Sebastian Sinclair

Bitcoin plunged more than 8% to around $25,500 on Thursday afternoon, its largest daily decline this year.



The crypto had been trading around $28,000 shortly before a Wall Street Journal report that SpaceX had sold all its holdings in 2022. That appears largely coincidental, however, as bitcoin had already begun its descent, reflecting several bearish <a href="https://blockworks.co/news/bitcoin-holders-underwater-nupl">on-chain </a>metrics, when the Journal article was published at 3:22 ET.



SpaceX, which held $373 million worth of BTC in 2021 and 2022, <a href="https://www.wsj.com/tech/behind-the-curtain-of-elon-musks-secretive-spacex-revenue-growth-and-rising-costs-2c828e2b">reportedly</a> sold the crypto after writing down the value of its holdings, <a href="https://blockworks.co/news/elon-musk-teslas-bitcoin-sale-not-a-verdict-on-the-asset">similar to actions take by Tesla last year</a>.&nbsp;



Neither SpaceX nor CEO Elon Musk have commented on the report, and the exact timing of the sale is unknown. SpaceX did not immediately return a request for comment.



Analysts are skeptical about the timing and response to the news. Terrence Yang, managing director at Swan Bitcoin, told Blockworks, &#8220;The fact that SpaceX sold all or almost all its bitcoin should have been priced in by the market.&#8221;&nbsp;



Other analysts pointed to overexposure and market exuberance over a potential US spot BTC ETF approval, which has reportedly been delayed until March of next year.



“Combined with nuance around how price action has been really apathetic and weak post-ETF announcements, the conclusion should have been short-term caution,” Jason Pagoulatos, head of markets at Delphi Digital told Blockworks.&nbsp;



He said a lot of market participants were likely mispositioned because of that hype and were likely caught unaware, resulting from <a href="https://members.delphidigital.io/feed/crypto-price-action-apathy?utm_source=link&amp;utm_medium=portal">price action apathy</a>. Thursday’s sell-off subsequently witnessed more than <a href="https://blockworks.co/news/price-dip-long-liquidation">$200 million</a> lost over a 24-hour period in long positions.



<h2 class="wp-block-heading">Panic sell</h2>



The bitcoin-led sell-off sent shockwaves through the market. Ether (ETH) fell 12% to $1,530, while dogecoin (DOGE), a Musk favorite, fell 15% to $0.056. Ether recovered from its five-month low, clawing back 9.7% <a href="https://www.bnnbloomberg.ca/sec-set-to-greenlight-ether-futures-etfs-in-win-for-crypto-industry-1.1960429">following</a> a Bloomberg rehashing of <a href="https://blockworks.co/news/sec-consider-ether-futures-etfs">previously reported news</a> that the SEC may greenlight a futures-based ether ETF. The industry’s second-largest digital asset remains suppressed — down about 6% over the past 24 hours as of 5:00 am ET.



Rich Rosenblum, CEO of market maker GSR, agreeing with previous takes on market exuberance, noted multiple factors were at play, including a strengthening US dollar and a reversal to this year&#8217;s tech rally.&nbsp;



“Strong tech sector buying, BTC ETF filings, and the Ripple win brought a wave of macro buying to crypto in June,” he said. &#8220;But that bullishness is fading as macro markets have been reversing course in recent weeks,&#8221; he said.



“The simultaneous timing of Evergrande and the SpaceX news spooked the market, flushing out some futures length. Assets that rose the most over the last month were the hardest hit.”



The tech-heavy Nasdaq Composite fell 1.1% to 13,316 by mid-afternoon on Thursday, while the Dow Jones Industrial Average also slipped 0.8% to 34,474



<h2 class="wp-block-heading">The case for Evergrande</h2>



The crypto turmoil coincides with a broader sell-off in risk assets. <a href="https://blockworks.co/tag/evergrande">Evergrande Group</a>, China&#8217;s one-time second-largest property developer, <a href="https://www.afr.com/chanticleer/china-s-fresh-evergrande-mess-isn-t-only-warning-sign-for-investors-20230818-p5dxix">filed for</a> Chapter 15 bankruptcy in New York on Thursday.&nbsp;



The firm&#8217;s extensive borrowing led to its <a href="https://blockworks.co/news/evergrande-default-adds-to-market-jitters">default</a> in 2021, triggering a severe property downturn in China&#8217;s economy. At the time, officials from the People&#8217;s Bank of China sought to downplay the risks to financial markets, arguing a contagion-wide effect had been contained.



