Covario Goes Broke
In today's edition of YIYL, (You Invest, You Lose) we take some time to remind ourselves that the gold rush into bitcoin and shitcoins brought in a lot of institutional money this time around. Considering the bitcoin market cap peaked at 1 trillion and shitcoins combined close to 3 trillion you can imagine how many investors thought they found a new source of alpha and this rocket ship would keep going.
Sadly that's not how this works, retail investors like myself who have been here for a while know the ups and downs and prepare for them, while newbies are going to make the same mistakes we made in previous years it's just how the process works.
This is not going to be different for institutional money, and we saw plenty of companies go bust and take their LPs down with them, LPs like pension funds for example, in the form of Celsius and FTX.
While most of the news focuses on the bigger markets like the US, there were smaller regional players that got into the space and also got over their skis, notably one in the Swiss Alpes. Zug has emerged as a sort of crypto capital in the country with several shitcoin companies calling it their base, and while it was Rosey early on, it ain't looking so good now.
Happy holidays shitcoiners
Just before the holidays, employees of the Covario crypto broker based in Zug, Switzerland learned that their employer was no longer solvent.
Clearly this news was kept under wraps to keep operations going and keep people calm, while a salvage job was going on in the background. According to reports attempts to secure a buyout had been unsuccessful, and the company is entering bankruptcy.
Extend and pretend
The firm didn't just keep things quiet on the solvency front but actively tried to convince clients and staff that everything would be hunky dory. They had attempted to keep up appearances by spending lavishly and even opening new offices several weeks before entering bankruptcy.
Maybe they could have used that capital smarter and extended runway or at least paid their staff, how pathetic can you be, but really it is a reflection of the sorry state of crapto companies. They're all run by a bunch of clowns who mistake brains for a bull market and when the tide goes out so does whatever they thought they knew.
It turns out that employee pension contributions had not been being paid since early summer. Employee salaries had not been paid since October.
If you haven't been paid for 3 months and your company tells you they're calling it quits in December, I am pretty sure you're having a shitty Christmas and new year.
Taking out the trash
If you take a look at google maps you'll see they're marked as closed now, lol 🤡 all I can say is nature is healing and we're seeing who has the brains and the backing.
I keep saying this but we're not over yet, borrowing costs continue to rise and debts continue to compound, banks and LPs aren't willing to invest when they can secure a sweet risk-free 4% and as long as that goes on, liquidity will dry up.
There will be very few bail outs in the shitcoin market, because nothing is worth saving in this space and we will continue to see more names added to my growing obituary.
Stay tuned for more, and as always hold your own keys!
Sources:
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Posted Using LeoFinance Beta
A Train wreck is a more apt description of the Exchange industry than a car pile up.
Posted Using LeoFinance Beta
Lol You'd think people would have learned from Mt Gox and Quadriga but it seems like this cycle got even worse, how many more times are we going to see this same mistake repeated with bigger numbers
The amount of crypto companies that are dead or secretly dying is likely way worse than even we think. Most people don't realize how hard some of these projects will get pressed this time around. Like you said with the interest rates money is a lot more expensive to borrow and the advice a lot of these guys went off of was all n00bie advice.
It's so strange that these projects will just go off of advice from someone that started in crypto 2 months prior and they look at actual experts as clown ass FUD machines.
The amount of times this cycle I had people saying I was just all FUD while I'm rolling away in the Bentley and their scammy investments are taking multiple trips through a trash compactors. One guy even told me he was building generational wealth while he put all his funds into the most scammy meme tokens anyone could conceive of.
I have been deep in the weeds recently and there are an egregious amount of bombed out coins and tokens. Like probably 20,000 or more because there is tons of shit that people put money in that isn't listed, isn't tracked, etc.
Then even projects that got some momentum the guys running them weren't responding to anyone or anything. Crazy stuff.
On top of that we don't know how many projects might have been able to roll something out but they are being attacked by the SEC or other government entities. It's really going to be rough for most projects to make it through this.
Lol many of these companies are spun up by clowns man, look at Mashinkey, SBF, and the crypto.com and NEXO guys all don't know their ass from their head but got funding to start casinos
Financial Darwinism at its best, people are so damn soft, they've been conditioned to never take losses because they outsourced their investing to ETFS and brokers and now feel because that shit isn't doing much that they need to become active traders, which no one without expertise should be, but its profitable for exchanges to make people believe they can trade so they jump on this garbage.
While I warn against scams, I have zero sympathies for either side, if you get rugged good on you, if you go to jail for rugging someone good for you, either way money is misallocated in the short term to move to the prudent in the long term and I just enjoy the fireworks..
This whole of the government, oh the SEC, oh the market is rigged is such nonsense, that might work if you're a company, but if you're claiming to be decentralised it shouldn't matter at all, but the fact that it does shows its all a bunch of nonsense and I say let the government clear out the nonsense.
Seems like they have went after various individuals at times and tied them up legally. I don't know what happened to the Ether Delta guy. It was like if a Decentralized platform suddenly had some coin or token they considered a security they suddenly were in trouble before it had ever been determined to be a security in a court of law. A lot of people and companies can't fight against entities that large.