Unchained - Why Possible Insolvencies by Celsius and 3AC Could Spell Disaster for Crypto - Ep. 364

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the June 17th, 2022 episode of Unchained. And I should note, since I forgot to on Tuesday, that Tuesday, June 14th was Unchained's sixth anniversary. Thanks to all of you for listening all of these years. Hey, builders, looking for one of the best scaling solutions in crypto? That's easy. Avalanche's breakthrough subnet design lets you minimize transaction costs and maximize your speed, consistency, and user experience. To experience Web3 like never before, head to avox.network to learn more. With the crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code Laura, link in the description.

Starting point is 00:01:03 Today's guest is Mika Honkhasalo, independent crypto researcher. Welcome, Mika. Happy to be here. This has been yet another huge newsweek in crypto with one big lender, centralized lender, Celsius, and one big trading firm, Three Arrow's Capital, both teetering on the edge. Let's just start with the very basic news. it all began with Cryptolender Celsius tweeting out Sunday night, Celsius is pausing all withdrawals, swap, and transfers between accounts. In May, Celsius reported having $11.8 billion under management with 1.7 million customers.

Starting point is 00:01:41 Why don't you explain what it is that Celsius does what this news meant and why it was so significant? Celsius is one of these sort of fintech layers on top of defy and allowing sort of basic crypto capabilities like buying and selling crypto. They also had services for earning yield. A lot of that was derived from defy sources and then also the ability to sort of borrow against your crypto. So kind of like this kind of fintech layer on top of the existing crypto ecosystem. What happened here was in Celsius's case, it was very interesting that there were sort of

Starting point is 00:02:16 rumors that started quite early already. And I don't think people really realized what was happening and how strange the situation might get. But there were early on just these weird signs sort of on chain that you could see something happening that really shouldn't, specifically like them selling their SDEs positions or people suspecting that it was them. And from there, I think it just sort of snowballed a lot and the information started to come out more and more. And I think for us, that people were a bit downplaying it, but then people started to realize that the situation could be quite serious and they could actually be a borderline insolvent. And so you mentioned STEath, Staked Eith. Why don't you describe what that is for listeners

Starting point is 00:03:00 and why this could cause an issue for Celsius? Staked Eith, and I think you'll see this as a theme of a lot of these mistakes that have been made, is a financial instrument within crypto, and misunderstanding of that financial instrument, how it works and how it should be priced, really is at the cause of a lot of these things. So SDEath is simply a derivative of Ethereum that gives you two things.

Starting point is 00:03:27 It allows you to access the yield that's already on the Ethereum 2 chain, so there's like the inflation from proof of stake, and then you'll be able to redeem that derivative to the underlying collateral eth in about a year or so, or maybe a bit over a year. And this instrument has traded on par with ETH like one-to-one for most of its history. But since people started to be maybe a bit more skeptical about what each of these financial instruments should be priced at after the U.S.T and Luna collapse, the price has started to drop.

Starting point is 00:04:00 And one of the first indicators really that something was wrong was that Celsius started selling their ST on the market. And this is something that you wouldn't really do unless it was kind of a bad, situation because you should have sort of known what you're getting into and you know that when those are redeemable and really the only way that it can create a problem for you is if you're mismanaging risk and you are in a very bad position where you actually have to start selling this asset that only has a certain amount of liquidity on decentralized and centralized exchanges and when you have to start selling that position that's like a pretty big red flag

Starting point is 00:04:34 that something is going wrong yeah and even just to take a step back for people the reason that staked ETH exists is because if you want to actually stake Eith on the beacon chain in Ethereum 2, then that locks it up and there's no liquidity. So that's what the purpose of this derivative is, is to enable you to actually still use that ether, even though technically you have it staked. And so essentially it's like when you say that they were selling it and correct me if I'm wrong, but my understanding is that it's sort of like this long-term asset. And yes, you have this other asset that represents it. But by selling it, that indicates, like, you need that money right now, which technically, if you, you know, have it locked up, then, then, like, it should be money

