills of fiat money become more apparent.
This is not to say that all regulation is bad. Some lenient regulation is probably a good thing for the space. However, for the speakers to be so concerned about regulation and seemingly free of concern for decentralization says to me that they are only aligned with crypto insofar as there is a potential for profit.
And those aren’t the people I want leading crypto going forward.
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