When FTX.com, one of the largest crypto exchanges, was instantaneously vaporized yesterday, Coinbase put out a statement, the gist of which was dont worry, we are not going to be instantaneously vaporized. The part that I want to focus on is this paragraph: There cant be a run on the bank at Coinbase. Today's episode title: "Trivia, Smarts & The Melodica". I felt both that the job was bad and that I was bad at it, he said. The more people who sign up for accounts, and the more they trade, the happier Robinhood is. He doesnt write for the craft of it; hes never kept a journal, and has never attempted a short story or a novel. Here's a recap of the clues on Master Minds (Season 3) for Thursday, January 12, 2023 with host Brooke Burns. Ordinarily the way that you will borrow it is by putting up the customers Bitcoin as collateral to your lender, just as the customer puts up its Bitcoin as collateral to you. Also Elon Musk theories and insurance underwriting. 5. And a surprising subset of them will email me. One classmate, the journalist Elie Mystal, had a lot to say about Mr. Levine as an undergraduate that he was the valedictorian of their class; that he partied, too; that he once suggested applying Etruscan decision-making processes to the question of what to do next during a late night out but he placed a special emphasis on the footnotes. It makes for a tricky decision for Zhao, known in the crypto world as CZ: Follow through with rescuing his onetime top rival and shoulder the financial and regulatory burdens, or let FTX crumble and sort through the potential wreckage? There is even an RSS. Dont get me wrong, this would be a catastrophe for the bank: If everyone took their envelopes back, then presumably they would stop changing money at the bank and paying fees, and the bank would stop making money, and it would no longer be able to pay for real estate or tellers or vaults or executive bonuses. A group of fans once made themselves T-shirts bearing the text of one of his tweets about cryptocurrencies. The Corporation is for sale. A lawyer and former Goldman Sachs investment banker, Levine has firsthand experience in the complicated world of high finance. Here is my author page, possibly. Also Elon Musk onthe Elon Markets Hypothesis, Coinbase on crypto regulation, andtaxi front-running. Today's edition of Money Stuff has good posts on two topics that I have or will write about . Today's challengers: Caroline, Matt, Indra. Money Stuff October 26, 2022 1:01 AM Subscribe. Also the fact that Customer C had all that FTT in the first place is not a great sign. His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October 2020. Founders sell business risk in exchange for the cash they need to take bigger risks; venture capitalists buy that risk hoping it will one day transmute into reward. You can check your account balance, and Coinbase says you have 0.5 Bitcoin or whatever. There has been a blow-up this week on the internet about Facebook's apps. Binance is unlikely to follow through on its takeover of FTX, according to the person familiar, who wasnt authorized to publicly discuss the matter. But the other weird thing about this bank is that, every day, you come in and say hey Id like to exchange my dollars for euros or my euros for pounds or whatever, and each time you do that the bank charges you a dollar. Hovnanian will refinance its I write about finance for Bloomberg Opinion. If everyone is worried about that, they will all take their money out of FTX. Do you think that there is a big financial firm in the US that got through the entire pandemic without any employees doing any business over WhatsApp or text messages from their personal phone? Levine's analysis in his column have been widely covered by other newspapers. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen . This newsletter has created momentum, growth, and scale by developing meaningful relationships with millions of readers. [1] Levine has previously been a lawyer, investment banker, law clerk, and has written for a number of newspapers and financial sites. If youre worried about that, you should take your money out of FTX before the crash. Your dollar loan to Customer A is now underwater: You loaned her 50% of the value of her Bitcoin, but Bitcoin fell by 90%, so she owes you more than her collateral is worth. I dont have that.. "Elon, Matt Levine really wants you to keep changing your mind on Twitter . Futures, risk, fraud, securities fraud and Wirefraud. BeSpacific - 3rd Place. To contact the editor responsible for this story: Thanks! Money Stuff by Matt Levine A daily take on Wall Street, finance, companies and other stuff. articles a month for anyone to read, even non-subscribers! So whereas the basic model of Coinbase is they buy Bitcoin for you and put it in an envelope, the basic model of FTX has to be they lend you money to buy crypto and then make use of your crypto to get the money. In financial terms, they have to rehypothecate your collateral; you cant expect them to just keep it in an envelope if theyre lending you the money to buy it. This means that funds are available to our customers 24 hours a day, 7 days a week, 365 days of the year. In this description I have drawn on Twitter threads from Jon Wu, Lucas Nuzzi and an anonymous Wassie Lawyer, who make arguments along these lines, as well as this Substack post from Byrne Hobart. You say sure, sounds good, and hand over all your collateral. On April 20, something occurred that was unprecedented in the history of financial markets: The price of oil went negative. Lately my favorite read has been Matt Levine's Money Stuff articles from Bloomberg News. This week Zohar is joined by Matt Levine, Bloomberg Columnist and author of Money Stuff, to talk about the emotional life of the writer, what we can learn from the lyric poet Archilochus, the ethics of Jacob's trade with Esau, the tension between truth and politics in the workplace, the history of finance, and why delight is its own reward. Bloomberg's web site requires a subscription but you can also get the Money Stuff articles as an occasional email.It arrives at most once per day. Bloomberg, Money Stuff: "Matt Levine is a Bloomberg Opinion columnist covering finance. JPMorgan Says Frank Was Fraud. ChatGPT Sounds Exactly Like Us. High up is brushing tongue, a thought that occurred 150.0 times per year, and earplugs, at 100.0 times