The man on the other end, an FBI agent, told Devin that the seemingly legitimate software developer he’d hired the previous summer was a North Korean operative who’d sent tens of thousands of dollars of his salary to the country’s authoritarian regime.
Stunned, Devin hung up and immediately cut the employee off from company accounts, he said.
“He was a good contributor,” Devin lamented, puzzled by the man who had claimed to be Chinese and passed multiple rounds of interviews to get hired. (CNN is using a pseudonym for Devin to protect the identity of his company).
Now, US federal investigators are publicly warning about a key pillar of the North Korean strategy, in which the regime places operatives in tech jobs throughout the information technology industry.
The FBI, Treasury and State departments issued a rare public advisory in May about thousands of “highly skilled” IT personnel who provide Pyongyang with “a critical stream of revenue”that helps bankroll the regime’s “highest economic and security priorities.”
It’s an elaborate money-making scheme that relies on front companies, contractors and deception to prey on a volatile industry that is always on the hunt for top talent. North Korean tech workers can earn more than $300,000 annually — hundreds of times the average income of a North Korean citizen — and up to 90% of their wages go to the regime, according to the US advisory.
“(The North Koreans) take this very seriously,” said Soo Kim, a former North Korea analyst at the CIA. “It’s not just some rando in his basement trying to mine cryptocurrency,” she added, referring to the process of generating digital money. “It’s a way of life.”
The value of cryptocurrency has plummeted in recent months, depleting the North Korean loot by many millions of dollars. According to Chainalysis, a firm that tracks digital currency, the value of North Korean holdings sitting in cryptocurrency “wallets,” or accounts, that have not been cashed out has dropped by more than half since the end of last year, from $170 million to about $65 million.
But analysts say the cryptocurrency industry is too valuable a target for North Korean operatives to turn away from because of the industry’s relatively weak cyber defenses and the role that cryptocurrency can play in evading sanctions.
US officials have in recent months held a series of private briefings with foreign governments such as Japan, and with tech firms in the US and abroad, to sound the alarm about the threat of North Korean IT personnel, a Treasury Department official who specializes in North Korea told CNN.
The list of companies targeted by North Koreans covers just about every aspect of the freelance technology sector, including payment processors and recruiting firms, the official said.
Pyongyang has banked on its overseas tech workers for revenue for years. But the coronavirus pandemic — and the occasional lockdown it has caused in North Korea — has, if anything, made the tech diaspora a more crucial funding source for the regime, the Treasury official told CNN.
“Treasury will continue to target the DPRK’s revenue generating efforts, including its illicit IT worker program and related malign cyber activities,” Brian Nelsonc, Tresuary undersecretary for terrorism and financial intelligence, said in a statement to CNN, using the acronym for North Korea.
“Companies that engage with or process transactions for [North Korean tech] workers risk exposure to US and UN sanctions,” added Nelson, who last month met with South Korean government officials to discuss ways of countering the North’s money-laundering and cybercrime activity.
CNN has emailed and called the North Korean Embassy in London seeking comment.
Federal investigators are also on the lookout for Americans who may be inclined to lend their expertise in digital currencies to North Korea.
In April, a 39-year-old American computer programmer named Virgil Griffith was sentenced to more than five years in US prison for violating US sanctions on North Korea after speaking at a blockchain conference there in 2019 on how to evade sanctions. Griffith pleaded guilty and, in a statement submitted to the judge before sentencing, expressed “deep regret” and “shame” for his actions, which he attributed to an obsession to see North Korea “before it fell.”
But the long-term challenge facing US officials is much subtler than conspicuous blockchain conferences in Pyongyang. It involves trying to curtail the diffuse sources of funding that the North Korean government gets from its tech diaspora.
The North Korean government has long benefited from outsiders underestimating the regime’s ability to fend for itself, thrive in the black market and exploit the information technology that underpins the global economy.
One of the most infamous North Korean hacks occurred in 2014 with the crippling of Sony Pictures Entertainment’s computer systems in retaliation for “The Interview,” a movie involving a fictional plot to kill Kim Jong Un. Two years later, North Korean hackers stole some $81 million from the Bank of Bangladesh by exploiting the SWIFT system for transferring bank funds.
North Korea’s hacking teams have in the years since trained their sights on the boom-and-bust cryptocurrency market.
The returns have been astronomical at times.
Pyongyang-linked hackers in March stole what was then the equivalent of $600 million in cryptocurrency from a Vietnam-based video gaming company, according to the FBI. And North Korean hackers were likely behind a $100 million heist at a California-based cryptocurrency firm, according to blockchain analysis firm Elliptic.
“Most of these crypto firms and services are still a long way off from the security posture that we see with traditional banks and other financial institutions,” said Fred Plan, principal analyst at cybersecurity firm Mandiant, which investigated suspected North Korean tech workers and shared some of its findings with CNN.
The thousands of North Korean tech workers overseas give Pyongyang a double-edged sword: They can earn salaries that skirt UN and US sanctions and go straight to the regime while also occasionally offering North Korea-based hackers a foothold into cryptocurrency or other tech firms. The IT workers sometimes provide “logistical” support to the hackers and transfer cryptocurrency, the recent US government advisory said.
“The community of skilled programmers in North Korea with permission to contact Westerners is surely quite small,” Nick Carlsen, who until last year was an FBI intelligence analyst focused on North Korea, told CNN.
“These guys know each other. Even if a particular IT worker isn’t a hacker, he absolutely knows one,” said Carlsen, who now works at TRM Labs, a firm that investigates financial fraud. “Any vulnerability they might identify in a client’s systems would be at grave risk.”
And both tech workers and hackers from North Korea have used the relatively open-door nature of the job search process — in which anyone can pretend to be anyone on platforms such as LinkedIn — to their advantage. In late 2019, for example, possible North Korean hackers posed as job recruiters on LinkedIn to target sensitive data held by employees at two European aerospace and defense firms, according to researchers at cybersecurity firm ESET.
