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Bitcoin Family is moving more than $1 million into decentralized exchanges after Sam Bankman-Fried’s FTX disaster

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The Taihuttu family in November, days after moving back to Phuket.

Didi Taihuttu

Confidence is quickly eroding in the crypto sector, as it faces a wave of bankruptcies and investigations into Sam Bankman-Fried and his failed exchange, FTX, for losing and misspending billions of dollars in user deposits.

But Didi Taihuttu; his wife, Romaine; three daughters, and Teddy, a Pomeranian puppy they adopted in Portugal last year, are as confident as ever in their bet on bitcoin — they’re just changing how they store it.

Ever since liquidating all of their assets and buying bitcoin in 2017 back when it was trading at around $900, the Taihuttus have safeguarded their crypto riches in three main places: centralized exchanges, or CEXs, such as Bybit and Kraken; decentralized exchanges, or DEXs, such as Uniswap; and hardware wallets hidden in secret vaults on four different continents.

But as digital asset brokers, lenders, and exchanges continue to fall into bankruptcy — locking up customer funds in the process — the Dutch family of five is proactively moving $1 million in crypto into DEXs, which allow users to hang on to custody of their tokens.

“For me, bitcoin is still about freedom, and decentralized currency should be able to be used by everyone in the world without needing to do KYC or any other regulatory stuff,” Didi Taihuttu told CNBC, referring to the know-your-customer, or KYC compliance, required by many centralized platforms such as Coinbase. DEXs don’t require users to connect an ID or bank account to the platform, hence making it an ideal custody solution for the Taihuttus.

The Taihuttu family in Lagos, Portugal on the day they adopted Teddy, their Pomeranian puppy.

Didi Taihuttu

CNBC caught up with the 44-year-old patriarch a few days after the family made the move from Lagos, Portugal, to Phuket, an island just off the western coast of mainland Thailand in the Andaman Sea. The family is currently living on 0.3 bitcoin a month — about $5,000 — and they are buying back the bitcoin that they sold when the cryptocurrency was trading at around $55,000 a year ago. For the Taihuttus, the cascade of crypto bankruptcies and failed tokens just shows that “bitcoin is the king” and “completely different than all the other projects,” Didi Taihuttu said.

While the Taihuttus did not have any tokens tied up with FTX, Celsius, Voyager Digital, or any of the other platforms that recently went under, the wave of failures did remind them of the importance of ownership.

In crypto, one of the mantras is “not your keys, not your coins,” meaning that rightful possession of tokens comes through the custody of the corresponding private keys. DEXs such as Uniswap and SushiSwap are peer-to-peer platforms where transactions happen directly between traders, entirely cutting out intermediaries such as banks and brokers. That means that users retain custody of their tokens by never handing over their private keys.

DEXs eliminate centralized intermediaries from financial transactions such as trading, holding and transferring assets through programmable pieces of code known as smart contracts. These contracts are written on a public blockchain such as ethereum, and execute when certain conditions are met, negating the need for a central intermediary. 

In essence, with DEXs, you trust code, and with CEXs, you trust people.

“You never send your bitcoin to an exchange. Your bitcoin stays in your own wallet, meaning you have complete custody of your coins,” explained Taihuttu. “You connect to a DEX, and by making that connection, you trade out of your own wallet.”

That nuance of ownership is critical.

“If the DEX collapses, it doesn’t matter, because the bitcoin are always in your own wallet,” he added.

It just got harder and less profitable to mine for bitcoin as algorithm adjusts

Changing their storage strategy

From the beginning, Taihuttu said he could tell something was “really off” with FTX, even though it was one of the biggest CEXs on the planet before it imploded in November.

“Too many influencers were paid too much money to promote that one,” said Taihuttu, who added that reliable crypto products and companies typically don’t rely so heavily on celebrity endorsements.

Taihuttu had learned his lesson in 2017, when he lost four bitcoin to a hack of a centralized exchange known as Cryptopia.

“From that moment, I was always searching for alternatives,” he said.

The Taihuttu family in the Netherlands.

Didi Taihuttu

People who choose to hold their own cryptocurrency can store it “hot,” “cold,” or some combination of the two. A hot wallet is connected to the internet and allows owners relatively easy access to their coins so they can spend their crypto. The trade-off for convenience is potential exposure to bad actors.

“Cold storage often refers to crypto that has been moved to wallets whose private keys — the passwords that enable the crypto to be moved out of the wallet — are not stored on internet-connected computers, so that hackers can’t hack into the computer and steal the private keys,” said Philip Gradwell, chief economist of Chainalysis, a blockchain data firm.

Thumb drive-size devices such as a Trezor or Ledger offer a way to secure crypto tokens “cold.” Square is also building a hardware wallet and service “to make bitcoin custody more mainstream.” The Taihuttu family has largely relied on cold storage to safeguard their tokens for the last six years.

