CRIMINAL CRYPTO CAPITALI$M

Coinbase tumbles after SEC warns of securities violations

The Coinbase app icon is seen on a smartphone, Tuesday, Feb. 28, 2023, in Marple Township, Pa. Coinbase’s stock is tumbling before the market open on Thursday, March 23, after the cryptocurrency trading platform received a warning from the Securities and Exchange Commission that it could possibly face securities charges. (AP Photo/Matt Slocum)

Shares of Coinbase tumbled 15% Thursday after the cryptocurrency trading platform received a warning from the Securities and Exchange Commission that it could face securities charges.

The cryptocurrency trading platform said in an SEC filing late Wednesday that it had received a Wells Notice from the agency, which indicates that regulators believe laws protecting investors were violated.

Among the practices being targeted by the SEC is “staking,” which is “Coinbase Earn” by the company.

Users of trading platforms can stake their cryptocurrency, essentially locking up some of their assets, in exchange for payment later, much like earning interest rates in a savings account. Those assets are used by platforms like Coinbase Global Inc. to guarantee other transactions taking place on the blockchain.

The SEC says Coinbase and other platforms must register as a securities platform to offer such services, and only after it is approved by the SEC’s Division of Corporation Finance.

A Wells Notice for Coinbase is another warning shot from SEC Chair Gary Gensler who is attempting to establish the agency’s oversight of crypto firms when they wander into areas typically associated with banking.



Kraken, a rival crypto exchange platform, agreed to settle in February for $30 million and to stop offering staking as a service.

Analysts that follow crypto and Coinbase said there is a significant threat for the company.

“We continue to see regulatory risk as meaningful for Coinbase given substantial (high quality) earnings growth potential from services like staking that are at risk of regulatory elimination,” wrote analysts with JP Morgan on Thursday.

Coinbase CEO Brian Armstrong lashed out at the SEC late Wednesday and the company has been critical of regulations related to staking, calling them vague.

“Going forward the legal process will provide an open and public forum before an unbiased body where we will be able to make clear for all to see that the SEC simply has not been fair, reasonable, or even demonstrated a seriousness of purpose when it comes to its engagement on digital assets,” Armstrong tweeted.

In a blog post, Coinbase Chief Legal Officer Paul Grewal said that the SEC matter was a “disappointing development.”

“Rest assured, Coinbase products and services continue to operate as usual,” Grewal said.

In January New York announced a $100 million settlement with Coinbase over what state officials called significant failures in the cryptocurrency trading platform’s systems for spotting potential criminal activity.

Under the terms of the settlement, the San Francisco company agreed to pay a $50 million penalty to New York state and will invest another $50 million in its compliance program. An independent monitor installed by the state will work with Coinbase for a year to oversee compliance.

That same month, Coinbase announced that it was cutting approximately 20% of its workforce, or about 950 jobs, in a second round of layoffs in less than a year. Coinbase announced the elimination of 1,100 jobs in June, or approximately 18% of its global workforce, in a first round of cuts.

Coinbase was founded in 2012 and has no headquarters. It went public in April 2021 by listing its stock directly and skipping the traditional process of hiring underwriters.

Cryptocurrency has been on a tear this year after plunging severely in 2022. Bitcoin climbed another 3% Thursday to $27,700 and is now up 68% for the year in an era of mass layoffs in the tech sector and widespread anxiety about stability in the U.S. banking sector.

Mysterious new behavior seen in whales may be recorded in ancient manuscripts

Feeding strategy recently discovered in whales may explain strange creatures described in Classical and Norse eras.

Peer-Reviewed Publication

FLINDERS UNIVERSITY

 

IMAGE: COD. 318FOL. 15V: HTTPS://WWW.E-CODICES.UNIFR.CH/EN/LIST/ONE/BBB/0318 CC BY 4.0, COLOR AND CONTRAST CORRECTED). view more 

CREDIT: COD. 318FOL. 15V: HTTPS://WWW.E-CODICES.UNIFR.CH/EN/LIST/ONE/BBB/0318 CC BY 4.0, COLOR AND CONTRAST CORRECTED).

In 2011, scientists recorded a previously unknown feeding strategy in whales around the world. Now, researchers in Australia think they may have found evidence of this behaviour being described in ancient accounts of sea creatures, recorded more than 2,000 years ago.

They believe that misunderstandings of these descriptions contributed to myths about medieval sea monsters.

Whales are known lunge at their prey when feeding, but recently whales have been spotted at the surface of the water with their jaws open at right angles, waiting for shoals of fish to swim into their mouths. A clip of this strategy was captured in 2021 and went viral on Instagram.

This strategy seems to work for the whales because the fish think they have found a place to shelter from predators, not realising they are swimming into danger.

It’s not known why this strategy has only recently been identified, but scientists speculate that it’s a result of changing environmental conditions - or that whales are being more closely monitored than ever before by drones and other modern technologies.

Dr John McCarthy, a maritime archaeologist in the College of Humanities, Arts and Social Sciences at Flinders University, first noticed intriguing parallels between marine biology and historical literature while reading about Norse sea monsters.

“It struck me that the Norse description of the hafgufa was very similar to the behaviour shown in videos of trap feeding whales, but I thought it was just an interesting coincidence at first. Once I started looking into it in detail and discussing it with colleagues who specialise in medieval literature, we realised that the oldest versions of these myths do not describe sea monsters at all, but are explicit in describing a type of whale, says Dr McCarthy.

“That’s when we started to get really interested. The more we investigated it, the more interesting the connections became and the marine biologists we spoke to found the idea fascinating.

Old Norse manuscripts describing the creature date from the 13th century and name the creature as a ‘hafgufa’.

This creature remained part of Icelandic myths until the 18th century, often included in accounts alongside the more infamous kraken and mermaids.

However, it appears the Norse manuscripts may have drawn on medieval bestiaries, a popular type of text in the medieval period. Bestiaries describe large numbers of real and fantastical animals and often include a description of a creature very similar to the hafgufa, usually named as the ‘aspidochelone’.

Both the hafgufa and aspidochelone are sometimes said to emit a special perfume or scent that helps to draw the fish towards their stationary mouths. Although some whales produce ambergris, which is an ingredient of perfume, this is not true of such rorquals as the humpback.

