Crypto basically died by 2024. Now it’s back in the headlines, but that’s not because it’s alive and doing things — it’s because America’s much-beloved president, Donald Trump, his family and several of their very good friends attached the electrodes to crypto and ran 415 volts through it.
Mr Trump just held a dinner you could attend if you held the most Trumpcoin. [Reuters; NYT, archive]
Not that he bothered to interact with the top Trumpcoin holders at the dinner. “He just gave a few remarks and left,” one said. It’s like once he had their money, he didn’t care any more! [Twitter, archive]
As Matt Levine says: [Bloomberg, archive]
You can read various news articles quoting ethics experts howling into the void about this, but why would you do that.
The crypto industry was hoping the President of the United States personally endorsing crypto would finally be the starter’s pistol for a new crypto bubble!
But nobody new is getting into crypto. Except so they can bribe the president. The use case for crypto.
Coinbase Q1 2025: retail volume is down
How do we know nobody’s getting into crypto? Because we have numbers we can probably trust from the biggest actual-dollar crypto exchange.
Retail trading is critical to the crypto economy. You can only get dollars out of crypto if someone else is putting them in — there’s no other source of cash — and those retail suckers are the source of cash.
If the retail suckers are not showing up, then crypto is just companies exchanging tokenised book entries with a dollar sign in front that they cannot realise as actual dollars.
How can we know that number? In crypto, any number that can be faked is faked. But Coinbase is a publicly traded company. So they have to file the state of their business with the SEC every quarter.
If the retail dollars are showing up at Coinbase, then ordinary people are interested. If they’re not, then they’re not.
Is the bubble back? Are ordinary mums and dads looking to the bitcoins to satisfy their yearning to get rich for free?
Nope. Retail trading volume on Coinbase is down 17% from fourth quarter 2024 to first quarter 2025 — even as the bitcoin price hits new heights, well over $100,000. [Yahoo]
So nobody even believes in crypto as a get rich quick scheme any more.
Nobody is calling the bitcoin price a “bubble.” I think right now it’s more of a hot-air balloon. There are guys manning the pumps.
Coinbase is going just great
Coinbase filed an 8-K about an insider data breach on Wednesday 14 May. [SEC]
Coinbase ran their customer service by outsourcing to various other countries really cheap — they pay their front-line staff about $2,000 to $5,000 a year. [Twitter, archive]
Running a ton of money through your systems and cheaping out on staff leaves an obvious attack. So crooks bribed these customer service people to give them customer data. The crooks then attempted to blackmail Coinbase for a ransom or they would release the data.
The hackers apparently had access to the data since January. [Bloomberg, archive]
Venture capital is screwed
What about the big money? They’re not so into crypto either, despite the headlines.
Over at Pivot to AI, I wrote up the Pitchbook-NVCA Venture Monitor for Q1 2025. This is the National Venture Capital Association talking to its members about the state of things. It’s what the VCs are saying to themselves.
The summary is: the VCs are all-in on OpenAI and the rest of venture capital is moribund. This includes the same VC who used to be super into crypto before they pivoted to AI.
Pitchbook also put up a Q1 2025 summary of VC crypto activity. The VCs have put into some companies, like the convicted criminal conspiracy exchange Binance. But they admit retail volume is still down. [Pitchbook, PDF, archive]
We hope everyone involved in funding all these crypto companies just has a nice time.
Setting up the next Silvergate
In early 2023, while Silvergate Bank and Signature Bank were in the process of collapsing, the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency issued joint advice telling banks to stay the hell away from crypto. [Federal Reserve, PDF, archive]
But it’s a new era! The OCC told banks to go wild with crypto earlier this year. Now the FDIC and the Fed have followed suit and withdrawn their previous advice. [FDIC]
Crypto companies like Circle and BitGo are lining up for bank charters too, which will surely work out even better! [WSJ, archive]
With the new stablecoin GENIUS act, if a bank collapses, the stablecoin grifters get their money first, before the ordinary depositors. Isn’t that nice. [Credit Slips]
I guess you could put your savings into small rocks and twigs.
Twenty One Capital
Michael Saylor had an interesting strategy with Strategy, formerly called MicroStrategy: assume the stock market will give you more money for a pot of bitcoins than the bitcoins are worth. And it worked?! The stock price of Strategy is about twice the face value of the big pot of bitcoins.
Surely the crypto old guard can use this trick. Twenty One Capital is an entity intended to trade on the stock market. It’s a big pot of bitcoins, with a stock price.
The 21 means 21 million, the maximum number of bitcoins. We’re back to magical bitcoin cultist numbers now. No, they don’t have 21 million bitcoins.
The bitcoins come from stablecoin issuer Tether, Tether’s crypto exchange Bitfinex and — wait a minute —SoftBank?! — and cash from Cantor Equity Partners.
Twenty One Capital is a SPAC — an empty shell — set up by Howard Lutnick’s company Cantor Fitzgerald, who run Tether these days.
Lutnick is not involved in Twenty One Capital. What a terrible conflict of interest that would be! No, it’s his son. So that’s all right then.
Crime is legal now, but this crime that’s legal has sucked in SoftBank. I realise SoftBank’s poor judgement is the stuff of legend, but I’m actually surprised they’re this desperate.
The rest of the Twenty One crew is the usual crypto malefactors. Also, how the heck is Jack Mallers in there? The guy who announced El Salvador’s bitcoin misadventure and failed to get the contract for the Chivo Wallet? [CoinDesk]
A hundred and four degrees
In September 2022, just after the crash, but before FTX fell down too, I was in a room full of state and provincial securities regulators telling them what to do about crypto, and if they saw a 20% interest rate, just stomp on the obvious Ponzi, please.
After the talk, several of these senior bureaucrats told me without prompting that their next goal was to put the backside of Alex Mashinsky of Celsius Network in a cell. Celsius was a huge Ponzi that promised 20% interest in the crypto bubble, stole everyone’s money and collapsed in mid-2022.
Anyway, Mashinsky just got 12 years. So here’s to the champagne popping in state government office buildings across the US. [DoJ]
Whatever happened to The Mashinsky Method, anyway?
In further legal crime news, Defence Secretary Pete Hegseth, the administration’s most able and adept user of secure communication protocols, is a crypto dumbass who lost a bundle in Celsius. Because he’s a greedy idiot. [Cryptadamus]
Living on video
I was quoted extensively for an article on bitcoin muggings. Don’t put the bloody Coinbase app on your phone. At all. Come on now. [Independent]
In actual living on video, enjoy the video version of this very article! [YouTube]
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