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Austin Campbell Profile picture
@CampbellJAustin
May 3 • 3 tweets • 1 min read • Read on X
x.com/i/article/1918…
If you want to hear me talk about this topic with @TheStalwart and @tracyalloway on Odd lots, you can do so here:

If you want to hear what I had to say to @USHouseFSC about stablecoins, read my testimony, or listen to the hearing, you can do so here:

financialservices.house.gov/calendar/event…

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More from @CampbellJAustin

Austin Campbell Profile picture
Mar 12
0/ One of the first transformative things I learned when I was doing my MBA at @NYUStern was from @AswathDamodaran in his class on valuations.

Namely, when you see multi-decade growth rates at huge CAGRs, you know you are dealing with an idiot or a scammer.
1/ Professor Damodaran is a nice person (much nicer than me, low bar), so I don't think he quite put it in those terms, but that was the message I took away.

Why do I bring this up here? Look at the CAGR that has to be assumed for an asset that already has a trillion dollar market cap to make these scenarios realistic!
2/ Notice that even at the midpoint of this estimate, Bitcoin is growing so fast that it essentially becomes a significant percentage of the total American economy. At the high end, it is larger than the stock market. Think about that for a moment.

Would anyone, outside of one of the Satoshi's Witnesses in the thrall of a cult-like belief, want to own a piece of code that literally does nothing over, oh I don't know, literally the entire US economy and its productive capacity? This becomes deranged at some point to even consider.

Put differently, at no point in history has money been worth more than the total supply of productive assets.
Read 7 tweets
Austin Campbell Profile picture
Feb 24
0/ A while back, I had written a piece on @ethena_labs and USDE asking them to disclose risks clearly and not overpromise stability or call it a stablecoin.

I'm used to people in crypto getting grouchy with me when I point things out, so let me tell everyone now that it was a huge fucking surprise to me when not only did Ethena actually listen, they started doing things based on exactly the discussion we had.

Unusual. In a good way.

Well, now I'm going to write another piece on the @Bybit_Official hack and how it impacted Ethena, and why there are 100% lessons in here for everyone else in crypto.

TL;DR - fucking great work, @ethena_labs team and @leptokurtic_
1/ First of all, when the hack happened, everyone knew @ethena_labs had exposure. Rather than hide the ball, lie about the exposure, or drop some "steady lads deploying capital" bullshit, the team was able to:

Clearly state exactly how much exposure they had (x.com/ethena_labs/st…)

Have one of their partners, given they had also clearly disclosed this and how their custodial arrangements worked in advance - and hint, you have to do this in advance or everyone shits their pants and doesn't believe you in the moment, they need to know you had the bomb shelter before it was a problem - also put out a statement (x.com/CopperHQ/statu…)

They pulled together a war room (I was talking to someone in it) and were able to lead from the front, talking to partners, making sure information was current and accurate, and able to tell people when exposure was closed out (x.com/ethena_labs/st…)
2/ After all of this, the founder did not hide, run away, or dissemble. Guy put out a clear statement on exactly what happened (x.com/leptokurtic_/s…), and makes the key point that people can talk about risk plenty in advance, but what matters is how things operate when the rubber meets the road. As someone who has handled some crisis situations myself, I want to share the following observations on what worked:

1. Ethena understood their risks. They knew what the problems were, and having the 3rd party custodian and proper PNL sweeping timeline matters. They had exposure to @Bybit_Official and they did not lie about it or hide it, but by building for it, they knew what it was.

2. They immediately got into a war room and they immediately started communicating. Accurate. Clear. Blunt. Not sugarcoating but being prepared.

3. They continued to handle redemptions just fine and had a structure that was designed for this. You can't come up with it after the fact. You need to do it in the moment, and you need to have built for that when it happens. While the fiat world is different, I was able to do the same with BUSD and ensured we survived FTX, 3AC, and UST all collapsing with no issues (and that it could later be shut down and return every penny). You have to think about these things in advance, and it's clear the Ethena team did.
Read 4 tweets
Austin Campbell Profile picture
Dec 15, 2024
0/ So people are upset with me for opposing the Bitcoin Strategic Reserve and saying Coinbase should not buy #BTC for their treasury, have incorrectly assumed this means somehow I don't like Bitcoin.