Instead, researchers suggest this element may have been inspired by the ejection of filtered prey by whales, to help attract more prey into a whale’s mouth.

Research co-author Dr Erin Sebo, an Associate Professor in Medieval Literature and Language in the College of Humanities, Arts and Social Sciences at Flinders University, says this may be another example of accurate knowledge about the natural environment preserved in forms that pre-date modern science.

“It’s exciting because the question of how long whales have used this technique is key to understanding a range of behavioural and even evolutionary questions. Marine biologists had assumed there was no way of recovering this data but, using medieval manuscripts, we’ve been able to answer some of their questions.”

“We found that the more fantastical accounts of this sea monster were relatively recent, dating to the 17th and 18th centuries and there has been a lot of speculation amongst scientists about whether these accounts might have been provoked by natural phenomena, such as optical illusions or under water volcanoes. In fact, the behaviour described in medieval texts, which seemed so unlikely, is simply whale behaviour that we had not observed but medieval and ancient people had.” 

The new paper on ancient descriptions of whales is: McCarthy, J., Sebo, E. and Firth, M., 2023. Parallels for cetacean trap feeding and tread-water feeding in the historical record across two millennia. Marine Mammal Science, pp.1-12. Accessible in full at https://onlinelibrary.wiley.com/doi/10.1111/mms.13009

The original 2017 description of the tread-water feeding behaviour by whales in the Gulf of Thailand is: Iwata, T., Akamatsu, T., Thongsukdee, S., Cherdsukjai, P., Adulyanukosol, K. and Sato, K., 2017. Tread-water feeding of Bryde’s whales. Current Biology, 27(21), pp.R1154-R1155. https://www.sciencedirect.com/science/article/pii/S0960982217312435 

A digital reconstruction of a humpback whale trap feeding (J. McCarthy).

CREDIT

John McCarthy, Flinders University

Icelandic Physiologus (c.1200) depiction of the Apsido feeding 

(Reykjavík AM 673 a II 4to fol. 3v Public Domain, color and contrast corrected).

Above: Ortelius's 1658 map of Iceland showing various mythological sea creatures. Below, a detail of a sea creature labelled H, ‘the greatest of whales’ which could not chase fish but caught them through cunning 

(Public Domain, color and contrast corrected).

VIDEOS

Bryde's Whales engaging in tread-water feeding in the Gulf of Thailand 2 (video courtesy of Surachai Passada, Department of Marine and Coastal Resources)

Bryde's Whales engaging in tre [VIDEO] | EurekAlert! Science News Releases

Bryde's Whales engaging in tread-water feeding in the Gulf of Thailand Close Up

Bryde's Whales engaging in tre [VIDEO] | EurekAlert! Science News Releases

JOURNAL

Marine Mammal Science

DOI

10.1111/mms.13009 

METHOD OF RESEARCH

Case study

SUBJECT OF RESEARCH

Animals

ARTICLE TITLE

Parallels for cetacean trap feeding and tread-water feeding in the historical record across two millennia

ARTICLE PUBLICATION DATE

28-Feb-2023

Crypto Regulatory Initiatives Show SEC’s Dominance Among US Regulators: JPMorgan

Will Canny
Thu, February 23, 2023 

Jesse Hamilton


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Recent regulatory initiatives have shown the Securities and Exchange Commission’s (SEC) dominant position in the U.S. in regulating the digital assets space, JPMorgan (JPM) said in a research report last week.

Its actions have also shown the SEC’s bias in viewing most crypto, with maybe bitcoin (BTC) as the only exception, as securities, the report said. It noted that SEC Chair Gary Gensler started pushing back against implementing special rules for the crypto industry in September, arguing that most cryptocurrencies should be classed as securities and thus be regulated under existing securities laws.

“Given the above it should not come as a surprise that the SEC looks at the offering of a staking service as being similar to offering any other type of security,” the note said. This opens the way for other firms offering staking services to have to be registered as a securities platform with the SEC, the report added.

The bank predicted more regulatory actions on stablecoin issuers, custody and protection of investors’ digital assets, and on the unbundling of broker/trader/lending/clearing/custody activities.

It also expects mandated regular disclosure, reporting and auditing of reserves, assets and liabilities across major crypto entities, analysts led by Nikolaos Panigirtzoglou wrote. These regulations will lead to “convergence of the crypto ecosystem towards the traditional financial system over time,” he added.

“Staking business should shift more towards direct staking for institutional investors and more towards decentralized (DeFi staking) alternatives for retail investors,” the note said. DeFi is an umbrella term for a variety of financial applications carried out on a blockchain.

Ether (ETH) will likely see additional selling pressure on Ethereum following the forthcoming Shanghai upgrade, as crypto exchange Kraken has 1.2 million ETH staked on the network, a significant amount of which is owned by its U.S. clients. Adding the 1 million ether from staking rewards that could be withdrawn immediately after the upgrade, the downside risk to ether becomes even more significant, the note added.

Read more: Bernstein: SEC Tightening of Crypto Regulations Is Not an Existential Threat.

Crypto Long & Short: Washington Plays Tennis With Crypto


Glenn Williams, Nick Baker, Jodie Gunzberg
Wed, February 22, 2023 

This week, Glenn Williams Jr. examines what politicians are saying about crypto regulation in Washington, D.C.

Then, Jodie Gunzberg, managing director of CoinDesk Indices, talks about the crypto sectors that continue to thrive despite the regulatory crackdown.
– Nick Baker

You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

A Descent Into Partisanship for Digital Assets Won’t Benefit Anyone

I took the time last week to tune into the Senate hearing on cryptocurrencies titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets.” Quarterbacked by Democrat Sherrod Brown and Republican Tim Scott, it focused on the need for increased regulation within the digital asset space, punctuated by recent industry collapses.

At times I question the importance of even monitoring these events. It’s getting to the point where if you’ve heard one, you’ve heard them all. One concern, however, is whether the regulation of digital assets is drifting more and more into partisan waters, which I think is negative for all involved.

