1/ Waiting on pin’s and needle’s to read the #SEC settlement with @BlockFi reported by @business over its crypto lending product
2/ Bloomberg reported a $100 m settlement and agreement to not take in US investors because SEC deems the lending product to be a #security
3/ BlockFi does not provide much information on borrowers, but speculation is that the large trading market and hedge fund have been driving the demand for crypto lending products.
4/ Fund borrows 100 Bitcoin valued at $50k each for $5 million and immediately sells. Bitcoin price drops to $37k each and Fund buys 100 Bitcoin for $3.7 million. Fund pays back 100 Bitcoin to lender. Clears $1.3 million in profit (minus fees)
5/ So if you have been wondering about one factor that drives Bitcoin up and down some much….welcome to the world of Shorts.
6/ So, is the lending out of Bitcoin in this manner a security - hard to argue it is not. The accounts are being used in a common enterprise for profit.
7/ Expect to see most platforms in the US move towards only allowing this in US for accredited investors (Circle Yield and Compound Lab’s Treasury product)
8/ #staking is completely different - in that case ownership doesn’t change in the underlying crypto. depositing it to support verification of transactions (in most cases). And then how should completely decentralized matching platforms be treated?
9/ these are the wonderfully complex #defi / securities Rubik’s Cubes that keep me awake at night and why I love this industry.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
