Goldman Sachs Forbids Bitcoin Buys on Apple Card; But Loves ‘Pixie-Dust’ WeWork

Another banking firm has followed the industry line of forbidding the purchase of cryptocurrency using its credit cards. Goldman Sachs announced Friday that its upcoming Apple Card – a collaboration with Apple Inc – will not allow Bitcoin or crypto buys.

Goldman joins a long list of international banks which now refuse to deal with Bitcoin. The rhetoric for why that is tends to center around the idea of protecting the end user from cryptocurrency’s volatility. Banks fear an unexpected drop in the crypto market may translate into a sudden swathe of unpaid debts on their end.

But on the same day that Goldman Sachs announced it wouldn’t break bread with Bitcoin, news broke regarding its interest in something even more dangerous.

Reuters reports that JPMorgan (another who forbids Bitcoin purchases) is now in pole position to launch the WeWork IPO; while Goldman Sachs retains a strong interest.

IPO and ICO – Two Names for the Same Scam

WeWork is a startup which takes aim at the co-working space industry; renting properties and then letting them out to middle-class hipsters for the same price as a two-bed apartment. The business model, where the WeWork rents out properties long-term, and then sublets the space to customers on short-term contracts, has already drawn skepticism for the obvious risk involved.

Just months away from an expected IPO, the firm behind WeWork, the We company, is already valued at an estimated $47 billion. To date, the majority of that sum has come from behind-the-scenes investors, including Japan’s SoftBank Group.

Last year the company expected profits of close to $1 billion. Instead it racked up $1.9 billion in losses. Earlier this year the Wall Street Journal reported that the WeWork CEO had been renting out his personally owned properties to the WeWork company, making millions in the process.

The same outlet reported recently that the CEO, Adam Neumann, has begun to cash out a significant chunk of his WeWork shares just as the IPO starts to get underway. At least $700 million worth has been cashed out already, WSJ reports.

This is the same CEO who once said the firm’s “energy and spirituality” were more important than its revenues.

More Style Than Cryptocurrencies, But Just as Little Substance

The majority of cryptocurrency ICOs are opportunistic cash-grabs and outright scams. In the two years encompassing 2017 and 2018, the total funds raised by ICOs exceeded $15 billion. In 2019 thus far, the total sum raised has been a mere $340 million.

That’s in part because of regulatory pressure, but also because the bubble has now burst, and most people realise they won’t get rich by throwing all their savings at yet another “Ethereum Killer”, or “the next Bitcoin”.

ICOs have earned a bad reputation, and rightfully so. But, as someone who got into cryptocurrency before he got into stocks, this writer can’t figure out why the reputation of IPOs is much better.

The Financial Times called WeWork a “hypothetical company”, while others have derided it as being typical of the “pixie-dust” companies that flood out of places like Silicon Valley every year. With enough airy-fairy stylings and millennial buzzwords, even a simple real-estate business can capture the aura of being a new, disruptive entity. Charles Clinton of real-estate firm EquityMultiple told the BBC that marketing an old trick to a new audience was partly why:

“I think that they have expanded the base that accesses these kind of services very dramatically by marketing to a new audience, much like Apple has been able to do. Sometimes style alone is a form of disruption.” 

Bankers Bank

Even some of the most successful IPOs, like Amazon, still had to be propped up by investors’ money after they went public. In this way, many large bondholders and angel investors are equivalent to whales in the crypto market. Follow their lead if you dare, but if they start to lose interest, or their money gets drawn elsewhere, you better be ready to move.

When the banks say they want to protect their customers from volatility, all they really mean is that they want to protect themselves from volatility. As witnessed in their rush to get a piece of the WeWork pie, the banks, like fiat sniffer-dogs, will go wherever the money goes, as long as their risk can be insured and their profits assured.

How much consideration will be given to average-joe investors of the WeWork IPO when the share price inevitably dumps 30-35%in the first month, like the recently launched Lyft?

Right now, WeWork holds an estimated value even greater than Ethereum, XRP, Bitcoin Cash and Litecoin combined. And if Softbank have been crazy enough to throw $6 billion at this high-overhead business model, then there must be something there, right?

Apparently that’s all the reasoning that’s needed to justify chasing after a $47 billion “hypothetical” unicorn. More “spirits and energy” please.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Greg Thomson is a freelance writer who contributes to leading cryptocurrency and blockchain publications like CCN, Hacked, and others.