I regret to inform you that this will be the last issue of Triple Entry. I’m pursuing a career as a bankruptcy lawyer focused on crypto companies.

Just messin’ – that sounds like a boring job, but they sure are raking in the dough right now.

In some ways, we’re picking up right where we left off with our last entry: covering the unfolding Genesis and FTX sagas. We’ll also discuss the Department of Justice’s massive international enforcement action and make fun of SBF’s balance sheets.

Enjoy! (as much as you can, given the bad news)

“Calc”-you-later, 🧮


P.S. Greetings and salutations to the seventy-nine (79) new subscribers who got in on the action since last entry! We have fun here. You’ll see.

The Exodus of Genesis

Barry Silbert, CEO & Founder of Digital Currency Group, tweeted this back in the ancient crypto history of June 2021:

I’m no literary expert (I’m an accountant), but I’m pretty sure this is foreshadowing. Or maybe it’s situational irony? Either way, I doubt Silbert foresaw this “daisy chain of borrowers and lenders” leading to the downfall of his subsidiary Genesis.

Last week, crypto lender Genesis filed for Chapter 11 bankruptcy. If you’ve been following the Genesis saga, this doesn’t come as a surprise. If you missed our last entry, go give it a read to understand how we got to this point.

What does come as a surprise, however, is the number of creditors Genesis has and the dollar amounts owed to each of them. In its filing, Genesis Global Capital says it has more than 100,000 creditors (yes, 100,000 with five zeros) and between $1 billion and $10 billion (that’s quite a range) in liabilities.

Of those creditors, you may only recognize a few of them:

  • Gemini Trust Company (crypto exchange) – $766 million
  • Cumberland DRW (trading firm) – $18.7 million
  • Mirana (invested in ByBit) – $151.5 million
  • MoonAlpha Finance (Babel Finance team) – $150 million
  • VanEck’s New Finance Income Fund – $53 million

Interestingly, a company called Heliva International Corp. is also owed $55 million and names Decentraland’s CFO Santiago Esponda as the contact point.

In other words, plenty of people besides Cameron Winklevoss want their money back. Speaking of Cameron Winklevoss, he’s still out for blood. In a tweet thread following the Genesis bankruptcy news, he said, “This is a crucial step towards us being able to recover your assets,” but that Barry Silbert and DCG “continue to refuse to offer creditors a fair deal.” He closes out his thread with these fightin’ words:

Genesis filed a plan with its bankruptcy petition indicating that it’ll sell itself under an asset sale. If they cannot find a buyer, they’ll transfer assets to a general unsecured creditor trust. They say they have about $1B in assets, but there’s a hodgepodge of cash, crypto, and collateral for notes in that number.

What’s all this talk about DCG “refusing to offer creditors a fair deal”? We can only speculate, but it may have to do with the fact that Genesis didn’t file a disclosure statement indicating who it’s selling its assets to. Cameron Winklevoss may expect DCG to make a bid for the assets, meaning that creditors (and Gemini’s Earn customers) still wouldn’t be made whole.

A Major Nothing Burger

Picture this scene that played out for the Multisig team on Wednesday last week. From noon ET until approximately 12:09 PM ET, we’re frantically refreshing www.justice.gov waiting for the major press conference to begin – popcorn bowls in hand. Earlier that morning, the Department of Justice updated its homepage, saying it would announce a “major international crypto enforcement action.”

Was Binance going down? Was Tether done for? These were the rumblings on Crypto Twitter. The conference begins. There’s fanfare and self-congratulatory back-patting. Anticipation builds. They took down…

Bitzlato? What the heck is a “Bitzlato?” It sounds like a hipster ice cream shop where you pay $10 per scoop.

As it turns out, it’s a crypto exchange registered in Hong Kong run by a Russian national named Anatoly Legkodymov, aka “Gandalf.” Apparently, the exchange had processed at least $700 million in transactions for the prominent “darknet marketplace” Hydra.

