Reading time 3m33s
GM geniuses 🧠
This week is thanksgiving for millions in America, which means some awkward conversations for crypto br0s 😅
I’m getting used to the calls and text messages every time Bitcoin or crypto make the news.
Just remember that everyone buys BTC at the price they deserve.
Today's Agenda:
Top Dog DCG in BIG 💩
Safe CEX w/ Vitalik 🤭
Regulations Coming 📣
Celsius Bankruptcy ⚠️
FTX Hacker Moving 💰
If Genesis Falls.. 💥
According to the numbers in this Twitter thread, it could be bigger than FTX.
But let’s establish a few things first.
1/ Genesis is like a crypto exchange for big $$ players (institutional investors)2/ Genesis also lends a lot of money to prominent crypto companies and firms3/ Genesis is owned by DCG (Digital Currency Group), who also owns the largest Bitcoin fund, Grayscale
So Genesis, a company that builds and backs many of the top crypto projects, is owned by the same company that also owns Grayscale, the largest Bitcoin fund.
It sure would be a shame if something happened to the top dog, DCG 👀
Grayscale put out an update reassuring investors that they hold all the underlying assets in their fund and have never lent or traded with them; no on-chain verifiable proof, though 👀
Genesis had $2.36B exposure to 3AC which had to be covered by DCG, and then another reported $175M exposure to FTX, which are just two of the big holes in their loan book, forget about their exposure to LUNA and UST 👀
It makes sense why they had to halt withdrawals last week.
Long story short: they might be insolvent, but it remains to be seen how much they can raise either through funding or by selling individual assets.
Which brings us to the “BIG WEEK AHEAD” you might have heard about.
Here’s a comprehensive breakdown of the many assets held by DCG.
Them selling = markets tanking.
And when the markets tank, there is always a next player who was just barely hanging on; the crypto contagion continues via liquidation cascades and more insolvent firms.
And it looks like that might happen.
Their deadline to raise funds is today.
If Genesis drops, DCG might too.
If DCG drops, there are genuinely no words to articulate how catastrophically devastating it could be to crypto.
And DCG appears to be preparing for it.
And if you’re thinking to yourself that all this seems just a tad on the confusing side, don’t worry. It is.
Here’s everything you need to know in one place if you really want to dig to the bottom of what happened in this mess:
But let's just go back to one tweet from May 5, 2022 that started it all.
It always comes back to crypto contagion patient 0, Terra-LUNA.
But not all is lost. There is hope.
There is still plain old Bitcoin 🧡
How to have a “Safe CEX” according to Vitalik Buterin
Believe it or not, FTX isn’t the first centralized exchange (CEX) to go bust.
Shocking, I know 🤯
But unfortunately CEXes might be a necessary evil because it seems like the average person just can’t do without the convenience they provide.
Therefore we need to establish some baseline of best practices to avoid more FTX-level collapses in the future.
In a recently published blog on the topic, Vitalik lays out how he thinks a safe CEX should look going forward.
It’s pretty complex, involving Merkle sum trees, smart contracts & ZK-SNARKs, but essentially what it hopes to achieve is:
CEXes can prove holdings
CEXes can prove liabilities
CEXes can’t take user funds
Basically it’s a way for exchanges to prove they are healthy and solvent.
He even suggests ways to make CEXes non-custodial via cryptographically constrained tools, but that’s for the future.
For now, the two classes of exchanges are custodial and non-custodial, or centralized and decentralized (CEXes and DEXes), and the latter are definitely the best option at present 💯
How much is the new FTX CEO getting paid to oversee their bankruptcy?
Tap your answer below to see if you’re right!
Web3 Pipeline 📢
Joe Biden Leads ‘Critical’ Call For Game-Changing, Global Bitcoin And Crypto Rules After FTX Collapse - the crypto contagion may be winding down, but the final battle has only just begun.
Celsius Customers Have Until January 3 to File Claims - the bankruptcy filing for Celsuis is moving along faster than expected. If you have funds trapped in their platform, make sure to file a claim!
The FTX Hacker Continues to Convert Thousands of ETH into BTC - earlier reports about the hack being tied to the Bahamian government turned out to be wrong, as that was a different pile of tokens they were talking about. The real hacker is still out there.
NFT drops of the day 👀
🧈 Golden Reserve | 129 (ADA)Nov 23 - working to improve the understanding of the Crypto/NFT & Gold market and highlight the value of gold to individuals, investors, and the world at large.
🛑 NOTE: drops not promoted/endorsed✅ DYOR and practice safe minting!
Honestly I’m not sure if this is the lizard people conspiracy or the Illuminati one, or if those are both the same.. whatever.
I believe in it 😅
That’s all for today frens!
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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice to buy or sell any assets or to make any financial decisions. Do your own research.