Tag: Mike Novogratz

Celsius hearing, December 8: Selling GK8 to Galaxy Digital

  • By Amy Castor and David Gerard
  • It’ll take a lot of Patreon money to buy us apartments in the Bahamas, but you’ll never know if you don’t try! Here’s Amy’s, and here’s David’s. Give so we can point and laugh at SBF some more.

Celsius is bankrupt, with liabilities that are hugely greater than its assets. So they’re selling what can be sold — such as subsidiaries that are solvent going concerns.

Celsius bought Israeli crypto custody company GK8 in October 2021 for $115 million — $100 million in cash, and the rest in their own CEL tokens.

Now Celsius wants to sell GK8 to Mike Novogratz’s Galaxy Digital for $44 million, plus $100,000 assumed liabilities (debts that Galaxy will be responsible for). This is a huge loss — but Galaxy was the only qualified bidder. [Notice of successful bidder, PDF]

Galaxy wants GK8’s assets free and clear. The tricky bit is whether creditors in the bankruptcy have any claims against Celsius subsidiaries and affiliates. So the December 8 hearing was about this sale. [Amended agenda, PDF]

Judge Martin Glenn, who is overseeing the bankruptcy, was inclined to approve the sale — if the tricky details can be resolved.

This was a “hybrid hearing,” taking place both in the Southern District of New York courtroom and over Zoom. This hearing was on Thursday after a long, exhausting week of hours of hearings on Monday on Earn accounts and more hours of hearings on Wednesday on Custody and Withhold accounts.

Lawyers were dumping GK8 documents on Judge Glenn at the last minute on Wednesday, so he was up late the night before reading them — much to his displeasure. Everyone knows Celsius is running out of money. The holidays are coming up, and the mood was tense. The judge blew up at the lawyers more than once. 

Why does Galaxy Digital want GK8?

Galaxy Digital is Mike Novogratz’s crypto hedge fund. Galaxy is publicly traded on the Toronto Stock Exchange (GLXY.TO). Its stock is down 83% in the last year.

GK8 was founded in 2018 by two former Israeli government cybersecurity experts, Lior Lamesh and Shahar Shamai, the CEO and CTO of the company. Even though the firm has forty employees, these two pretty much are the company.

Celsius had planned to integrate GK8’s custody product into its own platform. But alas, Celsius filed for bankruptcy in July. So it started shopping for a buyer for GK8.

GK8 is a going concern — but it doesn’t seem ever to have made money. In fact, it needs funds to keep going.

We don’t understand what Galaxy wants GK8 for. This sale doesn’t make sense.

This could be an acquihire — Galaxy wants the founders, and the founders insist on bringing the company.

Or the sale could be Galaxy attempting to plug a hole in its books by buying a custody firm — if they account for assets in custody US-style, as company money with a liability, and not as customer money. (Now, you might think that resolving this would mean eventually stiffing the customers.)

But we’re speculating here. Maybe Novogratz will get a GK8 tattoo to go with his Terra-Luna tattoo?

We just know that Celsius needs to sell GK8 as soon as possible — and Galaxy Digital are a keen buyer, and GK8 would be very happy to go to Galaxy.

Do Celsius customers have a claim against GK8?

Do creditors have claims against just particular Celsius entities, or do they also have claims against Celsius subsidiaries and close affiliates? Such as ones the company wants to sell?

Celsius and the Unsecured Creditors’ Committee (UCC) both feel that Celsius’ terms of use — in all eight versions — made it clear that depositors were contracting with Celsius Network LLC and its affiliates. 

But Andrew LeBlanc from Milbank, for the preferred equity holders in Celsius, had a different interpretation of the terms of service: “there are limitations in the documents that exclude claims against affiliates.”  

