Well, there is no denying it….we have entered a definitive bear market.
Bitcoin is down nearly 60 percent from its all time high, and for the past 7 months we
have been sliding, and sliding down.
Crypto winter is upon us, but all winters begin with a capitulation dump…bringing
all types of investors to their knees.
What’s going to cause it this time around??
Well find out in about ten minutes…because it’s time for Chico Crypto!!
Now many could argue that the Terra Luna death spiral was the capitulation dump of this bear
market.
It was devastating, and rippled throughout the entire crypto industry, bringing many
investors to their knees…but not all investors.
There will be one more implosion which rocks the crypto markets, even making the biggest
bulls turn bearish.
Sooo, what could it be??
Well there is Celsius Network….
Now many people believed Celsius had overexposed themselves to Terra Luna and UST…but CEO
of Celsius Alex Mashinsky took to twitter to dispel those rumors.
He said “At Celsius Network we have stated several times publicly that we had minimal
exposure to Luna and $UST.
I understand people who are trying to sell you competing services are spreading these
rumors but you have to trust our Twitter posts.
So they weren’t overexposed…but that may not be the reason for their downfall…it
may be just what Celsius is doing with the money.
Digging deeper into Celsuis there are very suspect transactions, and I would like to
thank Youtuber Upper Echelon Gaming for this content and research, but I’m going to go
through it myself right now…
Diving into, Celsius network wallet 5, a crypto wallet directly tied to the celsius network
project, which executes transactions for them…and as we can see this wallet has executed over
560 thousand transactions, with a ton of volume…
Now nothing looks suspect on the surface, but if you sort the transactions by outgoing,
you start to see something suspicious…there are certain transactions of 5 ether sent to
random wallets, and if you dive into the wallet…that wallet periodically takes in 5 ether, then
distributes the 5 ether into thousands of transactions of .025 eth each, to random wallets.
This one on screen has over 14 thousand transactions, and each .025 eth goes to a brand new wallet
each time.
This wallet alone has processed over 700 ethereum, worth over 1.4 million.
Now when these random wallets receive the ethereum, they usually make just 1 transaction
swapping the received eth into another token or stablecoin.
This is odd, wouldn’t you say??
Well it’s not just one wallet, its hundreds of wallets…on just 5 pages of the celsius
wallet, there were 50 different wallets, collectively taking in over 2400 ethereum, worth nearly
5 million dollars.
Doing the same thing, dispersing it in .025eth increments, where they convert the money to
a group of 5-6 different coins, and then go dark.
This has been going on for years, and the amount of ETH being distributed like this
is probably in the hundred of millions.
Here is a visualization of what this looks like, this is not natural…this is not interest
payments, this is not gas payments, this is not going to celsius customers.
The only reasonable explanation for this is something much more nefarious.
Could it be money laundering??
Well here is information on a laundering technique called a peel chain.
It says “Peel chain is a technique to launder a large amount of cryptocurrency through a
lengthy series of minor transactions.
A small portion is ‘peeled’ from the subject’s address in a low-value transfer.
These incremental outputs are often directed to exchanges where they can be converted to
fiat currency (e.g., dollars) or other assets.
The subject’s remaining UTXO passes to a new change address and the process repeats.Due
to the small amounts of each individual transfer, outputs from the peel chain are less likely
to raise red flags for AML compliance at virtual asset exchanges or trigger mandatory reporting
to tax and regulatory authorities.
Peeling some money off the top Celsisus??
That would be them in more than hot water, contributing to an eventual investigation
and their collapse…
Speaking of investigations…let's now get into the meat of this episode…Tether USDT…
If you didn’t know, Tether the company and it’s executives are the center of a criminal
probe by the US department of justice in regards to bank fraud…
The article states “But the Justice Department investigation is focused on conduct that occurred
years ago, when Tether was in its more nascent stages.
Federal prosecutors have been circling Tether since at least 2018.
In recent months, they sent letters to individuals alerting them that they’re targets of the
investigation”
So what happened to Tether in the early days?
Years ago??
Well bank fraud of course!!
This Pymnts.com article sums it up nicely…”An alleged shadow banker for cryptocurrency exchanges
is facing up to 90 years in jail after pleading guilty to bank fraud, bank fraud conspiracy
and operation of an unlicensed money transmitting business.
The Department of Justice said on April 25 that Reginald Fowler, a former co-owner of
the NFL’s Minnesota Vikings, had been charged with facilitating the fraudulent processing
of $750 million from a number of top exchanges beginning as early as 2013 through 2019, when
U.S. banks had cut off the industry.
Fowler acted on behalf of Crypto Capital, the DoJ alleged, saying the company “provided
fiat-currency banking services to various cryptocurrency exchanges through a series
of bank accounts opened under false pretenses” in order to allow those exchanges to send
and receive fiat payments.
Among those using its services were Kraken, which ended its relationship with the company
in early 2017, and Bitfinex, which wishes it did.
The exchange was forced to borrow $625 million of dollars from its sister company, USDT stablecoin-issuer
Tether, in 2019 after $850 million of its funds went missing….
Tether got involved with a shady, shady company…who was committing bank fraud…Crypto Capital
and their fall guy, Reginald Fowler…and since they lost all that money, 850 million
they had to borrow it from somewhere…
The money was borrowed in 2018, late 2018, to be exact.
During this time, when Bitfinex and tether lost 850 million dollars, the tether market
cap was reduced by a whopping 44 percent.
From over 3.5 billion Tethers, to just about 2 billion.
Guess what this preceded??
The 2018 capitulation dump…November 2018 to December 2018, BTC went from the 6k level,
down to a low of about 3200.
Now I’m sure most of you have noticed this…Tether’s are being reduced once again, by the largest
level since that 2018 reduction due to losing 850 million dollars.
Tether’s market cap has been reduced by over 10 billion, over 14 percent of the supply
in just the last couple of weeks.
Is this preceding another capitulation dump like what came in 2018?
So what could be coming??
Well Mr. Bitfinexe’d who has been on Tether’s case for years tweeted this just yesterday.
He said “Disclosure of Tethers reserves could be another reason why insiders are dumping
Tether, they could be expecting that Tether loses this fight and everyone finds out what
kind of garbage they have on their balance sheet.”
With a court document that says “although petitioners claim that the information already
available is substantial and petitioners disclosures provide market participants with information
that can be used to assess the riskiness of the vast majority of Tether reserves, it is
worth noting following the collapse of another stablecoin, investors in Tether recently withdrew
over 7 billion dollars reportedly amid fresh fears about its stablecoin’s backing, and
raising new questions about the reserves, it claims backs its stablecoin, Consequently,
it is now more necessary than ever to require disclosure of the information around the nature
of the reserves backing Petitioners Tether stablecoin as requested.”
The heat in court to find out exactly what is backing Tether is on…
So Celsius and Tether…those are my top two contenders for causing a capitulation dump…but
it’s not only these guys playing with fire…Binance, the worlds largest crypto exchange is also
being probed by US officials, the justice department and the IRS…and that probe was
expanded in September of last year to include insider trading.
So beware my friends, this capitulation dump could even come from an announcement of charges
brought against binance.
Be safe, be smart…we will make it thought it.
Cheer’s I’ll see you next time!