July 24, 2022 | Issue 25
NOW THAT I HAVE MY KEYS, I HAVE MY CRYPTO AND PEACE OF MIND
In June 2021, I purchased crypto on the Coinbase exchange. This was not an impulse purchase. I had been studying crypto and was ready to take the plunge. However, I was a bit worried about messing up the purchasing process. I did not want to become a victim of hacking.
I experienced being a cybercrime victim in 2017 when my wife and I sold our house in Westfield, NJ. Our mortgage payoff funds were stolen when criminals accessed my attorney's email and changed my mortgage payoff wiring instructions.
Eighteen months later, the title company's E&O insurer paid $239,000 plus interest to Wells Fargo. That experience inspired me to educate real estate agents across the US about wire fraud prevention.
I had my battle scars and took every possible precaution with my crypto purchase. I even bought a "cold wallet" for my crypto password. (A cold wallet is a USB device that holds your private key.)
Once my crypto was purchased and sat in my Coinbase account, I would have to move control of my crypto onto my cold wallet. The process was not a simple task for an old guy like me and I kept procrastinating.
My crypto was still at Coinbase in June of this year when things started to get ugly in cryptoland. Big crypto companies started dropping like flies and I was getting scared.
Everyday I checked the crypto news and I was worried I'd see an alarming headline about Coinbase freezing customer funds. I was like a scared little kid watching a horror move with my hands in front of my eyes.
This past week, I earmarked the time to figure out how get my crypto off the exchange. I was successful and I marveled over how great I felt. I no longer had to worry about Coinbase. If you have crypto and have been meaning to move your private key onto your wallet, follow my lead. I'm sure you will experience the relief that I feel.
Reach out to me with your thoughts and questions. Have a productive week and stay crypto curious! Rich Hopen firstname.lastname@example.org | 908.917.7926 PS. You can find all CNR newsletters here. PSS. This newsletter is supported by home buyers and sellers in NJ who retain me as their real estate agent. If you know of anyone looking to buy or sell a home, please reach out to me.
▸ Former Employee of Crypto Exchange Coinbase Charged With Insider-Trading
A former product manager, Ishan Wahi, for Coinbase provided confidential information to his brother and a friend. Justice Department prosecutors alleged that Wahi knew in advance about crypto assets that were going to be listed on the Coinbase exchange.
Wahi shared the private information with the two defendants who then made trades. They profited $1.5 M.
It is noteworthy that the Securities & Exchange Commission classified the tokens as unregistered securities. If the courts agree with the SEC that the tokens are securities, Coinbase and other exchanges would need to comply with security regulations. The US attorney for the Southern District of New York, Damian Williams, said, "Our message with these charges is clear: fraud is fraud is fraud, whether it occurs on the blockchain or on Wall Street."
▸ House Financial Services Committee Ready to Release Stablecoin Bill
Bloomberg reported that the House committee is planning on releasing a stablecoin bill next week. The bill will refer to stablecoins as "payment stablecoins" and would limit issuers to banks and non-bank licensed issuers. The Federal Reserve would license the issuers and would be responsible for setting financial solvency standards. All stablecoin issuers would be required to maintain 100% reserves.
▸ FTX Pursues Bankrupt Voyager For Its Customers
On Friday, FTX CEO Sam Bankman-Fried presented an offer to bankrupt Voyager.
Voyager was a broker and lender that was impacted by the collapse of hedge fund Three Arrows Capital Ltd.
Voyager lent $650 M to Three Arrows and the loan will not be paid.
FTX's proposal to Voyager offered a restructuring deal which would attract Voyager's customers. FTX would buy Voyager's digital assets and loans for cash. The loan to Three Arrows would be excluded.
FTX would also offer Voyager customers an option to receive their bankruptcy claim by opening an account with FTX. Bankman-Fried said, “Voyager’s customers did not choose to be bankruptcy investors holding unsecured claims. The goal of our joint proposal is to help establish a better way to resolve an insolvent crypto business -- a way that allows customers to obtain early liquidity and reclaim a portion of their assets without forcing them to speculate on bankruptcy outcomes and take one-sided risks.”
CRYPTO CLASS – BITCOIN HALVING
When Bitcoin was invented by Satoshi Nakamoto in 2009, a cap of 21 bitcoin was written into the protocol. By limiting the supply and ensuring scarcity, Nakamoto sought to prevent devaluing of the cryptocurrency.
The number of bitcoin would be released into the marketplace gradually.
Bitcoin is created when bitcoin miners are rewarded with bitcoin for verifying blocks of transactions and solving a complex math equation with their computers. Bitcoin uses the proof-of-work system. (See Proof-of-Work and Proof-of-Stake)
The first BTC reward was 50 BTC per block. This was worth less than a dollar in 2009. Today, it would be over $1M.
Approximately every four years, the BTC reward is halved. The first halving was in 2012 and the reward to miners went from 50 BTC to 25 BTC. Today's reward is 6.25 BTC (around $142,000).
Halving ensures a controlled release of bitcoin over time. There will be 32 halving events until the 21 million BTC have been mined.
INFLUENCERS - People to follow
Willy Woo – @woonomic
Willy Woo is a widely-cited bitcoin analyst and co-founder of a fund that supports crypto quantitative trading firms. He has 1M twitter followers.
RESOURCES – Books, websites, podcasts, interviews, articles, videos I have flagged as Influencers both Bloomberg Opinion columnist Matthew Levine and FTX founder and CEO Sam Bankman-Fried. If you are deep into the finance piece of crypto and have been watching FTX's role in saving faltering crypto companies, you will find this video interview fascinating.
CRYPTO WORD – Tokenomics Tokenomics is the underlying foundation of a cryptocurrency. It determines what is valuable and interesting to investors by assessing a token's supply, its utility, yields for defi tokens, and mining/staking for base layer blockchains.
OH, ONE MORE THING –