The FTX story just keeps getting crazier 😳; El Salvador is a case study in crypto's structural problems 🇸🇻; (R)evolution: ChatGPT can now both make and break Smart Contracts 🤯🤯🤯
You're missing out big time... Weekly Recap 🔁
👋 Hey, Linas here! Welcome back to a 🔓 weekly free edition 🔓 of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, it’s the only newsletter you need for all things when Finance meets Tech.
If you’re not a subscriber, here’s what you missed this week:
Africa will be the driving force for crypto adoption globally 🚀 [deeper dive with facts & figures]
Tencent doubling down on remittances highlights two key payments trends 💸🇨🇳
Circle's canceled SPAC signals that crypto contagion is real and spreading 🦠
The bullish case for struggling Coinbase 🤑 [focus on what many ignore]
Reddit is crushing the NFT game. Again! 🚀 [learn from them!]
Genesis just got one step closer to bankruptcy. Here's why it should alarm you🚨
Every major bank right now should copy Goldman Sachs. Here’s why 😎
As for today, here are the 3 FinTech stories that were making a monumental difference this week. This week was just nuts 🥜, so definitely check out all the above stories.
The FTX story just keeps getting crazier 😳
Deeper down the rabbit hole 🕳 I said this earlier and I will repeat it again - the FTX story just never stops giving. It’s a horror movie, a comedy, and a thriller at the same time. Yet, it’s too important to be left behind, so let’s take a look at some more astonishing things that were discovered and revealed as of late.
More on this 👉 Here’s what you need to know:
Let’s talk about the interviews first. The one with the New York Times was pretty painful to watch. Sam Bankman-Fried barely gave a straight answer or even looked at the camera. In essence, he was just digging himself a deeper hole 🤷♂️
This sums it up pretty nicely:
while this one is just… 🤯🤯🤯
And a cherry on top is the round of applause after it’s over…🍒 Seems like a simulation to me 🤷♂️
After this, SBF talked with Good Morning America. It’s worth listening to as well as there are plenty of gems there 💎
Finally, if you want to go really deep, listen to the one where Frank Chaparro talks to SBF (it’s pure gold!):
Now, about other things…
FTX's interconnection with Alameda was solidified further as reports suggest that the tainted cryptocurrency exchange used its sister company’s banking accounts to process transactions for the exchange. Fraud 101 👏
SBF told Tiffany Fong that though he made sizable donations to Democrats, he also made “dark” donations to Republicans that aren't as publicly known.
Bribes👉 Donations 😎In relation to that, FTX donated $1M to the Super-PAC linked to Mitch McConnell, The Senate Leadership Fund, on October 27. Just days before FTX declared bankruptcy.
More lies - SBF said he couldn't hack into FTX because he didn't know how to code while in September 2019, the same SBF said on The New Trust Economy that the goal of the code is used to be functional versus the code is the goal. My goal is to write the most beautiful code I can 🤡 A brilliant illustration that he’s a pathological liar.
Sam Bankman-Fried said he will testify before the House Financial Services Committee after he’s finished “learning and reviewing” the events that led to the implosion of FTX. Seriously? 😳
SBF of FTX has hired Mark Cohen as his attorney, as per Reuters. Cohen recently defended Ghislaine Maxwell in her sex trafficking trial and defended El Chapo prior to that. This tells you all you need to know about this man. :)
A cheery on top is this - Sam Bankman-Fried wanted to pay Taylor Swift more than $100M for FTX to sponsor her tour. He also wanted Taylor to endorse FTX on social media (she said no). Seems Taylor Swift did better due diligence on FTX than all of the top VC firms. :))
Among all the mess, Binance saw a 30% surge in trading activity following the FTX implosion, according to Bloomberg. Binance really wants to be your crypto bank.
Additionally, Goldman Sachs GS 0.00%↑, plans to spend tens of millions of dollars to buy or invest in crypto companies after the collapse of the FTX exchange hit valuations and dampened investor interest, as per Reuters. As I said last week, now is a brilliant time for banks to increase their acquisition game.
Finally, the $5.4B Alameda VC portfolio was revealed by the Financial Times. Here it is (only the first page):
The largest investments are: 1) Genesis Digital Assets 2) Anthropic 3) Digital Assets DA AG 4) K5 5) IEX. It also includes Sequoia, SkyBridge, SpaceX, and Boring Company, in addition to game studios, betting platforms, online banks, publishers, a fertility clinic, a military drone maker, and a vertical farming company. This is just nuts 🥜
✈️ THE TAKEAWAY
Trying to make sense of it all… 🤯 Continuing on the last point, in order to understand how big of a Ponzi Scheme FTX was, think of it as follows: Sequoia invested in FTX so FTX could lend money to Alameda so Alameda could invest in Voyager so Voyager could lend money to FTX so FTX could invest in Solana Foundation so Solana Foundation could invest in FTX, and so on and so forth… You just can’t make this up… And the most worrying thing about this mess is that the trust and integrity (as much as it had such a thing) of the crypto industry has been severely comprised.
