SafeMoon: An Obvious Scam for Total Suckers. (News 11.6.23)
Also: A bullish rate pause, FTX's massive Tether question, and OpenSea Parted.
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Welcome to the first day of the rest of your life. Chances are good that right now, unlike Sam Bankman-Fried, you are not in a federal correctional facility awaiting a May 28th sentencing hearing that could put you away for 20 years to life. Take a moment to appreciate that.
There is still a lot of postmortem work to do around FTX, and we’ll be picking at that bit by bit. Many people have cited SBF’s conviction as a turning point for crypto, a clearing out of rot that will allow new growth. And indeed, the crypt market has been healthy, with a halving over the horizon …
But it’s important to keep digging because, given its scale and nature, FTX could still hide landmines. Today we’ll look just briefly at one of those: Alameda Research’s huge use of the stablecoin Tether.
But first, other news. In today’s edition:
The Fed’s Interest Rate Pause
SafeMoon Destroyed by Facts and Logic
Alameda Research and Tether
The Federal Reserve isn’t necessarily done hiking interest rates, but they very well might be, and the proverbial “soft landing” for the economy as a whole is ever more on the table.
The Fed chose not to hike interest rates for the second straight time at their meeting last Wednesday, leaving the target rate at 5.25%, where it’s been since July. The economy, at least as the Fed sees it, is in the process of cooling off. Core inflation from April to September was an annualized 2.8%, which is really an accomplishment.
The inputs to this are, I would argue, almost exactly what you’d assume if you’ve been paying attention for the past three years. Wage growth is slowing even though unemployment is historically low and basically unchanged at 3.9%, which I would argue speaks to the long tail of pandemic relief payments and work-hesitancy - core inflationary pressures in ‘21-’22 - running out. The labor force participation rate has climbed steadily for nearly three years now. Totally unsurprising.
This is just one part of Powell’s focus on “improving supply conditions, including fewer bottlenecks and shortages of goods, freight shipping and workers,” per WSJ. Does this sound familiar?
Yes, it’s your old friend supply chain, which consensus about two years ago said was causing a huge portion of inflation. That, more or less, is why the inflation was described as “transitory,” a phrase I’m sure someone on fintwit is still making fun of to this day. But it was transitory.
Three years is transitory, and now inflation is actually much closer to pre-pandemic levels than even I could have guessed.
Now, for some light comedy: A bunch of clearly really stupid guys are going to jail for something incredibly dumb. You love to see it.
This time it’s “SafeMoon,” a ponzi token that saw a big mania in about early 2022. The real gem here is that the three guys charged with securities and wire fraud in a new Federal indictment not only operated out of Provo, Utah, but also incorporated in the United States. Now that’s some grade-A idiocy, fellas. Mad shouts to Braden John Karony, Kyle Nagy, and Thomas Smith.
There is a deeper analysis to be had here about why SafeMoon’s tokenomic design was equally moronic. On top of their terrible ideas, the SafeMoon team also simply stole funds from the system, much like Do Kwon with Terra.
But let’s just keep things simple: Anything called “SafeMoon,” with a picture of a rocket in the logo, is obviously a complete fucking scam, and if you didn’t realize that, you should not be investing in speculative assets. Period.
It’s so obvious it’s almost hard to explain why in a thoughtful way, but let me try to sketch out a principle:
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