cryptocurrency
Coinbase Files S-1 for IPO
February 25, 2021
Coinbase filed an S-1 Thursday morning, a significant step in gaining a listing on the Nasdaq. It’s like Christmas morning for the crypto-obsessed financial media, tearing into the document like wrapping paper on a new bike to pry into the private crypto-selling firm’s operations.
For starters, Coinbase was profitable in 2020, as it should be with ATH bitcoin prices. The company posted a net income of $322 million on net revenue of $1.14 billion. There was no listing price for shares, though according to Axios, private pre IPO shares to investors went as high as $373/share.
Coinbase said it had 43 million verified users, 2.8 million of which transact monthly. There are $90.3 billion in assets on the platform and $193 billion in volume traded last year. The majority of revenue comes from Bitcoin and Ethereum trading. In an age of sudden fintech SPAC IPOs, Coinbase is launching a stand-alone public offering.
The buzz on social media is over the first completely remote company listing. Coinbase stated, “In May 2020, we became a remote-first company. Accordingly, we do not maintain a headquarters.” Though someone pointed out on Twitter, Coinbase, Inc still files taxes through a San Franciscan address.
The pandemic might not be the only reason Coinbase went remote. US-based coin Ripple was recently sued by the SEC for violations of securities laws. Accordingly, in the “risk factors” section, along with a warning about the natural volatility of cryptocurrency prices, Coinbase describes the similarly ever-changing nature of crypto regulation.
“We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition,” Coinbase said.
Another strange thing to see in an S-1 was that the form was sent to the unknown identity of Satoshi Nakamoto, the person or group that created the currency itself. Coinbase somehow sent the S-1 to the founding Bitcoin block address at:
One of the risk factors Coinbase listed was the unforeseen result if Nakamoto was ever identified: “The identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins.”
Satoshi has never been truly identified beyond the initial launch of Bitcoin. Satoshi’s original block address has been sent 68 bitcoins since inception or more than $3.2 million at today’s valuation. Some other curiosities include the definitions page:
Flash Boys 2? Ethereum Bot Wars
February 25, 2021
A whole new group of traders is colluding to beat the market. No, not Redditors or fiber-optic wielding Wall Street “quants.” Today, in both a simpler and way more complex way money can be made using bots to outbid trades on cryptocurrency markets.
According to research by Flashbots, in the past 30 days alone, $106.5 million of Ethereum (ETH) has been extracted “permissionlessly” from trades on the ETH blockchain. The problem has gotten progressively worse throughout 2020, where Flashbots researcher Alex Obadia started their search.
“After scraping the Ethereum blockchain starting from the first block of 2020, we’ve classified more than 1.3M MEV transactions,” Obadia wrote. “And found a total of at least $314M worth of Extracted MEV since Jan 1st, 2020.”
It’s called Miner Extracted Value (MEV) and Flashbots scoured millions of ETH transactions to find when it happened. Flashbots was created because of the vulnerabilities of decentralized crypto markets, like MEV exploits.
It’s stated that a simple version of how this extraction can be done is by a miner piggy-backing off existing trades, the bot can find a trade waiting to be completed in the blockchain memory pool, and “memsnipe,” creating an identical trade but raising the transaction price to complete it.
The flaw was first documented in a 2019 Cornell economics and crypto research paper.
“Blockchains, and specifically smart contracts, have promised to create fair and transparent trading ecosystems. Unfortunately, we show that this promise has not been met,” Cornell researchers found. “Like high-frequency traders on Wall Street, these bots exploit front-running in DEXes, paying high transaction fees and optimizing network latency to front-run, i.e., anticipate and exploit, ordinary users’ DEX trades.”
Flashbots updated the findings to claim that miners were rarely the culprits and that the term should be amended to Maximum Extracted Value.
Trump Attacks Bitcoin and Cryptocurrencies
July 11, 2019
President Trump revealed his stance on cryptocurrencies over twitter on Thursday, and he’s no advocate.
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!”
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
….Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National…
— Donald J. Trump (@realDonaldTrump) July 12, 2019
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
— Donald J. Trump (@realDonaldTrump) July 12, 2019
New York Attorney General Turns Up The Heat On Tether, Bitfinex
July 9, 2019
Bitcoin is back over $12,500 but a growing chorus within the crypto faithful are pointing to a potential catastrophic event that could change the crypto markets forever.
It’s the potential implosion of Tether, a company spotlighted in a recent deBanked magazine story for its uncanny ability to create digital dollars out of thin air, and a new forceful response from the New York Attorney General’s Office over Tether’s attempt to weasel its way out of being investigated.
Specifically, Tether has raised several challenges to the OAG’s and New York Supreme Court’s jurisdiction, most recently through a motion to dismiss a formal investigation. The OAG, who believes the tactics are only being used to stall, wrote in papers submitted on Monday that “the delays must stop, and Respondents must produce the information they were originally directed to produce.”
The AG calls out Tether on its claims that its digital dollars (USDT) are fully backed 1:1 by real US dollars on deposit in a bank account, when in fact they are not. Additionally, they believe Tether is attempting to circumvent a court ordered injunction and is further bending securities laws in part by purportedly selling $1 billion of a new digital token to anonymous investors to cover losses that are already under investigation.
“This is an ongoing law enforcement investigation. The OAG is entitled to pursue it, without further impediment or delay,” they state in court papers, stressing yet again that Tether should no longer be allowed to delay the process.
