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Coinbase is in deep sh*tcoins—and so is the SEC



Coinbase is in deep sh*tcoins—and so is the SEC

Bitcoin maxis are not very pleasant people. The maxis—short for maximalists—have no use for any blockchain that’s not Bitcoin, and they are often rude, intolerant and paranoid. But say what you want about the maxis, they care deeply about Bitcoin and will do anything to protect it. If only other blockchain communities were a little more like them.

Solana, in particular, could learn a thing or two from the maxis. Since bursting on the crypto scene in 2020, Solana is viewed by many as the third most important blockchain thanks to its top ten market cap, and its vibrant community of developers and entrepreneurs. But what Solana is not known for is security or reliability—two things Bitcoin has in spades.

This week, Solana was in the news for a hack that drained funds from more than 8,000 token owners, and that appears to have been caused by a wallet called Slope that stored users private keys in plain text on a centralized server, and whose code is not open source. The Slope hack comes just months after another calamitous attack that saw hackers steal $320 million from a so-called bridge that let users interact with the Ethereum blockchain.

Solana defenders are quick to point out that fault for the hacks lies with external applications and not the blockchain’s core protocol. This is correct, but also raises the question of why the Solana eco-system is so vulnerable to these sort of large scale attacks in the first place. Can’t the community do more to ensure Solana’s infrastructure isn’t riddled with vulnerabilities? Can’t they improve how the protocol interacts with third parties, or do more to promote bug bounties and other security measures?

The reason for Solana’s problems may lie in its culture. I asked Twitter recently how the Solana community differs from those of Bitcoin and Ethereum, and the most common answer was that Solana is heavily influenced by venture capitalists. If this is true, it helps explain why Solana became a major crypto player so quickly and has attracted so much buzz. This is not a bad thing—hype and growth are essential to any successful crypto project. But the venture capital influence may also explain some of the shortcomings of Solana, particularly its neglect of security and push for growth at all costs.

Solana also seems different from Blockchain and Ethereum when it comes to maintaining its core protocol. The communities around the latter blockchains are hyper-attentive to every upgrade and potential weakness in their chain’s code. The Solana crowd, by contrast, is buzzing about a new retail store in a swanky New York City mall, but less concerned with core operations. This could be why Solana has been weighed down by a series of crashes and outages in recent months.

All of this is not to say Solana is a bad project. On the contrary, Solana’s speed and its community’s focus on building popular products that are easy to use make it one of the best blockchains to come along in years. But if Solana doesn’t start paying attention to fundamentals, in particular security, it could land in serious trouble. Bitcoin maxis may be unpleasant, but there is no doubt their blockchain will be here in a decade. The same can’t be said of Solana.

Jeff John Roberts


Credits 🚀 

Bitcoin miner earns $9.5M in power credits during Texas heatwave

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Crypto users spent $2.7B minting NFTs in first half of 2022

Debits 🐻 

Tinder’s crypto plans killed as CEO gets the boot

Scooter company Lime tells Helium to stop claiming it is a client

Robinhood cutting 23% of staff, CEO says ‘We overhired’

Hackers drain $200M from crypto bridge Nomad



“In terms of madmen, Saylor is ‘Elon Junior,’ without the business talent.” That’s a juicy quote from a new profile of MicroStrategy CEO, Michael Saylor—known for his bold Bitcoin buys—penned by Fortune legend Shawn Tully.

Tully makes the case that Saylor, who appears to live for thrills in his business and personal life, may finally be in over his head with the Bitcoin bet. The issue is the CEO has been taking mass loans against MicroStrategy’s consulting revenue, and that his creditors will come for him if Bitcoin’s price doesn’t improve.

Saylor may be on thin ice but, over his three decade career, he has also proved to be an early visionary when it comes to new tech like the web, mobile and cloud. Could he escape his current predicament? 

