38: Bankruptcy, Scammers and Blockfi Bailed Out as 3AC Go Down

Tracey: [00:00:19] Welcome to the Crypto Curious podcast designed to help you navigate the dynamic world of cryptocurrency. We're here for anyone who is interested in crypto at all. Maybe you've already dip your toe in the water, or maybe you don't know anything about it. And this is the very beginning. But we recommend heading back to the early episodes to get your footing. However, if you think you're ready to dive in headfirst, then let's do it. My name's Tracy and I'm joined by my mates from the Bamboo App, Blake and Craig. Hey, guys. Are you going? [00:00:48][29.1]

Blake: [00:00:49] Very well. [00:00:49][0.3]

Craig: [00:00:50] How you been, Trace? [00:00:50][0.5]

Tracey: [00:00:51] I've been well. Thanks for asking, Craig. Welcome to another week of crypto news. Look, the market hasn't moved. There's not been a lot of price action, I think. At time of recording, we're still floating around 20,000 for Bitcoin and around $1,000 for a Etherium. But we've been keeping you up to date with the Celsius and Three Arrows Capital Story over the last 4 to 6 weeks. So let's start with an update to where this has gone in the last week. According to a report by media outlet Bloomberg Three Arrows Capital has filed for Chapter 15 bankruptcy in New York. They've gone from a $10 billion crypto powerhouse to insolvency in a matter of months, which is kind of depressing for those guys. Craig, what's the latest on Celsius? [00:01:38][47.4]

Craig: [00:01:39] Yes. Can you believe Luna was, you know, six, eight weeks ago? That feels like it was about a year ago. And everyone's forgotten about it except. [00:01:46][6.7]

Tracey: [00:01:46] For the people that lost all the money. Maybe they haven't forgotten. [00:01:48][1.9]

Craig: [00:01:49] Yeah, sure. But yeah. Celsius. So there's been a bit of problem investigation going on with Celsius. Like, as you know, everything's on the blockchain. You can track or attempt to track what's going on. And a few investigators believe that Celsius have now paid back some of their loan to make a protocol and make it is a decentralised finance platform where you can park your funds and earn a yield of them and Celsius have repaid to the tune of $150 million in debt, which has lowered the Bitcoin liquidation price to less than 5000 US, which is obviously very good news to the 14,000 that was being rumoured a few weeks ago. So despite all of this, it actually looks like Celsius might survive this ordeal. At what cost? I don't know. But it looks like they could come out the other side. [00:02:41][52.8]

Tracey: [00:02:42] Yeah. And like I said, that is good news for people who still have some money locked up in Celsius. So that's good to see. So it seems like they're doing their very best. So like, have you heard any more on the Blockfi story? What's happening there? [00:02:54][12.0]

Blake: [00:02:55] Yeah, so Blockfi is an interesting one. It seems that FCX is in fact stepping in to save the day and they've put a $400 billion line of credit in to their business and now they have the option to acquire Blockfi for 240 million. So it's been really interesting to see how there's this consolidation happening in the sector with the weaker companies being acquired by, you know, some of these are much stronger companies. And the CEO claims that the total deal consideration could be a total of $680 million, which is not as good as their previous valuation. But at least they're going to get something for their business and their millions of users. It's going to be really interesting to see if they rebrand under the banner or they stay a standalone kind of subsidiary. [00:03:48][53.6]

Tracey: [00:03:49] Interesting. Interesting. Hadn't really thought about that. What do you think about that, Craig? [00:03:52][3.2]

Craig: [00:03:53] It wouldn't surprise me. They got blockfolio got them to rebrand Bitcoin, but who knows if that even gets acquired at the end there? It could not happen. [00:04:01][8.3]

