- If you enjoy this newsletter, tell all your friends and colleagues to click here and type in their email address — then they’ll get sent every post to this blog, for free!
- If you want to support my work, sign up to my Patreon, for $5 a month — like buying me a drink — or $20 a month — like buying a round of drinks. Don’t forget to have a drink yourself, we’re in lockdown again after all.
- Please also tell everyone that the author of that great book Attack of the 50 Foot Blockchain has a new book out. And take a moment to review Libra Shrugged on Amazon!
Number go up!
Bitcoin hops over $15,000! Are bitcoins popular now? Is this institutional buy-in??
No, it’s just another pump, for the usual reasons — massive issuance of dubiously-backed tethers, withdrawal troubles at OKEx and Huobi, and BitMEX is in trouble.
We’ve now hit 17 billion tethers — crypto trading’s favourite substitute fake dollar token — being printed at a rate of billions a month. These may be backed by dollars, bitcoins, loans, or just hot air — who knows?
Tether is a ticking time bomb under the entire Bitcoin market — seventeen billion “dollars” that don’t seem to be backed by anything. Anyone talking enthusiastically about the Bitcoin price rise and failing to say “Tether” is a con man. The first crypto media I saw to mention the word “Tether” in connection with the present pump was CoinTelegraph. [CoinTelegraph]
The large Tether-based OKEx and Huobi crypto exchanges were showing withdrawal problems, after executives from both were arrested by Chinese authorities. Whenever a large exchange has withdrawal problems, the price listed on that exchange goes up — even if you can’t realise that price in practice.
There’s also considerable market disquiet over the US arrests and indictments of executives from BitMEX, the largest Bitcoin derivatives exchange. Then there’s the lawsuit alleging that BitMEX executives stole $440 million from the exchange after the US charges came to light. [The Block]
Bitcoin doesn’t go up or down for macroeconomic reasons, such as quantitative easing, or the decisions of real-world investors. The market is thin and manipulated, and every price change is fully explained by internal market issues.
And “institutional investors” is a Bitcoin pumper phrase meaning “HODLer in a tie with a chromebook.”
The financial press did notice the number going up. Thankfully, they’ve mostly caught on that it’s not real market interest, but internal manipulation. I even got a ping from Reuters asking about it. [Reuters]
The tricky bit in pumping Bitcoin is not to go so high that weary bagholders from your previous pump will try to cash out. But it seems the pump has hit that level. The price chart on Coinbase — one of the few exchanges you can get actual dollars out of — oscillates between pumps to keep the number going up, and dumps as bagholders finally exit. (See the graph above, a snapshot from around 6:30pm today.) Someone really needs the number to be above $15,000.
But of course, you shouldn’t believe those conspiracy theorists who keep saying that tethers keep the price of Bitcoin pumped — such as Giancarlo Devasini, CFO of Bitfinex, who worried that the Bitcoin price “could tank to below 1k” if Tether couldn’t operate. [NYAG court filing, PDF, 2019]
How’s the pump going for picking up retail interest out in the real world? Not even the people who tell me every dumb Bitcoin story that passes their way have mentioned the price.
More good news for Bitcoin
That 69,370 BTC from the Silk Road darknet market that was seen moving recently? It turns out to have been a US government seizure. The feds got the key from the individual in question. [Complaint for forfeiture, PDF]
I wonder what happens when the US government auctions a notional “$1 billion” of bitcoins onto the open markets. Number will go down unless someone can put up one billion actual dollars for those Silk Road coins — and not tethers. I suppose it’s one way to get libertarians to pay their taxes.
Binance is finally shutting its doors to US citizens, after announcing in September 2019, over year ago, that they would be doing so. I wonder what brought this on just now. [The Block]
Just listen to the Bitcoin analysts — “The above chart shows that the amount of addresses holding over $100 worth of Bitcoin are at an all time high, while on the left the low velocity shows Bitcoins are increasingly being stored and not moved. Both of these are positive signs for Bitcoin’s adoption as digital gold.” Nobody is using bitcoin? This is good news for Bitcoin! [Medium]
The iFinex extended universe
The case of Reggie Fowler of Crypto Capital Corp, erstwhile US dollar bagman for iFinex and substantial chunks of the North American crypto economy, continues. The latest is that his lawyers, James McGovern and Michael Hefter of Lovells, want to withdraw from representing him.
The only substantive reason they give is “Rule 1.16(c)(1) of the New York Rules of Professional Conduct” — that “withdrawal can be accomplished without material adverse effect on the interests of the client” [NYSBA, PDF] — with a footnote that they can’t go into detail in this filing due to “among other things, the attorney-client privilege and lawyer-client confidentiality obligations”.
The lawyers note they had warned Fowler that they’ve had grounds to withdraw as counsel since 26 February 2020. It was in January 2020 that Fowler rejected the plea deal that would have required him to surrender hundreds of millions of dollars to the feds. I’m increasingly sure that Fowler is playing stupid games, and will win stupid prizes. Found on PACER by Amy Castor, who’s put the document up. [Motion to Withdraw as Counsel, PDF; case docket]
I am told, but can’t verify, that one actually-Institutional Investor in crypto borrowed tethers from Tether Inc — and the loan was put on the books as being the asset backing the tethers in question. That is, they just printed the things out of thin air, then went, “welp guess that’s a liability this size.” On the other hand, iFinex admitted to the New York Attorney General that they’d commingled company and customer funds, so I’d say that fine detail in accountancy isn’t in their list of aptitudes.