If the discussion around cryptocurrencies devolves into a scenario where one’s stance can be accurately predicted by which side of the aisle they sit on, it will have sunk to a level of simplistic discourse; a new technology like crypto deserves better than that. For that reason I often find political discussions around crypto as more akin to political theater.

But if you’re going to operate within a sector, it makes sense to have an idea of which way the regulatory winds are blowing. It certainly makes sense to challenge your own ideas with ones that may be counter to your own. I would encourage all to watch it, even at 1.25x speed – which I may or may not have done.

(Highcharts.com)

Chairman Brown’s testimony appeared to target cryptocurrencies in general. The overarching theme from my perspective is that the sector itself is not just vulnerable to fraud, but intrinsically emblematic of it. My guess is that if I sat down with him and discussed cryptocurrencies, it would largely revolve around its usage in criminal activity and the “greater fool theory” – the idea that the only value crypto has to the owner is being able to sell it to a bigger fool in the future at a higher price. It’s worth noting, however, that his testimony concluded with a list of pre-existing financial regulatory methods. Examining where crypto fits within an already existing framework at least implies that a place is seen for it.

Ranking member Scott’s testimony seemed to center around the failure of current regulators, with Securities and Exchange Commission Chairman Gary Gensler singled out specifically. An acknowledgement that financial innovation is an engine for growth was stated, along with an emphasis on the need for existing regulation to be conducted in a timely and appropriate manner. My guess is that if I sat down with him and discussed cryptocurrencies, he’d ask me if I knew where Gary Gensler was.

From there, testimony was provided by Lee Reiners of the Duke Financial Economics Center, Professor Linda Jeng of the Georgetown Institute of International Economic Law and Professor Yesha Yadav of the Vanderbilt University Law School. Each provided their views on cryptocurrencies, discussing the harnessing of innovation, development of a self-regulatory organization (SRO) and the banning of cryptocurrencies outright. I think some of their suggestions warrant consideration, while other suggestions seem openly hostile to the asset class itself.

For example, a focus on clear disclosures by crypto exchanges makes perfect sense to me. A well-informed investor is prone to making decisions based on an underlying idea they believe to be true. It doesn’t guarantee that the idea is right, but at least it’s rooted in something.

The prohibition of the commingling of funds is also something that makes sense. I can’t think of a good reason why customer funds and firm funds shouldn’t be separated. It’s been the case for years within traditional finance, and for good reason.

The creation of self-regulatory organizations (SRO) within crypto rang as a viable option to explore as well. What also stood out is that it was presented as a practical (though not perfect) way to improve the current regulatory framework in short order. SROs exist within traditional finance, so a blueprint for implementing them already exists.

I take issue with the notion that bitcoin being 14 years old means it’s not a “new” asset class. While bitcoin’s genesis block was mined in 2009, a significant amount of trading activity has occurred within the last three to four years.

Moreover, it strikes me as incongruent to state bitcoin’s existence since 2009, but only noting its performance as an asset since 2021. The fall from $69,000 to $21,000 should absolutely be stated. But its rise in price from less than 10 cents to $21,000 since 2009 should be mentioned as well if the objective is to be balanced.

Still, what was most encouraging about the witness testimony is that, agree or disagree, I’m not able to automatically determine their political affiliation based on their recommendations. I don’t know if I can say the same for the people asking the questions, however.

There’s a cadence that is beginning to present itself in these hearings that mirrors that of a tennis match – one where politicians alternate back and forth between pro-crypto and anti-crypto statements, directing the bulk of their questions to whichever witness aligns most with their political party’s’ decided stance.

I sincerely hope that this does not become the norm. Extreme partisanship would be detrimental to all parties involved, because it will likely remove the nuance necessary to allow for technical innovation, while protecting individual investors from bad actors.

Ultimately, investor protection, financial inclusion and innovation are all necessary elements for healthy growth within the digital asset space. As members of the U.S. Congress work to achieve these goals, I hope that they view them more from the lens of individuals than as members of a political party.

– Glenn C. Williams Jr., CMT

Bitcoin, DeFi and Computing Thrive Amid Crypto Crackdown

After bitcoin’s (BTC) best January since 2015, it has retreated because the U.S. Securities and Exchange Commission is cracking down on crypto, and inflation was slightly hotter than expected. Despite these challenges, crypto continues to dramatically outperform traditional asset classes.

The CoinDesk Market Index (CMI), the broad measure of crypto returns, surged 6.5% in February through Feb. 16. Stocks haven’t done nearly as well, with the S&P 500 up only 0.5%. The Bloomberg U.S. Aggregate Bond Index fell 2.2%, while the Bloomberg Commodity Index lost 3.9%.

A key reason why crypto is doing so well: Bitcoin is on a tear because the Ordinals Protocol essentially brings non-fungible tokens (NFT) to that blockchain. “This has demonstrated a new, high-value use case for the longest-running cryptocurrency chain,” CoinDesk Chief Content Officer Michael J. Casey recently wrote.

(CoinDesk Indices. Bloomberg. Data ending 2/16/2023)

The big gain in the CoinDesk Bitcoin Price Index (XBX) shows the enthusiasm. But many other digital assets performed even better. There are 158 total digital assets in the CMI, and 109 of them did better than bitcoin. These outperforming assets were concentrated in the CoinDesk Digital Asset Classification Standard’s (DACS) DeFi and Computing sectors.

Although they make up only 2% and 1.4%, respectively, of the CMI’s weight, their gains stand out. Month to date, Computing is up 23.5%, giving it a gain of 91.5% so far this year. DeFi is up 12.4% in February and nearly 66% in 2023. Computing has been driven by excitement over artificial intelligence (AI), with ChatGPT and Bing dominating the conversation. DeFi is the sector many are looking to for greater security and infrastructure.

Although Computing and DeFi are relatively small by market cap, there are many constituents in each sector: Computing has 23 assets and DeFi has 39. So opportunities for big gains (alpha, for you pros) are plentiful.

(CoinDesk Indices. Data ending 2/16/2023)

However, bitcoin is still in high demand as the most established, largest, most-liquid asset with the longest track record and deepest derivatives market. So, in order to mix bitcoin with some of these potentially high performers, some market participants prefer the CoinDesk Large Cap Select Index (DLCS), which is similar in concept to other market-cap-weighted flagship indexes to measure various asset classes.