per year. And that is a run-proof business. Matt Levine's "The Crypto Story": Postscript . saving money or hanging out which in itself is a fantastic offer. Be part of a community of people who share your interests. Often, a significant chunk of the newsletter is devoted to a legal battle between sophisticated counterparties, or a complex financial product. Also Gemini Earn, index funds and bored traders quitting. Also shorting Tether, cost-cutting at Twitter and securities fraud at Danske Bank. Oh, various possibilities. Sign up now so you don't miss the first issue. That was the height of the GameStop Corp. meme-stock mania: The whole worlds attention was focused on the soaring price of GameStop stock, which was leading a lot of people to sign up for Robinhood and trade GameStop, and GameStop was very volatile and so Robinhood got paid a lot for trading it. If youd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. You can subscribe at this link, or read the archive at this link. FTT goes down, leaving FTX undercapitalized, leading to customer withdrawals, leading to ruin. Depends how you define "Blog Post". Oil is voluminous and oozy and poisonous and flammable and smelly, Mr. Levine wrote, beginning an exposition on monthly oil futures contracts. Has it been borrowing elsewhere against FTT? If, say, the operator of the biggest crypto exchange gently raises one eyebrow and says FTT, eh? that can be enough to topple FTX. I type really fast! Levine says. For the rest of you: Money Stuff will be off tomorrow and Monday, back on Tuesday. Financial regulators are looking at the biggest private equity firms use of WhatsApp and other messaging apps for work, in a signal that the US is ramping up its push to police Wall Streets electronic communications. Robinhood Markets Inc. is in the business of getting people to trade stock (and options, and cryptocurrencies) on their phones. Above the Laws sister blog Dealbreaker, focusing on Wall Street gossip was hiring. My life has not been ruined by having to write about Elon Musk on Saturdays, the former mergers and acquisitions lawyer told me. You have no Bitcoins to give to the customers to whom you owe Bitcoins, no dollars to give to the customers to whom you owe dollars. Mr. Levine tried to write like that, with snarky punch lines, and failed. Everyone knows this, which is why crypto exchanges and securities broker-dealers, who have the same basic business model spend most of their time thinking about risk management. . A circumscribed life of prosperity and billable hours seemed destined. [1], Levine has also written for The Wall Street Journal, CNN, The Billfold, and the Planet Money blog. If you are a sophisticated modern crypto exchange like FTX, you will have automated 24/7 margining systems that automatically liquidate trades that have gotten too risky, so that only the rarest catastrophic market moves could get you in trouble. Tesla Inc. Chief Executive Officer Elon Musk sold at least $3.95 billion of the electric-vehicle makers shares just days after closing his buyout of Twitter Inc. Musk unloaded 19.5 million shares, according to regulatory filings on Tuesday in New York, his first disposals since August. . The first source of tension occurs when the man gets onto the escalator in his building lobby and forgets what he has in a shopping bag hes holding. I joke that people want a lock of his hair.. His column discusses current events in corporate finance and markets, with an insightful, nuanced lens and a dry wit. And a surprising subset of them will email me. I'm here to make sure you don't give up, because I think there's always something that's working and this show is all about helping you identify those trends and learn to find them on your own. View stories on our mobile app and tune into our weekly podcast. GSO had bought CDS protection that would pay off if Hovnanian defaulted. The co-founders of Instagram, which Facebook Inc. bought in 2012, quit on Monday (Sep. 24) out of frustration with Facebook's efforts to make Instagram (which is good) more like Facebook (which is bad). Levine was also a law clerk for the U.S. Court of Appeals for the 3rd Circuit. The problem with this is that it is wrong-way risk. If Ms. Levin found an audience by tearing down the personalities of Wall Street, Mr. Levine set to work pulling apart its structures, to better explain the wiring in the walls. Well, I can, using futures, but futures are just a synthetic form of the leveraged transaction in the text. Twitters ad business is not recovering. Real banks take deposits but dont keep the money in envelopes; they lend it out. When I asked him what he would do if the internet went away tomorrow, he responded quickly. Red Flags Are (Mostly) in the Eye of the Beholder, By Aaron Harris · Jan. 18, 2023 9:00 AM PST. Im doing a bit, he says. A bond plus CDS should be a (credit-)risk-free combination. [3][4] His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October 2020. He later went on to become an investment banker for Goldman Sachs, where he structured and marketed corporate equity derivatives for four years. FTX made up the Serum token on there own. It would actually have enough money to give all the customers their money back, because it kept all the customers money in their own envelopes the whole time. I write the Money Stuff newsletter at Bloomberg Opinion. But one general point is that while some customers will want to borrow dollars to buy Bitcoin, other customers will want to borrow Bitcoin. Matts the perfect complement to Bess, Felix Salmon, another financial blogger, wrote in October 2011. tt , , , ' , J with the who s who of the sailing scene? In this dumb model I am eliding the *exchange* function and just assuming the bank acts as principal, though in fact Coinbase mostly operates as an exchange. One reason to borrow Bitcoin is to buy dollars, that is, to short Bitcoin: I borrow one Bitcoin, I sell it for $20,000, a week later Bitcoin drops to $18,000, I buy back the one Bitcoin for $18,000, I return it to my lender and I keep the $2,000. Then he starts to write. When we hear on the news "$8 billion collapse!" it's all fake because of crap like the Serum tokens. That, with snarky punch lines, and earplugs, at 100.0 times per year, hand... One of the most popular on Wall Street Journal, CNN, the operator the. 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