“We actively seek out signs of state-sponsored activity on the platform and quickly take action against bad actors in order to protect our members,” LinkedIn said in a statement to CNN. “We don’t wait on requests, our threat intelligence team removes fake accounts using information we uncover and intelligence from a variety of sources, including government agencies.”
Learning to spot red flags
Some in the cryptocurrency industry are getting more cautious as they look to hire new talent. In Jonathan Wu’s case, a video call with a job candidate in April may have kept him from unwittingly hiring someone he came to suspect was a North Korean tech worker.
As head of growth marketing at Aztec, a company that offers privacy features for Ethereum, a popular type of cryptocurrency technology, Wu was looking for a new software engineer when the hiring team came across a promising résumé that someone had submitted.
The applicant claimed experience with non-fungible tokens (NFTs) and other segments of the cryptocurrency market.
“It looked like someone we might hire as an engineer,” Wu, who is based in New York, told CNN.
But Wu saw a number of red flags in the applicant, who gave his name as “Bobby Sierra.”He spoke in halting English during the interview, kept his web camera off, and could hardly keep his backstory straight as he practically demanded a job at Aztec, according to Wu.
Wu didn’t end up hiring “Sierra,” who claimed on his résumé to live in Canada.
“It sounded like he was in a call center,” Wu said. “It sounded like there were four or five guys in the office, also speaking loudly, also seemingly on interviews or phone calls and speaking a mix of Korean and English.”
“Sierra” did not respond to messages sent to his apparent email and Telegram accounts seeking comment.
CNN obtained the résumés the alleged North Korean tech workers submitted to Wu’s firm and the cryptocurrency startup founded by Devin. The résumés seem deliberately generic as to not arouse suspicion and used buzzwords popular in the cryptocurrency industry such as “scalability” and “blockchain.”
One suspected North Korean operative tracked by Mandiant, the cybersecurity firm, asked numerous questions of others in the cryptocurrency community about how Ethereum works and interacts with other technology, Mandiant said.
The North Korean may have been gathering information about the technology that could be useful for hacking it later, according to Mandiant principal analyst Michael Barnhart.
“These guys know exactly what they want from the Ethereum developers,” Barnhart said. “They know exactly what they’re looking for.”
The fake résumés and other ruses used by the North Koreans will likely only get more believable, said Kim,the former CIA analyst who is now a policy analyst at RAND Corp., a think tank.
“Even though the tradecraft is not perfect right now, in terms of their ways of approaching foreigners and preying upon their vulnerabilities, it’s still a fresh market for North Korea,” Kim told CNN. “In light of the challenges that the regime is facing — food shortages, fewer countries willing to engage with North Korea … this is just going to be something that they will continue to use because nobody is holding them back, essentially.”
The remarkable growth in cryptocurrency’s popularity over the past few years has provided a platform for countless exciting projects to launch. Many of these projects make use of a presale phase, designed to raise capital and boost awareness – whilst providing investors with an opportunity to purchase tokens at a discount.
This guide will take an in-depth look at the best crypto presale to invest in, reviewing ten upcoming presales with huge potential before highlighting some of the key factors to keep in mind before investing.
Best Crypto Presales for 2022 – Full List
Finding the best cryptocurrency presales can be tricky, especially given the abundance of new coins within the market. However, through extensive research and analysis, we’ve narrowed down the selection to our top 10 presale crypto projects – all of which are listed below:
Say Network (SAY) – Overall Best Crypto Presale to Invest In
LunaOne (XLN) – Cryptocurrency Presale Project Within the Metaverse Niche
Panda Elon (PELON) – ‘Meme Coin’ Presale with Huge Price Potential
Bonuz (BONUZ) – Exciting Social Media Presale Crypto Platform
EstateX (ESX) – Best Crypto Presale to Invest In for Fractional Real Estate
TechDoge (TECHDOGE) – New Crypto Presale Looking to Emulate Dogecoin
Diferencial (DRL) – Utility-Based Token with Numerous Use Cases
Leshy Inu (LES) – Best Crypto Presale to Invest In with DeFi Connections
NFT Workx (WRKX) – Top NFT-Based Crypto Presale Project
Sleep Care (SLEEP) – First-of-its-Kind ‘Sleep-to-Earn’ Crypto Presale
A Detailed Look at the Best Crypto Presales in 2022
Our list of best crypto presales 2022 features projects from various niches, ranging from DeFi to NFTs. Let’s take a closer look at these projects, focusing on their use cases and value potential over the longer term:
1. Say Network (SAY) – Overall Best Crypto Presale to Invest In
Our pick for the best crypto presale to invest in is Say Network. Say Network is a Layer-1 blockchain network that aims to provide a foundation for constructing exciting decentralized applications (dApps). uSay is the incumbent social media app hosted on Say Network, designed to offer more control over the content that each user posts.
One of the most appealing features of uSay is that users will be compensated for posting content through distributions of the $SAY token. Although the uSay platform is still in production, this app looks to revolutionize how social media operates – whilst providing a way for users to earn passive income through engaging content.
The other reason Say Network is our pick for the best crypto presale 2022 is that it will integrate seamlessly with NFTs. The litepaper mentions a feature for users to create NFTs from their social media profiles and posts, providing full ownership over the longer term. Finally, given that Say Network will function as a DAO, all network participants will have a say in the direction the platform takes.
2. LunaOne (XLN) – Cryptocurrency Presale Project Within the Metaverse Niche
Another exciting presale cryptocurrency to be aware of is LunaOne. LunaOne is a metaverse project that looks to combine business, gaming, and education into one ecosystem. As such, this will allow members of one niche to interact with demographics they wouldn’t usually communicate with – fostering new relationships and providing a platform for innovative creations.
LunaOne users will be able to create their own avatar, which will provide the basis for earning XLN – LunaOne’s native token. Although investors can purchase tokens through the LunaOne crypto presale, users will also be able to acquire them in-game through studying, working, or taking part in cybersport events. There will also be ‘quests’ for users to complete, offering rewards in XLN.
