FTX filed for bankruptcy on November 11, 2022. Some other major events might go down soon. And I am finally getting around to making a post about my thoughts a month later. Well, actually, let’s not talk about FTX specifically. Let’s just do a follow-up on the “another crypto catastrophe warning” post from July of 2022, which itself was a follow-up on “am I pulling out of crypto” post from May of 2022.
First things first, I SODL the bitcoin that I had held in a publicly viewable wallet (see this post for detail on this empty wallet). Occasionally I would add BTC I earned from Fold card but the value of the wallet kept on dipping because BTC as a whole market kept on dipping.
I sometimes do day trading of shit coins but even that is a risky business. Holding crypto (or even USD) on exchange is risky and you can’t really hold USD itself on an personal crypto wallet. Sure, you can save it as a stable coin but I don’t trust USDT (or USDC or any of the other buffoons for that matter).
I remember saying financial platforms that support crypto can be a liability to you and maybe it is a good time to resonate that feeling once again. I once highly spoke of OnJuno but I have been fairly disappointment with them, especially with them releasing their own shit coin. In November, PrizePool, another company I like, temporarily stopped lending crypto (of consumers who agreed to lend) and moved all customers funds into an FDIC-insured bank while continuing to pay the 4% interest rate these lenders were promised. I don’t know if that is what all fintech who were doing it need to do or if they just need to permanently cut it off.
If you are curious why I am only talking about small things as opposed to the FTX of the world, well, I am talking about stuff I have blogged about. I am not sure if I ever blogged about FTX but in the crypto catastrophe post I had said the following:
As a result of that and market downturn, it is bound to happen that yet another house of card will collapse, and maybe that will trigger another one to collapse as well. So, where does this leave us? BTC to 10K? What if the biggest fraud of them all, USDT, collapses? Maybe we will see BTC under 5k?
Maybe I had unknowingly described the FTX situation or maybe the situation that will follow. Maybe USDC will collapse and USDT will be fine. Who knows? Does it even matter?
By the way, you still remember CoinZoom? Their coin is somehow trading at $0.015. Now, don’t get excited and buy it. I am sure the requirement for high cashback will be bumped again. I recall the good time when a few readers had mentioned they made $50k+ with this card. The golden days of this card is long over.
But you know what isn’t over? Coinbase is still somehow paying 4% cashback. Could you totally lose the money you put on Coinbase in case they go bankrupt or you get hacked? Yeap. The less risky way is to do direct deposit (not your actual direct deposit…please don’t) and use the card right away doing you know what. And of course, direct deposit and card spend should be set to USD (not USDC).
Also, Fold hasn’t Folded yet and maybe they won’t? At least the money you hold on Fold is USD held at or transferred to Sutton Bank, which is nice because:
Your funds are eligible for FDIC insurance. Your funds will be held at or transferred to Sutton Bank, an FDIC-insured institution. Once there, your funds are insured up to $250,000 by the FDIC in the event Sutton Bank fails, if specific deposit insurance requirements are met and your card is registered. See fdic.gov/deposit/deposits/prepaid.html for details.
But that still doesn’t answer what happens if Fold itself folds. The chances are fed will step in like they did when another fintech named Beam failed before our eyes. Here is a link to an article where I trashed beam but the relevant posts regarding government body getting involved can be found at Doctor of Credit [1] [2]. Another recent example might be how Voyager, an public company from Canada, had falsely claimed that FDIC would cover customers if in case Voyager failed which lead to the federal reserve itself issuing a statement on this matter. After the collapse of Voyager, it seems the judge ordered that customers who held USD be allowed to withdraw USD (DoC).
Closing Thoughts
I don’t know if I said this in a blogpost but the easy/safe opportunity in crypto was always in crypto debit cards. However, even that should be trended carefully. Oh and don’t fall for the shit cards [1] [2] that for a very brief moment were the greatest cards we saw in a very long time.