Currently, the Taihuttus keep 27% of their crypto holdings “hot” on centralized exchanges such as Bybit, a platform Taihuttu said is transparent and backed by real assets. He also keeps some tokens on Kraken, since it is one of the oldest exchanges. He refers to this crypto stash as his “risk capital,” and he uses these crypto coins for day trading and potentially precarious bets.

The other 73% of the Taihuttus’ total crypto portfolio is in cold storage. These cold hardware wallets, which are spread around the globe, hold bitcoin, ether and some litecoin

Didi Taihuttu in a desert in Dubai.

Didi Taihuttu

The family declined to say how much it holds in crypto, but they did disclose that they are shifting $1 million worth of bitcoin, ether, litecoin, polkadot, and other tokens from these hardware wallets and centralized exchanges to decentralized exchanges.

Taihuttu said he ultimately wants to move 100% of the family’s crypto savings into DEXs and invest 15% of their net worth into upstart DEXs since he sees these decentralized platforms as the centerpiece of the next bull run. When asked why he is going all in on DEXs instead of keeping his crypto cold, Taihuttu pointed to ease of access.

DEXs allow him to connect the crypto he safeguards on thumb drives in hiding spots all over the world directly to the platform, meaning that he can make trades far more easily while still protecting his tokens.

“Our capital now is really difficult to use in trading, because then I need to send my bitcoin from my ledger into an exchange,” Taihuttu said.

The financial privacy offered by DEXs is also a huge incentive.

“You’re trading from an anonymous ledger on an exchange as an anonymous entity,” he said. “You get full access to non-KYC trading in a decentralized way on a DEX.”

Taihuttu isn’t alone in shifting his focus to DEXs. Following the FTX bankruptcy, Trezor’s sales revenue reportedly jumped 300% and billions of dollars in bitcoin fled exchanges. Meanwhile, Multicoin Capital, a crypto investment firm, told limited partners that 7% of its assets are similarly stored cold, in self-custodied wallets.

Didi Taihuttu and two of his daughters on a boat trip in Portugal.

Didi Taihuttu

The pros and cons of DEXs

Centralized exchanges are a big part of what helped spur crypto adoption by offering new investors an easy on-ramp.

“Centralized exchanges have played a vital role in the adoption of cryptocurrency,” said Auston Bunsen, co-founder of QuikNode, which provides blockchain infrastructure to developers and companies. “With their growth came the industry’s growth.”

But in the last few years, and especially in the last six months, decentralized exchanges have grown in popularity as investors look to trade in a manner that protects their funds.

Boaz Sobrado, a London-based fintech data analyst, sees three main advantages to DEXs: They are noncustodial, meaning you don’t have to trust someone, like Sam Bankman-Fried, to store your funds for you; they are open, meaning anyone in the world can participate; and transaction data is more widely available, reducing the risk of insiders getting an edge from knowledge only they have.

Didi Taihuttu in Lagos, Portugal.

Didi Taihuttu

Uniswap has facilitated more than $1 trillion in trading volume from around 100 million trades since it launched in 2018, according to a research note from Bank of America on June 13. Rival DEXs such as SushiSwap and PancakeSwap have also gained traction among traders, though Uniswap still accounts for around 51% of all trading volumes on DEXs year to date.

While DEXs play an important role in the digital asset ecosystem, there are a lot of reasons these decentralized platforms won’t eclipse their centralized peers any time soon, according to Alkesh Shah, Bank of America‘s head of web3, crypto and digital assets strategy.

“Centralized exchanges provide a one-stop shop for investing or trading digital assets with someone to speak to if something goes wrong — this will be critical for mainstream adoption beyond the early adopters of today,” Shah told CNBC.

Shah said that investors are likely to prefer exchanges that are more transparent about their operating practices, adding that regulated and transparent CEXs are likely to be important for mainstream adoption long-term.

Bank of America said in its June note that it expected Uniswap, in particular, to face regulatory scrutiny. The bank said it also saw the potential for the Securities and Exchange Commission to require its registration as a National Securities Exchange or broker-dealer.

Didi Taihuttu and his eldest daughter, Joli.

Didi Taihuttu

“Uniswap may be unable to comply with regulatory requirements, given its inability to verify user identities, implement AML/KYC [anti-money laundering/know your customer] requirements or provide the necessary disclosures for the thousands of tokens listed on its platform,” the research note said.

Some centralized platforms are splitting the difference by offering DEX-type services, but it is unclear what sort of regulatory blowback they might ultimately face.

Meanwhile, Sobrado told CNBC that at this stage, most DEXs lose money, meaning they might not be sustainable.

DEXs are also automated market makers, meaning that the exchange pools liquidity from its users and then uses an algorithm to price the assets within that pool. Sobrado said that this model has proven remarkably resilient — but is unproven versus orderbook exchanges such as Coinbase.

