Headline: Take your Chances, TWICE!!!!
Body:
Well, once again, I find myself resorting to the analogy of using 2 stacked rolling chairs to change a lightbulb. Let me explain. Casinos are one thing: You walk in with a small amount of money that you are willing to lose, for the small chance of winning a REALLY BIG payday. This is very risky, but in moderation, can be exciting and done responsibly. But, now, the casinos are beginning to accept cryptocurrency and the boil-out is often, one doesn’t even know how much they are “down” until it is well and truly too late. On the other hand, if you win big, it can really be BIG!!!! So, this seemed like a really good basis for an entry.
OK, so what is this thing that we are talking about?
We are talking about an online casino, known as Stake.com (Hereinafter referred to as “Stake.”). Doubtless, you’ve seen ads for the slot machine games? Same sort of thing, only, the account that you setup has kinds of cryptocurrency instead of fiat currency. This casino was launched in 2017 by Mr. Craven and his co-founder Bijan Tehrani; and they have a really interesting history. They met playing a fantasy-based role-playing game where they first tested the concept of online gambling. In observance of their efforts, they were banned from the game. Their real enterprise has been growing FAST!! The $105 Million in revenues in 2020 increased to $26 Billion in 2022. Currently based in Curacao, they provide crypto and non-crypto gambling services all over the world.
Why was it so successful?
Star power is a large portion of this answer. I only know the name of 1 current rapper, and that’s Drake. Drake had some gambling in this casino and on the basis of Bitcoin, he had won $38 Million USD. The owner, Mr. Craven, might’ve displayed displeasure having to pay this out, but I suspect that such a high-exposure winner will make him lots of money over the longer term. (And I think he knows it.) And it’s not only Drake: There are Premier League teams and F1 teams that endorse this business.
So, is it falling apart?
Yes. Former partners of the duo are suing for stealing their intellectual property. In a separate action, there is a class of people claiming that Craven and Tehrani helped FTX owner Sam Bankman-Fried cover up a loss of several Billion dollars. In the latest news, Stake has had to deal with a hack of $41 Million held within “hot” wallets on the site. Amazingly, they were only out of business for a few hours before resuming operations.
That’s A LOT of money!! How was it not seen?
The hack started with some unusual transactions just after noon on a Monday. Little by little, bits of cryptocurrency were moved off-chain and transferred to fiat currencies. This happened at both Stake.com and at Binance. An additional $25 million was siphoned off of Binance Smart Chain and Polygon, according to blockchain investigator ZachXBT. I have read many descriptions of this attack, and the miscreants are repeatedly described as “methodical.” They would drain only the “hot” wallets, and they wouldn’t drain them completely.
So, what can I learn from this?
You can learn a few things:
- Keep most of your digital assets in a cold wallet, one which you keep secured in a safe or other secured environment. Hot wallets should only contain a VERY small percentage of your digital assets. And for Heaven’s sake, please record your password legibly in several places.
- Stay out of casinos, usually. When you do go, have a firm budget, and only bet currencies that you know the true value of. (This dis-qualifies cryptocurrencies.)
- If you do go with a hot wallet, make sure that it is hosted by Coinbase, Binance, or some other trusted custodian. They have professionals who know a lot more about cyber-security than you and I do.
REFERENCES
Crypto casino Stake reopens withdrawals just 5 hours after $41M hack (cointelegraph.com)
Drake-Backed Crypto Casino Stake Loses $40M in ‘Unauthorized’ Transfers – Decrypt
Crypto Casino Stake Opens Withdrawals After Reported $40M Exploit (cryptonews.com)
Stake.com: the Aussie gambling minnow that made it big on crypto | Financial Times (ft.com)
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.