According to Michael Rinko, research analyst at Delphi Digital, China is undergoing an extensive, state-driven deleveraging of the real estate sector.&nbsp;



The situation has shaken confidence and demand across the nation, with recent indications such as a recent <a href="https://www.cnbc.com/2023/08/15/china-central-bank-cuts-rates-for-second-time-to-support-economy.html">rate cut</a> by the People&#8217;s Bank of China hinting at developing economic cracks.



Investment manager Cathie Wood of Ark Invest also weighed in, asserting that China is exporting deflation more extensively than many economists realize.&nbsp;



An unfolding deflationary trend in China, exacerbated by recent defaults within the real estate and trust industries, may be nearing a 20% impact, she noted.



Wood also expressed concerns over the Federal Reserve&#8217;s aggressive rate hikes, which she contends have exacerbated global deflationary risks. The unprecedented 22-fold increase in the Federal Reserve&#8217;s funds rate may be impacting China first, with potential repercussions for the global economy to come later, the CEO added.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Bitcoin, crypto sell-off amid broader market jitters

Shalini Nagarajan

Elon Musk has asked a US court to drop a $258 billion (yes, billion) dogecoin lawsuit filed against the billionaire and his companies last year.



Musk’s lawyers argued the plaintiffs had cherry-picked his statements about the premiere dog-themed cryptocurrency, labeling the suit a “fanciful work of fiction.”



Musk was sued by investor Keith Johnson in Manhattan federal court last June. Johnson accused Musk, Tesla and SpaceX of running a pyramid scheme focused on inflating the price of <a href="https://blockworks.co/price/doge" target="_blank" rel="noreferrer noopener">DOGE</a>. 



“There is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion,” Musk&#8217;s lawyers said in the <a href="https://www.reuters.com/legal/elon-musk-seeks-end-258-billion-dogecoin-lawsuit-2023-04-01/" target="_blank" rel="noreferrer noopener">filing</a>. “This court should put a stop to plaintiffs’ fantasy and dismiss the complaint.”



In September, the lawsuit added seven more investor plaintiffs and six defendants, including the UK-registered non profit Dogecoin Foundation.&nbsp;



The monumental damages sought are triple the estimated decline in dogecoin’s market capitalization from its all-time high, which preceded the lawsuit.



&#8220;Defendants were aware since 2019 that dogecoin had no value yet [promoted it] to profit from its trading,&#8221; Johnson argued in the original complaint. &#8220;Musk used his pedestal as world’s richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement.&#8221;



In Musk’s defense, lawyers said he’d publicly supported dogecoin because it was more accessible than other cryptocurrencies, and that many employees on the production lines at Tesla and SpaceX owned dogecoin, among other reasons.&nbsp;



Musk had warned the public about potential fluctuations in the price of dogecoin, saying in his <a href="https://twitter.com/elonmusk/status/1113178951403180032" target="_blank" rel="noreferrer noopener">first tweet</a> about the coin that its “value may vary.”



The lawsuit further claimed that some of Musk’s dogecoin-related tweets — including ones that said “<a href="https://twitter.com/elonmusk/status/1113173498384441344" target="_blank" rel="noreferrer noopener">Dogecoin rulz</a>” and “<a href="https://twitter.com/elonmusk/status/1357244295091208193?lang=en" target="_blank" rel="noreferrer noopener">No highs, no lows, only Doge</a>” — were fraudulent.&nbsp;



But lawyers argued that the plaintiffs’ didn’t explain how these statements were misleading, “as they are so vague and subjective as to constitute quintessential puffery.” Blockworks has reached out to SpaceX for comment. Tesla <a href="https://electrek.co/2020/10/06/tesla-dissolves-pr-department/" target="_blank" rel="noreferrer noopener">disintegrated</a> its media relations department in Oct. 2020.



