• March 8th: Silvergate Capital announced that it will wind down operations and liquidate its bank.

• March 10th: Silicon Valley Bank—the 16th largest bank in the United States—was shut down by federal regulators

• March 12th: Signature Bank closed by New York State Regulators

After that on March 13th many bank stocks started trading like crypto shitcoins:

• Western Alliance Bancorp -75%

• First Republic Bank -66%

• Customers Bancorp -54%

• PacWest Bancorp -46%

• Zions Bancorp -44%

• Bank of Hawaii -42%

• Comerica -39%

• East West Bancorp -32%

Since then they have somewhat recovered, but situation has not improved:

There are 186 banks across the country that could fail if half of their depositors quickly withdraw their funds, a new study published on the Social Science Research Network found.

Even insured depositors — those with $250,000 or less in the bank — could have problems getting their cash if these institutions face the sort of run that Silicon Valley saw a week ago.

Source: “Nearly 200 banks at risk for same fate as SVB: study“

And it is not that surprising if you look at unrealized losses of US banks:

This is a good description of situation:

From a depositor perspective, banks are basically highly-leveraged bond funds with payment services attached, and we treat it as normal to keep our savings in them.

To help normalize that and make it seem less weird, the FDIC provides insurance against deposit losses up to $250,000 which mitigates some of the risk. However, at any given time, FDIC only has about 1% of bank deposits’ worth of insurance in their fund. They can protect depositors against individual bank failures, but they don’t have enough to prevent against system-wide banking failures, unless they draw in aid from elsewhere or are backstopped by Congress with a fiscal bailout.

https://www.lynalden.com/march-2023-newsletter/

Also interesting that while FDIC is very limited in their ability to provide insurance, they still decided to cover all deposits of Silicon Valley Bank and Signature Bank (also those above $250k), and Janet L. Yellen explained that it was done because of systemic risk:

In short - couple of people will decide again which banks will get bailouts, which will burn down, but in the meantime - deposits will flow from small, regional banks to one of the “Too big to fail“ banks.

And not surprising that with a small delay bank failures continue in Europe:

• UBS is buying Credit Suisse in bid to halt banking crisis

What will happen next?

Increasing interest rates at such a fast pace as it was done in last year is seen as one of reasons for bank failures, so if bank runs continue, then fighting inflation might get postponed and trying to restore faith in banking system might become top priority. That would mean lowering interest rates, providing liquidity and continuing with money printing.

But that can also work only for a limited time, the whole fractional-reserve banking system is not sustainable, and even US Treasury admits it:

How to escape?

Since March 12th when first 3 banks collapsed, Bitcoin exploded from $20k to $28.5k, +40% in 8 days:

In same period Gold went from €1755 to €1886 per Troy Ounce, +7.5%:

Recommended reading:

• Nic Carter: Operation Choke Point 2.0 Is Underway, And Crypto Is In Its Crosshairs

• Lyn Alden: How the Fed “Went Broke”

• Arthur Hayes: Kaiseki

Also enjoyed this discussion:

Key Takeaways:

1. Money deposited in smaller banks is not as safe as many believed. Rational thing to do is buying short-term Treasury bills and keeping money in the “too big to fail” banks.

2. Whole fiat system feels like house of cards, it is not sustainable, even US Treasury admits it.

3. Hard to believe that the fight against inflation will continue, if trust in banking system continues to fall. At some point inflation might even be a neccessary evil to reduce government debt.

Complicated company structure

At first let’s look at FTX corporate structure - Financial Times compared it to Lehman Brothers Holdings Inc. saying: “The SEC’s post-mortem diagram of Lehman’s corporate structure looks a model of simplicity in comparison to FTX“:

What about Binance? As I mentioned in my previous post “Is Binance safe? Where is it based?“ - Binance has 50+ legal entities that we know about, but in reality - could be many more.

Here is one attempt to visualize them:

Improper use of customers funds

In case of FTX everything was controlled by Sam Bankman-Fried and he secretly transferred $10 billion of customer funds from FTX to his trading company Alameda. And he ordered Gary Wang to open a $65 billion secret backdoor line of credit for Alameda Research. In short - Sam used customer funds as his own with no oversight.

What about Binance?

Late last year, as crypto markets were struggling to regain their footing, the world’s biggest cryptocurrency exchange quietly moved $1.8 billion of collateral meant to back its customers’ stablecoins, putting the assets to other undisclosed uses. They did this without informing their customers.

It is difficult to ignore similarities to the transactions that contributed to the crisis and collapse at FTX. While FTX allegedly ran into trouble by misappropriating customer deposits to the benefit of its sister hedge fund Alameda, in this circumstance Binance seems to have taken funds that customers had reason to believe were dedicated collateral and used them for its own purposes.

Source: Binance’s Asset Shuffling Eerily Similar To Maneuvers By FTX

In short - Binance was responsible for holding billions of USD in collateral for it’s so called stablecoin, but in reality - it secretly moved $1.8 billion of these funds around and it is not clear how they were used.

So far this has not caused any damage, but it resulted in following:

• New York regulators have ordered the cryptocurrency firm Paxos to stop issuing Binance USD (BUSD) — over concerns that it can’t “safely” issue the token

• Coinbase Drops Troubled Stablecoin Binance BUSD

And the only response from Binance CEO? Ignore the FUD:

Concentration of control

Although at some point Sam Bankman-Fried declared that he is no longer involved in daily operations of Alamada Research and appointed a new CEO there, in reality he made all the decisions till the end both for FTX and Alameda, and there was no real separation of both companies.

And who was the CEO of Alameda? His fuckbuddy Caroline that uses meth instead of math, is comfortable with risk and does not use stop-losses:

Even worse - customer funds were commingled with FTX and Alameda investments and daily expenses, and there was almost no record keeping. Complete clusterfuck.

What about Binance? The only guy that seems to be making any decisions and talking to media is Changpeng Zhao. Other C-level positions seem to be a joke:

1. Binance’s former CFO worked for 3 years and did not have access to full financials

2. Catherine Coley, who was CEO of Binance.US for two years, just dissapeared one day, and is still missing for 300+ days.

3. Brooks, who took over from Coley, only lasted a few months at the helm of Binance.US before stepping down.

And just like in FTX, also in Binance commingling funds of different entities is standard practice - Binance and Binance.US have transferred billions of dollars in crypto between each other, while claiming that they are separate entities with different management teams.

Hidden financials

There were no audits or financials available for FTX. In case of Binance - CZ is even actively trying to hide their legal entities, changing them and cannot respond, which is the main company behind Binance?

The only insight that is available - report for 2021 of their Lithuanian entity Bifinity UAB:

Interesting to note that “general and administrative” costs were EUR 34 317 817. Assuming that in 2021 Bifinity UAB had the same amount of employees like now, that would mean a spend of 1.7 million EUR per employee.

Binance also failed their own audit: Binance auditor withdraws from working with crypto company

Key Takeaways

• There are many similarities between FTX and Binance, lot of red flags

• Binance is operating like a black box, everything is based on trust

• Mt. Gox filed for bankruptcy in 2014, recovered funds still have not been returned to customers. If Binance shuts down for some reason, you will be waiting for a long time to recover anything

Sold stocks, bought $ETHE, $GBTC

My thoughts at the time were following - stocks seemed overvalued in general and with…

Read more

Who is behind Binance?

Let’s start with a simple question - which company is behind Binance?

In their privacy policy we can find a company from Ireland:

Binance (Services Holdings) Limited, a company registered at 6th Floor, South Bank House, Barrow Street, 4 Dublin, Ireland, is the data controller for personal information collected in connection with provision of Binance services in Europe.

However, depending on your place of legal residence certain other Binance entities could be involved in processing activities such as Know Your Customer (“KYC”) activities which are necessary for us to provide Services to you. For example, if you are resident in France, Binance France SAS, is responsible for running KYC checks. These Binance entities could act as Controllers of your personal information and use it in accordance with this Privacy Notice.

But the Ireland company is only 1 year old, and looks like an empty legal entity, using the same address as their legal partner Mason Hayes & Curran that set this company up.

“The company documents list the place of business for the Binance firms as an accountancy office above an athletics shop at a small, nondescript building on Dublin’s southside.

Binance (Ireland) Holdings, which was established last year, currently lists Mr Zhao’s residential address as being in Malta and confirms that he is a Canadian citizen.“

Source: Global crypto trading giant Binance expands Irish corporate network

Ok, let’s try Terms of Use:

Binance Operators refer to all parties that run Binance, including but not limited to legal persons (including Binance UAB), unincorporated organizations and teams that provide Binance Services and are responsible for such services. For convenience, unless otherwise stated, references to “Binance” and “we” in these Terms specifically mean Binance Operators.

UNDER THESE TERMS, BINANCE OPERATORS MAY CHANGE AS BINANCE’S BUSINESS ADJUSTS

ADDITIONALLY, THE SCOPE OF BINANCE OPERATORS MAY BE EXPANDED DUE TO THE PROVISION OF NEW BINANCE SERVICES, IN WHICH CASE, IF YOU CONTINUE TO USE BINANCE SERVICES, IT IS DEEMED THAT YOU HAVE AGREED TO JOINTLY EXECUTE THESE TERMS WITH THE NEWLY ADDED BINANCE OPERATORS.

IN CASE OF A DISPUTE, YOU SHALL DETERMINE THE ENTITIES BY WHICH THESE TERMS ARE PERFORMED WITH YOU AND THE COUNTERPARTIES OF THE DISPUTE, DEPENDING ON THE SPECIFIC SERVICES YOU USE AND THE PARTICULAR ACTIONS THAT AFFECT YOUR RIGHTS OR INTERESTS.

Binance business is operated by so called “operators“ - and they might consist of legal persons and also unincorporated organizations and teams. And these operators might change. But Binance is not providing a list of these operators, so you have no idea who you are dealing with, and which “operator” is responsible for what, and where he/she or a specific team or legal entity is even located. And the best part - if there is a dispute, you need to somehow figure out on your own - which is the responsible counterparty? Completely insane.

What is Binance UAB?

And what about Binance UAB - the only legal entity mentioned in Terms of Use? It does not even exist. Binance did create a company with such a name in Lithuania, but it was later renamed to Bifinity UAB:

Who owns Bifinity UAB (previously: Binance UAB)? The only shareholder: CHANGPENG ZHAO with an address from Dubai, United Arab Emirates. Name matches with CEO of Binance:

What about Bifinity CEO Saulius Galatiltis? No mention of him on Binance website and also hard to notice connection with Binance in his profile:

Could this Lithuanian company Bifinity UAB be the parent company of Binance? It had 680 million turnover in 2021, so it is an active company, but it has only 20 employees according to rekvizitai.vz.lt:

So what is this company doing? According to Binance terms:

if you are resident or located in an EEA jurisdiction or in the United Kingdom, then all Fiat Services will be provided to you by Bifinity UAB or

you use any Fiat Services, which involve a debit card or credit card, then (regardless of your residence or location) such the Fiat Services will be provided to you by Bifinity UAB,

Bifinity UAB is not a licensed financial services provider and cryptocurrency exchange and depository services provided by Bifinity UAB are not regulated by the Bank of Lithuania. Bifinity UAB may work in collaboration with regulated third party service providers to offer Fiat Services.

Bifinity UAB is a service provider to Binance that helps with Fiat Services, but it is not regulated itself and instead uses another third party service provider to offer Fiat Services. So Bifinity UAB is just an intermediary and the real service provider is not even mentioned.

And with Fiat Services Binance means bank transfers and credit card transfers - so everything that is related to depositing or withdrawing Fiat currencies from Binance.

Is it possible to find the real Fiat service provider? Let’s try depositing USD. One week ago if I selected USD currency, I had to send a minimum of $100 000, and to a company called Key Vision Development Limited that is from Seyschelles:

Does not sound very trustworthy, but situation went from bad to worse. Right now it is not possible to deposit USD at all, it is removed from options:

What about EUR deposits? They still seem to work and Bifinity UAB is mentioned, but in reality I get asked to wire money to a company called: Paysafe Payment Solutions Ltd, and a bank “Banking Circle” from Luxembourg.

Also I had to agree to more terms where I could find this info:

The Bifinity Digital Wallet is provided by Paysafe Payment Solutions Limited, a company incorporated under the laws of Ireland with registration number 626665. Paysafe Payment Solutions Limited is authorised by the Central Bank of Ireland (CBI) under the European Communities (Electronic Money) Regulations 2011 for the issuance of electronic money and the provision of payment services (reference number C184986). For the avoidance of doubt, please note that – unlike the e-money and payment services which are provided to you by Paysafe Payment Solutions Limited – cryptocurrency services provided to you by Bifinity UAB are not regulated by the CBI.

So the real fiat service provider is paysafe.com - company from Ireland that has following licenses:

By the way, this part seemed interesting: “cryptocurrency services provided to you by Bifinity UAB“. So Bifinity UAB is supposed to provide crypto services to Binance? At the same time The Bank of Lithuania had previously issued a warning to Binance:

Companies that are registered in Lithuania as virtual currency exchange operators are not supervised as financial service providers. They also have no right to provide any financial services, including investment services.

And according to The Bank of Lithuania, Binance enables customers to invest in derivative financial instruments related to crypto-assets (futures and options), contracts for difference (CFD) or crypto-assets linked to securities. These means are considered financial instruments.

But getting back to the question about the main parent company (assuming there is one?) - it is still not answered. On website it just is not mentioned - not in About section, not in Privacy Policy, not in Terms of Use or anywhere else.

Binance Mobile Apps

So I tried one more thing - what about mobile apps? Maybe Apple or Google would require to create proper Terms of Use or Privacy Policy that shows the counterparty?

On Apple Store I could find company name: Binance LTD - but no registration number, no address, so this company could be registered anywhere. And as Seller Binance (Switzerland) AG is mentioned - it operates in the sector «IT services», and has 2 board members: Markus Felix Spillmann, Changpeng Zhao.

On Google Play we get another name: Binance Inc. - again, no more details provided.

Previous locations of Binance?

Turns out - Binance has a history of setting up companies, getting banned and then moving to a new country. With almost 200 countries available, CZ can play a cat and mouse game almost indefinitely:

In 2017, Binance left China, setting up shop in Japan and Taiwan, before heading to Malta—a jurisdiction well known for its lax crypto regulations. 

But last year, Malta clarified that Binance is not licensed to operate in Malta. Five months after that, the Malaysia Securities Commission alleged that Binance was operating illegally in the country. At the time, Binance support staff told Decrypt that Binance operations were running just fine in Malaysia. 

In 2017, the same year Binance left China, the crypto exchange registered Binance Holdings Limited in Georgetown, Cayman Islands. A corporate linkage document previously seen by Decrypt shows the Cayman Islands as Binance’s headquarters. What’s more, Binance has previously used this address to register several trademarks of the Binance name and logo.

In 2019, Binance also registered the Binance Investments Company in the Seychelles. 

Source: Binance CEO CZ Still Says His Company Has No Headquarters

And from a more recent article, situation has not really improved:

CZ still can't say where Binance is headquartered, but he says the answer is coming soon.

"We have a global holding company, a global holding entity for the centralized exchange," he said on the latest episode of Decrypt's gm podcast.

So, where is it? "We haven't announced it yet," he said with a laugh. "We will announce that in due time. But it's very simple. It's not that complicated."

Key Takeaways

• Binance is hiding it's global holding company (if it exists at all)

• Getting banned in many countries seems to be “business as usual“

• If you as an investor cannot even find the legal company behind the crypto exchange, how likely is that you, police or any lawyers will find any funds that might later go missing? Who will go through all their 50+ legal entities?

• Terms of Use matter and in case of Binance there is no transparency behind counterparties and their so called “operators“.

• Funds are not safu. If anything happens, you are on your own.

Read more

Which company could go bankrupt next?

All publicly listed crypto mining companies are suffering losses right now, so one way how to bet against them could be shorting Valkyrie Bitcoin Miners ETF - it consists of following companies:

Not sure why is included in this ETF, but and are missing, but an actively managed fund like this one can change the companies that are included in their holdings and I would expect that in normal situation they would want to select the most promising companies from crypto mining industry.

On other hand for me it is safer to short the weakest mining company, not a large pool of them - as some of them might survive current crypto winter.

After some research I decided to short Greenidge Generation Holdings Inc. - as you can see from these charts, it is very good at losing money:

And latest news don't seem promising:

• In December Greenidge warned it may seek bankruptcy protection while entering into debt restructuring talks with NYDIG

• It has $74 million debt with NYDIG, and needs to pay about $5.5 million per month to cover principal and interest payments

• Greenidge’s average monthly cash burn rate in October, November, December was around $8 million

• Company's cash and cash equivalents and restricted cash as of November 30, 2022 amounted to approximately $22.0 million, compared to $38.5 million as of September 30, 2022

In short - looks like a zombie that has just couple of months left before it runs out of cash. Just like this guy, they need Bitcoin price to go up very fast:

Will NYDIG bail them out?

NYDIG provided funding to many Bitcoin miners and now - when miners are defaulting, NYDIG are forced to start crypto mining themselves:

NYDIG originated about $378 million in rig-backed loans to miners between October 2020 and May 2022, according to data compiled by TheMinerMag. Already it’s received about 26,200 machines from Stronghold Digital Mining Inc. to eliminate the miner’s $67 million debt, and it’s likely to take over another batch of machines from Iris Energy after it defaulted on $103 million in machine-backed loans.

Source: Bloomberg

Same scenario might play out also in case of Greenidge:

In December, NYDIG agreed to pay Greenidge Generation Holdings not only for its mining rigs but to operate them in exchange for debt reduction. The deal effectively made Greenidge  — once one of the largest Bitcoin miners — a hosting firm while NYDIG became the miner.

More details are available on Greenidge investors news page.

But even if the non-binding term sheet gets signed, there are still some issues:

• If Greenidge becomes a hosting provider for NYDIG, “a near-term increase in bitcoin prices, even a significant one, may not have a corresponding beneficial impact on Greenidge's business, liquidity or prospects”

• To remain viable through 2023, the Company currently estimates it will require at least approximately $20 million of additional liquidity to fund its cash requirements, although this estimate is subject to a number of assumptions and may vary materially.

So even in best case scenario where Greenidge becomes a hosting provider for NYDIG and basically gives up most of it’s business, it will still need to find $20 million just to survive till end of 2023.

What can go wrong?

If price of Bitcoin has a sudden and big increase, Greenidge might become more attractive to potential investors or lenders. And that can result in stock price to increase several times.

To mitigate the risk, I will try to hedge it by buying Bitcoin. So in a bad situation I would lose money on shorting stock, but profit from price increase of Bitcoin. In good scenario - if price of Bitcoin stays the same or increases slowly, might go bankrupt, and I could make profit from both trades.

In worst case scenario - Greenidge stock explodes, I close short position to limit losses, and then later Bitcoin goes down as well.

It is interesting that share price was $0.25 on December 23rd and then it increased up to $1.23 - so almost +500%, while at the same time Bitcoin price changed from $16800 to $21000 (only +25%):

My trades

I planned to use about $2000 to short $GREE, but because Interactive Brokers has a margin requirement of 259.43% for opening a short position, I have about $2000 cash frozen, but actual position is worth only $766. I am shorting 700 shares at avg price of $1.09:

And to hedge it I bought 0.0933140400 Bitcoin for $2000 with avg price of $21433.

