Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



A couple of years ago, the quarterly refunding announcements (QRA) from the Treasury Borrowing Advisory Committee (TBAC) were dry and boring meetings that only dorks like myself paid attention to. The TBAC advises the Treasury on debt issuance strategy for the upcoming quarter.&nbsp;



Ever since rates came off zero and fiscal deficits exploded, however, market participants have started to pay close attention to how the government is funding itself. Supply and demand are drivers of US Treasury yields. Therefore, if more supply is coming onto the long end of the yield curve, that will have a tangible impact on market prices.&nbsp;



This week, we received the last QRA before the election. With the caveat that anything from January 2025 onwards assumes a continuation of the same administration, let’s dig into what we learned from the report!



<h2 class="wp-block-heading">The quantity of debt to be issued</h2>



The first half of the QRA came on Monday when we received an update on the amount of debt the Treasury plans to issue for the upcoming quarter.



The Treasury anticipates the following:&nbsp;



For October – December 2024:



<ul class="wp-block-list">
<li>Targeting a Treasury General Account (TGA) drawdown from the current $886 billion to $700 billion.</li>



<li>During this time, Treasury plans to issue $546 billion in net issuance.</li>
</ul>



For January – March 2025:



<ul class="wp-block-list">
<li>Targeting a TGA balance of $850 billion, up from the previous quarter that anticipates $700 billion.</li>



<li>Net borrowing of $823 billion. </li>
</ul>



The numbers reflect a significant increase in debt issuance planned for the next couple of quarters — an increase of $277 billion. That said, the decrease in the TGA balance explains $150 billion of that marginal requirement.&nbsp;&nbsp;



<h2 class="wp-block-heading">The composition of debt to be issued</h2>



The real juice of the QRA comes from getting a pulse on what the maturity profile of the debt issuance will be (essentially, how much of each maturity will make up the total borrowing amounts).



We can see the composition of debt for the next two quarters below:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8joSk3ubk3dsaOzf5K0REVsC6b5qQW5wD3bOTCW4-TTAHWWaSHrH0WISTzYf7zhcJo9GMxnYsEAevzGQ_i7LEcYnC-ZyryVcXGC0VkPb7sIoJh-3utPtgoLPT2AIBK-Qmj8Goo6YBre84WZKloJO_meDK?key=Nc1g8IyQIc_HvGRuD4Hyp4ca" alt=""/></figure>



A few key insights here:



<ul class="wp-block-list">
<li>Treasury Secretary Janet Yellen has provided guidance that there are no plans for any change in long-duration issuance composition in the coming quarters. Effectively, the dollar amount of issuance for anything longer than one-year of duration is set to remain constant. </li>



<li>This means if borrowing needs increase, it is up to issuance of less than a year (T-bills) to take up the mantle of issuance. </li>



<li>Because of the incoming TGA drawdown to $700 billion, then reversal to $850 billion, a substantial increase in bill issuance will be required to fund the Treasury.</li>
</ul>



When we look at the proportion of total net issuance in recent quarters that is T-bills, we get the following:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdDmnAuHwEd5cs3ehB41MzhKFcDOxzEw1QsyAZSm8p9GhSAxBF7U1SociLGndlfDVGREhSUb4CwVSygje6Niur8uizYzg-w3swp1lnJLUNdOXOsDAsFOUeboAP4MN7xyM4GTW4xtu1YrTBwBAyYcLIRo3dX?key=Nc1g8IyQIc_HvGRuD4Hyp4ca" alt=""/></figure>



Of note, the Treasury is forecasting an increase of proportion from 13% to 45%. This is notable, as historically the Treasury targets a long-term average of 15% to 20% of total debt being T-bills. Admittedly, this 45% weighting is likely an outlier that will be reversed in Q2 2025 when tax receipts come in and dampen the requirement for bills to take up the issuance mantle.



That said, with total Treasury debt outstanding already above the upper limit of their target range at 22%, one must wonder how long this game of avoiding surprising markets with duration can last:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeMeLBGPAswzEdANZ-V5wQvdEMtG0AXysU_STMUfOSKWEBGAIfTGvsBuNWpGohMDkRS-KpEDS-sa9M_7cnDH_KR4U_2oCbVcXwZ4wTize3pWxOe1gUodZDDOKe6M0j-lG6jGGzjhKvTL9ufQOccScTT4fw_?key=Nc1g8IyQIc_HvGRuD4Hyp4ca" alt=""/></figure>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Breaking down the recent TBAC borrowing recommendations

Darren Kleine

America’s ongoing banking and budget dramas seem to have, once again, got people thinking about keeping money under the mattress — or elsewhere.&nbsp;



Of course, stuffing some cash under the bed doesn’t isolate the holder from inflation. Plus it isn’t exactly the safest place to keep it, albeit arguably safer than <a href="https://blockworks.co/news/bitcoin-dominates-bank-stocks">some fragile bank accounts</a>. Many are instead turning to assets that offer a degree of isolation from the failures of the system, namely crypto.