Still, the digital asset market is in its early days, so the concentration is high currently with five assets (which are in two sectors) accounting for 70% of the index’s market capitalization. Therefore, some prefer a broader sector exposure through the CoinDesk Market Select Index (CMIS) that spans five sectors with at least five market-cap-weighted assets from each sector.

– Jodie Gunzberg, CFA, managing director of CoinDesk Indices
Takeaways

From CoinDesk’s Nick Baker, here’s some recent news worth reading:

MT. GOX: Once upon a time, in the early days of crypto, there was an exchange called Mt. Gox (which stood for Magic: The Gathering Online eXchange, just to clue you into the vibe). The business collapsed spectacularly because of a 2014 hack. The ensuing bankruptcy process has dragged on and on, but there was important news last week that may signal the end is in sight: The two largest creditors picked the repayment option that could allay fears the restructuring will tank the price of bitcoin (BTC).

CANADIAN CRACKDOWN: Canada is close to boosting requirements on crypto exchanges, putting it toward the front of the pack in terms of tangible action in the aftermath of FTX’s collapse. Surely, it will not be the last to do something, though.

SHANGHAI VOLATILITY: The Ethereum Merge didn’t stir up ETH prices much back in September. But there’s reason to believe that Shanghai, the Ethereum upgrade that will allow staked ETH to be unstaked, could generate volatility.


JUMP CRYPTO: Last week the Securities and Exchange Commission didn’t identify the company that made more than $1 billion from the terraUSD/luna ecosystem before it collapsed. (The unnamed company wasn’t accused of wrongdoing.) But sources told CoinDesk that it’s Jump Crypto, which declined to comment.


BRAGGING: CoinDesk journalists won one of the biggest prizes in journalism, a George Polk Award, for the scoop that led to FTX’s collapse and two explosive followups.

To hear more analysis, click here or here for CoinDesk’s “Markets Daily Crypto Roundup” podcast.

One of Biden’s top COVID advisors believes vaccine critics ‘quietly’ got jabbed on the side

Eleanor Pringle
Wed, February 8, 2023 

David Kessler wasn't one of the people wheeled out in front of the press pack every day during the pandemic.

If he was on-screen, the White House's Chief Science Officer for the COVID-19 Response Team was often speaking to President Biden in a desperate bid to get the nation's response right "the first time".

When he got the call from the President's team in mid-2020 to help strategize a response to the strange and terrifying new disease, the former FDA commissioner believed he "wasn't good at it". Three years on he said he still feels that way, despite the fact that 269 million people have had at least one shot of a vaccine.

And even those who spread doubt about the jab rollout are likely to be among the 81% of the population who have had it, Kessler believes.- 

Speaking to Politico from his home in Maryland, the former head of Operation Warp Speed said: "The fact is, 226 million people got the primary series. Push comes to shove, many of those who are being critical of vaccines, I think quietly they’ve gotten the vaccine."

Having taken on Warp Speed after it was created under the Trump administration, Kessler also cautioned against those who confused a questioning mindset with undermining basic facts. Or, as he sees it: "Creating enough doubt so people go, well, maybe I don’t need to do this."

He added: "I’ve lived this before. In 1952, with the first data that smoking caused cancer. The mantra of the industry was, “not proven, not proven, not proven.” It created enough doubt that it gave people a crutch who didn’t want to quit. It gave them a reason to continue to smoke.

"These vaccines are not perfect. But certainly, if you’re over 50, if you have any risk factors, the benefit/risk [ratio] is just overwhelming. So yes, ask questions. But please make sure that people who need this, whose lives are really at risk, take advantage of a very important potentially lifesaving tool."

He added that disinformation would be the next frontier to battle, as the "virus is not done with us yet".

Kessler's Tucker Carlson regret

Although happy to have served out of the limelight, Kessler did reveal he had one regret: not sitting down with Fox News host Tucker Carlson to attempt to find some "common ground".

Carlson has long criticized the vaccine rollout, calling it "unethical" and "immoral" as well as peddling unfounded claims that vaccines are linked to cardiac arrest.

Kessler added opening communication between vaccine skeptics and the scientific community is core to America's "greatness", as it is a country built of people who "know how to solve problems together."
There's more work to do

That problem-solving may well need to be aimed at a next-generation vaccine, Kessler hinted. Time and again COVID has proved it can mutate –the latest strain, dubbed 'Kraken', is the most transmissible yet with a study warning it could spawn other immune-evasive mutations.

As well as needing to provide a level of protection against future strains Kessler added that they needed to be affordable.

President Biden announced at the end of January that the public health emergency would end in May, thus reducing some levels of government support. Among the measures will be the end of free at-home tests and hospitals not getting any extra cash for treating COVID patients.

The cost of getting vaccinated is also expected to rocket once the government stops forking out for them.

Pfizer said in October 2022 that it plans to sell the Covid vaccine it developed with BioNTech at $110 to $130 per dose for teens and adults once government funding runs out.

Kessler, who began serving the Oval Office under President George H.W. Bush at the FDA, announced his retirement at the start of this year.

He finished by saying there's a lot of work left to be done on COVID and that the road will be far from easy, but offered some optimism in that it was a "once-in-a-century" pandemic.

This story was originally featured on Fortune.com

Mining companies partner on lithium


Mon, January 30, 2023 

BURGEO — From Matador Mining and the Cape Ray Gold Project to Atlantic Minerals Ltd. and the Lower Cove Mine on the West Coast, the mining industry has been growing in Newfoundland and Labrador, and it appears that trend will continue. A joint venture near Burgeo has uncovered another significant mineral outcropping – lithium.

Andrew Parsons, Minister of Industry, Energy and Technology, said there are two companies presently involved in the discovery.

“One of them being Sokoman (Minerals Corp.) and Benton (Resources Inc.). It’s a joint play and they have what is called the Golden Hope Project. They are just west of the Burgeo highway and just north of Burgeo, and they’ve actually made an initial discovery, and they are very excited about what they’ve found, but it’s really early on,” said Parsons. “Since that time I’ve been made aware of another company called MLK Gold who are looking for the same thing in the same vicinity.”

