I Still See You, XRP
In the public equities market, it’s standard for companies to pay annual six-figure listing fees to major stock exchanges.
So it’s not overly surprising to read the news yesterday about Ripple’s attempts to pay XRP’s way on to Gemini and Coinbase.
According to Bloomberg, the company was rebuffed in a seven figure offer it made to Gemini to list XRP on its exchanges.
Its bid to Coinbase was even more aggressive: we’ll lend you $100mm in XRP to let users trade the asset, and you can pay us back in dollars or crypto. The insinuation being: “if this piggy doubles after listing, you could pocket a cool $100mm in the trade.”
Less standard by public equities standards, but this dynamic isn’t unique in crypto.
Earlier this week, Autonomous Research published a report that claimed the average listing fee charged by top crypto exchanges stretched up to $3mm, 10x what you’d expect in the public markets.
The problem is crypto companies tend to want things both ways.
Act like a securities offerer when it’s convenient from a capital formation perspective or when you’re doling out “founders’ rewards”. Pretend you’re actually selling a currency or commodity when it becomes markedly less convenient from an investor disclosures standpoint.
There’s a reason for public equities listing fees, by the way. They usually carry with them the expectation that listees will be regulated and subject to some level of standardized reporting. They only get to list in the first place if they’ve abided by widely accepted rules.
In that case, I suppose we should welcome this week’s news!
I look forward to working with Ripple on standardizing disclosures around how they (and other token teams) manage their treasuries.
I’m sure board members like Gene Sperling (former Economic Advisor to Presidents Clinton and Obama) and Ben Lawsky (creator of the infamous NYS BitLicense) would push fervently for better disclosures around XRP’s treasury management and distribution.
Especially given Lawsky’s mandate at the company:
Here’s a starting point for disclosures:
+ How is Ripple paying its strategic partners? What are the terms with respect to discounts, lock-ups, etc? How do the rebate programs work for companies testing XRP? Are they like Coinbase offers…free money “loans”?
+ Why did the company implement a programmatic selling program where they aimed to sell 25 bps of global XRP volume per quarter only to ratchet that back in Q4? Did the $91.5mm in XRP sales look like it might set off alarms, so they stopped short of selling $300mm?
+ Why does the company write about XRP price appreciation as if it’s a milestone? Why do they do little to tamp down speculation around XRP enterprise adoption? No, why do they actively insinuate big news is coming by writing things like “XRP markets began to connect the dots once again?”
+ What are Ripple’s insider trading policies with respect to XRP? Are any employees or advisors paid in XRP? If so, what are the terms?
It might seem annoying to pester the company like this, and indeed it would be more convenient to approach their marketing team — who is doubling as investor relations, but we can’t call it that — to answer these questions in private.
But the company is managing a “bridge currency” that they package to retail investors, who buy on the assumption that they are front-running big bank purchasers.
That makes this a public conversation. How about an analyst call, Brad?
*Note: I hope they will sit down with a real journalist soon and answer macro questions about their policies. A good interviewer wouldn’t let them off the hook because “confidentiality agreements.” NDAs prevent a company from discussing specific deals. They do not preclude you from discussing general distribution strategy. That cop out should be called out.
*Speaking of disclosures, I wanted to write more about an A+ post from Meltem Demirors re investor disclosures in crypto, but I got carried away with the XRP stuff. When angel investors have better transparency standards than $25bn token projects, there are some, umm, problems in the space.
*My outstanding piece from January on XRP for your reference. Truly exceptional analysis.
I Like Pictures
Speaking of bribes, did I say too much?
Apparently, I should have paid $105k for John to follow me for longer than 30 seconds.
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. Starting next week, we’ll start featuring one new token profile each day.
Interested in participating in this exclusive research group and slack channels? Apply to Eric Turner (email@example.com).