Starting point is 00:05:21 that you wouldn't need at that moment. Exactly. The misunderstanding most of the market seems to be making is that STEath was supposed to be somehow pegged to the ETH price, which isn't the case at all. There's no reason for the derivative to trade on par with ETH. Arguably, it doesn't have to, it can be priced at whatever the market wants to price it, and that should be okay under any normal circumstance. But yeah, if you're now here forced to sell that position, that's very strange and the situation that Celsius found themselves in. So at the time of this recording, it's not clear whether Celsius is illiquid or truly insolvent. But I think most people would say that no matter what, after this debacle, the company is

Starting point is 00:06:07 essentially done for since they've lost people's trust. And why does it appear that at least so far its competitors, NXO and BlockFi, haven't yet been hit so hard? And I should also make it as closer that NXO is a former sponsor of my show. Well, I think you have to take a few steps back here. And one of the words being used all the time right now is contagion and how things affect each other. And this problem probably really starts from the the Luna UST debacle. And it's likely that they were quite exposed to that. That means that there's some amount of money that they expected to be tied to the US dollar that simply went to zero. And based on how large those losses are mixed in with some suspected defy loss that they've had over the last year, that's what really put them in a bad position.

Starting point is 00:06:58 So it really comes down to risk management within these firms. and it's just that this company doesn't seem to have done a good job. And it's really as simple as that. All the due diligence for understanding that what the downside case may be with Luna and UST, that was available there, all the issues that STE may have that was all available there, is just that I think during the bull market, no one was really doing too much due diligence, everyone was just jumping into things. And this is the end result when things become adverse and suddenly not everything goes up.

Starting point is 00:07:30 and you have to really think about what should be the correct price for some of these assets. Yeah, and just to highlight some of those defy hacks that hit Celsius, one was that they lost maybe about $22 million from the Badger Dow hack. And there was another one. Unfortunately, I put this in my notes and I forgot to put the name of the actual hack. But in that one, they lost 35,000 Eath, which at this moment is worth $39 million, I'm sure at the time of the hack is worth a lot more because, you know, as you mentioned, they appear to have had a different strategy, potentially riskier strategy for investing its customers' assets.

Starting point is 00:08:11 Nexto, threw some shade at Celsius by tweeting that they would offer to buy some of Celsius's assets this week. But one thing I wanted to ask about was that you mentioned that they probably had exposure to Tara. And for those of you who have, you know, been following everything that happened post-Tera. Nansen did a report on all the wallets that triggered the Terra collapse. And one of them actually was a Celsius wallet. So from that report, it sort of appears that at least that one Celsius wallet was able to exit Terra unscathed. So are you saying that Celsius must have had other wallets that were also invested in Terra and then lost money from that? It would certainly explain a lot, because when you're just calculating up the losses and the customer

Starting point is 00:08:57 funds and the funds they've raised, it's likely that they would have lost, like, physicians in Luna, but these are obviously difficult to verify. You can see this dynamic where the information that we really get in the market that's good, that's the defy information and things we can see on chain. But then everything we can't see on chain is a suspect and you don't know who owns what wallets and they may not be perfectly tagged and that sort of thing. So ultimately, it's like impossible to know, but it would certainly help explain losses in the Luna ecosystem and I've certainly explained like some other volatility that has happened also in the market recently. So it would be very surprising to make those losses without losing money there in a sense.

Starting point is 00:09:37 All right. So in a moment, we're going to talk about three euros capital, which is what you were alluding to. But first a quick word from the sponsors who make this show possible. Join over 10 million people using crypto.com. The easiest place to buy, earn, and spend over 150 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 8% cash back instantly, plus 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 with the code Laura.

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Starting point is 00:10:52 their infrastructure to support mainstream adoption. Experience Web3 like never before. Scale with subnets. Head to avox. Dot Network to learn more. Back to my conversation with Mika. So actually, before we turn to three arrows, I did want to just kind of look ahead to what might happen for Celsius's investors.

