Every once in a while, while writing this newsletter, I stop to marvel at the amount of money flowing through tech companies. We often talk about acquisitions, quarterly earnings and market caps in the Billions of dollars.
The magnitude of these numbers makes it easy to forget that ordinary people, through their routine investments and regular purchases, fuel this enormous economic ecosystem. Your neighbors may not be throwing money around like Elon Musk or Warren Buffett, but their holdings are no less personal.
We need a periodic reminder of this reality – and the victims of the Celsius Grid Collapse provide one.
Over the past few weeks, the tech and cryptocurrency industries have been gobsmacked by the demise of Celsius, a high-profile crypto lender that filed for bankruptcy in mid-July. The crash followed a sharp decline in crypto prices, driven by inflation, which exposed Celsius’ strategy of borrowing funds and making risky bets that depended on the continued rise in crypto values. .
Celsius’ debtors include institutional entities in the crypto space, but the vast majority of its 1.7 million users are retail investors who have bet on the huge returns promised by the company’s management. Although there is certainly an element of caveat emptor to their losses, many sincerely believed Celsius CEO Alex Mashinsky when he repeatedly extolled the company’s underlying strength and promised that the private company had sufficient reserves to meet its obligations.
More than 100 of these ordinary investors have now written to a New York federal judge overseeing Celsius’s bankruptcy proceedings. Their powerful letters provide a window into the collateral damage caused by reckless entrepreneurs in a largely unregulated market. They describe the pain, shame and heartbreak of believing Celsius’s false optimism. Many take responsibility for their erroneous decisions, though virtually all are seething with anger at the lender’s leadership.
Here is a sample of their letters:
Thomas Bull, from Australia, who “owned 95% of my savings in degrees Celsius”: “I have suicidal thoughts and the only reason I hadn’t killed myself yet was the burden that would leave my family behind. And I lost 15% of my body weight in 6 weeks from the stress of suddenly losing everything I’ve spent my whole life building. Worst of all my mom shares my house with me so if I miss home she will be homeless at 60 with no other savings. His rock bottom to a dead end place will be in my hands, and I just can’t see any way to recover.
Dalena, last name and location not provided: “Unfortunately, all my savings are held on the Celsius platform. My family trusted me to store their Bitcoin in my Celsius account as well. However, we did not expect to be caught It was a lot of money that we were going to use as leverage for a better life – not having to live paycheck to paycheck, not having to worry about rent owed, being able to pay off our debt and school fees. It may not seem like a lot to most people, but two years of our savings and investments have been stolen from us. For a low/middle class family, this whole situation is very intimidating and extremely stressful.
Merilou Athens-Barnekow, who had about $50,000 tied to Celsius: “I’m a small depositor, an 84-year-old widow from Social Security. The deposit was my lifelong savings to pay for home care when I will no longer be able to care for myself. I don’t have years to wait for my savings to come back to me. I made this decision after seeing the terrible care my husband received in a rehabilitation hospital that was also a nursing home.
Gregorylast name and location not provided: “I’m 71, retired, and have six-figure money tied up in degrees Celsius. Since I retired, I’ll never have chance to replace those funds. I don’t know if I’ll ever get my deposits back, but I’m lucky in that regard. I won’t starve and I’ll always have a place to live. Money , stupidly, was for my heirs. I can’t bring myself to let them know that I lost their money, even though they didn’t know it was housed in Celsius. In the end, I can only take it on myself.
It is unrealistic to expect policymakers to eliminate all peddlers and hacks in the still nascent crypto and decentralized finance spaces. But as members of Congress and federal bureaucrats weigh additional guardrails, another regulatory proposal arrived on Wednesday – the voices of common Celsius debtors should be ringing in their ears.
The losses of Celsius’s victims may not have been in the billions, but they might as well have been for them.
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A cloudy future. Electric car manufacturer Lucid Thursday cuts its vehicle production forecast for 2022 for the second time this year, citing supply chain and logistics issues that continue to plague the start-up of electric vehicles. Clear-headed officials said they now expect to produce 6,000 to 7,000 of the company’s luxury sedans in 2022, up from a target of 20,000 vehicles set at the start of this year. Lucid shares fell 10% in midday trading Thursday and are now down 55% year-to-date.
A power play for lunch. house tenant Nancy Pelosi had dinner on Wednesday with the two senior executives of Taiwan semiconductor manufacturing company during his controversial 7 p.m. visit to the Asian island, The Washington Post reported. Pelosi used the meeting to reinforce the importance of TSMC, which makes around 90% of the world’s most advanced chips, and tout the benefits of $52 billion in federal subsidies expected to go to semiconductor industry. Taiwanese President Tsai Ing-wen said the two sides “exchanged views on deepening cooperation between Taiwan and the United States in various fields.”
Shop closing. Facebook plans to end its live video shopping platform in October, a tech company’s latest retreat away from functionality, TechCrunch reported on Wednesday. The Meta encouraged creators and online sellers to switch to sister site Instagram, which still offers a live shopping platform, or Facebook’s short-form video feature known as Reels. The decision comes a month after The Financial Times reported that TikTok plans to scale back its live e-commerce ambitions in the US and Europe due to disappointing public response.
Pointing fingers. Solana blockchain developers believe a software issue with the closed-source Slope wallet is responsible for an ongoing hack hitting thousands of cryptocurrency holders, CoinDesk reported Wednesday. Thieves have drained several million dollars from around 9,000 wallets linked to the Solana ecosystem, although the nonprofit organization behind the Solana network says it suspects the problem lies with hot wallet providers. About 25 million wallets exist on the Solana blockchain.
FOOD FOR THOUGHT
Still in the game? Michael Saylor, perhaps the biggest Bitcoin bull of them all, has gone astray as CEO of his analytics and software company, MicroStrategy. But like Fortune‘s Shawn Tully reported on Wednesday, the outspoken entrepreneur hasn’t soured on his signature crypto investing, which includes betting his entire company’s future on Bitcoin’s growth in value. While Saylor remains executive chairman of MicroStrategy, pledging to focus on “our bitcoin acquisition strategy and bitcoin-related advocacy initiatives,” company watchers wonder if his resignation really signals a change in the company he co-founded more than three decades ago.
In a surreal twist, despite the company announcing (on Wednesday) a mammoth $918 million writedown on its Bitcoin holdings, MicroStrategy shares soared the day after the news, rising 15% to $321 and earning over $400 million in market capitalization.
The jump deepens the mysterious mythology of Michael Saylor. Did Wall Street cheer because the commodity software company will fare much better when Saylor, distracted by Bitcoin, doesn’t handle day-to-day things? Or does having him as a full-time crypto evangelist actually improve Bitcoin’s prospects and therefore illuminate MicroStrategy’s future?
IN CASE YOU MISSED IT
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BEFORE YOU LEAVE
A virtual miracle. Modern medicine and virtual reality have recently come together for an incredible achievement in Brazil. The Washington Post reported Wednesday on the remarkable effort this summer to cranially separate 3-year-old conjoined twins, Arthur and Bernardo Lima, who became the oldest known couple to successfully undergo the complex procedure. The Rio de Janeiro-based medical team used VR technology to perform the grueling series of seven surgeries, allowing them to train virtually alongside renowned experts in the UK. Doctors said Arthur and Bernardo are on the mend, although they will remain in hospital for around six months.