cryptocurrency

Be Careful When “Financial Consultants” on LinkedIn Offer Crypto Advice

June 28, 2022
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LinkedInAccording to CNBC, fraudsters are disguising themselves on LinkedIn to trick users into financial schemes. What may seem like a simple networking conversation could be a tactic to develop trust until the mark is presented with a fraudulent crypto investment opportunity. These fake accounts on LinkedIn often pose as financial consultants. In an interview with CNBC, a group of victims that came forward revealed they had individually lost $100,000 to as much as $1.6 million from such scams.

LinkedIn claims they removed 32 million fake accounts just in 2021 alone. There are several warning signs listed on the site that give examples of a scam message including grammar mistakes, messages that ask for personal information, offers that seem too good to be true and if they are not addressed to you personally.

Sean Ragan, the FBI’s special agent in charge of the San Francisco and Sacramento field offices, said “It’s a significant threat. This type of fraudulent activity is significant, and there are many potential victims, and there are many past and current victims.”

New Owner of Loan.eth Says its Worth Millions

June 8, 2022
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make money!Less than two months after spotlighting a new domain name market linked to the Ethereum blockchain, the name loan.eth was sold on a secondary market for the equivalent of $45,000. It’s not a website domain like one would expect with a .com or a .net, but rather a crypto wallet address shortener that can double as a screen name and authentication service on web 3.0. That’s just the tip of the iceberg of the utility that a .eth domain can offer.

Although most people may not be familiar with .eth domain names, the new owner of loan.eth, who goes by @BloomCapital_ on twitter, is so confident that such names will be adopted in the future, that he believes the value of this one will be many times what he paid for it.

“Just so it has to be said, Loan.eth won’t be sold for less than $10M,” Bloom wrote. Bloom said he considers loan to be the top .eth name that he has.

Senior Business Lending Exec of Square Has Moved to Coinbase

May 16, 2022
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coinbaseRonak Daya, who spearheaded several of Square Capital’s lending divisions, including “head of product for business lending” and “head of product for external lending and partnerships,” announced on twitter that he had moved on from the company. He had been involved in SMB lending for 7 straight years. His new role? Head of Financing Products at Coinbase.

If you thought Coinbase was just about buying Bitcoin, you’re wrong. Daya announced that he’ll be leading a team “to build lending and financing products both for consumers and institutional clients.”

“As I explored what came after Square, my primary focus was on challenging myself to go in a fundamentally new domain/area, and build for a new customer,” Daya wrote. “The priority was learning. Learning by building in domains that I am passionate about, but know little about.”

Convinced that the world is moving towards becoming a crypto-native economy, Daya added that he wants to “play a part in using trust, ease and education to onboard the next billion customers to a new financial system.”

Currently, Coinbase already offers a lending product, loans up to $1 million at 8% APR with monthly payments and no credit check. Though Bitcoin is used as collateral, payments are made by monthly ACH debit or through a linked USD wallet.

Join the deBanked Team in NYC for a Night of Networking in Web3 & Crypto

May 8, 2022
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The Refinery Rooftop NYCThe team behind deBanked is hosting a 3-hour open bar in New York City this Wednesday night on May 11th from 6-9pm. It’s called deCashed. deBanked readers interested in Web3, NFTs, and crypto are welcome to attend the event being held at The Refinery Rooftop.

Sponsored by Artchive and designated as the first in-real-life meetup for enthusiasts of the Ethereum Name Service’s recently formed “10KClub,” deCashed intends to bring crypto-capable folks together for a night of fun, networking, and cocktails.

“I think there is a big misconception among folks who associate crypto with things like the value of bitcoin,” said Sean Murray. “In my opinion, cryptocurrencies are not investments. They’re payment tools and a means of identity. If you’ve soured on crypto because you were told a coin was going to go up and then it went down instead, that is unfortunate because the actual use-cases for crypto are just starting to be used and are on the verge of mass adoption. You don’t need to invest in any coins, just be knowledgeable of the infrastructure.”

Twitter, for example, has already implemented a limited Web3 mechanism in which ethereum-based NFTs can be used as profile pictures for users that connect their wallets. Instagram too is slated to roll out integrations with ethereum, solana, flow, and polygon THIS WEEK as social media the world over begins its slow evolution forward. Coinbase too rolled out its own social network last week. Similarly, a handful of non-bank lenders have already pivoted to smart-contract-based loans in which lenders are effectively 100% insulated from loss.

Seven years ago there was a big rush for small business lenders to incorporate social media activity into the underwriting process with the premise that much could be learned by what businesses say, share, and present themselves as on social media. Today, social media users are slowly gravitating toward a blockchain-based experience connected to their digital wallets in which their bank statements and their online photos are effectively accounted for in the same system. Do you know how to examine that?