Aside from the passive income aspects, LunaOne will also provide an NFT launchpad driven by the community. The metaverse itself will operate as a DAO, meaning the users can decide on policies and other areas of how the world will work. The LunaOne crypto presale is due to end in Q2 2022, with a view to launching the metaverse in Q3 2022.
3. Panda Elon (PELON) – ‘Meme Coin’ Presale with Huge Price Potential
As the name implies, Panda Elon is an upcoming ‘meme coin’ with inherent links to Elon Musk. Most crypto investors will understand Musk’s influence on the crypto market, which was evident during the peak of Dogecoin’s price rise. The Panda Elon creators are attempting to leverage this influence whilst combining it with China’s best-known animal – the panda.
Panda Elon’s creators don’t deny that this meme coin is designed to make money for investors. The $PELON token itself is hosted on the Binance Smart Chain (BSC), with a total supply of 1 billion tokens. However, 425,000,000 (42.5%) will be put aside for the presale before being listed on PancakeSwap after that.
Details remain scarce on $PELON’s use cases, although the whitepaper mentions an 8% tax on buy and sell transactions. Half of the collected amount will be used for marketing, whilst the remainder will be used for further development and liquidity pools. So, although utility may pose an issue for Panda Elon, this project could be one of the best presale crypto coins due to its community-building potential.
4. Bonuz (BONUZ) – Exciting Social Media Presale Crypto Platform
Bonuz looks set to be the best crypto presale to invest in regarding social engagement and interaction with celebrities. Put simply, Bonuz is a turnkey engagement platform that allows content creators to develop their own tokens, which their fans can purchase. This helps create stronger communities filled with exciting benefits for token holders.
At launch, Bonuz will focus exclusively on celebrities, influencers, and brands. However, as the platform grows, the team will also begin targeting game studios and publishers, enabling them to tokenize their content through the platform. The tokens themselves are BEP-20 compatible and will allow holders to gain exclusive access to ‘channels’ hosted by the connected creator.
In terms of benefits for token holders, these range from Q&As to offline meet-and-greet events. Creators may also host giveaways or even provide a one-on-one call with specific fans. Finally, given that the $BONUZ token is deflationary, speculative investors can also gain exposure to the project’s growth whilst benefitting from price appreciation driven by regular token burns.
5. EstateX (ESX) – Best Crypto Presale to Invest In for Fractional Real Estate
EstateX is a regular presale crypto project that looks to revolutionize how real estate investing works. At its core, EstateX will offer a blockchain-based ecosystem that significantly improves the accessibility of real estate investing to retail investors. Since EstateX offers ‘fractional ownership’, investors can purchase shares in a property for as little as $100.
In turn, this enables investors to generate a passive income stream through $ESX – the ecosystem’s native token. Furthermore, liquidity shouldn’t pose an issue, as EstateX will offer 24/7 property token trading on a dedicated secondary marketplace. Users can even take out instant loans backed by fractional ownership in EstateX properties.
Given that the European tokenized real estate market is estimated to be worth €1.5 trillion by 2024, EstateX is poised to be one of the best crypto presales in 2022. Since all transactions are handled via smart contracts, the ecosystem will be entirely decentralized, boosting safety and transparency. Finally, investors who aren’t on the EstateX platform can still invest in $ESX tokens, providing a way to gain exposure to the platform’s growth and success.
6. TechDoge (TECHDOGE) – New Crypto Presale Looking to Emulate Dogecoin
Much like Panda Elon, which we discussed earlier, TechDoge is the latest attempt at a ‘meme coin’, looking to capitalize on the success of Dogecoin. However, not only does TechDoge aim to leverage the power of DOGE’s community, but it also seeks to provide real-world use cases. According to the roadmap, these include regular airdrops, mini-games, contests, and NFT collections.
One of the key elements going in TechDoge’s favour is that the token was designed by the team behind MiniDOGE – which surged to a $220 million market cap in 2021. None of the development team will own TechDoge tokens, which helps reduce the possibility that this is a ‘pump and dump’ scheme. What’s more, TechDoge has already been KYC verified and audited by Cyberscope, providing credibility to the project.
TechDoge will also include a ‘static rewards’ mechanism, whereby a 10% tax will be levied on each transaction. A total of 5% of the collected amount will be given back to TechDoge token holders, whilst the remainder will be used for marketing or burned – reducing the supply. As more tokens are burned, the remaining TechDoge tokens will become scarce, which will help drive the price over the longer term.
7. Diferencial (DRL) – Utility-Based Token with Numerous Use Cases
One of the best cryptocurrency presales to keep an eye on in the months ahead is Diferencial. Put simply, Diferencial (DRL) is a utility-based token hosted on the Binance Smart Chain (BSC) that looks to provide token holders with a route towards regular passive income. This is accomplished through Diferencial’s ‘reflection’ mechanism.
This mechanism works by taxing buy and sell transactions, meaning a 6% distribution is provided to remaining token holders. Notably, the amount each holder receives is in proportion to their investment – so larger investors will receive more passive income.
Aside from reflections, Diferencial’s whitepaper notes other use cases, such as NFT buying and selling, secure document transfer, DRL fashion, exercise rewards, and more. The NFT aspect is fascinating, as it will contain a staking and voting mechanism which can lead to further rewards. Finally, Diferencial will also be launching a dedicated mobile app where users can swap, stake, or trade their tokens.
8. Leshy Inu (LES) – Best Crypto Presale to Invest In with DeFi Connections
Leshy Inu is a presale cryptocurrency project that has already garnered significant attention on social media. At the time of writing, Leshy Inu’s Twitter page has nearly 14,000 followers, whilst the official Telegram group boasts more than 33,000 members. This community backing forms the foundation of Leshy Inu’s appeal, as the name is derived from the famous ‘Shiba Inu’ coin.
However, Leshy Inu isn’t just a meme coin – it also offers use cases within the world of DeFi. These include a custom-built swap exchange, where users can trade tokens and yield farm. This exchange will be based on an Automated Market Maker (AMM) model, which will offer revenue sharing for liquidity providers.
