Tag: FinTech

A look at how one fintech CEO’s PR decision backfired | TechCrunch

[ad_1]

Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up! Last week, we chronicled one CEO’s big PR flub, one firm’s new infusion of capital for early-stage fintech startups and much more. Read on!

The Streisand effect

Image Credits: Carta

This past week, Carta CEO Henry Ward took it upon himself to send a letter to customers addressing the company’s recent negative press. The move had many scratching their heads, including many customers and at least one investor.

I first learned about it when I saw one of those customers, Winnie co-founder and CEO Sara Mauskopf, post something on X. In her post, she noted that prior to receiving the email from Ward, she “didn’t actually read any negative press about Carta recently.”

She wasn’t alone.

So essentially what Ward did was notify all of Carta’s customers that the company was the target of lawsuits around allegations of sexual abuse on the part of executives and has been accused of having a toxic “boy’s club culture,” among other things. He did so by pointing them to a Medium post/missive he had shared with Carta employees a few days earlier.

It is obviously not great that Carta has found itself in such a position. But Ward’s decision to address it all directly to his customers makes one question his, well, decision-making abilities. And quite probably, he only made things — including public perception — worse.

As Sara put it, “I think people overestimate how much people notice or are talking about them.” Even one of the company’s investors called the email to customers “weird.”

It also reminded many of when actor and singer Barbra Streisand made a huge deal about some photos taken of her home, only to draw a massive amount of attention to said photos. That incident led to the coining of the term “Streisand effect,” which, according to Brittanica, is “a phenomenon in which an attempt to censor, hide, or otherwise draw attention away from something only serves to attract more attention to it.”

Interestingly, Ward told customers he was sharing his experience since they were founders, too, and might find it “helpful for other CEOs thinking through similar problems.” I would hope that the majority of Carta’s customers are not also the target of such lawsuits.

What I’m most curious about now is how all of this drama might be affecting Carta’s business. — Mary Ann

When opportunity strikes

Image Credits: Finerio Connect / José Luis López and Nick Grassi, co-CEOs of Finerio Connect

This week, I wrote about Finerio Connect, a Mexico City–based fintech startup, raising $6.5 million in new funding. The company, started by Nick Grassi and José Luis López in 2018, developed an open finance platform to provide compliant sharing and consumption of financial data and data analytics across Latin America. Their goal is better access to personalized financial products and services.

The co-founders recognized how open banking was taking hold in the region and jumped on the opportunity. Mexico is widely known for its citizens’ distrust of the banking system, so what stood out was that while the country passed some fintech regulation around transparency, it hasn’t gone as far as Grassi and López would like.

Here’s some extra comments from Grassi talking about the challenge:

We had a promise of regulation for a long time, but it’s been five years that they have declared they will come out with open banking regulation, and they haven’t come out with anything. That’s been a challenge to getting more adoption and for more companies to take the leap because they don’t want to have to change everything later — they don’t want to have to absorb any risks.

As a result, Finerio has looked at other markets in Latin America that are moving more swiftly in this area and learned about what works and what doesn’t.

“We actually wound up doing workshops for banks and financial institutions about how this is probably going to affect them,” Grassi said. “We were consultants by nature, though that isn’t our business, however, we want to help banks understand how to take advantage of a force where sometimes there’s some fear about it, some misconceptions and myths, and build new business lines off of it and break into new markets without a huge cost burden.”

Today, Finerio works with over 120 financial institutions and fintechs and also launched an API hub with Visa and Ozone API last year for products and services, including digital payments, credit and personal finance management. It also provides a place for financial institutions to comply with new open banking regulations. — Christine

Weekly news

Reporter Aisha Malik wrote about Apple now making its Apple Pay Later product available to all users in the U.S. Users are able to split payments into four installments and have six weeks to pay without penalty. The consumer tech giant is also enabling Pay Later to be used on purchases between $75 and $1,000 made on iPhone and iPad. Having “reasonable” repayment terms like that could be what drives more usage of buy now, pay later (BNPL), according to a new J.D. Power study. The BNPL industry has had its fair share of struggles, much of which prompted the U.S. government to figure out better ways to regulate it, as Mary Ann reported earlier this year.

Earlier this year, Christine covered Candidly’s $20.5 million in Series B funding round to continue developing its employee benefit offering for student debt relief. This week, the company expanded its solutions to include emergency savings, also as a workforce benefit. Employees can set up payroll deduction, auto-enroll and the ability to round up daily transactions to go into an emergency fund.

A lot went on in the credit space this week. Reporter Manish Singh viewed some documents that show one of India’s largest companies, Reliance, is poised to get in on the country’s co-branded credit card market with state-backed lender SBI. Once established, the cards will be called Reliance SBI Card and offer some “exclusive” benefits, such as vouchers of Reliance Retail, the conglomerate’s retail chain, and discounts on spendings at other Reliance properties. This would be another new sector for billionaire Mukesh Ambani, who has been quite active in the past week with some of his entities, including Jio Financial Services, which launched lending and insurance businesses last week. Here’s some other credit card items we spotted:

Money20/20 took place this week, and while neither Mary Ann nor Christine (sadly) could attend, here is a sampling of some of the news announced at the event:

Other items we are reading:

How a fintech reckoning Is rippling through a small bank in Washington

Apple Card architect heads to Lightspeed to hunt for fintech deals

Howard Morgan, tech & VC pioneer — 50 years of shaping the future, from ARPANET to building RenTech, First Round, and B Capital

Nium launches Global FX (Read more about the B2B payments platform in TechCrunch’s coverage of its $200 million Series D in 2021.)