Tracey: [00:04:01] Yeah, who knows? Who knows? Like you said, it's it all move so fast in this in this neck of the woods. So maybe, you know, not so good for the original shareholders of Blockfi. They're but really good for their users. So we'll see what happens. And Celsius isn't the only one on the brink of insolvency. There seems to be a new casualty each week. Volt with a D a Singapore crypto exchange. Start-Up has suspended withdrawals, trading and deposits on its platform with an immediate effect as negative financial challenges it said has affected their business. Blake, what do we know about these guys? [00:04:34][32.6]

Blake: [00:04:34] Yeah, they're only about three years old and they raised about $27 million and they had about $198 million worth of withdrawals since June. So people are really worried about their deposits on the platform. And they were advertising that if you get 12 to 13% yield per annum on usdc stablecoins and. Six or 7% on Bitcoin and Ethereum, which you know is just unsustainable in this climate. And yeah, it's just unclear whether they got caught up in any of the lunar issues. So yeah, unfortunately I think we're going to see a lot of these come to the surface over the month. You know, these defi apps have, you know, not managed their risk correctly. [00:05:23][49.0]

Tracey: [00:05:24] Yeah, we'll see how it goes. Like you said, it's really unfortunate for those who lose money in these scenarios, but it's also really sad for all the employees that get caught up in the businesses and lose their jobs. We've talked in the past about FUD in the markets, which is fear, uncertainty and doubt and we're seeing a bit of this creeping at the moment and move the markets a little bit. And what we're seeing is exchange FUD and what we're seeing here is rumours kind of take hold. In the last few days there have been a few rumours around Kucoin exchange going under. Now Craig, can you tell us a bit about these because they basically are just rumours, right? [00:05:57][33.0]

Craig: [00:05:58] Yeah, I think everyone's sort of got PTSD from the Luna fiasco. When Luna was first breaking, Celsius was first breaking, people were like, Oh, it's just FUD and obviously didn't move quick enough and there obviously is a time window with these things, but. Q Coin does a rumour that, you know, you should be taking all of your funds off the exchange because they're going to go under. And the CEO came out pretty quickly and denied the rumours that Kucoin were even going to halt their withdrawals. And he went on to say that the exchange had no exposure to Luna three Rose or Celsius, and Kucoin is one of those few platforms that are still hiring and launching new features. So the token is now recovered from this FUD, but just shows that you can't believe everything that you read on Twitter. [00:06:48][50.1]

Blake: [00:06:49] Hmm. I think we heard Binance come out last week and said that they're going to potentially help bail out over 150 companies that are struggling through, you know, this dip in the market. And it just makes you think that, like, you know, how many companies are in trouble and haven't gone public. [00:07:08][19.1]

Tracey: [00:07:08] So that we don't know about. Yeah, that's a really good point. Look, next up, Glassnode is a company who source on chain data analysis. And this week they told us some interesting facts. Back on November 12th, just days after Bitcoin hit its all time high of around 69,000, a total of just over 108,000 Bitcoin addresses reported a balance greater than 1 million. So lots of kind of on paper millionaires were made at today's measly 20,000 bitcoin. A mere 26,284 addresses now report to contain upwards of $1 million. So not so many millionaires partying out there on boats. But the stat that I found really interesting boys was that despite the decline in millionaires, this bear market has seen more than 13,000 new whole coins. And what this means is that that's a wallet that contains more than one Bitcoin. So that total number of whole coins is now just over 860,000. So this significant spike in the number of whole coins suggests that retail investors are accumulating large amounts of Bitcoin while the price tanks. So people are buying the dip. This is this is bullish sentiment, isn't it, Craig? [00:08:25][76.9]

Craig: [00:08:26] Yeah, it's bullish to a degree, but also like one Bitcoin all time high was so unachievable for a lot of people. I guess it just shows that people now have higher conviction on the way down and they're just continuing to buy and getting more bitcoin for their dollar. So we're hoping to see that that number go up and Bambu is helping create those new whole coins as well by, you know, putting encouraging people now to put in $50 a week or whatever it is, forget about their portfolios and then come back hopefully with the whole coin for the next bull run. And we saw people in 2018 that did this strategy when bitcoin was obviously a lot cheaper. They continued to buy small increments averaging and they reaped the rewards of a spectacular bull run. [00:09:12][45.6]

