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11th January 2022 > > Phishing scams and institutional adoption.


Another heart-breaking phishing scam, and why city brokers are moving into cryptos.

Market Snap (at time of writing)

Market Wrap

What is there to say? All eyes on the US CPI number tomorrow, which has the potential to move the dial significantly for risk assets, probably to the downside.

Occasional Series – Downing Street lockdown parties

Breaking news that for one of these events over 100 people were invited. It’s a disgrace.

Curious Cryptos’ Definition of the Day – Phishing scams

On 10th June 2020 Eric Savic decided to upgrade his KeepKey hardware wallet (containing nearly 13 BTC or approximately $520,000 at current prices). He downloaded a Chrome extension which asked for his recovery phrase to create a backup. Eric input his recovery phrase into the Chrome extension thus breaking one of the fundamental rules of owning cryptos.

There is no situation in which the software element of a hardware wallet would ever ask for your recovery phrase. One uses a hardware wallet so that the private key NEVER leaves the hardware wallet.

As you have guessed by now, the Chrome extension was fake, and Eric lost his 13 BTC. I feel sad for him, but also more than a little embarrassed for him. This truly was a schoolboy error.

Curious Cryptos’ Commentary – TP ICAP

You may not know this – I would be surprised if you did - but TP ICAP (formed from a merger of Tullett Prebon and ICAP) is the world’s largest inter-dealer broker.

Their business model had been continually disrupted by the growth of IT information systems, and electronic trading platforms. Hence the merger a few years ago.

They are now offering their clients trading services in crypto-linked exchange traded products (ETPs).

This brings them into direct competition with their own client base such as the investment banks Goldman Sachs, UBS, Bank of America et al who have all set up their own client facing trading desks for crypto products.

As previously discussed, the German exchanges are leading the charge for crypto related ETPs. France is dismissively bringing up the rear though tax dollars are always a good argument for changing someone’s mind.

The key issue with ETPs of liquidity – many of these products trade rarely, hence they have large bid-offers, and hence they rarely trade.

TP ICAP has plans to roll out these services to its US clients, putting them on a direct collision course with Gary Gensler and the SEC. At some point the pressure on Gary to approve a swathe of BTC cash-settled ETFs (exchange traded funds) in the US will become too great to bear.

Sooner rather than later we all hope.

In related news, the International Swaps and Derivatives Association (ISDA) has established a legal and documentation working group to set standards for over-the-counter (OTC) swaps and derivatives specifically for cryptos.

What this means in practice is that the volume of crypto related OTC trades now held on investment bank’s trading books has gotten so large that Legal and Compliance departments (who essentially run ISDA) feel the need to act now to standardise the format and settlement of these products.

This is a clear sign that institutional investors continue to explore the myriad means of gaining crypto exposure for their portfolios.

Reserve Treasury Protocols (before they all go to zero)

Reminder – Olympus and Wonderland are, to the best of my knowledge, live viable projects. XEUS, FORT and JADE turned out to be scams, though they are still live scams. Scams are not uncommon in these Wild West fringes of Decentralised Finance (DeFi).

Photon appears to have won the prize for being the most extraordinary scam. In under 18 hours it went to zero. And as far as I can tell – and I am no blockchain analytics expert – they walked away with less than $30k.

It is very upsetting we have scumbags like that around.

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