Under it all, the Bitcoin Family still believes that the original cryptocurrency is a solid bet. They say they haven’t been swayed by the turmoil of the last six months.

“We seem to get that lesson every bitcoin cycle,” said Taihuttu. “It was Mt. Gox, it was banning bitcoin in China, it was banning mining. There’s drama every time.”

“But looking at the current situation: We have a huge war going on, we have a huge financial crisis, we have FTX, we have Celsius, we have a lot of bear market signals,” he said. “I think that bitcoin is really holding strong at $16,800. For me, bitcoin is still doing perfect and still doing what it always does: Being a decentralized currency that is usable by all people all over the world.”

Didi Taihuttu giving a speech on bitcoin adoption in Tulum, Mexico.

Didi Taihuttu

Correction: This story has been updated to reflect that the family currently keeps 73% of its crypto tokens in cold storage. A previous key point gave an incorrect percentage.


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Two children and two adults survive after Tesla plunges 250 feet off California cliff

View from the helicopter during a rescue operation after a vehicle carrying two adults and two children went over a cliff in Devil’s Slide, San Mateo county, California, U.S., January 2, 2023, plunging hundreds of feet, according to the Department of Forestry and Fire Protection, in this still image obtained from social media video.

CHP – Golden Gate Division | Reuters

Two adults and two children were rescued from a Tesla that plunged 250 feet off a cliff Monday morning in San Mateo County, California, officials said. 

The car was traveling southbound on the Pacific Coast Highway when it went over the cliff at Devil’s Slide, south of the Tom Lantos tunnel, and landed near the water’s edge below, the Cal Fire San Mateo-Santa Cruz Unit said. 

The car flipped and landed on its wheels in the fall, CAL FIRE/Coastside Fire Incident Commander Brian Pottenger said. Witnesses saw the accident and called 911. 

As crews were lowered down, they were able to see movement in the front seat, through their binoculars, meaning someone was alive.

“We were actually very shocked when we found survivable victims in the vehicle. So, that actually was a really hopeful moment for us,” Pottenger said. 

Fire officials called for helicopters to help hoist the survivors to safety. As they waited, firefighters rappelled to the scene and rescued the two children.

Rescue teams are seen at the scene as a Tesla with four occupants plunged over a cliff on Pacific Coast Highway 1 at Devils Slide on January 2, 2022 in San Mateo County, California, United States.

Tayfun Coskun | Anadolu Agency | Getty Images

The California Highway Patrol shared video on social media showing helicopters lower first responders to the scene to extricate and rescue two adults inside. 

All four were hospitalized. The San Mateo Sheriff’s Office said the two adults suffered non-life-threatening injuries and the two children were unharmed.

It’s not clear what caused the car to go over the cliff. CHP is handling the investigation. 

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Tesla shares tumble more than 10% following deliveries report

Tesla vehicles are shown at a sales and service center in Vista, California, June 3, 2022.

Mike Blake | Reuters

Shares of Tesla dropped 13% on Tuesday morning, a day after the electric auto maker reported fourth-quarter vehicle production and delivery numbers for 2022.

Deliveries are the closest approximation of sales disclosed by Tesla. The company reported 405,278 total deliveries for the quarter and 1.31 million total deliveries for the year. These numbers represented a record for the Elon Musk-led automaker and growth of 40% in deliveries year over year, but they fell shy of analysts’ expectations.

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According to a consensus of analysts’ estimates compiled by FactSet, as of Dec. 31, 2022, Wall Street was expecting Tesla to report around 427,000 deliveries for the final quarter of the year. Estimates updated in December, and included in the FactSet consensus, ranged from 409,000 to 433,000.

Those more recent estimates were in line with a company-compiled consensus distributed by Tesla investor relations Vice President Martin Viecha. 

Some Wall Street analysts think Tesla’s deliveries miss spells trouble for the electric vehicle maker, but others see a buying opportunity for the company in 2023.

Baird analyst Ben Kallo, who recently named Tesla a top pick for 2023, maintained an outperform rating and said he would remain a buyer of the stock ahead of the company’s earnings report, which is scheduled for Jan. 25.

“Q4 deliveries missed consensus but beat our estimates,” he said in a Tuesday note. “Importantly, production increased ~20% q/q which we expect to continue into 2023 as gigafactories in Berlin and Austin continue to ramp.”

Analysts at Goldman Sachs said they consider the delivery report to be an “incremental negative,” and view Tesla as a company that is “well positioned for long-term growth.” Goldman reiterated its buy rating on the stock in a Monday note and said that making vehicles more affordable in a challenging macroeconomic environment will be a “key driver of growth.”

“We believe key debates from here will be on whether vehicle deliveries can reaccelerate, margins and Tesla’s brand,” the analysts said.

