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By Joe Hoppe
Barclays PLC said Monday that Chief Executive Officer C.S. Venkatakrishnan has been diagnosed with non-Hodgkin lymphoma, with treatment expected to last 12 to 16 weeks.
The FTSE 100-listed bank said the cancer has been detected early and the prognosis is good. Mr. Venkatakrishnan will continue to actively manage the company during the treatment period.
Write to Joe Hoppe at joseph.hoppe@wsj.com
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Several years before my father’s death, he offered me and my two siblings each an early “cash gift” from his estate in the amount of whatever the maximum non-taxable amount was at the time. He was an active investor and offered the gift in the form of the stock instead of cash. My siblings took the cash and I decided to take it in stock valued the same as the cash amount.
Fast forward five years: My father just passed away and my siblings bought expensive toys and luxury automobiles with their cash, while my stock is worth many times what it was when it was given to me. His will states that the three of us should share in equal parts of his estate, but my siblings are arguing that my now very valuable stock should be included as an asset to be split among the estate.
Legally, they have no leg to stand on, but both are insistent that I’m taking money that is morally theirs. There’s no changing their mind and I’m convinced that we’re headed for a family feud. I’m not sure what I should do. Had the stock value gone to zero in that time, they wouldn’t be arguing that I should get extra to compensate for my “bad gamble.”
The Other Brother
Them’s the breaks — in this case, the sudden screeching of car brakes.
Your siblings could have chosen stocks over cash, but they wanted immediate gratification. That was their decision, and they are going to have to take ownership of their choice and live with it. Buying stocks are more likely to pay off if you hold on to them over the long term. You did just that. Instead of buying a Ferrari or a Tesla
TSLA,
you effectively chose to invest your gift.
Show the same certainty now, and don’t cave to your siblings’ demands. Don’t allow them to bully you into selling.
Investing is all about delaying your gratification — the ability to live for today and save for a more comfortable tomorrow, as opposed to having everything today and to hell with tomorrow. The gamification of stock trading with apps such as Robinhood
HOOD,
which has extended its trading hours beyond the market’s official hours, is in part about getting that dopamine hit. (However, trading after hours comes with risks — chief among them warped stock prices.)
This dispute is about choice. If you had taken the cash, those stocks would still be part of your father’s estate, but you made the choice to take the stock. Your siblings had the same option and chose not to exercise it. Tell them, “I know it must be frustrating for you, but we all had the same opportunity. I took it. You took the cash.”
There is only one reason they missed out — and if they look in the rearview mirror of their respective luxury cars, they will see that reason staring right back at them.
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
More from Quentin Fottrell:
• My girlfriend says I should tip in restaurants. I say waitstaff are just like construction and fast-food workers. Who’s right?
• ‘He was infatuated with her’: My brother had a drinking problem and took his own life. He left $6 million to his former girlfriend who used to buy him alcohol
• ‘She had a will, but it was null and void’: My friend and her sister are fighting over their mother’s life-insurance policy and bank account. Who should win out?
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Credit Suisse Group AG shares tumbled in Wednesday morning trading after the bank said asset outflows at its wealth-management business would lead to a fifth consecutive quarterly loss.
Shares
CS,
CSGN,
at 0830 GMT were down 4.9% to CHF3.66.
The Swiss lender said it expects to post a loss before taxes of around 1.5 billion Swiss francs ($1.58 billion) in the fourth quarter, after lower deposits and assets under management led to reduced commissions and fees.
The bank, Switzerland’s second-largest by assets, said that it net-asset outflows in the quarter to Nov. 11 were around 6%, or $88.3 billion of its total $1.47 trillion assets under management.
At the bank’s wealth-management arm, its key business serving the world’s rich, customers removed $66.7 billion.
It came after the Zurich-based company experienced deposit and net-asset outflows in the first two weeks of October, it said, after social-media reports and a spike in credit-default swaps caused a frenzy over the bank’s financial position.
The bank said the outflows led its liquidity to fall below some local-level legal requirements, but it maintained its required group-level liquidity and funding ratios at all times.
Write to Ed Frankl at edward.frankl@dowjones.com
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NASSAU, Bahamas—Sam Bankman-Fried’s $32 billion crypto-trading empire collapsed in an incandescent bankruptcy last week, prompting irate customers, crypto acolytes and Silicon Valley bigwigs to ask how something that seemed so promising could have imploded so fast.
The emerging picture suggests FTX wasn’t simply felled by a rival, or undone by a bad trade or the relentless fall this year in the value of cryptocurrencies. Instead, it had long been a chaotic mess. From its earliest days, the firm was an unruly agglomeration of corporate entities, customer assets and Mr. Bankman-Fried himself, according to court papers, company balance sheets shown to bankers and interviews with employees and investors. No one could say exactly what belonged to whom. Prosecutors are now investigating its collapse.
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The U.S. leading economic index fell 0.8% in October, the Conference Board said Friday.
Economists polled by The Wall Street Journal had expected a 0.4% fall.
This is the eighth straight decline in the leading index.
The long period of declines suggests “the economy is possibly in a recession,” said Ataman Ozyildirim, senior director of economic research at the Conference Board. He said the data show a recession is likely to start around the end of the year and last through mid-2023.
