59 – Genesis fallout, CZ & the Coinbase tweet storm & JP Morgan’s Digital Wallet plans

Tracey: [00:00:20] 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 dipped your toe in the water, or maybe you don't know anything about it. And this is a very beginning, but we recommend heading back to the early episodes to get your footing. However, if you're ready to dive in headfirst, then let's do it. In this week's episode, we discuss the genesis and greyscale fallout from the FTX saga. We touch on CZ and Coinbase, and there's a tweet story there, as well as discussing Jp morgan's digital wallet. And there's a whole lot of short, sharp news bites. So hang around. My name is Tracey and this week it's Craig and I as Blake is at NFT Fest with all of the other Aussies in the scene, it would seem. So we're holding the fort today and we're going to bring you the news from the last seven days. But there's also an interesting bit of housekeeping this week. Craig, fill in our listeners. 

Craig: [00:01:14] Yeah. So we're actually dropping two episodes this week and we're going to be moving towards episodes on a Wednesday rather than a monday. And the reason for that is right now we're recording on a Thursday. The episode goes live on a monday and the crypto news cycle is firing at the moment. And what we've noticed is that by the time the episode comes out on Monday, we've probably missed one or two developments. 

Tracey: [00:01:39] And it's not even just because of Sam and FTX, but the crypto space, as you guys all know, it just moves so quickly. There's so much news, there's so much going on because we do cover such a wide variety of topics. So we're doing this for you guys to make sure that when you hear your news now, which will be on a Wednesday, that it is recorded the day before and you guys are going to be well and truly up to date. 

Craig: [00:02:02] So the better yet, if you hit subscribe, then it will just be on your home screen on Spotify, Apple Podcasts, and you won't need to worry about jumping in. It'll be there ready for you.

Tracey: [00:02:12] So ready to go so that you're listening to us today on Monday and you're going to get double whammy this week on Wednesday with some more news. There you go. Alright, so let's get into the news. And again, lots has happened in the FTX saga for the last seven days. So let's recap what we need to mention to the listeners this week? Craig. 

Craig: [00:02:34] We'll just do a quick update on some of the revelations that have dropped and a new one that's just dropped this morning. So we've learnt from last week that Sam personally took 300 million of the $420 million raised that he did for tax, essentially paying himself and that little pay bonus made him the sixth highest paid CEO in the world. So generally when you when investors are investing in the company, they're investing to improve the product. 

Tracey: [00:03:05] That wasn't yeah. That wasn't in the sticks. Yeah. I think that was in the pitch deck. 

Craig: [00:03:09] So it's kind of shocking that a company of this size Sequoia investing TomBrady with massive celebrities there's essentially no due diligence on their end. 

Tracey: [00:03:20] Oh, I'm sure there was. I'm sure there was. But it's at this point, it's smoke and mirrors. Like you said. Who knows what was in that pitch deck.

Craig: [00:03:29] I'll go near term, Tracey. That I think it is. It's the bull market goggles. 

Tracey: [00:03:33] Okay. 

Craig: [00:03:34] Everyone just believes. 

Tracey: [00:03:35] In the hype. 

Craig: [00:03:36] In the hype and believes the best in everyone. And, you know, don't worry about D-Day. But yeah, now it's coming to the forefront. 

Tracey: [00:03:43] And what also happened in the last seven days was that the hacker converted 25,000 ETH or about 30 million into wrapped bitcoin, which caused ETH actually to slip around 7% when it happened. At one point we thought that the Bahamian government were the hackers, but they actually did come in and seize some different assets from Ftec. So there is still a hacker out there. We still don't know who they are, but they still do have close to 370 million. 

Craig: [00:04:12] I feel like this whole hacker so it's just been like everyone is just like oh you're onto the next thing. Like this is a big deal and we still don't even know who it is. SBF reckons it's an insider. Are there Twitter threads going on about speculating who it is? But yeah, we still have no idea. 

Tracey: [00:04:27] But they're still tracing it. I was watching even just yesterday. Someone is still tracing where it's going. This is a small bit still moving, but the bulk of it is still just sitting there. But yeah, look, another big revelation was that it owes 3 billion to its 50 largest creditors and one person in particular has lost 226 million. So that's incredibly unlucky for that person. And there's a lot of speculation around who that is. We won't mention it. 

Craig: [00:04:53] He that has to be a fund has to be a fund.

Tracey: [00:04:57] You would assume. You would assume. But that's it. 3 billion to the 50 largest. That's a lot of coins. Yeah. 

