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This week in crypto: Crypto buys a soccer team and a lending company; Coinbase reintroduces margin trading; and Pundi X struggles to achieve adoption. What a week, eh? Crypto never sleeps, and nor does Decrypt, which, uh, explains a lot.
For someone who’s made a name for themselves living off the grid and outside the purview of government, Jameson Lopp, CEO at key-security company Casa, sure talks about the government a lot. This week, he released a web page that purports to show how the US government has lost out on $1.7 billion in unrealised gains from selling seized and forfeited Bitcoin.
His “US Marshals Bitcoin Auction realtime schadenfreude tracker” is, essentially, a list of 8 government auctions he’s found online, bunged into a spreadsheet and added up. Lopp’s calculator returns a big “I told you so,” showing that the government might have made an extra $1.7 billion if they held all the Bitcoins they’d ever seized, and sold them when Bitcoin hit $10,000.
Of course, Lopp’s estimate—$1.7 billion—is conservative. Since the bulk of the Bitcoins were seized before the 2017 Bitcoin bubble, the governments could have made billions upon billions, if they sold at the right time. Shoulda woulda coulda, eh?
Decrypt forensically deconstructed the high-flying narrative of a $34m ICO, Pundi X, which has sought to bring mainstream adoption to cryptocurrencies. Alas, as our investigation showed, Pundi X has blown $17m worth of deals, shipped less than 1 percent of its targeted 100,000 point-of-sale devices, and, to top it all off, has generated scant retail interest, with the vast majority of its “confirmed” customers reporting zero usage.
“As of today, over 1,000 XPOS [have] been activated,” Judie Liu, a Pundi X spokeswoman, told Decrypt. She said that despite the modest number of machines in use, “in 2019, we have handled 22.6 million USD worth of crypto transactions across XWallet, XPOS and XPASS cards.”
Pundi X serves as a cautionary tale to startups who, swayed by bull market prospects of easy riches, build solutions in search of a problem. Still, they’re holding out hope. “We do believe that all the currencies will eventually move to the blockchain,” said Liu. “The XPOS platform plays an important part in facilitating speedy blockchain-based transactions in physical retail outlets.”
This week, the CEO of the blockchain sports empire, London Football Exchange, told me there was nothing stopping me from owning a football club. But when I asked its CEO, Jim Aylward, if I could have the club he’d just bought an 80% stake in, Perth Glory FC, he politely declined.
This was understandable, Aylward, not me, was the one who raised $70 million in a token sale back in 2018, promoted his company on the shirts of Perth Glory FC players for a month, and convinced Tony Sage, the club’s chairman, to join LFE as chairman. Still, if Aylward ever wants to change his mind, I’m here.
Just because LFE’s now majority stakeholder, the management of the club won’t change. But its commercial infrastructure will silently move to the blockchain. Fans will be encouraged to buy LFE Cash, LFE’s token, which can be used to get discounts on merchandise and tickets.
What do Anthony Pompliano, Michael Arrington, the Winklevoss twins, and Nic Carter have in common? A couple of hundred thousand Twitter followers, and a penchant for New York City-based crypto loans company, BlockFi. They’ve all contributed to a $30 million Series B funding round led by Valar Ventures, which brings BlockFi’s total funding to $100 million.
BlockFi offers up to 8.6% a year yield on Bitcoin, Ether, and stablecoins; loans that let investors liquidate up to half of an asset’s value in US dollars; and trading without fees. It holds over $650 million in assets.
Flori Marquez, co-founder of BlockFi and VP of operations, told Decrypt, “In the near-term, we’re looking to expand our products for audiences beyond existing crypto investors—opening BlockFi to everyday consumers. Most people don’t know that you can access 8.6% on USD equivalent assets. Our focus is to make sure that everyone in the US knows that they can access this product, with no minimum account size.”
Nic Carter, of Castle Island Ventures, told Decrypt, “The private markets in crypto are heating up for sure. Lots of high-quality entrepreneurs [are] coming to market.”
This week, Coinbase announced that Coinbase Pro customers can engage in margin trading, where they borrow funds from other traders to increase their buying power. If you buy some Bitcoin with 3x leverage and sell it for a profit, you'll triple your money—you can also triple your losses.
Coinbase previously offered the service in 2017, but scrapped it after it made the price of Ethereum to drop from $300 to $0.1. It’s available to institutional customers who are based in one of 43 US states (not New York) or nine international countries; or retail customers in one of 23 US states. Customers have to have enough collateral to use the feature. Coinbase thus joins the ranks of rivals like Huobi, Kraken, and Poloniex, in offering margin trading. Those companies all offer 5x margin trading, far less than BitMex and ByBit, which offer a trouser-burning 100x leverage on trades.
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