Celsius, the UCC, and the preferred equity holders want the court to approve a briefing schedule that would allow them to clear a path for Celsius to come up with a reorganization plan. Here’s the briefing schedule. [Doc 1338, PDF]

Judge Martin Glenn said this is a gating issue — a blocker on a reorganization plan — and he wants it resolved sooner rather than later. He told the lawyers to gather their extrinsic evidence — evidence of contractual intent that isn’t written in the contract — so they can work out everything in a single hearing. 

“I don’t want this being prolonged. I think this is an important issue,” said the judge. He told Patrick Nash (Kirkland & Ellis), Andrew Zatz (White & Case), and LeBlanc to revise the briefing schedule accordingly.

Why the sale of GK8 assets is messy

Celsius will run out of cash by early 2023. It needs this GK8 sale to go through soon. Here’s the sale motion. [Doc 1615, PDF]

Dan Latona from Kirkland, for Celsius, told the court that the GK8 sale was a result of “hard-fought and arms-length negotiations between the debtors and potential bidders and their respective advisors.”

Judge Glenn cut him off immediately to point out that this wasn’t just Celsius and the advisors negotiating — GK8 insiders also heavily negotiated, insisting on employment contracts and transfer of all potential avoidance claims, so that Galaxy could buy GK8 assets clear of any reclamation rights. “I have real questions on whether this is an arms-length transaction,” he said.

An avoidance action is an action to undo (avoid) certain transactions that the debtor engaged in before the bankruptcy. These include clawbacks.

Centerview, an investment banking advisor, managed the marketing and bidding. The GK8 sale started as an equity sale but morphed into an asset sale. In his declaration, Centerview’s Ryan Keilty said: “During the second round, all prospective bidders indicated an asset sale was the only structure in which bidders were willing to bid.” [Doc 1622, PDF]

Keilty explained that Celsius would have preferred an equity sale, as “a path of least resistance” — but the bidders insisted on an asset sale, given the backdrop of potentially billions of dollars of exposure in customer-related claims. 

Galaxy’s bid was conditioned on retaining GK8 founders Lamesh and Shamai. In turn, Lamesh and Shamai were unwilling to continue with Galaxy without certainty as to their future. On December 2, the parties struck an agreement: Galaxy would pay $44 million in cash, plus $100,000 of assumed liabilities for GK8.

To complete the sale, Celsius filed Chapter 11 for the GK8 corporate entity. They want approval to appoint Celsius CEO Chris Ferraro as a foreign representative and to file recognition proceedings in Israel to seek enforcement of the sale order. Later in the hearing, Judge Glenn approved first-day motions for GK8.

The asset purchase agreement contemplates assuming all operational liabilities. “The purpose of the sale is to insulate the GK8 assets from the hang of potential Celsius account-related claims,” said Latona.

Avoidance claims

GK8 has forty employees. Judge Glenn was concerned that if any of them had crypto on Celsius and withdrew those assets within 90 days (if retail buyers), a year (if insiders), or even up to two years (in the case of fraudulent conveyance) before Celsius filed bankruptcy, it might raise so-called “avoidance issues.” 

Judge Glenn wanted to know if anyone had looked into potential avoidance claims. “If that analysis showed there were $50 million in claims for the individuals, the $44 million price tag just disappeared. You’re getting nothing.”

Latona for Celsius said was unlikely it would be $50 million in avoidance actions, but the judge pushed on this topic. “How do you know?”

The judge, who had only just read some of the GK8 filings — because they were all sprung on him the day before — went ballistic. “You’ve provided the court with zero analysis of the potential avoidance claims against any of these people. Maybe there aren’t any. But I don’t know whether you are proposing to transfer a valuable asset of the estate to Galaxy. And I am not approving a sale until I understand that, with evidence.” 

Latona stressed that the legal claims would have little if any value. Zatz for the UCC said that avoidance claims, if any, would remain property of the bankruptcy estate, and are not being transferred.

The judge was somewhat mollified by Latona and Zatz. But he still wanted one or more declarations along with a memorandum of law summarizing the analysis that Zatz provided about specific provisions of the purchase agreement — i.e., what potential claims are being transferred to Galaxy and what claims remain with Celsius. 

