NYDIG Co-Founder Says ‘Do Not Invest’ in ‘Non-Bitcoin Crypto’ or ‘Non-Bitcoin DeFi’

Ross Stevens, Co-Founder and Executive Chairman of NYDIG, and Greg Cipolaro, NYDIG’s Head of Research, recently wrote an article in which they explained why their firm “always has been” and “always will be” a Bitcoin company.

NYDIG is “a subsidiary of Stone Ridge, a holding company that has led the creation of forward-thinking firms across the worlds of technology and finance, including a $13B+ alternatives asset manager.” It “delivers Bitcoin products across industries, from banking and insurance to fintech and nonprofits” and joins “stringent regulatory standards with ironclad technology to make Bitcoin universal.”

As you probably know, on Friday (11 November 2022), Samuel Bankman-Fried (aka “SBF”), the Co-Founder and CEO of crypto exchange FTX, announced the collapse of the FTX empire:

In a NYDIG blog post (titled “Through the Looking Glass: The FTX and Alameda Saga”) published on Thursday (10 November 2022), Stevens reiterated some of what he had said in a paper (jointly written with Nic Carter and Allen Farrington) that was published in June 2022:

I will start with the conclusion: my piece failed. Nothing has changed. DeFi-driven blowups have continued. Therefore, in the strongest possible terms, I repeat, with humility: do not invest in non-Bitcoin crypto. Do not invest in non-Bitcoin DeFi. This is why NYDIG is a bitcoin company. Always has been, always will be.

Over the last few years, we have had the ‘opportunity’ to ‘partner’ with Three Arrows, BlockFi, Celsius, FTX, and more. However, at Stone Ridge/NYDIG – far from a mistake-free firm comprised of mistake-free people, including and especially me – we seek to think from first principles.

When you cannot satisfy yourself with straightforward answers to straightforward questions such as, ‘how do you make money?’, or ‘why are you positive the GBTC-arb will always be positive and what happens to your business if you’re wrong?’, or ‘why do you think it’s appropriate for us to lend you money with less collateral than what’s required for US Treasury repo or with no collateral or all?’, or ‘why do some of your external investments come from one entity and other investments come from another?’, run, do not walk, away.

In addition, we have had countless ‘opportunities’ to ‘invest’ in ‘crypto yield’ projects that were momentarily enormously profitable, yet so obviously destined to blowup and so obviously violations of US securities laws. Hard pass. Life is too short to do anything other than partner with people you like, trust, and would be ferociously proud to be together with in a foxhole when the bullets are flying.

On 3 October 2022, NYDIG issued a press release to announce “the promotion of executives Tejas Shah and Nate Conrad to the roles of CEO and President, respectively.” The press release also mentioned that “NYDIG’s bitcoin balances hit all-time highs in Q3, up almost 100% year-over-year, and revenue is up 130% through Q2, with another increase when the firm closes its books on Q3.”

It went on to say that “building on this momentum, Shah and Conrad will focus on accelerating NYDIG’s investment in its industry-leading Mining Solutions franchise serving the largest North American miners and in its platform technology business, helping banks and non-bank enterprises utilize the Lightning Network for next-generation wallets and global payments.”

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