Leshy Inu also aims to offer lotteries and NFTs within the ecosystem, providing an ‘all-in-one’ platform for trading and investing. There are 10 trillion $LES tokens in existence, although 90% of these will be burned at launch. With only 3.5% of the total supply available for early investors to purchase, this regular presale crypto looks likely to be one of the most sought-after crypto events of the coming months.
9. NFT Workx (WRKX) – Top NFT-Based Crypto Presale Project
Our pick for the best crypto presale 2022 within the NFT niche is NFT Workx. NFT Workx is an upcoming NFT platform that provides services related to Web 3.0, such as consulting, strategy, and marketing. The platform works with artists, athletes, musicians, and more to develop their own collections and build a loyal following.
In a sense, NFT Workx works similarly to a marketing company, as the project will also offer press releases, paid ads, promo videos, digital artwork, and more. One of the project’s main features is its ‘Starter Package’, which includes everything a creator needs to develop an NFT collection and build awareness.
The NFT Workx platform will be powered by $WRKX, which has several compelling use cases. These include discounts on fees and prices, early access to new NFT collections, VIP partner benefits, and voting opportunities for governance. $WRKX users will even be able to stake their tokens on the NFT Workx platform and earn an attractive APY whilst still benefitting from price increases.
10. Sleep Care (SLEEP) – First-of-its-Kind ‘Sleep-to-Earn’ Crypto Presale
Rounding off our list of the best crypto presale projects to invest in is Sleep Care. Sleep Care is a first-of-its-kind ‘sleep-to-earn’ protocol where users can receive passive income based on their sleep quality. This passive income is denominated in $SLEEP, Sleep Care’s native token.
To begin earning a return, users must own at least 500 $SLEEP tokens and complete a minimum of five hours of sleep each night. Since Sleep Care’s overarching goal is to make a noticeable impact on the world’s sleep quality, users who sleep ‘better’ will receive more income. Sleep quality is monitored by the Sleep Care app, which uses GPS technology and body sensors to help measure sleep.
There will also be a monthly leaderboard where the top 10 ‘sleepers’ will receive a bonus prize. Sleep Care will also include built-in social media elements, allowing users to view the sleep habits of other users and form lasting relationships. Finally, with an inherent burn mechanism, $SLEEP will be a deflationary token, helping price appreciate over the longer term.
What are Crypto Presales?
Now that we’ve discussed the best crypto presale to invest in, it begs the question – what exactly are crypto presales? Put simply, presales are limited-time sales of a crypto token designed to raise awareness (and capital) for a project. These presales occur before the Initial Coin Offering (ICO) and tend to only be available through the provider’s website.
The main appeal of these presales is that they allow early investors to purchase tokens at a reduced price point. Naturally, this is a risky endeavour, as the project itself will still be in the very early stages of its growth. Nevertheless, risk-seeking investors can generate huge returns if they pick projects that achieve huge valuations.
One of the most successful crypto presales was by Ethereum back in 2014. In just 12 hours, more than 7 million ETH was raised, which equated to roughly $2.3 million. Given the incredible prices that Ethereum has reached in recent years, it’s fair to say that presale investors hit the jackpot with this one.
How to Find the Best Crypto Presales to Invest In
Due to the regularity of crypto presales, finding high-value projects to invest in can be tricky. Fortunately, there are a few factors to keep in mind which can help narrow down the selection:
Keep Tabs on Crypto News Sites
Crypto news sites are an excellent resource for finding new crypto presales to invest in. These websites constantly monitor the market, providing updates on new projects or developers launching other enterprises. However, due to the abundance of news outlets, it’s best to use those that are objective and do not partner with any crypto projects – as they tend to showcase some bias.
Use Social Media
Social media is another excellent resource and one that led to great success with the Crypto Vault presale. Twitter and Reddit tend to be the best networks for information on presales, as they offer real-time updates with discussions from real traders. Subreddits like r/CryptoCurrency are great for established coins and soon-to-be-released projects with high potential.
Review Whitepaper & Roadmap
Finally, once an exciting project has been found, it’s crucial to review the roadmap and whitepaper presented on the website. These two elements are essential to determining longevity (and price potential), so it can be a red flag if they aren’t present. It’s also wise to research the development team behind the project to ensure they have the relevant credentials to lead the project forward.
Are Presale Cryptos a Good Investment Opportunity?
Crypto presale projects are inherently risky – there’s no escaping that fact. However, those investors who are happy to take on the risk can receive some tremendous benefits, such as:
Become Part of Growing Community
Early investors in presale crypto projects can become part of a growing community at the ground level – which can be extremely rewarding. As there will likely be a limited number of investors at first, it’s easier to form connections with like-minded people. Furthermore, making connections can also lead to tips about other high-potential presales in the future.
Market-Beating Price Potential
Naturally, investing in crypto presales presents a path to generating huge returns. This is because tokens will be priced at a discount, which can help produce triple-digit (or even quadruple-digit) returns if the project begins gaining traction. However, it’s also essential to remain grounded and realize that not all projects will be ‘winners’ – as many will not grow to the level required for notable returns.
Gain Exposure to New Niches
Finally, investing in crypto presales can also provide exposure to new areas of the market that investors may not have otherwise ventured into. The projects listed earlier hail from various niches, from DeFi to NFTs. Not only does this provide compelling use cases, but it can also help diversify crypto portfolios and optimize the risk/return ratio.
Best Crypto Presales – Conclusion
In conclusion, this guide has discussed the best crypto presale to invest in during 2022, highlighting which coins have the highest potential and the most hype. Although presales are undoubtedly risky, they can provide market-beating returns – ensuring they remain an essential part of the broader crypto ecosystem.
Say Network and LunaOne are two of the most promising projects on our list, offering compelling use cases and stellar development teams. However, any of the ten projects discussed in this guide could be the next to take off, so it’s crucial to conduct prior research and never invest more than you’re comfortable losing.
How do crypto presales work?
Crypto presales occur before the Initial Coin offering (ICO) in an attempt to raise capital and promote the project. Presales often last for a limited time and offer tokens at a discounted price point.