It wasn’t too long ago that a banking crisis began with the collapse of a few regional services including <a href="https://blockworks.co/news/who-will-bank-crypto">Silvergate and Silicon Valley Bank</a>, instigated by a combination of problematic balance sheets and panicked bank runs.&nbsp;



More recently, the bad news coming out of First Republic Bank about depositor flight seems to have <a href="https://blockworks.co/news/crypto-related-stocks-soar">pushed more people toward crypto</a> as a potential exit from the mess.



Avi Felman, head of digital asset trading at GoldenTree, and global head of trading at Cumberland, Jonah Van Bourg spoke to Blockworks on the <a href="https://www.youtube.com/watch?v=i7ddfquivmM">1000X podcast</a> about the paradigm shift around bitcoin’s value proposition — moving from being perceived primarily as a correlated macro asset to an asset that “<a href="https://blockworks.co/news/crypto-stayed-green">might actually be fulfilling its promise as a banking system alternative</a>.”



“The best opportunity of the year,” Van Bourg reflects, “was the [<a href="https://blockworks.co/price/btc">BTC</a> and <a href="https://blockworks.co/price/eth">ETH</a>] dip-buy during the banking crisis.”



“We might have another one of these types of opportunities coming down the pike possibly as the debt ceiling approaches.”&nbsp;



<h2 class="wp-block-heading">Weaponizing debt ceilings</h2>



Debt ceiling disagreements and the looming possibility of defaults are just about a yearly occurrence over the last couple decades, with opposing political parties weaponizing the approval process. In an effort to push through policies that would not stand a chance of passing through the usual channels, parties will attach conditions that allow the debt ceiling to increase once again. The system can then carry on paying out its obligations.



In 2011, under the Obama administration, the debt ceiling conflict between the Democrats and Republicans had serious repercussions, with the United States of America being <a href="https://www.reuters.com/article/us-usa-debt-downgrade-idUSTRE7746VF20110806">downgraded</a> from its AAA credit rating by Standard &amp; Poor’s. It was “not because of an inability to pay,” Van Bourg says, “but because of a potential unwillingness to pay.”



“That was a big deal,” he says, “that was the beginning of a 20 or 30% gold rally.”



Debt ceiling drama returned during the Trump presidency, causing a government shutdown as the two parties again locked horns.&nbsp;



“Now, I think the vitriol is just as high, if not higher than then,” Van Bourg says, “and unlike then, interest rates aren&#8217;t zero anymore.”



“So if the government were actually to default,” he says, “then you end up with an unprecedented event in financial history whereby the supposed risk-free rate is no longer risk-free.”&nbsp;



“The United States government will say, ‘Hey, Mr. Dentist, we owe you $100 grand. Sorry, we don&#8217;t have that for you right now. We got you, though. Wait a week or two until we figure this out in Congress.’”



The impending possibility of default, exacerbated by underwhelming tax receipts, hasn’t roiled markets yet, Van Bourg says, because “we&#8217;ve been through a few of these that have resolved in an okay fashion.”



Directly following the Obama and Trump debt ceiling events, Van Bourg notes that gold enjoyed 30% rallies.



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG2717767326" width="100%"></iframe>







Felman replies, “I bet bitcoin would do quite well in that scenario.”



“If you look at the correlations between BTC and gold and then BTC and equities, it basically flipped over the last month.” Felman says that Bitcoin “is a lot more correlated with gold than it was with equity.”



<h2 class="wp-block-heading">The supply side</h2>



Felman cautions that the “supply side” of the bitcoin story may dampen spirits. The United States government is currently in the process of <a href="https://blockworks.co/news/us-government-dumps-bitcoin-silk-road">selling off its bitcoin holdings</a> and the potential for sales from <a href="https://blockworks.co/news/crypto-bear-cases-bull-consider">Mt. Gox</a> creditors might also suppress the market. Despite this, he says the debt ceiling story may act as “a massive catalyst” in the short term.



Felman says he views the current situation as “an opportunity to trade — similar to what the banking crisis was, with an additional benefit of making Bitcoin better long-term” because it may convert some retail traders into holders.&nbsp;



Van Bourg prefers to think in a longer timeframe. “I know that my bias is a little bit more to try and just focus on the long term,” Van Bourg concludes, “because that&#8217;s a framework that you can cling to when things are going badly and you&#8217;re staring at a bunch of red numbers.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Debt Ceilings and Defaults: A Return to Bitcoin as a Safe Asset Narrative?

Ben Strack

Amber Group has yet to publicly address the latest reports around its financial health, outstanding liabilities, and its retail business, despite saying certain claims against the company have been inaccurate.



