🟠 Everything Is On Fire
TLDR inside TLDR: Mt. Gox coins teasing creditors, Silvergate and SVB finally collapse and USDC de-pegs
It’s Arsen, bringing you the 7th edition of TLDR - the newsletter that keeps you informed AND entertained.
First off, happy Sunday to 955 of you reading today.
There’s a cold wave where I live. I’m not ready for the cold, but you’re not ready for the heat I’m bringing today either.
This week was busy. Like REAL BUSY. So read until the end.
Alright, let’s get into it.
Here’s what I got for you:
Mt. Gox coins are back: dump imminent?
It’s official: Silvergate is insolvent.
Silicon Valley Bank up in flames
Estimated read time: 4 minutes and 44 seconds
MT. GOX COINS ARE BACK: DUMP IMMINENT?
So there are two big timeframe memes in bitcoin:
Mt. Gox coins returning
It’s like those “hot milfs in your area internet ads” - they promise a lot, only to rug-pull you.
The milfs are unfortunately still not looking for you, but it seems that Mt. Gox coins are set to return 142,000 BTC back to its creditors.
If you’re unfamiliar with Mt. Gox, go into the shame of corner. Then read this to learn why it’s a significant event in the history of bitcoin.
Anyways, after over a 9 years-long legal battle, the Mt. Gox creditors will start being repaid on March 10th.
So why are people freaking out about this?
Well, when Mt. Gox went down, BTC was worth $600. As I write this, BTC is $19k - a 35x increase.
In total, those Mt. Gox coins are worth $3B+.
And some investors fear the creditors will sell these coins, causing the price to dump.
That Lambo you’ve been eyeing? Not gonna happen.
But not all creditors will sell. Some of them are long-term holders. For example, the largest Mt. Gox creditor does not intend to sell his coins.
So should you sell all your bitcoin and return to your old McDonald’s job?
Short answer: no
There’s no risk of a crypto contagion event. Unlike FTX or Silvergate, the Mt. Gox coins are strictly insulated from second and third-order effects.
Many of the creditors’ claims have been bought by various investment funds. They bought the claims close to the BTC's current market value and will want to hodl for longer to get bigger profits (capitalism, baby!).
Remember how I said Mt. Gox coins returning is one of the longest-running memes?
Well, as I’m writing this email to you, the distribution deadline was pushed to October 31st - again.
At this point, you have better chances of finding a hot milf in your neighborhood than seeing the Mt. Gox coins get repaid.
IT’S OFFICIAL: SILVERGATE IS INSOLVENT
Last week I wrote about Silvergate having troubles.
Well, it’s official: Silvergate is shutting down operations and liquidating its $11B in assets.
Just like that, the largest crypto-friendly bank is no more. All we have left now are angry creditors and some hilarious memes.
Another one bites the dust (screams in Freddy).
Here’s a recap of why this matters:
Silvergate was the biggest TradFi bank that banked crypto companies (including Coinbase, Kraken, Gemini, and Crypto dot com).
With a major banking partner gone, there are risks:
The crypto market won’t function properly as exchanges struggle to stay liquid.
Exchange volumes will decrease. Silvergate made it easy to move $$$ in and out of the crypto market.
Other banks won’t step in. The risk to too high, or governments will simply stop them.
ELI5: the only functioning toilet at a local festival broke. Now people have nowhere to go for their toilet business.
So yeah, you could call it a ‘shitshow’.
But who will step in and fix the toilet?
There are a few crypto-friendly banks left that could play superman and save the day.
Silvergate will be a warning to other TradFi players who have been thinking about dabbling in crypto:
Silvergate was a profitable bank operational since 1988.
In 2016 they started offering crypto services
Now they’re bust
“Yeah…I’ll stick to robbing old people.” - banks, probably
While this would also affect the adoption of bitcoin, it would not kill it. Far from it.
Bitcoin would move underground and operate at the edges of financial systems, just like it did in the early days.
Bitcoin is different from crypto. It’s built with antifragility in mind.
This is why Bitcoin will survive. I can’t say the same about all the shitcoins out there.
Shoutout to @TheBTCTherapist for the memes.
SILICON VALLEY BANK UP IN FLAMES
Think I’m done talking about banks going bust?
No, the clown world news ain’t over.
As I was looking for a meme to finish this newsletter, the news about Silicon Valley Bank (SVB) being insolvent came out.
And it’s not looking good…
And it’s not just SVB. The rest of the banks are getting decimated too.
Or it looks very good - it depends on whether you want:
SVB clients (startups mostly) to be bailed out by big daddy government
Munch popcorn and see a bank run happen in real-time
Needless to say, it’s chaotic out there. Here’s what we know about the situation:
Yesterday, SVB was forced to shut down by U.S. regulators.
The bank was added to the "Failed Bank List," and $175B of customer deposits were seized by the Federal Deposit Insurance Corporation (FDIC).
It’s the worst bank failure since 2008. And except for Kung Fu Panda coming out, 2008 was pretty bad.
But why did SVB fail?
Well, it’s because they “invested” their customers' deposits in government bonds, which are highly impacted by shifts in interest rates (shoutout to my boy Jerome).
And as the Fed raised rates, those bonds lost value.
Wait…it’s as if... gambling with customers’ money is not a good idea. Who would have thought?
But people are finally waking up to the dangers of fractional reserve banking, which is good.
Thank Satoshi, we have bitcoin.
“But Arsen, SVB is TradFI bank. What does it have to do with bitcoin?”
This event will bleed into bitcoin. Let me explain:
Circle, the company behind the second biggest stablecoin USDC, announced it has $3.3B of its reserves stuck on SVB. This caused the stablecoin to de-peg to 80 cents.
Blockfi, a now-bankrupt crypto lender, has $227M on SVB.
Are you old enough to remember when Coinbase told you you can “always” redeem your USDC for $1?
Remember: there is no such thing as a “stablecoin”. They are as stable as the institutions that issue them (spoiler: not very stable).
My favorite stablecoins are satoshis. You can be damn sure that 1 sat = 1 sat. Forever.
By the way, to put things in perspective, SVB was the 16th largest bank in the U.S.
So yeah, no bank is safe.
Stay safe out there!
Was this email forwarded to you? You deserve your own 👇
Rabbit Hole Reads
Play stupid games, win stupid prizes. Multicoin Capital’s hedge fund reveals a 91.4% loss in 2023
LEAK: Binance tried to bribe the SEC. Binance planned to avoid the U.S. authorities and offered Gary Gensler an advisory role. Who needs Netflix when you have crypto?
A sweet win for Bitcoin. Paul “the internet is just a fad” Krugman gets blacklisted by Venmo.
This week in a meme
Dear, Silvergate, SVB, and Fed.
Thanks for the cheap sats!
Job of the week
Stacker News, a Lightning native publishing platform, is looking for ‘Everything Engineer’.
They say it's like Hacker News, but they pay you in bitcoin.
Platforms like this are important for the growing V4V trend in the creator space.
From the archive
10 years ago, an anonymous artist uses MS Paint to make this masterpiece.
And so the first bitcoin meme is born. The rest is history.
Shoutout to my French tutor for her patience.
If you like pain, I recommend learning French
Also, shoutout to all the new readers - I appreciate you.
That’s it for this one.
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See you next Sunday,
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Thanks!!! Very good content!
Great update. Next week will be interesting. I don’t own enough Bitcoin lol.