If you think that is what I think, you are wrong and should feel bad.
1/ The misunderstanding comes from one of the problems that incessantly plagues the crypto space and, in fact, was casual to the crippling issues of 2022, that is to stay not understanding the proper roles of controls, risk management, and division of responsibility.
2/ So first, #BTC. I own some (in cold storage and inaccessible to me on a daily basis and in ETF form, before someone tries to mug me for it - you'll be very disappointed). I am in favor of it as an asset. I am on the record in the past having said I think it's not unreasonable
Read 25 tweets
Austin Campbell Profile picture
Nov 30, 2024
0/ What is debanking and what are the mechanics?

Since @pmarca blew the whistle on Operation Chokepoint 2.0 on @joerogan's podcast, this issue has finally gotten the attention it deserves. However, as is usual with these things, the discourse has become the embodiment of chaos.
1/ Therefore, as a long time banking expert (yeah, it's as bad as you think, I'm pretty dire) and someone who has been writing about this from the early days and was paying attention even back during Operation Chokepoint 1.0, I wanted to take a moment to explain a few things.
2/ So let's start with debanking. Mechanically, this is very simple: a bank closes all of your accounts with them. Why? Well, funny you should ask that, because the bank often is not going to tell you.

This part is often a surprise to people outside the industry, but there's a reason I wrote a whole thread about this and advise every single two-legged person to have two bank accounts in the United States, and if they are with two very different banks, even better.

But yes, the punchline is simple: they close all your accounts and they don't tell you why.
Read 12 tweets
Austin Campbell Profile picture
Nov 6, 2024
0/ So talking out loud here:

1 - I don't think that the previous misconception that crypto is all scams and money laundering is correct. But don't take my word for it. The CEO of @inca_digital testified on this exact topic in front of congress, and he's both a former JAG and interpol, so the exact kind of expert you want on this. I'll link to Adam's testimony at the back, but punch line is that while there certainly is bad activity in crypto, it's likely less as a % than both cash (still king for crime) and the traditional system.
1/ To quote Adam:

"US Agencies estimate that Hezbollah receives an annual fund of approximately $700 million per year from Iran. They also receive hundreds of millions more in annual revenue through drug-trafficking, trafficking in art and diamonds, and money-laundering networks. Here, too, a forensics company estimated that $12 million in cryptocurrency had been sent to Hezbollah since 2021. This means approximately $4 million in
cryptocurrency has been sent to Hezbollah for the past three years, with over a billion sent to the organization via other means."

Not exactly the numbers people allege.
2/ I've also talked extensively about the problem of banks not being able to easily transform themselves due to a number of both financial and regulatory constraints on Odd Lots with @TheStalwart and @tracyalloway. I'd encourage you to listen to that whole thing if you want to, but the key point I would say is that innovation, historically, does not come from large companies protecting oligopoly profits within an industry. It comes from outsiders challenging them and breaking that wall down. While government regulation could certainly reduce bank profits, I think it's doubtful it could increase customer service unless antitrust action was accompanied with other changes to the regulatory frameworks and behavior of the banking regulators.
Read 10 tweets
Austin Campbell Profile picture
Sep 28, 2024
1/ Now that @cz_binance has been released, I want to take a moment to comment on the situation involving @binance and the US approach to crypto.
2/ First, it is almost certainly true that between 2018-2021, there were significant controls issues at Binance and material illicit finance issues.

This is not totally surprising to me; a business going from 0 to huge is going to have that kind of issue in any field if it handles money.

In fact, any scaled financial business in general has these issues, so those two factors combined definitely made Binance a target for money launderers, as insufficient controls + scale makes for a solid conduit for bad actors.

This is true across tradfi as well: criminals seek out the weak points to exploit them. It is the nature of the system.
3/ For context, during that same period, Goldman Sachs paid ~$3B for the issues in the 1MDB scandal, Standard Chartered paid a ~$1.1B fine for AML/KYC failures (including trading with sanctioned entities), UniCredit paid ~$1.3B for the same, and WestPac in Australia paid a nearly $1B fine for the same.

Compliance issues are rife throughout tradfi, and it is a subject I have been thinking about deeply and will be publishing more on with regard to how to effectively combat financial crime in general.

I would state my hypothesis here that there are probably significantly more severe issues in tradfi than crypto, but we just can't see them because the system is fragmented and opaque.
Read 20 tweets

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