Amber Group said in a Dec. 6 tweet that the company and <a href="https://blockworks.co/news/crypto-trading-platform-amber-group-eclipses-3b-valuation-with-latest-raise" target="_blank" rel="noreferrer noopener">UK-based crypto subsidiary WhaleFin</a>, which operates a consumer-facing app, <a href="https://blockworks.co/news/amber-group-says-business-as-usual" target="_blank" rel="noreferrer noopener">“are business as usual</a>.” But a source familiar with the matter told Blockworks that the company’s Whalefin business has essentially been “shut down.”&nbsp;



The source, who spoke on the condition of anonymity, added that Amber Group has recently shifted focus to its institutional business.&nbsp;&nbsp;



Last week The Block <a href="https://www.theblock.co/post/193616/amber-group-vauld-ceo-counterparty1-a-130-million" target="_blank" rel="noreferrer noopener">reported</a> that Amber Group owes about $130 million to Darshan Bathija, the CEO of crypto lender Vauld, citing “a source with direct knowledge of the matter” and a legal document.



The crypto platform appeared to deny the report.



“Regarding certain false allegations against Amber today, our legal counsel will issue an official statement shortly and take potential legal actions,” the company <a href="https://twitter.com/ambergroup_io/status/1601214677610287105" target="_blank" rel="noreferrer noopener">tweeted</a> on Friday.&nbsp;



But the firm had not yet shared any follow-up to the claim, as of Monday mid-day.



An Amber Group spokesperson declined to comment.&nbsp;



Vauld <a href="https://blockworks.co/news/vauld-stops-withdrawals-eyes-restructure-after-users-pull-nearly-200m" target="_blank" rel="noreferrer noopener">suspended</a> withdrawals, trading and deposits on its network in July, just weeks after it <a href="https://blockworks.co/coinbase-backed-vauld-cuts-workforce-by-30-seeks-to-halve-exec-pay/" target="_blank" rel="noreferrer noopener">laid off 30%</a> of its staff.



Bathija and the company did not immediately return requests for comment.



<h3 class="wp-block-heading">Cutting costs and raising funds&nbsp;&nbsp;</h3>



The Financial Times <a href="https://www.theblock.co/post/193530/amber-group-satellite-hubs-lose-key-executives" target="_blank" rel="noreferrer noopener">reported</a> the day before that Singapore-based Amber Group had paused its expansion plans as it is in the process of raising the second half of a planned $100 million funding round.



<a href="https://www.linkedin.com/in/cactusraazi/" target="_blank" rel="noreferrer noopener">Cactus Raazi</a>, who was hired as Amber Group’s US CEO in October 2021, is among leaders who have left the company in recent months, a source told Blockworks. <a href="https://www.linkedin.com/in/angiedicarlo/" target="_blank" rel="noreferrer noopener">Angie Beehler</a>, formerly Amber Group’s global co-head of institutional sales and business development, and ex-Chief Strategy Officer <a href="https://www.linkedin.com/in/dimitrios-kavvathas-3bb3654/" target="_blank" rel="noreferrer noopener">Dimitrios Kavvathas</a> left the company in September, according to their LinkedIn profiles.



The company is reportedly getting ready to lay off several hundred people as well.



Bloomberg <a href="https://www.bloomberg.com/news/articles/2022-12-09/crypto-s-amber-to-end-chelsea-sponsorship-axe-over-40-of-jobs-in-ftx-fallout?leadSource=uverify%20wall" target="_blank" rel="noreferrer noopener">reported</a> Friday that Amber Group is set to cut its workforce to less than 400 from roughly 700 and is also seeking to end its sponsorship deal with Chelsea Football Club.



Several days prior to Bloomberg’s report about Amber Group layoffs, reporter Colin Wu <a href="https://twitter.com/WuBlockchain/status/1600018582212988929" target="_blank" rel="noreferrer noopener">tweeted</a> that the firm began to lay off hundreds of people again this month, citing former employees.



An Amber Group spokesperson declined to comment on the layoffs.



“Weathering through market cycles, we have to constantly adjust and pivot our business strategies, product offerings, and, as a result, internal teams and functions,” the firm <a href="https://twitter.com/ambergroup_io/status/1600101239294787584" target="_blank" rel="noreferrer noopener">said</a> on Dec. 6.



Amber Group<a href="https://twitter.com/ambergroup_io/status/1590382100955697154" target="_blank" rel="noreferrer noopener"> said last month</a> that it was an active trading participant on now-bankrupt crypto exchange FTX and had withdrawals yet to be processed — accounting for less than 10% of Amber Group’s total trading capital. Amber Group said at the time that the situation did not pose a threat to its business operations or liquidity.