TBI’s Compression Algorithm
Iran’s government in hot debate over potential Telegram ban. Several Iranian government officials have publicly called for Telegram to be banned in the country, believing the platform shouldn’t be the country’s dominant social app. Their main concern is linked to national security, since the assumption is that the app played an undeniable role in igniting the December 2017 protests across the country. In response, Iran’s moderate president, Hassan Rouhani declared his opposition to such a ban, noting that blocking access to messaging platforms was not a solution. TBD on Telegram’s future in Iran. AL Monitor
Asia’s volatile cryptocurrency arbitrage. China’s crypto ban in late 2017 resulted in the boom of underground traders known as “bitcoin mules”. These traders buys cryptocurrencies in other markets (such as Thailand or Japan) and sells them at a premium to investors in China, who cannot otherwise get them. Aside from the geographical arbitrage, the traders also exploit lesser known exchanges by buying cryptocurrencies cheaply on lesser-known exchanges and selling them for a profit on more liquid and widely used platforms. With the downturn in recent crypto markets combined with the flood of traders in the space, the premium for crypto has fallen from 30–40% at its height to around 7% or so. Reuters
SweetGreen’s leads the digital revolution for food. Application for the tech goes beyond finance and into the food sector with Ripe.io, an application that tracks produce like tomatoes. Beginning last year, their ripeness, color and sugar content were tracked step by step, reducing spoilage and documenting the supply chain Sweetgreen, the innovative fast-casual chain, is leading the digital resolution in food as the firsts to use blockchain as an application for food. Bloomberg
South Korea arrests and detains four CEO and executives of cryptoexchanges on charges of fraud. South Korean prosecutors detained Kim Ik-hwan, the CEO of Coinnest (among others), the country’s sixth largest cryptocurrency exchange by bitcoin trade volume in local currency terms, for allegedly embezzling customers’ assets. Others detained include the head of another unidentified bitcoin exchange and two other senior executives. This comes on the heels of a string of enforcement actions in Korea against the crypto market leaders. WSJ
Quick Bits (Don’t read that, I read it for you)
Choke Points (Exchange news)
+ Japanese internet brokerage Monex Group confirmed it is looking at acquiring Coincheck, the Japanese cryptocurrency exchange that was victim to a hack early this year that resulted in loss of $523 million of NEM coins.
Startup Signals (ICOs and startups)
+ CoinList raised $9.2 million to build out a platform where accredited investors can invest in ICOs, or custom cryptocurrencies issued by startups and open-source projects. Investors include Polychain, FBG Capital, Libertus Capital, Electric Capital, CoinFund and Digital Currency Group.
+ Chainalysis announces a new real-time cryptocurrency compliance tool and a $16 million Series A investment from Benchmark Capital.
BigCo Noise (Enterprise initiatives)
+ The Bank of Montreal expands their crypto ban by no longer allow the purchase of cryptocurrencies via Interac Online Payments (Canadian interbank network) or by using a retail consumer Mastercard-branded credit or debit card.
+ The Central Bank of Russia is considering using its Masterchain blockchain software, a software developed by Russia’s FinTech Association (a group of Russian banks, payment firms and financial startups) to transmit SWIFT financial messaging across the Eurasian Economic Union.
+ FIH Mobile, a Foxconn subsidiary, will work with Sirin Labs to bring a secure, user-friendly blockchain phone to market.Instead of keying in a complex address and private key, Sirin said users may eventually verify their identities with an iris scan, a fingerprint and a simple password.
The Powers That Be (Legal/Reg/Policy)
+ The Chelan County Public Utility District, a utility in Washington State — a popular location for bitcoin miners — has cut off electricity to three “unauthorized” sites that officials said posed a risk to public safety, warning that rogue operators could face potential legal repercussions for power theft and public safety endangerment.
+ Arizona’s latest bill will allow Arizona corporations to hold and share data on a blockchain. This comes a year after Arizona passed a bill that recognizing signatures recorded on a blockchain and smart contracts as legal documentation.
+ Three crypto focused investors made Forbes “up-and-coming” Midas List, Sequoia’s Matt Huang, Initialized Capital’s Garry Tan, and Placeholder VC’s Joel Monegro.
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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