GM. This is Milk Road, the daily newsletter that guides you on a crypto safari. Those lions might look friendly, but they’ll eat your wallet.
Here’s what we’ve got for you today:
Celsius gets a makeover & token
BlockFi financials leaked!
Circle’s got bad blood with the SEC
Crypto exec gets $100M+ pay day
CELSIUS SEZ I-O-U
What do you do when your lending platform is overleveraged, goes belly up, and needs to repay all the customers it lied to?
Well create a new, made-up, imaginary token, of course. Obvi, duh.
Celsius lawyers want to give so-called Asset Share Tokens (AST) to creditors so they can either A) HODL them for dividends over time or B) sell them.
Here are the quick deets:
Only customers with assets above a certain amount get these tokens
The ASTs would reflect the value of the assets they have locked on Celsius
The rest of Celsius’s customers with locked assets below that certain amount (which is ~60-70% of its base) get a one-time repayment of good ole’ liquid crypto
We don’t know what that threshold will be just yet.
AND we don’t even know if regulators will green-light this whole proposal.
It’s all part of a plan for Celsius to reinvent itself post-bankruptcy — 90s high school movie-style.
Celsius wouldn’t be the first crypto company to try something like this; Bitcoin exchange Bitifinex gave BFX tokens to victims to redeem that represented what each user lost after a $72M hack in 2016.
And Poolin, a bitcoin mining pool, came up with the incredibly original name IOU Tokens that reflected what users were owed after the platform halted withdrawals in September.
There was an attempt.
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BLOCKFI'S BIG OOPSIES
BlockFi’s “secret financials” have been exposed. According to a CNBC report, the bankrupt crypto lender had $1.2B in assets tied up with FTX and Alameda Research.
The wild part? The info was leaked by accident.
An advisor to the creditor committee uploaded an uncensored version of the financials. Now all of BlockFi’s financials are exposed like Janet Jackson at the Super Bowl Halftime Show.
Here’s what the docs show:
$415.9M worth of assets are frozen on FTX
$831.3M was loaned out to Alameda
The money tied up with FTX & Alameda account for ~50% of all BlockFi’s assets
As of now, BlockFi has $1.3B in assets left over, but only $669M is “liquid/to be distributed”.
BlockFi is still going through its bankruptcy process so it’s still to be determined how much money they’ll be able to recover. The crypto lender recently sued one of Sam Bankman-Fried’s holding companies seeking some of his shares in Robinhood that were pledged as collateral.
In simple terms – one friend lent two other broke friends A LOT of money. Then the two broke friends went to Vegas and lost it all on roulette, drugs, and luxury penthouses.
Now everyone is broke and their friends have disappeared.
CIRCLE X THE SEC
The line for crypto firms that have beef with the SEC is out the door. And around the block. And down the street.
And Circle just joined the queue.
The company is behind the second-largest stablecoin, USDC, and was trying to button up a $9B SPAC merger in December that fell through after FTX imploded and the market went down the drain.
Only here’s what Circle’s alleging: it was the SEC’s fault, not the market’s, because it didn’t approve the registration before the deal expired.
The crypto space already had some major problemos with the SEC and its captain, Gary Gensler. Industry folks would say the agency grandstands via “regulation by enforcement” and stifles crypto innovation.
G-man says he just wants to protect investors.
Needless to say, there’s some bad blood.
MILK AND COOKIES
Another day, another hack. Today's victim? NFT Whale Kevin Rose, founder of Proof and Moonbirds. He lost $2m+ by confirming an off-chain signature on a phishing website.
There’s a new #1. Polkadot has seen the most developer activity over the last 30 days, according to data from Santiment. Developer activity is measured using the work being done by any project’s developers on its public GitHub repositories. Milk Road Rule #38: Follow the devs.
9-figure pay day. Coinbase’s Chief Product Officer is stepping down and will cash-in on a $105M exit package on his way out. He will also keep ~250k shares of Coinbase worth ~$12M, at todays prices. Talk about a nice pay day.
Bitcoin going legal? Three Arizona Senators introduced a bill that would make Bitcoin a legal tender in the state. If it passes, voters could choose to make virtual currencies tax-exempt in 2024.
The best-performing asset award goes to….Bitcoin. Goldman Sachs has ranked Bitcoin as the best performing asset in the world in 2023.
That's a wrap for today. Stay thirsty & see ya tomorrow! If you want more, be sure to follow our Twitter (@MilkRoadDaily)
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A ROADERS REVIEW
VITALIK PIC OF THE DAY
Get someone that looks at you the way Vitalik looks at [woman with beanie at ETH Denver 2022] https://t.co/kiImDcw5rf
— Milk Road (@MilkRoadDaily)
Jan 26, 2023
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.