Fintech meltdown, working for Musk, regulating AI: WTF highlights

Riskified and Plaid to enhance risk protection for ACH bank payments

Fiserv touts a link to Melio to reach more banks for payments and acquiring

Konsentus: Open Banking underway or live in 68 countries

Funding and M&A

As seen on TechCrunch

Flourish Ventures, a ‘fintech venture fund with a purpose,’ secures $350M in new capital

Singapore-based fintech YouTrip picks up $50M led by Lightspeed

Nomad Homes adds software for real estate agents following $20M capital infusion

Aleph is building a platform to reconcile disparate financial data

AgentSync raises $50M more in a massive Series B extension (TC+)

Seen elsewhere

Open banking startup Prism Data raises $5M

Preczn rakes in $6.8M to revolutionise SaaS platforms with operational fintech features

Cyber insurance startup Upfort raises $8M

Image Credits: Bryce Durbin

[ad_2]

Christine Hall

Source link

October 29, 2023
Here’s what Sam Bankman Fried said in his first full day on the stand in his $8 billion fraud trial

[ad_1]

Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks outside the Manhattan federal court in New York City, U.S. March 30, 2023.

Amanda Perobelli | Reuters

FTX founder Sam Bankman-Fried told jurors in his criminal trial on Friday that he didn’t commit fraud, and that he thought the crypto exchange’s outside expenditures, like paying for the naming rights at a sports arena, came out of company profits.

On Friday morning, defense attorney Mark Cohen asked Bankman-Fried if he defrauded anyone.

“No, I did not,” Bankman-Fried responded.

Cohen followed by asking if he took customer funds, to which Bankman-Fried said “no.”

Bankman-Fried, 31, faces seven criminal counts, including wire fraud, securities fraud and money laundering, that could land him in prison for life if he’s convicted. Bankman-Fried, the son of two Stanford legal scholars, has pleaded not guilty in the case.

Prior to the defendant’s appearance on the stand, the four-week trial was highlighted by the testimony of multiple members of FTX’s top leadership team as well as the people who ran sister hedge fund Alameda Research. They all singled out Bankman-Fried as the mastermind of a scheme to use FTX customer money to fund everything from venture investments and a high-priced condo in the Bahamas to covering Alameda’s crypto losses.

Courtroom sketch showing Sam Bankman Fried questioned by his attorney Mark Cohen. Judge Lewis Kaplan on the bench

Artist: Elizabeth Williams

Prosecutors walked former leaders of Bankman-Fried’s businesses through specific actions taken by their boss that resulted in clients losing billions of dollars last year. Several of the witnesses, including Bankman-Fried’s ex-girlfriend Caroline Ellison, who ran Alameda, have pleaded guilty to multiple charges and are cooperating with the government.

‘Significant oversights’

On Friday, Bankman-Fried acknowledged that one of his biggest mistakes was not having a risk management team. That led to “significant oversights,” he said.

At the start of his testimony, Cohen walked Bankman-Fried through his background and how he got into crypto. The defendant said he studied physics at the Massachusetts Institute of Technology and graduated in 2014. He then worked as a trader on the international desk at Jane Street for over three years, managing tens of billions of dollars a day in trading. That’s where he learned the fundamentals of things like arbitrage trading.

In the fall of 2017, Bankman-Fried founded Alameda Research.

“This was when crypto was starting to become publicly visible for the first time,” Bankman-Fried testified.

He said people were excited about it, watching bitcoin, which had jumped from $1,000 to $10,000 in a two-month period. Banks and brokers weren’t involved yet and it seemed like there would probably be big demand for an arbitrage provider, he said.

“I had absolutely no idea” how cryptocurrencies worked, Bankman-Fried said. “I just knew they were things you could trade.”

The first Alameda office was in an Airbnb in Berkeley, California, he said. It was listed as a two bedroom but they used the couch in the living room as a third bed and also repurposed the attic as a fourth bedroom.

He started FTX in 2019. Trading volume grew substantially on FTX from a few million dollars a day to tens of millions of dollars that year to hundreds of millions of dollars in 2020. By 2022, that number was up to $10 billion to $15 billion per day in trading volume, he said.

Bankman-Fried said Alameda was permitted to borrow from FTX, but his understanding was that the money was coming from margin trades, collateral from other margin trades or assets earning interest on the platform.

At FTX, there were no general restrictions on what could be done with funds that were borrowed as long as the company believed assets were greater than liabilities, Bankman-Fried testified.

In 2020, a routine liquidation gone wrong led to some of the special borrowing permissions at Alameda, he said. The risk engine was sagging under the weight of growth. A liquidation that should have been in the thousands of dollars was in the trillions of dollars. Alameda was suddenly underwater because of closing the position.

The incident exposed a larger concern, that the potential of an erroneous liquidation of Alameda could be disastrous for users.

Bankman-Fried said he talked to FTX’s engineering director Nishad Singh and co-founder Gary Wang, both of whom testified earlier on behalf of the prosecution. He suggested creating an alert, which would prompt the user to deposit more collateral, or a delay, Bankman-Fried said. In response to this feedback, Singh and Wang told Bankman-Fried they had implemented a feature like that, he said, adding that he later learned it was the “allow negative” feature.

Bankman-Fried testified that he wasn’t aware of the amount Alameda was borrowing or its theoretical max. As long as Alameda’s net asset value was positive and the scale of borrowing was reasonable, increasing its line of credit from so that Alameda could keep filling orders was fine, he said. Earlier testimony from Singh and Wang suggested the line of credit was raised to $65 billion, a number Bankman-Fried said he was not aware of.

Tough sell

Convincing the jury will be a tall order for Bankman-Fried after a mountain of damning evidence was presented by the government.

Prosecutors entered corroborating materials, including encrypted Signal messages and other internal documents that appear to show Bankman-Fried orchestrating the spending of FTX customer money.

