The Controversial Ledger 🤨

"Financial asset security is the bridge that connects your aspirations to reality."

— Unknown

👋 Friends, Rallie here. The newsletter sending you into the long weekend with a healthy dose of crypto, tech, and finance news.

On the menu:

• 👀 Ledger's "trusty" wallet service

• 🗞️ Headlines that hit

• 📈 Refresh: A nation's debt

• 💯 Top tweets

The Rallie Recap

😬 Ledger in hot water from the crypto community as a new service, Ledger Recover, makes its customers as the question, is my wallet safe?

• Ledger, the maker of crypto hardware wallets, has a new optional service for consumers, called Ledger Recover. The service gives a way to secure their speed phrases (their crypto wallet's recovery key) through splitting them up into three fragments that are secured by three separate companies.

• To access to your wallet, you would have to get 2 out of the 3 companies to send you fragments back to the Ledger device to reassemble them for your key. That way, you do not have to worry about losing that piece of paper that has your speed phrase on it.

• But, many argue that ruins the entire purpose of hardware wallets, considered the most secure way to hold crypto, with issues of the vulnerability when sharing fragments to companies and the requirement of government issued IDs for use.

• With its last data leak in 2020 that caused 270,000 customers' names and addresses being leaked, trust in the company is shaky at best. Many customers also note that Ledger's new service walks back on its original promise, to never have access to customer's private keys.

• Ledger's chief experience officer, Ian Rogers, had this to say, "People have had a lot of fear, which is perhaps unjustified," with the argument the service is optional and has transparent partnerships with the other third-party custodians holding the fragments. Yikes.

• Ledger CEO, Pascal Gauthier, said "Actually, this is what future customers want ... This is the way that the next hundreds of millions of people will actually onboard to crypto." As cryptocurrency and other digital asset technologies develop, the balance between security and accessibility will constantly be tested.

Headlines That Hit

• 🤑 Were you influenced? The $GREED experiment conducted by Voshy, had 43K Twitter accounts and 55K wallets signed over to the influencer to make the "big bucks".

• ⛓ Denied! Elizabeth Holmes and Ramesh Balwani ordered to pay $452 million to victims of Theranos while bail is withheld. 

• 👑 A royal car chase. Prince Harry and Meghan Markle dangerously pursued by paparazzi in a two-hour car chase.

• ⚖️ Bad breakup. Citadel Securities sues former employees for "stealing" trade secrets after they left to form a market-making firm for cryptocurrency.

• 🚗 Uber for everyone! The new accessibility features, including enhanced safety features for teens ordering rides, has just rolled out for Uber users.

• 🏦. The bank panic fallout. Former CEO of First Republic Bank argues that the unexpected failures of other major banks caused $100 billion in withdrawals that the company could not prepare for.

• 🗞️ The blame game in Senate. Greg Becker, former CEO of Silicon Valley Bank accused the media, the government and SVB's board for the company's collapse but had nothing to say about his mistakes. 🧐

Rallie Refresh: A nation's debt

With panic all around about US's debt ceiling, let's get back to the basics. Today, we're breaking down what a nation's debt is and why it gets so much buzz.

💵 What is a nation's debt?

• Think of a nation's debt levels and its debt "sustainability" like its credit score, it represents the "creditworthiness" rating of the country. Who its creditors are fall under a wide range, from private bond holders to lenders consisting of multiple countries and/or banks.

• It is normal for a nation to have debt; however, 🚩 red flags start waving when the debt is not sustainable. This means that the government is able to meet all its payment commitments, present and future, "without exceptional financial assistance or going into default."

• What does it mean to default? For governments, it means that they are unwilling or cannot to repay their creditors. The different types of defaults will be covered later.

🤨 So when is debt good?

• Some debt is considered good for a country because the additional funds through these loans can improve domestic revenue, mitigate the effects of crisis through policy and other support systems and more.

• However, the positive effects can offset by debt distress, where a country's debt is unsustainable and debt restructuring is necessary.

🫠 Why should you care about a country's debt?

• When a country does not have enough money to fulfill their financial obligations, funding for its people and social programs often gets pushed aside or cut.

• Furthermore, it can lead to market exclusion, penalties, lower economic output for years after, a negative financial reputation for the country, its assets and its citizens, issues with fulfilling their human rights obligations and harm future economic growth. 

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DISCLAIMER: This is not financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions.