Crypto Currencies

[Roger]

Ken. Go back over this thread and you'll see many K-F's had foresight about Bitcoin and Cryptocurrency 

[Roger]

Whoops    Another reason NOT to dabble in this ?

''A Canadian cryptocurrency exchange said it could not repay at least $250 million to clients after its chief executive died suddenly while visiting India. The company, Quadriga CX, said in court filings that the C.E.O., Gerald W. Cotten, was the only person who knew the security keys and passwords needed to access the funds.''

https://www.nytimes.com/2019/02/05/business/quadriga-cx-gerald-cotten.html

[Coolkorat]

''A Canadian cryptocurrency exchange said it could not repay at least $250 million to clients after its chief executive died suddenly while visiting India. The company, Quadriga CX, said in court filings that the C.E.O., Gerald W. Cotten, was the only person who knew the security keys and passwords needed to access the funds.''

Which means this company, with $250m of real money, had no auditors or internal control mechanisms. You've run some large companies Roger: what would your meeting the auditors look like if you'd run the company this way!

[Roger]

CK there's no doubt that many 'caught the wave' and made a lotta money. But in the end, that'll be matched 1:1 by those who lose money.

That the Regulatory frameworks didn't control the cryptocurrency phenomenum is shocking. IME Company Auditors were always very thorough BUT the businesses involved were less complex than the crypto's 

I guess there'll be more bad stories to come - people losing retirement savings and so on. I know how it feels - I invested in SCLP    (still expecting that to do OK, one day).

[Roger]

Bitcoin still feels like a scam to me    but what do I know ?  Not much it seems . . .   

"    The price of the cryptocurrency has jumped by almost 300pc since October    

Billionaire tech mogul Elon Musk could face the wrath of regulators after ramping up the price of bitcoin just days before Tesla revealed a $1.5bn (£1.1bn) bet on the cryptocurrency. Mr Musk is likely to be quizzed by the US Securities and Exchange Commission (SEC) over whether Tesla already owned bitcoin when his intervention on social media sent prices surging, experts said. The world's richest man, who is chief executive of Tesla and owns around a fifth of the electric car company, propelled the online currency as much as 20pc higher on January 29 after he changed his Twitter profile to include '#Bitcoin'.

Tesla then revealed in a filing earlier this week that it had bought $1.5bn of bitcoin at some point this year. It is not known if this was before or after Mr Musk's Twitter activity. He has previously been reprimanded by the watchdog for tweeting about Tesla itself, sending shares higher.

Doug Davison, a partner at Linklaters and a former branch chief of the SEC's division of enforcement, said: “It would not be surprising - given the focus on the chief executive's tweets, Bitcoin pricing and recent dramatic market moves - for the SEC to ask questions about the facts and circumstances here.”  Vitor Constâncio, who served as vice president of the European Central Bank until May 2018, wrote on Twitter that the SEC is likely to be looking into what happened. He added: "It was not disclosed when Tesla had made this investment. In December, Musk said that Tesla could buy Bitcoin, and this was followed by many statements that he supported Bitcoin. Bitcoin kept going up and the Tesla investment has appreciated."

Mr Musk followed up his market-moving Twitter profile change with the message "In retrospect, it was inevitable" - seen by some as a reference to the spike in the currency's price. He removed the bitcoin reference from his profile several days later.
It came amid a wider rally in the value of Bitcoin, with the cryptocurrency up almost 300pc in the past five months as speculators bet on higher prices. Experts said  the SEC is likely to focus its attention on exactly when Tesla bought bitcoin. In its filing, the firm said its investment policy changed in January and added: "Thereafter, we invested an aggregate $1.5bn in bitcoin."

https://www.telegraph.co.uk/technology/2021/02/09/elon-musk-faces-sec-probe-teslas-15bn-bitcoin-bet/

[Coolkorat]

I think the SEC is justified in looking closely at this. There seems to be a lot of manipulation going on at the moment regarding stocks and pricing:

Bitcoin spike:



GameStop spike:

[Roger]

Hard times in this sector with Bitcoin down to $17k from once $66k. CK I know very little and it'd be great to hear your views. Just caught this in the DT :-

""The entrepreneur behind a cryptocurrency exchange teetering on the brink of collapse has admitted he "f—-- up", as he blamed internal errors for the blowup that has triggered a broader market meltdown.

In a lengthy Twitter thread posted on Thursday, Mr Bankman-Fried repeatedly apologised to FTX's users while blaming the exchange's woes on his own misreading of its management accounts.

"A poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin," he wrote.

“I f—-- up, and should have done better.”

