TheBRRR’s GM

We’re two weeks into the criminal trial of FTX founder Sam Bankman-Fried and if one thing is clear - it’s that he’s going to spend a significant amount of time in jail.

The crime? Fraud.

He fabricated documents to misrepresent the health of FTX’s balance sheet to mislead lending partners, potential investors and customers.

What’s fascinating is that while FTX did declare bankruptcy amidst genuine panic and perception they were missing $11B worth of customer funds, they’ve since identified over $7B in liquid crypto assets, another $1B in illiquid tokens, and potentially $5B+ in illiquid equity in other startups, including the fast-rising AI firm Anthropic.

The $500M Anthropic investment was made over 2 years ago and may already be worth $4B+ alone, based on comparables in the space and the vast funding that has since plowed int the company, led by Amazon, as we covered last month.

Prosecutors will have none of it during the trial, arguing it’s immaterial to the case, but defense attorneys for SBF have pushed the judge to allow them to bring it up in questioning and cross-examination.

While FTX and Alameda Research were fraudulent and overinvested in illiquid tokens and illiquid startup equity, they did hold a lot of dollar-pegged stablecoins, Bahamian real estate, and they may have binked a 10x with their investment in Anthropic amidst the AI surge.

They did buy aggressively and lavishly, but they didn’t blow the money on irretrievable garbage. They didn’t withdraw billions to personal accounts and go on the run.

They simply got overleveraged and illiquid - but they unforgivingly lied about it.

We’re covering two stories today.

1) Bitcoin Pumps & Dumps - the SEC doesn’t appeal GBTC judgement, Cointelegraph Tweets Fake ETF Approval News
2) Treasury Secretary Janet Yellen Weighs In On Israel, Because She Weighs In On Everything

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Market News

Grayscale’s Win Stands as SEC Declines to Appeal, Bitcoin Price Drifts Higher As ETFs Appear Imminent

The Securities and Exchange Commission (SEC) decided not to appeal a court ruling in favor of Grayscale Investments, indicating a potential approval of a spot Bitcoin ETF. Recent amendments to Bitcoin ETF proposals, seemingly at the SEC's request, also suggest progress.

The court had ruled against the SEC's decision to block the conversion of the Grayscale Bitcoin Trust (GBTC) to an ETF. The deadline for the SEC to appeal the decision passed on Friday night.

On Monday morning, Cointelegraph faked out the market by tweeting that the SEC had approved Blackrock’s Bitcoin ETF application, only for Blackrock to deny it minutes later.

• Amendments Reflect Cooperation: Recent amendments to Bitcoin ETF proposals, believed to be made at the SEC's request, indicate cooperation between issuers and the regulator. The changes demonstrate the SEC's willingness to work towards approving Bitcoin ETFs, with a focus on addressing regulatory concerns and increasing transparency.

• Positive Sentiment on Approval: Industry experts like Nate Geraci suggest that the SEC's decision not to appeal the Grayscale case indicates a positive outlook for Bitcoin ETF approval. Observers, including Scott Johnsson and Jake Chervinsky, express optimism that the SEC is moving toward approving spot Bitcoin ETFs, given the recent developments and regulatory cooperation.

• Whiplash Response to False Tweet: BTC went through a rollercoaster ride in response to a deceptive CoinTelegraph tweet that wrongly claimed the SEC had approved a spot Bitcoin ETF. Bitcoin experienced a significant price surge, surpassing $30k but then fell back down into its previous $28k range, following speculation surrounding the SEC's decision. BlackRock refuted rumors of their ETF approval.

  Read more and here

Macro News

Dollar Diplomacy: U.S. Backs Battles, But At What Cost?

U.S. Treasury Secretary Janet Yellen confirmed America's financial capacity to support both Israel and Ukraine in their respective war efforts. Despite spending nearly $100B in Ukraine, amidst immense fraud and futile results, there is appetite for more.

While President Biden has reiterated unwavering support for Israel during its conflict with Hamas, he also mentioned that an Israeli re-occupation of Gaza would be a mistake and emphasized the importance of a path to a Palestinian state.

As the Israel-Hamas conflict escalates, with a rising death toll and humanitarian concerns, the U.S. administration has shown its commitment to Israel's defense while advocating for the protection of innocent civilian lives.

• Moral Ambiguity in Foreign Policy: The support that the U.S. offers to Israel, particularly during a period marked by intense conflict and rising casualties in Gaza, raises questions. The collateral damage and humanitarian situation that ensues complicates the narrative. This puts the U.S. in a challenging spot, attempting to balance its strategic alliances with its values of human rights and global justice.

• Navigating Economic Waters: Despite concerns about inflation, the U.S. economy is doing “extremely well” with a historically low unemployment rate of 3.8%. Secretary Yellen highlighted this strength as a reason for America's ability to support allies like Israel and Ukraine. Potential implications of the Middle East conflict, particularly on oil prices, adds another layer of unpredictability to the U.S.'s economic trajectory.

• Regional Ripples and Impacts: The Israel-Hamas conflict doesn't exist in isolation. There's a tangible risk of drawing in neighboring powers, such as Iran, which could drastically escalate tensions and reshape Middle Eastern dynamics. With the U.S. deeply involved and backing specific parties, its role could either pave the way for regional stability or inadvertently contribute to broader geopolitical tension.

  Read more

Today’s Reader Poll

For today’s poll, we again want to hear your overall concern about inflation:

Here are the results from Friday’s poll, when we asked about your same thoughts.

AI Art of The Day

Janet Yellen comments on everything from military spending to social issues with such irrational confidence - there’s nothing she doesn’t think she can do.

Got feedback? Follow the writer on Twitter @frank_locascio and send a message.

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