June 17: Week in Review - Transcripts

June 17, 2022

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Transcript

Good morning everybody is the decrypt daily from the crypt Media and like always on friday, we're doing our week in review. But first as we want to make sure that these episodes stay around 15 minutes. Let's get into those crypto prices for friday, june 17th 2022 it is 8 15 AM Eastern daylight savings time

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you're wondering why I started taking athletic greens. I started taking athletic greens because to be honest, they sent them to me and so I tried them and now two months later I'm still taking them and I just ordered some more. Every morning I wake up, the first thing I do. Well first is I brew my coffee but I go straight over to athletic greens, I fill up a cup of water. I put the greens in it. I put my drops of vitamin D and vitamin K. And I take that on an empty stomach every morning. My girlfriend does it to her fitness instructor also takes athletic greens and turned her onto it. And now we both first thing in the morning take a huge glass of water with our athletic greens. We like it because it's lifestyle friendly. Whether you eat keto, paleo, vegan, dairy free or gluten free. You can take the greens, it contains less than one g of sugar, no GMOs no nasty chemicals or artificial anything and it still tastes good.

And to be honest I kind of feel that I'm more mentally clear after taking them. So in my opinion right now it's time to reclaim your health an army, your immune system with a convenient daily nutrition especially heading into cold and flu season. It's just one scoop in a cup of water every day. That's it. You don't need a million different pills and supplements to look out for your health to make it easy. Athletic greens is going to give you a free one year supply of immune supporting vitamin D. And five travel packs. With your first purchase. All you have to do is visit athletic greens dot com slash decrypt daily. Again that's athletic greens dot com slash decrypt daily to take ownership of your health and pick up the ultimate daily nutrition insurance and Bitcoin is sitting at $21,114 down half a percent in 24 30% and seven is at $1096 down 1.7%. Taylor's number three U. S.

D. C. Is number four and B. And B. Is number five at 2 18 up 180.8% running off the top 10. We have B. U. S. D. Card. Oh no X. R.

P. Selena. And does coin popping back into the top 10. The total market cap is at $903 billion A btc dominance of 44.3 and dominance of 14.7. And if we're talking about prices, Celsius is up 23% in 24 hours is at 63.6 cents on reasons unknown. Moving into our week interview on monday new york based Celsius announced that it's freezing all withdrawals and transfers between accounts late sunday night meaning that the crypt announced this on monday but they announced on sunday and the firm claimed that it was taking this action to put Celsius in a better position to honor over time its withdrawal obligations on the news Celsius tokens, cel token plunged 70% from about 50 cents to 18 cents. It's back up to what we said earlier 62 63 cents and those around reasons withdrawals are still locked. They tweeted, we are taking this necessary action for the benefit of an entire community in order to stabilize liquidity in operations. While we take steps to preserve and protect assets. Furthermore customers will continue to accrue rewards during the pause in line with our commitment to our customers meaning if you have stuff on Celsius you're still gonna collect your interest but they can't pay it and you can't redraw so interesting Ryan, Celica, ceo of marciari tweeted crypto lenders, exchanges and custodians should have proof of reserves and public disclosure requirements on their lending books immediately. Full stop, stop mucking around and cover the basics in the wake of this next competitor. There's a couple competitors with Celsius, there's Black Fi Next.

So Voyager and Mexico took to twitter on monday morning to post a letter of intent outlining its potential interest to acquire certain remaining qualifying assets, mainly collateralized loan receivables secured by corresponding collateral assets, brand assets and customer database of the business and that's of Celsius network LLC and Celsius lending LLC basically they're saying, hey you guys are in trouble. We got you, we're just gonna just gonna sell to us everything, your data, your loans, everything will buy it from you According to the off remains in effect for one week until June of 2022 so still has a couple days we'll see if it's rejected or accepted or just expires. It's worth noting that other lenders seem to be okay. Black five people have reported that there's no problems with drawing for Black five next so has money apparently to buy Celsius or buy assets of Celsius or databases, Celsius and Voyager and I don't think they even commented, but everybody is okay until they're not moving into Tuesday, there was a nice twitter thread outlining what everybody thinks is happening with Celsius and I read it here. Well I told you I'm going to read twitter thread from john woo dot Aztec at john woo underscore about everything that's happening with Celsius And it's very interesting. Now I'm going to say that this is a twitter thread thread that was made by him. Let's take a lot of this with a grain of salt. Also, there's a lot of sarcasm in this twitter thread. So you're gonna have to read through that a little bit because hopefully I get it myself. So let's get into it. Celsius is one of the largest centralized gateways to crypto. It raised $864 million in venture capital at one point and custody over $3 billion in funds for one million plus customers.