Timothy Froude, President, CEO and Director of Sokoman Minerals Corp. said the companies are equal partners on the project.

“It’s a very large property and we staked it in the spring of 2021. It covers about 750 square kilometres and it straddles the Burgeo Highway. It doesn’t quite go down to Burgeo,” said Froude via phone interview. “It covers a pretty big swath of ground and it’s going to take us a little bit of time to get our heads around it.”

While the project, which consists of over 3,000 claims, was initially staked for gold with the Hope Brook Mine in the same area, prospectors happened to discover lithium.

“We were prospecting for gold when we discovered a series of lithium bearing dykes (the Kraken Prospect) about 12 kms west of the Burgeo Highway, 30 kms or so north of the town of Burgeo. In late 2022, we discovered a dyke (named Hydra) which is highly enriched in cesium, along with significant lithium, rubidium and tantalum, 12 kms to the northeast of the Kraken."

These dykes, called pegmatite dykes, are an igneous rock type that carry significant levels of obscure minerals like lithium, cesium, and tantalum.

“We’ve moved up to the next level and put a camp in. There is a camp there now, but we’re not occupying the camp because winter is a difficult time to explore down there with the windy conditions and white outs. It’s not very safe, so field work will probably start again down there around April. The snow won’t all be gone, but the days will be longer and it will be warmer.”

These minerals are a critical aspect of the greener economy the country and province are currently focused on.

“This is still really early on. At the end of the day, mining is a boom and bust industry and it very much depends on factors that are out of our control, such as the price of the commodity, and it comes down to demand. But right now, these are minerals that are very much in demand for what they call the ‘green economy,’” said Parsons.

Even though the resources themselves are non-renewable, the impact they have on the economy is significant.

“When you’re talking about a non-renewable resource, you have to ensure you get the best value for it that you can because once you take it, it’s gone,” explained Parsons. “No different than producing oil. The thing is that it has a value. It’s a resource that belongs to the people, and it’s these resources that pay for our social systems that we rely heavily on, our healthcare system, education, all these other things that we’ve grown to rely on, and it’s got to be paid for somehow. Resources are what pay for it.”

As with any large undertaking, environmental impacts are always a concern.

“Anything they do still goes through an environmental process, same as any other natural resource development, so there’s nothing that I’ve been made aware of that’s any different from any other extraction or natural resource processes,” said Parsons. “Anybody who wants to do anything in this province has to go through an environmental application process and, depending on what you’re trying to do, there are different levels to that. If anything, given the need for lithium as a critical mineral, I think you’re going to see more of it, not just in Newfoundland and Labrador, but worldwide.”

Froude said the project is still considered a grass roots project and is a low-impact exploration.

To date there have not been any formal Indigenous consultations, but both companies employ Indigenous workers, including Benton Resources, whose President and CEO, Steve Stares, is a Qalipu member.

“Yes, there will be local ground disturbances for the camp and drill setups, but we reclaim and backfill sites we feel are low potential as we go. We also operate under a series of guidelines and requirements that are mandated each year in our work permits that have to be renewed each year,” said Froude. “We don’t do things unchecked.”

The project, which are actually two separate entities – the gold project and the lithium (and other critical minerals) project – will remain under the same umbrella, and the hope is for multiple strike sites.

“We already have two prospects 12 kms apart (Kraken and Hydra) so the potential is high for others,” said Froude.

Currently the camp in place is a 10-person camp, but there is much indirect and contract work that contribute to the necessary manpower, which would undoubtedly increase if and when a mine is put in place.

“We are a long way from a mine yet, many years in fact. The results of the work this year will go a long way towards giving us the information we need to determine whether or not the project has a chance,” said Froude.

The project will also carry a hefty budget.

“We are budgeting between $3 and $5 million this year for the project, of which nearly all will go to NL-based workers and businesses. This will include businesses in Burgeo, Springdale, Clarenville, Stephenville, with employees coming from all over the island.”

Froud said they source locally whenever possible, which means significant benefits to the surrounding communities.

“We also have a joint venture project with Benton just north of the tiny village of Grey River, where we’ve been drilling for gold there for a couple of years, and we’re part of the family down there now I think,” said Froude.

“We’ve grown attached to the place and for the past two Christmases, in fact, we’ve bought a turkey for every household in Grey River just to ease the burden. Anything we can do to help out, and right now I’m in the process of trying to scratch up some funds because we got a request from the principal of the school in Grey River to help fix up the playground for the kids who are there. So we’ll be donating to that and helping out as much as we can. We do try to help out and we will continue to do that. It’s part of our corporate responsibility as a good corporate citizen.”

Even though the company itself is primarily a gold company, Froude said they are also an exploration company.

“We don’t throw stuff away that we’re not looking for. It’s part of my mission and mandate as CEO to evaluate any and all possible commodities to the benefit of the local community first and the shareholders second, so I’m really excited,” said Froude. “I’ve worked in these types of rocks before, a long time ago up in Ontario, and I never considered Newfoundland as a go-to spot for these sort of things, but Newfoundland is obviously full of surprises. We’re one of the busiest gold exploration areas in the country right now and there’s a lot more gold out there then people realize, I think. We are also trying to prove to the world that Newfoundland and Labrador is a destination of choice, not just for copper, zinc, iron ore, and nickel, but things like lithium and cesium that I’m still learning about."

Jaymie White, Local Journalism Initiative Reporter, Wreckhouse Weekly News

Burgeo

Burgeo is a town in the Canadian province of Newfoundland and Labrador. It is located mainly on Grandy Island, on the south coast of the island of Newfoundland. It is an outport community. Wikipedia

CRIMINAL CRYPTO CAPITALI$M;FTX

UPDATED

Former FTX US President Accuses SBF of ‘Gaslighting and Manipulation’

André Beganski

Sun, January 15, 2023

Former President of FTX US Brett Harrison shared details of his tenure under Sam Bankman-Fried on Saturday, distancing himself from the disgraced crypto mogul who’s been charged with a series of financial crimes.

