Coronavirus: Will crypto conferences survive? What about crypto media?

Novel coronavirus is a real threat. We now know the incubation period for COVID-19 is up to 14 days, and people can spread the disease without showing any symptoms at all. The best way to keep from getting ill is to avoid close contact with other people. Ultimately, that means cutting back on air travel and opting out of large events. 

As a result, companies in all fields are canceling conferences in droves. They either can’t sell enough tickets or too many sponsors and speakers are starting to pull out. In some cases, entire cities are outright banning large indoor gatherings.  

Last week, Facebook canceled the in-person part of its F8 developer conference in San Jose, originally scheduled for early May. In 2019, more than 5,000 people attended F8.

Nvidia said Monday that it will not hold its GTC 2020 conference that had been scheduled for March 22-26 in San Jose. As many as 10,000 attendees were expected at the event, which centered around semiconductors, graphic chips, and AI technologies.  

Also, on Monday, Facebook and Twitter pulled out of SXSW Conference & Festivals, a sprawling 10-day event in Austin set to kick off on March 13. The event drew more than 400,000 attendees last year. SXSW says the event is still going as planned, even though an online petition is in the works to cancel it.  

Similarly, the crypto world is feeling the pain. Tron has postponed indefinitely its Nitron Summit due to coronavirus concerns. The event was scheduled to take place between Feb. 29 and March 1 in Seoul, South Korea.

Paris Blockchain Week, originally set to kick off on March 31, is postponed until December. Even that is risky, though. December is when the cold and flu season starts up again, and a coronavirus vaccine isn’t due out until sometime in 2021.  

How will crypto media fair?

Coindesk Consensus 2018
Consensus 2018 was a massive event. People waited in long lines to register.

If the trend continues — and likely it will — conference cancellations could hit some crypto media publications hard. I’m talking about Coindesk in particular. The company pulls in 85% of its revenue from conferences, according to a May 2019 report in The Information. Coindesk doesn’t feature ads on its site anymore, so events are its bread and butter.

It hasn’t always been that way. I remember ads for every bottom-of-the-barrel initial coin offering on the site a few years ago. I’m not sure why Coindesk stopped serving ads, but they seem to have completely disappeared from the site after its relaunch in November

Last year, Coindesk held one investor event in New York and another in Asia. But its flagship conference is Consensus. Held annually in Manhattan, Consensus is widely considered the most significant event in the cryptosphere, accompanied by lots of satellite conferences around the same time. This year, Consensus is scheduled for May 11-13 at the New York Hilton midtown.

In 2018, just coming down from the peak of the crypto hype cycle, Consensus drew in more than 8,500 attendees, each paying about $2,000 per ticket. Coindesk’s total revenue for the year was $25 million, so do the math — that’s $21 million in events alone. 

Consensus 2019 saw less than half that with only 4,000 attendees. But even at an estimated $10 million in revenue, that’s still a decent amount of money. Despite the drop-off, Kevin Worth, Coindesk’s CEO, told The Information that Digital Currency Group, which owns 90% of Coindesk, still planned on growing its media business.

Indeed, Coindesk has been on a bit of a hiring spree. Almost anyone who has been writing about crypto has gotten pulled into working for the media outlet. It will be interesting to see what happens if Coindesk ends up having to cancel Consensus 2020 and potentially even Consensus 2021 — or even if it sees a significant drop in attendees.

Oddly, Consensus is the only event listed on the Coindesk’s website at this time. The company’s other two events — “Invest: NYC” and “Invest: Asia,” as they were called last year — are conspicuously missing. I reached out to Coindesk this morning. If they respond, I’ll post their comments here.

Other media pubs also rely on events for revenue, though not to the extent that Coindesk does, and their events aren’t nearly so huge. 

Breakermag started planning an NYC event called Breakercon before it shuttered in 2019. The Block took over the event renaming it “Atomic Swap.” This year, The Block is now calling the one-day-event, scheduled for May 12, The Block Summit. Tickets cost about $800 and CEO Mike Dudas expects things to go as planned with 400 attendees.