The coincident index, which measures current conditions, rose 0.2% in October after a 0.1% gain in the prior month. The lagging index increased by 0.1%, matching the September gain.
The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys.
Stocks
DJIA,
SPX,
were trading higher on Friday morning and the yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.8%.
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The numbers: Existing-home sales fell 5.9% to a seasonally adjusted annual rate of 4.43 million in October, the National Association of Realtors said Friday. Compared with October 2021, home sales were down 28.4%.
Economists polled by the Wall Street Journal had expected an decrease to 4.37 million units.
The level of sales is the lowest since December 2011 excluding the 2020 pandemic.
This is also the ninth straight monthly decline in sales, the longest streak on record.
Key details: The median price for an existing home was $379,100 up 6.6% from October 2021.
But price gains are decelerating. Prices were up over 20% on a year-on-year basis earlier this year.
Housing inventory fell 0.8% to 1.22 million units in October. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months a year ago.
A 6-month supply of homes is generally viewed as indicative of a balanced market.
Sales declined in all regions of the country.
Big picture: Home sales have dropped as mortgage rates have risen sharply and affordability has dropped.
Softer inflation data in October have led to a drop in mortgage rates, which could lead for a floor on sales.
At the same time, Federal Reserve officials may pencil in a “peak” interest rate above 5% at the policy meeting next month.
Economists see home prices have further to fall in this market.
What the NAR is saying: Home sales have been very low and the softness could continue for a few months. But sales could pick up early next year if the mortgage rate has peaked, said Lawrence Yun, chief economist at the NAR.
Market reaction: Stocks
DJIA,
SPX,
opened lower on Friday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose to 3.79%.
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Remember that hack of nearly half a billion dollars in cryptocurrency from bankrupt FTX last weekend? Turns out it was actually a government asset seizure.
The Securities Commission of the Bahamas has now acknowledged that it was behind the removal of $477 million in crypto assets from the bankrupt exchange on Nov. 12.
“The Securities Commission of the Bahamas, in the exercise of its powers as regulator acting under the authority of an order made by the Supreme Court of the Bahamas, took the action of directing the transfer of all the digital assets of FTX Digital Markets Ltd. to a digital wallet controlled by the commission, for safekeeping,” the agency said in a statement.
The transfer occurred the day after FTX had filed for Chapter 11 bankruptcy protection in Delaware and immediately sparked concerns of a major hack. The company announced that day that “unauthorized access to certain assets has occurred” and that they were coordinating with law enforcement on the matter.”
On Thursday, the U.S.-based bankruptcy administrators led by John Ray, III, who have taken control of FTX, said in court filings that they had “credible evidence” that officials in the Bahamas had directed FTX founder Sam Bankman-Fried to access FTX’s systems after the Chapter 11 filing, “for the purpose of obtaining digital assets of the debtors.”
The seizure of assets came amid an emerging fight for control over the direction of the bankruptcy proceeding, with officials in the Bahamas filing a separate Chapter 15 bankruptcy petition in federal court in New York on Nov. 15.
That filing was on behalf of FTX Digital Markets Ltd., a subsidiary that managed significant aspects of the company’s operations from its headquarters in the Caribbean island nation.
A Chapter 15 filing is used typically in cases involving companies with debtors in multiple countries.
In its statement, the Bahamian Securities Commission said it believed FTX Digital Markets was not part of the Delaware bankruptcy proceeding.
The administrators of the Delaware bankruptcy have asked the judge in their case to combine the cases, saying that it was duplicative and confusing to keep them separate. The judge scheduled a hearing on the matter for Monday.
The administrators of the Delaware case have accused Bankman-Fried of attempting to undermine their efforts to sort out the mess he left behind by pushing the second bankruptcy case brought by Bahamian officials.
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Visa Inc. Chief Executive Al Kelly plans to step down from that role in February, to be replaced by Ryan McInerney, the company’s current president and a veteran of the payments giant for nearly a decade.
Kelly, who’s been with Visa
V,
in the CEO role since late 2016, said the timing of the change was right for him in a number of ways, as he’s soon to turn 65 and has a “lot of energy” to move into the next chapter of his life. He plans to embrace both his role as a grandfather and to continue to serve Visa through an executive chairman position on the company’s board of directors.
After working with McInerney for the past six years, Kelly sees him as a worthy successor.
“He is ready to be the CEO of this company,” Kelly told MarketWatch. “He’s a phenomenal executive. He has the ability to be extraordinarily strategic and he’s also an incredibly thoughtful, get-in-the-weeds problem solver.”
Under Kelly’s tenure thus far as CEO, Visa’s market value has increased to $437 billion from $181 billion, while its stock gained 173%.
He is nearing his 65th birthday next year, as is Visa, based on a popular understanding of the company’s origins.
Visa framed the transition as reflective of “the board’s very well-established and thoughtful succession plan,” according to comments from John Lundgren, the board’s lead independent director, in a press release.
“We see this announcement as part of a planned succession and do not think it will be a surprise to investors,” RBC Capital Markets analyst Daniel Perlin wrote in a note to clients.