Craig: [00:05:04] And a more insult to injury. Revelations have come out that Sam's parents owned 19 properties in the Bahamas worth 121 million. Most likely from FTX users. And also the weak journalism continues. We touched on it last week. New York Times with the softest pieces on SPF. Forbes has a piece on Caroline, the elevator CEO, also a soft piece of journalism, which is probably due to the fact that SPF has bankrolled a bunch of media companies. And now he's even talking at a New York Times event. So this guy has stolen $8 billion from users or lost, and now he's talking freely on an event. It's an embarrassment. 

Tracey: [00:05:46] So you just told me this this morning. This has come out today. He's got and he's and he's also. So we. Let's go back to what's happened in the last 24 hours. He's issued an apology. So this has come out he's written an apology to his staff and his team. And we'll leave a link to that if you want to read it. It's it's you know, it's a full page. It's a lot of waffles. He's placing blame. It's similar to what he said in these other interviews. He doesn't make himself out to be the bad guy here. Again, it's all accounting woes. It's a lot of rubbish, to be honest. So that's come out in the last 24 hours to his staff. And then you're saying this morning he's also published that he's now leaving the Bahamas and going to New York, because I also saw this this morning somewhere he's travelling to I thought that whole point was he was wanting not wanting to get because they're trying to extradite him out and to go to New York. Is he leaving to go and speak at an event or is he doing this? 

Craig: [00:06:43] He's going to the DealBook Summit with a journalist called Andrew. Andrew Sorkin, who is a New York Times columnist and DealBook, is essentially Andrew Guy's column, right? Mm hmm. Mm hmm. I mean, the gripe is that this guy is essentially, I believe, a criminal for what he's done wrong. 

Tracey: [00:07:05] We all believe him. 

Craig: [00:07:07] And now he's freely flying to New York to chat to a journalist. And now revelations have come out that SBF has actually invested in the New York Times. And it really is a bit embarrassing, really, because after all this, there's one person in jail from all this saga, which is the kid that wrote the tornado cash code who is like a 20 year old genius. He's in jail. But someone that can steal $8 billion from user funds is going to fly to New York and talk freely to a judge. 

Tracey: [00:07:43] Yeah, look, it is not right. And I mean, you were just before we started recording podcasts, we were talking to our lovely producer, Sascha off air, saying that I saw a tweet early this morning about a guy in the Bahamas who is livid because in the Bahamas, you still I think this guy was saying some arsehole sausage and now he's a sausage bundle and he's now he's in jail for, you know, a couple of months or whatever it is in the Bahamas and and Sam's there's this morning around there's photos of him and his parents in their lovely apartment, and he seems to be getting away with it in you know, he actually seems to be at this point getting away with it. However, I just don't think that's going to happen. He cannot get away with it. However, I am surprised he's travelling to New York because I believe they're trying to extradite him there. So it seems unusual that he would willingly fly there. So we might need to fact check that. 

Craig: [00:08:33] Well, Elan has been commentating about this as well, and I think he summed it up very well. He said he responded to the New York Times article and he said, this is one of the greatest failures in US journalistic integrity of the 21st century. I think that sums it up well.

Tracey: [00:08:49] The fact that I'm agreeing with Alan, we've really something's wrong in this world. Amazing.

Craig: [00:08:55] Literally.

Tracey: [00:08:55] Look, I think. Yeah, well, there you go. And there's a few things that have happened in the saga. There's a lot of people reporting it out there, Genevieve, from The Grit. You should follow her on Instagram. She's actually put some really funny and well-researched posts up so you can follow her. She's really on top of that story, but those are the ones that we know of are the last weeks. Let's move on to our next story. Genesis and Greyscale, they will be part of this fallout and we are not sure where this is going. So Genesis has warned investors that it will go bankrupt without new funding. The platform recently stated it needs 1 billion as an emergency fund by the end of this week. It has reportedly had a difficult time raising the funds. Genesis held billions of dollars in FTT, which was the FTX's native token. So by the time we do put this one live on Monday, we'll know a little bit more about this story.

Craig: [00:09:51] So according to Ram Aloha, he's like a crypto commentator. He says that Genesis has lost more earnings than the. Generated since inception. So obviously not a good look. All due to the three R's capital and FTX. Contagion, if you will. And that's not exactly a great sales pitch because there's rumours, I think they have no suspicions that there is a $1 billion hole in the Genesis balance sheet. Tracey, what are your thoughts on this? 