Blake: [00:09:12] Yeah, this is interesting and I think it's awesome to see so many people coming into the market and achieving, you know, one Bitcoin, which is a great long term investment potentially for people that, you know, see that see a broader future for Bitcoin and cryptocurrencies. But, you know, what I've been starting to think about is how do derivatives and ETFs and futures and these other products affect the market? You know, the reason that we're attracted to Bitcoin is that there's only 21 million of them. But in reality, you could have as many different types of synthetic derivatives as possible to gain exposure to the asset class without actually owning them. So it's going to be really interesting to see how that supply and demand dynamic evolves over time as the market. Matures with all these new products. [00:10:00][48.4]

Tracey: [00:10:01] Yeah, that's a really interesting take on it. And on that, let's take a break. And when we come back, we'll talk about which scammers are going to win the Gold Logie of prison sentences. We'll be back. You're listening to the Crypto Curious podcast. So where there's cash, inevitably there's scammers and crypto is no different. Each week there's a new scam to be mindful of, and law enforcement all over the globe are cracking down on this type of behaviour. And this week, federal prosecutors in the U.S. are continuing their crusade against crypto and NFT scammers. There are a number of notable crypto and NFT fraud schemes in the past week alone that have seen people indicted. Blake, you've got an old school case that's caught up with someone this week. [00:10:45][43.6]

Blake: [00:10:45] Yes. And this one dates back to the 2018 ICO boom, and the project's name was Titan Blockchain Infrastructure Services, and they raised $21 million. And the SEC obtained a court order to halt the ICO in May 2018, and they made false testimonials. The project White Paper was Vapourware and they also made up business relationships with other popular brands like Pfizer and Apple and Disney. So it turns out that he's going to get the CEO is going to get 20 years in prison, which, you know, is fair enough. Consumer protections are so important. And I think we're going to see many more of these go through the court system because it was really the Wild West back then and unfortunately attracted some bad actors. Yeah. Yeah. [00:11:34][48.7]

Tracey: [00:11:34] Well, look, four years later, you still are going to get found out and you still are going to get caught, though. 20 years is a is a nice slog. What about Craig? What have you what have you got for us there? [00:11:42][7.9]

Craig: [00:11:43] Yeah, I've got another one quite similar to Blake Azure boom. As you know, retail investors are going crazy and NFT boom. As you know, everyone was buying pictures of apes, pictures of penguins, pictures of anything was selling out. And this one NFT project called Baller Ape Club is now confirmed. Rog Frogpool and the guy who committed it is a guy called Tran in Vietnam. And he allegedly collected $2.6 million from his Bola, a NFT meant only to delete the website, delete the roadmap, delete the socials, launder the money through different blockchains. And the Justice Department has caught him so he could now face up to 40 years in prison. And I'm sure that this will not be the only case of an NFT rug pull getting called out. I'm sure there was plenty. [00:12:36][53.6]

Tracey: [00:12:37] I'm pretty sure there'll be loads more. 40 years a lot for 2.6 million. But do they not understand that it's the blockchain? Like I know that you saying you kind of move that money across multiple blockchains, but I mean, the whole point of this is that it's the blockchain you're going to get you're going to get found out. But 20 years in prison, 40 years in prison is nothing compared to this next guy that I'm gonna tell you about. He could face up to 115 years in prison. David Safran, the owner of an investment site Circle Society, faces the most serious charges. This guy is accused of falsely claiming that his trading bot would net investors returns of 500 to 600%. He's allegedly misrepresented his own personal success, travelling with an armed security group to create false appearance of wealth. So Safra has been charged with one count of conspiracy to commit wire fraud, four counts of wire fraud, one count of conspiracy to commit commodities fraud, and one count of obstruction of justice. So if you can do it, do it right, hashtag wam. But 115 years of prison, I mean. [00:13:42][65.0]