McInerney has been responsible for Visa’s global businesses in his role as president, looking over the company’s product team and merchant team, among others. He’s been with Visa for almost a decade and sees “huge opportunity over the next 10 years” in areas like business-to-business transactions, government-to-consumer disbursements, and other payment functions that are newer to Visa.
In both emerging and developed markets, he told MarketWatch he sees the potential for an “amazing digitalization of what we call ‘new payment flows.’”
McInerney views Visa founder Dee Hock, who died over the summer at 93, as an “inspiration. Hock was “one of the original disruptors” who “saw things so far in the future that people couldn’t really imagine,” he said.
See also: He saved credit cards, and now he’s inspiring crypto enthusiasts
Kelly, who is staying on the company’s board, said he “will not be involved in the day-to-day running of the company,” but that he will be there to serve as a helper and adviser “for as long as it’s valuable to Ryan and his executive team.”
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Billionaire Jeff Bezos, who founded the e-retail behemoth Amazon, has some spending tips as Americans gear up for a holiday shopping season — amid four-decade high inflation and recession worries.
Here’s what he said:
“‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table.’”
Bezos made the comments in a CNN
WBD,
interview that aired this week, the same interview where he pledged to give away most of his fortune in his lifetime.
Why did Bezos offer the tip for consumers and small business to go easy on big-ticket items? He gave one big reason.
“If we’re not in a recession right now, we’re likely to be in one very soon,” he said in the interview, picking up on his cautionary tweet last month that “the probabilities in this economy tell you to batten down the hatches.”
Bezos is currently executive chair at Amazon
AMZN,
transitioning to the role last year as Andy Jassy took the reins as CEO.
Later this week, Amazon confirmed it was laying off some of its staff in its device and services business — joining a growing list of tech companies, including Facebook parent Meta
META,
— that is laying people off. Amazon’s job cuts could number around 10,000, according to the Wall Street Journal.
“Critics have taken aim at these words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza.”
To be sure, Bezos is not alone is his worries about a potential recession as the Federal Reserve and other central banks fight higher costs by hiking interest rates.
But his advice prompted some guffaws on social media. In a nutshell, critics say these are words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza that lets consumers seamlessly spend money.
As Joshua Becker, a proponent of minimalism wrote on Twitter: “I didn’t hear him mention refraining from Amazon’s Prime Day deals or Black Friday offers, but I recommend adding those items to your list as well.”
Regardless of how anyone feels about hearing spending advice, particularly from one of the world’s richest people, there are some things to consider as events like Black Friday and Cyber Monday approach.
For one thing, maybe there are discretionary expenses where people can cut back. Many Americans are still spending briskly, as Walmart
WMT,
third-quarter earnings and October’s retail-sales numbers recently affirmed. Holiday-spending projections paint the same picture.
Americans will spend between $942.6 billion and $960.4 billion on holiday-season sales this year, according to projections from the National Retail Federation. Last year’s holiday sales totaled $889.3 billion, the trade association said.
“During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to the National Retail Federation.”
But Americans are planning for the holidays while credit-card balances are increasing — likely because credit cards are helping them keep up with rising costs.
During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to Federal Reserve Bank of New York data.
While balances grow, so do credit-card interest rates. The annual percentage rate (APR) on new credit-card offers averaged 19.14% in mid-November, according to Bankrate.com. That beats the old record on APRs for new cards, set at 19% three decades ago.
The holiday shopping season is typically when Americans accumulate credit-card debt, pay the debts in the early part of the coming year and repeat the holiday-season debt the following year.
This year, the stakes could be higher if high credit-card bills arrive and a recession-induced job loss follows.
“It’s not the time to overspend and have a problem with paying your bills later,” Michele Raneri, vice president of financial services research and consulting at TransUnion
TRU,
one of the country’s three major credit bureaus, previously told MarketWatch. “We know the economy is sending mixed messages.”
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On Thursday, John Ray, III, the new CEO of FTX, dropped a long-awaited declaration in U.S. bankruptcy court, giving a sober assessment of the collapse of Sam Bankman-Fried’s crypto empire. The bankruptcy-court filing followed a whirlwind of events, including the publication of explosive texts Bankman-Fried sent to a Vox reporter earlier this week.
Ray set the tone for what he has found since FTX filed for bankruptcy protection last week, citing his 40 years of experience in the legal and restructuring business, including a role as chief restructuring officer and CEO of Enron, one of the biggest corporate collapses ever.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote. “This situation is unprecedented.”
Here are 10 revelations that Ray made in federal bankruptcy court on Thursday about Bankman-Fried and the FTX debacle he created.
As of Thursday, Ray made clear that while he now controls the various FTX trading and exchange platforms and Bankman-Fried’s crypto hedge fund Alameda Research, he’d “located and secured only a fraction of the digital assets” he hoped to recover. In fact, Ray said only some $740 million of cryptocurrency had been secured in new cold wallets. Ray cited at least $372 million of unauthorized transfers that had taken place on the day FTX and Alameda filed for bankruptcy last week, and the “dilutive ‘minting’ of approximately $300 million in FTT tokens by an unauthorized source” in the days after the filing. FTT tokens were created by FTX to facilitate trading on its exchange and made up a big chunk of Alameda’s assets.
FTX.com and FTX.US had customers around the world who used its cryptocurrency exchanges and platforms. But Ray said he was unable to create a list of FTX’s top 50 creditors that included customers.