More recently, Amber Group co-founder Tiantian Kullander unexpectedly died in his sleep on Nov. 23, according to <a href="https://www.ambergroup.io/newsDetail?id=444&amp;source=In%20the%20News&amp;page=1" target="_blank" rel="noreferrer noopener">a company post</a>. He was 30.



A spokesperson declined to comment on the impact of Kullander’s death on the company.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Amber Group Claims ‘False Allegations’ Against Company, Provides No Details

Sebastian Sinclair

Bitcoin miner Iris Energy remains defiant despite facing debt default on $103 million in loans next week.



In a recent SEC <a href="https://www.sec.gov/Archives/edgar/data/1878848/000114036122039464/brhc10043621_ex99-1.htm" target="_blank" rel="noreferrer noopener">filing</a>, the Australia-based firm said that while it can generate $2 million in monthly gross profit by mining bitcoin, monthly principal and interest repayments on its debt stands at $7 million, representing a $5 million monthly shortfall.



Iris Energy stock trades on the Nasdaq and fell 15% following the disclosure, now down more than 80% year to date.



Macroeconomic factors, rising inflation and a sharp hike in electricity prices are severely impacting miners’ ability to turn a profit globally. Miners now find themselves in a very different market compared to a year ago, when many across the industry <a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/" target="_blank" rel="noreferrer noopener">took out high-interest loans</a> to fund rapid expansion.



Loans were commonly financed against bitcoin mining machines, as is the case with Iris Energy. But now that prices are down and bitcoin mining <a href="https://bitinfocharts.com/comparison/bitcoin-difficulty.html#alltime" target="_blank" rel="noreferrer noopener">difficulty</a> is high, multiple major operations have found themselves underwater, weighed by unmanageable debt obligations.



Core Scientific, one of the largest bitcoin mining operations in the world, <a href="https://cms.blockworks.co/core-scientific-stock-price-plummets-70-as-it-considers-bankruptcy/" target="_blank" rel="noreferrer noopener">revealed</a> last month it was considering restructuring its capital or seeking relief through bankruptcy, collapsing its stock price by more than 80%.&nbsp;



Argo Blockchain, another major miner, has also been <a href="https://cms.blockworks.co/crypto-miner-consolidation-imminent-as-some-industry-players-struggle/" target="_blank" rel="noreferrer noopener">feeling</a> the pinch after an unnamed investor withdrew a <a href="https://cms.blockworks.co/core-scientific-stock-price-plummets-70-as-it-considers-bankruptcy/" target="_blank" rel="noreferrer noopener">$27 million</a> capital injection at the eleventh hour. The firm faces potential closure if it can’t find fresh funding.



Concerns are swirling that Iris Energy could suffer the same fate. But Bom Shin, vice president of corporate finance at Iris Energy, told Blockworks the company’s bad debt is structured within a number of special-purpose vehicles (SPVs).



Iris Energy’s SPVs maintain a market value of approximately $65 million to $70 million, about 35% less than its principal loans outstanding as of September’s end.



According to Shin, the debt is “very much contained” and shouldn’t immediately lead to bankruptcy. Shin said that while an “uneconomical market” was not generating enough cash flow, Iris was engaged in ongoing discussions with its lender to shore up the situation. The executive declined to comment on the identity of the lender.



Should an agreement with its financial lender stall, Iris said in its update that neither of its SPVs would be able to make scheduled principal payments on its debt ahead of next Monday.



The firm did say it is holding ongoing discussions with its mining equipment vendor Bitmain in a bid to unlock prepayments — the partial or full settlement of debt ahead of an official due date.



<h3 class="wp-block-heading">Iris Energy still hopes to expand and diversify revenue</h3>



Iris Energy immediately offloads its mined bitcoin at market rate, which means it has averaged its way down from BTC’s highs last year. This contrasts strategies employed by some <a href="https://cms.blockworks.co/crypto-miner-bitfarms-sells-half-its-bitcoin-to-reduce-debt-boost-liquidity/" target="_blank" rel="noreferrer noopener">competitors</a>, which only sell their bitcoin when times get tough — or <a href="https://cms.blockworks.co/crypto-miner-marathon-digital-posts-192m-net-loss-in-q2/" target="_blank" rel="noreferrer noopener">not at all</a>.



Bitcoin’s price has shrunk 68% from highs seen 12 months ago when it was hovering just above $64,000. Bitcoin was trading at $20,350 as of Thursday morning.



While registered in Sydney, Australia, Iris said three of its operations are based in Canada, including a flagship data center operation in British Columbia. All operations are entirely powered by hydroelectricity at a set price of four cents per kilowatt-hour, providing 12-month visibility of fixed costs.



Further expansion plans are anticipated in Childress County, Texas, which would happen “very carefully,” signaling the firm’s intentions to move forward with its operations, Blockworks was told.