Musk’s joke during a Saturday Night Live (SNL) show in May 2021, in which he described dogecoin as a “hustle,” didn’t add any new revelation to public knowledge about dogecoin’s risks, Musk’s lawyers said. 



Dogecoin surged to record highs in the days leading up to Musk&#8217;s SNL appearance and <a href="https://www.theverge.com/2021/5/9/22427006/dogecoin-crashing-elon-musk-snl-host" target="_blank" rel="noreferrer noopener">crashed</a> directly after.



The token has lost around 45% of its value in the last 12 months, and up about 10% year to date.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Musk Lawyers Say ‘Nothing Wrong’ With Memes in $258B Dogecoin Lawsuit

David Canellis

<div id="highlights-block_6315b5cb2096f" class="highlights">
 <ul>
 <li>This is the third hack in one week for South Korea&#8217;s official social media channels</li>
 <li>Google Korea is now investigating most recent YouTube incident along with Seoul’s cyber crimes unit</li>
 </ul>
 
</div>



Crypto fraudsters reveled over the weekend, hijacking an official South Korean government YouTube channel alongside accounting giant PwC’s Twitter account to promote scams. 



South Korea’s Youtube channel was commandeered on Saturday and renamed to “SpaceX Invest.” Hackers then broadcasted a crypto-related video followed by an interview with Tesla and SpaceX CEO Elon Musk, <a href="https://en.yna.co.kr/view/AEN20220903001700325" target="_blank" rel="noreferrer noopener">Yonhap News</a> reported.



Around the same time, the Venezuelan arm of PwC’s Twitter account was tweeting more than a dozen links to a classic crypto giveaway scam. 



The links led to a phony Ripple Labs website which encouraged users to send ripple (XRP) to a specific address, after which they were promised more in return. The account posted: &#8220;Want to see how #XRP will make you rich?&#8221; and &#8220;#XRP gogogo,&#8221; among other slogans.



It took at least eight hours for PwC Venezuela’s Twitter account to be cleaned up, while South Korea’s YouTube channel was restored after about four hours. Google Korea and Seoul’s cyber crimes unit are now reportedly investigating the incident.&nbsp;



The hack is the third such instance against South Korea’s official YouTube channels in a week, with one operated by the Korea Tourism Organization illegitimately operated last Thursday and Friday.



A YouTube channel belonging to South Korea’s National Museum of Modern and Contemporary Art was also compromised on Thursday, <a href="https://www.koreaherald.com/view.php?ud=20220904000123" target="_blank" rel="noreferrer noopener">The Korea Herald</a> reported.



Twitter and YouTube have <a href="https://www.tenable.com/blog/fake-bitcoin-ethereum-dogecoin-cardano-ripple-and-shiba-inu-giveaways-proliferate-on-youtube" target="_blank" rel="noreferrer noopener">long been critised</a> as platforms for the promotion of crypto scams, <a href="https://thenextweb.com/news/twitter-cryptocurrency-musk-ethereum" target="_blank" rel="noreferrer noopener">stretching</a> all the way back to 2018. The ruses commonly leverage likenesses of unwitting celebrities including MicroStrategy’s Michael Saylor and Ethereum’s Vitalik Buterin.



Musk <a href="https://www.bbc.com/news/technology-61749120">called out</a> YouTube earlier this year, claiming it was not doing enough to tackle fake advertisements using his identity to promote crypto giveaway scams. 



While not a giveaway scam, cybersecurity researchers <a href="https://threatpost.com/musk-spacex-cryptoscam-youtube-advertising/167219/" target="_blank" rel="noreferrer noopener">detailed</a> a recent fraud campaign purchasing legitimate YouTube advertisements for dodgy ‘SpaceX’ themed tokens, purchasable via Uniswap. YouTube said in June that it removes channels reported to be advertising crypto scams.



At the height of public interest in crypto beginning this year, Meta’s social media platform Facebook was also targeted by hackers for roughly the <a href="https://cms.blockworks.co/australian-billionaire-brings-criminal-case-against-facebook-over-fake-crypto-ads/" target="_blank" rel="noreferrer noopener">same purpose</a> — to swindle capital from prospective crypto investors.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.