The defense’s case, which consists of Bankman-Fried’s testimony along with that of two witnesses who took the stand Thursday morning, hinges largely on whether the jury believes the defendant didn’t intend to commit fraud.

The logo of FTX is seen on a flag at the entrance of the FTX Arena in Miami, Florida, November 12, 2022.

Marco Bello | Reuters

In Friday afternoon testimony, Bankman-Fried was asked about FTX’s marketing and promotions.

He said there were 15 people on the marketing team, and noted that he got more involved with it as time progressed. In particular, he discussed the naming rights in 2021 for the basketball arena in Miami, which was to be a 19-year deal for $135 million.

Bankman-Fried said the sponsorship of FTX Arena would deliver returns for the company and create wide brand awareness because even he, as an “average level sports fan,” could name dozens of stadiums. He said the investment would be about $10 million a year, or 1% of revenue. The company had been deciding among a few different stadiums, including the homes to the NFL’s New Orleans Saints and Kansas City Chiefs, Bankman-Fried said.

A crucial part of his testimony came when Bankman-Fried said he thought the stadium deal funding was coming from revenue from the exchange and returns from venture investments, as opposed to customer money.

Similarly, Bankman-Fried testified that he believed the lavish Bahamas properties were being paid for with FTX operating cash that came from revenue and venture investments. He said having available property to rent was a necessary incentive if the company wanted to poach developers from Facebook and Google.

As for the venture investments, Bankman-Fried said he thought that money was coming from Alameda’s operating profits and third-party lending desks. Alameda’s venture arm was renamed Clifton Bay Investments, which Bankman-Fried said was a first step in building a dedicated venture brand.

When asked about loans he took from the business, Bankman-Fried said they were to pay for venture investments and political donations. He said that, as the primary owner of Alameda, he thought he had a few billion dollars in arbitrage profit from the past few years and there was no reason he couldn’t borrow from it. He said the loans, except for the most recent one prior to the firm’s bankruptcy filing, were all documented through promissory notes.

Bankman-Fried said he never directed Singh or former FTX executive Ryan Salame to make political donations. Salame pleaded guilty in September to federal campaign finance and money-transmitting crimes, admitting that from fall 2021 to November 2022, he steered tens of millions of dollars of political contributions to both Democrats and Republicans in his own name when the money actually came from Alameda.

Bankman-Fried, who allegedly used FTX customer funds to help finance over $100 million in political giving during the 2022 midterms, testified that he talked to politicians about pandemic prevention and crypto regulation. He said he had a vested interested in crypto policy even though FTX’s U.S. operation was relatively small, because the company was seeking to offer crypto futures products in the U.S.

Bankman-Fried then discussed his public persona. He said he hadn’t intended to be the public face of the company because he’s “naturally introverted.” But a few interviews went well, and it snowballed from there. He said he was the only person at the company that the press sought.

He wore T-shirts and shorts because they were comfortable and said he let his hair grow out because he was busy and lazy.

Bankman-Fried was photographed at the 2022 Super Bowl in Los Angeles with Katy Perry. He told the jury, which was previously presented with the photo by the prosecution, that he thought it was natural to go to the game because he was in town for meetings and the company had a commercial running.

“I thought maybe it would be interesting,” he said.

Shifting blame to his ex-girlfriend

The afternoon testimony largely focused on Bankman-Fried’s repeated and unsuccessful request to Ellison that she hedge Alameda’s risk. Bankman-Fried said in late 2021, he had talked to Ellison about putting on trades to protect against the risk of market moves since Alameda had been leveraged long, meaning they would lose money if the market went down.

Ellison said she would look into it, which Bankman-Fried said he “interpreted” as her being “far less enthusiastic about it.” Over the course of 2022, Bankman-Fried said every two months he would check in to see if Alameda had hedged, and each time he was told not yet, but Ellison would say she was planning to do so in the near future.

Specifically, Bankman-Fried said he had talked with Ellison and Ramnik Arora, who had been the head of product at FTX, about putting a $2 billion hedge on the company’s investment in Genesis Digital Assets, a bitcoin miner. He told the jury that the hedge was never made.

There was also more detail on how Bankman-Fried was told about FTX’s $8 billion liability. According to the defendant, in October 2022, developers built a Google database that included financial data. That’s where Bankman-Fried noticed the negative $8 billion balance, which he said he was “very surprised” to see.

Cohen then brought the jury through the summer months of 2022, a time when Alameda’s lenders, specifically Genesis, BlockFi, Celsius and Voyager, all had direct conversations with Bankman-Fried about the need for emergency capital. In the end, only BlockFi and Voyager received funds from Alameda and Bankman-Fried.

In late 2021 and early 2022, Bankman-Fried said he wanted FTX revenue to be above $1 billion because it was a round number. He asked company executives if there were ways to reach that mark. Singh said he’d dealt with it by staking the company’s investment in crypto token Serum, a way of putting the coins to work. That had added another $50 million in revenue. Bankman-Fried testified that he was “a little surprised” they found that additional money, but it got him to $1 billion.

— CNBC’s Dawn Giel contributed to this report

WATCH: Sam Bankman-Fried testifying in his criminal case

[ad_2]

Source link

October 27, 2023
With China playing catchup with the U.S., these 3 charts show the top countries for fintech in 2023
[ad_1]
Chinese and US flags fly outside a hotel during a 2012 U.S. presidential election results event organized by the US embassy in Beijing on November 7, 2012.

Ed Jones | AFP | Getty Images

From the U.S. to China, countries around the world are battling it out to lead on financial technology, a heavily lucrative industry that has grown over the years taking everything from retail banking to wealth management online.

