WHY DOES BBBYcx EXIST?

 

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APRIL 4, 2019  BBBY.cx hits the blockchain

 

 

Six trading after days Legion secures a key victory in the proxy battle's progress, BBBY.cx, a crypto coin minted by Binance, appears out of thin air onto the blockchain. The first batch is 294,464 tokens, followed by 58,893 more on April 10, 2019. 

 

 

trade Volume quadruples immediately

 

 

The table below is historical price / volume data.

 

Yellow cells = days the BBBYcx tokens arrive on chain

 

March 26 was the day the Legion proxy fight was officially announced, highlighted in green. 

Immediately after the BBBYcx tokenized shares made their way onto the blockchain, the volume increases exponentially. This certainly lends to the idea these are being used in the traditional finance system to satisfy locates for real shares. 

 

No crypto company offered tokenized securities at this time. It is likely multiple insitutions used them as locates, and each tokenized share likely represents multiple shares. 

 

There is no legal explanation or justification for their existence. FTX wouldn't start offering tokenized shares until almost two years later during the GameStop madness of Jan '21. They immediately faced regulatory pressure and stopped the program after a couple of months. In June '21, Binance offers tokenized stocks. One month later they disband the program. 

 

A few days later, almost 2 billion more BBBYcx tokens are minted to the chain. 

 

 

JULY 24, 2021  1.999 billion more bbbycx are minted (bbby $28.72)

 

Binance's tokenized share program was abandoned after about a month, citing regulatory pressure. Pressure they knew was there going into it. However, the fact that it existed at all allowed them mint billions of tokenized shares for this stock and many others. 

 

As we covered in Why did Legion bet against the company?, Legion Partners had sold 1,000s of Jan 22 $26 & $30 call options without having the underlying shares. If the price of the stock were to climb over $26, or even worse $30 they would be in real trouble.

 

BBBY was trading just shy of $29 at this time. This is far too close to that $30 strike, but with these tokens they have time to walk it down before January. 

 

The tokens appearing on-chain seemingly starts the downward march of the stock. By mid-August, the stock is below $26 and stays there. By October, the stock would be down 60%. 

 

 

 

Theoretically, these tokens could also be used by JP Morgan (who facilitated the companyshare buybacks) to sell back to the company. JP Morgan is also who their ABL loan is through, which Mark Tritton expanded from 850m to 1 billion dollars in August '21, a month after the additional coins are minted. 

 

And wouldn't you know it? JP Morgan is also the bank that provides the shares for the company's share buyback program. A program that Mark Tritton would accelerate on Nov 4, '21. 

 

The volume explodes.

 

 

Again, if you hold these tokenized shares, it seems they're being used as real shares. So that means you could so something like the following...

 

1. Announce share buybacks to garner retail attention. 

2. Banks & hedgies sell tokenized BS into the market. 

3. JPM sells tokenized BS to Bed Bath and Beyond instead of real shares as part of their accelerated repurchase agreement. 

4. Let the stock run to maximize the effect. If the price gets too high to the strikes they sold calls in ($30) they can just short it back down. 

 

In short, these tokens give you full control over the price of the stock. So, they let it run, and then when they decide to change directions they make money shorting on the way down. 

 

Like clockwork.

 

They let it run up, and then when they're ready, they walk it back down. Remember, Legion & pals (JPM, others) need this far away from the $30 range due to the calls they sold in October 2020. They succeed. Their trade is safe, out of the thousands of calls they sold naked every single one expired worthless. 

 

Why do these exist at all? 

 

Why was Tritton expanding the ABL at a time of dwindling cash, and a 26% (!) decrease in revenue? 

 

Why is there such a significant change in the volume / movement of the stock if these aren't being utilized?