Shares of Tesla suffered an extreme yearlong sell-off in 2022, prompting CEO Musk to tell employees in late December not to be “too bothered by stock market craziness.”

Musk has blamed Tesla’s declining share price in part on rising interest rates. But critics point to his rocky $44 billion Twitter takeover as a bigger culprit for the slide.

Morgan Stanley analysts said they think the company’s share price weakness is a “window of opportunity to buy.”

“Between a worsening macro backdrop, record high unaffordability, and increasing competition, there are hurdles for all auto companies to overcome in the year ahead,” they said in a note Tuesday. “However, within this backdrop we believe TSLA has the potential to widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition.”

CNBC’s Lora Kolodny and Michael Bloom contributed to this report.

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Tesla makes China boss Tom Zhu its highest-profile executive after Elon Musk

Tom Zhu Xiaotong, Tesla’s current executive in charge of China, speaks as a new Tesla experience store opens on Aug. 18, 2015 in Hangzhou, China.

Visual China Group | Getty Images

Tesla’s China chief Tom Zhu has been promoted to take direct oversight of the electric carmaker’s U.S. assembly plants as well as sales operations in North America and Europe, according to an internal posting of reporting lines reviewed by Reuters.

The Tesla posting showed that Zhu’s title of vice president for Greater China had not changed and that he also retained his responsibilities as Tesla’s most senior executive for sales in the rest of Asia as of Tuesday.

The move makes Zhu the highest-profile executive at Tesla after Chief Executive Elon Musk, with direct oversight for deliveries in all of its major markets and operations of its key production hubs.

The reporting lines for Zhu would keep Tesla’s vehicle design and development — both areas where Musk has been heavily involved — separate while creating an apparent deputy to Musk on the more near-term challenges of managing global sales and output.

Tesla did not immediately respond to a Reuters request for comment.

Reuters reviewed the organizational chart that had been posted internally by Tesla and confirmed the change with two people who had seen it. They asked not to be named because they were not authorized to discuss the matter.

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Zhu and a team of his reports were brought in by Tesla late last year to troubleshoot production issues in the United States, driving an expectation among his colleagues then that he was being groomed for a bigger role.

Zhu’s appointment to a global role comes at a time when Musk has been distracted by his acquisition of Twitter and Tesla analysts and investors have urged action that would deepen the senior executive bench and allow him to focus on Tesla.

Under Zhu, Tesla’s Shanghai plant rebounded strongly from Covid lockdowns in China.

Tesla said on Monday that it had delivered 405,278 vehicles in the fourth quarter, short of Wall Street estimates, according to data compiled by Refinitiv.

The company had delivered 308,600 vehicles in the same period a year earlier.

The Tesla managers reporting to Zhu include: Jason Shawhan, director of manufacturing at the Gigafactory in Texas; Hrushikesh Sagar, senior director of manufacturing at Tesla’s Fremont factory; Joe Ward, vice president in charge of Europe, the Middle East and Africa; and Troy Jones, vice president of North America sales and service, according to the Tesla notice on reporting lines reviewed by Reuters.

Tesla country managers in China, Japan, Australia and New Zealand continued to report to Zhu, the notice showed.

Zhu does not have a direct report at Tesla’s still-ramping Berlin plant, but a person with knowledge of the matter said responsibility for that operation would come with the reporting line for Amsterdam-based Ward. Ward could not be immediately reached for comment.

Zhu, who was born in China but now holds a New Zealand passport, joined Tesla in 2014. Before that he was a project manager at a company established by his MBA classmates at Duke University, advising Chinese contractors working on infrastructure projects in Africa.

During Shanghai’s two-month Covid lockdown, Zhu was among the first batch of employees sleeping in the factory as they sought to keep it running, people who work with him have said.

Zhu, a no-fuss manager who sports a buzz cut, favors Tesla-branded fleece jackets and has lived in a government-subsidized apartment that is a 10-minute drive from the Shanghai Gigafactory. It was not immediately clear whether he would move after his promotion.

He takes charge of Tesla’s main production hubs at a time when the company is readying the launch of Cybertruck and a revamped version of its Model 3 sedan. Tesla has also said it is developing a cheaper electric vehicle but has not provided details on that plan.

When Tesla posted a picture on Twitter last month to celebrate its Austin, Texas, plant hitting a production milestone for its Model Y, Zhu was among hundreds of workers smiling on the factory floor.

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Allan Wang, who was promoted to vice president in charge of sales in China in July, was listed as the legal representative for the operation in registration papers filed with Chinese regulators in a change by the company last month.

Tesla board member James Murdoch said in November the company had recently identified a potential successor to Musk without naming the person. Murdoch did not respond to a request for comment.

Electrek previously reported that Zhu would take responsibility for U.S. sales, delivery and service.

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