Iris floated plans to establish hosting services that would allow clients to mine crypto for a fee without needing to build or invest in the infrastructure themselves, which it considers a significant growth opportunity.



Remaining upbeat, Shin likened Iris’ current situation to that of a healthy body with a rotten arm.



“Chop off the arm and the body survives,” he said in relation to the firm’s SPVs.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Bitcoin Miner Iris Energy Says Bad Debt Contained in ‘Rotten Arms’

Bessie Liu

<div id="highlights-block_62bb5c8981b98" class="highlights">
 <ul>
 <li>After halting withdrawals last week, CoinFLEX announced it would launch a new token to raise $47 million</li>
 <li>Ver denies that he is the debtor and says CoinFLEX owes him a substantial amount of money</li>
 </ul>
 
</div>



The chief executive of CoinFLEX alleged Tuesday that the former CEO of crypto trading platform and wallet provider <a href="http://bitcoin.com/" target="_blank" rel="noreferrer noopener">Bitcoin.com</a> owes the cryptocurrency exchange $47 million.



CoinFLEX CEO Mark Lamb <a href="https://twitter.com/MarkDavidLamb/status/1541831697787928576" target="_blank" rel="noreferrer noopener">tweeted</a> that Roger Ver, current executive chairman of Bitcoin.com, is a longtime customer and the counterparty whose outstanding debt forced the derivatives-focused exchange to halt withdrawals last week. The company on Monday moved to <a href="https://cms.blockworks.co/coinflex-plans-to-raise-missing-funds-with-new-token/" target="_blank" rel="noreferrer noopener">issue a new token</a>, rvUSD, to stabilize its balance sheet, with the goal of raising at least $47 million. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Roger Ver owes CoinFLEX $47 Million USDC. We have a written contract with him obligating him to personally guarantee any negative equity on his CoinFLEX account and top up margin regularly. He has been in default of this agreement and we have served a notice of default.&mdash; Mark Lamb 💪 (@MarkDavidLamb) <a href="https://twitter.com/MarkDavidLamb/status/1541831697787928576?ref_src=twsrc%5Etfw">June 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Lamb told Bloomberg rvUSD will have a 20% yield, and — if $47 million is raised — users would be able to withdraw their funds in full.&nbsp;



After being suspected as the debtor by the anonymous crypto market participant <a href="https://twitter.com/FatManTerra/status/1541778973511884802" target="_blank" rel="noreferrer noopener">FatManTerra</a>, Ver initially denied.



“Not only do I not have a debt to this counter party, but this counter party owes me a substantial amount of money,” Ver said at the time.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">While the debtor is pasting scripted rebuttals from his lawyer and the creditor claims they&#39;re in convo to resolve it while launching a questionable &quot;product&quot; to fill the gap. Disgraceful.<a href="https://t.co/sbTYQ7c0Gt">https://t.co/sbTYQ7c0Gt</a> <a href="https://t.co/Oyo11lHOxD">pic.twitter.com/Oyo11lHOxD</a>&mdash; DeFiyst (@DeFiyst) <a href="https://twitter.com/DeFiyst/status/1541837986626768896?ref_src=twsrc%5Etfw">June 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In defense of CoinFLEX, Lamb tweeted that “[Ver] is denying that the debt pertains to him and so we felt the need to clarify to the public that yes — the debt is 100% related to his account.”



He added that his company does not owe any debts to Ver, and that “his statement is blatantly false.”



Ver has been a proponent of a 2017 bitcoin fork, <a href="https://www.blockworksresearch.com/assets/bch/" target="_blank" rel="noreferrer noopener">Bitcoin Cash (BCH)</a>, which was later <a href="https://www.investopedia.com/terms/b/bitcoin-cash.asp" target="_blank" rel="noreferrer noopener">split again</a> into Bitcoin Cash ABC (remaining known as BCH) and Bitcoin Cash Satoshi&#8217;s Vision (BSV) the brainchild of <a href="https://cms.blockworks.co/?s=craig+wright" target="_blank" rel="noreferrer noopener">Craig Wright</a>. Despite neither fork being embraced by the market as the canonical bitcoin, they currently rank at number 32 and 49 by market cap, with the cryptoassets together worth about $3 billion, or about 0.7% the value of BTC.



As a bitcoin evangelist, Ver became known as “<a href="https://www.investopedia.com/tech/who-roger-ver-bitcoin-jesus/" target="_blank" rel="noreferrer noopener">Bitcoin Jesus</a>.” He renounced <a href="https://www.bloomberg.com/news/articles/2014-06-15/-bitcoin-jesus-calls-rich-to-tax-free-tropical-paradise" target="_blank" rel="noreferrer noopener">his US citizenship</a> in 2014, <a href="https://youtu.be/kApf5j-clzE?t=37" target="_blank" rel="noreferrer noopener">motivated in part</a> by his experience serving 10 months in federal prison for illegally selling explosives on eBay.



