Wall Street is at it again, folks. This time, they’re going deep on Bitcoin! To achieve this, they’re creating a new publicly traded entity named Twenty One through a merger with Cantor Equity Partners (CEP). On the surface this seems like a big win and yet another step towards bringing crypto into the mainstream. Behind the rosy veneer of “innovation” and “democratization of finance,” however, lies a deeply troubling reality. You need to know about them long before your retirement savings comes anywhere close to this monstrosity. Get ready to go on a jagged journey.

Concentrated Power Threatens Market Integrity

Let’s be blunt. Tether and Bitfinex will hold 95% equity stake in Twenty One. This is one fact that you should absolutely be quaking in your boots about! Tether’s history is replete with controversy and a lack of transparency regarding the backing of its USDT stablecoin. Today, it has extreme influence over a $1 billion market cap publicly traded company with a gigantic Bitcoin treasury to boot. Think about that for a moment.

This coalition partner has a deeply troubling history. It has now taken on an outsized impact on a sector already known for its instability. Remember the GameStop saga? Now picture that, but magnified by the opaque nature of cryptocurrency and the ability to engage in market manipulation.

And this isn’t simply about Bitcoin, folks— this is literally about ensuring the integrity of our financial system. When a handful of entities, including SoftBank with its "significant minority ownership," control a substantial portion of a publicly traded asset, the potential for abuse skyrockets. We aren’t just talking about abuse through insider trading, pump-and-dump schemes, and other chicanery that turns millions of ordinary investors into the proverbial bagholders—though it surely includes that, too.

Massive Bitcoin Treasury, Massive Hacking Risk

Forty-two thousand Bitcoin. That's a huge target for hackers. In short, Twenty One is just begging for their lawsuit to be thrown out. As more validation of their strategy, they have become the third largest corporate Bitcoin treasury in the world.

Let’s face it, the cryptocurrency world isn’t short on stories of hacks and thefts. Remember Mt. Gox? Remember the countless DeFi exploits? What’s the legal and consumer impact when Twenty One gets hacked and thousands of Bitcoin vanish into the digital ether?

The crucial question is: how well is this treasury insured? My bet is not well enough. The crypto asset insurance market is still in its infancy, as coverage is severely limited and costly. If a major hack occurs, retail investors in Twenty One could be left holding the bag, watching their investments vanish as the company scrambles to recover its losses.

We’re not just talking about losing a few bucks here. It’s easy to understand why so many people are tempted by the lure of Bitcoin wealth. This might result in primarily existential losses for them. This is not a game.

Bitcoin Volatility: A Recipe for Disaster

Bitcoin is notoriously volatile. For some, that’s a bug, but for many, that’s a feature. For the everyday investor, it’s a surefire recipe for sleepless nights and eventual financial disaster. Twenty One’s approach of maintaining a large Bitcoin treasury and aggressively promoting Bitcoin adoption might make this volatility even worse.

Think about it: if Twenty One starts buying up even more Bitcoin, it could drive up the price artificially, creating a bubble that will eventually burst. And when that bubble bursts, who pays the price? Of course, the retail investors rushed in at the top. And they were seduced entirely by the hype – by the promise of the quick new dollar.

We've seen this movie before. History repeats itself. It repeats itself because nobody learns.

Jack Mallers, the CEO of Twenty One, played a key role in El Salvador's disastrous decision to adopt Bitcoin as legal tender. This needs to be an alarm bell, not a trophy case.

Make no mistake, I’m the last person opposed to innovation. But when that innovation puts the lives of everyday people at risk, we need to pump the breaks.

Wall Street’s Bitcoin bet is a speculation, and you’re the one cashing the tickets. Play them wisely.

  • Diversify, diversify, diversify. Don't put all your eggs in one basket, especially a basket as volatile as Bitcoin.
  • Do your homework. Understand the risks involved before investing in any cryptocurrency-related asset.
  • Be skeptical. If something sounds too good to be true, it probably is.
  • Demand transparency. Call on regulators to scrutinize Twenty One and ensure that it is operating in a responsible and transparent manner.

Wall Street's Bitcoin bet is a gamble, and you are the one holding the cards. Play them wisely.