The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #616 - Clash Of The Titans





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November 8 · Issue #616 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Clash Of The Titans
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. LBRY Loses To The SEC
  5. The Feds Have A Lot Of Bitcoin
  6. You Thought Crypto Was Bad
  7. My Recommended Platforms And Tools
Clash Of The Titans
The battle between Sam Bankman-Fried and Changpeng Zhao is coming to a head. I covered the story briefly in the news section yesterday, but feel compelled to continue the conversation in today’s intro.
I am not taking sides and have no bias. I have hosted both men on my show and believe that neither has bad intentions. Most of the “news” being reported is simply speculation based on half baked assumption and incomplete data. As always, my goal is to search for the truth, which has become increasingly impossible to find in crypto news.
SBF is an effective altruist. His purported motivation has always to make as much money as humanly possible with the goal of giving it all away and helping the world. He graduated college with a degree in physics, but chose to head to Wall Street. He landed at Jane Street Capital. Sam quickly discovered an uncanny ability to spot inefficiencies in markets and decided to build a career capitalizing on this incredible skill set. He is known for his talent in arbitrage trading, building fascinating tech, and creating top-of-the-line trading systems. 
CZ has a similar story. Changpeng Zhao studied computer science and then transitioned into financial markets. Like SBF, he started as a trader, then founded a high-frequency trading system for brokers before making his foray into crypto. Both men founded successful exchanges, built utility tokens, contributed greatly to the advancement of the space, and are deeply respected.
The media seems to believe that the two are polar opposites behind the scenes, but I am not convinced. Here are quotes from both CEOs. See if you can guess who said each.
I do intend to give away most of my wealth like many wealthy entrepreneurs or founders did from Rockefeller [late American business magnate John D. Rockefeller] until today. I do intend to give away 90, 95, or 99% of my wealth.
“I’ll keep enough money to maintain a comfortable life: 1% of my earnings or, at minimum, $100,000 a year. A while ago I became convinced that our duty was to do the most we could for the long-run aggregate utility of the world. In the end, it’s the work my friends and colleagues at foundations do that matters the most.”
The first quote is from CZ. The second is from SBF. I would have personally guessed the opposite. These two men live by identical driving principles. Sam has been said to be the “crypto Robin Hood,“ but that title can equally be assigned to both men.
How did the two end up as "enemies?”
First, Binance incubated FTX. They were a fundamental contributor to the success of SBF. Here is the Binance blog post from 2019.
Binance Announces Strategic Investment in Cryptocurrency Derivatives Exchange FTX | Binance Blog
As you can see, the two were once very much aligned.
Now we jump to the speculation. The answer as to how they became opposing forces seemingly comes down to regulation, their view on how crypto should interface with governments and the tone of meetings that happened behind closed doors.
SBF is being accused by the crypto mob of selling out to regulators. The resounding view of the loudest FUDsters is that he is acting in the interest of FTX and not of crypto and that he is doing his best to close the door on Binance in the US.
A CEO is acting in the interest of his company. Not shocking.
Again, this is speculation. But there was clearly enough there to warrant a response from CZ, who likely feels betrayed.
That led us to the where we are today. There are rumors that Alameda is insolvent, even though they have shown tens of billions of dollars in assets on their balance sheet. I am yet to see a single shred of actual evidence that they have financial problems. I think this story can be outright dismissed for the moment, until actual proof is discovered.
We do know that CZ is actively selling a huge position in FTT.
What a soap opera.
What does it mean for us as investors in crypto?
First off, I want to encourage all of you to continue asking questions in search of the truth, because right now we are simply pandering in rumor and hearsay.
Second, we have some decisions to make as investors. Protecting your assets is paramount. Time to ask some hard questions that only you can answer. Do you hold FTT? Does it still fit into your risk profile? Do you hold coins on FTX? Do you hold coins on any exchange?
While I think there is minimal risk of FTX blowing up, this is a reminder that the risk is never zero and you should act accordingly. The same goes for Binance. If you custody the bulk of your own assets, then you have little to worry about. Take the coins you are not actively trading off of exchanges. Easy.
There are a few actual facts to interpret. The price of FTT is dropping, FTX is experiencing minor transaction delays, and there are large shifts in token reserves by the exchange. This could all just be normal operating procedure that is being more heavily scrutinized. But it is making the community nervous.
Who can blame them? We all have PTSD from Celsius and Voyager. Both platforms collapsed after a groundswell of rumors arose about their issues. In the early days, it seemed like FUD and nonsense.
That said, just because it happened to them does not mean that we should expect every platform to collapse. FTX and Alameda run a very different kind of business, and SBF is a different kind of CEO. Remember, he is a trader at heart. The assets they hold are being rented, not bought.
This story will continue to develop, but I find it hard to make any firm decisions based on the few facts that we have.
Mist importantly, it is essential that we remember that we are more similar than different. It is better to give others the benefit of the doubt before making wild accusations.
I have no idea how this will end. I just know that it’s not helping anyone of us at the moment.
Bitcoin Thoughts And Analysis
Bitcoin dropped over night, coming down to retest both the $19,666 2017 ATH and the 50 MA as support. I have no better idea than anyone else whether they will hold, but I do know that this is still in a sideways range and is nothing to get too worked up about.
The real story is that altcoins are dumping harder, as tends to happen. As I mentioned last week, quite a few coins broke out and were due a retrace and retest of support. Let’s see if those hold.
I think it is clear why I am so hesitant to share charts and analysis, as sideways and choppy market are the most dangerous. Support rarely holds, lines rarely matter, indicators are often wrong.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Nov. 8 - Bloomberg
US stock-index futures rose as investors bet the outcome of midterm elections will support a nascent rally. Treasuries erased losses before Thursday’s inflation print that may offer clues on Federal Reserve policy.
Key events this week:
  • Euro-zone retail sales, Tuesday
  • US midterm elections, Tuesday
  • EIA oil inventory report, Wednesday
  • China aggregate financing, PPI, CPI, money supply, new yuan loans, Wednesday
  • US wholesale inventories, MBA mortgage applications, Wednesday
  • Fed officials John Williams, Tom Barkin speak at events, Wednesday
  • US CPI, US initial jobless claims, Thursday
  • Fed officials Lorie Logan, Esther George, Loretta Mester speak at events, Thursday
  • US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
  • The Stoxx Europe 600 rose 0.2% as of 10:26 a.m. London time
  • Futures on the S&P 500 rose 0.1%
  • Futures on the Nasdaq 100 rose 0.3%
  • Futures on the Dow Jones Industrial Average rose 0.1%
  • The MSCI Asia Pacific Index rose 0.8%
  • The MSCI Emerging Markets Index rose 0.3%
  • The Bloomberg Dollar Spot Index was little changed
  • The euro fell 0.3% to $0.9994
  • The Japanese yen rose 0.2% to 146.32 per dollar
  • The offshore yuan fell 0.4% to 7.2617 per dollar
  • The British pound fell 0.3% to $1.1474
  • Bitcoin fell 4.6% to $19,735.73
  • Ether fell 5.9% to $1,483.07
  • The yield on 10-year Treasuries declined one basis point to 4.20%
  • Germany’s 10-year yield was little changed at 2.34%
  • Britain’s 10-year yield advanced one basis point to 3.65%
  • Brent crude fell 1% to $96.90 a barrel
  • Spot gold fell 0.3% to $1,670.14 an ounce
LBRY Loses To The SEC
LBRY Sold Tokens as Securities, Federal Judge Rules
What a shit show.
The SEC has been suing LBRY for years on accusations that they offered an unregistered security. LBRY lost the battle. If you are looking for further context, I recently spoke to LBRY founder Jeremy Kauffman. He shared the entire story.
An Epic Battle With The SEC And The Future Of Decentralized Media | Jeremy Kauffman, CEO at LBRY
The LBRY token has been deemed a security, giving the SEC grounds to argue that almost every other coin is a security as well. As usual, the SEC failed to offer guidance in advance and simply enforced nonexistent lies after the fact. We STILL don’t know what the industry can or cannot do.
There is some scary language in the opinion section written by the judge.
it's dicta, but here the LBRY judge reasons that even if team is completely silent about efforts--no promises, no contracts--but premines tokens, that alone creates a sufficient expectation of profits from their efforts in common enterprise to pass the Howey test