CoinFLEX and Ver did not immediately return requests for comment.



Correction: Roger Ver has served as the executive chairman of Bitcoin.com since Aug. 1, 2022. Dennis Jarvis is the current CEO. Updated June 29, 2022 at 9:00 am ET.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Troubled Exchange CoinFLEX Confirms Bitcoin.com’s Executive Chairman Owes It $47M

Michael Bodley

Dan Keeler

<div id="highlights-block_62b8bd881d311" class="highlights">
 <ul>
 <li>The potential deal comes as Goldman increasingly explores digital assets, including starting its own in-house trading desk</li>
 <li>The bank would not carry any exposure to the struggling lender under the proposed arrangement </li>
 </ul>
 
</div>



Investment banking powerhouse Goldman Sachs is considering helping an investor raise approximately $2 billion to snap up distressed assets stuck in limbo from troubled digital asset lender Celsius, according to two sources familiar with the matter. 



The deal — which one source said likely would occur via the investment bank’s asset management unit — could see investors purchase assets from Celsius at a discount, even if the lender does not declare bankruptcy. The source said the $2 billion is an estimate at this stage.



A spokesperson for Goldman was not immediately available for comment. Sources were granted anonymity to discuss sensitive business dealings. CoinDesk <a href="https://www.coindesk.com/business/2022/06/24/goldman-sachs-raising-funds-to-buy-celsius-assets-sources/">first reported</a> the capital raise. 



One source made it clear Goldman would not own or oversee the acquired assets, stressing Goldman would be a broker, not an investor in the potential deal.&nbsp;



It is understood Goldman moved quickly to explore the potential deal, but its initial response was not favorable. The would-be buyer of Celsius’ assets is understood to be canvassing other organizations with the capability to broker a deal.&nbsp;



The move follows Goldman’s recent bullish push into crypto, including establishing its own trading desks and gauging interest from institutional investors in lending products. The strategy preceded Celsius significantly.&nbsp;



Celsius, which ran $12 billion in May, has been on the brink of insolvency since the firm abruptly said it would halt all withdrawals from its platform earlier this month. In the event of a bankruptcy proceeding, customers would be considered unsecured creditors — and thus far down the list in terms of recouping their assets.&nbsp;



“Goldman didn’t want to buy into the top of the market,” one source said. “This is more their style.”



The source drew a parallel between the woes of star stock trader Gabe Plotkin’s now-shuttered Melvin Capital, which took an emergency cash infusion from Steve Cohen’s Point72 Asset Management and Ken Griffin’s Citadel.



Though Melvin closed after a kerfuffle in which the firm tried to launch a new fund to keep taking in limited partner management fees, the hedge fund firm did not go bankrupt.&nbsp;



Whether Celisus does remains to be seen.&nbsp;&nbsp;



This story has been revised to reflect new information emerging. It is a developing story and will be updated accordingly. Correction: The story initially stated Goldman could purchase Celsius’ assets outright via its asset management arm. The bank is advising on a potential deal with third parties as a broker of the transaction.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Goldman Sachs Approached to Broker Deal for Crypto Lender Celsius’ Assets

Casey Wagner

<div id="highlights-block_6154912134d2a" class="highlights">
 <ul>
 <li>Representative Jerry Nadler suggested the US Treasury Secretary mint a $1 trillion coin in order to avoid the US defaulting on its debt for the first time in history</li>
 <li>The idea has been thrown out for decades, and it is perfectly legal </li>
 </ul>
 
</div>



Yes, the United States government has the power to mint a $1 trillion platinum coin to pay off US Treasury Bills, and yes, there is at least one congressman on board.&nbsp;



Representative Jerry Nadler (D-NY) voiced the idea on Tuesday during a House Democratic caucus meeting, according to Speaker of the House Nancy Pelosi.&nbsp;



“Jerry Nadler wants to have a coin, a trillion dollar coin,” she told reporters Tuesday. “That doesn’t even require a congressional act.”



