There is simply no better place to watch as the dominoes fall in the beleaguered world of cryptocurrencies, blockchain, and non-fungible tokens (NFTs) than the cryptosnark subreddit, r/Buttcoin (tagline: “ButtCoin. It’s a scam. At least we’re honest about it!”).
And it was there where I learned that the latest domino had fallen—Genesis Trading, a crypto lender forming part of Barry Silbert’s Digital Currency Group (DCG), filed for bankruptcy:
Crypto lender Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court, the latest casualty in the industry contagion caused by the collapse of FTX and a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group.
The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.
A list of the 50 largest unsecured creditors was leaked, and it turns out that both of the co-founders and the current Chief Financial Officer of blockchain metaverse Decentraland are owed an eye-watering US$55 million. Crypto news website The Block reports:
Virtual world platform Decentraland has not one but three of its executives and founders listed among the 50 largest non-insider unsecured claims against Genesis Global, the crypto lender that filed for bankruptcy protection on Thursday.
Decentraland CFO Santiago Esponda drew attention after his Decentraland email address was listed in court filings as the contact for Heliva International, a Panama-based company owed $55 million by Genesis. But a closer look reveals that Decentraland’s two co-founders are also listed in the documents with non-Decentraland email addresses.
Esteban Ordano, a Decentraland co-founder who now acts as an adviser, is listed as the contact for an entity called Winah Securities. Genesis owes Winah, which is located on the same floor in the same building as Heliva, almost $27 million. Ordano told The Block that Winah has no relationship with Decentraland.
Gaming company Big Time Studios is owed $20 million. It’s run by Ari Meilich, Decentraland’s other co-founder. He started Big Time in 2020 but also remains a Decentraland adviser. Meilich declined to comment.
Which brings me, in a roundabout way, to the point of this particular editorial: how I will be covering blockchain-based metaverse platforms going forward on this blog.
In a previous editorial, I explained that I was substantially cutting back on my coverage of Second Life, to refocus my blog on virtual reality in general, and social VR in particular. Likewise, I have also decided that I will no longer be writing about any blockchain-based metaverse platform unless it incorporates virtual reality. According to my comprehensive and reasonably up-to-date list of virtual worlds and social VR, the only platforms which incorporate blockchain technology (cryptocurrencies and/or NFTs) and support virtual reality are three:
- NeosVR (a social VR platform with an associated cryptocurrency called NCR, which was planned to be the in-world currency but has not been incorporated; please note that Neos does not have NFT-based virtual real estate, or use NFTs at all)
- Sensorium Galaxy (this ultra-high-end social VR platform uses the SENSO cryptocurrency to purchase avatars in their online store; as far as I am aware, Sensorium Galaxy does not use NFTs)
- Somnium Space (a blockchain-based virtual world that supports VR, with a cryptocurrency and NFT-based real estate)
All the other blockchain metaverse platforms I have written about on this blog (including the one that first attracted my attention, Decentraland) are either flatscreen virtual worlds which do not support virtual reality, or they have not yet launched (and, in the current crypto nuclear winter, are increasingly unlikely to do so; the only exception being The Sandbox, which is still in extended alpha testing).
And (as illustrated by my initial anecdote about the Decentraland co-founders and executive entangled in the Celsius bankruptcy case), those platforms which had the great good fortune to launch well before the current crypto carnage, are possibly still entangled in the web of interconnected crypto companies lending and borrowing from each other, in highly speculative cryptocurrencies whose actual value is based only on what the next greater fool is willing to pay for them. In particular, those who purchased overpriced NFT-based real estate on such platforms as The Sandbox, Somnium Space, and yes, even pioneering Decentraland, are going to find it very difficult, if not impossible, to make any sort of profit off their investments.
And one only has to observe the travails which NeosVR has gone through, after a cyncial pump-and-dump instigated by cryptobros, to see how a social VR project with such technical promise can be hamstrung by attaching a cryptocurrency to it. There has, to my knowledge, been no active development on the platform in over a year, and it is unclear what 2023 holds for NeosVR. It breaks my heart and it angers me.
While I will continue to follow the current crypto winter shenanigans as an interested (and bemused) observer, I have decided that I will no longer be writing about any blockchain metaverse unless it has launched, and it supports virtual reality. In particular, I will no longer waste my time (and your patience) writing about all the blockchain metaverse projects which consist of little more than an .io website, a Telegram or Discord channel, and a white paper long on hand-waving, but short on actual technical details. Enough with the bafflegab and bullshit.
If you happen to actually launch a product which incorporates blockchain in some way (cryptocurrencies and/or NFTs), and it supports users in a VR headset, then I will gladly write about it. Otherwise, I’m no longer interested.
UPDATE 4:43 p.m.: Well, well, well…another news nugget I gleaned from the r/Buttcoin subreddit: AsiaMarkets.com is reporting this evening that the mighty SWIFT global financial network will, as of Feburary 1st, 2023, no longer process fiat currency transfers from bank accounts to cryptocurrency exchanges, if they are worth less than US$100,000:
The SWIFT payments network has made an extraordinary decision that will have widespread implications on cryptocurrencies.
Asia Markets can reveal SWIFT will no longer process fiat currency transfers from bank accounts to cryptocurrency exchanges, with a value of less than US$100,000, effective from February 1, 2023.
The move will thwart cryptocurrency access to tens of millions of people worldwide.
One of the first crypto giants to notify users of the development this weekend, has been the world’s largest exchange, Binance.
“The banking partner that services your account has advised that they are no longer able to process SWIFT fiat (USD) transaction for individuals of less than $100,000 USD as of February 1, 2023. This is the case for all their crypto exchange clients,” said Binance.
“Please be advised that until we are able to find an alternative solution, you may not be able to use your bank account to buy and sell crypto with USD via SWIFT with a value of less than $100,000 USD.”
Time to go get more popcorn; this three-ring circus is just getting started!