June 28, 2022 / Unchained Daily / Laura Shin
- SEC Chairman Gary Gensler said that the Bitcoin is the only cryptocurrency that classifies as a commodity.
- Online group Anonymous released a video message stating their desire to bring Do Kwon to justice.
- FTX is making plans to acquire Robinhood, the commission-free stock exchange.
- Voyager Digital issued a default notice against Three Arrows Capital for failing to repay a loan worth more than $650 million.
- Goldman Sachs downgraded Coinbase share from neutral to sell with a price target of $40.
- Nexo (disclosure: a former sponsor) might pursue legal action against an anonymous Twitter account for claiming that Nexo’s cofounders stole funds from a charity.
- Banxa, an Australian crypto trading company, is laying off one third of its staff.
- XCarnival, an NFT lending aggregator on Ethereum, recovered 50% of $3.8 million it lost in an exploit.
- Celsius seeks support from its users to avoid bankruptcy.
Today in Crypto Adoption…
- Tribal, a B2B financing and payment platform focused on emerging markets, will join the Blockchain Association, a crypto-industry lobbying group.
The $$$ Corner…
- Unizen, a crypto exchange, raised $200 million from Global Emerging Markets investment group.
- Azuro, a protocol building a decentralized betting platform, raised $4 million in a funding round.
What Do You Meme?
Hedge Funds Are Shorting USDTAccording to The Wall Street Journal, hedge funds are betting against USDT, a Tether dollar-pegged stablecoin. At the moment, USDT is the world’s largest stablecoin with $66 billion in market capitalization.
The WSJ reported that hedge funds are trying to short USDT through Genesis Global Trading, a crypto brokerage for professional investors and institutions. “There has been a real spike in the interest from traditional hedge funds who are taking a look at tether and looking to short it,” said Leon Marshall, head of institutional sales at Genesis.
Some of the reasons cited had to do with the broader macro outlook, since interest rates are inching higher, and due to concern about the quality of the assets that back Tether.
Yesterday, Tether CTO Paolo Ardoino confirmed on Twitter that there have indeed been coordinated attacks by traditional hedge funds trying to short USDT. According to Ardoino, these hedge funds’ goal is to harm Tether liquidity by creating selling pressure, and then buy tokens at a much lower price.
Ardoino listed some of what he called FUD (fear, uncertainty and doubt) that Tether had to endure in the past few months: for example, that Tether was not fully backed, that it had exposure to Evergrande (the Chinese property developer that suffered a major crisis in 2021), and that 85% of Tether’s treasury was in Chinese commercial paper.
In May, Tether released an attestation report, in which they disclosed a reduction in its commercial paper holdings by 17% from December 2021 through March 2022, from $24.2 billion to $19.9 billion and also that they were fully backed by liquid assets, which at the time were worth $83 billion.
Despite all the accusations, Ardoino is proud of how they were able to respond to extreme market conditions, specially after the UST debacle. “As we always said, Tether had/has in fact >= 100% of the backing, never failed a redemption and all USDt are redeemed at 1$. In 48 hours Tether processed 7B in redemptions, averaging 10% of our total assets, something almost impossible even for banking institutions,” he said.
The Tether CTO took a shot at the entities struggling with solvency who underwent massive liquidations. “Many lenders and hedge funds considered the holy heroes of our industry were actually taking risks that Tether never touched even with a ten foot pole,” Ardoino stated.
However, it could be argued that it is obvious that Tether would deny all these accusations. The company’s history is not a clean one at all. In 2019, Tether had to admit that only 74% of USDT was backed and settled a case against them with the New York court. In October last year, Tether was fined $41 million for lying about its reserves. Furthermore, Tether has been pushing a very awaited audit for a long time, and only recently they announced that they would undertake a full audit by a top 12 firm.
In other related news, Tether announced a few days ago the launch of a British pound-pegged stablecoin, after already having a crypto stablecoin for the US dollar, the Euro, the Yuan and the Mexican peso. This announcement came just days after Circle, the entity behind USDC, had communicated they would be releasing a Euro-pegged stablecoin.
“More private money please. Bullish!,” said Mario Nawfal, CEO of NFT Tech-
1) Chris Dixon on how crypto and web3 will be at the center of the next cycle:
2) “17 truths about Crypto” by Covduk:
3) Matthew Barrett on the Harmony Hack:
On The Pod…
Shaun Maguire and Michelle Bailhe, partners at Sequoia, discuss their long term view and thesis about crypto, what do they look for to invest in a crypto project, the takeaways from the blowup of Terra, the insolvency of crypto companies, and much more. Show highlights:
- what is Sequoia’s long term view and thesis about the crypto industry
- how different our lives will look 20 years from now due to blockchain technology
- how Sequoia had to adapt to invest in this new asset class and what are the similarities and differences with investing in traditional startups
- when a product or service on the internet should be offered in a decentralized or centralized way
- how Sequoia decides whether to invest in the entity behind a project or in the tokens
- whether having venture capitalists involved at all goes against the ethos of decentralization
- why Shaun believes that Ethereum proved that decentralization can be achieved even when you start being centralized
- whether people underestimate the value that VCs can add to a project
- why Shaun believes that Solana is moving towards decentralization
- Sequoia’s thesis about privacy in crypto and the potential of zero-knowledge proofs
- how Michelle sees the macroeconomic environment impacting crypto and whether this cycle is different from the previous ones
- the importance of product market fit in crypto projects
- what crypto projects should be focusing on and the business model they should be pursuing
- the main takeaways of the Terra collapse and how it was a major setback for algo stablecoins
- how crypto founders should always do the right thing even though there is no clear regulation
- whether SBF is the Berkshire Hathaway of crypto today
- the lessons to be learned from the potential insolvency of some crypto lenders and investment firms
- how demand for blockspace will keep increasing and whether a single blockchain could supply all that space
- the future of the metaverse and how it can be defined
- Michelle’s mental model for crypto and the phases for achieving worldwide adoption
My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!
You can purchase it here: http://bit.ly/cryptopians