Craig: [00:13:43] How much did he collect from from users? [00:13:45][2.4]

Tracey: [00:13:46] From investors? I don't I don't know. I should I should look a bit deeper. But I'm assuming I'm assuming it was a bit I mean, who knows? But I guess what they're saying is all those all those counts go up 215 years. So there must be a good bot onto some short, sharp news bits to finish off the weekly news wrap. Get the Guernsey on this one. Craig, you're up first. [00:14:06][20.4]

Craig: [00:14:07] Yes, sir. Three arrows. Everyone's been tracking the three arrows wallet to see what they're holding. And a really good tool that was spoken about in the past to track wallets is called Nansen. So Nansen have released, you know, 3 hours capital. You can check their wallet and they allegedly hold a bunch of tees that are worth over seven and a half million, including one border ape, a few cryptopunks. And unfortunately, they have over 100 pudgy penguins. So as a pudgy penguin holder, I'm a little bit nervous to see when they're going to put them for sale. But I will do my part and I will buy a penguin off them. Off the weak hands of three arrows. Yeah. The news was shared by a bunch of NFT people on Twitter June legs as well, which is another wallet tracking app. So let's see where these notes end up. [00:14:55][48.4]

Blake: [00:14:55] You're not definitely interesting, I think. Next up, we're going to chat about Rootstock. So Rootstock, if our listeners haven't heard of them, they have a token that goes by the ticker of RS. K was planning to do basically smart contracts on top of Bitcoin or a side chain of Bitcoin which. Would open up bitcoin to all sorts of defi possibilities and allow users to transfer their aether and usdc onto one of these smart contracts. These side bitcoin side chains to then leverage the security of the Bitcoin blockchain. So this is a major milestone if they can get it up. This is really the holy grail of what, you know, projects have been trying to achieve for over a decade now, getting smart contracts on top of Bitcoin somehow. So if they've done it, I think that there's a really interesting future for the project and for Bitcoin beyond its current use case. [00:15:51][55.3]

Tracey: [00:15:51] Yeah, it's a big one. I've always kept an eye on Rootstock, so that's good news. Moving on, you're all big fans. Well, the three of us are big fans of famous macroeconomist and crypto enthusiast Ralph Powell. His real vision group is actually a great source of crypto news, so check it out via YouTube. But the man has just announced a new company, Science Magic Studio. So apparently it's a digital assets venture studio that plans to help tokenise some of the largest cultural communities in the world. Pretty ambitious from Ralph, how he doesn't do things in halves. So we'll see how that goes. [00:16:22][30.2]

Craig: [00:16:23] So another layer, one platform is getting involved with mobiles. First Solana. Now Polygon is partnering with tech hardware business HTC to build a HTC Desire phone. So this phone is another crypto phone that will be competing with the Solana saga and users will now be able to manage their tokens and nfts on both Ethereum and Polygon. So this phone will offer virtual reality apps and rich metaverse experiences without a VR headset. So this is essentially Etherium and Polygon's answer to Solana. So let's see how they go. [00:16:57][34.5]

Blake: [00:16:58] Yeah, but I think Polygon Craig is a layer two. So Polygon is built on top of a theorem. It is a sidechain and is a scaling solution for Ethereum. Now that's very different to Solana because Solana is a and non EVM compatible chain, which means that smart contracts on Ethereum aren't able to be used on Solana. [00:17:20][22.0]

Tracey: [00:17:20] They're always educating here on the crypto curious things like Love it, love it, breaks news. [00:17:26][5.6]

Blake: [00:17:27] Yeah. So Meta has announced that the wallet Novi is set to come to an end. It was a pilot programme and it was to support their project called DME, which formerly known as Libra, which is a stablecoin that they were trying to take to market. But it got shot down by the industry and regulators. They didn't have much success integrating cryptocurrencies and stablecoins into their ecosystem, but they did say that they were going to spend about $10 billion on crypto in the Metaverse last year. So I don't know how they would have got through spending $10 billion, which is a ridiculous amount of money to spend done on building the metaverse. So yeah, it's going to be really interesting to see what does come out of that R&D and that product development. [00:18:15][48.7]