See you at the deCashed three-hour open bar this Wednesday night in NYC at The Refinery Rooftop from 6-9pm if Web3 and crypto appeals to you. Please register in advance. If you need help, e-mail events@decashed.com or call 917-722-0808.

deBanked Spins Off Crypto News into a Separate New Brand

February 28, 2022
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deCashedMove over de-banked, one segment of fintech is becoming completely de-cashed as crypto transactions continue to flourish. The universe of bitcoin, ethereum, blockchain, smart transactions, and NFTs only scratch the surface of the innovation and potential that could one day replace the financial system as we know it.

deBanked began reporting on crypto in 2014 in the early days of Bitcoin and since then, through fits and starts, has increased the amount of coverage in that space. After much internal deliberation, our team decided at the end of 2021 to create an off-shoot brand focused entirely on crypto-related news, deCashed.

deCashed will cover everything from crypto-lending to fintech to smart contracts to NFTs. deBanked launched its own NFT smart contract on the Ethereum blockchain last September and deBanked Chief Editor Sean Murray will be speaking at NFT NYC in June 2022.

“Everything with the deBanked brand and business will remain the same,” said Murray. “I’ve been using and following cryptocurrency for eight years at this point. deCashed will finally provide us with the journalistic runway to expand our horizons into a market we already know and one that has so much untapped opportunity.”

As independent media, deCashed is still in its early days. “It’s live already but stay tuned,” Murray said. “We’ve been talking about doing this for a really long time.”

Flash Loans: The Seemingly Risk Free, Instantly Repaid Lending Trend Taking Over DeFi

January 27, 2022
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EthereumIt’s a loan that can never be defaulted on, is paid back in seconds, and brings massive return potential. There are no qualification minimums for the borrower, no collateral needed, and minimal risk for the lender. That’s because the loan is funded and repaid in the same transaction.

This type of lending is highly prevalent in the NFT market, where JPEGS are being bought and sold for hundreds of thousands, sometimes millions of dollars, according to a source close to deBanked.

The source, who recently made the switch from nearly a decade in traditional finance to being a major proponent in the web3 online community, said that this type of funding is particularly dominant with the purchasing of CryptoPunks—  a collection of ten-thousand NFTs that can cost upwards of $10 million each.

A flash loan is atomic, meaning that it is indivisible. In computer science, things are atomic when they must be executed in full in-order for a particular thing to take place.

Due to the way smart contracts on the blockchain work, if the contract is broken, it’s nulled. With flash loans being written on smart contracts, the funds are immediately sent back to the lender if anything out of the ordinary occurs in the funding process. Thus, the loan can never be defaulted on. 

A hypothetical real-world example of this could be an auto dealer flipping vehicles. If a dealership borrows money to purchase two-million dollars of inventory that they already have buyers for, they could work it into the contract with the lender that the only way the funds would be released is if every car in that inventory is sold for a predetermined amount. If the lender, dealer, and buyers all hold up their end of the deal, the funding can instantly take place and then be repaid.

In what some have called ‘lending on steroids’, the movement of money in flash loans is tremendous. According to Aave, an open source and non-custodial liquidity protocol, flash loans as high as $200,000,000 have been reported as funded and repaid.

It’s seemingly a lender’s dream, a set-it and forget-it smart contract that does all the work without risk. But the purpose of the loan may not be known. For example, a flash loan for $532 million last October had the appearance of being used to finance the most expensive NFT purchase in history. The problem? Both the borrower and the lender were the same person.

Which all begs the question, why is a loan necessary in the first place if the borrower can repay it in the same transaction? Perhaps because it eliminates counter-party risk in a type of transaction considered among the most risky, crypto. The cost of a flash loan, borrowing funds for mere seconds, is probably more attractive than a flash loss, in which the other side doesn’t live up to the terms of the deal and in a flash… is gone.

El Salvador Partners with DeFi Lending Platform for Bitcoin-Backed SMB Loans

January 21, 2022
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el salvador bitcoinEl Salvador continues to be an unprecedented experiment of mainstream crypto use. The small Latin American country that shifted its national currency to Bitcoin alongside the US dollar in June is now partnering with Acumen, a DeFi lending platform, to power Bitcoin-backed loans.

“Basically what we are doing is an alliance with the government,” said Andrea Maria Gomez, a Project Manager for Acumen. “[The government] is not backing anything. They are just giving us the channels for which we will reach the small and medium enterprises.”

CONAMYPE, an acronym in Spanish that represents the national commission for medium and small enterprises, already offers business financing. Rates for this are generally high, and just like in the US, the qualifications to get financing are extensive. With Bitcoin-backed loans, it seems that the funding process will be the thing that affects El Salvadoran merchants the most.

