Hey crypto bros! Journalism ≠ advertising
...As CZ explains in his tweet, he has recently learned that most journalists are forbidden to HODL, the crypto term that means to “hold” and conveniently exposes the contradiction at the heart of digital currencies: HODLing means you are not actually using crypto for payments, its original intended purpose. (The one time a HODLer might actually want to use such an inefficient, slow and volatile means of payment as crypto would be to pay for things online that they want to keep private, such as drugs -- which even bitcoin's earliest advocates credit with its growth -- but CZ doesn't want to talk about that.)
CZ seems to have been told about the concept of the conflict of interest. It's a real thing! See this from the Financial Times' own code of conduct:
A conflict of interest may occur when our interests or activities (or those of our family or friends) affect our ability to make objective decisions for FT Group. This includes personal relationships with another employee if you have influence over their salary or career path. We either avoid these situations and/or are transparent about them and ensure they are approved at the appropriate level.
That's right! Journalists at “MSM” outlets such as this one are told to avoid situations in which they feel their ability to report fairly is compromised....MORE
Which raises the question "What exactly was going on here" (March 24, 2016):
That time I defaulted on Bloomberg’s Tracy Alloway
Back in October, 2015, Bloomberg’s Tracy Alloway and I struck an OTC futures deal over a teeny, tiny vial of crude oil, which Tracy for some reason felt compelled to nickname “Williston”.
Read about it here.
I now plan to default on this contract (a ladies’ agreement, witnessed by “the world” due its publication on Bloomberg) and this is a public notice explaining my reasons for doing so.
The terms of the contract — henceforth known as the “Williston contract” — were agreed as follows by email:
The contract was structured on Oct 16, 2015 and agreed a price of $49.78 for oil to be delivered in March.
The delivering party pre-agreed to take on the full cost of delivery. (She promised to walk it over to the FT’s office in New York, rather than deliver to Cushing Oklahoma.)
Tracy’s theoretical profit on the contango deal (which this contract was designed to hedge) — bar any basis risk between WTI and North Dakota Light Sweet — was expected to be $2.25 a barrel.
Since the quantity of the oil being dealt was a small fraction of a barrel — about 1 litre — Tracy’s spot acquisition price was deemed 24 cents in October. At $49.78 per barrel, my contract covered a promise to pay approx 31 cents for the oil in question. Her expected profit from a performing hedge was expected to be about 7 cents.
It is now March 24, and WTI oil is trading at approx $38.78 per barrel at the time of writing.
Tracy is in the money on the trade, having wisely hedged her crude in October. I, the counterparty to her hedge, owe her 31 cents in value, in exchange for the delivery of the Williston container to the FT’s office as soon as the transaction is settled. That’s a profit for Tracy no matter what.
Except...
…MORE
Our comment at the time:
"Default, dear Brutus, is not in our stars,
But in ourselves, that we are underlings."
First rule of bidness: Know your counterparty or use a clearinghouse.....
