Happy Friday Everyone! 👋
Contagion has reached the crypto industry and Bitcoin has fallen below the 20,000 level.
Goldman Sachs downgraded Coinbase to a ‘sell’ amid falling crypto prices. The Wall Street giant is not entirely bearish on the space though (more on that below).
Once considered by some the most promising area in crypto, NFTs have not been exempt from Crypto Winter as Christie’s has sold just $4.6M in NFT art this year. Last year's sales nearly reached $150M.
Finally, don’t look now but LUNA2 (not to be confused with LUNA) might be making a comeback!? The new token reached a price of $2.77 this week after falling to a historic low of $1.62 earlier in the month.
Having said that…let’s get to it!
RIP: 3AC
Goldman Sachs crypto bargain shopping
If you’re invested in crypto, you don’t have to worry about taxes
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1. RIP: 3AC
Crypto Winter is here and it’s wasting no time in claiming victims.
Over the weekend I dove into the domino effect that has revealed structural cracks/failures in the industry.
This week, a British Virgin Island court ordered the liquidation of Three Arrows Capital (3AC), one of the space’s most prominent hedge funds, after it failed to repay debts owed to creditors.
Holding roughly $3B in AUM in April (with some estimates putting peak AUM at over $18B), 3AC missed obligations on loans from some of the biggest names in the industry.
Lenders Voyager Digital and BlockFi, for example, made loans totaling over $1.5B to the failed hedge fund and have devolved into crisis mode.
As we mentioned last week, Sam Bankman-Fried’s FTX was making moves amid the chaos: the company has issued revolving credit lines to both Voyager Digital and BlockFi, and could potentially acquire the latter for pennies on the dollar.
2. Goldman Sachs crypto bargain shopping
One could describe FTX’s strategy right now as “aggressive growth by acquisition”, but there’s a least one battered company it wants no part of: Celsius.
After signaling interest in acquiring the lender (whose users are still unable to withdraw assets!!), the crypto giant walked away from the deal citing a hole in the company’s balance sheet two billion dollars wide.
They also said Celsius was “hard to deal with”…
FTX’s pass, however, has yet to curb interest in Celsius from another financial giant: Goldman Sachs.
Goldman is gauging interest from Web3 funds, traditional funds, and funds that specialize in distressed crypto assets to potentially pick up marked-down assets in the case of bankruptcy (which seems likely).
The bank is leading a group of investors seeking to raise $2B to acquire the failing lender’s distressed assets.
3. If you’re invested in crypto, you don’t have to worry about taxes (for now)
Legislation passed by Congress in November stated that crypto firms were to start recording detailed client transaction data starting in 2023.
However, thanks to expected delays from the Treasury Department and IRS, crypto investors can put their tax worries on hold—at least for a little while longer.
Although the agencies didn’t comment on the reasons for the delay, the original law has received a great deal of criticism from industry leaders who claim it was drafted too broadly.
Firms like Coinbase complained it would take up to two years for them to prepare, update software, and properly comply.
Despite Washington’s continued concern regarding tax evasion in the crypto markets, they’ve been flatfooted when it comes to quickly drafting rules for crypto companies to use when collecting and reporting data, which tells me standardization for crypto taxes is not coming any time soon.
SOURCES*
1. WSJ
3. Bloomberg
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