very bad result
The implication is that any premined token can be deemed a security. That includes, well, basically everything. Here is what Jeremy Kauffman had to say.
Jeremy Kauffman 🦔
@LBRYcom The SEC vs LBRY case establishes a precedent that threatens the entire US cryptocurrency industry.

Under this standard, almost every cryptocurrency, including Ethereum and Doge, are securities.

The future of crypto now rests with an org worse than the SEC: the US Congress
In two weeks, there will be a status hearing to determine the next steps for LBRY. Their punishment will be a huge tell. We will see how severe the downside is of being labeled a security by the SEC.
The Feds Have A Lot Of Bitcoin
Feds Seize Silk Road Hacker’s 50,676 BTC Worth Over $3,600,000,000 Ten Years After Massive Heist - The Daily Hodl
U.S. investigators are quietly seizing and stockpiling a massive amount of Bitcoin. The Department of Justice just announced that they acquired 50,000 Bitcoin last November from a Silk Road hacker, the second largest financial seizure ever. We don’t know what will happen to this money. We do know that the USA holds a sizable bag of Bitcoin. According to some estimates, they have acquired over 200,000 coins. Wow.
You Thought Crypto Was Bad
this should get regulated, extremely dangerous for retail investors
A picture speaks a thousand word. And this one is worthy of a novel.
These are just some of the worst performing tech stocks, but there is also a MASSIVE cohort of other companies down 50% to 70%.
Crypto gets a bad rap, when it is clearly an everything winter.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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