“We work through a stable doc so investors put their crypto in there, we convert it into a stable coin, and what we eventually loan out to the end user is dollars,” said Gomez. “So we don’t give Bitcoin or Solana or anything like that, we give them dollars.”

“For [merchants], it’s easier,” Gomez continued. “You are not depending on the volatility of a coin, you just have dollars.”

Just like in the US, funders borrow money at high rates from banks, resulting in the cost of financing being pushed down to the final borrower. In a government that has Bitcoin as an official currency, Acumen can lend Bitcoin backed dollars at a lower rate than what’s already being offered in the marketplace.

“What we are doing, this is like an initial run, is we are going to contribute one fund to CONAMYPE for them to be able to [lend] at a lower rate,” said Gomez. “We can provide at a lower rate because in crypto, the capital is loaned at a lower rate.”

When asked about the lack of digitally-native people in El Salvador, Gomez stressed that the application process doesn’t require a crypto-enthused business owner. “Business owners don’t need to understand the tech or go to a wallet to ask for the loan. It’s a regular loan to them. The difference is, the source of the funds is coming from this protocol.”

The El Salvadoran government is confident that these loans will open up access to capital to small businesses who would have no alternative source for funding. Mónica Taher, Technological & Economic International Affairs Director at Government of El Salvador, shared her thoughts with deBanked about the vision for this plan down the line.

“The Bitcoin small loans for Salvadoran businesses will re-energize the economy by allowing the unbanked to have the opportunity to have access to digital money and create a credit history,” said Taher.

This Just In: Crypto Transactions Aren’t Tax Free

January 20, 2022
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Patrick White BitwavePatrick White, CEO, Bitwave

“I don’t always believe people that say they are surprised about having to pay taxes on crypto. There’s a field on your tax form to say where you’ve made money doing illegal things. If you sell drugs, there’s a place to report how much money you’ve spent selling drugs. The IRS doesn’t care. Everything is taxed in this country.”

There is no such thing as too many crypto transactions when it comes to accounting purposes according to Patrick White, CEO of Bitwave. Bitwave operates the software that does the accounting for major blockchain companies and retailers who have taken crypto as payment.

White says that the high volume of crypto transactions aren’t coming from individuals sending digital assets back and forth, but rather from the companies that host the infrastructure of these transactions.

“It’s not just trading, trading is fun and we all love the rat race that is trading, but where it’s a lot more interesting is how some of our customers who are in the NFT space are seeing millions of revenue transactions a month.”

These sites like OpenSea, a client of Bitwave, are seeing sky high amounts of these types of transactions. When asked about the cost of accounting for an individual doing ten-thousand trades a month, White laughed.

“Ten-thousand trades a month is nothing,” he said.

BlockchainWhite spoke of an instance which is seemingly a common occurrence in the crypto world. “We had a customer who when we were running their [transactions], I couldn’t figure out [an issue] with one of their months. I went to go look at the data, and they had turned on a Binance bot and without even realizing it, they didn’t know this, they accidentally had 200,000 trades in a month. The volume is incredible.”

When asked about how digital assets have impacted the accounting world, White stressed that the amount of transactions have resulted in companies appearing larger than they are from a transactional-perspective. According to him, some of his clients are doing as many transactions as some of the largest companies in the world.

“[One client] is a one-year old company that is doing the volume of a sixty year-old retail business, it’s unheard of.”

When asked further about the difference of cost in accounting digital assets versus dollars, White explained that it isn’t much different than how larger companies have maintained their books for some time.

“No matter what, if you are a high frequency trader and you’re making hundreds of millions of trades a year, you will need software to deal with that,” said White. “I wouldn’t say that [the amount of transactions] are increasing costs across the board, it is a cost that you would already be expected to [have].”

When asked about the apparent vacuum of crypto-native accountants, White seemed to cast blame on the approach of the information. When hiring, he says he finds more value in people with engineering experience over accounting experience, and blockchain experience over anything else.

“[Other accountants] are trying to apply finance 1.0 things to this crypto world,” said White. “We look for good engineers. A good engineer can figure anything out, a bad engineer with accounting experience can’t. We’re looking for blockchain experience, as blockchain [technology] is more difficult than accounting in many ways.”

While most businesses will file extensions this time around and finish their taxes in October, White believes that blockchain accounting will become more widespread as new firms leverage the infancy of the space and settle into their niches.

“Cottage industries will come up in order to enable the IRS,” said White. “I don’t expect the IRS to build this technology or this understanding in-house. There will be people and businesses that will do it for them.”

With the IRS’ decisions about taxing crypto having the potential to change at any notice, White stressed the necessity for malleability when developing this kind of accounting technology in such an unpredictable space.

“We’ve designed Bitwave from the very beginning to be able to rapidly adjust to the new laws that are coming out,” he said. “Even back then, it was very obvious that we couldn’t build this tech in such a way that it is inflexible.”

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