Crypto Weekly (2/16)

Thursday, Feb 16th 2023


 “What's dangerous is not to evolve.” – Jeff Bezos

1) Billionaires Clash Over Silvergate: Crypto bank Silvergate is at the center of a high-finance spar, according to latest filings with the Securities and Exchange Commission. Legendary financier George Soros’s Soros Fund Management and Ken Griffin’s Citadel Securities are holding opposite positions in the debt-laden crypto lender. In the red corner, as of Dec. 31, Soros’s family office held a short position in the form of put options on 100,000 Silvergate shares worth $1.74mn. In the green corner is Ken Griffin’s firm with 1.73 million shares, or a 5.5% stake in Silvergate.

Titan’s Takeaway: Tuesday was the deadline for hedge funds and institutional investors to report certain U.S. holdings. So it’s not a big surprise that some of these filings may contain opposite views on certain companies.

Silvergate is a curious case for a few reasons. It’s the second most-shorted stock with over 72.5% of its shares shorted. Over the past twelve months, the stock is down about 90% on bearish pressure over its ex-customers bankrupt firms FTX and Alameda Research.

Why did Citadel purchase a 5.5% stake? According to the filing, Citadel is a market maker in the company’s options, which may not have anything to do with a directional call on the stock.

While hardly a notable clash, nothing like, for example, the Herbalife battle between activist investor Bill Ackman and predatory corporate raider Carl Icahn — it’s among the first instances of a crypto firm caught in the crossfire, even if both parties may not know anything about it.

2) Credit Suisse Leads $65M Fundraising Haul: Swiss banking giant Credit Suisse is venturing deeper into Web3 by leading a $65M Series B round for crypto firm Taurus. The company is based in Switzerland and is building out a platform to serve financial institutions by providing custody for digital assets and tokenization of securities. Other participants in the capital raise included Deutsche Bank and Swiss private bank Pictet Group. The round comes three years after an $11M series A and the proceeds will be used to expand staff, develop the platform, and increase international presence.

Titan’s Takeaway: Bear-market opportunities, if they pay off, have the potential to do so with above-average returns. We have to factor in, however, that Credit Suisse’s recent track record leads us to believe it’s not exactly “smart money” that’s flowing into Taurus.

The Swiss lender posted a $1.5B loss in Q4, bringing annual performance to a massive $7.9B loss. For what it’s worth, the big-name banks in the roster of Taurus backers are significant enough to pique our interest in the company’s future.

3) Celsius to Sell Crypto Platform: Defunct cryptocurrency lender Celsius has reached a deal to have its retail platform acquired by NovaWulf, a digital-asset investment firm. The sale plan will be presented to the bankruptcy court for the sign off but it also needs to be accepted by a majority of Celsius debtors. Under the proposal, customers of the collapsed lending firm would receive a share of their liquid crypto assets that were frozen on the platform last summer.

Titan’s Takeaway: It seems there may be some light flickering at the end of the tunnel for Celsius users. The deal is part of a larger plan where Celsius reinvents itself into a new entity and distributes liquid digital tokens to users.

But many obstacles still remain – before the controversial spin off, Celsius needs to get a regulatory nod, leave out its founders, and have a new board appointed by the committee of unsecured creditors.

All in all, Celsius has a gaping $1.2B hole in its balance sheet and the majority of its liabilities are tokens owed to customers – a complex case that will most likely take many more months to settle.

4) Three Arrows Founders Resurface: The founders of imploded hedge fund Three Arrows Capital are setting their gaze on yet another crypto venture. Going by Open Exchange, or OPNX, the new firm will act as a crypto marketplace where users will be able to trade bankruptcy claims from failed platforms and funds in exchange for immediate credit in a token called USDG. The platform is expected to launch this month with the ambition to be the first mover in a $20B market of crypto claimants.

Titan’s Takeaway: Instead of helping liquidators find whatever money is left after they blew up a $12B crypto fund, Kyle Davis and Su Zhu are ramping up efforts to try and make new money. If a similar sales pitch would’ve worked in the past couple of years, the duo may find things harder this time around.

5) LeBron James NFTs Soar: Sales of LeBron James NFTs are skyrocketing now that the NBA superstar broke the NBA’s all-time scoring record. James hit the 38,388th point last week, surpassing Kareem Abdul-Jabbar’s 39-year-old mark. In the digital-asset space, the milestone will be celebrated by minting only 99 NFT editions of the record-breaking shot. Other LeBron James NFTs have changed hands in the past week, bringing total sales to roughly $500,000 in the secondary market.

Titan’s Takeaway: If NFTs were all the hype in 2021 (someone paid $230K for a LeBron James dunk NFT which was worth just $25 in mid-2022), it’s almost like a switch has been flipped in the aftermath of all this excessive spending.

NFT sales have marked a pronounced downshift from a year ago, but were enthusiastically up 43% in January, compared to the previous month.

Main Contributor: Rosen Traykov

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