There have been reports that FTX lent out billions of dollars in customer funds to Bankman-Fried’s hedge fund, Alameda Research. But on Thursday, Ray revealed that Alameda had made $4.1 billion of related-party loans that remained outstanding at the end of September. This included a $1 billion loan Alameda made to Bankman-Fried himself, a $543 million loan made to FTX cofounder Nishad Singh, and $55 million borrowed by FTX co-CEO Ryan Salame.
Bankman-Fried lived in a luxury resort in the Bahamas, where FTX was also based. There, bankruptcy filings say, corporate funds of FTX “were used to purchase homes and other personal items for employees and advisors.” Ray said in his filing that there is no documentation for the transactions and loans associated with these real estate purchases, which were recorded in the personal name of employees and advisors.
To demonstrate the lack of disbursement and appropriate business controls at FTX, Ray pointed out that FTX employees “submitted payment requests through an on-line ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”
According to the bankruptcy filing, Alameda’s balance sheet showed $13.46 billion in total assets as of the end of September. That’s roughly equivalent to the assets managed by famous billionaire hedge fund traders like Bill Ackman, Paul Tudor Jones and Jeffrey Talpins.
Bankman-Fried secured audit opinions for the international FTX trading platform part of his business from Prager Metis, a firm that Ray had never heard of before. Ray said he went to the firm’s website to learn more about it and discovered that Prager Metis described itself as the“first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland.”
Ray’s filing on Thursday indicated that Bankman-Fried’s Alameda hedge fund might have had a trading edge on the FTX.com trading platform. According to the filing, Alameda had a “secret exemption” from “certain aspects of FTX.com’s auto-liquidation protocol.”
Ray expects that the FTX.US exchange and trading platform, which serviced American customers, will have “significant liabilities arising from crypto assets deposited by customers through the FTX US platform.” He believes the FTX exchange that was used by FTX clients outside the U.S. could also have significant client liabilities. But none of these liabilities are reflected in the financial statements that were prepared while Bankman-Fried ran FTX, Ray said.
Time and again in the filing, Ray offers the same disclaimer after detailing FTX-related financial statements. He notes that many of the balance sheets at FTX and Alameda are unaudited, and that because they were produced while Bankman-Fried ran and controlled the company, “I do not have confidence in it.”
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The European Union’s ban on seaborne imports of Russian oil, along with the Group of Seven’s plan to cap prices of oil from Russia early next month won’t guarantee that prices for the commodity will see a lasting rally, or that supplies will tighten further in the days ahead.
“In isolation, the sanctions on Russia should be bullish for prices,” says Matt Smith, lead oil analyst, Americas, at Kpler. However, they may have a limited effect, as Russian barrels get “rerouted and not taken off the market,” while a price cap still has so much uncertainty surrounding it that its impact may be “muted due to workarounds or may simply be ineffective.”
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The latest message from former FTX chief executive Sam Bankman-Fried left onlookers puzzled and alarmed after the swift decline into bankruptcy for the cryptocurrency exchange he founded.
In successive tweets, Bankman-Fried’s twitter account merely stated, “What,” followed by capital letters H.A.P.P.E.N., unfurled slowly over the span of about 19 hours.
Bankman-Fried has been an active tweeter throughout FTX’s demise, earlier having written that he was “shocked to see things unravel the way they did.”
Twitter and Tesla
TSLA,
CEO Elon Musk, who’s also having some difficulties, tweeted with fire emojis to an attempt at a translation of the cryptic tweet.
Musk also tweeted his amusement at the claim that Bankman-Fried played a “League of Legends” game — the same game the executive infamously was playing when the venture-capital firm Sequoia invested in FTX. Court filings from Musk’s failed attempt to get out of his Twitter purchase show that he doubted that Bankman-Fried ever had $3 billion liquid to co-invest in Twitter.
While the broader social-media sentiment was a wish for Bankman-Fried to be jailed, there also was concern for his health.
FTX has filed for Chapter 11 bankruptcy protection, and over the weekend there also seems to have been a hack of customer funds. The securities regulator in FTX’s headquarters of the Bahamas meanwhile said it had not requested the prioritization for withdrawals of funds for Bahamian clients.
Reuters reported the allegation Bankman-Fried had a “back door” that allowed him to mask the transfer of customer funds to his Alameda hedge fund, which Bankman-Fried told the news agency was just “confusing internal labeling.”
The former FTX CEO couldn’t be reached for comment.
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Federal Reserve Gov. Christopher Waller said Sunday that financial markets seem to have overreacted to the softer-than-expected October consumer price inflation data last week.
“It was just one data point,” Waller said, in a conversation in Sydney, Australia, sponsored by UBS.
“The market seems to have gotten way out in front over this one CPI report. Everybody should just take a deep breath, calm down. We’ve got a ways to go ” Waller said.
Investors cheered the soft CPI print, released Thursday, driving stocks up to their best week since June. The S&P 500 index
SPX,
closed 5.9% higher for the week.
The data showed that the yearly rate of consumer inflation fell to 7.7% from 8.2%, marking the lowest level since January. Inflation had peaked at a nearly 41-year high of 9.1% in June.
