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To all of our U.S. readers, Happy Thanksgiving! Here's what we'll be doing tomorrow:
Catch up on the past week in crypto in 10 mins or less. Here's what we're covering today:
- Binance vs Coinbase
- Types of rug pulls
- More from around the web
BINANCE VS. COINBASE
Just two weeks after the collapse of rival exchange FTX, led in part by the tweets of Binance founder and CEO Changpeng Zhao (CZ), the Binance founder is now taking shots at Coinbase.
As we covered last week, the fallout of the FTX collapse is leaving many companies in the crypto ecosystem scrambling. One such company is Digital Currency Group, which is the parent company to Grayscale, Genesis, and Coindesk, among others. Genesis, a crypto lender, is reportedly on the brink of bankruptcy while Grayscale, a crypto asset manager, is facing questions about its reported holdings.
Grayscale reportedly holds 635k Bitcoin on Coinbase. However, Binance CEO CZ tweeted in a since-deleted tweet yesterday, that Coinbase only held 600k Bitcoin in total. Coinbase CEO Brian Armstrong refuted those claims, citing his company's publicly available financials:
We hold ~2M BTC. ~$39.9B worth as of 9/30 (see our 10Q)
— Brian Armstrong (@brian_armstrong)
Nov 22, 2022
However, some are still worried about Coinbase's solvency. Genevieve Roch-Decter on Twitter gave some insight on the situation at Coinbase and why some are worried.
The market is worried about Coinbase’s solvency.
Here’s what I know:
— Genevieve Roch-Decter, CFA (@GRDecter)
Nov 22, 2022
Here's what she said:
- Coinbase has $95 BILLION in customer crypto assets
- But the exchange relies on high trading volumes to cover massive operational costs
- Bear market + lowered interest in crypto = low trading volumes, this spells bad news for profitability of the core business
But, Coinbase is regulated by the SEC and their financials are public, so they have to be more transparent (looking at you, FTX) about what they're doing with customer funds, so there is seemingly no funny business.
TYPES OF RUG PULLS TO LOOK OUT FOR
Frankly, we're sick of the scams. Many in crypto are building tools that will actually be useful and interesting, but like we've seen with FTX, there are still those looking to pull the rug on the masses.
This thread on twitter did a great job of breaking down all of the different types of rug-pulls to look out for.
The Crypto Rug Pull Megathread
Might as well get the rest of the crypto skeletons out of the closet 💀💀💀
Here’s my compendium of rug varieties I’ve uncovered in my research over the last few years.
TL;DR it’s rugs all the way down 🧵👇
— drnick (anti-crypto arc) 🗳️² (@DrNickA)
Nov 23, 2022
These include The Basic Rug, The Classic Rug, The Slow Rug, The Sly Rug, The Pump and Rug, and much more. While the examples of these are virtually endless in the crypto ecosystem, the fact remains that no utility = no value.
Most of these scams involve someone pumping up the value of some new token with either a marketing tactic, a partnership announcement, a list of prominent investors, or just an outright scam. Regardless, the point is to dump the bag on the masses who are investing in earnest.
In a bull market, these scams worked great, because everyone wanted in on the next big thing. Now the tides are going out, people are leaving crypto and as Warren Buffett once said "you only find out who's swimming naked when the tide goes out". Hopefully, we'll see less of these as time goes on and crypto grows in legitimacy and utility.
More from around the web(3)
- Collapsed crypto exchange FTX owes top 50 creditors over $3 billion, new filing says - The list of creditors excludes names, as ruled by the court, but the largest of those creditors is owed $226M.
- JPMorgan Registers Trademark For Crypto Wallet - The largest bank in the US plans to offer crypto payment services among other services in crypto despite Jamie Dimon's personal feelings toward crypto.
- Bill Ackman Endorses Crypto Project Helium, Discloses Crypto Holdings - The famous hedge fund CEO has turned a new leaf on crypto announcing via Twitter that he has several investments in various crypto projects.
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