When to close them?

I plan to close both of these positions when one of these things happen:

• Greenidge stock price increases by +300% (so $3.27 or higher)

• Greenidge goes bankrupt or private

Or if none of these scenarios play out in next couple of months, then I plan to close both positions by end of June.

Guess the outcome

Let’s try a small competition - if you can guess, how much USD I will lose or make in total after both trades are closed, write a comment or reply directly to email with your prediction. For example: -$1000 or +$2000.

Person, who gets the closest to real outcome will get awarded 0.005 BTC

What about Bitcoin network?

Since November 2021 Total Hash Rate has increased from 165 EH/s to 270 EH/s (+64%), so even with price crashing -77% security of Bitcoin network just increased.

The only time in last 3 years when Total Hash Rate significantly decreased, was in May 2021 when China announced a ban on Bitcoin mining, but even then Total Hash Rate recovered after 6 months and has almost doubled again.

Bitcoin mining companies

Bitcoin network is as healthy as ever and that likely won't change, but what about companies doing all the mining? Largest mining operations right now are based in US, and all of them are struggling:

• Compute North Files for Bankruptcy - Sep 22, 2022

• Iris Energy to cut mining hardware after defaulting on $108M loan - Nov 22, 2022

• Greenidge Generation Holdings on the edge of bankrupty - Dec 20, 2022

• Core Scientific Files for Bankruptcy - Dec 21, 2022

• Argo Blockchain Will Avoid Bankruptcy With $100M Bailout - Dec 28, 2022

Even those companies that are not bankrupt yet, are burning cash like crazy and might still run into serious issues later. For example:

Marathon Digital Holdings, Inc. ($MARA)

Stock price in Nov, 2021: $51.07, right now: $5.37 (-90%).

Riot Blockchain, Inc. ($RIOT)

Stock price in Nov, 2021: $44.19, right now: $5.37 (-88%).

Crypto mining in Europe

If the situation seems bad in US, then it certainly is way worse in Europe - the most critical thing in crypto mining is access to low cost energy. But in last couple of years Germany, Spain and Belgium were busy shutting down their nuclear power plants and France is so bad at maintaining their nuclear fleet that it runs only at half capacity.

After Russia’s invasion in Ukraine and reduced use of Russian gas, now many countries are struggling with energy shortage. Germany was forced to revive coal just to keep the grid running and energy prices sky-rocketed in Europe in 2022.

So with this bleak background it is actually surprising how the biggest crypto mining company in Europe - Northern Data - has managed to still keep going with no financial debt:

In 2022 #NorthernData produced 2,798 BTC, generating EUR 77.7 million in #Bitcoin revenue alone. Northern Data also expanded its #CloudComputing capacity in a capex-friendly manner. We have started 2023 securely and free of any financial debt.

But even with their exceptional management they still sold more Bitcoin than they generated. In 2022 they generated 2798 BTC and sold 3005 BTC. So if they were forced to sell 207 Bitcoins, that would mean losing about 3.5 million EUR at current prices.

Northern Data AG ($NB2.DE)

Stock price in Nov, 2021: Є97.10, right now: Є7.97 (-92%).

Very likely that energy problems in Europe won't be solved any time soon, so unless Northern Data AG moves their data centers, I expect that 2023 will be another challenging year.

What about Power Mining?

I am a co-founder of a Latvian company called Power Mining - at the beginning we tried mining Bitcoin ourselves, but have no active farms right now. We learned the hard way that energy prices are too high in Baltics and in Europe in general, and when we tried operating in a Middle East country with cheap energy, it backfired later with different kind of challenges - like difficult import process, unstable grid, unreliable partners, lost shippments, government seizing equipment.

Turns out - if you want access to cheap energy and low labour cost, you will have to operate in a 3rd world country and face other kind of risks like crime, corruption, unstable environment, etc.

So in last couple of years our focus is on building crypto mining containers for those companies that have access to capital, low cost electricity and ability to manage these risks. In June 2022 we used 800m2 of space for our operations and even that was not enough.

But as the crypto market crashed, so did the demand for new containers. So right now we use 200m2 of space for storage and are waiting for market to recover.

How bad is the current situation?

For a successful and profitable crypto mining operation you need following things:

1. Low electricity rate - that means $0.04/kWh or below. For comparison - global average is about $0.14/kWh and European average was about $0.27/kWh in first half of 2022.

2. Low-cost labour - for example, you can get cheap energy in Iceland or Norway, but everything else - paying salaries, building mining facilities - that will be very expensive.

3. Stable grid - in some developing countries you can find both - cheap energy and low-cost labour, but it often can also mean unstable grid and unexpected down times. If miners are operating, for example, only 70% of time, it will be harder to recoup initial investment - mining difficulty grows all the time, and miners must be connected and working from the moment you buy them. Any delay or any downtime will mean higher chance of losing money.

4. Large scale - so that operating expenses per each miner would be as low as possible.

Taking these factors into account, now let’s look at the current market situation. If you would buy the latest generation ASIC miner, it would cost you $2379:

If you add costs related to shipping, import fees, taxes - it could end up costing around $3000. Assuming you can get a very low electricity price of $0.04/kWh and 100% uptime, your ROI would be: 44.35%, so you would lose more than half of money invested:

To actually get any profit at all, you would need so low electricity cost, it is almost for free. With price of $0,002/kWh you could operate miner for 1.5 years and then earn back the $3000 that was spent on it:

And this is not taking into account costs for miner hosting (containers or facilities), pool fees, maintenance, internet connection, etc. So situation right now is really, really bad for anyone in crypto mining business - specially considering that in this example I took the latest generation miner, but existing operations have older miners that are less efficient.

So I am not surprised at all, that right now our space is almost empty:

What will happen next?

1. Most of existing crypto mining operations will go bankrupt. Total Hash Rate might decrease for a short period of time.

2. New companies will be created that will take over assets and start again with clean balance sheets, Total Hash Rate will continue to go up.

3. This cycle can continue forever - and only few, very efficient operations will actually make any money. Everyone else will be donating time and money to support the Bitcoin network.

Key Takeaways

• Even 14 years after creation, Bitcoin is still volatile and you can expect -80% moves once in a while.

• Bitcoin mining is extremely competitive, and unless you have every single thing nailed - from cheap energy to stable operations, you will lose money. Do not invest in crypto mining companies. Publicly traded companies might have fancy facilities and access to low cost capital, but they are competing with everyone around the world - including those, who get (or steal) energy for free and have very low overhead.

• Not your keys, not your crypto! As we see from $GBTC case, even a regulated trust in US can trade with 40-50% discount relative to their assets. And it is almost expected that once in a while crypto lenders and exchanges will blow up. The only rational way to get exposure to Bitcoin - buy it and store it yourself.

  ---

What is Helium?

A recent NY Times article provides a good introduction:

On a basic level, Helium is a decentralized wireless network for “internet of things” devices, powered by cryptocurrency.

The network is made up of devices called Helium hot spots, gadgets with antennas that can send small amounts of data over long distances using radio frequencies. These hot spots, which cost roughly $500 apiece and can reach 200 times farther than conventional Wi-Fi hot spots, share their owners’ bandwidth with nearby internet-connected devices — like parking meters, air-quality sensors or smart kitchen appliances.

Anyone can use the Helium network, although most of its users so far are companies like Lime (which has used Helium to keep tabs on its connected scooters) and the Victor mousetrap company (which uses it for a new line of internet-connected traps). More than 500,000 Helium hot spots are in use around the world, with thousands being added to the network every day.

Here’s where the crypto part comes in: In addition to transmitting data, Helium hot spots reward their owners for participating in the network by creating units of a cryptocurrency called $HNT. These tokens can be bought and sold on the open market like any other cryptocurrency, and the more a hot spot is used, the more $HNT tokens it generates.

Source: nytimes.com/2022/02/06/technology/helium-cryptocurrency-uses.html

Is anyone using Helium?

I find it strange that Helium does not provide a good overview of network usage. They do provide some datapoints in their Explorer, but there is no way to check how these numbers change over time.

For example, I can see that $5m were spent in data credits in last 30 days, but it is not possible to see what happened 3 months or 1 year ago. Is the usage flat, growing or in decline? Are most fees generated from setting up new hotspots or for actually using the network?

By seeing that amount of Hotspots is growing, one could assume that also network usage is growing, but from Helium stats it is not possible to verify it.

So I tried to Google and check if someone else had looked at this data and found an interesting blog post: “Connecting the HNT price to demand for using the Helium network by analyzing data credit burns“.

A number of data credit burn categories are included in the data. I focused on the “Fee” and “State channel” categories to best approximate sustainable external demand for using the Helium network (the other categories are one-off fees or costs associated with establishing a new hotspot within the network). I started the analysis in October 2020, after the initial fees to open state channels have passed.

Immediately, we see usage of the Helium network has grown exponentially in the last year.

$10k per day is not much (data is from October 2021), but the growth looks good.

Data burn - misleading stats?

I used the Python script created by stin.eth to also check what is going in last couple of months. I was able to get data from 15.06.2021 up to today, and this is how data credit burn categories look like:

So when Helium says that $5 152 062 are spent in last 30 days for data credit burn and explain it with "Data credits are spent for transaction fees and to send data over the Helium Network.“, they are hiding - that only 5% of this number is related to fees for using the network, and 95% are spent by miner owners.

And this is how network usage fees spent looks like from June 2021 till Feb 2022:

And this is how miner expenses (Assert Location + Add Gateway) look like:

Last 3 months are flat, does not look so good anymore.

What happened in 2021?

