The Wolf Den #635 - SBF Bought Influence Everywhere
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In This Issue:
SBF Bought Influence Everywhere
Bitcoin Thoughts And Analysis
Legacy Markets
Crypto Collapse Explained
Can ETHE Be Saved?
Proof Of Reserves Cause More Controversy
SBF Will Testify As A Witness
My Recommended Platforms And Tools
SBF Bought Influence Everywhere
Surprising news dropped hard this weekend, hitting the streets like a Funkmaster Flex mixtape in the 90s.
The Block, founded in 2018 by Mike Dudas, is a powerhouse in the crypto news business. It is one of the top online publications, alongside competitors CoinDesk and Cointelegraph.
Unfortunately, the integrity of The Block has been compromised.
Big time.
In April 2021, The Block underwent a “successful management buyout, to become the first 100% employee-owned company.” Mike Dudas stepped down from his role as CEO, and the transition to becoming an employee-owned company was complete. It was widely celebrated by employees and the wider crypto community.
The new CEO, Michael McCaffrey, reportedly received a loan from his family to execute the transaction. He became the majority shareholder.
So everyone believed.
What we didn't know at the time was that this “transition” was a sugar-coated lie. McCaffrey's bid was secretly funded by Alameda.
SBF.
Again.
Bankman-Fried secretly funded an “unbiased” and “objective” making it neither "unbiased" or "objective." The only explanation is that he was looking to influence the reporting in some manner, although the news room maintains that they were completely unaware of this arrangement.
Journalism is supposed to be a refuge for truth, not a breeding ground for lies.
Alameda sent $43M, in 3 separate "loans." They money was used to cover expenses ranging from buyouts to day-to-day operations and real estate purchases... in the Bahamas. The loans funded the company transition and much more.
Did SBF want favorable coverage? Certainly. But it is unclear whether he actually got it, as The Block has been objectively tough on the former FTX CEO.
When the CEO, Michael McCaffrey, went public with the news, he made it clear that he “never told a soul of the funding.” And so far, this statement has not been disproven.
Was it a terrible decision to keep the loan a secret? Yes. Did the journalistic integrity remain intact because of it? Maybe.
This could simply be a case of pure greed.
The fate of The Block is in question, but my assumption is that they will eventually be fine. Mike Dudas has tweeted that he will try to buy the company back, Ryan Selkis of Messari has floated the idea of a buyout by a "Media DAO" and others are surely interested. Both Dudas and Selkis are upstanding, incredible individuals.
So who else has quietly taken money from SBF? We already know that he donated to politicians and invested in countless companies. There's almost no chance that the buck stopped at The Block.
Ryan Selkis has already hinted that he was loosely offered money by SBF as well. Sam was looking to buy influence wherever available. And as bad as this story is, the details of his political donations will probably end up looking much worse.
This entire thing is a horrid soap opera - and we have our eye lids pinned back and are chained to a chair, forced to watch the awful show.
I have no idea what shoe will drop next, but nothing would surprise me.
Bitcoin Thoughts And Analysis
WEEKLY CHART
Bitcoin is trading above support at $16,218 and below resistance at $17,592. That is our basic range, and there's little to do while price is in it.
Two weeks ago we printed a nice bullish candle after a few weeks of wicks below support. This week printed a doji, meaning that the market is due for a pause and there is indecision.
Not very exciting.
Legacy Markets
"US equity-index futures advanced at the start of a pivotal week for monetary-policy decisions from the Federal Reserve, European Central Bank and a host of their peers.
Investors are looking for firmer clues on how far and how fast central banks will tighten monetary policy from here on, as recession fears resurface. The Fed is projected to slow its hiking spree to a 50 basis-point move on Wednesday, though officials have said borrowing costs will need to remain restrictive for some time. US inflation figure on Tuesday will throw more light on whether that’s the case or markets have a case for expecting rate cuts in late 2023.
“Throughout this year, we have seen the Fed taking serious aggressive monetary-policy measures to control inflation,” Naeem Aslam, the chief markets analyst at Ava Trade Ltd., wrote in a note. “However, the last reading made the Fed believe that inflation has started to move in the right direction. This means that they need to do less as there is plenty more tailwind behind this which will continue to push inflation lower.”
Still, a robust labor market and lingering concerns about inflation prevent traders from turning bullish. Disparities in the economic outlook between the world’s regions, from the resurgence of Covid in China to energy volatility in Europe, keep a lid on risk sentiment. The dollar was little changed, after posting a small gain earlier.