How do you invest in presale crypto?
Since presale crypto coins are not listed on exchanges, investors must purchase them through the project’s official website. This usually requires a crypto wallet and some cryptocurrency for the swap (e.g. BNB).
Are crypto presales considered ICOs?
Presales are not considered ICOs, as they occur beforehand. Furthermore, presales offer an inherent discount on the listing price and tend to have a limited supply.
What is the best crypto presale to invest in this year?
Say Network is one of the best crypto presales of the year, as it aims to rival other Layer-1 blockchains within the market. However, all of the presales on our list have high value potential whilst operating in various niches of the market.
NEW YORK (AP) — The wealth-generating hot streak for bitcoin and other cryptocurrencies has turned brutally cold.
As prices plunge, companies collapse and skepticism soars, fortunes and jobs are disappearing overnight, and investors’ feverish speculation has been replaced by icy calculation, in what industry leaders are referring to as a “crypto winter.”
It’s a dizzying turn of events for investments and companies that at the start of 2022 seemed to be at their financial and cultural apex. Crypto-evangelizing companies ran commercials during the Super Bowl and spent heavily to sponsor sports arenas and baseball teams. The industry’s combined assets back then were estimated to be worth more than $3 trillion; today, they are worth less than a third of that. Maybe.
On Monday, the price of bitcoin traded at $20,097, more than 70% below its November peak of around $69,000. Another leading cryptocurrency, Ethereum, was trading near $4,800 at its November peak; it is now less than $1,000.
Bitcoin and other cryptocurrency prices have been sliding all year, a decline that accelerated as the Federal Reserve signaled that interest rates would be moving higher to try and snuff out inflation. What is happening to crypto is, in part, an extreme version of what is happening to stocks, as investors sell riskier assets at a time when the threat of recession is rising.
But the crypto sell-off is more than that, experts say; it signals growing trepidation on Wall Street and Main Street about the industry’s fundamentals, which right now are looking shaky.
“There was this irrational exuberance,” said Mark Hays at Americans for Financial Reform, a consumer advocacy group. “They did similar things leading up to the 2008 crisis: aggressively market these products, promise returns that were unreasonable, ignore the risks, and would dismiss any critics as folk who just didn’t get it.”
Hays and others are also drawing comparisons to the 2008 housing-market meltdown because the collapse in bitcoin and other digital coins has coincided with crypto industry versions of bank runs and a lack of regulatory oversight that is stirring fears about just how bad the damage could get.
Unlike housing, the crypto industry isn’t large enough to trigger major turmoil across the wider economy or financial system, analysts say.
But recent events have nevertheless shattered many investors’ confidence:
— The so-called stablecoin Terra collapsed in a matter of days in May, wiping out $40 billion in investor wealth. In the crypto business, stablecoins are marketed as a safe investment and the price of each one is typically pegged to a traditional financial instrument, like the U.S. dollar. Terra instead relied on an algorithm to keep its price steady near $1 — and partly backed up its value with bitcoin.
— A company called Celsius Network, which operates like a bank for crypto holders, last week froze the accounts of its 1.7 million customers. Celsius took deposits, paid interest, and made loans and other investments with its customers’ cryptocurrencies, once valued at close to $10 billion. Unlike a real bank, there is no federal insurance backstopping these customers’ deposits.
— Shortly after Celsius froze accounts, the founder of Three Arrows Capital, a Singapore-based hedge fund that specializes in cryptocurrencies, addressed rumors of its imminent collapse with a mysterious tweet: “We are in the process of communicating with relevant parties and fully committed to working this out.”
Extended periods of pessimism for stocks are called bear markets. In the world of crypto, bouts of heavy selling prompt references to the HBO series “Game of Thrones,” which popularized the ominous warning: “winter is coming.”
Last week, the CEO and co-founder of Coinbase, one of the largest crypto exchanges, announced that the company would be laying off roughly 18% of its employees, and he said a wider recession could make the industry’s troubles even worse. “A recession could lead to another crypto winter, and could last for an extended period,” the CEO, Brian Armstrong, said.
This isn’t the first crypto winter. In 2018, bitcoin fell from $20,000 to less than $4,000. But analysts say this time feels different.
Hilary Allen, a law professor at American University who has done research on cryptocurrencies, said she’s not worried about the latest industry turmoil spilling over into the broader economy. However, among crypto investors, problems may be brewing under the surface.
“There are hedge funds who have bank loans who have made bets on crypto, for example,” she said.
And anytime investors borrow money to magnify the size of their bets — something known in the financial world as ’’leverage″ — the concern is that losses can pile up fast.
“People are trying to do analytics, but there’s a lack of transparency and it’s hard to understand how much leverage is in the system,” said Stefan Coolican, a former investment banker and now advisory board member at Ether Capital.
For these reasons, and others, there has been a push in Washington to more closely regulate the crypto industry, an effort that is gaining steam.
“We believe the recent turmoil only underscores the urgent need for regulatory frameworks that mitigate the risks that digital assets pose,” the Treasury Department said in a statement.
Amid all the chilly warnings, though, hope still springs eternal for some crypto investors.
Jake Greenbaum, a 31-year-old known as Crypto King on Twitter, said he has recently lost at least $1 million on his crypto investments — “a nice chunk of my portfolio.” While he believes things could get worse before they get better, he is not throwing in the towel.
Things look bad now, he said, “so this is where you want to start positioning back in.”
Jason Holloway — who is currently running for a seat in the Florida House — says his relationship with cryptocurrency began in 2017 when a friend suggested that he begin investing in digital asset companies.
He immediately began making money from his investments but was intrigued and wanted to learn more about the technology behind it.
That led to him acquiring a master’s degree in digital currencies from the University of Nicosia in Greece, the only accredited academic blockchain technology program in the world at the time.
What You Need To Know
Jason Holloway. who is accepting crypto contributions, is running for the Florida House District 58 seat in northern Pinellas County
Democratic gubernatorial candidate Nikki Fried’s political action committee is also accepting crypto contributions this election year
A former legislative aid to St. Petersburg Democratic state Sen. Darryl Rouson, Holloway is now running for a legislative seat as a Republican in the House District 58 race this year, and is one of a very select group of political candidates in Florida accepting cryptocurrency campaign contributions this election cycle.
