August 18, 2022

The biggest crypto news and ideas of the day

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In today's edition: Canadian pension giant Caisse has written off its $150 million investment in Celsius. The cash-backed HUSD stablecoin lost peg, dropping to 92 cents. And crypto broker Genesis cut 20% of its workforce as CEO Michael Moro exited.

– Daniel Kuhn

Today's must-reads

Top Shelf

INSIDER TRADING: A new academic study found that insider trading was a bigger issue than previously thought at cryptocurrency exchange Coinbase (COIN). The paper found suspicious trading in 10% to 25% of new crypto listings and said the problem goes beyond the instances in the U.S. Department of Justice case brought in July.

Permissionless pools: Solend is giving the same "permissionless" principles underpinning decentralized exchanges' limitless token listings a try on Solana Network's cryptocurrency lending market. However, by design, these "permissionless pools'' don't have any of the safeguards afforded to Solend's whitelisted markets.

PENSION BUST: Canadian pension giant Caisse has written off its stake in bankrupt crypto lender Celsius Network. The Quebec-based fund invested $150 million in Celsius in the fall of 2021, and said it had acted "too soon" in entering the sector.

CRIMINAL OPERATORS? The United States has extradited an alleged cryptocurrency money launderer from the Netherlands, claiming that the Russian citizen was part of a team behind the Ryuk ransomware attacks that affected thousands of people. He faces up to 20 years in prison, if convicted.

South Korea's anti-money-laundering authority flagged 16 foreign crypto firms for operating without registration. Crypto exchanges KuCoin and Poloniex are among the foreign firms.

CRYPTO CONCERNS: Wednesday's U.S. Federal Reserve minutes showed more rate hikes coming as well as rising concerns about crypto. In particular, the central bankers at the Federal Open Market Committee meeting said stablecoins could pose a threat to financial stability and create bank runs.

This comes as European Union lawmakers propose setting caps and hefty capital requirements on banks that are exposed to cryptocurrencies like bitcoin (BTC).

TWO CRASHES: The HUSD stablecoin, which is issued by Stable Universal, has fallen to 92 cents, an 8% drop from its planned $1 peg. The depeg occurred 16 days after crypto exchange FTX removed HUSD from its basket of supported USD stablecoins.

Rumor hit: The native token for Ethereum layer 2 blockchain Optimism briefly crashed in price on Wednesday after rumors spread on Twitter that its multi-signature wallet had been hacked. However, Optimism's core team insists there was no hack.

IN AND OUT: Genesis Global Trading CEO Michael Moro is stepping down as the company slashes 20% of its 260-person workforce following major losses tied to the collapse of Three Arrows Capital earlier this summer. The firm, CoinDesk's sister company owned by Digital Currency Group, is thought to have lent over $1 billion to the failed hedge fund.

Coming in: Former Coinbase Vice President Adam White has joined private equity giant Blackstone, where he will act as an investment adviser and help direct the firm's growing efforts in the crypto sector.

– Xinyi Luo

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Overheard on CoinDesk TV...

Sound Bites

"It's unlikely that any crypto legislation is going to move this year."

– U.S. Representative Tom Emmer, on CoinDesk TV's "First Mover"

Off-Chain Signals

What others are writing

Dapper Labs Opens NFL Version of NBA Top Shot NFTs to the Public (Decrypt)
Meme Stocks are Back – And They've Brought Dogecoin and Shiba Inu (Blockworks)
Crypto Can't Fix Carbon Offsets – But Crypto Fans Are Trying Anyway (The Verge)
A Crypto Winter King Wants to Reanimate the Industry (Bloomberg)

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Putting the news into perspective

The Takeaway

The BlackRock Trust: Crypto Legitimacy or the Beginning of the End for Bitcoin?

Zac Colbert, a guest writer for The Node, has written about crypto and finance for over half a decade.

After BlackRock, the largest asset manager in the world, announced on Aug. 11 that it will launch a private bitcoin trust for its clients, some crypto enthusiasts said the move could legitimize the digital asset in the eyes of more traditional investors.

BlackRock's new private trust will make bitcoin available to its institutional clients, tracking bitcoin's performance, offering direct exposure to the price of the cryptocurrency and of course, trading options.

"Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities," BlackRock said in its press release.

The news comes shortly after the firm announced a partnership with Coinbase to provide clients of its Aladdin platform access to cryptocurrency trading and custody services. These developments highlight how traditional investors and institutions from banks to hedge funds are moving into the crypto market, indicating that digital assets are here for the long haul.

These fresh endorsements lend crypto ever-stronger legitimacy, bringing digital assets into the more traditional financial industry and therefore making them more accessible to both new and old investors.

But does advocacy from a multinational investment management firm go against everything Bitcoin originally stood for? Especially when, just five years prior, BlackRock CEO Larry Fink called bitcoin an "index of money laundering."

Bitcoin's anarchic beginnings in 2009 heralded the potential democratization of finance. Blockchain technology promised a more open and secure approach to currency for everyone. So with bitcoin now trending in mainstream Wall Street investment portfolios, has the leading cryptocurrency betrayed its revolutionary roots?

At the end of June, Coinbase's stock was at its all-time low of $47.02. But the announcement of BlackRock and Coinbase's partnership may be partly responsible for the recent upward trajectory of the crypto exchange's share price.

But Coinbase shares are still down 75% from their peak, and online skeptics feel BlackRock's partnership with the once top-of-its-game Coinbase is nothing more than a power grab by a centralized financial institution.

And with the added possibility of new regulations from U.S. Congress, the news further fuels fears that the current crypto winter is not fleeting, but the beginning of the end for Bitcoin.

As is always the case with the market, only time will tell.

– Zac Colbert

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