Global Financial Crisis... Incoming

GM (gainful morning) everyone. This is the BitDegree Insider, and we cut through the noise.

Today we're talking about:

• Credit Suisse 'Critical Moment'
• Vitalik Interview
• Celsius Network Founder Red-Handed
• Transit Swap Drama
• Selected Meme of The Day

Credit Suisse 'Critical Moment'

So, a few days ago, Credit Suisse CEO Ulrich Körner said that the bank is at a 'critical moment'. Now those are some heavy words. For a bank that holds assets worth over $750 billion, the potential failure of it wouldn't be just a financial crash. It would be a financial nuke.

But there's more on the plate. Deutsche Bank, Germany's biggest bank, is also showing signs of distress. Together with Credit Suisse, these two banks hold around $2 trillion in assets. In comparison, the Lehman Brothers, the infamous financial firm which filed for bankruptcy back in 2008, had $639 billion in assets. They were deemed 'Too Big To Fail'. Yet they failed. And it started the vortex of the 2008 crisis, which took down the global economy down the drain

So if Credit Suisse and Deutsche Bank would come out as insolvent… We would go through a global economic meltdown, just like in 2008, but on steroids. No one wants that. Okay, so what's up?

Key takeaways:

• Both banks are categorized as TBTF (Too Big To Fail).
• The stocks of both banks have been slowly, yet steadily, sinking deeper, and deeper, and deeper...
• Value of both banks' stocks are around 90% down from 2009 high.
• Deutche Bank went from $12.30 to $7.40; Credit Suisse went from $9.83 to $3.92
• Twitter users are already joking that today 'it's cheaper to buy Credit Suisse stock, than a coffee in Zurich'.
• The Credit Default Swaps (CDS) for Credit Suisse are going up almost vertically. The last time they were at a point like this was during the 2008 financial crisis. CDS is a financial derivative which enables investors to swap (or offset) credit risks with other investors.
• High CDS costs = high risk, since CDS basically function as an insurance for the investors.
• The signals are panic-inducing. And panic creates panic. Things could get messy. Therefore Credit Suisse Executives are reassuring clients that all is OK, and they should chill out.

Here's how the stocks have been doing:

Vitalik Buterin Speaks

The Ezra Klein Show is described as an invitation into a conversation with something that matters. On September 30, something that mattered was Vitalik Buterin, the Ethereum's flagman.

The whole convo goes on for 1:39:00, and you can listen to it here. Okay, so what were the beans that Vitalik spilled?

• Vitalik stated that after the massive crash of the Mt.Gox (crypto exchange) in 2014, the overall crypto decentralization was developing in the right direction.
• But things took a bad turn. According to Vitalik, the collapse of the stablecoin issuer Terra (LUNA) at the beginning of this year dealt a big blow to the decentralization of the crypto market.
• The Ethereum boss believes that although the Terra blockchain was decentralized, the team behind it had too much control.
• Vitalik described blockchains as 'Lego for mechanism design'. This proves that great minds can make complex stuff easy.

It's an in-depth conversation that covers a wide range of topics. It's not your average Instagram Reel, or a TikTok. People like Vitalik deserve the long format.

Celsius Network Founder Red-Handed

Alex Mashinsky, the founder of the bankrupt crypto lender, is once again under the magnifying glass.

Apparently, he withdrew $10 million from Celsius' account less than a month before the Celsius infamously froze customer accounts. This, eventually, ended up in the firm filing for bankruptcy. When they did so, the company was $1.2 billion in debt.

This update about Mashinsky withdrawing before the ship hit the iceberg is revealing. It makes it way easier to believe that Mashinsky knew about what was coming. And despite it, he continued brushing critics off as 'FUDsters', and continued reassuring everyone that Celsius' reserves are healthy, and described their situation as 'full speed ahead'.

Well, things have taken a nasty turn. Again. Court will take this update into account, that's for sure.

Transit Swap Drama

Transit Swap, a decentralized exchange, recently received a blow to its chest. But then the attacker put a band-aid on it, and said 'hey, it's ok'. Here's what happened.

On Saturday, Transit Swap had a bad day. A hacker exploited a bug in Transit Swap's code, and managed to get away with around $23M in their pocket.

Transit Swap tweeted that they are 'deeply sorry'. Users, of course, got furious, people's trust in crypto jumped off the cliff again, crypto skeptics rejoiced in yet another story to point fingers at when explaining how the whole web3 thing is just a bubble.

But then something interesting happened. The hacker (probably touched by the 'we are deeply sorry' message) returned 70% of the stolen $23M. Well that's one way to look at it.

Another way is to take into account that, reportedly, the hacker didn't manage to hide their traces well enough, and ended up leaving a trail behind. Transit Swap tweeted that they know the hacker's IP, email, and associated on-chain addresses. So maybe it's probably less poetic than we previously described. A thief stole some stuff, got identified, now they're returning it. Maybe the remaining 30% of the stolen assets will be regarded as the salary for the DEX's safety check.

Anyway, it's a dynamic story that shows how fast things change in the crypto game. You gotta stay sharp. Always.

Selected Meme of The Day