Ben Strack & Casey Wagner welcome you to the On the Margin Newsletter. You’ll discover the following in this edition:
- Casey breaks it down on the latest news about Donald Trump and his family DeFi venture.
- After this morning’s retail data, and ahead of the Fed rate announcement that is imminent, we’ll do another market review.
- Why an upcoming club opening in Manhattan’s downtown must pay $750,000 to the SEC.
Trump launches crypto-business
We finally know some details after weeks of vague and ominous promises about Donald Trump’s DeFi family venture, World Liberty Financial.
Here are some highlights if you missed the two-and-a-half hours of the Mar-a-Lago livestream last night:
- Chase Herro, Zachary Folkman and Donald Jr. are part of the team. Herro is also known as the Alter Ego, a self-proclaimed alter persona. “dirtbag of the internet.” They have sold anything from marijuana to how-to courses for getting rich fast and picking up women.
- It’s going be a token. It’s true that we would have guessed as much and reports have confirmed these rumors. The team behind World Liberty Financial finally acknowledged last night that WLFI is coming. The exact date is still a mystery.
- WLFI distributes 20% to its founding members/Trump Family and 17% to other beneficiaries. “user rewards,” The remaining 63% will be available for purchase by the general public. According to a leaked plan of World Liberty, 70% of tokens were reserved for the project leaders.
Around 90 minute in, Farokh (Sarmad) of Rug Radio addressed Barron or at least tried to. NYU’s freshman student had left the classroom.
“He talks about his wallet; he’s got four wallets or something,” Trump said about his youngest son. “It’s almost like younger people know it a lot better than older people.”
Nobody said how the public or regulators would perceive a president who is currently in office’s involvement in a cryptocurrency venture, if Trump wins November. According to the original report by CoinDesk, the white paper leak includes an acknowledgement that Trump and family members do not control or manage World Liberty Financial. However, they could be compensated.
Trump has mentioned the SEC “has been very hostile and really going after people” The crypto industry is booming. Trump also said that the US government has recently pulled out of the crypto space, due to Trump’s candidacy as president.
“People that were under serious investigation for having done nothing wrong are all of a sudden allowed to go free,” He said.
“If for some reason bad things happen and we don’t win the election, those people that were under investigation and that are free as a bird right now, and people that weren’t being looked at in the crypto world, they will be living in hell,” Trump added “Because it’ll start the day after the election if they win.”
He didn’t mention specific projects or people who were able to achieve this. “walk free” SEC’s scrutiny. I will also add that Flyfish Club’s livestream occurred hours after SEC dropped their latest enforcement action against them for a alleged unregistered security offering. (More on this later).
Speaking of an unregistered securities offering…
Although I don’t know all of the specifics about WLFI at this time, it’s safe to say that the SEC has a keen interest. Commissions will look for signs that tokens were promoted and evidence of project leaders giving buyers reasonable expectations about profit.
Hope the World Liberty Team is doing some reading on Howey.
— Casey Wagner
63%
CME Group’s FedWatch Tool calculates the probability that, as of Tuesday at 2pm ET, the Federal Reserve will cut rates tomorrow by 50 basis points.
The chance that a 50bps reduction will occur has been fluctuating in the last few days, after it jumped higher at the end of last week. Prior to that, markets thought a 50bps cut was more probable.
Tomorrow, at 2:30 PM ET, the press conference of Fed chair Jerome Powell will begin. To read Blockworks’ FOMC rate decision preview, click here.
What is the likelihood of a rate reduction by 25 bps?
The Fed is expected to reduce its rate from the current 5.25%-5.50% range. The decision is just a few days away.
It remains to be seen whether we’ll see a 25bps cut or if it will amount to 50bps. The US retail sales figures for August are one of the last data points that should be considered before the Fed announces its decision.
The Census Bureau’s report this morning showed these sales slightly rose (unexpectedly) last month — amounting to a month-over-month increase of 0.1%. Reuters polled economists who had predicted a decline of 0.2%.