In 2020 production of hotspots was done by Helium themselves + two third party manufacturers that relied on Helium Inc's firmware, staking servers, and customer support.

But this changed in 2021 - a proposal was introduced for a process for any manufacturer to participate in production, called Helium Improvement Proposal 19. You can track the progress in a Google Sheet.

Results seem very impressive:

We started the year with 14,000+ Hotspots on the Network. We now have over 25 approved Makers building Hotspots on the Network, and the Maker applications continue to roll in. Today, the Helium Network has coverage in over 34,096 cities and 161 countries thanks to nearly 450,000 Hotspots deployed by the community. Approximately 3,000 Hotspots are being added by the day and over 5,000 new cities are added by the month. By next year, we anticipate we’ll exceed well over 1 million Hotspots in the wild.

Source: blog.helium.com/2021-helium-breakout-year-cd90ebc843fa

How centralized is it?

Helium is trying very hard to focus on the aspect that the hotspot network is decentralized, but 100% control is still in hands of 1 company: Helium Inc.

• In order to join the blockchain, every hotspot requires an onboarding code. This code is exclusively issued by and validated by Helium Inc’s staking server. On top of that Manufacturer needs to pay $40 to Helium for each new hotspot added to the blockchain.

• Helium Inc is the only party that can issue the keys required to add a new hotspot to the blockchain and there is no plan for granting direct key issuance authority to any third-parties.

• Any manufacturer that wants to produce hotspots, needs to also provide Helium Inc with following info:

  • Submit detailed hardware designs, including relevant parts and supply chain information

  • Submit a prototype for audit

  • Proof of identity for individuals owning 25% or more of the manufacturer

  • Proof of the capital necessary to fund the production budget

In short - if any government agency would like to influence or shut down the network, it needs to visit only 1 company or could just take over their staking server.

Another potential disaster that might happen - as network grows and also the internet bandwith used by hotspots, some internet service providers might limit service to either these devices or to clients who use them:

Putting a Helium hot spot in your house might also technically violate your internet service provider’s terms of service, since it involves reselling a portion of your bandwidth. The terms of service for Comcast Xfinity subscribers, for example, prohibit using your connection “for any purpose other than personal and noncommercial residential use.” So far, internet service providers haven’t cracked down on Helium users en masse, but that could change.

Source: nytimes.com/2022/02/06/technology/helium-cryptocurrency-uses.html

Helium in 2022

I think the most interesting development will be the roll out of the Helium 5G network. 5G miners are in such a high demand that even waitlist is closed.

Starting in September, FreedomFi began shipping the first batch of compatible gateways to consumers across the US with an incredible backlog of demand. By the end of 2022, FreedomFi predicts Helium 5G could span over 40,000 small cells, making it larger than many small cell networks to date.

Portfolio

Just like 2 previous weeks, I invested another $1000, half in $BTC and $ETH, and half in a new altcoin:

• $350 in Bitcoin

• $150 in Ethereum

• $500 in Helium ($HNT)

Snapshot of my portfolio is below. As you can see, $KP3R is still underwater, but $FNT is slightly outperforming $BTC and $ETH:

Obviously, $KP3R devs did not see my last post, so I will try again:

Previous posts:

• Can I beat Bitcoin?

• Can I beat Bitcoin? Week 2: Fantom

Bitcoin news

• KPMG in Canada adds Bitcoin and Ethereum to its corporate treasury

• DOJ Seizes $3.6 Billion in Bitcoin Stolen in Bitfinex Hack

• Wells Fargo said Bitcoin is nearing a “hyper-adoption phase” similar to the internet in the mid-to-late 1990s.

  

Key Takeaways

• In spite of Helium Inc. being a very centralized operation, the HNT hotspot network and usage in 2021 has grown a lot, but last 3 months are flat

• Helium is building out 5G as their second major wireless network and demand for miners is there. I am hoping the same will be true from client/user side and HNT can get more than $10k in fees per day

• 95% of data credit burn is done by miners, only 5% are related to usage fees. If growth of new miners stop, it will have 20x larger influence on data credit burn than actual usage of the network

P.S. Join “High-risk investments“ Telegram group for more discussions

The “Total Value Locked” of a protocol is simply taken as the sum dollar valuation of all collateral deposited in that specific application, regardless of its functionality. As such, TVL enables money markets like Aave to be compared with Decentralized Exchanges like Uniswap. TVL has become the de-facto way to measure DeFi adoption.

The first thing that I noted - Ethereum dominated a year ago with 94% market share when looking at TVL metric, but situation has changed a lot since then. Ethereum is still the leader with $113B in TVL, but that translates to only 60% from total market:

So which are the top Ethereum competitors when it comes to DeFi?

Market dominance:

• Ethereum: 59.83%

• Terra: 6.8%

• BSC: 6.27%

• Fantom: 4.86%

• Avalanche: 4.53%

• Solana: 4.28%

• Polygon: 2.47%

• Tron: 2.05%

• Cronos: 1.04%

Polkadot has seen the biggest growth in last month when it comes to TVL, but at the same time it is also the most “expensive“ - if you look at Mcap/TVL ratio, for Polkadot it is 6.25x higher than in case of Ethereum. It is also easy to grow fast when numbers are smaller and Polkadot has not reached even 1% of market share yet.

At the same time Fantom has seen 100% growth in TVL in last month while other chains with market share above 2% have seen on average -25% declines in TVL. What is even more interesting - at the same time it is the “cheapest“ if you look at Mcap/TVL ratio: it is only 0.55 while others are closer to 2.5:

What about performance in last 30 days? Just like the rest of market, Fantom has lost value, but a bit less than others:

Maybe there is a simple explanation why some chains have significantly lower or higher Mcap/TVL ratio when compared to Ethereum and I am not aware of it yet, but the 3 factors taken together: TVL growth, almost 5% market share and lowest Mcap/TVL ratio seem good enough for me to bet $500 on Fantom this week.

Portfolio

My first week’s pick $KP3R is not doing very well. It is down -12% while BTC and ETH positions are up. Hard to beat BTC with this kind of performance, but let’s see - maybe situation will improve as time goes on.

So this week I am adding Fantom to my portfolio, and filled these orders:

• Bought $350 worth of Bitcoin

• Bought $150 worth of Ethereum

• Bought $500 worth of Fantom

Current situation:

What would Hayes do?

Arthur Hayes, co-founder of BitMEX, is a bit skeptical about altcoin performance in next 3-6 months and has 2 good blog posts where he describes his views:

I don’t have hard data on this, but my hunch is that there are billions of dollars worth of Bitcoin and Ether currently pledged as collateral. Holders deposited Bitcoin / Ether and received dollars in return. These dollars were used to buy assets such as cars or houses, as well as punt altcoins. If you believe we are in a bull market and you already own the benchmark, as a trader, it makes sense to lever up and purchase an altcoin that could easily pump 10x if Bitcoin rises another 10%.

Regardless of whether you purchased a sick pad or more SHIB, if Bitcoin or Ether falls 20% to 30%, you will be forced to sell assets and raise Bitcoin or Ether in order to avoid forced liquidation. The contraction of the fiat price of the benchmark assets will cause some traders on the margin to indiscriminately dump their altcoin positions, regardless of whether they are in the money or not. This is the power of the last price influenced by marginal weak hand sellers.

It doesn’t take much marginal selling pressure to prick the hopium bubble. Fuck all those high farming APYs – as soon as the underlying shitcoin starts pooping, everyone will head to exit to monetise their unrealised gains. Even if only a small slice of traders acquired their altcoin positions in a leveraged fashion, on the way down it will be hard to find bids in size due to the illiquidity of these coins. Remember, big door in, small door out. 

Source: Maelstrom

At the same time, he expects that Fed will resume an easy money policy soon enough:

I believe that, politically, 7% unemployment is worse than 7% inflation. The Fed and their political handlers may soon be forced to choose between more goods and wage inflation or job losses if this sector of the credit markets blows up. My bet is on a resumption of easy monetary policies, which as we know is positive for the crypto markets. Market conditions change very quickly, and should the market believe the Fed does not have their back in the corporate bond sector, spreads will widen rapidly.

(..)

Worst case, the party gets going again after November. Neither US political party actually wants to halt the rise in asset prices. Both parties prove their value by shouting to the world: “I was in power, and the S&P 500 rose!” It makes everyone rich, and keeps your wealthy donors happy. After the plebes go through the theatrics of voting and expressing their displeasure at the skyrocketing cost of living, they can be forgotten about until the next election. The government will then get back to the business of pumping financial asset prices with printed money. It’s the business model of America, and one that must be maintained due to the structure of the global economy.

Source: Botomless

Stocks & Bitcoin moving together?

If anyone thinks that it might be a good idea to buy crypto to diversify your stock portfolio - you should note that since 2020 there is an increased correlation between both, so if stock market crashes, same might happen with crypto assets.

Before the pandemic, crypto assets such as Bitcoin and Ether showed little correlation with major stock indices. They were thought to help diversify risk and act as a hedge against swings in other asset classes. But this changed after the extraordinary central bank crisis responses of early 2020. Crypto prices and US stocks both surged amid easy global financial conditions and greater investor risk appetite.

For instance, returns on Bitcoin did not move in a particular direction with the S&P 500, the benchmark stock index for the United States, in 2017–19. The correlation coefficient of their daily moves was just 0.01, but that measure jumped to 0.36 for 2020–21 as the assets moved more in lockstep, rising together or falling together.

Source: blogs.imf.org

Key Takeaways

1. Total Value Locked in Fantom is growing fast even in a bear market and Fantom has comparatively low valuation, when looking at Mcap/TVL ratio

2. Arthur Hayes is holding mainly BTC, ETH and waiting for the market to bottom, is skeptic about altcoin performance in next 3-6 months.

