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The $100 Million Man
April 16, 2018 |
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Four years ago, I wrote a post about how Coinbase was eating the crypto world. After a brief stretch in 2016-2017 in which the company seemed to rein in its focus on just the on-and-off ramps for retail crypto investors, Coinbase looks like it's getting back to drinking everybody's milkshakes.
First there was the November announcement about an enterprise custody service, which allegedly came days after getting rebuffed from Anchor on an acquisition offer.
Then last month, they announced a new index fund product that would compete with Grayscale and Bitwise, and arguably make for the most competitive index on the market (large cap currencies automatically added and rebalanced according to Coinbase's own rubric).
Around the same time, the company announced it would get into the venture investing game, and welcomed a new VP of business development to pursue M&A opportunities.
Within the last week, they've turned up the heat, announcing the acqui-hire of the Cipher Browser founder, in order to combine the Cipher decentralized app browser and wallet with the Toshi team's efforts, and earlier today, that they had acquired Balaji Srinivasan* for $100 million.
Coinbase's aggressive moves are part of a larger aggressive consolidation theme I'd expect to play out throughout 2018 and beyond. Crypto exchanges and high-profile token projects are now among the most well-capitalized businesses in the world, but they also happen to be among those with the most acute talent shortages.
Expect a lot of mediocre companies with top flight talent to get snapped up aggressively.
*Brian Armstrong's words, not mine. Check out the title of the Coinbase announcement post. Earn.com was included in the deal. Not a great outcome for the earliest investors, but a pretty sweet kick save on the estimated $121 million the company had raised for the decentralized mining hardware startup they started as. I'm very interested to see whether and how Earn continues to scale under the Coinbase corporate umbrella. Will it be merged into the Coinbase product portfolio? Run separately as a division a la GDAX?
Most importantly, will it perform as an investment? If it does, it would make for a key milestone for Coinbase - an acquisition of a going concern that continued to thrive under new management. That would have ripple effects in the coming years as other teams consider exiting to what looks like it will be the industry's first IPO.
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I Like Pictures
Like OnChainFx, but hate the mobile experience? Me too.
But there's hope. From what I've heard, this is coming soon...
Slick. And this should make it easier for projects like Stellar to call out their high Y2050 rankings without the ugly UX.
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Red Pillz
The volunteer army at Messari is building a free, open-source library that anyone can use as a resource, so you can go down the crypto rabbit hole a bit more efficiently. Today, we've got another good one for you.
MakerDAO is one of the earliest decentralized stablecoin projects, which uses ether to collateralize its US-dollar pegged ERC-20 token called Dai. The project uses a second token, Maker, that allows holders to vote on network upgrades such as whether to approve new collateral types or pegs. This is our first of several upcoming research reports on stablecoins.
Yes, we’ll be helping you compare and contrast them as we introduce new tools in the coming months.
The full library of tear sheets can be found by visiting the Messari website. Our briefs and their curated "further reading" resources will help you grok top cryptoassets in less than an hour.
Tell us what you think!
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Pincoin’s $660 million ICO Scam. In what might be the biggest exit scam in recent history, a team of seven Vietnamese nationals fled Vietnam after raising $660 million from approximately 32,000 people. Their company, Modern Tech, launched an ICO for a token called Pincoin, which offered bonuses for those who brought others into the sale. After initially paying investors in cash, Modern Tech quickly began to pay with more self-issued "iFan" tokens. Another red flag: Modern Tech’s site listed no founder information. Daily reminder to use common sense. TechCrunch
More institutional money going into blockchain investing. Barclays sets up fintech VC fund. Following its partnership with Coinbase in the UK, Barclays sets up Barclays UK Ventures, a venture capital-style unit that will focus on investing in artificial intelligence, distributed ledgers and smart contracts. The bank did not reveal how much it would be committing to the new unit, but aims to of add “billions of pounds” to its annual revenues by 2025. Financial Times
The Long Battle ahead for ICO Fraudster. (h/t Token Economy) Last September, the SEC charged Maksim Zaslavskiy and his two companies with defrauding investors in a pair of ICOs purportedly backed by investments in real estate and diamonds. Zaslavskiy is currently defending securities fraud claims in criminal court. His next court appearance is scheduled for April 27, but this will be a long legal battle. In order to successfully charge securities fraud conspiracy in a criminal probe, the Government must prove guilt to both judge and jury. A more difficult task than traditional securities fraud cases, as this is ICO fraud case to be prosecuted by the government. Worth reading more. Fast Company | SEC
Quick Bits (Don’t read that, I read it for you)
Choke Points (Exchange news)
+ China’s Bitmain receives an approval for a land lease and a purchase option from Washington State that would allow Bitmain to build its new crypto mining facility.
+ Chile’s financial institutions seem to be implementing a blanket ban on crypto trading platforms as many are complaining their bank accounts have been shut down without explanation. The exchanges have brought their claims to an appeals court, which agreed to hear their case.
+ Germany second largest exchange Börse Stuttgart will be launching Bison, a cryptocurrency trading app, later this year.
+ Japan’s GMO launches a bitcoin lending service that allow will customers to lend their bitcoins to the company for a period of 90 days with interest.
+ Following India’s largest crypto theft to date ($3 million USD), Coinsecure announced a bounty of approximately 20 million rupees (~US$306,722) to anyone who helps recover the lost bitcoin.
Startup Signals (ICOs, Cryptos, and Startups)
+ Coinsource, the bitcoin ATM network, expands into the greater Washington DC area with plans to install 20 bitcoin ATM machines.
+ Consensys introduces Token Foundry, a new service that seeks to “identify the consumers who will add the most value to each token-powered network, and to lower the barriers of entry to participate in them.” The language in this post seems to attempt to steer the team clear from associations with other token advisory services, which tend to look like quasi-investment banks.
The Powers That Be (Legal/Reg/Policy)
+ A Louisiana city may be considering an ICO due to insufficient funds and property tax revenues. + According to Credit Karma, not enough crypto users are filing their taxes. Just 100 in 250,000 returns files so far. This despite an estimated 5% of Americans claiming to hold crypto. Oh, and remember, Chainalysis, the analytics firm that just raised $14mm from Benchmark Capital, counts the IRS as a customer.
BigCo Noise (Enterprise initiatives)
+ Z Corporation, a Yahoo Japan subsidiary, acquires 40% of a Japanese cryptocurrency exchange BitArg Exchange Tokyo.
“Celebrities”
+ Bitgo’s co-founder Ben Davenport is stepping down from his role as CTO.
Did I miss something big?
Send me the link, your twitter handle and your best imitation compression algorithm write up. If I really whiffed, I’ll include your bit tomorrow (with attribution).
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Shameless Plugs
Hit me up when I'm in your city!
Upcoming Travel:
+ Boston (4/25-4/27 - Pillar VC's Unchained)
+ SF (5/1-5/3 - private event)
+ NYC (5/10-5/17 - Fluidity, Ethereal, Consensus, Token Summit)
+ Asia (Japan, Korea, Hong Kong early through mid-June)
My company, Messari, is hiring:
+ Front-end developer, blockchain engineers, data engineers
+ Volunteer analysts and summer interns
+ Content curation lead (compression algo tinkerer)
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