Waller said it was good there was some evidence that inflation was coming down, but noted that there were other times over the past year where it looked like inflation was turning lower.
“We’re going to see a continued run of this kind of behavior and inflation slowly starting to come down, before we really start thinking about taking our foot off the brakes here,” Waller said.
“We’ve got a long, long way to go to get inflation down. Rates are going keep going up and they are going to stay high for awhile until we see this inflation get down closer to our target,” he added.
The Fed is focused on how high rates need to get to bring inflation down, and that will depend solely on inflation, he said.
Waller said “the worst thing” the Fed could do was stop raising rates only to have inflation explode.
The 7.7% inflation rate seen in October “is enormous,” he added.
The Fed signaled at its last meeting earlier this month that it might slow down the pace of its rate hikes in coming meetings.
The central bank has boosted rates by almost 400 basis points since March, including four straight 0.75-percentage-point hikes that had been almost unheard of prior to this year.
“We’re looking at moving in paces of potentially 50 [basis points] at the next meeting or the next meeting after that,” Waller said.
The Fed will hold its next meeting on Dec. 13-14, and then again on Jan. 31-Feb. 1.
At the same time, Powell said the Fed was likely to raise rates above the 4.5%-4.75% terminal rate that they had previously expected.
“The signal was ‘quit paying attention to the pace and start paying attention to where the endpoint is going to be,’” Waller said.
In the wake of the CPI report, investors who trade fed funds futures contracts see the Fed’s terminal rate at 5%-5.25% next spring and then quickly falling back to 4.25%-4.5% by November. That’s well below the levels prior to the CPI data.
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Billionaire Dallas Maverick’s owner Mark Cuban recently offered his perspective on the implosion of crypto platform FTX late this week.
“‘That’s somebody running a company that’s just dumb-as-fucking greedy.’”
Cuban, speaking on Friday at a conference in Washington, D.C. hosted by Sports Business Journal, shared the view that avarice was at the root of the downfall of one-time crypto darling Sam Bankman-Fried, whose firm FTX Group just filed for chapter 11 bankruptcy.
“So what does Sam Bankman [Fried] do, he’s just–‘gimme more, gimme more, gimme more.’ So I’m gonna borrow money, loan it to an affiliated company and hope and pretend to myself that the FTT tokens that are in there on my balance sheet are gonna to sustain their value.”
Check out: Mark Cuban says buying metaverse real estate is ‘the dumbest shit ever
FTX’s collapse marks a stunning turnabout for a company, which was once valued at $26 billion, and whose founder, Bankman-Fried was viewed by many in the crypto industry as a venerable actor in the Wild West of digital exchanges.
On Thursday, the 30-year-old entrepreneur tweeted: “I f—ked up, and should have done better,” referencing the collapse of his exchange.
Embattled FTX, short billions of dollars, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run. FTX, an affiliated hedge fund Alameda Research, and dozens of other related companies also filed a bankruptcy petition in Delaware on Friday morning. Boasting a nearly $16 billion fortune recently, Sam Bankman Fried’s net worth had all but evaporated in the wake of the FTX implosion, according to the Bloomberg Billionaires Index.
The price of FTX’s native token FTT went down about 88.8% over the past seven days to around $2.74, according to CoinMarketCap data.
The U.S. Justice Department and the Securities and Exchange Commission are looking into the crypto exchange to determine whether any criminal activity or securities offenses were committed.
Regulators and are examining whether FTX used customer deposits to fund bets at Alameda Research, a no-no in traditional markets, according to reports.
Cuban, who is one of the stars of the investing show “Shark Tank” and owns the NBA’s Dallas Mavericks, is a big investor in crypto and blockchain-related platforms. According to a CNBC report, he has said that 80% of his investments that aren’t on Shark Tank are crypto-centric.
See: Tom Brady, Steph Curry and Kevin O’Leary set to lose big from FTX bankruptcy filing
For his part, Cuban is part of a class-action lawsuit accused of misleading investors into signing up for accounts with crypto platform Voyager Digital, which filed for bankruptcy in July. The suit alleges that Cuban touted his support for Voyager and referred to it “as close to risk-free as you’re gonna get in the crypto universe.”
Cuban mentioned Voyager in his Friday interview. Representatives for the billionaire investor didn’t immediately respond to a request for comment.
The Mavericks owner took to Twitter on Saturday to say that the crypto implosions “have been banking blowups. Lending to the wrong entity, misvaluations of collateral, arrogant arbs, followed by depositor runs.”
Cuban’s net worth is $4.6 billion, according to Forbes.
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Investors feeling giddy about last week’s sharp rally for stocks might want to give a listen to Tom Waits’ song, “Whistlin’ Past the Graveyard” from 1978, to sober up for the dangers that still lurk ahead.
The surge in stocks catapulted the S&P 500 index
SPX,
almost back to the 4,000 mark on Friday, also lifting it to the biggest weekly gain in roughly five months, according to Dow Jones Market Data.
Investors showed courage on signs of a slight slowing of inflation, but the fortitude also comes as a drearier backdrop for investors has been unfolding in plain sight. Massive layoffs at big technology companies, the dramatic implosion of crypto-exchange FTX, and the day-to-day pain of high inflation and skyrocketing borrowing on businesses and households are all taking a toll.