Starting point is 00:11:15 The Wall Street Journal reported that at least the venture investors in Celsius are unlikely to provide more funds to bail the company out. And the Wall Street Journal also reported that the company appears to have hired some restructuring lawyers. So at this point, what would you say is most likely to happen, not just to Celsius, but also to their customers and those customers' funds? There's really no reason for investors to bail the company out because it's obviously like a dead company and any money you put in would be a loss at this point. So I understand the investor point of view very well. Then it's just a question of

Starting point is 00:11:52 how bad the financial situation really is, and that one we don't know on how much, like, users will get back when withdrawals, I will resume. It's almost impossible to know, actually, like, how bad the situation is and how it plays out for individual users. And I'm not a lawyer, but there's also question marks around how much, like, they have to pay back in what scenario as well. So, yeah, at this point, it's just a waiting game and seeing how bad the situation is. I think people suspect it is quite bad overall, but it's really, impossible to know. But I mean, the company, I think it's quite obviously done and no investors should put their money in and help them out going forward. Yeah, I definitely worry about their retail

Starting point is 00:12:34 customers at this point. Let's now talk about three arrows capital because after everyone was a buzz with what was potentially happening at Celsius, rumors began swirling that three arrows capital was being margin called or insolvent. Again, at the time of recording, nothing has been confirmed, but it's clear that the company is in a bad place. Let's explain to people what three arrows capital is and then why it is that they believe that three euros capital is in trouble. Three arrows is basically a crypto hedge fund that also has done quite a bit of venture investing with very prominent sort of figures, Sue Chu and Carl Davis within the crypto community. and what makes that situation

Starting point is 00:13:20 and basically they're in a situation where it looks like they've been margin called a margin called a lot and are if not insolvent all basically there that seems to be a pretty safe assumption and that one is so surprising because a lot of industry players

Starting point is 00:13:37 trusted them they're a very large name and that's really where you have when Celsius is a story about contagion within like retail and how crypto is seen by the outside public. Three arrows really is more about what industry players were at risk and how much with them. So, yeah, it's been a pretty surprising situation.

Starting point is 00:14:00 And that's definitely one where no one saw it coming. When the rumors started swirling, no one really believed them. And because it seems almost impossible for a smart investor like them to be in a situation where BTC is at like 25, 30K. and then you are actually liquidated entirely. It's completely different to be down a lot versus actually being in an insolvency situation and where you can't pay your lenders and things like that.

Starting point is 00:14:28 So that one is really surprising because people just assume that they wouldn't go this far. And especially at this kind of price point, which is historically not even such a large drop for BTC. So how can a player who's so well versed in the industry not be able to survive like such a simple thing actually, it's something that everyone should be prepared for. Quick correction.

Starting point is 00:14:50 Three arrows capital is actually primarily a proprietary trading firm, though it did do some venture investing with limited partners. However, the vast majority of the operation was trading with the general partner's own money. And so just explain a little bit about these margin calls. So what positions would they have had? And then like what puts them in this position of being margin called and liquidated? In its simplicity, they were borrowing to go long, and they were in some form or another, there may be like complex ways in which they've done it, but in some form or another,

Starting point is 00:15:25 they were long the market a lot to be put in this situation. So, yeah, it's really one where I think they probably also got pretty good terms from like lending desks and other companies that they work with because they're such a trusted partner. And I think that makes it sort of all the more worse in this case. So earlier, I was actually surprised that, you know, you seem to to sort of express surprise at their position because I think pretty early on it was known that 3AAS Capital was one of the firms that was affected by Terra's collapse. So I imagine that that probably kicked things off. Is that the case? And if so, how badly do you think that that kind of triggered the rest of the story for them? Yeah, that one triggered the story for them in the sense that they would probably have made pretty big losses. They were very big investors in Luna.