My guess is that the DOJ discovered the link between Hydra and Bitzlato when they shut down Hydra last year, followed “Gandalf” around for a bit, arrested him when he came to US soil, then passed it off as a significant standalone investigation.

Why would the agencies make such a big deal of a big nothing burger? In the words of Deputy Attorney General Monaco, “Today’s actions send the clear message: Whether you break our laws from China or Europe – or abuse our financial system from a tropical island – you can expect to answer for your crimes inside a United States courtroom.” They wanted to send a message: the U.S. is cracking down on crypto crime.

This message probably has Binance CEO Changpeng Zhao shaking in his boots. Not only was Binance named Bitzlato’s top counterparty, but it has also been accused of facilitating transactions for Hydra buyers and sellers. Suppose the DOJ has record of transactions between a no-name exchange and Hydra. In that case, you bet they have the same evidence as it relates to Binance – which doesn’t bode well for their ongoing investigation by the DOJ for a money-laundering complaint.

So maybe this particular press conference was a major nothing burger compared to things the DOJ may still have in store. Even so, we went from thinking we were going to be live-tweeting the next biggest development in crypto since FTX, and all we got was…well, some pretty fantastic memes (see “Extraordinary Items” further down).

Please, Make it Stop

SBF is doing his darndest to distract us from the fact that he’s a fraud. This time, he started a Substack and is posting ad hoc “balance sheets” so horrendous that they can’t be ignored – especially by us accountants.

In his most recent issue, he attacks the bankruptcy attorneys from Sullivan & Cromwell (S&C) for claiming that FTX US is insolvent:

First off, who cares if FTX US is solvent? That doesn’t change the fact that you defrauded investors of billions of dollars, my dude. What I’m more interested in from the bankruptcy report is how you created a backdoor in your code that allowed Alameda to borrow without collateral up to $65B from customers.

Second, if I didn’t know anything about this case or SBF, I would be 100% convinced that he’s a psychopath solely by looking at his spreadsheet. (Who in their right mind puts line items in the columns?)

For a minute, I considered tearing his “balance sheets” apart, but it’s not even worth my time. If anything, this shows that getting your accounting right is easier before you’re forced into bankruptcy.

Spotlight 🔦 – Triple Entry Lunch Break – with Guest!

If you missed it last time, I took to LinkedIn Live for the first edition of the Triple Entry Lunch Break, a livestream edition of this newsletter where I break down the main story (or stories), with the added bonus of chopping it up with all of you who comment live. I figure this gives me a chance to better interact with some of you, and gives you a chance to listen to the content instead of reading it if a podcast format is more your style.

This week before getting into the newsletter content, I’ll be joined by my friend Michael Nadeau, author of his own stellar newsletter The DeFi Report, to chat a little about valuation models for Ethereum and on-chain financial data.

If you like what’s going on and want to be a future guest on the livestream, make sure to hit me up on either LinkedIn or replying to this email. We go live today, Jan. 24th, at noon MST!

Hit the image to go to the event.

Quick logistical note – since this is on LinkedIn Live, you will need a LinkedIn account to watch and comment, and if you plan to join on mobile you can only do so from the LinkedIn app.

The Water Cooler 🚰

Things worth talking about at the office water cooler…if you 1) talk to people, 2) still work in an office, and 3) have a water cooler.

💲💲💲 Featured Funding Find: Tick-Tack-TaxBit

Good things come to those who wait. The presses have re-started on crypto funding stories since our last entry (though what we found for our FFF last time was still super interesting and relevant for the future of the accounting and finance industry), and today we’ve got a pretty thought-provoking piece of funding news for you.

TaxBit buys Tactic to expand into crypto accounting services…but why?

Sometimes I wish that we released last year’s M4 Digital Asset Accounting & Finance Software Solutions Report with a prediction list. Something like “How many of these companies do we think will acquire each other by this time next year?” Well, here are two names that would belong on that list.