“We are not convinced this is the beginning of a new bull market,” said Sam Stovall, chief investment strategist at CRFA Research. “We believe that we are headed for recession. That has not been factored into earnings estimates and, therefore, share prices.”
Stovall also said the stock market has yet to see the “traditional shakeout of confidence capitulation that we typically see that marks the end of the bear markets.”
From Meta Platforms Inc.
META,
to Lyft Inc.
LYFT,
to Netflix Inc.
NFLX,
there is a wave of major technology companies resorting to layoffs this fall, a threat that could sweep other sectors of the economy if a recession materializes.
Yet, information technology stocks in the S&P 500 jumped 10% for the week, while financials, which stand to benefit from higher interest rates, rose 5.7%, according to FactSet.
That could reflect optimism about the odds of a slower pace of Federal Reserve rate hikes in the months ahead, after sharp rate rises helped to undermine valuations and pull tech stocks dramatically lower in the past year. However, Loretta Mester, president of the Cleveland Fed, and other Fed officials since the October inflation reading on Thursday have reiterated the need to keep rates high, until 7.7% annual rate finds a clearer path to the central bank’s 2% target.
The stock-market rally also might suggest that investors view continued mayhem in the crypto sector as contained, despite bitcoin
BTCUSD,
trading near its lowest level in two years and the shocking collapse in recent days of FTX, once the world’s third-largest cryptocurrency exchange.
Read: FTX’s fall: ‘This is the worst’ moment for crypto this year. Here’s what you should know.
Blows to the American economy rarely have been good for stocks. A look at seven past recessions, starting in 1969, shows declines for the S&P 500 as more typical than gains, with its most violent drop occurring in the 2007-2009 recession.
Refinitiv data, London Stock Exchange Group
While a looming U.S. recession isn’t a foregone conclusion, CEOs of America’s biggest banks have been warning about the risks for months. JP Morgan Chase’s Jamie Dimon said in October that a “tough recession” could drag the S&P 500 down another 20%, even though he also said consumers were doing fine, for now.
Still, the steady stream of warnings about the recession odds have left many Americans confused and wondering if one can even happen without an increase in job losses.
Big moves lately in stocks also have been hard to decode, given the economy was shocked back to life in the pandemic by trillions of dollars in fiscal stimulus and easy-money policies from the Fed that are now being reversed.
“What I think goes unnoticed, certainly by the average person, is that these moves are not normal,” said Thomas Martin, senior portfolio manager at Globalt Investments, about stock swings this week.
“It’s all about who is positioned how — and for what — and how much leverage they’re employing,” Martin told MarketWatch. “You get these outsized moves when people are offside.”
Here’s a view of the sharp trajectory upward of the S&P 500 since 2010, but also its dramatic drop this year.
Refinitiv Datastream
While Martin isn’t ruling out the potential for a seasonal “Santa Claus” rally heading into year-end, he worries about a potential leg lower for stocks next year, particularly with the Fed likely to keep interest rates high.
“Certainly what’s being priced in now is either no recession or a very, very mild recession,” he said .
However, Kristina Hooper, Invesco’s chief global market strategist, said the overarching story might be one of stocks sniffing out the first steps in a path to economic recovery, and the Fed potentially stopping its rate hikes at a lower “terminal” rate than expected.
The Fed increased its benchmark interest rate to a 3.75% to 4% range in November, the highest in 15 years, but also has signaled it could top out near 4.5% to 4.75%.
“If often happens that you can see stocks do well, in a less-than-good economic environment,” she said.
The S&P 500 rose 4.2% for the week, while the Dow Jones Industrial Average
DJIA,
gained 5.9%, posting its best weekly gain since late June, according to Dow Jones Market Data. The Nasdaq Composite Index shot up 8.1% for the week, its best weekly stretch in seven months.
In U.S. economic data, investors will get an update on household debt on Tuesday, retail sales and homebuilder data on Wednesday, followed by jobless claims and housing starts data Thursday. Friday brings existing home sales.
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Sam Bankman-Fried, co-founder at crypto exchange FTX, tweeted Friday that he was “shocked to see things unravel the way they did,” after he quit as chief executive and the company and its related entities filed for bankruptcy.
The bankruptcy “doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes,” Bankman-Fried tweeted Friday.
Bankman-Fried has seen his net worth plunge to almost zero from $16 billion in less than a week, according to Bloomberg Billionaires index.
FTX was once the third largest cryptocurrency exchange by trading volume. Bitcoin
BTCUSD,
fell 3.4% Friday to around $16,838, hovering at around a two-year low, according to the CoinDesk data.
A representative at FTX didn’t respond to a request seeking comment.
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FTX, the crypto exchange, filed for voluntary Chapter 11 bankruptcy in a Delaware court on Friday, and chief executive Sam Bankman-Fried has resigned.
Following the news, here is how prices are doing for major cryptocurrencies, according to CoinDesk data.
Bitcoin BTCUSD, -4.92% The price for Bitcoin was around $19,350 before the announcement of the potential FTX/Binance deal on Tuesday. The price jumped to $20,590 in less than an hour after the announcement. But dropped to a 2-year low of $17,484. Currently, the Bitcoin price is $16,907.19, a change of -5.04% over the past 24 hours.