In case you missed it: The FTX story is getting wilder and wilder 🤯
FTX is much worse than anyone imagined 🤯🤯🤯
The aftermath of the FTX collapse could be bigger than the earthquake 🌋
Contagion of contagion, or how Genesis could cause Crypto Armageddon 😳
WTF: Binance walks away from FTX takeover 😳🥶
El Salvador is a case study in crypto's structural problems 🇸🇻
A refresher ♻️ In the middle of November, El Salvador 🇸🇻 announced that it is going to be buying a Bitcoin a day. I won’t discuss whether it’s good or bad today. The biggest problem with this is that we may never know if that’s true or not…
More on this 👉 Since making the cryptocurrency legal tender last year, the country has failed to officially declare any of its holdings and now likely has unrealized paper losses with bitcoin's price drop of about 71% over the past year, as per The Block.
The public has had to rely on President Nayib Bukele’s word — or more specifically, his tweets (as seen above) — to find out when he’s buying BTC, how much, and at what price.
Where we are? 🤔 Based on Bukele’s social media posts, El Salvador has purchased 2,381 BTC. This is without 1 BTC every day he announced in November. Beyond that, there is no official or public record of how much El Salvador has spent so far.
The “Nayib Bukele Portfolio Tracker” estimates that the country has spent more than $107M on BTC and would have lost more than $67M so far based on current prices. The same website had pegged El Salvador’s estimated losses at $18M in February.
✈️ THE TAKEAWAY
El Salvador & BTC 👀 Buying Bitcoin with your taxpayers’ money and not showing proof or accountability it’s the same as SBF and FTX buying homes and taking out personal loans from their customers’ funds. It’s pure fraud. The best part? Bukele and his finance minister Alejandro Zelaya have downplayed estimated losses in the country’s Bitcoin portfolio, arguing that it has not actually lost money because it hasn’t actually sold any BTC. Bukele even told followers in June to “stop looking at the graph and enjoy life” as BTC prices plunged 🤡 The amazing lack of transparency and accountability is everything that’s wrong in the crypto space today. Unless we solve these structural problems first, we can’t have and don’t deserve a better financial system. Zooming out, it’s yet another proof of why BTC in El Salvador is one of the greatest PMF failures ever.
Bonus: Bitcoin in El Salvador🇸🇻 is one of the greatest product-market fit failures ever 🤦♂️
(R)evolution: ChatGPT can now both make and break Smart Contracts 🤯🤯🤯
Trending🔥 Whether you’re in tech or not, everyone these days has been talking about OpenAI's impressive ChatGPT — an AI-powered chatbot and its ability to interact with humans conversationally.
More on this 👉 It’s now clear that ChatGPT is helping people to write songs, create stories in a unique style, do homework, or even write pitch decks.
But now it's getting super serious. The AI-powered chatbot is reportedly able to code Ethereum smart contracts and even point out vulnerabilities in existing ones. But there’s more to that… Take a look at some fascinating examples below:
✈️ THE TAKEAWAY
The future is… 🤯 As you can see from the few examples shared above, ChatGPT can write, audit, and even break the code for smart contracts. While robots are not taking over just yet, we’re definitely approaching a blockchain singularity. The world is going to be very different in the next 5 years. And that’s both fascinating and terrifying.
🔎 What else I’m watching
More crypto layoffs 😢 Crypto exchange Bybit announced another round of job cuts as it hunkers down for the crypto winter. In a Twitter thread Bybit boss Ben Zhou said that "tough times demand tough decisions. I have just announced plans to reduce our workforce as part of an ongoing reorganization of the business as we move to refocus our efforts for the deepening bear market." The latest round of cuts follows layoffs announced in June by the firm which affected 25% of the workforce. The planned downsizing will be across the board, with sources suggesting that as many as 30% of the remaining staff may be affected. Following Kraken, it’s yet another reminder that nobody’s safe in this market.
Klarna and ClimaTech? 🤔 Sweden-based FinTech Klarna has partnered with climate tech startup Vaayu to provide granular carbon footprinting for more than 50 million fashion items. This will give customers more accurate insights into their environmental impact than ever before and enable them to make more conscious purchasing decisions. Using Vaayu’s technology, Klarna’s upgraded CO2e tracker automatically calculates carbon emissions for fashion purchases on a product level in real-time, as featured in Klarna’s recent ‘Spotlight’ event. The cradle-to-grave life cycle assessment (LCA) approach provides users with an enhanced breakdown of a product’s CO₂ emissions along different stages of its lifecycle, allowing Klarna’s 150 million consumers to develop a deeper understanding and sensitivity for their shopping choices. These stages include everything from raw material extraction and processing to product assembly and delivery to the end user. Not sure how this helps Klarna hitting profitability in 2023… 🤔
💸 Following the Money
645 Ventures has closed on its fourth fund and first select fund, oversubscribed at $348M.
Tonik Financial has entered into an agreement with Tendo Payment Solutions to acquire its Philippine business, operating under the brand name TendoPay.
Crypto tax and accounting platform Bitwave raised $15M in a Series A funding round led by Hack VC and Blockchain Capital.
👋 That’s it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up: