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June 28, 2023

🥛 Another crypto company goes down 👀

Today’s edition is brought to you by Roots – the first real estate portfolio that creates wealth for both its investors and its residents.

GM. This is Milk Road, the crypto newsletter that's more satisfying than finding the perfect mixtape in your CD collection. Get ready to groove to the rhythm of financial success.

Here’s what we got for you today:

  • Wtf is going on with Prime Trust? 🔥

  • How long until we get a Bitcoin ETF? 🏁

  • Web3 Wednesday 🗒️

  • Apple kicked Nostr off its App Store 🍪

Prices as of 9:20 AM ET.

CRYPTO’S HOT SEAT: PRIME TRUST 🔥

Every week, someone new is in the Crypto Hot Seat.

This time it’s Prime Trust – a crypto custodian.

What happened? Nevada’s Financial Institutions Division (NID) filed a legal petition to place Prime Trust in receivership.

I’ll put it in simple sports terms: regulators are looking to send the starters (AKA current Prime Trust management team) to the bench and sub in a new team.

Why? Regulators found out Prime Trust wasn’t playing by the rules.

Here’s everything you need to know:

  • In 2021, Prime Trust went through a management change

  • During the transition, the new management team lost access to some “legacy wallets” (AKA wallets that were created before the transition)

  • To cover it up, Prime Trust started buying crypto using other customers’ funds

  • Essentially, the “new” customer deposits were paying back the “old” customers (*cough* ponzi scheme *cough*)

Fast forward to today, Prime Trust owes its customers ~$155M.

The problem: it only has ~$71M. That means 54% of customer funds are gone. Poof.

To make things worse, Prime Trusts' largest holding (~$61M) is in an illiquid token called AUDIO.

So, what now? Prime Trust (terrible name now, btw) will most likely be put under receivership and things might get messy for customers. It could be a long road ahead to getting back funds.

sigh

Another week, another black eye for crypto. And talk about a beating for the industry over the last year – Luna, 3AC, FTX, Celsius, and now Prime Crime Trust.

It’s feeling a lot like that one Family Guy episode where Mike Tyson fights an old grandma.

P.S. – the grandma wins, and so will crypto.

P.P.S – this is just another example of “not your keys, not your coins”. Learn to self-custody!

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THE RACE FOR THE 1ST BITCOIN ETF 🏁

There are two words on everyone’s mind right now: Bitcoin ETF.

  • BlackRock & Cathie Woods’ ARK Invest filed for one

  • Fidelity is also reportedly going to file for one

  • Grayscale has a 70% chance of getting its Bitcoin ETF approved.

  • The first leveraged Bitcoin ETF launched yesterday.

Just look at how many people are Googling “Bitcoin ETF:”

But everyone’s also been asking the same questions:

  • Wtf is a Bitcoin ETF?

  • Will the SEC actually (and finally) approve one?

  • And if it does, how long until it’s live?

Let’s dive in…

1/ Wtf is a Bitcoin ETF?

A Bitcoin ETF (exchange-traded fund) is a way for investors to be exposed to Bitcoin without actually buying it.

No gas fees, no need to store it, nada. It’s cheaper & easier (still fairly risky though.)

The Bitcoin ETF operator (BlackRock, for example) buys the Bitcoin. Then it sells fractions of the pool to investors via shares.

It’s like if the rich kid in school bought all the marbles at the store. And instead of buying some yourself, you gave the kid some money for a share of the bunch.

If the value of the pool of marbles went up, so does the value of your shares.

2/ Will the SEC actually (and finally) approve one?

The good news = TradFi getting in on the game means more investors in crypto, which means more mass adoption (woo!)

The bad news: we don’t know if the SEC will approve any of these applications. It’s been staunchly against Bitcoin ETFs.

(Side note: the SEC doesn’t like spot Bitcoin ETFs, which is different from the leveraged Bitcoin ETF that launched. That kind uses Bitcoin futures as leverage for investors to get, or lose, a sh*tton more money.)

3/ If the SEC does approve one, how long until it’s live?

More bad news: Even if the SEC did approve one, the listing might not go live for a number of years.

Take ARK. It says it’s first in line to have its Bitcoin ETF approved because the SEC’s next date to move forward with its application is August 13.

And the others (BlackRock, etc.) don’t even have a date like that set yet.

But who knows. ¯_(ツ)_/¯

One thing the Milk Man’s sure of: turtles move slow, the government moves slower.

WEB3 WEDNESDAY 🗒️

It’s Wednesday y’all! You know what that means…

Get ready for all the cool Web3 jobs we’ve rounded up for you today.

Here ya go:

P.S. – Are you trying to hire in Web3? Learn how to get your open jobs in front of 250K+ crypto enthusiasts here.

MILK & COOKIES 🍪

Apple removed the decentralized social media app Nostr from its App Store this week. It warned the company earlier this month that it’d get the boot if it didn’t nix its Bitcoin tipping feature.

HSBC (a big bank in Hong Kong) reportedly is now offering Bitcoin & Ethereum ETFs on the Hong Kong exchange. U.S. crypto investors over here are mad as hell…

Microstrategy just bought 12,333 BTC worth ~$347M. Michael Saylor’s company now holds 152,333 BTC that amounts to ~$4.5B.

MILKY MEMES 🤣

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.