Ethereum ETHE, -9.66% Currently, the Ethereum price is $1,252.60, a change of -6.60% over the last 24 hours. The price of Ethereum was around $1,438 before the announcement, and peaked at $1,562 under an hour after. Later on Nov 8, the price dropped to $1,289.
FTT: Today the price of FTT, which is the FTX token, is $2.74, down 20.37% in the last 24 hours, according to CoinMarketCap data. At the beginning of the week, on Nov 7, the price was around $22.06.
Solana: Currently, the price is $17.34, a change of 2.91% over the past 24 hours. The price of Solana before the announcement was around $27.69, and peaked at $31.29 shortly after the announcement.
Binance Coin: The Binance Coin price is $285.74, a change of -7.02% over the past 24 hours. The Binance Coin price was around $322 before the announcement that Binance might acquire FTX on Nov 8.
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The stock market remains open Friday, Nov. 11, the Veterans Day holiday in the U.S., even through it counts as a holiday for the $53 trillion American bond market.
That means a full day of trading for stocks, which appear poised to book a robust week of gains, despite continued fears of a potential U.S. economic recession as the Federal Reserve works to tame stubbornly high costs of living.
Signs of a potential cooling off on the inflation front led the Dow Jones Industrial Average
DJIA,
to advance 1,200 points on Thursday, with it, the S&P 500 index
SPX,
and Nasdaq Composite Index
COMP,
all booking their best daily gains since 2020.
Don’t miss: Veterans Day: Are banks open? Does USPS deliver mail?
While Friday marks the start of a three-day weekend for the bond market, Treasury yields already have climbed dramatically this year with the Fed’s sharp rate hikes. The central bank aims to temper demand for goods and services by making borrowing costs more restrictive.
The benchmark 10-year Treasury rate
TMUBMUSD10Y,
fell to about 3.8% on Thursday, but was up from a 1.3% low last December. Bond yields move in the opposite direction of prices.
The fresh rally on Wall Street followed the consumer-price index reading for October showing a 7.7% annual rate, down from a 9.1% high in June. The Dow remains down more than 8% from its January peak, the S&P 500 is 17.5% lower and the Nasdaq is 31% below its last record close, according to Dow Jones Market Data.
Veterans Day was born out of the wreckage of World War I, with Nov. 11 recognized as a legal holiday in the U.S. in 1938, two decades after an armistice between the Allied nations and Germany went into effect at the 11th hour of the 11th day of the 11th month.
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Crypto lending platform BlockFi announced it was halting withdrawals Thursday night in the wake of the collapse of crypto exchange FTX.
“We are shocked and dismayed by the news regarding FTX and Alameda,” BlockFi said in a tweet. “We, like the rest of the world, found out about this situation through Twitter.”
BlockFi said that due to the “lack of clarity” regarding FTX and Alameda, “we are not able to operate business as usual,” and that until there is “further clarity, we are limiting platform activity, including pausing client withdrawals.”
The company asked clients not to deposit into BlockFi Wallet or Interest Accounts at this time, and said it will share more specifics “as soon as possible,” though it warned it likely would communicate “less frequently” than what its clients and stakeholders are used to.
In June, BlockFi received a $250 million bailout from FTX to help keep it afloat.
FTX, once valued at $32 billion, collapsed this week under a liquidity crisis, and faces a shortfall of up to $8 billion, according to several media reports. Without a cash injection, the company might plunge into bankruptcy, according to a Bloomberg report.
Also see: ‘Bedazzled by money’: Democratic ties to Sam Bankman-Fried under scrutiny after FTX collapse
FTX founder and CEO Sam Bankman-Fried reportedly extended about $10 billion in loans to its affiliated trading firm Alameda Research — amounting to about half of FTX’s customer assets of $16 billion, according to the Wall Street Journal.
“I fucked up, and should have done better,” Bankman-Fried said in a tweet Thursday, saying he had, among other things, misread the use of margin on the platform.
More: The $26 billion rise and fall of FTX crypto king Sam Bankman-Fried
Late Thursday, it was revealed that Alameda appeared to have shorted the stablecoin Tether, according to blockchain data.
The FTX fiasco has spread fear of a “contagion” across the broader crypto industry, and sent the price of bitcoin
BTCUSD,
at one point to its lowest level since November 2020.
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Just six months ago, CEOs, celebs and world leaders like Bill Clinton and Tony Blair flocked to him, gathering at a Davos-like conference he hosted in the Bahamas where he lives as one of the most outspoken evangelists for the power of the blockchain.
Fast forward to Sunday and Bankman-Fried’s crypto empire came crashing down, the victim of an old-fashioned bank run that quickly exposed the weaknesses of the new finance system he had championed.
Almost overnight, Bankman-Fried’s cryptocurrency exchange, FTX, had gone from being valued at $32 billion to worthless, leaving scores of investors scrambling to get their deposits back and triggering probes in the U.S. by the Securities and Exchange Commission, the Commodities Futures Trading Commission and the Department of Justice, according to reports.
On Thursday, the 30-year-old Bankman-Fried took to Twitter to level with his clients.
“I fucked up, and should have done better,” he wrote.
