Here’s what we’re reading and working on this week at Epsilon Theory.
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Every item in this email is a discussion thread on the Epsilon Theory Forum – a safe space to speak your mind, a safe space to find like-minded truth-seekers. Watch from a distance if you like, but when you’re ready … join us.
From a Bloomberg article on Thursday:
“Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday, contradicting reports earlier this week that the company had no intention of paying an extortion fee to help restore the country’s largest fuel pipeline, according to two people familiar with the transaction.”
“The company paid the hefty ransom in difficult-to-trace cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get gasoline and jet fuel flowing again to major cities along the Eastern Seaboard, those people said. A third person familiar with the situation said U.S. government officials are aware that Colonial made the payment.”
“Once they received the payment, the hackers provided the operator with a decrypting tool to restore its disabled computer network. The tool was so slow that the company continued using its own backups to help restore the system, one of the people familiar with the company’s efforts said.“
I love how Colonial thinks it’s important for you to know that they were very dissatisfied with Darkside customer service. The decryption tool was so slow! LOL.
I think there’s zero coincidence that you also saw this Bloomberg article on Thursday:
“The officials involved include prosecutors within the Justice Department’s bank integrity unit, which probes complex cases targeting financial firms, and investigators from the U.S. Attorney’s Office in Seattle. The scrutiny by IRS agents goes back months, with their questions signaling that they’re reviewing both the conduct of Binance’s customers and its employees, another person said.”
“The U.S. Commodity Futures Trading Commission has also been investigating Binance over whether it permitted Americans to make illegal trades, Bloomberg reported in March. In that case, authorities have been examining whether Binance let investors buy derivatives that are linked to digital tokens. U.S. residents are barred from purchasing such products unless the firms offering them are registered with the CFTC.”
The tax sleuths are on the case! More from that Bloomberg article:
“In the U.S., authorities have been cracking down on exchanges for flouting laws that are meant to prevent financial crimes, with officials citing the platforms use by terrorists and hackers. Tax violations have also been a priority, with the government recently winning a court order as it seeks to unmask U.S. clients of Kraken, a San Francisco-based exchange.”
It’s so weird that a Kraken affiliate was so vocal on Twitter saying that my “In Praise of Bitcoin“ article was nonsense. Still more:
“In October, federal prosecutors in Manhattan announced charges against the founders of Seychelles-based BitMEX, accusing them of violating the Bank Secrecy Act by permitting thousands of U.S. customers to trade while publicly claiming to restrict their access. The claims included failing to register as a futures merchant with the CFTC and not having adequate anti-money laundering controls. Three of the BitMex officials pleaded not guilty and a trial has been scheduled for March 2022. One remains at large.”
I missed this Arthur Hayes news! From April 6:
“A Singapore resident, Hayes on Tuesday surrendered to U.S. authorities in Hawaii, six months after federal prosecutors in New York accused him and his BitMEX co-founders of conspiring to skirt U.S. laws requiring the implementation of money-laundering controls. He appeared before a federal judge in Honolulu and, pursuant to an earlier agreement, was released on $10 million bond pending future court proceedings in New York.”
Arthur Hayes is the most fascinating criminal defendant since Martin Shkreli, and I think (hope?) his trial next March will live up to its amazeballs potential. Hayes writes a really smart blog, btw, and his latest blog post – “Fear Is The Mindkiller” – came out yesterday. It’s a great read! Honestly, I think everything Hayes writes in this post is spot-on, with gems like this:
“Most new entrants to our pond want an easy way to acquire Bitcoin vs. fiat risk. That is, they believe Bitcoin Number Go Up, but have zero interest in becoming their own financial institution. They want the 1-800 number to call when they forget their password, and a human to complain to when things don’t go as planned. Service providers are happy to sell paper Bitcoin derivatives that provide exposure to the asset, while dealing with all the pesky blockchain issues for a fee.”
“Judging by the asset gathering success of Grayscale’s GBTC, Coinshare’s XBT Provider, and other paper derivatives, the average investor just wants price risk.“
Or like this:
“Crypto has nothing to fear from Doge. It instead should be used as a foil to show the emperor has no clothes. Money is a mental abstraction. The sooner gen pop realizes that everything is make-believe, the sooner they can make the leap from physical government issued bank notes, to a purely digital decentralized currency.”
“They are both equally as fake.“
It’s all true, as Hemingway said. It’s all fake, as Hayes says. Both statements are correct!
Because that is the definition of good art: a fake that tells the truth.
Man, I can’t wait to read what Hayes writes next.
Unfortunately for him, if Sauron has anything to say about it, he’ll have a lot of free time on his hands for writing over the next few years. Just maybe not a lot of access to his blog.