Since the 2008 financial crisis, thousands of new firms have been set up with the aim of taking on the financial incumbents and providing more accessible services to both consumers and businesses alike.

In the U.K., startups like Monzo and Starling took the banking world by storm with their digital-only offerings, while in China, Alibaba and Tencent launched their own respective mobile wallets, Alipay and WeChat Pay.

In August, CNBC, in partnership with Statista, launched a list of the world’s top fintechs. To choose the top global firms, Statista used a rigorous method that evaluated a few key business metrics and fundamentals, including revenue and number of employees.

Statista identified 200 of the top companies globally, across nine categories including neobanking, digital payments, digital assets, digital financial planning, digital wealth management, alternate financing, alternate lending, digital banking solutions, and digital business solutions.

Using additional data provided by Statista, CNBC analyzed the top nations overall when it comes to financial technology, splitting the analysis into three main areas of focus:

The countries with the most valuable fintech industries based on market capitalization.

Overall number of top fintech firms, as identified by Statista.

The amount of “unicorn” companies with valuations of $1 billion or more across different countries.

So, which countries are at the top of their game when it comes to fintech? In three charts, here’s what we found.

U.S., China home to most valuable fintechs

The U.S. is home to most valuable financial technology companies in the world in 2023, according to Statista data — but China isn’t far behind with mega-payments firms like Tencent and Ant Group making the country a solid second.

The valuation data is up to date as of April 2023, with the exception of Ant Group, Stripe, Nubank, Checkout.com, Revolut, Chime, Polygon, Rapyd, Ripple, Blockchain, and Plaid.

Combined, the U.S. produces the most value in terms of fintech, with eight of the top 15 highest-valued financial technology companies in the world worth a combined $1.2 trillion based stateside.

Visa and Mastercard are the two biggest fintech firms by market value, with a collective market capitalization of $800.7 billion.

China is home to the second-most highly valued fintech industry, with its financial technology giants worth a combined $338.92 billion in total market capitalization.

UK has second-biggest number of top fintech firms

The U.S. was home to 65 of the top fintech companies, according to CNBC’s list of world’s top 200 fintech companies. The U.K. was a close second with 15 of the top 200 fintech names globally, while the European Union is home to 55 top fintech companies.

The U.S. has a vibrant fintech market, not least thanks to its deep-pocketed investors.

Silicon Valley is a natural home for the sector given its storied history in birthing some of the world’s largest technology companies, like Apple, Meta, Google, and Amazon, and a well-established venture capital ecosystem with major players such as Sequoia Capital and Andreessen Horowitz present.

In the U.S., some of the top global fintech companies on Statista’s list include names like Stripe, PayPal and Intuit. These are all companies with significant shares in their respective markets and hallmark products used by thousands, if not millions, of businesses both big and small.

The U.K., similarly, has a prominent fintech industry.

Buoyed by forces many — from innovation-driven regulars like the Financial Conduct Authority, to growing pools of capital, including venture and private equity, to a government that has tried to rank fintech firmly high up on its agenda — the U.K. has managed to produce significant in the fintech world, from digital banking behemoth Monzo to listed payments firm Wise.

In China, which was another standout fintech player identified by Statista, the market for digital financial services is massive.

WATCH: CNBC’s full extended interview with Robinhood CEO Vlad Tenev on AI, credit cards and more

Tencent’s WeChat Pay and Ant Group’s Alipay have cornered the market for mobile payments, providing ample competition to its fragmented, less built-up banking sector. Consumers in China tend to have a closer relationship with digital platforms like WeChat than they have with incumbent lenders.

But the fintech industry is faced with a number of challenges — not least macroeconomic headwinds.

Among the top roadblocks the sector faces right now, dwindling liquidity in venture capital is well up there.

In Europe, a combination of the Russian invasion of Ukraine, the aftermath of Covid-19 lockdowns, and resulting interest rate increases have impacted most major economies.

In the U.K., meanwhile, the technology industry’s problems generally have been compounded by Brexit, which critics argue is limiting foreign investment.

“The venture environment is generally struggling,” Nick Parmenter, CEO of business management consultancy Class35, told CNBC. “IPOs are fewer and lower in valuation, funds are struggling to raise from LPs and valuations are down throughout the venture cycle.”

“This makes raising growth capital a lot tougher, which makes management teams more conservative in their cash consumption. This has had a trickle-down effect on the fintech market — consumers have less discretionary income to invest or spend, which limits revenue potential for consumer-focused fintechs and small businesses alike.”

U.S. top for fintech unicorns, UK second

The U.K. again flexes its fintech muscles when it comes to the number of richly-valued “unicorn” companies in the country — Britain stands only second to the U.S., which hosts most of the world’s fintech unicorns. Unicorns are defined as venture-backed companies with a valuation of $1 billion or more.

In the U.K., some of the biggest unicorns include online banking startup Revolut ($33 billion) crypto wallet provider Blockchain.com ($14 billion), and digital payments groups Checkout.com ($11 billion), Rapyd ($8.75 billion) and SumUp ($8.5 billion).

Stateside, meanwhile, the largest fintech unicorns are Stripe ($95 billion), Chime ($25 billion), Ripple ($15 billion), Plaid ($13.5 billion), Devoted Health ($12.6 billion, and Brex ($12.3 billion).

Other leading ecosystems for fintech unicorns include India, on 17 unicorns, and China, on eight. France, Brazil and Germany each have six fintech unicorns.

Standing in 8th place is Mexico, with five fintech unicorns, Singapore, also with five, and the Netherlands, which has four in total.