Starting point is 00:16:18 We don't know if they did anything with UST or spent money trying to defend the peg at the time. But there's a huge difference, I think, between just being down a lot, being down 90%, and actually being in a position where you're levered long and can't pay your debts. It's more understandable to make a loss and just be wrong about stuff than they're. and to manage risk that poorly. I think that's the part that is really surprising. So I think it's good to make that distinction. And then so what happened this week to send three Eros Capital into a crisis situation? I think it's just the price of BTC dropping ultimately that meant that their portfolio wasn't performing. And they were long, the industry overall, it's hard to know what the specifics are, but in some sense they were just long BTC and must have been long BTC on

Starting point is 00:17:09 margin. So they also had the exact same thing as Celsius, which was a 30,000 ETH cell into the curve, the STEs cell into the curve pool, which is the classic sign of disaster apparently right now that everyone can sort of see. And that that's one where you're actually worried again, that why are they market selling this? That this is, it's so weird, such weird behavior. So overall, I think it just comes down to, yes, there are positions probably within their portfolio that have done really poorly over time. They've been low. long publicly, things like Avax and Solana, and those are down a lot. So is BTC and ETH. But again, being long spot and being down is very different from actually going insolvent, which they

Starting point is 00:17:53 seem to have managed in this case. Right. Yeah, not yet confirmed. So we'll see what, you know, what eventually we find out. But as we discussed earlier, Celsius's troubles will hit its retail customers. Who gets hurt if three arrows goes under? This is quite clearly the large lending desk who they do business with. So you'd expect the usual suspect names that are the biggest sort of BlockFi and Genesis and others to be involved in some way. I think BlockFi already said that they are in a pretty good position and this doesn't affect them much. But generally, those are the types of name you're looking at and they will be the ones who are taking on pretty big losses here. I would be surprised if any of them actually

Starting point is 00:18:35 took such a big loss that it's really existential to their business in any way, then you would have to look at their risk management as well. And surely some of those practices will have to be improved after this. But there is money lost here, clearly. And it comes with their counterparties. And their counterparties are also things like they make fund of fund investments. Those funds are expecting them to participate in capital calls. That won't be happening in all likelihood. So there are a bunch of industry players who are tied to. I also saw that a company called Eight Blocks Trading tweeted that it had been trading out of one of three AC's trading accounts. And they said that three AC took one million dollars of

Starting point is 00:19:16 their money. So in that case, are they, is it just if three euros decides to give them the money back? Like what happens to a trading partner like that? The feeling is pretty much that that they may have been going around, and this is unconfirmed, but going around a little bit and just trying to borrow from everyone sort of unsecured at the last minute. And what this capital was used where it's unclear, probably some margin calls or something like that seems most likely here. So, yeah, these are, when you're one of these partners, it sort of depends on the specific legal contract you have with them, but you may be trading and doing specific strategies

Starting point is 00:19:57 within the market using their funds, let's just delta neutral strategy. which this firm, and that you mentioned, seems to have done. So in that case, this is one where I sort of hesitate because I'm not a lawyer, but it starts to get really, really questionable the actions, actions when you get to this level. So obviously, it would be huge news if both Celsius and Three Eros Capital had their demise right now. And so as we mentioned, it looks like, you know, the writings on the wall for both of them. nothing's been confirmed, but if indeed both of them go under, what effect would all of this have on the industry? I would say that three arrows leads to some industry losses just to very important

Starting point is 00:20:41 players. And Celsius, it's the before mentioned retail trust and how we're able to, as an industry, build that over time again, is a big question. But I think in the big picture, the worry isn't necessarily even what happened here. The worry is that does it stop here? And also if the market goes under 20K, under previous all-time highs, is that a situation where you would actually see other players be in a similar situation and also have mismanaged risk in sort of similar ways? So I'm not even that worried about the specific cases here, but I would be worried that others have behaved in a similar manner and they would be in sort of a close proximity from the current price point. And that is sort of a really bad scenario and would lead to a pretty big flush out. So the things we're monitoring going forward are who's the next one, who's the next one, who is sort of part of this line of the current line, and then also who are the new names