In a flurry of Twitter posts, Harrison accused Bankman-Fried of “gaslighting and manipulation,” claiming he was isolated as a leader while working to build out the defunct cryptocurrency exchange’s presence in the U.S.

Harrison stepped down from FTX’s U.S. division in September, just weeks before Bankman-Fried’s crypto empire began to crumble—but says his relationship with the former CEO had begun to fall apart long before that.

“My relationship with Sam Bankman-Fried and his deputies had reached a point of total deterioration, after months of disputes over management practices at FTX,” he wrote.

Former FTX US President Promises to Share More Information ‘In Time’

While Harrison led FTX US for a total of 17 months, the former high-ranking employee said he threatened to leave the company in April of last year—just 11 months into his role—over “organizational problems” that he identified with FTX’s structure.

Harrison said one issue he flagged was the separation of FTX’s legal, development, and executive teams, which had influence over both FTX US and the company’s international exchange, according to Harrison.

Harrison said Bankman-Fried ultimately disagreed with the suggested structural changes early on in his role at FTX US, describing the FTX founder as stubborn and spiteful when his authority was questioned.

Harrison added that he faced “tremendous pressure not to disagree with Sam” as president of FTX US, along with other employees who worked within the cryptocurrency exchange’s U.S. division. He said the team’s professional background was rendered “irrelevant and valueless.”

“I wasn’t the only one at FTX US who disagreed with Sam and members of his inner circle,” he stated. “FTX US was staffed with experienced professionals from US finance firms, law firms, and regulated exchanges.”

Other sticking points Harrison said he identified were “the delegation of managerial responsibility and controls,” which he said were handled by Bankman-Fried and other company executives based in the Bahamas, where FTX was based.

He also wanted to make more transparent the software development responsibilities of FTX co-founder Gary Wang and Nishad Singh, the former FTX engineering chief who is now seeking a cooperation deal with federal prosecutors in New York pertaining to Bankman-Fried’s criminal trial.

Attorneys in the Southern District of New York filed charges against Wang last month, as well as the former CEO Alameda Research, Caroline Ellison, who led the trading firm founded by Bankman-Fried before FTX. Wang and Ellison are both cooperating with investigations into FTX. Singh and Harrison have not been accused of wrongdoing.

Prosecutors have charged Bankman-Fried with eight criminal charges, including fraud and money laundering. He is accused of siphoning billions of dollars worth of customer funds away from FTX to cover trades made by Alameda, donate to political campaigns, purchase private real estate, and expand his business.

After submitting a formal complaint about issues he identified with FTX’s structure, Harrison resolved to leave the company upon receiving backlash, stating he was “threatened on Sam’s behalf” that he would be fired and his professional reputation ruined.

FTX US President Brett Harrison Stepping Down, Shifting to Advisory Role

Harrison explained he was initially sympathetic towards Bankman-Fried’s unfavorable leadership, stating he thought “addiction and mental health problems” could’ve been a contributing factor.

The former FTX US president had come to know Bankman-Fried as a junior trader at New York-based trading firm Jane Street, where Ellison also got her start in finance as an intern. Harrison had worked there for over seven years prior to roles at Citadel Securities and Headlands Technologies.

In addition to the proficiency Bankman-Fried displayed in a programming class he taught, Harrison developed a positive perception of Bankman-Fried as a “sensitive and intellectually curious person who cared about animals,” and senior traders “indicated he had promise.”

During Harrison’s time at FTX US, the company was hit with a cease-and-desist-letter from the Federal Deposit Insurance Corporation over a false and misleading statement made by Harrison. In a now-deleted Tweet, Harrison had claimed “direct deposits from employers to FTX US are stored in individually FDIC-insured bank accounts in the users’ names.”

When asked about the statement via Twitter on Saturday by EZPR founder and CEO Ed Zitron, Harrison blocked Zitron’s account, according to a recent post made by Zitron. Zitrion told Decrypt that Harrison’s move was “laughable.”

FTX US Hit With FDIC Cease-and-Desist Over 'False and Misleading' Statements

Harrison did not respond immediately to requests for comment, but he replied to Zitron’s question stating “it’s impossible to have a good faith or fact-based discussion” about the incident on Twitter.

When Harrison departed from FTX US in September, he announced that he would be shifting into an advisory role with the firm over the next few months but wouldn’t be leaving the crypto space in his next role.

“I don’t doubt my experiences in this role will be among the most cherished of my career,” he stated. “I’ll be assisting Sam and the team with this transition to ensure FTX ends the year with all its characteristic momentum.”

Harrison is currently launching a crypto software company, for which he recently sought funding at a valuation of up to $100 million, Bloomberg reported last month. In a reply to Harrison’s thread on Saturday, American financier and former White House director of communications Anthony Scaramucci identified himself as an investor.

Scaramucci's investment firm Skybridge Capital received $40 million from Bankman-Fried's FTX Ventures in September in exchange for a 30% stake in the investment firm. FTX was also featured prominently as a sponsor at SALT New York last year, a networking event affiliated with Skybridge.

“I am proud to be an investor in your new company,” Scaramucci stated. “Go forward. Don’t look back.”

 

Meet Sam Trabucco, the Alameda exec who oversaw the development of the crypto hedge fund's ultra-risky trading strategies

Morgan Chittum
Sun, January 15, 2023 

Sam Trabucco was the co-CEO of Alameda Research.

Sam Trabucco was Alameda Research's co-CEO. He left the crypto hedge fund a few months before its collapse.


Before he left Alameda, he reportedly went on a $10 million all-cash property buying spree and bought a 52-foot yacht.


US prosecutors have not alleged Trabucco with any wrongdoing.

Sam Trabucco stepped down as the co-CEO of trading firm Alameda Research in August, just months before Sam Bankman-Fried's crypto empire filed for bankruptcy and lost $8 billion of customer money.

Around the time of his departure in late August, he tweeted, "But if I've learned anything at Alameda, it's how to make good decisions – and this is the right one for me."

Whereabouts of Trabucco, who has not been accused of any wrongdoing, are unclear. Here's what we know about one of the top executives at Alameda Research.