Craig: [00:18:16] I know is sort of lack of a better word, taking the piss out of Facebook and building the metaverse. But my father actually bought the meta headset with the metaverse goggles and it's cool. My uncle's got one and they play golf together in the metaverse and they can see each other, talk to each other. And it was like I was actually like, whoa, like, this is sick. Like if they integrate crypto with this, so guys, I'm going to be committed here. I'll get them. [00:18:46][29.6]

Tracey: [00:18:46] To say one thing, too. Okay. Yeah. On this, my my nephew was staying with me a couple of nights ago. He has some you know, I'm not into gaming into any of this. I'm the biggest anti-matter in Facebook that there is. I put him on the other night. Yeah. And got into the game the boys are playing literally. It was like the first time I did stuff I mentioned on a podcast, I put them on and I was like, Oh, I loved it. I was like, This is awesome. [00:19:16][30.1]

Blake: [00:19:17] What was the game? [00:19:17][0.5]

Tracey: [00:19:18] Oh God, it was some fantastic. It was called like Harry Potter, but it was just it was awesome. I was like, this is amazing. It was so light. It was so real. I was like, Should I get some? I was like, The kids were loving it, but I really could see why. The appeal, I was instantly immersed and I was yeah, I was blown away at how realistic and how fun it was. Yeah, I was blown away. [00:19:40][22.6]

Craig: [00:19:41] So was I couldn't I couldn't believe it. Like Dad was telling me, he has a fishing game and he was in this boat with a guy from Texas and he was just chatting to him about, about fishing and like they'll catching fish together and talking about that. I was like, what is going on? And like, imagine that like if he can trade his fishing rod or whatever and that becomes a whole thing. So well omg I'm going to, I'm going to get some better stock choice. [00:20:05][23.9]

Tracey: [00:20:05] I think maybe we'll do our podcast in in the metaverse. [00:20:08][3.4]

Blake: [00:20:09] Wow, that'd be cool. The future is here. [00:20:12][2.2]

Tracey: [00:20:12] The future. Or is he a feel good story to end it here? So Cinemark teamed up with Disney to release a marvel studio NFT for Thor, Love and Thunder, and I'm really keen to see this movie actually. So Cinemark Movie Awards members have an exclusive chance to win one of a thousand nfts in celebration of Thor's return to the big screen. Marvel have actually just partnered as well with NFT Project Bros. Beauties, and I think they were involved somehow with the latest announcement of the boss beauties, which is really big draw actually bringing their super boss buddies, which is a second collection of nfts to life at the moment. And full disclosure, I hold one of those, but so it's Marvel getting involved as well with the NFT side of things, which is which is pretty big and pretty cool. That rounds out the news for this week. And once again, we love hearing from our listeners and finding out what you want to know about crypto. These are big news that maybe we missed out this week. Please hit us up. Yeah. [00:21:08][56.4]

Blake: [00:21:09] And if there's anything you want us to deep dive on, just please hit us up. And we'd love to love to hear your feedback. [00:21:15][5.8]

Tracey: [00:21:15] There you go, Blake. Put it out there. If there's anything you want us to have a deeper dive on or find out about and please email us at podcast at Get Bamboo Dot IO and follow us on social media, Instagram and our Facebook community as well. Make sure you hit the follow button whether you're listening to us right now so you don't miss an episode and get notified every time we release a new one. We'd also love for you to share this podcast with your friends and family. We know there are a lot of people out there who are crypto curious and have a lot of downtime in this bear market. So send them our way and don't forget to write reviews in your podcast app. Thanks again for listening to us and we look forward to hearing from you next week. Bye for now. [00:21:55][39.3]

Blake: [00:21:55] Bye. [00:21:55][0.0]

Craig: [00:21:56] She's us. [00:21:56][0.5]