Shara Cornell for the US Trustee thought GK8 should have its own creditors’ committee. Cornell also noted that GK8 hadn’t filed schedules yet. Judge Glenn said he couldn’t imagine there being a separate creditors’ committee for GK8, and overruled her objections. 

Ron D’Aversa from Orrick, for Galaxy Digital, worried that Judge Glenn’s additional request for memorandums of law and declarations would delay the GK8 sale: “The timeline, the sequence, along with everything else in this agreement was painstakingly negotiated for months,” he told the court. 

Judge Glenn, who had already been doing double time reading Celsius bankruptcy filings all week, didn’t like being told he had to move faster. He ripped into D’Aversa: “You are not going to cram down unreasonable deadlines for me to act. So go back to your client and tell them that you can either negotiate now for a revised schedule or you can just blow up the deal. And that is too bad, as far as I am concerned, but don’t tell me that I have to act today or tomorrow or Monday, because it isn’t going to happen.”

Pro se creditor Simon Dixon asked if the GK8 deal could be settled in bitcoin, rather than dollars. Galaxy has an OTC (over-the-counter) trading desk, so in his mind, this made sense. “Any sale in bitcoin would be very beneficial to the estate” — that is, creditors could get their bitcoins back. The judge told Dixon that was not going to happen. 

Judge Glenn said he would withhold a ruling on the GK8 asset sale until he got memoranda of law and one or more declarations specifically addressing the issues regarding the avoidance claims. But he was “tentatively inclined to approve the sale of the GK8 assets.”

Latona and Zatz said they would both do a filing in support of the sale by Monday at 5 p.m. 

First-day motions and uncontested matters

Judge Glenn granted several administrative motions, including the motion allowing Celsius CEO Chris Ferarro to represent GK8 as a foreign entity in Israel. [Doc 1626, PDF; Doc 1628, PDF; Doc 1637, PDF) 

Celsius wants to repay a DeFi loan of $3.26 million loan in USDC and get back collateral (wrapped BTC and USDC) worth $7.5 million. The revised order just says that the judge has to rule that Earn is a property of the estate. [Doc 1360, PDF; Doc 1636, PDF]

The judge said that Celsius could go ahead and pay back the loans — but the collateral would have to be held in a separate wallet subject to the court’s determination on whether Earn assets are property of the estate, which he hadn’t ruled on yet.

What’s next?

An omnibus hearing in the Celsius bankruptcy is scheduled for December 20. We expect that issues in the sale of GK8 will be in that somewhere. Further omnibus hearings are scheduled for January 24, 2023, and February 15, 2023. [Doc 1393, PDF]

It’s important to keep in mind that this week’s hearings have been furious arguments over the alignment of the deck chairs on the Titanic. But the iceberg is still there. Celsius is flat broke. There’s no business. There are pennies left for creditors at best. Celsius is a shambling zombie. It should have been liquidated in July.

There’s also the much-anticipated final version of the Examiner’s Report, including the question of whether Celsius was operating a Ponzi. And there are still multiple state regulators looking to issue charges against Celsius, and possibly against founder Alex Mashinsky personally. The fun stuff should really get going in 2023.

Posted on by Amy Castor 1

News: Bitcoin tops $24,000, Ledger’s gift to SIM swappers, Pornhub only accepts crypto now, FinCEN’s new rule

The price of bitcoin keeps hitting new all-time highs, recently topping $24,000, which means things are getting a little nutty. The coiners want bitcoin to shoot to the moon. And the no-coiners want Tether to get taken down and the nonsense to end, like it should have three years ago after the 2017 bubble.

I’ve now got hundreds of new Twitter followers, most of them bitcoiners repeating the same boilerplate phrases like “have fun staying poor,” “gold is a Ponzi too” (it’s not) and proclaiming me the U.S. dollar is going to collapse, which would be a shame as bitcoin is mainly traded in dollars.