3. Stocks and crypto as risk-on assets might move together, so you can expect that Fed monetary policy will have big impact on both.

It ended quite well after 7 months:

As you can see from results - I was able to outperform S&P 500 index and Warren Buffett’s Berkshire Hathaway ($BRK.B) mainly because of my decision to invest 40% in Bitcoin.

Investing in Bitcoin

Did I get lucky? Maybe, but if you check what returns can be produced by using a DCA strategy and investing in Bitcoin, there are not many things that can beat it.

For example, if someone had started investing in Bitcoin at one of worst possible times: 16.12.2017 when cost of 1 Bitcoin was $19 500 (and it was less than $1 000 at beginning of 2017), and used DCA approach - and invested $1000 in BTC each month up to today, results would be following:

It almost looks too good to be true:

In short - while in the first investing experiment I tried to beat S&P 500 and $BRK.B, the real challenge could be to outperform Bitcoin. Is it possible at all in longer term?

Can I beat Bitcoin?

I decided to create a new experiment and try to outperform Bitcoin. I am probably setting myself up for a failure, but still interested to try a new challenge and learn more about altcoin space.

So I've decided to invest $1 000 per week in following way:

• $350 in Bitcoin

• $150 in Ethereum

• $500 in some other crypto currency

So after a while 50% of portfolio will consist of BTC and ETH - so called Blue Chip cryptocurrencies, and 50% of portfolio will consist of many so called “shitcoins”. If I don't run out of money and continue this experiment till end of year, I should have a portfolio of 50 different altcoins.

The goal is to find out over longer time period:

1. Can ETH outperform BTC? I am skeptical, but there are lot of ETH fans talking about possible flippening and people are paying lot of money to use ETH network, so it must be valuable.

2. Can I somehow pick 50 altcoins from ~10 000 in the market that outperform Bitcoin?

3. Even if I pick few high-performing altcoins, how does that translate to overall results of a larger crypto portfolio? Does diversification make any sense?

What about risks?

The biggest risk is picking up lot of altcoins that end up like this:

My hope is that even if most of altcoins perform very bad, then BTC and ETH should work as a hedge overall.

Of course, there is also a risk - that investing in crypto ends up as a bad idea in general, and for some reason (heavy regulation, stablecoins like Tether going to 0, etc.) all portfolio value underperforms S&P 500, $BRK.B or just holding cash, but I am not too worried about this and think that the longer I continue the experiment, the less likely that this risk will materialize.

At least in case of cash, it seems like even the most developed countries will do everything possible to print it like there is no tomorrow, and you can expect your USD or EUR to lose purchasing power over time just like most of crypto altcoins:

Portfolio: Week 1

I've made my first $1 000 investment today, and the altcoin of the week is $KP3R, you can read more about it here.

To track results of this experiment, I started using Coingecko portfolio function:

You can also use this link coingecko.com/en/portfolios/public/kristapsmors to view the same info, but without PNL or holding amounts.

Key takeaways

1. It is very difficult to beat the average market return, but beating Bitcoin - almost impossible

2. The reasonable way to invest in Bitcoin: use DCA, but remember about volatility: it can drop in price -50% per day, or even -80% in a year.

3. Most altcoins just like fiat currencies tend to become worthless over time.

P.S. Join “High-risk investments“ Telegram group for an informal discussion.

By buying shares of Grayscale Bitcoin Trust ($GBTC), which currently trade at more than -20% discount to its net asset value:

The discount/premium to NAV is a percentage that calculates the amount that an exchange traded fund or closed end fund is trading above or below its net asset value. This metric can be a valuable metric to track how far away a security is trading away from its true value.

Source: ycharts.com/companies/GBTC/discount_or_premium_to_nav

Market price of a $GBTC share vs value of Bitcoin holding per share:

How to buy shares of $GBTC?

Shares of Grayscale Bitcoin Trust can be bought and sold through any brokerage account, for example: Interactive Brokers, the same way - as you would buy or sell any shares in other publicly traded companies like Amazon, Apple or Google.

In theory, if current market price is $41 000 per Bitcoin, then with a -21% discount you would be buying Bitcoin at price of $32 390.

Will the discount disappear later?

There are couple of problems with $GTBC that also explain why this discount exists:

1. There is no redemption program - so you cannot exchange $GBTC shares to Bitcoin and Grayscale is not motivated to activate such a program - that would result in lower assets under management.

2. Annual management fee of 2% in a market, where you can buy similar products with lower fees, for example: Purpose Bitcoin ETF (1% fee, based in Canada).

3. $GBTC is not an ETF, and although Grayscale filed on Oct. 19, 2021 an application to convert the trust to an ETF, so far SEC has denied all Bitcoin ETF applications. Will SEC change it’s mind in 2022? Not very likely.

The U.S. Securities and Exchange Commission has delayed its decision on a spot bitcoin exchange-traded fund (ETF) proposal from Grayscale Bitcoin Trust, the world's largest digital currency manager.

In a notice dated Wednesday, the markets regulator said it now expects to review Grayscale's proposal by Feb. 6, later than the original December deadline.

In October, Grayscale, which has over $45 billion of cryptocurrency assets under management, had said it plans to convert its Grayscale Bitcoin Trust (GBTC.PK) into a spot bitcoin ETF.

Source: reuters.com/markets/us/us-sec-delays-decision-grayscales-spot-bitcoin-etf-2021-12-17/

Twitter thread about Bitcoin ETF approval:

Final conclusion from James: “At the end of the day, issuers are chipping away at the SEC's arguments from multiple angles but I'm still pretty pessimistic that we will see a Spot #Bitcoin ETF in 2022. The SEC is VERY entrenched against it. If I had to give odds I'd say somewhere around 20%?? Maybe?“

According to Bloomberg:

The discount will disappear if the SEC allows Grayscale to convert GBTC to an ETF. We expect the agency to use Bitcoin futures ETFs as a stepping stone.

So it might not happen in 2022, but when the discount dissapears, that could result in good gains:

Source: bloomberg.com/professional/blog/etf-launch-in-october-may-hurt-gbtc-spur-below-market-bitcoin/

When to avoid buying $GBTC?

Historically the premium/discount range to net asset value has fluctuated from to +132.6% (May 31, 2017) to -23.69% (Jan 5th, 2022) and reasons for it are described here: The Problems With the World’s Biggest Bitcoin Fund

The common sense would be to buy $GBTC only when there is a big discount to net asset value and avoid buying, when there is a premium, otherwise you can end up in a situation like this:

Key Takeaways

1. Bitcoin is down -40%, might be worth to buy some or start a DCA strategy.

2. If you have access to a trading account, $GBTC is one of the ways how to get exposure to Bitcoin, and get a discount at the same time.

3. $GBTC has a high 2% annual fee, but with -20% discount it still might be a good risk/reward option.

Moving from an apartment to a house

At end of 2020 I made some major life changes. I started to rent a …

Read more

Part 1:

00:45 Dižozols - how it started?
04:00 What are other successful projects on Crowdestor?
06:00 Who are Crowdestor co-founders?
07:55 Changes in Crowdestor Security Agent ownership
08:23 Lending automation to SMEs - what happened to this project?
12:27 Why did Artur Geisari left Crowdestor?
13:10 Marketing - 15y of experience, debt recovery - first job?
14:52 Real Estate projects - does anyone have experience with RE development?
19:50 What are other projects connected to Janis or Gunars?
20:40 Exiting connected projects
22:46 Crowdestor Security Agent OU - no reports, is it empty?
24:19 Crowdestor SME SIA - tax debt of 142k EUR?
25:45 Pledges registered with Crowdestor Security Agent SIA
30:50 Meža Enerģija list of assets - where is it?
31:40 General view on Meža Enerģija
33:10 What is the point, where you stop waiting?
34:40 Inch2 - what happened?
38:12 Orange Square Transport - Janis had 100% control?
41:50 Dystopia user acquisition campaigns - why are they late?

Part 2:

00:00 Promise about strict policy, no-mercy to borrowers
06:15 Grocery store - 17 months late, still not defaulted?
10:00 Connected projects - conflict of interest, debt recovery
16:10 Delivering updates each month
17:00 Commissions paid in cash?
18:25 7.6% of projects are in recovery, any results so far?
19:35 Organika case
21:43 Projects with no hard assets to sell
25:10 Warhunt movie - still looking for buyer?
26:58 Would you agree to external audit of portfolio?
28:35 Are some of objects very bad?
30:57 Can Inch2 be defaulted?
32:35 How many criminal cases so far?
33:15 70-80% discounts in secondary market
36:35 Crowdestor Flex - why was it started?

Part 3:

00:00 Crowdestor Flex - why was it hidden?
05:50 Does lending company that raises capital, needs a license?
07:05 Why are Flex portfolio companies hidden from investors?
08:05 How much money was raised from ticket sales?
09:06 Would you be able to repay equity loans without ticket project?
11:05 Ticket sales are hidden, what happened?
11:50 Where would you like to move Crowdestor company?
12:14 Which regulators have issues with Flex and tickets?
12:48 Can a regulator ask to refund ticket sales?
14:10 Would you be able to spend 800k to solve urgent issues?
15:01 Should platform get their fee when loan is repaid?
15:30 Ticket project description
17:55 What will happen with money raised from remaining ticket sales?
19:05 Will ticket money be used straight away?
19:40 Investors are buying tickets to repay their own loans?
22:20 How many people work for Crowdestor?
23:10 Monthly burn rate?
23:30 Funded volume
24:30 Average fees, cash flow
25:34 How big are Crowdestor reserves?
26:40 Poll about legal action against Crowdestor
27:26 What is happening with big projects?
29:08 Why is Fertilizer not counted as capital loss in stats?
29:30 What happened with Buyback (Provision) Fund?
32:47 Should not Buyback be triggered when loan is in default?
33:35 Can you prove this 400k fund exists?
35:25 Why withdrawals are marked as refunds?
36:53 Georgian loan portfolios
38:15 Vormsate castle, Medical centre Aizupe
41:01 Any steps taken to become regulated?
41:58 Is there a risk to freeze operations or shut down?
42:39 Current business model is not working?

