October 10, 2022

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Merchant Tradeoffs

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Cash is King

October 03, 2022

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digital daily: Get the (Selling) Memo?

Get the (Selling) Memo? Fast-twitch muscles rule social media. But to say anything worth hearing, you must build from the source. Like the US government’s sentencing memorandum on James Zhong, who pled guilty to wire fraud after stealing ~50K bitcoin from Silk Road. Forensic investigators were not only able to trace stolen bitcoin, but they were also able to recover privacy coins designed to blur payment trails. Last week’s memo release provided fresh detail on government plans for confiscated bitcoin. After all, the US government is one of the single largest bitcoin holders, with more than 200,000 bitcoins. The memo also revealed that the government sold 9.8K bitcoin on March 14, departing from past auctions. Market-based forensics picked up on this sale well in advance when 49K bitcoin moved from US government wallets. One of those transfers, at 9.8K bitcoin, was to a Coinbase wallet. The memo indicates four tranches of sales, with ~40K in the period ahead. This is anticipated to follow the auction process last led by the US Marshal Service in 2020. Is it a headwind to digital asset markets? It’s more of a soothing breeze. Let’s put it into context. The price of bitcoin has averaged $23,047, with an average daily trading volume of $25.2 billion so far this year. Four auctions at ~10K per auction would amount to less than 1% of the daily trading volume. The lesson here is broader than market risk – bitcoin criminals live in prisons of their own making, imposed by the transparency of the blockchain. Cash is king for criminals.