Starting point is 00:21:42 who may come up if price goes under 20K specifically, whether or not we see a lot of this type of thing happen at that specific price point because it's right below the all-time highs. it's a previous all-time highs. It's a nice round number, and it feels like there may be some risk right below there. And are there any particular types of companies that you will be keeping your eye on? It has to be funds, funds who are leveraged and the lending desks who participate in in those actions. Those are the large ones. Anyone who has touched high defy yields, taken too much risk on behalf of their customers,

Starting point is 00:22:22 I think in that case you see a lot of maybe smaller companies than Celsius. Celsius is just a big name, but sort of the smaller versions of them who could be in a similar situation and who probably are. So, yeah, I think it's sort of the same batch of mismanagement and same type of companies that we've seen be in trouble up until this point. It would also be in trouble sort of going forward. And do you think that blockfys and nexus and any similar centralized lending companies that those would be ones that people should keep their eyes on or potentially pull their funds out from? I would, it is very difficult to justify holding your BTC or USC with a lender who has actively participated in some of this more questionable side of defy, not like the core defy is working very well, but something. stuff like UST and Luna that has broken. So I think people should really look at the company and look at how they behave and do they seem

Starting point is 00:23:25 like an institution that that would go so far out on a risk curve that they are in trouble in a situation like this. I think there are companies who operate very, very differently to others in this space. And this really is a situation where maybe the other company has been able to bring in customers with better yields and things like that. but the companies who have been really long-term thinking all the time, who may have struggled in some cases because of that, I think those are really the big winners here

Starting point is 00:23:55 because now the strong companies survive and they will be like the next generation of winners and for the next cycle that we have, if there ever is one, that won't have some of these names that made mistakes and it will have as its biggest names, the companies that survive. So I think there is a sort of a positive silver lining to take from that. Yeah, yeah, that makes sense. I think that's why when the rumors were going around that someone had attacked Tara and set this off, people were like, it doesn't matter.

Starting point is 00:24:26 It doesn't matter how this happened because if they couldn't survive, then, you know, they shouldn't. So anyway, all right, well, thank you so much for explaining all this. It has been a pleasure having you on Unchained. It's been a pleasure. Thanks. The ScoreBet app here with trusted stats and real-time sports news. Yeah, hey, who should I take in the Boston game? Statistically speaking. Nah, no more statistically speaking.

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Starting point is 00:26:04 Plus, 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 with the code Laura. Link in the description. Thanks for tuning in to this week's news recap. BlockFi liquidates 3AC as contagion spreads to fin blocks. There was so much news regarding Celsius and three arrows that a few items didn't make it into the interview portion of the podcast that bear mentioning. First, the Financial Times reported that BlockFi liquidated three arrows after it failed to meet margin calls on its Bitcoin loans, with additional collateral this weekend.

Starting point is 00:26:48 Yuri Mushkin, Blockvice chief risk officer, told the FT that the company, quote, can confirm that we exercised our best business judgment recently with a large client that failed to meet its obligations. We believe we were one of the first to take action with this counterparty. Additionally, Finn Blocks, a crypto yield and staking platform, announced a $500 daily withdrawal limit and a $1,500 maximum monthly withdrawal limit

Starting point is 00:27:15 for all users on Wednesday, in light of a highly volatile market. As of press time, they have yet to release a schedule on when withdrawals might return to normalcy. Notably, Three Arrow's Capital is an investor and one of eight partners that previously helped FinBlocks generate yield, according to a statement released by FinBlocks on Twitter. In FinBlocks's Twitter bio, the company urges customers to sign up and buy and earn up to 90% APY on your crypto. Coinbase reduces its workforce by 18%. Coinbase, the largest crypto exchange in the U.S., laid off 18% of its workforce this week. The firm announced the move on Tuesday, with roughly 1,100 employees receiving the bad news