Bankman-Fried was the sole CEO of Alameda from its inception until October 2021 when Ellison and Trabucco took over. Trabucco was formally in his role as Alameda's co-CEO for less than a year, according to a court filing, from October 2021 to August 2022.

Trabucco, 30, hasn't publicly been accused of any wrongdoing. He stepped down from the company in August, shifting Caroline Ellison into the role of Alameda's CEO.

Trabucco significantly reduced his role at Alameda in this months leading up to his departure. He couldn't "personally continue to justify the time investment of being a central part of Alameda," he tweeted, adding that he would be staying on as an advisor to the company but would not have a "strong day-to-day presence."

Trabucco wanted to "prioritize other things."

"What other things? I'm really not sure, exactly. Lately I've been really happy, spending a lot of time traveling, visiting friends and family, working on 'myself' and whatnot," he said. "Also I bought a boat, that's been cool. I needed to relax, and I'm really, really happy."

Before he left Alameda, it was reported that Trabucco a went on a $10 million all-cash property buying spree, purchasing two luxury apartments in San Francisco, according to Protos. He also bought a 52-foot yacht, which he called "Soak my Deck." The Financial Times reported that Trabucco even paid a freelancer on Fiverr to design the boat's logo.

A little over a month after his departure from FTX, Trabucco tweeted: "Why are journalists so excited to make my stepping down about something other than a desire to go fast over the nice water."

Bankman-Fried and Trabucco have known each other for over a decade. They met at a five-week math camp at Mount Holyoke College in 2010, where Trabucco said Bankman-Fried rarely slept during his stay, Insider reported.

The two later reconnected in college at Massachusetts Institute of Technology, where Trabucco studied math and computer science. Before joining Alameda as a trader in 2019, he had a stint as a quant trader on Susquehanna's bond exchange-traded fund desk, according to his LinkedIn.

In a press release announcing Trabucco and Ellison's move to become co-CEOs, the company said the two will "oversee all operations at Alameda while also collaborating to execute on the strategy the organization" and "focus on managing the trading desk."

The former exec was an aggressive crypto trader, employing risky bets in Alameda's business. Trabucco has indicated in a series of public comments that he also employed poker and blackjack strategies in trading, Bloomberg reported.

"Bigger is Bigger (when Betting is Better)," he tweeted in January of 2021, explaining how his gambling experience shaped his trading methods. "Getting it in good is a poker term referring to the idea that, when your odds are best.... you wanna bet more."

When crypto exchange OKX suspended user withdrawals on its platform in January of 2021, Alameda began buying out positions of investors wanting to reduce exposure.

"Not only are we not sellers, we're HUGE buyers -- even though it's risky -- because, in fact, we can take the risk and this trade is GREAT according to what we know -- was crucial, and it's something we're always aiming to do," he tweeted.

As for his involvement in FTX's downfall, US prosecutors have not said Trabucco was involved in any wrongdoing even as he worked in Alameda's C-suite with several execs who are now facing a slew of charges.

"[Sam] is not really involved in day-to-day operations in Alameda," Trabucco told CoinDesk in October of 2021. "Caroline and I have been leading the charge [at Alameda] for quite some time."

Despite his claims to the news outlet over a year ago,"Bankman-Fried remained the ultimate decision-maker at Alameda, even after Ellison and Trabucco became co-CEOs," the US Securities and Exchange Commission said in its complaint against the fallen FTX CEO.

The court document reads: "Bankman-Fried directed investment and operational decisions, frequently communicated with Alameda employees, and had full access to Alameda's records and databases."

Trabucco did not respond to Insider's request for comment.

FTX Collapse: Bankman-Fried Takes On a Powerful Law Firm

The disgraced former crypto king continues to tell a version of events that ignores regulators' allegations against him.

LUC OLINGA
JAN 14, 2023 

Sam Bankman-Fried faces a series of criminal and civil charges, including alleged fraud.

The trial of the disgraced founder of cryptocurrency exchange FTX and its sister company Alameda Research, a hedge fund and trading platform, is scheduled for October.

Bankman-Fried was released on bail on Dec. 21 after being extradited from the Bahamas where he lived and where FTX's headquarters were based.

The former trader pleaded not guilty on Jan. 3 during a hearing in New York.

Facing the court, he remained silent but since Bankman-Fried, known by the initials SBF in the crypto space, has resumed speaking on social networks. He tries, as during his apology tour at the end of November/beginning of December, to exculpate himself. In doing so, he tries to blame others.

He has just done this in a blog post in which he points the finger at the powerful law firm Sullivan & Cromwell. To be clear, Bankman-Fried is not accusing Sullivan & Cromwell of any wrongdoing related to FTX or Alameda Research.


Jabin Botsford/The Washington Post via Getty

'I Would Sometimes Work Out of S&C's Office'

He accuses Sullivan & Cromwell of conflicts of interest. He also claims that the law firm forced him to file for bankruptcy and to choose John Ray, the new CEO of FTX, as liquidator of FTX and Alameda Research. Basically, if his empire is in disarray it is the fault of Cromwell & Sullivan because there were other options than bankruptcy, says Bankman-Fried.

"Senators have raised concerns about a potential conflict of interest from Sullivan & Crowell (S&C)," the former crypto emperor wrote. "Contrary to S&C’s statement that they 'had a limited and largely transactional relationship with FTX', S&C was one of FTX International’s two primary law firms prior to bankruptcy, and were FTX US’s primary law firm."

He continued: "FTX US’ GC came from S&C, they worked with FTX US in its most important regulatory application, they worked with FTX International on some of its most important regulatory concerns, and they worked with FTX US on its most important transaction. When I would visit NYC, I would sometimes work out of S&C’s office."

GC stands for General Counsel. FTX US is the American subsidiary of FTX. Consumers residing in the United States wishing to buy or sell cryptocurrencies and other digital assets (NFTs) via FTX could only do so through FTX US, an entity based on American soil.

"S&C and the GC were the primary parties strong-arming and threatening me into naming the candidate they themselves chose as CEO of FTX -- including for a solvent entity in FTX US -- who then filed for Chapter 11 and chose S&C as counsel to the debtor entities," Bankman-Fried asserted without providing any evidence.