Questions & conclusions

1. Gunars Udris is a co-founder only in theory. Gunars has the option to become a shareholder, but does not want to. Why?

2. Crowdestor team does not have experience with real estate development, but added their own RE projects to grow the platform and amount of investors. Same with Foodestor.

3. Janis claimed that Gunars is not related to any Crowdestor projects, but at the same time Gunars owns 25% of TehniAir OÜ and 15% of TM Education and Trading OÜ.

4. ~€400k Buyback (Provision) Fund is not separated and exists only in theory. It is just a marketing gimmick.

5. For many projects pledges are promised, but real situation reminds of Schrödinger's cat - if you look for a pledge, it might be registered, it might not. When issues arise, you might get your money back, you might not.

6. Crowdestor does not follow their own policies. Similar attitude can be seen from borrowers - they can promise whatever for years, don't deliver and Crowdestor will accept it as long as they are responsive.

7. Janis thinks that “Flex“ product is future of Crowdestor, but Latvian regulator FKTK doesn't agree. Also Estonian Finantsinspektsioon is taking interest in ticket sales (selling equity of a non-existing holding company).

8. In many projects there is not much to recover, and most of them should not have been offered to investors at all. Funding empty companies that buy castles, debt portfolios, resort or yacht in Cambodia - is not that different as investing in camels in Somalia. Some dreams might come true, some ideas might work out, some investors might get lucky, but most will lose money.

9. Janis thinks that investors should diversify and be patient, but I am quite sure that even the most diversified portfolio from Crowdestor projects will have a negative return.

10. I was able to visit 7-8 objects, but when I asked for documents, could not get anything in last 2 weeks. Are real investors getting access to proof of payments, construction estimates, invoices, etc.? Probably not.

11. If investors will fund less than ~€700k per month in new loans, Crowdestor might run into cashflow issues. With 70-80% discounts in secondary market and some investors considering legal action, I don't think there are many optimists left. Maybe Jørgen should step in and do a tour with his mom?

12. 4 companies from Crowdestor have tax debts and one is late with submitting financial report:

    • Crowdestor SME SIA: €143k EUR debt

    • Crowdestor Investments SIA: €24k EUR debt + Prohibition from VID

    • CR9 SIA: €3.4k EUR debt

    • CR7 SIA: €0.5k EUR debt

    • Crowdestor Security Agent OÜ: no financial report for 08.12.2017 -
      31.12.2020

Key Takeaways

• Crowdestor is a great business for Janis (and Gunars?): by collecting ~8% in fees from a €54.4 million portfolio you could say that investors indirectly paid ~€4.3 million for a chance to fund mostly uninvestable companies and ideas.

• Investors who expected on average ~20% return from projects with no collateral, might learn that high interest = high risk. Some might also learn that investing in random crap will result in bad ROI.

• Crowdestor’s business model is not sustainable. I don't think Crowdestor as a platform will survive the new EU regulation or do serious debt recovery. But why even try, if investors might buy 75% of equity?

• Winter is coming for Crowdestor investors. Maybe it is a good time to visit the Sweet Dreams resort in Cambodia, rent a yacht and rethink your P2P strategy?

P.S. Join “High-risk investments“ Telegram group and learn more about P2P in p2p.holdings

As I have a very limited understanding of accounting, I asked for help to couple of experts to find out, if Creditstar should now be considered as almost investable lending company?

For context, please see:

• Info about Creditstar bonds: p2p.holdings/newsfeed/313

• Highlights from recent webinar: p2p.holdings/newsfeed/311

• Loan portfolio report

Expert background: one is a CFO from financial services company that is not directly competing with Creditstar, one is an auditor from Big4, one is an investor that invested in Creditstar through bonds, Mintos and Lendermarket, and one is researching all these lenders on a daily basis.

Is that a common practice to issue bonds before releasing audited report?

Expert #1: In case of normal lending companies that prepare their financial reports according to IFRS, no one checks if bonds are issued before or after audit. But any adequate issuer, of course, would not attempt to issue bonds shortly before the publication of important results as it can significantly reduce investors appetite.

Taking into account that Creditstar has never had any proper financial reporting, then issuing bonds before a public promise to publish first time audited financial statement is a blatant attempt to interfere with investors ability to get information about the financial situation of Creditstar. But it is fully in line with previous Creditstar policy to hide information from investors.

Expert #2: This is not very common, but might happen, if it is a company with a good track record (e.g. last 3 years) of financial statements being consistently audited by Big4 with clean audit opinion and always reported on time.

Probably need to also look at investors’ base such company is targeting, retail investors in less developed capital markets might be more risk seeking and thus might ignore such aspects of investing before reviewing audited financial statements.

Urs Kessler: We usually see, that investors, particularly institutional ones require audited annual reports from BigFour auditors. Sometimes we even see Quarterly review of financials statements from Bondholders. I would not see any Bank or experienced institutional investors to buy bonds of a lending company without having reliable financial statements.

MIFID-professional investor: Bond issues are typically timed based on company liquidity needs. In Creditstar’s case, when previous two-employee no-name auditor has lost licence due to professional reasons AND Creditstar accounts have been continuously done based on local GAAP instead of IFRS, any professional investor will ask for a properly audited accounts by reputable auditor before investing/reinvesting.

Other comparable companies (for example Mogo) are publishing audited reports in May.

It’s pretty strange for Creditstar to not bother to dispel the investor concerns by publishing audited report in May like peers whilst knowing 12 months before that they will need to issue new bonds in end-May to refinance previous bond issue.

What do you think about following statement from Creditstar? 

IFRS 9 is not very convenient for lenders because it requires an increased number of provisions to be reserved, which carries an increased amount of funding costs. On the other side, it is actually quite interesting for companies like us to adopt IFRS 9, because as soon as we adopt it we will open up ourselves for much cheaper sources of funding from institutional investors who actually require IFRS 9 to be able to give us money...which will be not to the benefit of P2P investors because if Creditstar will have much cheaper source of funding from institutional investors, there will be less need to put loans on the P2P platforms

Expert #1: Such a statement shows the company's absolute non-professionalism and cynicism. Are their other accounting policies also implemented only if they are beneficial to them? It is weird to hear such public announcements to put it mildly.

Expert #2: Such statement is misleading to put it lightly. It is in benefit of all investors and stakeholders to have an issuer/company that follows internationally accepted standards that increases transparency and comparability as well as provides credibility.

Investors do not generally seek just blindly higher return rather they appreciate the best risk/reward proportion, I believe that P2P (as well as any) investors would be totally happy to invest even at lower rate if risk/reward proportion improves and certainly IFRS is designed to hold companies accountable and thus has generally lower risk component than company reporting under local standards.

Urs Kessler: I need to split the statement into different points:

IFRS 9 is not very convenient for lenders as it requires an increased number of provisions. Higher provision would increase funding costs.

I agree to this. Creditstar would need to significantly increase loan loss provision if they would use IFRS 9 what would have a significantly negative impact on their equity. This would increase their funding costs.

If Creditstar would open itself to IFRS they would pay lower funding costs.

I disagree with this point. Based on my estimation of the additional loan loss provision under IFRS 9 they equity would be much lower and end up well below peers like Mogo or Iute. I would assume that it could be very difficult to issue bonds once financial statements under IFRS would be available. Thus I would even expect funding costs to raise once IFRS 9 is applied.

If Creditstar would use IFRS 9 there would be lower funding costs due to demand from institutional investors and less return for P2P.

I don’t agree with the comment:

- I doubt much lower funding costs would exist

- I doubt high demand from institutional investors

- I doubt lower costs and higher transparency would be negative for P2P investors even though their interest rate might be lower

MIFID-professional investor: IFRS 9 requires lender to recognize expected default losses at point of loan issue, as opposed to GAAP that allows recognition after actual default. As a result fast growing lenders like GAAP much better, because GAAP-backloading of losses especially if coupled with fast asset growth inflate the company results.

Switch from GAAP to IFRS would trigger significant one-off loss, for company sized like Creditstar measured in millions. 

A good CFO can do a back-of the envelope calculation estimating this one-off, thus Creditstar management must know how much of equity they will have left after switch.

Creditstar pays to investors 2-3% interest premium over peers to avoid disclosing this number. 

At what size should a lender adopt IFRS standard? Is there a big difference between Estonian Financial Standards and IFRS?

Expert #1: I don't know whether Estonia has any legislation which makes it mandatory to apply IFRS, but any adequate lending company that wants to raise money, would typically choose to apply IFRS9.

Expert #2: Size might not be too important, but would say that the broader the stakeholders that follow company the more likely for company is to have IFRS adopted. And certainly, ambition to tap capital markets or large investor base would qualify for such.

Not able to comment on difference between Estonian GAAP and IFRS in details. In general local country GAAPs are relatively quite close to IFRS however not fully, there are important differences especially for financial services companies, thus you can see that regulators require banks and insurance companies for example always report under IFRS. There are important aspects under IFRS that help to better show true result of company operating in financial  services industry (e.g. fair value of the receivables portfolio).

Urs Kessler: I see companies with a loan portfolio of 25 Million plus to use IFRS9.

I would not say, that loan volume should be the determining factor. For me the determining factor should be if a company borrows money from the public. Thus Creditstar should definitely use IFRS 9 like the main competitors do. How complex the model used is could then be discussed based on the complexity of the loan portfolio. As Creditstar is in the business for years, they should have necessarily data to properly do IFRS 9.