The Tether class action continues, alleging that the iFinex companies abused tethers to manipulate the Bitcoin markets. In the latest filing, plaintiffs respond to the defendants’ motion to dismiss. This is a 100-page memo of law and facts. The bit that caught my eye was that there was a whole section about Reggie Fowler. [Memorandum, PDF; case docket]
For those following the epic tale of Tether, Bennett Tomlin has A List of Companies Who Worked With Crypto Capital. [blog post]
Boris’ll fix it
The UK Treasury has announced a consultation on a “new regulatory environment for stablecoins.” This means Libra, not Tether — though it’ll probably get a mention. So far there’s just a few tweets with a headline. The Bank of England is still contemplating a CBDC. [Twitter; Twitter; press release]
Crypto companies in the UK are worried that they’ll have to cease operations by 10 January 2021 — because the FCA are dragging their feet registering anyone at all, after having told companies they had to be registered by then. [The Block, paywalled]
Getting screwed over by uncaring bureaucrats is absolutely a fair concern — but I feel I must point out that, after screwing up our COVID-19 response worse than anyone but the United States, the UK government has messed up Brexit so badly that the chairman of Tesco, the largest supermarket here, is warning that we’re going to have trouble feeding everyone. [Bloomberg]
So magical Internet pogs can just bugger off, really. But the FCA will probably grant an extension, if anyone happens to be there to answer the phone.
Gotta cash ’em all
Have you heard the story of the record-breaking $375,000 box of Pokémon cards, being sold by a crypto guy, that turned out to be fake?
Pokémon cards have long had collector value, because Pokémon is popular, and nerds are frequently cashed up. Lately, some particularly cashed-up nerds have been going wild with this stuff — such as YouTuber Logan Paul, who seems to have single-handedly pushed up the prices in card collector markets. This then attracted people who neither knew nor cared about Pokémon — but deeply appreciated the sight of a number going up.
In a bizarre and hilarious lesson in the value of domain knowledge in investments — i.e., knowing a damn thing about what you’re putting your money into — the Dumb Money podcast tried to buy a box of first-edition Pokémon cards from Jake Greenbaum, a.k.a. @JBTheCryptoKing. You’ll be shocked to hear that the cards were not original 1990s issue in original wrapping — but a rewrapped box, with some cards being from 2020.
Dumb Money did a podcast on their foolishness — but I urge you to watch the video precis of this ridiculous tale by Jarvis Johnson, also a massive Pokémon nerd (and proud of it). Johnson calls out all the contradictions in Greenbaum’s story, and all the bits where he’s foreshadowing that this is a failed con. On someone’s part. The Dumb Money guys’ chatbox was full of crypto people calling out Greenbaum as a known scammer, in real time. It’s a delight, even at 1.25×. [YouTube]
(I’m reporting what’s in the video. For all I know, JB is merely an unfairly maligned businessman of flawless character and repute. There’s so many of these in crypto, after all.)
Also in the Guardian: “This article was amended on 28 October 2020 to correct the spelling of Bulbasaur.” [Guardian]
What’s in Quadriga’s 7th Report of the Trustee? Amy Castor goes through it, and the answer is: mostly admin and accounting stuff on how EY plan to settle the 17,053 claims received so far. The claims add up to between CAD$224 million and CAD$290 million — but there’s only about CAD$39 million in funds to distribute. [amycastor.com; EY report, PDF]
South Korea will ban privacy coins from March 2021 — no Monero, Dash or Zcash for you! [Finance Magnates]
Microsoft engineer Volodymyr Kvashuk stole $10 million from his employer in 2016, using a test account to embezzle gift cards, then running the money through a Bitcoin mixer. He was arrested in July 2019, and has just been jailed for nine years. [Department of Justice press release]
The latest from the world of seasteading — anarchocapitalist plague ships, with alternative therapies instead of mainstream Keynesian fiat medicine. Chad Elwartowski, the great brain who tried seasteading in a damp floating coffin just off the shore of Thailand in early 2019, says he’s buying an old cruise ship — they’re cheap right now, for some reason — to operate as a libertarian paradise! Bioshock, but instead of health pickups you get reiki, for bitcoins. The important bit is: give Chad your money. Though my clairvoyant powers tell me that some terrible calamity will befall the project and your bitcoins will disappear, with Chad. [Bitcoin World; Twitter]
There’s a nice article on Bitcoin by Andrew Ancheta, called The Crypto Casino, in Current Affairs Sept/Oct 2020 (vol 5 no. 5), with extensive quotes from me. It’s not online, but it’s available in paper form. And it’s fantastic.
Imagine a world in which books have bug-fix patch releases
ePub continues to be a cursed file format. On some ebook reader software, Libra Shrugged had spurious bullet points before some of the headers. Cheers to the fans who helped me diagnose it. I’ve uploaded versions without this error to Smashwords and Draft2Digital, so when those are approved, you should try re-downloading. Or email me and I’ll send you a good replacement ePub.
Decrypt has run an excerpt from the book — chapter one, explaining: what on earth is a Libra? Please link it widely! [Decrypt]
I have four podcasts booked, two of those on Thursday. Please do call me any time to do more! I’ll post here when they’re up.
Here’s a book review by Roger Bell-West. [blog post]
Amazon Netherlands have fixed it now — but for a while there, the book was 42.99 EUR. This was because Amazon hadn’t realised they were printing the thing, so ranked a scammer offering it at a massive markup as the official recommended source. It’s been fixed now. [Twitter; Amazon.nl]
The loved one is recording the Libra Shrugged audiobook. Weird bit: having to check how Americans pronounce their own names and what sort of hash some ancestor made of them. Just the Americans. It’ll sound like we’re taking the piss, but we really did check.
— Bennett Tomlin (@BennettTomlin) November 8, 2020
— Jonathan Pinnock (@jonpinnock) November 9, 2020
Your subscriptions keep this site going. Sign up today!