Tether meanwhile, reportedly created another $100 million of USDT the same day the papers were filed. Should those funds be used to buy Bitcoin, Bitcoin’s value might continue to surge… in the short run.
George Popescu Steps Down From Lampix
May 13, 2019George Popescu is stepping down from Lampix, the augmented reality lamp company he founded, according to an announcement. Lampix raised $14.2 million through its sale of PIX tokens in a 2017 Initial Coin Offering (ICO). PIX sold at a price of 12 cents each but the value has since plummeted by more than 95%.
Popescu will be replaced by Salvatore Buccellato, who has been the Chief Revenue Officer since the summer of 2018.
“As outgoing CEO I am really proud to have taken Lampix from an idea/prototype to the successful manufacturing of the Lampix commercial development kits,” Popescu said in a published statement. “I strongly believe that it is good practice for companies to regularly have new CEOs who bring new ideas, new resources and a fresh outside vision to the company. During and after the full transition I will of course remain involved with the company as needed.”
Lampix was profiled in deBanked’s November/December magazine issue as a poster child for the murky world of crypto fundraising. At the time, Popescu was involved in several other ICOs in addition to Lampix. Among them was Restart Energy (which raised $30 million), Opiria, First Blood, AirFox (which later settled charges with the SEC for selling unregistered “securities”), and DropDeck Technologies, whose user funds were lost due to a software bug that also affected numerous other companies. Popescu was also advisory board chairman to Gatecoin, a Hong Kong-based crypto exchange which closed on March 20, 2019 following a 2016 hack.
Signature Bank Partners with trueDigital
December 4, 2018
Today, Signature Bank unveiled a proprietary digital payments platform for its commercial clients, according to a statement released by the bank. The platform, called Signet, is designed to allow Signature Bank’s commercial clients to make real-time payments in U.S. dollars, every hour of the year.
“The ability to transmit funds between approved, fully vetted commercial clients of the bank at all times is very valuable, especially in light of the increasing speed and frequency at which they conduct their business,” said Joseph J. DePaolo, President and Chief Executive Officer at Signature Bank. “Signature Bank has made a commitment to invest in its technology infrastructure, and the Signet Platform is indicative of this investment,”
This commitment by a bank to embrace technology is consistent with other banks of late. Chase and PNC have partnered with OnDeck’s ODX to streamline their online lending processes and other banks have partnered with fintechs recently as well.
“The partnership between trueDigital and Signature Bank will quickly prove to be extremely beneficial and revolutionary for clients globally as they will now be afforded the opportunity to make instantaneous USD payments to one another in real-time at no cost per transaction,” said Sunil Hirani, Founder of trueDigital.
The new Signet platform uses blockchain technology and can be used to make payments across a wide variety of industries, initially focusing on power, shipping, real estate, auto and digital assets where costs, delays, operational risks and counter-party risks are significant, according to a trueDigital statement.
The platform is not designed for a very small company as transactions made on the Signet platform require a minimum account balance of $250,000. Also, the companies exchanging money must both have an account at Signature Bank.
The New York State Department of Financial Services has approved the Signet platform and deposits held on the platform are eligible for FDIC insurance, up to the legal insurable amounts defined by the FDIC.
Signature Bank is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area. This year, the bank opened a full-service private client banking office in San Francisco. Signature Bank’s specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. trueDigital is a New York-based fintech company that provides solutions to financial markets by utilizing blockchain-based technologies.
ICO Settles With SEC, Must Return Millions to Investors
November 16, 2018
A Boston based startup that raised $15 million in funds via an Initial Coin Offering (ICO) must return the money to token purchasers and pay a $250,000 fine, the SEC announced. AirFox, who must make those payments in accordance with an SEC settlement, introduced a plan in 2017 to provide free data to mobile phone users in return for eyeballing advertising. The SEC was careful to note that they had not accused AirFox of fraud, but rather of failing to register their tokens as securities.
Since the ICO, the value of AIR tokens have dropped by 94%.
1st Global Capital’s Activities Spilled into Cryptocurrency and ICOs
September 14, 2018Curious details are emerging in the wake of the 1st Global Capital bankruptcy and subsequent SEC charges. Among them is that $161,000 of company funds were used to purchase cryptocurrency.
Many of those purchases were made in February of this year for a total of $92,492. The cryptocurrency market has slumped since then. Bitcoin, for example, is down 35%.
In May, less than three months before 1st Global filed Chapter 11, a purchase of $61,000 in cryptocurrency was addressed to TraNexus Ireland LTD. TraNeXus is an Ireland-based travel technology blockchain company that is currently raising capital via an Initial Token Offering (aka an Initial Coin Offering, ICO). “TraNexus is committed to changing the way people travel and revitalizing the travel and tourism industry by making travel easier, greener, more valuable and more fun,” the company says of itself in a recent press release. 1st Global Capital owner Carl Ruderman is something of a vanguard in the global tourism business whose acumen includes ownership of Elite Traveler magazine.
Separately, 1st Global is alleged to have funded a $40 million merchant cash advance to an auto dealership in California. Though it remains unconfirmed, industry insiders say it wasn’t even a 1st position deal and that the dealership had multiple advances.
On Wednesday of this week, the SEC served a subpoena on a JPMorgan Chase in Miami demanding all documents and payments related to 1st Global, Ruderman, and his companies.