It took less than five years for Bankman-Fried to build a personal fortune that was estimated at its highest point to be more than $26 billion, making him among the richest people in the world.
His schlubby, boyish appearance — ill-fitting t-shirts, gym shorts and a mop of curly hair — made him look more like a college student ripping bong hits in the basement of a frat house than a finance guru, but fit nicely with the anti-establishment ethos that appealed to crypto enthusiasts.
The son of law professors at Stanford University, Bankman-Fried was a wunderkind from an early age. He studied physics and mathematics at the Massachusetts Institute of Technology.
After a stint as an ETF trader for Jane Street Capital, a highly respected Wall Street firm that is known for attracting genius quantitative traders, Bankman-Fried became interested in the concept of effective altruism, a philosophy that focuses on using reason and evidence to find solutions that benefit the most people possible. In 2017, he launched Alameda Research, a quantitative trading firm focused on digital currencies.
Over the next year, he began building his fortune through arbitrage trading of Bitcoin
BTCUSD,
between exchanges in the U.S. and Japan, where prices were often slightly higher. In 2019, Bankman-Fried launched the crypto exchange FTX.
The timing was fortuitous: as the COVID-19 pandemic spread across the globe the following year, interest in cryptocurrencies among people exploded. FTX took off and brought in the big-name celebrity endorsers and partners, like professional athletes Tom Brady and Steph Curry.
Bankman-Fried soon found himself feted by some of the biggest institutions in finance, attracting investment from the biggest names on Wall Street and beyond like Softbank
9984,
Group, Sequoia Capital, Blackrock
BLK,
Tiger Global Management and Thoma Bravo. He even raised money from billionaire hedge fund legends Paul Tudor Jones and Israel Englander.
Soon, FTX was among the biggest players in the industry.
Despite his ballooning wealth, Bankman-Fried maintained the appearance and lifestyle of a teenage gamer. He moved to the Bahamas, where he reportedly lived in a penthouse apartment with 10 roommates.
On Zoom calls, he would often play video games while talking — his favorite game being League of Legends. Profiles of him often noted that he kept a bean bag just feet from his desk to sleep on.
What set Bankman-Fried apart from other crypto tycoons, was his professed interest in working with regulators to create a more robust framework around the nascent industry and treat it more like a traditional finance network.
To that end, Bankman-Fried appeared before Congress to try to explain to skeptical U.S. lawmakers how the crypto industry worked. He also said he welcomed regulation, not always a popular position in the crypto world.
“FTX believes [government agencies] could play an even more prominent role in the digital-asset ecosystem and bring greater investor protections by closing some regulatory gaps,” he said before a senate panel in February. “FTX believes that such efforts would combine the best aspects of traditional finance and digital-asset innovations.”
Bankman-Fried even put his great wealth to play in politics, becoming a major campaign donor for the Democratic party. In 2020, he was one of President Joe Biden’s largest single donors and spent nearly $40 million on political campaigns this year for the midterm elections, according to campaign filings.
As cryptocurrencies have experienced significant declines in prices this year, triggering the collapse of several operations, Bankman-Fried arose as a savior, buying up several failing partners as positioning himself as a kind of Robin Hood for the industry.
For as fast a rise to the top of the world that Bankman-Fried enjoyed, the fall was just as rapid.
On Sunday, Changpeng Zhao, the CEO of FTX’s competitor, Binance, and an archrival of Bankman-Fried’s, announced on Twitter that his firm, the world’s biggest cryptocurrency exchange, was liquidating its sizable holdings of FTT, the coin issued by FTX, “due to recent revelations that have come to light.”
Bankman-Fried accused Zhao of spreading false rumors. But the damage was done.
Binance’s move triggered a massive selloff with customers seeking to redeem some $5 billion in deposits. FTX didn’t have it and redemptions froze up.
On Tuesday, Bankman-Fried announced that FTX had reached a tentative agreement to be acquired by Binance, due to a “significant liquidity crunch.” The turmoil set off broad declines among several of the most popular cryptocurrencies and even spilled into the world of traditional finance, sending markets tumbling.
The next day, the chaos increased, with reports that FTX and Bankman-Fried were under investigation by several U.S. agencies. By the end of the day, Binance said it was walking away from the deal because due diligence had revealed that “the issues are beyond our control or ability to help.”
Binance’s deal seemed like the only thing preventing FTX from potentially collapsing. “At some point I might have more to say about a particular sparring partner,” Bankman-Fried tweeted on Thursday. “For now, all I’ll say is: well played; you won.”
Also on Thursday, the Wall Street Journal reported that Bankman-Fried had been using some customer deposits to fund risky bets by his Alameda Research firm, setting FTX up for collapse.
With the Binance lifeline gone and with few options available, Bankman-Fried told investors he needed $8 billion or more to plug the hole in FTX’s books, according to reports.
On Twitter, Bankman-Fried said he would focus all his efforts on making sure depositors got their money back. He also tried to explain FTX’s collapse, saying “a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users’ margin. I thought it was way lower.”
Said Bankman-Fried: “My #1 priority–by far–is doing right by users,” he wrote. “Right now, we’re spending the week doing everything we can to raise liquidity. I can’t make any promises about that.”
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