As of today it appears in solvent and is taking the whole crypto market with it. Here's the thread for starters, Celsius is a duet. All Fintech app meant to give customers an easy trusted access to crypto services trading high yield deposits on stable coins and cryptocurrencies and crypto backed lending and he has a picture saying that 1.7 million people call Celsius their home for crypto blah blah blah in essence is a custodial asset manager, Take the traditional world of E. T. F. Vanguard. And Fidelity wrap a basket of stocks into a retail facing e T. F. And take a fee for rendering the services to investors. Celsius is a kind of vanguard. But for decentralized finance opportunities. It provides regulated access to loans and yield and takes a fee for doing so all without exposing users to the purported inconveniences and risk of self custody, crypto like an E.

T. F. Provider. Celsius doesn't offer direct exposure to the underlying positions. They promised withdrawals and redemptions in case users want to exit the position, but Celsius ultimately manages the positions on investors behalf. But for all the traditional finance bonafides Associates position itself as a crypto native product. For starters, it has a white paper which essentially is a website in pdf form and the cel token which offers loyalty rewards and discounts on using social services. So for the most part hasn't performed um exceptionally well under these conditions. But even worse than the pseudo crypto vibe is Celsius dangerous use of meaningless platitudes and strident anti bank rhetoric. For example, banking is broken. Um, bank yourself Replacing Wall Street with Blockchain and 99% vs 1% all taken from their website and white paper. Worst of all is that in your face, focus on safety security, transparency and most of all, trust military grade security, withdraw your crypto at any time, keep your crypto safe.

Next level of transparency and wide trust Celsius all from their own marketing copy And there in lies the problem. The promise of sky high yields combined with a veneer of legitimacy, regulated onramp premium access for credited investors, regulator logos. It all cleared the way for Celsius to pursue a truly degenerate trading strategy with investors funds? There are two extremely bad behaviors Celsius undertook have combined to put it in its millions of retail investors in a bind. The use of an chain leverage and state F. Let's take each in turn, unchain leverage in order to provide low rate borrowing for users. Associates itself excesses leverage through permission list on chain money markets like Maker dow. That means taking user deposits and assets like wrapped Bitcoin and depositing them to borrow. Die Maker is a collateralized lending protocol. So for example, you put in a dollar 50 of volatile collateral example F and borrow the dai stable coin. If the value of collateral falls below the liquidation threshold, it is liquidated to repay the loan and prevent bad debt. Cool.

Now, back to Celsius, having a nine figure loan on Maker is a bit troubling, but normally it shouldn't be a problem. If Celsius lending collateral is falling in value then. So is Celsius customers lending collateral liquidate your customers loans and repay your own. Cool. Again, Now, on to state problem, Celsius offered a robust yields on F. F. Staking on the ethereum, proof of stake. Beacon chain offers 4.2% and ETh yields on iron finance or poultry 0.2%. What gives, how is Celsius offering 8%? It turns out the absolute mad lad Associates were using an F derivative called ST F to pump their headline F yields to attract more investors. So what is ST F. State F is a product by little finance.

It stands for liquid state ethereum and is one of the most innovative defi products to be released in the past few years. It allows anyone to earn staking meals without running staking infrastructures. State F can also be used to earn more yield than otherwise possible with vanilla F. Why? Because while state already earned staking yield, it also be lent out. A common strategy is to provide liquidity to curve finance, to enhance state F yields. The unfortunate tradeoff with ST F can be traded for F. In an open market, it cannot be redeemed for F. At least not until the beacon chain merges and then ethereum goes through a hard fork translation. Celsius bought a bunch of state death, which it can't be redeemed for F for six months after the merge and emerge hasn't happened yet. Now to kick this all off ST F is no longer trading 1 to 1 with ethereum. So they bought something for $1 and it's now worth 96 cents.