FTX was one of the five biggest cryptocurrency exchanges in the world until earlier this week, handling billions of dollars in daily trade. However, rumours about the company’s financial position created a stampede of withdrawals earlier this week that triggered a liquidity crisis and forced FTX to seek a bailout. Mr Bankman-Fried said yesterday that customers tried to withdraw $5bn from FTX on Sunday alone.""

https://www.telegraph.co.uk/business/2022/11/10/bitcoin-plunge-80pc-jp-morgan-warns-crypto-cascade/

[Alfie]

FTX was one of the five biggest cryptocurrency exchanges in the world until earlier this week, handling billions of dollars in daily trade. However, rumours about the company’s financial position created a stampede of withdrawals earlier this week that triggered a liquidity crisis and forced FTX to seek a bailout. Mr Bankman-Fried said yesterday that customers tried to withdraw $5bn from FTX on Sunday alone."" 

A liquidity crisis? In crypto?

How does that work?

[Coolkorat]

I think the widely-anticipated 'tulpenmanie' moment for Crypto has arrived. I feel very sorry for those who invested towards the end of the spike, often persuaded by Crypto evangelists (who invested early and were clued-up to the likelihood of a collapse) - they needed 'useful idiots' to fund their exit strategies. 'Pump and dump' in plain sight. I suspect this concept is behind Musk's buying Twitter; an army of useful idiots well placed to be manipulated in all manner of ways.

The irony is central governments are moving into the Crypto space at pace. With that will come regulation and stability; this from MAS (Monetary Authority of Singapore):

Singapore, 26 October 2022… The Monetary Authority of Singapore (MAS) today published two consultation papers proposing regulatory measures to reduce the risk of consumer harm from cryptocurrency trading and to support the development of stablecoins as a credible medium of exchange in the digital asset ecosystem.

[Crypto Regulation]

The fundamentals of the technology are sound: I am in the process of writing an article about succession planning in the Metaverse - using NFT's and their ability to tokenise assets such as property to facilitate transfer, rather than using trusts or corporate structures. Increasingly important at the moment - in Asia alone it's estimated US$10 trillion will transfer from generation 1 to generations 2 and 3 over the next ten years. Crypto, DeFi etc. are here to stay, but the bubble has burst.

[Coolkorat]

A liquidity crisis? In crypto?

How does that work?

I assume because they are withdrawing in fiat currencies, presumably the US$, and the exchange simply doesn't have access to the reserves or credit lines to support it. It torpedoes the argument that Crypto isn't a form of asset class which I could never understand.

[Roger]

Thanks for taking on Alfie's query CK - frankly, I had no idea myself LOL   

It's instinct and not much more, that has made me ultra cynical about crypto from the start   

[Roger]

Yes CK - crypto currencies are in chaos and it doesn't look as if it's going to get better.

A liquidity crisis it is !!

"Troubled cryptocurrency lender Genesis has been forced to insist it has no “imminent” plans to file for bankruptcy, as it hunts for rescue funding following the collapse of FTX. The US cryptocurrency company, which has a loan book worth $2.8bn, has halted withdrawals on key products following a surge in customers asking for their money as Genesis’s talks with potential rescuers stall.

Genesis is part of $10bn cryptocurrency empire DCG. The group’s cryptocurrency exchange business, Genesis Trading, has $175m stuck on exchange FTX, which filed for bankruptcy protection on November 11."

https://www.telegraph.co.uk/business/2022/11/22/crypto-broker-genesis-risk-bankruptcy-ftx-contagion-spreads/

"Tens of thousands of British traders have been left out of pocket by the implosion of the cryptocurrency exchange FTX, US bankruptcy proceedings have revealed.

Some 8pc of FTX's users were based in the UK, a Delaware court heard, suggesting that 80,000 Britons may have lost money. FTX left around one million creditors, the vast majority of whom were unsecured users of the exchange."

https://www.telegraph.co.uk/business/2022/11/22/ftx-collapse-leaves-80000-uk-crypto-traders-pocket/

"Nationwide is to launch a fresh crackdown on cryptocurrency, as high street lenders tighten controls in the wake of the collapse of FTX. A Nationwide spokesman told The Telegraph: “To help protect our members from cryptocurrency scams, the society is planning to introduce a daily limit on payments to crypto assets in the near future. We will update members when the changes are brought in.”

Nationwide, the world’s largest building society with 16 million members, currently has no payment limits on cryptocurrency, although it does limit its “faster payments” service to sums of £10,000. The planned policy change from Nationwide follows similar recent restrictions introduced at Starling Bank, Santander and Virgin Money."

https://www.telegraph.co.uk/business/2022/11/23/nationwide-restrict-crypto-payments-ftx-chaos/

There's a lot more pain to come . . . . .

[Coolkorat]

There's a lot more pain to come . . . . .

You're absolutely right Roger. There is no clearer example of what was wrong than the picture of Bankman-Fried ("SBF") lounging on beanbags whilst his barely-through-adolescence mates play computer games. All the time playing with people's life savings....

Interesting summary here.