Leena ElDeeb, a 21Shares analyst noted that retail sales were up. “beating expectations” The market has been very positive about the products. “alleviating recession fears for now.”
Bitcoin’s price was nearly $61,000 at 2 pm ET Tuesday — about 4.7% higher than 24 hours prior.
Brian Dixon of Off the Chain Capital told Blockworks that Blockworks’ better-than expected retail sales figures could force the Fed to only cut rates 25bps by tomorrow. “as the economy is still somewhat strong but clearly showing signs of slowing.”
Then he added: “I think the overall data picture shows that the Fed is probably thinking that it might be better to gradually taper down rates rather than initiate cuts in a big way.”
In a letter sent to Powell on Monday, three Democratic Senators urged that the Fed cut interest rates at its September meeting by 0.75 percent.
The US economy could benefit from a reduction in rates that is implemented first. “avoid sliding towards a potential crisis,” Sens. Elizabeth Warren wrote a letter with Sheldon Whitehouse.
Analysts have predicted that the market will price in 100bps rate cuts by the end the year.
“Obviously, even as inflation has eased, there’s certainly concern that it could return if overall monetary loosening takes place in a fashion that is too big and too fast,” Dixon said.
SEC Fine for new NYC Social Club: A stylish, cutting-edge feature
Flyfish Club LLC was fined $750,000 yesterday by the SEC for the social club that will be open to members only in Manhattan’s downtown this month.
Flyfish offered memberships in its still-to-be built private club by selling NFTs between the price range of 2.5 ETH to 4.25 ETH. Around 1,600 NFTs sold generated $14.8 million gross revenue. These funds were used for the construction of the “Flyfish Club,” The SEC has identified a restaurant located in Manhattan.
The Securities and Exchange Commission has taken action again against an NFT-issuer who allegedly offered unregistered investments. Hester Peirce, Mark Uyeda and others have a cleverly worded dissenting view.
“For curmudgeonly commissioners like us, crypto enforcement feels a bit like a trip to a restaurant for a meal, Omakase style,” Peirce & Uyeda mentioned the Japanese-style dining Flyfish Club intends to provide.
“Omakase translates to, ‘I’ll leave it up to you,'” Additions to the list include: “This directive is wonderful in the hands of a renowned chef, but disastrous in the hands of a crypto-obsessed commission.”
Although the club has not yet announced an opening date for Sept. 20, this is not very surprising. The team has already signed a 10 year lease and knew that enforcement would be coming even before yesterday’s announcement by the SEC. It’s not like they didn’t have time to do their homework. No press is also bad press.
FOMO sufferers can purchase an OpenSea NFT membership for as little as 1.425 Etherum (SEC did not block secondary sales but gave Flyfish a 10-day period to cease earning royalties). As of the time of this writing, it is cheaper than a membership purchased directly from Flyfish.
Please let us know if any of our NYC-based readers are members. If you have a membership, please let us know.
Bulletin Board
- A lot has been said about the expected Fed rate drop. The FOMC statement will be available on this site at 2pm ET. You can then watch Powell’s presser via the central banks YouTube channel starting at 2:30pm. Check back tomorrow for the On the Margin email to read about the Fed’s announcement.
- CleanSpark, a bitcoin miner in Mississippi, has purchased two additional sites for almost $5.8million. These facilities will increase the hashing rate of CleanSpark by approximately 1 exahash every second. This deal follows the agreement made last week by Las Vegas-based company to purchase seven additional Tennessee facilities for a total cash payment of $27.5 Million.
- Figure Markets launched its Cayman Islands crypto exchange on Tuesday. Figure Markets had earlier raised $60 Million (in a funding round led Jump Crypto by Pantera Capital and Lightspeed Faction), to develop a rival decentralized exchange to the most centralized cryptocurrency exchanges. Mike Cagney of Figure told Blockworks in the past that they wanted to make use of the Provenance blockchain as a platform for stocks, bonds, alternative investments and crypto assets.
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