A qualified Florida lawyer has posted a tweet claiming that Coinbase's redgipot is to blame for bitcoin's inability to grow. Sasha Hodder of Florida Coastal School of Law claims that CEO Brian Armstrong is to blame for bitcoin's price not rising since the bitcoin ETF appeared on U.S. exchanges.
According to her theory, which garnered over 780,000 reactions at the time of publication, "Coinbase somehow outbid its main lender, #ЛюбимыйТокен , to fund the Bitcoin #ETF [omitted].
Obviously, passing the Florida #bar exam doesn't guarantee that a lawyer knows how to spell the word "regpothecation," nor does it guarantee that he or she knows how capital markets work.
The post soon became a "community note," a feature of Elon Musk's social media platform X. According to this verified note, which was voted on by so many readers that it remained below Hodder's post, "Coinbase does this and there is no actual evidence that it does, and a later post by the author shows that it is pure speculation.
Bitcoiners have a natural aversion to re-borrowing assets. This is the fundamental motivation behind the creation of bitcoin. Banks, including central banks, are constantly re-hypothecating capital to secure loans and maintain the low capital buffer required for fractional reserve banking.
Re-hypothecation is the use of a customer's assets for new transactions. For example, if a customer deposits $100 into a money market account, most of the funds are re-hypothecated into bonds or other transactions. This is a common practice around the world.
Re-hypothecation allows banks to create money through fractional reserve lending. Re-hypothecation is necessary to maintain inflation. \n At best, re-lending allows multiple parties to realize a positive return on the same asset. At worst, overhypothecation liquidates assets of customers who did not consent to it. As an example of illegal overhypothecation, Sam Bankman Fry traded MobileCoin without the permission of FTX clients, losing hundreds of millions of dollars in illegally overhypothecated client funds.
He was sentenced to 25 years in prison for this and many other criminal decisions.
Read us at: Compass Investments