Tracey: [00:10:21] This kind of is scary for all the big players in the industry because it will talk about contagion. Then this will filter through even further because DCA is the most prominent investment firm in the sector. So everyone, you know, these tentacles run wild here. Everyone has some kind of link to these guys, which is why this is something that everyone's keeping an eye on. So it's unclear what the impact will be here, but there will definitely be a very, very big impact on the sector. And I guess we're going to find out after this week what will happen in saying that. There's me reading a little bit this week. There's a lot of people taking meetings. Apparently, there's been no shortage of meetings to be had because there's a lot of people who are quite willing to put their hand up to help. 

Craig: [00:11:14] You just will put the link in the article on our show notes, but just corrections. DCG, which is a digital currency group, which is the conglomerate that Genesis is a part of. So yeah, the tentacles run deep, but it's sort of almost worth mentioning as well. Retail got burnt with Luna and with FTX. Now with this genesis, greyscale or that, you know, ecosystem, this is where the institutions are going to. This is where the big funds have their money. So, you know, Cointelegraph have said this could have the potential of another black swan event yet because as you know, institutions hold a lot more than us. So yeah, quite a doomsday story. 

Tracey: [00:11:55] It is doomsday and I think let's leave it there for that one. But the saga, you know, probably has set the space back a year or two. But I think as an industry, we'll learn from this and be able to call out the warning signs for next time because there will be another FTX. But I think things like this will learn from it and people will be able to see the warning signs again, hopefully. 

Craig: [00:12:18] Well, my favourite bottom signal is crypto is dead and I actually have seen a few articles about that. So everything here has signs of a bottom. This is peak doomsday. Can it really get any worse? I'm not sure. Yeah, not financial advice. I've been saying. I've been saying it for six months. Is the bottom in? The bottoms in. I'll be right one day if I keep saying it. 

Tracey: [00:12:40] Speaking of the bottom stocks, I've also had a pretty rough trot of it, and one of our crypto companies that's in the Nasdaq and not looking too good is Coinbase. So it could be a good buy right now. But look, many assets in the crypto ecosystem have fallen out because of tech's insolvency. And this is definitely one that's felt the pain because it is one of the ones where the regular people can pull their money out. And the Coinbase shares have hit an all time low. Its shares have dived more than 80% year to date, hitting 40.60 this week. They had reached a high of 420 950, which was April of 2021. Regardless of this, founder Brian Armstrong has come out and stated that I'm just as bullish on crypto as ever. Then a little bit of a Twitter drama unfolded and. Craig Yeah, so this all happened yesterday and we're all jumping on the phone and chatting about this. So tell us what happened. Sees me again in the middle of the drama, started to think he might not be the good guy or the Luke Skywalker that we talked about a few weeks ago. Tell us what happened here. 

Craig: [00:13:55] So we'll put the link in out shownotes actually because the tweet is deleted, but says he took to Netflix. He's been pretty open on Twitter recently and he shared an article about Coinbase with some you know, the article was clearly not correct, but he shared it and he said, Coinbase custody holds 355,000 Bitcoin for greyscale. Four months ago Coinbase had less than 600 K BTC. So he's essentially trying to insinuate that Coinbase is insolvent. 

Tracey: [00:14:29] Starting another run on. 

Craig: [00:14:31] Another run on. But what sees a figure is that Coinbase is a publicly traded company and all of their finances are public. You can literally go on there now and look at their balance sheet that they release every quarter for their earnings. Brian pretty much reshared it and said this is FUD. 

Tracey: [00:14:50] He even said that remember our financials are public, we are a public company. He also made another dig. Brian he's like, remember, we all need to build this industry. In a responsible way going forward. Be wary of false information. 

Craig: [00:15:03] Yeah, well, CZ is not binance.us and public finance isn't even, you know, who knows? 

Tracey: [00:15:10] However, Binance are making great steps towards doing the right thing with their proof of solvency. So let's not. That's true. 

Craig: [00:15:16] And it's out there some big amount. 

Tracey: [00:15:18] Finance is a business is great. But I'm saying if a person is running a very fine line right now of being just a bit of a troublemaker, to be honest, that's the word. I'm going to call him. 

Craig: [00:15:28] A bit of a troublemaker. Yeah. Yeah. But the commentary and I, I tend to agree, like with last week or the last few weeks, we sort of saw Sisi as someone who had the best interests in mind. And I think this tweet has exposed him as like not a villain, but. 

Tracey: [00:15:43] Because what did he do next? Okay. Because he came out then and said. 

Craig: [00:15:46] He pretty much just said sorry. He just said sorry. And he deleted it. 

Tracey: [00:15:49] Tweet said, ah, Brian. He said Brian. He tweeted again and said, Brian Armstrong just told me the numbers in the articles were wrong. Deleted the previous tweet. Let's work together to improve transparency in industry. Well, maybe you should have hit up your old mate Brian personally and said, hey, just heard this. What's to go there instead of going public. Yeah. So yeah, I don't know. I don't. 