Last year, a leaked investor pitch deck for The Block indicated that of the $5 million the startup wished to see in 2020, $3.4 million will come from subscription revenue; $1.1 million will come from ads and $500,000 from events. At least The Block has its revenue model spread out a bit, so it’s not so heavily dependent on a single event. 

Decrypt relies on Ethereum venture studio Consensys’ patronage to keep its doors open. Consensys holds an Ethereal Summit each year in New York City right before Consensus. That also appears to be on track for May 8-9.

Cointelegraph has a separate events division that does BlockShow Asia, which it’s been holding since 2016. This year the event is scheduled for Singapore in November. The outlet, which claims 6 million visitors a month, also makes money on ads and consulting.

My guess is that as the coronavirus spreads, we’ll see more crypto events being canceled. Some conferences are opting to go the “decentralized” route and put everything on video, but I just don’t see that being too popular. Most crypto people go to conferences to network and party — the talks, not so much. 

A bigger threat: Crypto ice age

The bigger problem here is the crypto ice age, a term that refers to the general slowdown in the space that set in after 2017 due to increased regulation and the plunge in the price of bitcoin. As David Gerard details in a recent blog post, crypto media publications and low-end blogs are now collectively chasing an ever-shrinking pool of ad funds.

In general, the media advertising model has gone the way of the dinosaur. Subscriptions work for some publications. But big outlets like the New York Times and the Wall Street Journal who employ the model successfully have hundreds of thousands of readers. The crypto world simply does not have that big of a following.

Events are a big deal for many crypto pubs, and if that important revenue stream dries up, it could push some outlets to the breaking point. Expect more layoffs in 2020 with some crypto pubs and blogs falling off the map completely.

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News: Money laundering in real time, Binance has you covered, maybe, and Bitfinex ready to IEO with LEO

A lot is going on in cryptoland right now—most of it involves investigations, a New York Attorney General (NYAG) lawsuit and missing funds, but I don’t want to sound negative.

The destiny of all crypto exchanges is to be hacked, apparently. Last year, thieves stole $950 million worth of cryptocurrency from exchanges. So, in many ways, it’s not surprising to hear that Binance, the largest crypto exchange by volume, got hacked a second time.

Binance, all funds SAFU

Thieves looted more than 7,000 BTC from Binance in a single transaction. The hackers, however, are not free yet! They still need to move that $41 million worth of BTC into fiat,  a feat that typically requires layering funds into smaller and smaller amounts (generally using a script of some sort), moving it through coin mixers, and then funneling it through various exchanges until they can exit into cash. 

Thanks to blockchain, we can watch this money laundering happen real time. The first transaction out of Binance consisted of of 44 outputs. The hackers have since consolidated the bitcoin into seven addresses of mostly amounts. Now we wait.

After the hack, Binance suspended all deposits and withdrawals for seven days. Traders on the platform can’t dump their bitcoin—or their tether. If bitcoin were to crash, they would be trapped. Fortunately, bitcoin is not crashing—it’s pumping. As I write, bitcoin is now at $6,800, having shot up $1,000 within a week.

According to one expert, the boost is partially due to “a rare alignment of celestial bodies forged in an ancient supernova”—thus, number go up. Makes total sense to me.

Binance says it has an insurance policy—its SAFU fund—to cover losses on the exchange. Nobody knows for certain what is in that fund, because there has never been an outside audit, but Binance’s CEO CZ says they have enough bitcoin to cover the losses. Phew!

In a recent blog post, CZ also said the exchange is revamping its security measures, including its 2FA, API and withdrawal validation processes. Also, withdrawals and deposits should resume “early next week.”

Bitfinex’s legal woes

If you need to get up to speed with the Bitfinex and Tether saga, I covered the NYAG lawsuit in my previous newsletter. Robert-Jan den Haan also wrote a complete timeline of Bitfinex’s history with its third-party payment processor Crypto Capital.