WATCH: U.S. ranks first for top global fintechs in new report from Statista and CNBC
[ad_2]

Source link
October 25, 2023
Sam Bankman-Fried’s lawyers reveal his planned testimony in FTX fraud trial

[ad_1]

Lawyers for Sam Bankman-Fried late Wednesday revealed details of his planned testimony if he takes the witness stand at his FTX fraud trial.

Bankman-Fried’s legal team told Judge Lewis Kaplan in a six-page letter that he would address three key areas in such testimony, including suggesting that he relied on FTX’s former legal team in allowing some actions that later led to the implosion and bankruptcy of the cryptocurrency exchange.

Lawyers for the disgraced FTX chief also said he would also cite his understanding of common industry practices, as well as his intention to comply with Bahamian authorities.

Bankman-Fried faces seven criminal counts, including wire fraud, securities fraud and money laundering, that could land him in prison for more than 100 years if he is convicted at his trial in Manhattan federal court.

Bankman-Fried, the son of two Stanford legal scholars, has pleaded not guilty in the case.

Will he or won’t he?

The letter to Kaplan appears to cast doubt on whether the disgraced crypto billionaire will take the witness stand.

Earlier Wednesday, one of Bankman-Fried’s two chief trial attorneys, Mark Cohen, said in a conference call that his client would testify as would three other people.

But in his letter Wednesday evening, Cohen wrote, “Accordingly, should Mr. Bankman-Fried decide to testify in his defense, he should be permitted to testify as to his understanding of industry practices regarding use of omnibus wallets to show his good faith and lack of criminal intent.”

The statement suggests Bankman-Fried might stand down on testifying, should the defense’s requests be rejected.

Blaming ex-FTX lawyers

Kaplan previously ruled that Bankman-Fried’s lawyers could not make a so-called advice of counsel argument in their opening remarks since it might risk prejudicing the jury.

But Cohen in the new letter told Kaplan that although prosecutors “previously moved to preclude Mr. Bankman-Fried from offering evidence or argument regarding the involvement of attorneys,” Bankman-Fried’s “knowledge of the involvement of counsel in these matters” is “directly relevant” to “his state of mind and good faith at the time.”

Cohen cited specific examples where, at the guidance of FTX lawyers, Bankman-Fried adopted a policy which prosecutors argued shows his criminality.

One example was company-wide policy on the encrypted messaging app Signal.

Caroline Ellison, Bankman-Fried’s ex-girlfriend who also ran crypto hedge fund Alameda Research, testified SBF directed FTX and Alameda employees to use the disappearing message setting on Signal. She said he told them to be very careful about what they put in writing because of potential legal exposure.

Lesser-known FTX co-founder and ex-chief technology officer Gary Wang, as well as senior FTX developer Adam Yedidia, also testified to the directive that Signal communications be set to auto-delete.

The government similarly asserted in its opening argument before the jury that the 30-day auto-deletion policy on Signal was because Bankman-Fried “didn’t want a paper trail for his crimes.”

But Cohen wrote that Bankman-Fried’s understanding was that these auto-deletion policies were “instituted under the guidances of lawyers.”

In another example, Cohen pointed to the billions of dollars worth of FTX customer deposits that went directly into a bank account controlled by Alameda.

Prosecutors say customer cash was shuttled to Alameda via two channels: users depositing cash directly into accounts held by Alameda and through a secret backdoor that was baked into FTX’s code.

But attorneys for Bankman-Fried allege that SBF’s “understanding as to the involvement of counsel in the formation” of these accounts and in the payment arrangement established between FTX and Alameda would be “directly relevant” to the defendant’s “good faith belief that there was nothing improper about using Alameda-controlled entities to accept FTX customer deposits.”

In these and other examples involving the guidance of former FTX counsel, defense attorneys for Bankman-Fried return to the same rationale that the ex-FTX chief was acting in good faith and not with the criminal intent alleged by the government.

Blaming the Bahamian authorities

Wang has testified that last Nov. 12, after FTX declared bankruptcy, Bankman-Fried asked that Wang drive with him to the Bahamas Securities Commission for a meeting.

On the drive, Bankman-Fried told Wang to transfer assets to Bahamian liquidators because he believed they would allow him to maintain control of the company. Wang said he was not in the meeting with the securities authority, though Bankman-Fried’s dad was present. Wang said he returned to the U.S. and met with American prosecutors the next day.

He faces up to 50 years in prison when he faces a judge for sentencing following this trial. He told jurors he signed a six-page cooperation agreement that requires him to meet with prosecutors, answer their questions truthfully and turn over evidence.

Feds further allege that SBF prioritized paying certain creditors, including Bahamian authorities. In its pretrial motion, the government pointed to Bankman-Fried’s “criminal intent,” as well as the “false nature of his representations” that he wanted to “do right by customers.”

Cohen writes, “We anticipate eliciting testimony from Mr. Bankman-Fried regarding his good faith intentions on November 12, 2022 with respect to compliance with orders by Bahamian authorities to transfer assets from FTX to the Securities Commission of The Bahamas over the objections of FTX’s in-house counsel and U.S. bankruptcy counsel.”

“Such testimony would require Mr. Bankman-Fried to discuss his belief that the Bahamian authorities were acting in the best interests of FTX customers, whereas FTX’s in-house counsel and outside bankruptcy counsel in the United States had conflicts of interest,” the letter continues.

Blaming the status quo in crypto

Bankman-Fried’s understanding of commonly accepted industry practices may also figure prominently in his testimony.

In the crypto vernacular, an omnibus account is where the digital assets of multiple users are held collectively in a single account. Cryptocurrency exchanges and others in the industry typically use this type of collective storage strategy into order to slash costs and streamline the workflow.

In the case of FTX, the commingling of customer and company assets has become a major point of contention between the government and the defense.

Prosecutors argued that FTX’s “use of omnibus wallets is relevant to this case,” the letter said.