The idea appears to be legally sound under a vague provision of the Coinage Act of 1792, more commonly known as the Mint Act, that authorizes the minting of platinum coins for any amount to be used to finance public debt.&nbsp;



Pelosi is correct, congressional approval is not required. The Treasury Secretary has the authority to &#8220;mint and issue coins&#8230;in amounts the Secretary decides are necessary to meet the needs of the United States,&#8221; according to a 1982 amendment to the Coinage Act.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“On one hand, minting what is ultimately a meme coin to work around national debt limits shows how arbitrary the fiat currency system is in the first place, and wouldn&#8217;t have a major quantitative effect on anything, if performed once,” said Lyn Alden, founder of Lyn Alden Investment Strategies. “On the other hand, going that route can really spook the market by setting a bad precedent, because it basically goes around the intended checks and balances that keep some fiat systems more reliable than ‘banana republic’ fiat systems.” </blockquote>



Under US law, the Treasury can issue bonds to pay its obligations, but Congress is required for authorization on spending and taxes. The Federal Reserve is supposed to be independent of both the executive and the legislative branches, choosing what assets they will buy or sell within their mandate, Alden said.&nbsp;



“The Treasury (executive branch) going around Congress (legislative branch) and the spirit of the law by minting a coin in a loophole, and then encouraging/forcing the Fed to swap for it (i.e. going around the concept of central bank independence to support the Treasury market), basically shows that the Treasury can spend without taxing or issuing debt, and can therefore outright print money,” Alden said.&nbsp;



“Of course that&#8217;s essentially what is happening anyway, but it still needs to be rubber-stamped by a few supposedly separate entities, whereas this approach breaks that illusion of checks, balances, and independence.”&nbsp;



It is not the first time that the idea has been floated. Talks of minting a platinum coin swirled during President Obama’s tenure when a similar debt ceiling crisis was faced. He later described the crisis as one of the scariest points of his presidency and the idea of minting a coin seemed absurd to him.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;It was some primitive &#8230; it was out of the Stone Age,&#8221; President Obama said during an interview on the “Pod Save America” podcast in 2017. &#8220;I pictured rolling in some coin.&#8221;</blockquote>



As for logistics, the US government could, in theory, deem a coin of any size worth $1 trillion. President Obama admitted that when he pictured the coin, it was quite large.



It is also a common misconception that the coin of such a value would require copious amounts of platinum. In reality, the value of coins minted by the US Treasury is determined by legal tender, not material value.&nbsp;



The coin, if created and sold, would become the property of the Fed. It would likely be kept with other physical assets in the vault in the basement of the Fed Bank of New York in Manhattan.



<hr class="wp-block-separator"/>



Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.



<hr class="wp-block-separator"/>

A New York Congressman Wants the Treasury to Mint a $1 Trillion Coin to Pay off US Debt

Morgan Chittum

<div id="highlights-block_613f6ddb38c81" class="highlights">
 <ul>
 <li>Interest rates, redemption provisions and other terms of notes were not disclosed in the company’s statement</li>
 <li>Coinbase Global Inc. (COIN) shares fell on Monday’s news, shedding 2.37% to $242.44, as of press time</li>
 </ul>
 
</div>



Coinbase, one of largest cryptocurrency exchange platforms in the world, announced Monday that it plans to sell $1.5 billion of seven-year and 10-year debt to fund general corporate purposes such as potential acquisitions and future product development.&nbsp;&nbsp;



The $1.5 billion aggregate principal amount of its Seniors Notes are due in 2028 and 2031, the company revealed in a <a href="https://www.businesswire.com/news/home/20210913005454/en/Coinbase-Announces-Proposed-Private-Offering-of-1.5-Billion-of-Senior-Notes-for-General-Corporate-Purposes-Including-Product-Development-and-Potential-MA%C2%A0" target="_blank" rel="noreferrer noopener">statement</a>. However, interest rates, redemption provisions and other terms of notes were not disclosed in the press release.



“Neither the notes nor the related guarantee have been, or will be, registered under the Securities Act or the securities laws of any other jurisdiction, and unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from such registration requirements,” the firm said in the statement.



Coinbase declined to comment on the private sale, as of press time.&nbsp;



The announcement takes place as the Nasdaq-listed crypto company faces increased regulatory scrutiny from the US Securities and Exchange Commission (SEC). Last week, the SEC <a href="https://cms.blockworks.co/the-sec-will-sue-coinbase-if-it-launches-lend/" target="_blank" rel="noreferrer noopener">threatened to sue</a> the company if it launches its forthcoming lending program. The product, known as Lend, will allow users to earn interest on lended assets.&nbsp;



“As surprised as we were at the SEC’s threat to sue without ever telling us why, we want to be transparent with you about the course of events leading up to it,” Paul Grewal, chief legal officer of Coinbase, wrote in a <a href="https://blog.coinbase.com/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why-a3a1b6507009">blog post</a> Tuesday. “A healthy regulatory relationship should never leave the industry in that kind of bind without explanation. Dialogue is at the heart of good regulation.”



The launch will be delayed until at least October as a result of the notice, Grewal added.&nbsp;



Coinbase Global Inc. (<a href="https://www.google.com/finance/quote/COIN:NASDAQ?sa=X&amp;ved=2ahUKEwjjvfe5ovzyAhVQxZ4KHVPmBbAQ3ecFegQICRAa" target="_blank" rel="noreferrer noopener">COIN</a>) shares fell on Monday’s news, shedding 2.37% to $242.66, as of press time.



Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

Coinbase Wants to Raise $1.5B via Debt Offering

<div id="highlights-block_6125534eb721d" class="highlights">
 <ul>
 <li>The Fed is limited in its ability to prevent a sovereign debt default </li>
 <li>The extent to which the US government is supporting GDP is not sustainable</li>
 </ul>
 
</div>



The United States government is playing a bigger role in economic growth today than ever before, and it is posing a threat to US solvency, according to one macro analyst.&nbsp;



“The economy is not recovering in a endemic way and in a self-sustaining way, which was seeming like the case prior to the delta variant and post-delta is increasing looking like the case,” said Luke Gromen, founder and president of Forest for the Trees LLC, during a recent Real Vision <a href="https://www.realvision.com/shows/the-interview/videos/luke-gromen-the-fed-is-screwed-if-they-do-screwed-if-they-dont?utm_source=twitter&amp;utm_medium=social&amp;utm_campaign=2021824_INTV_JK_TW_W1_LINK" target="_blank" rel="noreferrer noopener">interview</a>.



With the US in the midst of its largest peacetime budget stimulus ever, amounting to more than 12% of total GDP, the apparent economic recovery may not be as strong as some think.&nbsp;



“If you look back in the last year, about 35% of US disposable personal income is coming from government transfer payments, which, in plain language, there really hasn&#8217;t been a consumer recovery. There&#8217;s been a US government-deficit-debt-fueled-Fed-monetized spending binge as they handed cash to consumers,” said Gromen.&nbsp;



Consumer spending, measured as personal consumption expenditures (PCE), increased 11.8% during the second quarter of 2021. Americans are spending an average of $675 more a month compared to last year, according to the <a href="https://www.businesswire.com/news/home/20210817005132/en/MassMutual-Consumer-Spending-Saving-Index-Americans-Experiencing-the-Financial-Impacts-of-FOMO-Are-Spending-765-More-Per-Month-Than-This-Time-Last-Year" target="_blank" rel="noreferrer noopener">MassMutual Consumer Spending and Saving Index</a>. 



Even as spending increases, which Gromen claims is mostly bolstered by pandemic-related monetary policy and higher unemployment benefits, wages have not kept up with inflation.



Real, meaning after inflation, hourly wages have fallen every month for the past seven months, totalling about 2%, according to <a href="https://www.bls.gov/news.release/realer.nr0.htm" target="_blank" rel="noreferrer noopener">data</a> from the Bureau of Labor Statistics. In the past year, real wages have fallen a total of 1.3%. This is in contrast to pre-pandemic real wages, which increased 1.4% over the year between August 2018 and July 2019. 



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="600" height="286" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png" alt="Federal Debt: Total Public Debt as Percent of Gross Domestic Product" class="wp-image-6950" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png?w=600 600w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/08/Screen-Shot-2021-08-24-at-3.40.13-PM.png?w=80 80w" sizes="(max-width: 600px) 100vw, 600px" /><figcaption>Federal Debt: Total Public Debt as Percent of Gross Domestic Product</figcaption></figure></div>



Federal debt-to-GDP is about 128%, down from its peak of about 135% during the second quarter of 2020, but still higher than it has ever been pre-pandemic.&nbsp;



“When you have debt-to-GDP of 130%, falling GDP is simply not a policy option,” said Gromen.&nbsp;



<h3 class="wp-block-heading">The fate of the dollar</h3>



The fate of the dollar, Gromen explains, is in the hands of the Federal Reserve and the US Treasury.&nbsp;



“The US federal government is now 22% of GDP, it&#8217;s the biggest single actor in the US economy by far,” he said. “And we saw them ramp up their spending significantly, which counter-cyclically is what you&#8217;re supposed to be doing in a downturn like we have here.”&nbsp;



But there has been little to no demand from foreign central banks to purchase US treasury bonds, which the US government needs to finance debts. Either bond buyers must be found, or the Fed will have to monetize all the debt.&nbsp;



“There&#8217;s not any private sector balance sheet big enough to finance US government deficits in a non-deflationary manner,” said Gromen.&nbsp;



If the Treasury spends enough in stimulus and the Fed monetizes enough of it, then it will likely be negative for the dollar, Gromen said. In the event the Fed does not monetize enough of Treasury spending, the dollar will rise, Gromen said.



“The challenge is if the dollar gets too positive for too long, it quickly begins to put, to be blunt, the US government&#8217;s solvency at risk,” said Gromen. “In other words, if they let the dollar get too strong, it leads to a cascading sell-off in global risk markets after not too long a period of time.”



US solvency, Gromen explains, depends on a significant increase in productivity in a short period of time. A continuation of fiscal spending and Fed monetization will increasingly put the US in a position where debt default becomes more likely.



Want more investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.