The rub is that Saylor has spent $4 billion to accumulate 129,699 Bitcoin at an average price of around $31,320. But today, with Bitcoin selling at roughly $23,300 or 26% less, his holdings are worth $3 billion, or $1 billion less than he paid.


Is SBF the next Warren Buffett? (exclusive Fortune cover story) by Jeff John Roberts

Crypto customers need FDIC protection. Will they ever get it? by Rob Stevens

The Ethereum ‘merge’ is coming: What competitors think by Taylor Locke

NFTs keep getting hacked. Can this startup keep them safe? by Marco Quiroz-Gutierrez

(Some of these stories require a subscription to access. Thank you for supporting our journalism.)


I first heard the term “Bitcoin maximalist” around early 2018 during the last crypto winter. The term was often invoked by the so-called “maxis” as a term of pride by those who believed Bitcoin would be the only blockchain to keep its value. Today, the terms is more commonly thrown around as an insult by those fed up with the Bitcoin hardliners. But it’s also becoming less common—likely because some maxis are making peace with the existence of other chains.

This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to receive future editions.


Coinbase’s near-term outlook is ‘still grim’, JPMorgan says, while BofA is more positive about firm’s ability to face crypto winter



Coinbase's near-term outlook is 'still grim', JPMorgan says, while BofA is more positive about firm's ability to face crypto winter

Coinbase is well positioned to successfully navigate this crypto winter and take market share, Bank of America said in a research report Tuesday. It maintained its buy recommendation following the exchange’s second-quarter results.

The results warrant “a muted stock reaction,” the report said. Net revenue of $803 million was below the bank’s and consensus estimates, while its adjusted $151 million loss before interest, tax, depreciation and amortization was better than the street expected. Importantly, the company remains “cautiously optimistic” it can reach its goal of no more than $500 million of adjusted EBITDA loss for the full year, the report added.

Coinbase shares fell almost 8% in premarket trading to $80.74.

Bank of America notes that Coinbase had no counterparty exposure to the crypto insolvencies witnessed in the second quarter. The company also has a “history of no credit losses from financing activities, holds customer assets 1:1, and any lending activity of customer crypto is at the discretion of the customer, with 100%+ collateral required.” These rigorous risk-management practices will be a “positive long-term differentiator” for the stock, the bank said.

JPMorgan said Coinbase had endured another challenging quarter, while noting some positives.

Trading volume and revenue were down materially. Subscription revenue was also lower, but would have been much worse were it not for higher interest rates, it said in a research report Wednesday.

The company is taking steps on expense management, and in addition to the June headcount reductions, is scaling back marketing and pausing some product investments, the note said.

The bank says the company’s near-term outlook is “still grim,” noting that the exchange expects a continued decline in 3Q 2022 monthly transacting users (MTUs) and trading volumes, but says Coinbase could take more “cost actions” if crypto prices fall further.

JPMorgan is less optimistic than Bank of America about the company in the near term, saying pressure on revenue from falling crypto markets will have a negative impact on the stock price. Still, it sees positives including higher interest rates, from which the firm will generate revenue. It also sees opportunities for the exchange to grow its user base, leveraging almost $6 billion of cash. The surge in crypto prices in July, and the forthcoming Ethereum Merge are also seen as positive catalysts, it added.

The bank maintained its neutral rating on the stock and raised its price target to $64 from $61.

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Elon Musk sold $6.9B in Tesla stock in case he’s forced to buy Twitter



Elon Musk sold $6.9B in Tesla stock in case he's forced to buy Twitter

Elon Musk sold $6.9 billion of his shares in Tesla Inc., the billionaire’s biggest sale on record, saying he needed cash in case he is forced to go ahead with his aborted deal to buy Twitter Inc.

“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” Musk tweeted late Tuesday after the sales were disclosed in a series of regulatory filings. 

Asked by followers if he was done selling and would buy Tesla stock again if the $44 billion deal doesn’t close, Musk responded: “Yes.”