But john If you gave me two of the same asset one yield producing and one not, shouldn't they trade at 1-1? Well, not necessarily due to all the intensity around ST F is trading at 96 cents to the dollar against ethereum. Worse yet, There isn't enough liquidity anywhere for C to swap out state for ethereum? Even at a loss, C has 445,000 or $565 million eth. And there's only 143 k of liquidity in the state f curve pool. Furthermore, they got billions of combined liabilities across multiple assets and protocols. So let's plate this delightful dish of degenerate delicacies. One Celsius opened a bunch of loans to, they took user deposits and traded them for State F. Three. They now owe a lot of money and don't have the reserves to pay them back. Celsius is insolvent, but the story is not over. This is where Celsius went from plausible poopsie to gross negligence.

As of yesterday, Celsius pause withdrawals and transfers, freezing users in place and giving them an awful choice top their own collateral to save their loans or get liquidated. But rather than repaying their own loans. Today, associates began topping up their collateral. Why is this neglect? Why is this insane Celsius slender maker has a minimum of 100 and 50% collateral ratio on loans. This means to access $1 to borrow. You must place a dollar 50 of collateral. Now let's say you have a big outstanding loans to repay it. You can either repay $1 or put in 1 50 option B seems 50% worse than option A. So why would you choose it? You do it because you can't actually repay if you're a degenerate gambler taking the little songs you have left and put it on black hoping to make it all back in one trade all this uncertainty has sent Bitcoin and ethereum tumbling meaning Celsius has even less collateral rumors are hedge fund allocator. Researches buying distressed assets and even Celsius as competitors in public show of disrespect are making offers hence the neck.

So story yesterday, Ceo and Skwierczynski for his part has been on a roadshow propping up the confidence in Celsius and its liquidity reserves claiming safety till the very end. Even the day before announcing withdrawals were frozen, Moshinsky was adamant, Celsius withdrawal freezes are fud, we have enough liquidity. Our job is to fight trad five traditional finance together all hours before users funds were frozen too long. Didn't read version Celsius had the opaqueness of traditional finance and all the degeneracy of defi take retail money lever up bet it on black convince everyone it's safe until the moment that it's not. They were ignorant, negligent or both Moving into Wednesday's news Coinbase said is going to cut its workforce by 18%. In preparation for the possibility of an extended crypto winter crypto dot com said they're gonna lay off 260 people or 5% of its corporate workforce as the markets continue to head downward and that was confirmed by ceo chris mars like a couple of things to note about crypto dot com. Well they spent an estimated $700 million becoming the exclusive crypto exchange for FIFA World Cup 2022. They spend $700 million dollars to put his name on the staples center which is now known as crypto dot com arena. But the one that I really have some questions about they paid matt Damon $100 million super bowl commercial. Now I want to put this into perspective tom brady and his wife made around 20 million or $22 million for their contribution to F. T. X.

And I think it was only in shares or ownership of F. T. X. They didn't actually get paid the cash and they got paid the cash is still $2022 million only right it's still $2022 million. But my question is and I'm not gonna say anything or allege anything but you should be raising questions, this is just like normal questions when it comes to finance and you know, fair market value. If you're over paying or I guess paying exorbitant amounts for things that you could get cheaper, you have to ask why are you paying that much money for matt Damon to start in a commercial that lasts a minute or two and I just wanna put this in perspective. Daniel Craig is the highest paid movie star of 2021 and he made $100. But that's because of two movies bond and knives out Going down to the second highest paid actor of 2021 Was the rock at 50 million. And that was because of red one and they thought it was gonna be 30 million but it went better than they thought and that might be up to 50 million will smith 40 million for king Richard, Denzel Washington for the little things, Leonardo Dicaprio got $30 million 20 million? 10 million will smith whoever get thor I don't, I don't know who you get, it just doesn't make sense. I don't care if people get paid. But sometimes you just have to ask questions like why are they paying that much?