“They’re true believers,” he said of crypto enthusiasts who have contributed to his campaign using cryptocurrency. “They don’t want to use U.S. dollars. They want to use bitcoin. They want to use dogecoin. They want to use something else, because that’s what they believe in. So, I’m giving them the opportunity.”
There has been an incremental increase in the number of U.S. political campaigns accepting cryptocurrency campaign donations (specifically bitcoin) since 2014.
Kentucky Republican Sen. Rand Paul became one of the first high profile politicians to accept crypto donations, going back to his unsuccessful bid for the Republican nomination for president during the 2015-2016 election cycle.
Four years later, Andrew Yang and U.S. Rep. Eric Swalwell began accepting crypto donations during their respective races for the Democratic presidential nomination in 2019-2020, as did Orlando-area Democratic U.S. Rep. Darren Soto in his last two re-election campaigns.
And the political action committee supporting Agriculture Commissioner Nikki Fried’s bid for governor this year, Florida Consumers First, announced in January that it was accepting donations by cryptocurrency.
Holloway was appointed by Gov. Ron DeSantis to the state’s Blockchain Task Force back in 2019 to study how the state and local governments can benefit from transition to blockchain-based systems for recordkeeping, data security, financial transactions and service delivery.
He extolled the virtues of blockchain-based systems, saying that people should think of it as simply a database system.
“They’re faster,” Holloway said. “They’re more secure — you can see every transaction that ever happens on there, and it’s immutable because you can’t go back and delete things and hide things. So, it’s really going to be important, especially in public records space, because if you were to look at all your public records that are on blockchain, you can’t delete stuff.
“You’re going to be able to see everything, which is really the way that it should be.”
Holloway spoke with Spectrum Bay News 9 last week at the Crypto Street Restaurant in Clearwater, a crypto-themed eatery which opened last December and features items like “The Blockchain Sandwich” (which is actually a club sandwich) and “Dogedog” hot dogs (dogecoin being another cryptocurrency that is accepted there).
General manager Ricardo Varona said that he was initially skeptical about cryptocurrency when his son began investing in it several years ago. He said that the number of customers who pay with cryptocurrency varies — some weeks he gets half a dozen or more such transactions.
Since the Federal Election Commission allowed political campaigns to accept crypto donations in 2014, the rule has been that candidates and political committees must convert crypto into cash before spending it. But the agency has recently approved allowing federal committees to hold bitcoin as an investment.
Ron Watkins, a Republican house candidate in Arizona, reported that he lost 27% (or $342) of his two bitcoin contributions that originally amounted to $1,255, according to the Daily Beast.
Holloway said that’s why he has set up his website to immediately convert any cryptocurrency contributions into cash.
“You should be converting it to U.S. dollars as soon as you get it,” he said. “You don’t take investments — I can’t take your Tesla stock and hold it, but I can take cryptocurrencies as a payment method. But I’ve got to make sure I sell it right away for that value.”
Florida is one of 12 states that allow cryptocurrency donations, according to govtech.com. Nine states ban cryptocurrency donations.
Ethan Eilon, the president of IMGE, a digital marketing agency focused on Republican politics, said legislators in many states are still trying to assess the landscape when it comes to cryptocurrency.
“I do think we will see some states take a more open stance toward them than the ones who’ve outlawed it,” Eilon said. “You’ve got folks in some states who are accepting crypto for state tax payments, like Colorado, and I think that sort of bias towards more open opportunity for crypto will lead into what happens on the donation front, too.”
The value of bitcoin and other cryptocurrencies has gone down dramatically over the past month — bitcoin specifically is down around 24% in the last 30 days, CNBC reported last week.
Holloway said that while he remains a cryptocurrency enthusiast, he disagrees with those who believe that cryptocurrencies will be the future of allpayments in the U.S.
“It’s going to be a means,” he said. “The government’s not going to go away, we’re still going to have the U.S. dollar.”
He said it’s also foolhardy to believe that crypto cash won’t be regulated in the future. That’s why he said people like himself need to be elected to ensure that there won’t be “overburdensome regulation and people creating rules that don’t understand the ecosystem of how it works.”
That kind of regulation would ultimately hurt the public’s faith in the idea of distributed ledger technology overall, he said.
A recent NBC News poll showed conflicting feelings that Americans have toward cryptocurrency: Only 19% of people said that they view crypto positively, while 25% view it negatively. The majority — 56% — said they feel neutral or they’re not sure about the crypto industry.
Holloway is one of four Republicans who have filed to run for the House District 58 seat in northern Pinellas County — which was changed from House District 67 due to redistricting — which is being vacated later this year by incumbent Chris Latvala.
Former state Rep. Kim Berfield, Paul Hatfield and Jim Vricos are also running in House District 58 on the Aug. 23, GOP primary ballot.
Newly elected U.S. Rep Madison Cawthorn (R-NC) speaks as supporters of U.S. President Donald Trump gather by the White House ahead of Trump’s speech to contest the certification by the U.S. Congress of the results of the 2020 U.S. presidential election in Washington, U.S, January 6, 2021.
Cawthorn, 26, revealed Friday that he bought between $100,000 and $250,000 worth of “Let’s Go Brandon” cryptocurrency on Dec. 21. The transaction came eight days before he wrote a Dec. 29 Instagram post that said, “Tomorrow we go to the moon,” in response to a photo of him posing with co-founders of the coin.
A day later, the dollar value of that crypto — which is named after a derogatory phrase about President Joe Biden — soared 75% on news of its sponsorship deal with a NASCAR driver.
The same filing Friday disclosed that the first-term congressman sold between $100,000 and $250,000 of the “Let’s Go Brandon” coin on Dec. 31.
That sale potentially recouped at least what he had paid for the virtual currency before its dollar price exploded.
