Scotch, this is one you’ll want to read along with the piece by Matt Levine on this board concerning Silvergate - which is an excellent short. I’ve got to run down this Marc Cohodes interview again and listen in with a rested mind. Cohodes is also on the scent of another bank with some similarities to Silvergate and that is Signature Bank $SBNY - but for now Cohodes is “all in” on this short of Silvergate which he warned the world about some two to three months ago with the same podcaster.
This week? The beginning of a big fall in Binance? If Binance goes under, think of what it is going to do to all the market makers downline, all those shite tokens it has hawked for years, all those shite tokens Musk and Thiel continue to pump. If Binance falls, I predict some very big wipeouts downstream, and this includes some hedge funds.
Binance’s Asset Shuffling Eerily Similar To Maneuvers By FTX
Late last year, as crypto markets were struggling to regain their footing, the world’s biggest cryptocurrency exchange quietly moved $1.8 billion of collateral meant to back its customers’ stablecoins, putting the assets to other undisclosed uses. They did this without informing their customers. According to blockchain data examined by Forbes , from August 17 to early December–about the same time FTX was imploding–holders of more than $1 billion of crypto known as B-peg USDC tokens were left with no collateral for instruments that Binance claimed would be 100% backed by whichever token they were pegged to. B-peg USDC tokens are digital replicas of USDC, a dollar-pegged stablecoin issued by Boston-based Circle Financial, that exist on blockchains not supported by the firm such as Binance’s proprietary Binance Smart Chain. Each stablecoin is worth one U.S. dollar.
Of the raided customer funds, which consisted of USD stablecoin (USDC) tokens, $1.1 billion was channeled to Cumberland/DRW, a Chicago-based high frequency trading firm, whose parent was founded in 1992 and began trading crypto in 2014. Cumberland may have assisted Binance in its efforts to transform the collateral into its own Binance USD (BUSD) stablecoin. Until a crackdown in mid February by the New York State Department of Financial Services on stablecoin issuance, Binance was aggressively seeking to gain market share for its dollar-backed token against rivals like Tether and Circle’s USDC.
That Marc Cohodes interview about Silvergate will singe your ears!
And then the incomparable Matt Levine adds his irreverent one-liners in this bang up synopsis of what happened at Silvergate, which is a great outline which can be filled in by some of Cohodes comments.
The Silvergate CEO should go straight to prison if their is still justice in this country for shareholders who are constantly lied to.
Matt Levine piece I’m talking about:
Anyway, hope all is well out your way. It’s getting stupider by the day in Florida. Never look back. Establish that progressive tribe out there in Montana.
Scotch, one more for you from Reuters/WSJ. Holy hell, this sounds like the week Binance has its moment of infamy:
March 5 (Reuters) - Binance, one of the world’s largest cryptocurrency exchanges, developed a plan to avoid the threat of prosecution by U.S. authorities as it started an American entity in 2019, the Wall Street Journal reported on Sunday.
Any lawsuit from U.S. regulators, who had signaled a coming crackdown on unregulated offshore crypto players, would be like “nuclear fall out” for Binance’s business and its officers, the WSJ said, citing a Binance executive’s warning to colleagues in a 2019 private chat.
p.s. Scotch, hit me up next time you’re in town. I think I can withstand four hours of Happy Dog from a zero gravity beach chair up at Kiki’s. That’s where the guys are every Sunday, 6-9 PM, with about 500+ fans spread all over the beach, inside, and upstairs. The parking lot is becoming a party zone as well. Truly a Keys bar for this moment in time. The band will break up before season ends, so, if you’re making a trip to the Keys anytime soon, this would be the time.
Man, o, man. I wonder how many hedge funds into crypto will be exposed? And think about all the $TSLA bros who bought the shitecoins Ole Sparky pumps on Twitter.
If Binance.US continues losing users, will there be a run on Binance worldwide because so many Americans used VPNs (at the company’s earlier suggestions) to illegally trade through Binance using high leverage - which the US entity would not allow by law.
This story just added another layer of crazy sociopathy to the cake which will melt in the rain inside MacArthur Park.
Binance exploded onto the crypto scene in 2017 and grew into the world’s biggest digital-currency exchange. It quickly ran into a problem.
It largely operated from hubs in China and then Japan, yet a fifth of its customers were in the U.S., where authorities signaled a coming crackdown on unregulated offshore crypto players. Any lawsuit from U.S. regulators would be like “nuclear fall out” for Binance’s business and its officers, a Binance executive warned colleagues in a 2019 private chat.
Worried about the threat of prosecution, Binance set out on a plan to neutralize U.S. authorities, according to messages and documents from 2018 to 2020 reviewed by The Wall Street Journal as well as interviews with former employees.