“For example, the Government elicited testimony from Mr. Sun that he did not believe that FTX customer deposits could permissibly be commingled with other funds of the business … and that FTX utilized an omnibus wallet for all customer digital assets,” the document continues, referring to FTX’s former general counsel, Can Sun.

“We respectfully submit that Mr. Bankman-Fried’s knowledge of industry practices regarding the use of omnibus wallets is relevant to his good faith belief that his conduct was permissible,” the letter added.

“Mr. Bankman-Fried’s understanding of whether FTX’s actions were consistent with the crypto industry practices with regard to use of omnibus wallets is probative of his good faith belief that FTX’s (and his own) actions were proper.”

[ad_2]

Source link

October 25, 2023
Marqeta CEO talks new credit card issuing platform

[ad_1]

Share

Closing Bell: Overtime

Simon Khalaf, Marqeta CEO, joins ‘Closing Bell Overtime’ to talk the company’s new credit card issuing platform for brands.

05:39

4 hours ago

[ad_2]

Source link

October 23, 2023
Credit risks, delinquencies worsening across financial services industry: Fmr. Capital One executive

[ad_1]

Share

Nigel Morris, QED Investors managing partner and Capital One co-founder and fmr. COO, joins ‘Fast Money’ to talk headwinds facing the financial services sector, the state of consumer spending, the fintech space and more.

[ad_2]

Source link

October 19, 2023
Coinbase CEO slams JPMorgan for banning crypto payments in UK, suggests government should act

[ad_1]

Brian Armstrong, chief executive officer of Coinbase Global Inc., speaks during the Messari Mainnet summit in New York, on Thursday, Sept. 21, 2023.

Michael Nagle | Bloomberg | Getty Images

Coinbase CEO Brian Armstrong is unhappy with JPMorgan Chase’s decision to block crypto-related transactions at its U.K. digital banking subsidiary, Chase UK.

Chase UK earlier this week put out a notice to customers saying it will no longer allow its customers to purchase cryptocurrencies using its debit cards or through bank transfers, citing concerns over the risk of fraud to users from digital tokens.

The bank, which has operated as a standalone entity in the U.K. since 2021, said it was taking the step because “fraudsters are increasingly using crypto assets to steal large sums of money from people.”

“Once in a while we see a bank in the world that decides they want to de-platform this whole industry,” Armstrong said in an interview with CNBC’s “Squawk Box” on Thursday.

“I don’t think that’s OK. I don’t think that’s the rule of things in our society. I think the government should decide what is allowed and what’s not.”

The move from Chase UK has not happened in a vacuum. Other British lenders have taken similar steps to bar crypto transactions, citing the risk of fraud.

Examples include NatWest, which placed limits on the amount of cash that can be sent to crypto exchanges, and HSBC, which banned crypto purchases altogether.

Crypto fraud concerns

In its note to customers Tuesday, Chase UK said that it was blocking the use of crypto by its customers due to concerns over a rise in fraud.

Data from Action Fraud, the U.K. fraud reporting agency, shows that U.K. consumer losses to crypto fraud increased by over 40% in the last year, surpassing £300 million for the first time.

Bitcoin, ether, XRP and other cryptocurrencies are not legal currency.

Originally created as an alternative, online form of money meant to bypass the need for bank accounts and other financial middlemen, they have increasingly been embraced by mainstream financial institutions such as PayPal, Visa, and Mastercard.

But they have long been associated with illicit activities such as money laundering, terrorist financing and illegal gambling, not least due to their pseudonymous nature.

The people transacting in bitcoin and other digital currencies don’t disclose their real identity, making it harder for banks to trace them for suspicious payments versus digital fiat currency transactions.

Legitimizing crypto

Nevertheless, crypto’s proponents say that the industry has matured a great deal in the wake of the collapse of FTX and numerous other scandals. They say it can become part of everyday payments and trading in a way that is legitimate.

For its part, the U.K. has been working to develop legislation that would regulate retail trading in crypto assets.

The Financial Services and Markets Bill is one example of legislation that already includes some provisions on cryptocurrency. That specific law aims to bring crypto assets into the regulatory fold. But it is not a comprehensive law addressing crypto through tailored laws.

In an interview with CNBC’s Arjun Kharpal, Economic Secretary to the Treasury Andrew Griffith said the U.K. could pass a crypto-specific law by April 2024.

Jurisdictions around the world from Dubai to Singapore have been trying to position themselves as crypto-friendly places to encourage firms to set up shop there.

The U.S., meanwhile, has taken a hard line on cryptocurrency firms with its regulators stepping up enforcement action against companies.

Armstrong suggested that the U.K. government should take heed of Chase UK’s move to ban crypto payments — though he acknowledged the country’s ambition to become a “Web3 and crypto hub.”

“The government in the U.K. through [U.K. PM] Rishi Sunak and Andrew Griffith the city minister in London have it made clear they want to make the U.K. a Web3 and crypto hub,” Armstrong said.

“They are trying to attract businesses there. I was disappointed to see Chase UK’s stance on that. I hope that was a misunderstanding that will be clarified in the coming weeks.”

WATCH: Coinbase CEO joins entrepreneurs on Capitol Hill to push for clear crypto rules: CNBC Crypto World

[ad_2]

Source link

September 29, 2023
Two small-business lenders with diverging strategies are merging

[ad_1]

Mickey Konson, co-founder of the online business lending firm StreetShares, will serve as CEO of the company formed through the merger of Camino Financial and Foundation. “We can serve a much broader set of needs,” Konson said.
Parker Michels-Boyce/Parker Michels-Boyce

Two online small business lenders, Camino Financial and Fundation, are merging in a deal that its architects say is well timed to capitalize on a pullback in available financing for entrepreneurs.