Caught up in the whirlwind, Mike Novogratz, CEO of Galaxy Digital, has gotten a tattoo—a large moon and a rocket with the letter “B” on it. Fortunately, the “B” is relatively small, so he can easily get that part lasered or covered up if bitcoin crashes, which it will, because that is the fate of all Ponzi schemes.

Here is the news:

Ledger creates a target list for SIM swappers

In July 2020, hardware wallet provider Ledger was hacked, with the hackers gaining access to its customer database. The database has been circulating for five months now, and the hacker has just dumped it on RaidForums, a site dedicated to sharing hacked databases, for the whole world to access—at no charge.

“The first confirmed price I saw for this database was 5 BTC,” the hacker wrote. “Today you can get it for free.”  

The database contains the emails, physical addresses, and phone numbers of 272,000 Ledger buyers along with emails of 1 million additional users.

Essentially, Ledger, a company dedicated to security, has given hackers access to a massive target list for SIM swappers and phishing campaigns. Ledger is very, very sorry for the leak. 

Coinbase plans to go public

Coinbase, the most valuable U.S. crypto firm, has filed confidentially for an IPO with the SEC. When the crypto exchange last raised private funding in 2018, it was valued at $8 billion. It is probably worth plenty more now, with investors going mad over tech stocks. 

The San Francisco company has tapped Goldman Sachs to bring it to market, meaning that that the bank will lead the syndicate of banks underwriting the deal. (Cointelegraph)

Several VCs have invested hundreds of millions of dollars into Coinbase, and it makes sense that at some point they want to realize the returns on their investment, probably before this bubble blows.

According to Nicholas Weaver, a researcher at the International Computer Science Institute in Berkeley, the IPO “is entirely about a16z and the other VCs unloading their ownership-bags, not cryptocurrency bags, before the space implodes because Tether finally gets killed.”

FinCEN to impose new rules on exchanges

The Financial Crimes Enforcement Network has unveiled new rules aimed at closing anti-money laundering loopholes for regulated cryptocurrency transactions. The rules call for additional customer verification and more reporting.

According to the proposed rule, if a user makes a deposit or a withdrawal of over $3,000 involving a non-custodial wallet, exchanges have to record the name and physical location of the wallet owner. Crypto exchanges also have to report to the U.S. Department of Treasury any deposit or withdrawal over $10,000. 

The rule is devastating to regulated crypto exchanges. In a lengthy Twitter thread last month, when he first learned of the new rule coming down the pipes, Coinbase CEO Brian Armstrong publicly attacked the new regulation. He knows serious KYC requirements will kill a lot of his business.

Nouriel Roubini responded by bashing Armstrong as a contemporary Gordon Gekko—a character in the 1987 Oliver Stone movie “Wall Street”—putting his profits ahead of the need to enforce regulations to stop the financial activities of criminals, tax evaders, terrorists, drug dealers and human traffickers.

Coming soon: Mt. Gox bitcoins

Tokyo bitcoin exchange Mt. Gox went bankrupt in early 2014, and its former users are still waiting to get some portion of their funds back. Their long wait may soon be over. Recently, the Mt. Gox trustee submitted a draft plan for the rehabilitation of creditors. 

If the Tokyo District Court gives the plan a thumbs up, that means 140,000 bitcoin may soon flood the market. The price of BTC has gone up substantially since 2014, so no doubt claimants will want to sell as quickly as possible—and that could create a bear market, pushing down the price of BTC. (Coindesk)

Unless there’s enough real cash left in the system—which is unlikely, because if there was, we wouldn’t need 20 billion tethers—Tether will need to issue an additional 2.5 billion tethers to absorb those bitcoin. 

Tether surpasses $20 billion

Tether has now crossed $20 billion worth of tethers in circulation. Paolo Ardoino, Bitfinex and Tether CTO, bragged about it on social media. He tweeted: “#tether $USDt 20 BILLION!”