But you don’t need us to just parrot the press release to you. Frankly, we think this should be a bigger story than it is right now, because (for those of you less familiar with startup valuations and typical acquisition timelines), this is a pretty big deal. So let’s take a quick look.

Why we noticed this

TaxBit has had a busy couple months. To recap:

  • December 20th: TaxBit announces layoffs of 15% of their workforce
  • January 14th: TaxBit…buys a whole new company?

So that’s less than 30 days between two pretty major events for TaxBit. TaxBit’s decision to expand into accounting services has been in the works for a while, according to CEO Austin Woodward, but why make this acquisition now, especially so soon after the layoffs?

Well, what about Tactic’s timeline? In late September 2022, they announced an $11M fundraising round, ready to rock and roll. Now here we are, right around four months later, and they’re selling lock stock and barrel to TaxBit.

That seems…quick? Consider that a typical acquisition timeline for a startup is something like 6-12 months on the normal side, 3-6 months if you’re in a hurry (take, for instance, the now defunct Galaxy Digital/Bitgo acquisition, which took the better part of a year from announcement to…well, not close).

The point here is these conversations take time, which means we need to backtrack from last week’s announcement to find when this conversation might’ve started, and ask why it might’ve started (presumably) right on the heels of Tactic raising $11M. Because it doesn’t seem likely that they would’ve been in acquisition talks while raising money.

Well, what do we do with the fact that FTX Ventures led Tactic’s fundraising round? What about this timeline?

  • September 27: Tactic raises $11M, led by FTX Ventures
  • November 11: FTX has a little moment in the press. Something something, liquidity crisis.

So we have TaxBit – best known for their enterprise-grade crypto tax software, wanting to expand into the accounting side, and we have a startup with a nice corner on the SMB crypto accounting market who is suddenly selling to them a few months after raising money through a company that was recently found to be insolvent.


We don’t know the exact nature of Tactic’s relationship with FTX Ventures, or where their funds were held, or what kind of crunches they were feeling around revenue expectations. But hopefully whatever the true reason for this quick pivot was, Tactic either got a piece of Taxbit’s $243M they’ve raised so far, or a cut of their $1.33B valuation to help them breathe a little easier.

Bigger picture

There have obviously been a lot of other layoffs in this space in recent months from players like Koinly and ZenLedger. Could we expect similar moves from them where the layoffs are closely followed by a strong move into a different vertical?

It’ll be interesting to keep an eye on who moves in to fill gaps from a) bigger fish moving out of spaces they’ve dominated for a while to focus on new products and b) smaller fish being bought out by the bigger fish. What kind of room does that make for smaller upstarts to move in on the new territory?

Let’s wait and see.

NEW SECTION: Tom’s Transaction 💻

We’d like to introduce a new section of Triple Entry, which may be of particular interest to those of you looking for brain-teasers during the accounting busy season.

First, meet Tom.

Tom is a real accountant and good friend of ours, and believe us when we say – Tom has seen it all when it comes to crypto accounting.

From this day forth, this section of Triple Entry will feature a scenario based on a real-life transaction Tom encountered on Etherscan. Your mission, should you choose to accept it, is to test your crypto accounting knowledge by solving Tom’s Transaction. Tell us a) what this transaction is and b) how you would account for it.

You can write in with your response, or (even better) jump on the Triple Entry Lunch Break Livestream this afternoon and drop it in the comments!

Disclaimer: The transactions being used are publicly available information on the blockchain that were randomly selected to show certain types of crypto activity. The owners of the wallets involved, as well as the true nature of the transactions, are unknown. These are interpretations of transactions as they might relate to US GAAP. None of the tokens, wallets, or protocols are endorsed, and links (when available) are provided for educational purposes only. This transaction’s references: Uniswap, FASB

Now then. We present Tom’s Transaction #1.

What is this transaction and how would you account for it?

We’ll reveal the answer in our next issue!

Extraordinary Items

Thanks again, FBI. Really doing the most out there. #protectandserve

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