Keep up with crypto with these 5 stories
Happy 2023, everyone. I’m on my way back to Colorado from Southern California, which I’ve discovered is home to the world’s biggest weather spinner – a few days of rain and everyone whining about the cold. Poor thing! Anyway, I spent the last day of my vacation catching up on crypto reading and thought I’d use the first newsletter of the new year to share with you some of the best things I read.
On the news front, the Winklevoss twins spent the holidays beefing with Digital Currency Group founder Barry Silbert. The ever cheerful Winklevii sent a letter to Silbert on Christmas Day criticizing him over a decision by Genesis – a subsidiary of DCG – to suspend interest payments as the crypto lender struggles to stave off insolvency. Bloomberg has a great account of the dust-up, including this great observation: “The dispute is the latest example of how the recent crises in crypto are fraying the bonds that have long existed among the top echelons of the crypto industry, transforming a ‘we’re all going to do it’ to an atmosphere centered on each company for itself.”
Meanwhile, Sam Bankman-Fried is still in the news. On New Year’s Day, the The Wall Street Journal punctured yet another myth about crypto’s Bernie Madoff. It turns out that he was not much of a trader. Here’s a key quote from the piece’s examination of Bankman-Fried’s hedge fund: “A closer look at Alameda shows that it was never particularly good at investing…the firm took big gambles, won some and lost a lot. And Mr. Bankman-Fried continually sought to borrow cash and crypto to fuel these efforts, promising lenders double-digit interest rates.”
On the functional front, MIT Technology Review published an intriguing piece about a company called CertiK that occupies a small but important niche in auditing blockchains—a task that’s especially important since, unlike conventional software, crypto is unforgiving when a company publishes buggy code. Here’s CertiK’s founder’s $600 million hack of gaming blockchain Ronin: “’The most expensive hack in history,’ says Gu, shaking his head almost in disbelief. “They say Web3 is eating the world – but hackers are eating Web3.”
Here at FortuneI teamed up with Term Sheet’s Jessica Mathews to investigate why no one was placing a Big Short style bet on FTX the way earlier traders did with the 2008 mortgage crisis. The short answer is that the crypto world lacks prime brokerages and other pieces of financial infrastructure to facilitate such trades – a situation that will hopefully change in the future since, “Absent short selling, there is no market mechanism to focus on [bad actors].”
Matt Levine wrote a coda to his epic piece on crypto that spanned an entire issue of Bloomberg Business Week. The tone of the original story offered a cautious but also slightly optimistic view of the industry, while the follow-up story is (unsurprisingly) more skeptical, but doesn’t write off crypto entirely. Levine describes it as a more fun version of finance for smart people who enjoy trading but not the rigors of compliance departments: “An imperfect but useful way to think about crypto is that it allowed the creation of a financial play system.”
Finally, please take the time to read my colleague Leo Schwartz’s excellent “2022 Jealousy List,” which highlights some of the stories we wish Fortune Crypto had written last year.
The plans of the gaming giants like Ubisoft to bring NFTs into the mainstream has gone poof, leaving a small pool of devotees to claim that crypto belongs in video games. (Polygon)
An AND Bitcoin The developer claimed that someone stole 216 Bitcoins from his self-managed wallet, but some have questioned whether the alleged hack was a “tragic boating accident” – code for tax evasion. (Coin Telegraph)
Wyrea merchant crypto service provider that was almost acquired for $1.5 billion by PayPal wannabe Bolt, turns off. (Axios)
Sam Bankman-Fried pleaded not guilty to fraud ahead of a trial set for Oct. 2, while a judge modified bail conditions to prohibit him from moving FTX funds. (Fortune)
A profile of Wintermute portrays the London-based crypto hedge fund as a fast-growing – but non-criminal – version of Alameda poised to dominate after its rival’s demise. (Forbes)
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