Craig: [00:16:09] Know. But Coinbase is the most transparent. Like you can read the chocolate and so you can read all that stuff easily. 

Tracey: [00:16:16] But how many big players are there in the centralised exchange industry you've got up there, there's obviously Binance and we're now left, there's Crypto.com and Binance and Coinbase, Kraken or the big guys like I'm just thinking about the big guys up there, and then I'm thinking about us here in Australia where you've got Swift X and or Binance here, but you've got Swift X BTC markets, independent reserve coin spot. Who am I missing? I'm talking about all the Aussie ones and we all get along, we all chat, we're all mates, you know, we're all trying to help the industry. We all speak often, you know, we would never do anything to try and hurt the other person. I just feel that CZ really, in this instance, showed his true colours. Yeah. And if anything, Brian's actually looking at the goods here. 

Craig: [00:17:03] I agree. And I mean, CZ has the power to move markets like I think the Coinbase stock took a bit of a tumble after he shared that tweet. Then he deleted the tweet and then the Coinbase share price, you know, had a rebound. So it's no joke. 

Tracey: [00:17:17] But in saying that, it's just it's just seasoned PR team needs to pull his phone out of his hand and move back because Binance as a business are still doing a lot of like they jumped last week and got straight into trying to help anyone that's in trouble with insolvency issues because of what's happened. I mean, as a business, they're doing some really great things for the ecosystem. So, you know, again, it's just easy. That's probably doing some silly things at the moment. But let's leave that story there and head to a break. When we come back, we'll see what Jp morgan is doing in space. Welcome back. You're listening to the crypto curious J.P. Morgan. Excellent gymnasts. What are they doing in space at the moment? Banking giant Jp morgan has filed a trademark for a digital wallet. The application for a digital wallet with crypto features has been awarded by the US Patent Office after more than two years in application status. Now we often laugh about this in the show and point to the amazing gymnastic abilities of JP and their back flips in the crypto space. Because like we've said this before, they were hiding on crypto for a few years, but this last year it seems that they're all over it. I mean.

Craig: [00:18:30] Yeah. So Jp morgan's run by this guy called Jamie Dimon. He's been very vocal in the past. Here's some of his quotes that he said. And he said, I think Bitcoin is worthless. He said crypto has no intrinsic value. He also said that cryptos are a decentralised Ponzi scheme and the notion that is good for anybody is unbelievable. 

Tracey: [00:18:52] This is all these are all a few years back like this is all pre I think this is oh 20 2020. Yeah. Yeah. And then, and then it starts to change history in a bit. Yeah. 

Craig: [00:19:01] He starts a Chinese tune a bit and you know since then he has partnered with Visa, they have a blockchain product called Link, which is Visa's Business to Business Network, and they help to carry out chain transactions for the settlement of BlackRock assets. And they even.

Tracey: [00:19:16] Huge. 

Craig: [00:19:17] Huge, they even penned a space in Decentraland. So their proper deejay ends at this point.

Tracey: [00:19:24] And that's all been in the last 12 to 18 months. So again, they've gone from being yet not not too keen to all of a sudden everywhere. So this is pretty big news. And the fact that it's been in for two years, I mean, I was trying to look back at when he made those quotes and that last one of crypto having no intrinsic value was eight months ago. So but you know what? They probably, you know, filed for the trademark just in case they're not silly, so. Mm hmm. 

Craig: [00:19:57] And it could just be from a settlement level. They might not even go to market with crypto. Well, yeah. So because the trademark itself does not exclusively apply to crypto, so. Mm hmm. Yeah, they might have just made a couple, but they've done one in payments, bill payments, a cheque processing, all that sexy stuff. 

Tracey: [00:20:14] Yeah, all the real fun stuff. But again, JPMorgan is flying that flag for crypto again. So good to see. Now on to actual action news bits because there's a fair bit to get through this week. Pudgy Penguins will now be on your Kellogg's cereal box, which is pretty cool. Not all. And I don't know if it's going to make it over here to Australia, Craig, but someone's little pudgy penguin has done a deal and over in the US you might see a cute little pad. I don't think it's yours, Craig.

Craig: [00:20:43] But why? So they did a deal and now they're using the penguin as like I pay to sell cereal. 

Tracey: [00:20:50] Yeah. How cool is that? 

Craig: [00:20:51] So you might have seen it. Bonnet's dropped their first TV commercial featuring other then Renaldo on the edge of the World Cup. It is. What do you think about it? I will put a link to it. 