Tesla’s chief executive officer offloaded about 7.92 million shares on Aug. 5, according to the new filings. The sale comes just four months after the world’s richest person said he had no further plans to sell Tesla shares after disposing of $8.5 billion of stock in the wake of his initial offer to buy Twitter.  

Musk last month said he was terminating the agreement to buy the social network where he has more than 102 million followers and take it private, claiming the company has made “misleading representations” over the number of spam bots on the service. Twitter has since sued to force Musk to consummate the deal, and a trial in the Delaware Chancery Court has been set for October. 

In May, Musk dropped plans to partially fund the purchase with a margin loan tied to his Tesla stake and increased the size of the equity component of the deal to $33.5 billion. He had previously announced that he secured $7.1 billion of equity commitments from investors including billionaire Larry Ellison, Sequoia Capital, and Binance. 

“I’ll put the odds at 75% that he’s buying Twitter. I’m shocked,” said Gene Munster, a former technology analyst who’s now a managing partner at venture-capital firm Loup Ventures. “This is going to be a headwind for Tesla in the near term. In the long term, all that matters is deliveries and gross margin.”

At the weekend, Musk tweeted that if Twitter provided its method of sampling accounts to determine the number of bots and how they are confirmed to be real, “the deal should proceed on original terms.” 

Musk, 51, has now sold around $32 billion worth of stock in Tesla over the past 10 months. The disposals started in November after Musk, a prolific Twitter user, polled users of the platform on whether he should trim his stake. The purpose of the latest sales wasn’t immediately clear.  

Tesla shares have risen about 35% from recent lows reached in May, though are still down about 20% this year. 

With a $250.2 billion fortune, Musk is the world’s richest person, according to the Bloomberg Billionaires Index, but his wealth has fallen around $20 billion this year as Tesla shares declined.    

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The rent is too d*mn high for Gen Z: Younger generations are ‘squeezed the most’ by higher rents, BofA says



The rent is too d*mn high for Gen Z: Younger generations are 'squeezed the most' by higher rents, BofA says

Most of Gen Z is too young to remember the 2010 New York gubernatorial candidate Jimmy McMillan.

But over a decade later, they would probably agree with his signature issue (and catchphrase): the rent is too damn high.

This July, median rent payments were 7.4% higher than during the same period last year, according to a Bank of America report released Tuesday. 

The national median price for a one-bedroom apartment has been hitting new highs nearly every month this summer. It was $1,450 for July, according to rental platform Zumper. In the country’s largest city, New York, average rent exceeded a shocking $5,000 a month for the first time ever in June. 

But inflation in the rental market hasn’t hit each generation equally, and no one is getting squeezed harder by the higher monthly payments as Gen Z. Those born after 1996 have seen their median rent payment go up 16% since last July, compared to just a 3% increase for Baby Boomers, BofA internal data shows. 
“Younger consumers are getting squeezed the most by higher rent inflation,” BofA wrote.

The great rent comeback

Early in the pandemic, landlords slashed rents and gave significant COVID discounts to entice tenants to stay instead of leaving urban areas. Once those deals started expiring in 2021, many landlords suddenly raised payments once again, sometimes asking for over double their pandemic value. 

Young people across the board have been hit hard, and rent burdens compared to age can be seen even within a single generation. Younger millennials had their median rent payment grow 11% from last year, while the median payment for older millennials rose 7%. Gen X experienced a 5% median rent increase, according to BofA. 

It’s not a surprise, then, that Gen Z feels so strapped for cash. The majority of young people, 61%, said they want to receive their wages daily instead of twice a week, a practice typically reserved for workers living paycheck to paycheck, according to a report from the Center for Generational Kinetics, which specializes in research across the generations. Rising rent inflation has even priced nearly a third of Gen Zers out of the apartment search altogether. Around 29% of them have resorted to living at home as a “long-term housing solution,” according to a June survey from personal finance company Credit Karma.

It’s no wonder—the rent really is too high.

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