Following the Fed, the ECB will announce its rate decision Thursday, and may opt for a 50 basis-point hike. Markets also have to contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
While the tumult of this year has a gauge of global stocks headed for its biggest annual loss since 2008, the world’s biggest investors predict that stocks will see low double-digit gains in 2023. As many as 71% of respondents in a Bloomberg News survey expect equities to rise, versus 19% forecasting declines. For those seeing gains, the average response was a 10% return.
Key events this week:
US CPI, Tuesday
FOMC rate decision and Fed Chair news conference, Wednesday
China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday
ECB rate decision and ECB President Lagarde briefing, Thursday
Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday
US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
Futures on the S&P 500 rose 0.3% as of 6:01 a.m. New York time
Futures on the Nasdaq 100 rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 fell 0.3%
The MSCI World index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0562
The British pound rose 0.2% to $1.2284
The Japanese yen was little changed at 136.68 per dollar
Cryptocurrencies
Bitcoin fell 0.7% to $16,987.45
Ether fell 0.8% to $1,255.41
Bonds
The yield on 10-year Treasuries declined five basis points to 3.53%
Germany’s 10-year yield declined three basis points to 1.90%
Britain’s 10-year yield declined seven basis points to 3.11%
Commodities
West Texas Intermediate crude fell 0.8% to $70.45 a barrel
Gold futures fell 0.4% to $1,803.40 an ounce"
Crypto Collapse Explained
This is a simple and compelling explanation for the crypto market implosion from Tarek Mansour, CEO of Kalshi. He makes the clear case that it is almost the same underlying situation as the 2008 great recession.
No need to summarize - read the thread!
Can ETHE Be Saved?
The ETHE discount has reached -50%, while GBTC is close behind at -48%. Analysts have suggested several ways to save ETHE. One idea gaining popularity is that Grayscale could stake the Ethereum to reduce the discount and offer a dividend to investors when they withdraw. This is unlikely to happen, but anything is possible in the world of cryptocurrency.
Many people think that buying these assets is a bearish trade for investors. If DCG and Genesis file for bankruptcy, the assets in these trusts could be frozen. This would halt selling and these assets could be tied up for years, still carrying their discounts.
However, there is also the possibility that DCG would be forced to sell shares to keep itself or Genesis afloat.
Yet another shit show.
Proof Of Reserves Cause More Controversy
It's difficult to say what is true and false regarding Binance's proof-of-reserves, but we do know that a single rumor can cause serious problems. While there is nothing wrong with using Binance, it is not wise to keep your funds on their platform or any other.
CZ recently tweeted, "Binance has no outstanding loans, just ask around," but even if this is true, it doesn't mean there can't be some sort of flaw in their bookkeeping. However, no one has come forward with concerns other than those regarding the proof-of-reserves.
Can I Get A Witness?
Yes, I can get a witness, and his name is SBF.
Based on the interviews that Sam Bankman-Fried has given in recent weeks, it is unlikely that he will be completely honest during his testimony before Congress this week. The hearing is scheduled to begin at 10 am EST tomorrow, and SBF will appear as a witness. In his previous interviews, SBF has often said that he "doesn't have enough data" to provide certain answers, which is probably another way of saying that he doesn't want to say too much. We will also have the chance to hear from the new CEO, John J. Ray III, who has been somewhat of a mystery until now. It is likely that we will be disappointed by the outcome of the hearing.
Bitcoin Is Money, Ethereum Is A Crypto Commodity | Massive Interview With Arthur Hayes
Arthur Hayes is a legend in the crypto space. If you are a trader, then you know that Arthur Hayes invented the most popular crypto derivatives instrument - the perpetual swap. If you are not a trader but are familiar with crypto, then you know Arthur from his famous blog, where he dives into complex ideas and explains them in 30-minute-long reads, aimed primarily at helping himself walk through with his investing thesis.
In this episode with Arthur Hayes, we discussed:
Inventing the perpetual swap
Perpetual swap for legacy market
US overinflated Bitcoin
Everyone who could go bankrupt went bankrupt
The casino always wins
Billions of dry powder
FTX proven the value proposition for crypto
What is Ethereum?
The future of Layer 1 blockchains
The issues of Ethereum
Building a superior financial system
Why are people so bad at trading
Do we need 100x Leverage?
Not your keys, not your coins
Huge crisis is coming
Defense spending
CryptoHayes blog
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
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