PayPal removes waitlist for crypto service as crypto crime drops in 2020
As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
PAYPAL REMOVES WAITLIST FOR CRYPTO SERVICE: PayPal (PYPL) announced Thursday that all eligible accountholders in the U.S. can now buy, hold and sell cryptocurrency directly with PayPal. U.S. customers will also be alerted to the new feature through both an email and a push notification in the coming days. The feature was already partially available in the U.S., but PayPal had been putting interested customers on a waitlist. With the update, users will no longer have to wait for a spot to open.
CRYPTO CRIME DECLINES IN 2020: Losses from crypto thefts, hacks and fraud dropped to $1.8B for the first 10 months of 2020 after reaching $4.5B in 2019, however crime in the “decentralized finance” space increased, Reuters’ Gertrude Chavez-Dreyfuss reported Tuesday, citing a report from crypto intelligence firm CipherTrace. “What we have seen is that exchanges and other cryptocurrency players have implemented more security procedures,” Dave Jevans, CipherTrace’s CEO. “They have taken the guidance and implemented the procedures to secure their funds better. So you’re going to see less mass-scale hacks.” Losses from thefts and hacks, excluding misappropriation and fraud, rose to $468M as of the end of October, up 30% from the whole of last year, and roughly 20% of those hacks, or about $98M, came from DeFi.
BITPAY ROLLS OUT CRYPTO PAYROLL SERVICE: BitPay, a provider of cryptocurrency payment services, announced Friday the launch of BitPay Send, a new mass payout service that enables organizations of all sizes to pay employees, affiliates, customers, vendors, contractors and others with cryptocurrency. BitPay Send allows for crypto payments anywhere in the world, on any day of the week, and at any time. BitPay Send enables companies to make payroll payments, facilitate customer cashout requests, pay independent contractors or affiliates, issue rewards or rebates and financially settle with marketplace sellers. The company funds payments in fiat and leverages the blockchain to send pre-tax payments without having to own or handle digital currency, eliminating inherent exposure to its volatility or risk.
CRED FILES FOR BANKRUPTCY AMID ALLEGED FRAUD: Crypto investment firm Cred filed for bankruptcy Saturday after its founder Daniel Schatt and a top executive engaged in a legal dispute and its bitcoin hedging strategy struggled amid price fluctuations, Bloomberg’s Josh Saul reported Monday, citing court filings. The company claims it was defrauded by its former chief capital officer James Alexander, who attempted to assume control of newly-established division Cred Capital and fled with roughly $3M in bitcoin that was expected to help correct its hedging strategy. The firm, which owes its users about $140M, alleges Alexander gave Cred Capital’s voting shares to an unnamed outside investor who never put money into the company and also failed to use a 300 bitcoin loan from founder Lu Hau to establish new hedging strategies, instead using a portion of the proceeds to pay off vendors.
Q3 EARNINGS: On Thursday, Marathon Patent Group (MARA) reported third quarter loss per share of 6c on a revenue of $835,184, which compared to a loss per share of 12c on a revenue of $321,716 in the prior year period. CEO Merrick Okamoto said, “With only 2,060 miners in operation in September when Bitcoin was trading at $10,000, the company generated $650,000 in Bitcoin revenue, our largest quarterly Bitcoin revenue in history. By the end of the second quarter in 2021, we will have 23,560 miners deployed which equates to a greater than 1100% increase in mining capacity. At current Bitcoin prices, our deployment of new miners has the potential to produce more than an 11 fold increase in our monthly revenue as compared to our September revenue production.”
On Monday, Ideanomics (IDEX) reported Q3 loss per share of 3c on a revenue of $10.6M, which compared to a loss per share of 11c on a revenue of $3.1M for the same period last year. The company also announced Thursday it has signed a definitive stock purchase agreement to acquire 100% of Timios Holdings, a nationwide title and settlement solutions provider, in an all-cash deal.
Additionally on Monday, Riot Blockchain (RIOT) reported Q3 mining revenue of $2.4M, which compared to mining revenue of $1.7M for 3Q19. The company said, “Riot continues to achieve substantial milestones on its bitcoin mining focus. As previously disclosed, the company expects to have a total of 22,640 miners deployed by June 2021, the vast majority consisting of the latest generation S19 Pro miners. At full deployment, Riot expects to achieve 2.3 EH/s of total hash rate capacity by utilizing 73 megawatts of energy. This would result in Riot having an overall operational efficiency of approximately 32.33 ±% 5 joules per terahash.”
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), Ideanomics, Riot Blockchain, Pareteum (TEUM) and Social Reality (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose roughly 4% this week at $16,130 in U.S. dollars, according to TradeBlock.