Sullivan & Cromwell did not respond to a request for comment.

The law firm is FTX's lead counsel in its bankruptcy.

'Pressured'

Four U.S. senators -- Sens. John Hickenlooper (D-Colo.), Thom Tillis (R-N.C.), Elizabeth Warren (D-Mass.) and Cynthia Lummis (R-Wyo.) -- recently wrote to Delaware Judge John Dorsey to point out that, given the past relationship between FTX and Sullivan & Cromwell, the law firm was not in the best position to deal with the current bankruptcy proceedings.

The bipartisan group of senators wrote that the law firm has "advised FTX for years leading up to its collapse and one of its partners even served as FTX’s general counsel."

As a result, "the firm is simply not in a position to uncover the information needed to ensure confidence in any investigation or findings."

"The firm had a limited and largely transactional relationship with FTX and certain affiliates prior to the bankruptcy,” Sullivan & Cromwell responded in a statement according to Bloomberg. A "broad team of sophisticated professionals, including conflicts counsel,” is advising FTX in bankruptcy.

The law firm has already said in court documents that it collected $8.5 million from FTX for work related to regulatory requests and transactions.

Dorsey found the senators' letter 'inappropriate' but said he will "make my decisions on the matters referred to in the letter based only upon admissible evidence and the arguments of parties and interest presented in open court."

Bankman-Fried says there was another option other than bankruptcy.

"Despite its insolvency, and despite processing roughly $5b of withdrawals over its last few days of operation, FTX International retains significant assets – roughly $8b of assets of varying liquidity as of when Mr. Ray took over," he asserted without providing evidence.

"In addition to that, there were numerous potential funding offers – including signed LOIs (letters of intent) post chapter 11 filing totaling over $4b. I believe that, had FTX International been given a few weeks, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole."

Bankman-Fried is not optimistic.

"Since S&C pressured FTX into Chapter 11 filings, however, I worry that those pathways may have been abandoned."

Why the IRS Has an Interest in the FTX Bankruptcy Case


Stacy Elliott
Sat, January 14, 2023

Of all the crypto bankruptcies over the past year, the FTX Chapter 11 proceeding is the only one that’s had a Department of Justice attorney assigned to represent the Internal Revenue Service.

Deputy Attorney General David Hubbert filed notice for Department of Justice trial attorney Elisabeth Bruce (replacing attorney Warren Benson, who was assigned in December) to appear in the FTX bankruptcy proceedings on Thursday.

There’s been no indication of the IRS’s exact interest in the case. A call to the IRS’s press office from Decrypt yielded a decline to comment. It’s also not clear if the agency plans to pursue its own litigation against the bankrupt crypto exchange. But the fact that it's involved at all is notable, especially given the IRS's prior interest in the customer data of major crypto exchanges such as Coinbase and Kraken.

FTX, founded by ex-CEO Sam Bankman-Fried, filed for bankruptcy on November 11. In the days leading up to its voluntary filing, the company saw billions worth of assets pulled off its crypto trading platform, was almost acquired by competitor Binance, and then froze withdrawals in a last-ditch attempt to stay afloat.

It was a sudden and spectacular downfall that caught the attention of U.S. regulators and law enforcement. Sam Bankman-Fried has since been arrested and charged with eight financial crimes. Members of his inner-circle Caroline Ellison and Gary Wang have already pleaded guilty and are cooperating with prosecutors as Bankman-Fried awaits trial.

Meanwhile, the FDIC, Federal Reserve, and Office of the Comptroller put out a joint statement two weeks ago, warning that crypto isn’t “safe and sound.” The White House has ramped up its call for regulation (while fielding questions about meetings between Bankman-Fried and President Joe Biden).

As for the IRS, Miles Fuller, TaxBit’s director of government solutions, told Decrypt that it seems the agency has more than a passing interest in the case.

Normally when debtors file for bankruptcy, those cases get assigned to an insolvency unit within the IRS, he said. The unit keeps tabs on the case and, if the IRS becomes a creditor in the proceedings, they file a proof of claim without getting lawyers involved.

He would know. Fuller spent 15 years working as an attorney at the IRS before joining TaxBit last year.

“If there was some very administrative thing that just needed to be handled, the Department of Justice's tax division is like, ‘Yeah, we don't care about that. We'll let you guys handle that,’” Fuller said. “But for any sort of really substantive tax related matter or high profile tax matter, they say, ‘No, no, we want to do that.’”

TaxBit, a tax software and crypto account firm, raised $130 million last year at a $1.3 billion valuation. That made it one of the rare startup unicorns in the middle of a not so great year for most of the crypto industry.

DOJ, IRS Target Tax-Evading Clients of Crypto Broker SFOX

Fuller said it’s possible, but a long shot, that the IRS is trying to get its hands on the customer list that FTX was given permission to keep private for another three months. If that were the agency’s interest, it wouldn’t be completely unprecedented. The IRS has issued John Doe summons seeking information on potential tax evaders to crypto firms Coinbase, Kraken, Circle, and SFOX.

Fuller suggested the IRS could also be working on guidance for how customers who have lost money in FTX, or other crypto collapses, can claim their assets at a loss without having to wait for the full bankruptcy proceeding to play out. The agency created a rule for victims of theft and Ponzi schemes in 2009 following the Bernie Madoff case.

Lisa Zarlenga, a tax attorney and partner at Steptoe & Johnson in D.C., said she’s not as optimistic about the IRS making accommodations for FTX victims.

Court Greenlights IRS Access to Kraken’s Customer Data

“You're probably still in limbo because you're gonna have to wait for the bankruptcy to play out. You could recover something, and so it's not really a closed transaction yet. They haven't actually incurred the loss,” she told Decrypt. “Some people have talked about triggering a loss by abandoning something, but can you even abandon a crypto account?”

She’s gotten the sense that most customers would prefer to wait and see what they can get from the bankruptcy, even if it means they forgo any immediate benefit. As for the IRS sending a Justice Department attorney to represent it in the case, she said her initial thought was that the agency is getting in line to file its own claim. Why? FTX—or one of its 130 entities—could owe the government money, she said.