But while everybody's laying off employees and cutting down and you know, talking about budgets because they overpaid for Super Bowl commercials and stars to start in those commercials, Sesay joe ceo of finance tweeted well it wasn't easy to say no to Super Bowl ads or stadium naming rights or huge sponsorship deals, but we did. And today we're hiring 2000 people for open positions at finance. Huh? Oh by the way, another thing that happened on Wednesday, is that a class action lawsuit was filed against finance dot us, alleging that the Cryptocurrency exchange misled customers about the safety of terra stable coin us tea and luna. Moving into thursday's news one day before the lockout, a person tweeted at Alex Moshinsky, The ceo of associates said, I hope retail can get out. I've been hearing a lot of accounts locked that would be similar to luna. We shall see. And the ceo replied saying, mike, do you know even one person who had a problem with drawing from Celsius? Why spread fud and misinformation? If you were paid for this? If you're paid to spread fud, then let everybody know you're picking sides. Otherwise our job is to fight traditional finance together and well.

Then he went silent because he locked everybody's accounts looks like mike, The person who tweeted in asking that question, we shall see saw firsthand and so did everybody else. And then three days later Alice McKenzie came out and tweeted. Finally, after three days Celsius network team is working nonstop. We are focused on concerns and thankful to have had heard from so many to see you come together as a clear sign of our community is the strongest in the world. This is a difficult moment. Your patience and support mean the world to us. I don't know why everybody always talks about community when things go bad, basically they're saying, please please please buy a token to support our mistakes and our negligence and incompetence Also on Wednesday afternoon, which is thursday's news. So that means Wednesday it happened and we reported on thursday three arrows capital which goes by three A. C. Had been selling off assets including $40 million worth of its little state ethereum or state f. Researchers and analysts say that it's to keep a $264 million loan and $35 million compound loan from going into liquidation. Moon overlord tweeted three arrow capital in trouble rumors swirling Kyle and ju the C.

E. O. S. Haven't tweeted anything for like in days ju took every coin in hashtag out of his bio, ju deleted his instagram and an hour ago they dumped 30,000 state and reduced all the positions. Another crypto analyst in reserve estimated that if the price of ethereum goes to $1,042, the loan would be liquidated and some reply to this Ryan cell cus he tweeted rumors, some secondhand R. E. Three arrows capital 1 to $1.5 billion now even if they have some exposure black fire journalists to be determined on others. The founders have ghosted everyone including their own team defines capital may be done and now moving into some new news or friday's news Maker DAO. The organization behind dai stable coin is set to disable the direct deposit module for defi lending platform Eva later today, the maker governance has voted to temporary disable the di direct deposit module. The governor's proposal put forward earlier this week invited the community to vote on temporary disabling it in order to reduce makers exposure to embattled crypto lending firm Celsius. Routers reported that security regulators in five states have opened investigations into Celsius decision to freeze withdraws texas. State Securities Board Director of enforcement told routers that officials in texas, Alabama, Kentucky, New Jersey and Washington are making it a priority to investigate the crypto lender.

I am very concerned that clients, including many retail investors may need to immediately access their assets yet are unable to withdraw from their accounts. The inability to access their investment may result in significant financial consequences, said the texas. State Securities Board Director Elon Musk and two of his companies, Tesla and SpaceX are facing a $258 billion Thursday reports, Bloomberg reported that an american citizen is suing the richest man for allegedly pumping does coin the lawsuit alleges that musk was part of a racketeering scheme to back the Cryptocurrency. The defendants falsely and deceptively claim that does coin is a legitimate investment when it has no value at all, said the person filing the lawsuit, which is quoted from the complaint also today, Panama's president vetoes a law that would have regulated Bitcoin and legalized dowse Circle. The issuer of US Dc stable coin is launching a new fiat back digital asset called euro coin or Euro, See the company said thursday. The new euro coin will initially launch an ethereum Blockchain as an E R C 20 on june 30th with more supported networks to follow later this year. And finally, alchemy is piloting a $25 million grant program to help developers continue building out web three ecosystems despite the downturn. And if you are curious about that and you want some of that money link is in the show notes, apply. Thank you for listening to this episode of the Decrypt Daily. We'll be back monday. I hope everybody has a great weekend. Let me know what's going on.

Matthew Aaron at the Crypt ASIO. Until then, good luck handling everyone

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