Starting point is 00:28:00 via their personal email, as Coinbase decided to immediately cut off all affected staff from the company's systems. In a blog post, CEO Brian Armstrong cited an upcoming crypto winter and an overhiring spree as the two main reasons for the layoffs. Coinbase was not the only major crypto company to shrink its workforce this week. Crypto.com, disclosure, a sponsor, trimmed its headcount by 5% over the weekend after laying off 260 employees. And crypto lending platform BlockFi plans to reduce its workforce by 20%, according to CEO Zach Prince. on Twitter. It's not all bad news for those looking for a job in Wem3. For example, FTX CEO, Sam Bankman Freed, says his firm is looking to grow from 300 to 400 people in the next year. Crypto Exchange Cracken, disclosure, a former sponsor, is also looking to fill over 500 open

Starting point is 00:28:56 positions. Finance is also in the hiring game, with CEO Chang Peng Zhao tweeting, in a thinly veiled shot at Coinbase and Crypto.com, that the exchange is high, hiring for over 2,000 positions. It was not easy saying no to Super Bowl ads, stadium naming rights, large sponsor deals a few months ago, but we did. Today, we are hiring for 2,000 open positions for Binance, Zhao wrote. The last time prices were this low? Data from coin market cap shows that this week, the total cryptocurrency market cap fell below $1 trillion for the first time since January 2021, marking a precipitous fall from its all-time high of $2.9 trillion in November 2021. Bitcoin is currently trading at $22,480, its lowest since December 2020.

Starting point is 00:29:48 Ethereum has also crashed substantially. ETH is trading at $1,220, its lowest since January 2021. Eiff has also had a particularly brutal last few months, falling 16.8%, 29%. and 36.8% over April, May, and June, respectively, according to data from CryptoRank. As currently constituted, out of the top 100 coins by market capitalization, only one token, BitFinex's Leo, is up year-to-date. On the flip side, 23 tokens are down more than 80% year-to-date. Cracken CEO gets political, invites unhappy employees to leave. The New York Times reported that Cracken CEO Jesse Powell,

Starting point is 00:30:32 sparked an internal culture war at the crypto exchange. Powell has allegedly led company-wide discussions on topics like the usage of preferred pronouns when using the N-word is okay, and whether Cracken employees should be able to arm themselves. Powell, in early Bitcoiner, with roots as far back as Mount Goggs, was cited as describing American women as brainwashed on the company Slack. In addition, Cracken also published a company-wide culture document alongside a jet ski program, because they want people who are leaving to feel like they are hopping on a jet ski and heading happily to their next adventure. That allows anyone who disagrees with the company to leave with four months pay. On Twitter, in a preemptive defensive thread before the New York Times article was published,

Starting point is 00:31:19 Powell said that roughly 20 employees out of 3200 are not on board with Cracken's culture. Based on Cracken executive Christina Yees reported words via Slack, this culture will not change anytime soon. CEO, company, and culture are not going to change in a meaningful way, she wrote. If someone strongly dislikes or hates working here or thinks those here are hateful or have poor character, work somewhere that doesn't disgust you. The SEC is investigating insider trading at crypto exchanges. According to Fox Business, the U.S. Securities and Exchange Commission launched an inquiry

Starting point is 00:31:54 into whether crypto exchanges have proper safeguards in place to prevent insider trading on their platforms. Fox reports that the SEC has sent a letter to one of the major crypto exchanges requesting information on its current insider trading safeguards. The SEC did not immediately respond to Fox's request to comment. Coin Center is suing the IRS. Here's why. Coin Center has filed a lawsuit against the Treasury Department, arguing that a crypto tax reporting requirement from last year's infrastructure bill is unconstitutional. The requirement called 6050I, which goes into effect in 2024, and which some of you may recall was covered on unchained last fall, would require U.S. taxpayers to report the social security numbers and other personal information

Starting point is 00:32:41 of anyone who sends them more than $10,000 in cryptocurrency. This is problematic, as CoinCenter explains in its lawsuit, because the reporting mandate would force Americans using cryptocurrency to share intrusive details about themselves, both with each other and with the federal government. Coin Center argues that such detailed reporting could have a negative impact on transactional privacy in the U.S. The reports would give the government an unprecedented level of detail about transactions within a realm where users have taken a series of steps to protect their transactional privacy. They conclude, in practice, the amendments reporting mandate would often be impossible to comply with because its terms do not coherently map onto the nature of the technology that it regulates.