Tracey: [00:21:03] And then like. 

Craig: [00:21:04] It was a little bit cringe.

Tracey: [00:21:06] It was grungy. It was a big budget. It was cringing. I didn't like it. Many will.

Craig: [00:21:10] Crypto ads tend to be a bit cringeworthy.

Tracey: [00:21:13] Yeah. Let's go. Next thing is how you're cherry picking them. I'm going to cherry pick two. Mattel is debuting an NFT marketplace this week on Flow Blockchain and it's turning its toys into digital collectables. And this is pretty cool. So the toy giant is launching an NFT marketplace which is going to look at its collectables such as Hot Wheels and Barbie. So this is quite cool. And I was trying to work out whether the Barbie connection was still anything to do with the boss beauties because they've got something to do with Barbie. But Hot Wheels is a big one. I think if they can click in here and get something going with the kids, then that'll be huge. But again, Mattel joined the action there with the marketplace on flow. Interesting news. 

Craig: [00:21:54] If I had the NBA top shots and now.

Tracey: [00:21:57] Seems to be getting everything. 

Craig: [00:21:58] Interesting. 

Tracey: [00:21:59] Next.

Craig: [00:22:00] So I was in Bali for the G20. I had a few meetings with sleepy Joe Biden and some other world leaders.

Tracey: [00:22:06] Mm hmm.

Craig: [00:22:07] Mm. No, but Sleepy Joe was in Bali and he has been talking about crypto. He reckons that international rules that are consistent across countries are critical for crypto space. I do agree with that. And he said potential risk to financial stability needed to be mitigated. So they're going to come out with maybe cross-border rules that everyone should follow, which I think is probably a good thing. Yeah.

Tracey: [00:22:34] Agreed. Next up, a virtual version of the Macy's Thanksgiving Day Parade will be held alongside the real one this year. And it's just a way of getting kind of the younger, more digitally savvy fans excited about the event. The department store is being scaled down. On version of this, which will be hosted onsite on the on cyber platform. And the activation will also include some NFT galleries, some from some of the creators. And people can visit and vote on their favourite. And yes, so that's quite cool. A real live version of downtown Manhattan for the Macy's Thanksgiving Day Parade.

Craig: [00:23:11] Will Nansen has shown positive. So Nansen's and Unchained Analytics platform. They've shown that the NFT market is actually bouncing. So it's been pretty much down only for ages now. But they saw, you know, some pretty good volume in the last weeks of 40 mil for Opensea, ten mil for magic eight and which is, you know, quite a big bounce from what we saw in the previous weeks. Hmm. 

Tracey: [00:23:36] That's good. Some good sentiment. That's good to hear. 

Craig: [00:23:38] Maybe finding a bottom in the NFT market. 

Tracey: [00:23:41] Craig again with these bottoms. Okay. So investors are shorting Bitcoin and Ethereum in record numbers at the moment. So the statistics show more institutional investors than ever are betting on the price of Bitcoin and other cryptocurrencies going down. According to a report this week by Coin Shares, institutional investors sentiment was deeply negative, according to the report, as short product inflows represent 75% of the total inflows, which is massive actually . That's bonkers. But on that I just wanted to round out today's episode in saying that we know historically that December and even November are are not great for crypto because December leads into tech's tax time in the US and it's a notoriously red month for crypto charts, so I wouldn't be surprised if we do get a sell off leading into the Christmas period and then we get that pump into the new year. So that's kind of what everyone's expecting. You know, obviously we've seen what's happened with sentiments not great. We're going into a period that's notoriously bad for crypto anyway. So that's I think where all these short plays are coming in. And I wanted to finish off by saying that, remember, the people of this market in general often do the opposite of what we think it is. So 75% of the market's shorting, then who knows? 

Craig: [00:25:01] What do you do? What are you trying to say? What are you trying to say to us? 

Tracey: [00:25:03] Just trying to say maybe you open a cheeky hundred X along that skin. I'm saying, who knows? This market likes to mess us about and you know, it's. Yeah, wait and see. It's an interesting time, that's for sure. And that's it for this week. So join us again next week or this Wednesday, as it might be. And maybe bring a friend, tell your friend about the Crypto Curious podcast if you've got anyone else, especially over this holiday period as well. When everyone's talking about crypto or people are asking you about FTX and what's going on, point them the way of the podcast because hopefully we're explaining things well for you and if not, you've got more questions. Then hit us up on the email, which is podcast@getbamboo.io Or on social media. We've got the Facebook page. Don't forget to rate and review us wherever you're listening to us right now. And we'll see you next time. Bye for now. 

Craig: [00:25:56] See you guys.