Camino Financial focuses on smaller or newer businesses without an extensive credit history, and it’s a government-certified community development financial institution. Fundation focuses on more established small and medium-sized businesses, and it often partners with banks on loans.

When the two companies are put together, they’ll be able to make their processes more efficient, which will help them offer more loans to small businesses whose credit options are often limited, said Mickey Konson, who will be CEO of the combined company. Camino customers, for example, will be able to get the lines of credit some of them have been seeking.

“We can serve a much broader set of needs,” said Konson, a former senior executive at Capital One Financial and co-founder of the online business lending firm StreetShares, which was acquired last year.

Under the terms of the deal, which was led by the Philadelphia-based private equity firm LL Funds, Camino Financial is acquiring Fundation.

The private equity firm, which lists Camino as one of its portfolio companies, was joined in the transaction by Community Investment Management and BankUnited, a $36 billion-asset bank based in Miami Lakes, Florida. The three companies are kicking in $250 million in debt and equity.

Shivraj Mundy, an LL Funds partner who will chair the combined company, called small business financing an attractive sector. He said that the market is underserved, and that demand is rising, given the post-pandemic surge in U.S. business creations.

The U.S. economy has thus far avoided a recession, but the environment has grown more uncertain, Mundy noted. While credit demand falls during downturns, the supply of credit “falls to a far greater degree,” which provides an opportunity for those ready to lean in, Mundy said.

“The lenders who enter a downturn in good shape and maintain their credit standards are usually really well placed to build up a profitable … business, capture market share, and do it while maintaining both underwriting and pricing standards,” Mundy said.

The combined company will be known as Camino Financial, but both firms’ brands will continue to be used after the merger.

Fundation’s model of partnering with banks on small business loans will also continue, said Konson, who added that he hopes to expand the company’s loan volumes and its list of partners.

The integration with Camino, a CDFI, may also help Fundation’s partner banks as they look to get more credit under the Community Reinvestment Act, Konson said.

[ad_2]

Polo Rocha

Source link

September 28, 2023
India’s top 20 start-ups to work for, according to LinkedIn — most are new on the list

[ad_1]

The days of easy money are over as entrepreneurs face a funding winter amid a slowing global economy — and start-ups in India are not exempt.

According to a local report, venture funding came in at $2.19 billion from January to March, dropping from the $11.34 billion invested in the same quarter last year.

However, there are sectors that have “demonstrated resilience amid challenging times,” said Pooja Chhabria, LinkedIn APAC’s head of editorial.

“Fintech remains a bright spot for investors despite the downturn, especially as we see funding on the recovery path and global tech giants eyeing fintech in India,” she added.

“The rise of edtech also underscores the continued demand for upskilling among professionals and students, especially with rapid changes due to technologies such as AI.”

This is reflected in the “LinkedIn Top Start-ups 2023″ list for India — which is dominated by fintech-related firms but also includes two new edtech entrants.

There are 14 new entrants this year, which is “a reflection of a booming entrepreneurial ecosystem and a spirit for innovation,” Chhabria added.

In compiling the list, LinkedIn drew on in-house data, measuring start-ups based on four aspects: employment growth, jobseeker interest, engagement, and ability to attract talent from LinkedIn’s top companies.

To be eligible, companies had to be headquartered in India and have 50 or more employees. LinkedIn said it also lowered its age criteria from seven years or younger, to five years and below to “feature more companies in their earlier, venture stages of growth.”

Here’s the full list of India’s top start-ups for 2022, according to LinkedIn:

20. Fasal — IT services and consulting

19. DotPe — Software development

18. TravClan — Software development

17. AccioJob — E-learning

16. Housr — Hospitality

15. Exponent Energy — Motor vehicle manufacturing

14. StockGro — Financial services

13. Teachnook — E-learning

12. Shyft — Wellness and fitness

11. Jar — Financial services

10. GrowthSchool — E-learning

9. Supersourcing — Software development

8. Sprinto — Software development

7. Fi — Financial services

6. GoKwik — Software development

5. Skyroot Aerospace

Industry: Defense and space manufacturing

Headquarters: Hyderabad

Full-time headcount: 260

Most common skills: Machining, aerospace engineering, manufacturing operations

Skyroot Aerospace was founded four years ago by engineers and former scientists from the Indian Space Research Organization. In 2022, it became the first private Indian company to launch a rocket into space. Skyroot Aerospace told Reuters that it’s expecting at least two launches in 2024, following the success of India’s Chandrayaan-3 mission.

4. Pocket FM

Industry: Software development

Headquarters: Bengaluru

Full-time headcount: 489

Most common skills: Writing, video, advertising

Audio series platform Pocket FM offers audio entertainment across multiple genres and Indian languages in its library with more than 100,000 hours of content. According to the company, it serves around 80 million listeners globally.

3. Ditto Insurance

Industry: Financial services

Headquarters: Bengaluru

Full-time headcount: 252

Most common skills: Communication, business management, advertising

Founded in 2018, this fintech start-up helps users compare insurance plans, understand policies and buy insurance through its online platform. According to LinkedIn, Ditto Insurance is looking to hire “hundreds of freshers” in the coming year.

2. BluSmart

Industry: Software development

Headquarters: Gurugram

Full-time headcount: 620

Most common skills: Development tools, business management, data science

BluSmart offers electric ride-hailing services in Delhi NCR and Bengaluru with its 4,500-strong electric car fleet. Founded in 2019, the start-up said it will be using its latest cash injection of $42 million to expand this fleet to 10,000 cars by the end of this year and invest in more charging stations across India.

