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If you have had any experience with crypto trading, then I sure you would have heard of Binance.
In case you aren’t aware, Binance is an exchange that provides a platform for trading various cryptocurrencies.
It was founded in 2017 and is domiciled in the Cayman Islands. Binance is currently the largest exchange in the world in terms of daily trading volume.
Or at least it was until last month.
Because right now some of the world’s biggest banks and payment companies are shying away from being involved with them.
Several hedge funds have backed away from trading and other activities on Binance in response to the accelerating regulatory crackdown on the crypto exchange, deepening the strain for a group already cut off by a clutch of banks and payments companies.
It appears to me to be a full-on regulatory attack on the trading company.
However, speaking for myself, I can always rely on my R-Ray vision goggles (R-Ray in case you’re wondering is short for ‘Real Estate Cycle” Ray vision!).
And they are telling me something else.
Your trading capital is in serious danger.
If you weren’t involved in trading when the 2008 crash went down, then consider this your first warning shot.
Because we have seen this before.
And the results back then were utterly devastating.
So why take the risk with your own money when the history of the real estate cycle can be your guide?
If you hold any significant money in ANY trading platform regardless the type of instrument, you need to know what I am about to tell you, to help keep your money safe.
Early warning.
I did mention that Binance is headquartered in the Cayman Islands. It was once in Hong Kong.
However, regulatory pressure from the Chinese Communist Party’s (CCP) punishing regulatory crackdown on cryptocurrencies and those companies that allow trading with them forced Binance to move.
They moved to Japan, and then following pressure from Japanese regulators it moved its HQ to Bermuda. You’ll soon notice a trend here.
And it’s not one to spark confidence.
In 2019 they reported a large hack of their systems resulting in around 7000 Bitcoin (BTC) stolen from their exchange.
Clearly keen to recoup what they lost, in September of that year they announced the creation of a ‘perpetual futures contract’, which is one with no pre-determined buy or sell date.
They can therefore be held indefinitely with no need to roll over the contract.
Did I mention they come with up to 125% leverage?
No wonder these instruments are only found on crypto exchanges.
Fast forward to this year in May 2021 and it was reported that Binance was under investigation by both the Internal Revenue Service and the United States Department of Justice on allegations of money laundering and tax offenses.
In June 2021, Binance was ordered by the UK’s Financial Conduct Authority to stop all regulated activity in the United Kingdom.
Which takes us to today.
Hola Darren (Wilson)! I’m a Venezuelan living in US. I just recently started to read your bulletin and some of the books you have recommended.
Let me tell you, I’m mesmerized by your content and eager to learn more about the cycle and how can I profit from it in the next years.
I want to thank you and the entire team for providing this info, and I’m looking forward to keeping the learning process from y’all…
Seize the day!
Daniel – July 2021
Most folk who trade cryptos that I’ve spoken to never once question the safety and security of the exchange they are passing their capital over too.
If that’s you, then I ask this question; “do you know how easy it is to get your money back?”
Regardless of what you are about to invest in, this is the FIRST question you ask yourself, without exception. And without handing over a single cent.
Here’s a cool fact. I wrote that in 2019 Binance was a victim of a hack which saw several thousand BTC stolen.
Did you know that when it occurred the company banned withdrawal of funds? For two whole weeks!
But you could keep trading of course!
Imagine something similar happening in a regulated entity based in the US, or Australia, for example Commsec, the Commonwealth banks trading service?
There would be a Royal Commission into its cause, I’m sure.
Recall that Binance is the biggest crypto exchange of all, and apparently the most liquid.
I know that dozens of smaller and more illiquid exchanges have done similar lockdowns on client’s funds, many of them never reopening after those same funds were stolen.
This is your first warning shot.
Material shortfall.
Man Financial was a major global financier and derivatives trading brokerage firm that went bankrupt in 2011.
During the run up to the global financial crisis, it was one of the largest primary dealer of US treasuries securities.