I have not much knowledge about specificities on Estonian Financial Standards. They are in most areas close to IFRS. However looking at the AUP done by KPMG it seems like that companies are not required to have as strict impairment requirements as IFRS 9 is asking. Thus resulting in significantly lower impairment provision as stated by Creditstar and as we find out if we compare loan parameters with competitors using IFRS 9.

MIFID-professional investor: Size – probably a function of benefit and cost. IFRS brings greater investor trust thus lower cost of funding = benefit. Also requires frontloading loan default costs which reduces nominal equity which investors then require to be increased = cost. IFRS is also a bit more complex and not practiced by every small auditor, increasing audit cost = cost.

Difference – see above. Estonian Financial Standards = Estonian GAAP in this case.

Any comment about Creditstar's Loss Given Default model? 

Expert #1: I don't want to spend my time analyzing useless and theoretical models. It has no link to reality and normally company policies are published as a part of AFS when we can be sure that it has been implemented. For me personally it is hard to understand why Estonian financial regulator allows to attract tens of millions EUR from investors for a company that has never been audited, even if formally no regulation is violated.

Expert #2: Under brief review seems model might not be fully in line with IFRS 9 – few things that caught my eye – PD seems to rely on historical roll rates, however more common practice would be to use some statistical model that is better estimation of future default rates and IFRS 9 also require to incorporate macro effects, I see that Covid has possibly been considered however again more common practice is to use a statistical macroeconomic indicators model here. Hard to comment on possible effects of both aspects if applied.

In general company itself states that their impairment model is being calculated under ‘historical loss method’, however IFRS uses ‘estimated credit loss’ model. There are several companies for whom transition to IFRS 9 (mandatory since 2018) resulted in significant one time cost – see 4finance (picture attached) and Ferratum as example.

Urs Kessler: The impairment model might be in line with Estonian financial reporting requirements what is also confirmed by KPMG however it leads to significantly lower impairments compared to IFRS 9. Based on my own calculation taking into account public information available on Mintos, I judge the provision for future loans losses as too low. I particularly judge the loan loss provision in Poland as well as Spain for not sufficient.

MIFID-professional investor: Didn’t really review. These models are highly sensitive to choice of assumptions and way of using raw data, so didn’t want to waste time before getting properly audited annual report by reputable auditor, see answer to point.1 

Pending payments on Mintos

At the same time Pending payments for Creditstar on Mintos have been increasing lately. I think it is fair to assume that cash was needed to repay bond holders and handling repayments to P2P investors was a second priority:

Key takeaways

1. Issuing bonds before publishing audited report does not look good.

2. I still have doubts about Creditstar, would consider them as “almost investable“ if they adopt IFRS and the financials still look OK.

3. Increase in pending payments on Mintos might signal that money was needed to repay old bonds first and without help from new bond investors there could be a liquidity problem.

P.S. Join “High-risk investments“ Telegram group and learn more about P2P in p2p.holdings

If you can avoid the frauds and badly managed platforms, you will already be ahead of most other P2P investors.

Questionable P2P platforms

Here is an updated list of platforms that I suggest to avoid. If you are invested in any of them and still have the ability to withdraw funds, that might be a good idea to consider:

Source: p2p.holdings/questionable-platforms

Which platforms are the next P2P disasters?

In 2020 the biggest pain to investors was caused by Kuetzal, Envestio and Grupeer. In 2021 it looks like the losses will be much bigger and I expect following platforms to turn into next disasters:

1. Juicy Fields: selling idea about cannabis growing = it looks like a Ponzi for the dumbest investors who aim for the highest yield

2. Iban Wallet: the most creative P2P scam - sold idea about safe investing and low (2-5%) returns, now rebranded to Neofinders and Neowintech

3. Viventor: from a P2P marketplace it has turned into a debt recovery company that does not want to recover anything because same persons own platform and largest lender.

4. TFG Crowd - another shady business loan platform, reminds of Envestio and Kuetzal. Lately removing info from website, maybe preparing for an exit scam.

5. Fast Invest - still having liquidity problems, 6+ months to withdraw funds. €62.5 million at risk, if you can trust their info about portfolio size.

6. Bondora: doing so bad that they are refusing to publish auditor’s report.

Key takeaways

1. Some investors might think that 2020 was problematic for P2P, but 2021 will be way worse.

2. Regulators are too slow and let some P2P scams grow way too big.

3. Diversification still does not work in P2P.

P.S. Join “High-risk investments“ Telegram group and learn more about P2P in p2p.holdings

Sold Ferratum Group

I sold my remaining 3426 Ferratum Group shares for €21 359.90 and made a profit of €8780.88:

Here are all my trades in connection to Ferratum Group:

• Bought 5139 shares at avg price of €3.55 …

Read more

Mihkel Roosme is involved in many shady real estate deals, but today I will cover the “Zīļu iela 10, Rīga” project that looks suspicious from the start.

Inflated valuation?

Valuation for “Zīļu iela 10, Rīga” land lot on 15.04.2019 was 296k EUR with potential sale in next 18 months. I am not an expert in real estate, but let’s look at background of two persons, who made this appraisal:

1. A. Zariņš, SIA “Balsts Expert”: last financial report was submitted on 07.06.2018 (for 2017 financial year: 44k EUR in turnover, 1 employee). Companies sertificate to do real estate appraisals expired on 05.09.2019, in 2020 company was suspended by State Revenue Service.

2. A. Podiņš, independent appraiser, his company did 7k EUR in turnover in 2019, and had 1 employee.

In short - valuation was done by couple of individual real estate experts, but not by one of top companies in this segment. Banks probably would not accept it, but I guess it was good enough for EstateGuru?

Also interesting to look at the last prices when property was sold:

• In 2014 DNB Banka sold property to Andrejs for 23k EUR

• In 2016 Andrejs sold property to OU Rolegur for 18k EUR:

Could the value of property increase from 18k EUR to 296k EUR in less than 3 years?

Latest valuation

• 15.04.2019: 296k EUR (valuation by SIA Balsts Expert)

• 31.07.2020: 70.5k EUR (valuation by VCG EKSPERTU GRUPA SIA for forced sale)

• Change in valuation: -76%

Of course there is some discount applied for a forced sale, so in normal market conditions maybe the property value is about 100-120k EUR, but I don't think it is anywhere close to 296k as valued by Balsts Expert.

And if that is the case, then EstateGuru provided misleading info to it’s investors - showing collateral value of 296k EUR and LTV: 60.8%

What happened?

It would be interesting to understand if Mihkel Roosme initial plan was to develop there anything at all? Some things point to a possibility of a fraud:

• inflated valuation

• no real work was done

• property was sold in an auction because of debt collection from The Municipal Revenue Office of Riga City, so not even taxes were paid

• Mihkel Roosme is involved in other shady real estate deals

• no info about what happened to 180k EUR that was raised from investors

EstateGuru’s comment

The auction of the property was successfully held on 29th of March 2021 and it was won by EstateGuru's debt collection agency who was acting in the name of EstateGuru's investors. EstateGuru remains in control of all the actions in regards to the property and the security agent’s mortgage will remain. After the results of the auction are approved, the property ownership will be transferred to our debt collection partner who will proceed with the sale of the property without the limitations of the forced sale process. This activity was necessary to avoid the property being sold under poor terms to other interested parties and to continue with the agreed activities to realise the collateral on favourable grounds and terms.

How is Mihkel doing?

Looks like EstateGuru is still happy to use his services. At least in December 2020 Mihkel was part of EstateGuru team that opened a branch in Berlin:

The PR agency redRobin accompanies with EstateGuru another market launch of an international FinTech in Germany. Estate Guru, the European market leader for alternative financing, opens a branch in Berlin and now offers its full service to German small and medium-sized enterprises (SME).

Source: red-robin.de/en/blog/estateguru-redrobin-takes-over-market-launch-fintech-germany

Conflict of interest?

Estateguru is one of few platforms where I've seen a special section called “POLICY OF AVOIDANCE OF CONFLICTS OF INTEREST“ and it sounds good in theory, for example:

3.2. In the performance of their functions, all employees of or persons related to EstateGuru must ascertain whether there is any conflict of interest, avoid conflicts of interest or withdraw if there are any potential situations that may cause or provoke a conflict of interest.

3.4. EstateGuru takes measures to ensure that:
a. EstateGuru’s interests have no unfair advantage over the lender’s and/or crowdfunding project owner’s interests and its actions must be compatible with the lender’s and/or crowdfunding project owner’s interests;
b. personal, financial or other interests of EstateGuru, its managers, employees or other associated persons have no influence or appear to have no influence on the provision of services to the lender and/or crowdfunding project owner on behalf of the EstateGuru;

But as we see - in practice it makes no difference, if such a policy is not enforced.

Key takeaways

1. EstateGuru failed to avoid a conflict of interest and failed to properly evaluate if the “Zīļu iela 10, Rīga“ project should be listed in platform at all.

2. If platform’s own shareholders or management cause a loss to investors and situation is not properly explained, that can create a big damage to investor trust.

3. EstateGuru plans to realise the collateral on favourable grounds, but it still might cause a 30-40% loss for investors.

P.S. Join “High-risk investments“ Telegram group and learn more about P2P in p2p.holdings

eToro was so overwhelmed that they made following changes:

• closed all leveraged crypto positions with a 4-hour notice

• no more leverage for cry…

Read more

Just look at all the crap Grupeer has been writing in last year. Grupeer has been positioned as the victim of Covid, banks, governments, investors, loan originators, bloggers, etc., but at the same time investors are urged to stay calm.

