Coppola Comment

Yesterday, the failed crypto lender Celsius filed a monthy cash flow forecast and a statement of its assets and liabilities held in the form of cryptocurrency and stablecoins. They showed that the lender is deeply underwater and will run out of money within two months.    Today, Celsius presented an update regarding its chapter 11 bankruptcy plans. Reading this, you'd think it was a different company. Liquidation isn't on the agenda. No, they are talking about "reorganization" and and seeking debtor-in-possession (DIP) financing:  DIP financing is a specialist form of finance for companies in chapter 11 bankruptcy to enable a company to continue operating. It usually takes the form of term loans. DIP loans are secured on the company's remaining assets and are typically senior over all other claims, so must be repaid before claims from existing creditors can be settled. Because DIP finance dilutes existing claims, the bankruptcy court must agree to it. In Celsius...

Coinbase recently filed its interim financial report. It makes pretty grim reading. A quarterly net loss of over $1bn, net cash drain of £4.6bn in 6 months, fair value losses of over 600k... To be sure, Coinbase is not on its knees yet. It still has $12bn of its own and customers' cash (both are on its balance sheet), and a whopping asset base. In fact its assets have increased - a lot. As have its liabilities. Coinbase's balance sheet is five times bigger than it was in December 2021.  Here's Coinbase's balance sheet, as reported in its 10-Q filing . I've outlined the relevant items in red:   There's a new asset called "customer crypto assets" worth some $88.45 bn, matched by a new liability called "crypto asset liabilities". This asset and its associated liability are by far the biggest items on Coinbase's balance sheet. Footnotes to the balance sheet describe these new items as "safeguarding assets" and "safeguarding lia...

Ursula Le Guin's short story " The Ones Who Walk Away From Omelas " contains a terrible moral conundrum. Many people have agonised over it: to my knowledge, no-one has solved it. Attempts that I have seen all in some way change the framing of the story, whether by justifying blood sacrifice , insisting that there must be a better way , or creating a better alternative . But if you change the framing, you have not solved the problem. You have avoided it. As I read through Le Guin's story to the end, I recognised the moral conundrum. It is similar to the one I posed in this piece . In Le Guin's story, as in mine, the facts don't matter. It is what people believe that matters. In Le Guin's story, millions of people believe their happiness and that of everyone they love - indeed, their very existence - depends on a child being condemned to live in darkness, pain and squalor. They accept that the child's suffering is necessary, so they do nothing about it. ...