The value of the Let’s Go Brandon coin collapsed in early January after NASCAR rejected its sponsorship deal with the driver Brandon Brown.
Read more of CNBC’s politics coverage:
Cawthorn’s disclosure of the transactions came four days after the House Ethics Committee announced it was investigating the North Carolina Republican over his Instagram comment about the “Let’s Go Brandon” coin.
In the same House financial disclosure form filing Friday, Cawthorn also belatedly revealed that he had bought between $1,000 and $15,000 worth of Ethereum cryptocurrency on Dec. 27, and between $1,000 and $250,000 of Ethereum on Dec. 31.
Under the federal STOCK Act, members of Congress are legally required to file disclosures of the purchase and sale of stocks, bonds, commodity futures and other securities within 45 days of the transactions.
Cawthorn’s disclosure Friday came five months after the transactions he detailed. It also came nearly two weeks after he narrowly lost a GOP primary, denying him the party’s nomination for a second term in office.
A spokesman for Cawthorn did not immediately respond to a request for comment from CNBC.
Sen. Thom Tillis, R-N.C., in late April called for the ethics probe to investigate Cawthorn for possible insider trading related to cryptocurrency after The Washington Examiner reported the congressman may have broken laws barring investors from profiting on nonpublic information.
On Monday after the House Ethics Committee announced that it authorized an investigation on May 11, Cawthorn’s chief of staff, Blake Harp, said, “We welcome the opportunity to prove that Congressman Cawthorn committed no wrongdoing and that he was falsely accused by partisan adversaries for political gain.”
“Our office isn’t deterred in the slightest from completing the job the patriots of Western North Carolina sent us to Washington to accomplish,” Harp added.
Cawthorn later tweeted Monday: “Wow — I must still be a problem for the swamp! They’re still coming after me!”
In addition to the cryptocurrency comment, Cawthown is being investigated over questions about whether he had an “improper relationship” with a person employed on his congressional staff, the panel said.
GREENSBORO, N.C. — Interest in cryptocurrency doesn’t seem to be going anywhere any time soon, especially after President Joe Biden signed an order calling for more research on it. Triad residents, like many others, have their eyes on digital currencies, and a professor and a hobbyist weigh in with their thoughts on tech money and its popularity.
Biden signed an executive order calling for more research on the digital currency of bitcoin and cryptocurrency, and creating new security measures to protect consumers.
What You Need To Know
There are more than 10,000 different types of cryptocurrency
President Biden signed the executive order in March, calling for more research on digital currency
Cryptocurrency is a decentralized digital money
Cryptocurrency, like bitcoin, is becoming more mainstream. It is a decentralized digital money designed to be used over the internet, which makes it possible to transfer value online globally without a middleman, like a bank.
Unlike non-digital money used, crypto is not issued or controlled by a government. It’s operated by a free and open source software, and secured by a technology called blockchain, which is similar to a bank’s balance sheet or a ledger.
Biden signed the executive order in March, and it is supposed to ensure responsibility within cryptocurrency. It’s the first ever whole government approach to addressing the risks and harnessing the potential benefits of this technology.
According to Nir Kshetri at the University of North Carolina Greensboro, the order asks various agencies to come up with recommendations. The goal is to figure out how to govern cryptocurrency and protect people from fraud.
“If these are implemented in the future then they make all these watch trading, or spoofing or price manipulation, all these things. The law clearly says it’s illegal. Then people will, are less likely to, break the law if they know that it’s clear,” said Kshetri, UNCG Business Professor.
Jane Nickles is the former chief information officer for the City of Greensboro, retiring last December. Since her retirement she is now into the popular world of cryptocurrency, and she finds the technology behind it all appealing, mostly bitcoin.
“Emerging technology that is very innovative, it’s very disruptive, but that’s what makes it very cool,” Nickels said.
The group meets monthly to discuss different topics to learn more about blockchains, crypto, investing and how it all works. There are more than 10,000 different types of cryptocurrency.
“I think this is important for people to have a place to come and learn about. They can talk to other people and find out what mistakes people have made and what works and what haven’t worked,” Nickels said.
Cryptocurrency is still young, and she’s glad the government is stepping in to research ways to provide stability.
“It’s not one thing, it’s not just bitcoin, it’s not just about currency, it’s a platform that all these other applications are being built on, and these applications do things like lending, buying, fractionalized ownership,” Nickels said.
Nickels says this reminds her of how the internet started from nothing and grew into the online world it is today.
Stock markets around the world also dropped in recent days
Bitcoin accounts for about a third of the cryptocurrency market with a total value of $650bn
The value of Bitcoin continued to fall over the weekend as it dropped below $34,000, according to the Coinbase cryptocurrency exchange, BBC reported. The world’s largest cryptocurrency by market value has now fallen by 50 percent since its peak in November last year.
The slide in the value of digital assets comes as stock markets around the world also dropped in recent days. On Monday, some Asian markets headed lower again with Japan’s benchmark Nikkei index down by around 2 percent.
Bitcoin accounts for about a third of the cryptocurrency market with a total value of $650bn, BBC reported. Ethereum, the second-biggest cryptocurrency in the world, has also fallen in value, down by more than 10 percent in the last week.
Although much of 2022 had been relatively quiet for the cryptocurrency market, volatile trading in digital assets has not been that unusual in previous years. Trading was dominated for years by individual investors, but more recently the market has seen an influx of professional investors, such as hedge funds and money managers.
With more traditional investors trading digital assets, cryptocurrencies have increasingly followed the movements of global stock markets. Many of the institutional investors that buy cryptocurrencies treat them as risk assets, similar to technology stocks.
In times of market uncertainty, traditional investors will often sell what they see as riskier assets and move their money into safer investments. Last week, central banks around the world, including the US, the UK and Australia, raised interest rates as they attempted to tackle rising prices. The US Federal Reserve raised its key lending rate by half a percentage point, marking its biggest rate hike in more than 20 years.
Bitcoin is a volatile asset, and has been known to swing more than 10% higher or lower in a single day.