It had spent the early part of the 2000’s buying up various financial investment houses and hedge funds including Australian based Ord Minnett.
Which meant it inherited all the client money sitting in accounts too.
It also meant it gained exposure to the contract for difference market and purpose-built trading platforms.
Man Financial decided to split the investment and brokerage businesses so they could each focus on their own markets.
The brokerage part of the business also changed its name during its IPO in 2007.
MF Global.
In February 2008 the first cracks appeared when MF Global announced a bad debt provision.
The provision was the result of unauthorized trading by a representative in a MF Global branch office, who on February 27, 2008, while trading in the wheat futures market in his personal account, substantially exceeded his authorized trading limit.
Oh dear.
Though its 2008, and anything goes so, why not use your own account?
I mean, who is asking questions when you deposit $142 million into it?
MF Global was fined $10 million.
I bet that hurt.
Well, it got a lot worse in 2011. Taking off balance sheet bets on European bonds using repurchase agreements (or Repos for short).
Thus, in October that same year a unit of the brokerage firm announced very matter of factly that they had a “material shortfall” in customers’ accounts.
By how much?
Oh, only $900 million.
Later though this was upgraded to $1.6 billion.
It was this time that terms such as Repos, collateral debt obligations (CDO’s) and the like first came to the public attention.
It was the popular take that these instruments are what brought around the so-called GFC.
But here’s your takeaway.
Those customer funds were segregated, MF Global had NO legal right to touch a single cent.
These are the funds that traders like you and I place our money. And they were stolen by the very financial firm we trusted to hold them safe.
The day this “material shortfall” was announced, customer funds were frozen the same day.
Not just those with MF Globals brokerage firm, but every account held with the other companies that they had brought up, such as Ord Minnett. And no reason nor warning given.
One day your money is there, the next it’s gone.
Those affected spent many years waiting to get even half their missing funds back.
Its time you got prepared.
Here’s another blast from the past.
To Repos and CFDs, you can add mortgage back securities (MBS).
A way to bundle mortgage loans lent against ever rising property prices (recall in 2007 they would never fall again), and then securitise these and resell them to institutional investors.
This was done as a way of removing the risk off from bank balance sheets.
Ah, those were the days, right?
Won’t need to worry about a repeat of that mess again.
Wrong.
A Wall Street Journal report from July 28th speaks about an exciting development for banks who can sell a ‘new kind of bond’.
One that shares the risk of mortgage default between the bank and institutional investors.
Ah, a security then, backed by…. mortgages….
Right.
Look, for those of us who study and research the 18.6-year Real Estate Cycle the reappearance of these MBS is sadly totally predictable.
There is nothing new under the financial sun.
Doesn’t matter if its Binance today, or a huge brokerage firm like MF Global back in 2011, here’s a self-evident truth.
Every real estate cycle sees a brand new and exciting way to part you from your money.
It’s baked in, there’s no avoiding this. See we have the reappearance of MBS for goodness’ sake!
Here are some simple steps you can take to safeguard yourself.
1. Understand that no-one cares more about your precious capital than yourself.
2. Before you hand over any money, understand just how simple and easy it is to take that same capital back out again.
3. Get ahead of the curve and educate yourself on the pitfalls and dangers inherently involved with exchanges like Binance.
4. Let your education start here with a member ship to the Boom Bust Bulletin (BBB). It’s designed to teach you the history of the real estate cycle (like what we covered here), why it does repeat (like I’ve discussed here) and help identify the life changing opportunities the cycle presents.
The setup is in, and we can now see that the same type of behaviour behind disasters like MF Global is now reappearing in companies like Binance.
All they want is your money, at any cost. Don’t let it happen to you.
Let the BBB become your go-to guide through the remainder of the cycle.
And all for less than $4USD a month.
Incredible value.
Don’t waste your time or money any longer.
Best Wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
P.S – Find us on Twitter under the username @PropertySharem1
P.P.S – Go to our Facebook Page and follow us for right up to date information on the 18.6-year Real Estate Cycle.