Patrick McKenzie, the software engineer who last year wrote this brilliant article explaining Tether, says all he wants for Christmas is for “Tether to unwind explosively.”

As Tether keeps issuing more and more tethers to pump bitcoin’s price, remember that the whole point in all this is to lure real dollars into the system. Look, the price keeps going up! You too can get rich! Buy bitcoin!

As David Gerard explained in a recent blog post, bitcoin price pumps are almost always immediately followed by a sell off. If you’re still not convince how the game works, CryptoQuant CEO Ki Young Ju provides proof.

He points out that when bitcoin hit $20,000, it was a coordinated pump fueled by stablecoins—127 different addresses depositing stablecoins to exchanges in one block of transactions on Ethereum minutes before the first price peak. “Price is all about consensus,” he said.

Porn Hub only accepts crypto now

Visa and Mastercard said they will stop processing payments on Pornhub following a report in the NYT about  illegal content on the site uploaded by unverified users. Mastercard has cut off ties completely, while Visa says it has cut off ties pending an investigation. (Decrypt)

According to Vice, Pornhub purged 70% of its content in an attempt to get the card providers back. How else will it stay in business? The site still accepts crypto—and cash via checks and wires—but apparently that’s not enough. There’s no way it can function without the credit card payments. More proof that bitcoin is a failed payments system.

Other news

The Dread Pirate Roberts is sorry, so please let him go. President Trump is weighing granting clemency to Ross Ulbright, the founder of the Silk Road. (Daily Beast)

“If Ulbricht’s supporters really cared about the war on drugs or libertarian ideals, they’d be demanding that the nearly half a million people currently in U.S. jails for drug offenses should be pardoned too.” (Vanity Fair)

A NY judge says Reggie Fowler’s defense team can withdraw from the case. Their client hasn’t paid them in a year. Fowler has 45 days to find a new lawyer who is also willing to risk not getting paid. (My blog)

Binance reportedly puts zero actual effort into keeping U.S. customers out. The info comes by way of a U.S. user who created a BFX account (no VPN), transferred bitcoins to BFX and sent some out from there. (Twitter)

If you want to cash out your USDT on Kraken, the exchange apparently only takes two types: Omni or ERC-20. (Twitter)

Eric Peters, CEO of One River Asset Management, has set up a new company to invest in crypto. His firm will bring its holdings of bitcoin and ether to about $1 billion as of early 2021, he said. (Bloomberg)

Michael Saylor wants to lure Elon Musk into bitcoin. (Decrypt)

Posted on by Amy Castor 0

News: Crypto Mom wants to give criminals a head start, IOTA’s meltdown, Lubin’s organism divides

As a reminder, I will be traveling to Vancouver on Feb. 22 to spend about a day and a half with David Gerard. We are being interviewed for a QuadrigaCX documentary. I know when we get there, we are going to wish we had more time to hang out and meet people in the area. Especially given how far Gerard has to travel (from London) and how beautiful Vancouver is. And with that, here is the news from the past week.

Crypto Mom wants to give criminals a head start

SEC Commissioner Hester Peirce (aka “Crypto Mom”) has unveiled her proposal to create a “safe harbor” for crypto startups, allowing them a three-year grace period after their ICO to achieve a level of decentralization sufficient to pass through the agency’s securities evaluations, specifically the Howey Test. (My story in Modern Consensus.)

Where to begin? Given that most, if not all ICOs are illegal securities offerings, this is like giving fraudsters free reign, so they can pump up their coins, cash in and leave the country. It’s like 2017 all over again. This whole notion of “sufficiently decentralized” is something that first came in mid-2018 when Bill Hinman, the SEC’s director, division of corporate finance, mentioned it in a talk he was giving about Ethereum. There is no clear way of defining “sufficiently decentralized.” It’s a murky concept to begin with. (See David Gerard’s story on Peirce. He goes into more depth and is not nearly so kind.)