Starting point is 00:33:27 Major wallets patched vulnerability before anything goes wrong. Metamask and Phantom, along with other browser-based wallets, disclosed a recently patched security vulnerability that was fixed without any attackers taking advantage of it. According to Metamask, the vulnerability did not affect the majority of users. In essence, the bug put a user's secret recovery phrase at risk within a device's storage under certain circumstances, such as if the user used a hard drive without encryption. Both Metamask and Phantom thanked Holborn Security, a crypto-cyber security firm,

Starting point is 00:34:08 for originally discovering the vulnerability in September 2021. Web 2 plus Web 3 equals Web 5. Block, through crypto-subsidiary TBD, announced an early-stage initiative called Web 5 on Friday. The goal, according to promotional slides made available online, is to build a decentralized web development ecosystem that does not necessarily involve renting storage space from blockchain protocols.

Starting point is 00:34:37 The initiative has apparently been named Web 5 to reflect that it is a combination of Web 2.0 and Web 3 principles and technologies. Jack Dorsey, CEO of Block and Web3 skeptic, said on Twitter that he believes Web 5 will likely be our most important contribution to the Internet. He also added, snarkily, RIP Web3VCs. While the new project was announced last Friday, there was no official release date.

Starting point is 00:35:06 Terraclone USDD is struggling. Tron's algorithmic stablecoin USDD broke its peg with the dollar this week. Data from Coin Gecko shows that the token has traded between 96 cents and 99 cents since Sunday afternoon Eastern Time. In response to the depegging event, Tron Dow Reserve, a found set up to ensure that USDD maintains its peg, deployed over $2 billion to restore the peg on Monday. The Dow also spent $220 million on purchasing more TRX on Wednesday, causing the price of TRX to jump 25% plus. Despite the announcements, USDD has not yet managed to reach $1 again. That being said, based on his website, it appears that Trondow Reserve has a bit more funding left to try to maintain USDA's peg. The organization claims to have over $2.3 billion in reserves left.

Starting point is 00:36:04 A new stable coin enters the market. Circle announced the launch of Eurocoin this week, a fully reserved Eurobacked stable coin. The token will become available on June 30th and will operate under the same full reserve model that Circle uses for USDC. Time for fun bits. If you're down bad, this. This TG chat is for you. There is now a telegram chat titled Bear Market Screaming Therapy Group, where members are only allowed to send screaming voice notes. So if you are really, really sad about Bitcoin being down 70% from its all-time high, well then, I guess you now have a place where you can go scream about it. Thanks so much for joining us today. To learn more about Mika and the potential

Starting point is 00:36:55 insolvencies of Celsius and 3 Arrow's Capital, check the showness for this episode. Synthetics founder Kane Warwick is launching his next mentor program and I'm excited to select one of the projects from my community. If you're a female founder working on L2s who'd love to be supported by a defy pioneer, send an email to hello at unchainedpodcast.com with the subject line, Kane mentorship. Mentees will get one-on-one time with Kane plus group sessions to talk you through topics like capital raising, token design, and more. Unchained is produced by me, Laura Shin, with help from Anthony Yun, Matt Pilchard, Mark Murdoch, Juan Oranovich, Pam and Jim Dar, Shashonk, and CLK transcription. Thanks for listening.

Unchained - Why Possible Insolvencies by Celsius and 3AC Could Spell Disaster for Crypto - Ep. 364

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