Grupeer bullshit

Mar 17, 2020:

While capital markets experience disruptions, your return remains stable with Grupeer, explains Grupeer CEO Alla Kisika.

Mar 27, 2020:

Grupeer would like to encourage the investors to be broadminded and exercise caution and patience in any attempt to speed up the retrieval of the investors’ funds. Any rushed and hasty individual actions may only hinder the execution of mutual interests of Grupeer and its investors.

Mar 31, 2020:

All payments to investors of Grupeer are currently suspended due to emergency state declared in European Union and worldwide regarding COVID-19 pandemic crises

Apr 2, 2020:

We have been receiving notices from loan originators that they have been contacted directly by a considerable number of investors urging not to repay the outstanding funds to us, but directly to them.

Apr 8, 2020:

Many of our partners are using the extraordinary circumstances in bad faith and are looking for ways to avoid fulfillment of their obligations. Our legal team is working to stop such activities.

We experience difficulties with our payment systems, a part of our bank accounts were recently blocked and we are working on that too.

Apr 13, 2020:

GRUPEER hereby informs you that considering the currently existing worldwide pandemic and the governmental measures preventing immediate actions towards enforced debt collection of the borrowers debts, the lenders you have concluded assignment agreements with, have exercised the before-mentioned rights and has extended the loan repayment periods for 60 (sixty) calendar days.

Apr 30, 2020:

Grupeer predicts stabilization within two years. Grupeer investors have unavoidably been exposed to late loan repayments, nevertheless that they still can expect to profit from their investments. Grupeer has received credible threats from investors and bloggers, including insults and threats of physical violence, forcing the platform to notify the police.

May 20, 2020:

In June we will announce an action plan for repayment of investments

July 20, 2020:

We will start legal actions against Primo Invest, Finsputnik/Lime Loans South Africa, and Right Choice Finance to collect the debt.

Aug 31, 2020:

We have created a solution to fulfil liabilities towards the investors who have submitted and verified their questionnaires. Grupeer will ensure repayments in collaboration with our debt collection partner Recollecta

Sep 7, 2020:

Stopping economic activity of SIA “Grupeer” does not affect factual or legal capability to continue to work to collect outstanding balances from loan originators and to ensure repayments.

It has come to our knowledge that attorneys-at-law office “Ellex Kļaviņš” has provided misleading counsel to the investors regarding the matter of what means “stopping of the company’s economic activity”. 

We have addressed “Ellex Kļaviņš”, requesting to recall or to provide a correct interpretation of the information to the investors. We have warned the attorneys-at-law office that failure to do so might result in legal actions towards them.

Sep 17, 2020:

We are removing the post from September, 14 regarding the licensing process on advice of our legal counsel.

Oct 7, 2020:

As soon as the loan originator transfers Recollecta the amount due, within 5 banking days Recollecta ensures payment to the investors according to the payment schedule. 

Nov 5, 2020:

We can now confirm that in cooperation with our debt collection partners we have started legal actions against several Loan Originators. Meanwhile, Latvian law firm “Ellex Klavins” has notified us that they on behalf of certain investors will seek a declaration of insolvency against us. 

Feb 19, 2021:

We had plans to aggressively pursue claims against the Loan Originators in default. We had to put our plans on hold because of the insolvency applications made by several investors. We approached the investors’ Latvian lawyers with an offer to go against the Loan Originators together.

Although we are still in the process of negotiating a formal ceasefire with the investors’ Latvian lawyers (Ellex), the talks we have had so far have given us confidence that a solution acceptable to all parties is possible. We are indeed grateful to the investors and their Latvian lawyers for agreeing to start a dialogue and we intend to make the most out of this unique opportunity.

What is Grupeer doing in reality?

My impression from Grupeer blog posts was that they are trying to confuse investors, continue promising good results, blaiming others for failures and at the same time - probably moving away assets.

And looks like Ellex Klavins has similar impression, so they even issued a statement:

Following the latest blog post of Grupeer, a statement was prepared by our legal partner Ellex Klavins:

--

Dear Investors,

In light of the blog post that was published on February 19, 2021 on the Grupeer platform, we would like to address the statements made and to clarify the actual facts of the current status of the case and the negotiations.

The commercial activity of the Grupeer platform has been terminated for almost one year. The sole real actions from the side of the Grupeer team have taken the form of vague informative status updates of the alleged steps taken.

Due to the evident financial and legal problems of all of the involved companies affiliated with Grupeer, their chosen strategy has been to publish teasing information regarding progress from time to time in order to create a perception that the situation is being addressed seriously and that there are plans to comply with all obligations and repay the funds owed to investors. However, it is unfortunately clear that for now there have been no real actions on the part of Grupeer to actually respect their payment obligations towards investors in the full amounts.

Settlement negotiations

We are open to discuss any real cooperation, including any settlements, only when the Grupeer team will be willing to cooperate in a fair and transparent manner by being ready to respect our pre-conditions necessary to kick–off any further negotiations.

Under the instructions of the core group of investors we have had one meeting on 27 January 2021 with the representatives of Grupeer group from the Law firm Repšs & Kvēps to discuss the possibility of future negotiations, and that followed by a short e-mail exchange. We have made it clear that a prerequisite for any negotiations is for Grupeer group to fully disclose objective information in respect of the financial situation of Grupeer and its group companies for the investors to be able to assess any future actions and to give all sides a platform from where to start the negotiations. We have also stated the necessity for an objective and impartial external financial audit of the companies affiliated with Grupeer platform including SIA Primo invest and SIA Finsputnik platforma.

We are convinced that such a transparent approach is paramount to re-establish any level of trust on the part of the investors towards Grupeer.

Following our request made on 8 February 2021, unfortunately so far the Grupeer team has not provided us with the required information in order to further proceed with the negotiations.

We emphasize that any discussions we have had so far with the representatives of the Grupeer team are in a very early stage and we in no manner can conclude that there is any evidence of the trustworthy intent of the opposing side. This is especially true taking into consideration all of the evasive actions that we have witnessed being performed in order for Grupeer to avoid compliance with obligations towards investors. The actual legal steps taken against our efforts strongly suggest different intentions.

Grupeer group companies have challenged the validity of the assignment agreements

As the legal representatives of the largest investor initiative we are seeking to exhaust every means to exercise the rights that the investors hold and to achieve progress in a re-payment process of all funds owed by the Grupeer group.

When specific investors used their rights to start insolvency proceedings against SIA Primo invest and SIA Finsputnik platforma, Grupeer group companies which had failed to comply with their obligations for almost a year, took diversionary action. These companies initiated civil proceedings in court against the investors in question seeking the court to recognize the assignment agreements by which the investors bought part of the claim against the debtors as null and void. The validity of the buy-back mechanism agreed in the assignment agreements was also challenged claiming that the mechanism causes excessive losses for SIA Primo invest and SIA Finsputnik platforma and that they therefore must be declared invalid.

Throughout these legal proceedings in court the representatives of SIA Primo invest and SIA Finsputnik platforma have expressly stated that all concluded assignment agreements on Grupeer platform should be recognized as null and void and the respective Loan Originators have never engaged in legal obligations in any form with the investors of the Grupeer platform. Also, the representatives of Grupeer SIA who have been summoned as co-respondents to the investors have argued that they do not have at their disposal information that would confirm the existence of such agreements.

Such highly alarming statements from the Grupeer group companies continue to support the suspicion that the Grupeer group is not planning to return the funds to investors voluntarily. Therefore, given the stated legal position of the Grupeer group companies about their obligation toward investors, we do not see how we can proceed with the negotiation discussions before: 1) Grupeer and its group companies recognize their obligations; as well as 2) an objective and detailed information is provided about the financial situation of the Grupeer platform and its affiliated companies.

In summary, we would urge any investor to critically assess the information posted on the Grupeer blog. Our current priority is to act in the best interests of the investors and we are working towards finding a safe solution that would be aimed at recovering the funds invested in the Grupeer platform. We are not adverse to negotiations with Grupeer and its representatives to find a viable solution to this matter, however we insist that such negotiations are based on principles of openness, transparency, and good faith.

Ellex Klavins Team

Source: sites.google.com/view/grp-5612/updates

Key Takeaways

1. There have been no real actions on the part of Grupeer to actually respect their payment obligations towards investors

2. Grupeer took evasive actions in order for Grupeer to avoid compliance with obligations towards investors

3. Grupeer group is not planning to return the funds to investors voluntarily

Previous posts about Grupeer

• Mar 9, 2020: Will Grupeer blow up or fix their issues?

• Mar 27, 2020: COVID-19 first P2P victims - Monethera & Grupeer

P.S. Join “High-risk investments“ Telegram group and learn more about P2P in p2p.holdings

They also agreed to share recording of it, so if anyone prefers video to reading, here is my attempt to do a 30min intro to P2P investing:

Topics covered:

• 00:00​ About me

• 01:20​ General risks

• 06:50​ Safe way to invest in P2P

• 07:36​ Failed P2P platforms

• 11:26​ Investing in camels

• 12:24​ Mintos failures

• 13:57​ P2P bloggers

• 15:42​ Questionable P2P platforms

• 24:50​ P2P platforms to consider

• 27:30​ Alternative to P2P

Note that recording was done on Feb 10th and I mentioned in the video 4 Mintos loan originators that I consider to be OK, and one day later there were some news about 1 of them, specifically Sun Finance operations in Denmark.

Platforms to consider

• Viainvest

• EstateGuru

• Twino

• Mintos

Key Takeaways

1. P2P is speculation at best, donation at worst. Don't expect safety or any real guarantees.

2. Some P2P platforms have failed, but many more to come.

3. If you are considering to invest larger amounts, consider bonds as an alternative.

P.S. Join “High-risk investments“ Telegram group and learn more about P2P in p2p.holdings