Jakub Porzycki | Nurphoto | Getty Images
Bitcoin continued to slide after a broader stock sell-off in the U.S. last week sent the cryptocurrency market into a frenzy and prompted bitcoin to plummet by roughly 10%.
Bitcoin, the world’s largest digital currency by market value, was down more than 3% at $34,582.36 on Sunday, according to data from Coin Metrics. This year, Bitcoin has been trading in a narrow range as it attempts to reclaim its highs of late 2021.
The drop comes after the blue-chip Dow Jones Industrial Average lost more than 1,000 points on Thursday and the Nasdaq plunged by 5%. Those losses marked the worst single-day drops since 2020. The Dow and Nasdaq fell again on Friday.
California Governor Gavin Newsom speaks at a press conference in Oakland, California, on Wednesday, on Feb. 9, 2022.
Medianews Group/east Bay Times Via Getty Images | Medianews Group | Getty Images
Tech investors and businesses in California have been betting on crypto for well over a decade. Now, the governor of the U.S. state with the largest economy is joining the party.
California Gov. Gavin Newsom issued an executive order Wednesday on cryptocurrencies, laying out a road map for regulatory and consumer protections and examining ways the state can take advantage of blockchain technologies and digital assets.
“Of the 800 blockchain businesses in North America, about a quarter of them are in California, dramatically more than any other state,” Dee Dee Myers, senior advisor to Newsom and director of the Governor’s Office of Business and Economic Development, told CNBC. “We’ve heard from so many that they want to be here, and we want to help them do that responsibly.”
Newsom is directing the state’s business and economic development office to work in collaboration with California’s Business, Consumer Services and Housing Agency and the Department of Financial Protection and Innovation.
The order is designed to “create a transparent and consistent business environment for companies operating in blockchain, including crypto assets and related financial technologies, that harmonizes federal and California laws, balances the benefits and risks to consumers, and incorporates California values, such as equity, inclusivity, and environmental protection.”
Bitcoin over the past year
The agencies will submit its findings and recommend next steps. According to the order, it will “reflect consultation with relevant state agencies regarding the forthcoming federal reports on the relationship of crypto assets to priorities in energy, climate, and preventing criminal activity.”
Myers said the agencies plan to hold roundtables and listening sessions with industry leaders, consumer advocates and even critics.
“The opportunities are almost endless,” Myers said. “We can do things like remove middlemen from transactions involving real estate or even automobiles. We can use it to protect people’s identity and provide benefits to people through government services. If we’re selling carbon offsets, we can make sure the same forest isn’t being sold twice and that there’s some record that’s transparent.”
Under California’s plan, the order would align with the Biden administration’s proposal in March to examine the risks and benefits of cryptocurrencies.
Some 37 states have pending legislation on cryptocurrencies and other digital assets, according to the National Conference of State Legislatures. In February, New Hampshire issued an executive order to propose new bitcoin laws.
Aaron Klein, senior fellow in economic studies at the Brookings Institution, said the most compelling part of Newsom’s plan is the exploration of ways to find “crypto solutions to existing problems.”
“California seems to be trying to walk a tightrope between moving the state forward to embrace new technology while making sure that consumers and investors are properly protected,” Klein said.
Newsom is sure to encounter skeptics, given concerns about the security of crypto and the speculative money that’s poured into digital assets. Criminals stole a record $14 billion worth of cryptocurrency last year, according to a report by data firm Chainalysis, and the SEC announced Tuesday that it will almost double its staff responsible for protecting investors in crypto markets.
“Blockchain has been around for decades, it has never found a widespread adoption use case,” said Stephen Diamond, a law professor at Santa Clara University. “There’s a mania underway and for the state of California to come in and essentially say this has huge potential, to me, they’re feeding the mania.”
Myers said it’s critical to put in place “guardrails” to eliminate the ability for bad actors to maneuver and to “make sure there are enforceable and clear guidelines to protect everybody.”
Timothy Massad, former chairman of the U.S. Commodity Futures Trading Commission, said it’s important to get states and government agencies on the same page.
“What we would not want to see is a situation where states are competing with one another to attract businesses by either lowering standards or providing incentives,” Massad said.
The front-runner to become the next leader of Canada’s opposition Conservatives said on Thursday he would ban the Bank of Canada from issuing a central bank digital currency if he became prime minister.
Pierre Poilievre, who is campaigning on a vow to make Canada the blockchain capital of the world, also said he would ensure the central bank faces regular scrutiny of its balance sheet, including an audit of its COVID pandemic bond-buying program.
“A Poilievre government will ban a central bank digital currency and allow Canadians to have the economic and financial liberty that they deserve,” he told reporters gathered outside Canada’s central bank building in Ottawa.
Poilievre, a Conservative member of parliament since 2004, is leading all polls ahead of a September vote to pick a new leader for Canada’s main opposition party.
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If elected, he will likely have to wait until 2025 for the next federal election, as Prime Minister Justin Trudeau’s Liberals have a political support deal with the New Democrats, a smaller left-leaning party.
The leadership race was triggered in early February when Erin O’Toole was ousted as Conservative leader after failing to beat Trudeau in last year’s election.
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Poilievre, in his campaigning, has blamed Canada’s high inflation rate on the central bank’s pandemic purchases of government bonds and said cryptocurrencies, like Bitcoin, are a good way to “opt-out of inflation.”
Central bank officials, this week, pushed back on those claims.
“We don’t see cryptocurrencies as a way for Canadians to opt out of inflation or as a stable source of value,” Bank of Canada Senior Deputy Governor Carolyn Rogers told lawmakers on Monday.
Governor Tiff Macklem added that he foresees the Canadian dollar remaining at the center of the country’s financial system.
The Bank of Canada had no immediate response on Thursday.
The central bank has been working on a digital currency (CBDC) for a number of years. The CBDC is currently in the development stage, though a final decision on its launch is up to the federal government.
Inflation in Canada hit a 31-year high at 6.7 per cent in March. Countries around the world are grappling with runaway prices amid strong demand and supply chain constraints. Russia’s invasion of Ukraine has pushed up commodity prices, adding to the pinch.