Peirce is a Republican with libertarian leanings. Her term expires June 5. With a proposal like this and a nickname “Crypto Mom,” I can only assume she is buttering up for her next gig? Also, the odds of this rule passing are slim to none, especially given SEC Commissioner’s Jay Clayton’s strong criticism of ICOs in the past. 

IOTA’s meltdown

IOTA is in full meltdown mode. Apparently, IOTA founders Sergey Ivancheglo (aka Come-from-Beyond) and David Sønstebø were working on a ternary computing development project called Jinn. But it fell apart, and now the two can’t stop pointing fingers at each other. Ivancheglo says that he no longer works for foundation director David Sønstebø and is suing him for 25 million MIOTA (~ $8.5 million). Sønstebø wrote this really long Medium post, which I had trouble staying awake through. There is also a r/buttcoin Reddit post that spells out the full drama, if you’re in need of entertainment.

Given the maturity level demonstrated by this project in the past, I’m not surprised by any of this. The project has been a complete mess ever since they tried to roll their own crypto in 2017. I wrote about it for Forbes, and they attacked me with weird blog posts and other nonsense. Cofounder Dominik Schiener even threatened to slap me. And when confronted, he accused me of “leading the FUD race.” FT Alphaville actually covered this in a story titled “FUD, inglorious FUD” at the time. 

Researcher Sarah Jamie Lewis is calling on some journalist somewhere to do a deep dive on this sketchy project. “At a glance it’s really hard to not come to the conclusion that there is rampant criminal fraud afoot,” she said in a Twitter thread.

Ripple perpetual swaps

Bitmex has announced trading of XRP perpetual swaps. Bitmex co-founder Arthur Hayes apparently believes XRP is lowly enough to trade on his exchange. Boo-yaka-sha!

Speaking of Ripple, XRP lost almost half of its value last year. It’s a touchy topic for Galaxy Digital CEO Mike Novogratz, because he has invested $23 million into the coin. He recently told a group of financial advisers in Orlando that XRP will “underperform immensely again this year.” He suggested it’s because Ripple owns a giant pool of the coins and keeps selling them off in a situation he likened to shares. (CoinDesk)  

The total amount of XRP in circulation is 100 billion tokens. While Ripple was “gifted” 80 billion, its holdings are down to 56 billion, most of which are in escrow. The company unlocks one billion XRP each month, sells a portion and puts the rest back in escrow. Does that sound like shares to you?

Mastercard dumps all over Libra

Mastercard was one of several payments companies (along with PayPal, eBay, Stripe, Visa, Mercado Pago) to pull out of the Libra Association in October. In an interview with the Financial Times, Mastercard’s CEO Ajay Banga revealed why.

First, Libra Association’s key members refused to commit to avoid running afoul of local KYC/AML rules. Banga would ask them to put things in writing, and they wouldn’t. Second, he didn’t understand what the game plan was for making money. “When you don’t understand how money gets made, it gets made in ways you don’t like.” Finally, the financial inclusion bit struck him as odd. “I’m like: ‘this doesn’t sound right,’” he said.

This gives us a bit of insight into the lack of thought and planning Facebook put into its Libra project before going public with it. You would think a huge enterprise like Facebook would get this stuff right, but apparently not.

ConsenSys splits in two

images (1)Joe Lubin’s organism (that’s what he used to call it, an “organism) looks to be running into more funding trouble, so it’s going to spin off its venture arm. The company will basically become two separate businesses, a software business and an investment business. In the process, it’s also  cutting another 14% of its staff. This is after cutting 13% of its staff in December. (My story in Modern Consensus.)

At one time, ConsenSys had 1,200 employees. In mid-2018, it reportedly had 900. About 117 were let go in December, and likely another 100 in this last round. This is a company that midwifed many of the ICOs that fueled the 2017-2018 crypto bubble. I can still recall going to ConsenSys’ Ethereum Summit on a sweltering day in May 2017 and watching some guy on stage strip down to his boxer shorts. Such was the exuberance at the time.

