tl;dr
• BlockFi filed for bankruptcy and goes after FTX for loan collateral• Nexo is making a case that they are different than other failed lenders and they could be right• Crypto bank, Silvergate, says their exposure to BlockFi bankruptcy is less than $20M• Kraken settles with Office of Foreign Assets ...
• BlockFi filed for bankruptcy and goes after FTX for loan collateral
• Nexo is making a case that they are different than other failed lenders and they could be right
• Crypto bank, Silvergate, says their exposure to BlockFi bankruptcy is less than $20M
• Kraken settles with Office of Foreign Assets Control (OFAC) for only $362K as compared to Kim Kardashian's SEC settlement of $1.26M
• BitBoy accuses Kevin O'Leary of allegedly being a part of what caused Celsius crash
• Coinbase wallet drops support for XRP, Ethereum Classic, Stellar and Bitcoin Cash
People are freaking out about the demise of BlockFi and other crypto lenders. I point to the complex investment vehicles that led to the crash of 2008. Here is what is on my mind today.
1. BlockFi filed for bankruptcy and goes after FTX in the same day. You know this was coming when BlockFi shutdown withdrawals last week. It sounds like FTX took a $275M loan from BlockFi and put up it shares of Robinhood as collateral. So, you can easily see why they are suing FTX. The question I have is after everything that happened with the crazy investment vehicles that brought down Lehman, how could people not think some of these new crypto investment opportunities weren't in the same class. Just look at the returns. How are you paying out more than you take in? I keep telling people if you do not understand how money is made, do not make the investment because it is a recipe for trouble. I think there is more under the sheet between FTX and BlockFi. Uh, where's the SEC?
2. To not get caught up in the failures of companies like BlockFi, Celsius Vauld and others, Nexo is making themselves more transparent as to how they make their money. In short, they say their primary revenue stream is through facilitating collateralized credit, including loans and interest-bearing crypto accounts. They also provide spot, futures and options trading. They say they acquire 2:1 collateralization for the loans they issue coupled with charging higher interest rates on the loans. I would want to see audits from a reputable accounting firm, but that does seem to stack up.
4. Although they are affected by the BlockFi bankruptcy, Crypto Bank, Silvergate, says their exposure is less than $20M. The banks shares still plummeted 11% down to $25.90 following BlockFi's announcement. Clearly there was overselling. I would expect things to correct today.
5. Back on July 27th, I told you Kraken was being investigated for allowing use of their platform from sanctioned countries, specifically Iran. Well, they have now settled that claim paying the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) $362K for allowing Iranians to skirt poor geolocation practices. Kim Kardashian had to fork up $1.26M for a lot less to the SEC. I think the government needs to rethink their priorities and make the punishment fit the crime.
6. BitBoy, Ben Armstrong, says Kevin O'Leary and Sam Bankman-Fried were behind the collapse of Celsius. More importantly, he says he is not afraid of being sued because he has proof. The bickering between BitBoy and Kevin O'Leary had been heating up and now we know why. I am sure there is going to be more stemming from this news.
7. Coinbase wallet is dropping support for XRP Bitcoin Cash, Stellar and Ethereum Classic citing low usage. You are talking about coins that all within the top 26 coins by market cap. XRP is within the top 10. Needless to say the move has taken a lot of people by surprise.