Posted on

MicroStrategy Sells $500 Million Notes To Buy Bitcoin

MicroStrategy has successfully sold off $500 million worth of notes (“the notes”) which it announced it was selling on June 8th in a press conference, to buy Bitcoin. The notes were sold to qualified institutional buyers in a private offering in reliance to Rule 144A under the Securities Act of 1933. They were all sold to persons outside of the United States in accordance with Regulation S under the Securities Act.

At the time of offering, MicroStrategy estimated that the net proceeds from the sale of the notes and related guarantees after deducting initial discounts and commissions and estimated offering expense payable by MicroStrategy would be $488 million.

MicroStrategy Confirms Sale Of Notes

In a press release that came out earlier today, MicroStrategy states that the notes and guarantees were all sold to qualified institutional buyers under the Securities Act.

“The notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy, and may be similarly guaranteed by certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering.”

There was massive interest in buying the notes offered by the corporation as the company reportedly received more than $1.5 billion in orders for the notes worth $500 million.

Related Reading | MicroStrategy Receives Over $1.5B In Orders For $500M Notes To Fund Bitcoin Purchases

CEO Michael Saylor who has always been bullish on Bitcoin said the plan was to buy more Bitcoin to add to its portfolio which now sits at approximately 92,079 Bitcoins.

The press release also issued a notice;

“This press release shall not constitute an offer to sell or a solicitation of an offer to buy the notes or any other securities, nor shall there be any sale of the notes or the related guarantees in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful under the securities laws of any such state or jurisdiction.”

The company is yet to disclose when it will purchase more Bitcoin.

MicroStrategy Unveils A New Subsidiary

The corporation also announced a new subsidiary, MacroStrategy LLC, which now holds all of the bitcoins the company has purchased thus far. This is assumed to be a play to separate the investment portfolio from the core business of MicroStrategy, which is an enterprise business application software vendor.

Related Reading | Why MicroStrategy Decided To Pay Its Board Of Directors In Bitcoin

MicroStrategy is the largest independent publicly-traded analytics and business intelligence company. Its ticker symbol is MSTR and it is traded publicly on the NASDAQ.

The stock market has reacted positively to this news. Shares of MicroStrategy are up 80% as at the time of this writing. MicroStrategy’s market cap now sits at around $5.82 billion, a massive jump from $5.03 billion as at yesterday.

A chart showing change in bitcoin price in 24 hours
Source: BTCUSD on TradingView.com

Bitcoin Market Reaction To MicroStrategy

This news follows Paul Tudor Jones announcing that he wants to allocate 5% of his portfolio to Bitcoin. Giving Bitcoin the bump it needed to finally get over the $40k hump after news of Tesla resuming payments with Bitcoin pushed it closed. Bitcoin price is up 9% today and is currently a little over $40k.

While this is by no means the bullish rally that investors have been hoping for but it shows that institutional investors are still optimistic about the future of the asset as it begins its climb back from its crash about a month ago.

MicroStrategy currently owns $3.7 billion worth of Bitcoin according to today’s prices, all of which were bought at an average of $24,000 per Bitcoin. This amount is higher than any other publicly-traded company in the world.

Chart from TradingView.com
Posted on

Why Bitcoin Is Actually “Bad For Crime” Contrary To Belief

Bitwise Management CEO Hunter Horsley was on Yahoo Finance Live to talk about why Bitcoin is bad for crime.

The technology which Bitcoin runs on, Blockchain, basically has a public ledger. Transactions cannot be hidden. No matter where or when a transaction originates, there is a digital trail that shows where it went to.

This helps to make sure that transactions are not subject to manipulation. Every single move is documented and can be seen, tracked by anybody. This is what authorities have been using to be able to recover funds gained illegally.

What Role Crypto Plays In Crime

When posed the question, the CEO pointed to the developments in the Colonial Pipeline ransomware attack where the FBI was able to seize and recover some of the assets. He said that while this was not intuitive to a lot of people, more and more of the public are learning about it.

Related Reading | Questions Linger As FBI Recovers Colonial Pipeline Ransomware Funds

Talking about his management fund, which is the largest crypto index fund manager worldwide, he explained that this is a topic that frequently came up with the people they work with. Everyone wants to know what role crypto plays in crime and what they should expect in the future. Referencing Chainalysis, an analytic service which is used by law enforcement, Horsley pointed out that the data on the site showed a downtrend in the use of Bitcoin and cryptocurrencies by cyber criminals in ransomware attacks.

Chart from TradingView website showing current Bitcoin price for the day.
24-hour Bitcoin chart | Source: BTCUSD on TradingView.com

For a number of years, Bitcoin has been the main currency used by cyber criminals to accept payment for ransomware attacks. Lots of companies have fallen victim to these attacks and have had to pay large amounts of money in crypto to attacks. One of those companies recently was Colonial Pipeline. They had to pay $4.4 million in Bitcoin to the attackers.

A Traceable Asset Is Bad For Crime

But the story doesn’t end there. With exchanges requiring KYC for their customers, authorities are able to trace Bitcoin transactions such as these. Since Bitcoin transactions are public, it is a matter of identifying which exchanges the coins are being moved to to be sold and the accounts can be frozen. Stolen coins are then gotten back from the exchanges.

As expected, a currency and/or transaction that can be tracked with such efficiency is not a good tool for crime. Thus leading to the fact that Bitcoin is bad for crime.

Related Reading | U.S. Recovers Millions Paid In Bitcoin For Pipeline Ransomware

Bitcoin use in cyber criminal activity is down 80 percent from 2019 to present. A significant downturn like this only shows that the criminals are starting to realize that Bitcoin is bad for their operations. This being very evident in the fact that the FBI was able to recover $2.3 million out of the $4.4 million paid as ransom to the attackers.

Hunter Horsely continues with stating that cyber security is even more important in crypto companies. They are the most targeted for hacks with regards to Bitcoin are other cryptocurrencies.

With regards to the government providing security in the cryptocurrency space, the CEO believes the government is doing a good job so far.

        “They’re equipping themselves with the right tools and then they’re enforcing on bad actors.”

The Department of Justice reported last year that they had seized millions of dollars from terrorist organizations in cryptocurrency.

This has led to a decrease in the use of cryptocurrencies in crime-related activities, despite the increase in cyber security incidents year over year.

This means that regulators and law enforcement are doing an effective job in ensuring that they keep the space safe.

Featured image from MarketResearchTelecast, chart from TradingView.com