We have podcasts, too. I discuss the Bitfinex drama with Sasha Hodder on HodlCast, and Robert talks about it with Laura Shin on her Unconfirmed podcast.

In response to the NYAG’s court order, Bitfinex submitted a motion to vacate. The NYAG filed an opposition, and Bitfinex responded. At a hearing on May 6, New York Supreme Court judge Joel M. Cohen called the preliminary injunction “amorphous and endless.” The prelim will stand, but he is giving both parties a week to sort it out.

Bitcoin was selling at a 6% premium on Bitfinex—a sign that traders are willing to pay more to get rid of their tether and get their funds off the exchange. The price of bitcoin on the exchange was so off-kilter that CoinMarketCap, a website that aggregates bitcoin pricing from top exchanges, stopped pulling from Bitfinex.

The Bitfinex premium disappeared when Binance halted withdrawals on its platform, Larry Cermak doubts it has anything to do with Binance though. He thinks it’s because Bitfinex started processing cash withdrawals again.

Twitter user “Bitfinex’ed,” disagrees. When bitcoins and tethers are stuck on Binance,  that effectively reduces the supply and makes it that much easier to pump the market, he told me. He think prices will crash when Binance reopens withdrawals.

“I am lion, hear me roar”

Screen Shot 2019-05-10 at 9.39.37 PMBitfinex has a $851 million shortfall due to issues with Crypto Capital. How is it going to fix that? Here is an idea: Why not just print more money?

The exchange’s latest plan is a token sale, or exchange traded offering (ETO), on its own platform. It will be selling a new token LEO—as in lion.

Earlier this week, iFinex, the parent company of Bitfinex, released a white paper outlining the business proposition behind the token offering. Each LEO is worth 1 USDT, which is worth $1 USD. This is not the first time Bitfinex has issued a new token to pull itself out of a financial mess. (It created a BFX token after it was hacked in 2016.)

Bitfinex shareholder Dong Zhao told CoinDesk that iFinex has received hard and soft commitments of $1 billion for the token sale. Perfect. That should definitely eleviate all of Bitfinex’s money problems.

QuadrigaCX

Ernst & Young, the trustee for failed Canadian crypto exchange QuadrigaCX, released a preliminary report describing the company’s assets and liabilities. In a nut, Quadriga has US$21 million in assets, but owes creditors US$160 million.

Elsewhere

Recently, Negocie Coins, a crypto exchange that you probably have never heard of, rose to number three on CoinMarketCap’s top exchange’s list sorted by volume. How is this even possible? Clay Collins, founder of market data company Nomics, made a video, explaining how crypto exchanges use ticker stuffing and volume spamming to game the system.

FinCEN has released a new “interpretive  guidance” for money services businesses using cryptocurrency. If you are not sure if you are a money transmitter, David Gerard breaks it down for you. Sasha Hodder also covers the new guidance in Bitcoin Magazine. And there were several tweet storms—here, here, and here.

The FinCEN document has far reaching implications, such as, it appears Lightning Network (LN) operators qualify as money transmitters. Emin Gün Sirer says he is not surprised “given how similar LN is to hawala networks, and given the role hawala networks played in financing terrorism pre-9/11.”

The US banking committee is concerned about Facebook’s attempt at a cryptocurrency—Facebook coin—and how the social media giant is treating people’s’ financial information. It’s published an open letter with questions for Facebook.

Redditor u/BioBiro, who needed to acquire bitcoin for a totally legal purchase, complains about the rigamarole he had to go through. Among other things, “Now there’s two pictures of me and my driving license on their server for the rest of time, I guess.”

Consensus, CoinDesk’s big money maker conference, kicks off in New York next week. Last year it had 8,500 attendees, pulling in ~$17 million in ticket sales—and that’s before sponsorships. Arthur Hayes, CEO of bitcoin derivative exchange BitMEX, was one of several who rolled up to New York Hilton Midtown in a lambo.

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