ConsenSys now lists only 65 companies in its investment portfolio. When Forbes wrote this scathing article in late 2018, the company had 200 startups. Lubin’s science experiment is starting to unravel.

Justin Sun finally breaks bread with Buffet

On Thursday, Tron CEO Justin Sun tweeted a receipt and pictures to show he finally dined with Warren Buffet. This, after paying $4.6 million in a charity auction last year to have lunch with the multi-billionaire. They were originally supposed to meet in San Francisco six months ago, but Sun postponed. This time they had dinner on Buffet’s home turf in Omaha, so Buffet clearly learned his lesson. Other guests were Litecoin’s Charlie Lee, Huobi CFO Chris Lee, eToro chief Yoni Assia, Binance Charity Foundation Head Helen Hai. The bill was for $515 and Buffet left a $100 tip. (Modern Consensus.)

Craig Wright’s abuse of privilege

Craig Wright, the self-professed creator of bitcoin, is driving the attorneys representing Ira Kleiman and the judge bananas. In a document filed with the court on Feb. 2, plaintiffs claimed that Wright has asserted privilege over 11,000 company documents. That is only part of the problem, they said. “The vague descriptions of what is being withheld makes any meaningful analysis on a document by document basis impossible.”

Wright has also apparently claimed that the” bonded courier” is an attorney and any communications with this person of mystery is privileged as well. (Modern Consensus.)

Altsbit gets hacked

Exchange hacks are extremely rare. We don’t hear about them too often, only once every few weeks or so. The latest victim is a small Italian exchange called Altsbit, which had its hot wallet vacuumed clean last week.

This was especially bad for Altsbit, because for some inexplicable reason, the exchange was keeping almost all of its funds in its hot wallet, which is a terrible idea. Most exchanges keep the majority of their funds in offline cold storage for security purposes.

According to reports, the hackers stole 1,066 Komodo (KMD) tokens and 283,375 Verus (VRSC) coins. The combined value of both stands at about $27,000. That’s small potatoes compared to other exchange hacks, where hundreds of millions worth of coins have gone missing. Almost all of Altsbit’s trading activity was coming from the ARRR/BTC pair. (ARRR is the native token of the Pirate Chain.) Altsbit said in a tweet on Feb. 5, it was investigating details of the hack and would get back to everyone soon, but so far nada. The exchange was founded in April 2018.

Bakkt gets into payments

Bakkt, the ICE-owned bitcoin options and futures exchange, isn’t making any money on bitcoin options, but that’s okay because it has another plan. It’s going into payments. The exchange is set to acquire loyalty program provider Bridge2 Solutions. The master plan is to integrate reward points, crypto, and in-game tokens into a single app, so consumers get an aggregate view of their digital assets. Eventually consumers will be able to spend those as cash via the Bakkt mobile app. But for that to happen, Bakkt will have to invest copious amounts of money into marketing to get merchants to adopt the new system of payment. (My story in Modern Consensus)

Other news

What’s happening with Jae Kwon? As Decrypt reported on Jan. 31, he stepped down as CEO of Cosmos to work on a project called Virgo with lofty aims. Cosmos pulled in $17 million in an ICO in 2017. Now Kwon is tweeting under three different monikers and the people within his company have come to find his behavior untenable. (Coindesk)

U.S. Marshalls is auctioning off $40 million of bitcoin (~4,041 BTC) on Feb. 18. (Coindesk.) If you want to put in a bid, you’ll have to deposit $200,000 in advance. Here is the registration form for anyone interested.  

Another study has come out showing that proof-of-stake is just as costly as proof-of-work. But instead of contributing to global warming, PoS requires stakers to put down tokens, lots and lots of them. It’s more evidence that blockchains aren’t economical.

If you have comments or feedback on this newsletter or a tip, drop me a line or DM me on Twitter at @ahcastor.

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Posted on by Amy Castor 0