1. Zepto

Industry: Software development

Headquarters: Mumbai

Full-time headcount: 1,400

Most common skills: Business management, data science, development tools

[ad_2]

Source link

September 27, 2023
Here are top 10 Singapore start-ups to work for, according to LinkedIn — most are in fintech

[ad_1]

Venture funding has taken a hit since 2022, as investors pull back on capital amid economic headwinds.

According to a report from research firm Tracxn, total funding into Southeast Asian startups fell by 71% to $2.3 billion in the first half of 2023 — compared to the same period one year ago.

Singapore startups attracted at least half of the funding and was the most-funded Southeast Asian city in the region, said the report.

LinkedIn added that the startups that made the list “have trailblazed their way through recent economic and workplace challenges — and managed to stand out to investors and top talent along the way.”

Much like 2022, fintech start-ups made up more than half of the companies on the “LinkedIn Top Start-ups 2023″ list for Singapore.

“This reflects the current needs of Singaporean consumers, who are keen to manage their finances and manage their wealth,” Adrian Tay, the senior editor in Asia for LinkedIn News told CNBC last year.

In compiling the list, LinkedIn drew on in-house data, measuring start-ups based on four aspects — employment growth, jobseeker interest, engagement, and ability to attract talent from LinkedIn’s top companies.

To be eligible, companies had to be headquartered in Singapore, have 50 or more employees. LinkedIn said it also lowered its age criteria from seven years or younger, to five years and below to “feature more companies in their earlier, venture stages of growth.”

Here’s the full list of Singapore’s Top Start-ups 2022.

10. Thunes — Financial services

9. Syfe — Financial services

8. ADDX — Financial services

7. Endowus — Financial services

6. Sleek — Accounting

5. Advance Intelligence Group

Industry: Software development

Full-time headcount: >1400

Most common skills: Business management, digital literacy, project management

Founded in 2016, Advance Intelligence Group is an AI tech startup with a portfolio of products, including buy-now-pay-later platform Atome, e-commerce intelligence platform Ginee, and risk-management platform ADVANCE.AI. According to the company, it has more than 30 million users across its products.

4. GetGo Carsharing

Industry: Software development

Full-time headcount: 167

Most common skills: Digital literacy, data science, project management

New to the list is GetGo Carsharing, a car-sharing service that operates on a pay-per-use model. The company aims to alleviate expenses associated with car ownership, and claims to have accumulated more than 1.8 million bookings thus far.

3. Doctor Anywhere

Industry: Health care

Full-time headcount: >580

Most common skills: Digital literacy, business management, leadership

Doctor Anywhere is a telehealth provider that aims to make health care more accessible. Its mobile app allows patients to consult a doctor quickly from wherever they are. Doctor Anywhere’s services are currently available in 6 countries across Southeast Asia.

2. YouTrip

Industry: Financial services

Full-time headcount: 140

Most common skills: Digital literacy, development tools, project management

YouTrip, another debutant this year, is a fintech startup that aims to reduce foreign transaction and cross-border fees with its multi-currency mobile wallet. Its platform offers users over 150 currencies, enabling convenient currency exchange while on the move.

1. Aspire

[ad_2]

Source link

September 26, 2023
JPMorgan’s UK digital bank blocks customers from buying crypto

[ad_1]

Signage outside a Chase bank branch in San Francisco, California, on Monday, July 12, 2021.

David Paul Morris | Bloomberg | Getty Images

Chase UK, the British challenger bank brand of JPMorgan, has blocked customers in the U.K. from purchasing crypto assets.

The company said in a statement Tuesday that, starting Oct. 16, Chase UK customers would “no longer be able to make crypto transactions via debit card or by outgoing bank transfer.”

“Customers will receive a declined transaction notification if they do attempt to make a crypto-related transaction,” the bank said in an email to clients.

“This has been done to protect our customers and keep their money safe.”

The company said it was taking the step because “fraudsters are increasingly using crypto assets to steal large sums of money from people.”

Chase UK cited data from Action Fraud, Britain’s fraud reporting agency, that showed U.K consumer losses to crypto fraud increased by over 40% in the last year, surpassing £300 million for the first time.

Crypto scams accounted for more than 40% of all reported crimes in England and Wales last year, according to the Office for National Statistics, Chase UK said in the customer email.

Chase UK is the latest bank in the country to take steps to limit the ability of their customers to purchase cryptocurrencies.

NatWest imposed limits on its customers which meant they could only send a maximum of £1,000 per day and £5,000 over a 30-day period to crypto exchanges, in an effort to tackle the rise in fraud attempts involving crypto.

HSBC and Nationwide have announced similar restrictions on crypto-linked purchases.

“We’re committed to helping keep our customers’ money safe and secure,” a Chase spokesperson told CNBC via email Tuesday.

“We’ve seen an increase in the number of crypto scams targeting U.K. consumers, so we have taken the decision to prevent the purchase of crypto assets on a Chase debit card or by transferring money to a crypto site from a Chase account.”

WATCH: Crypto enthusiasts want to reshape the internet with ‘Web3.’ Here’s what that means

[ad_2]

Source link

September 26, 2023
NIO, Moderna, Block, U.S. Steel, and More Stock Market Movers
[ad_1]
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

https://www.barrons.com/articles/stock-market-movers-8c0c7b23
Updated Sept. 19, 2023 5:18 am ET / Original Sept. 19, 2023 4:38 am ET

Order Reprints

Print Article
[ad_2]

Source link
September 19, 2023
Big banks are targeting regional banks’ customer base through Fintech

[ad_1]

Share

Hugh Son, CNBC.com reporter, joins ‘Closing Bell Overtime’ to talk more trouble for regional banks as big banks move in on their customer base.

05:28

Thu, Sep 14 20236:11 PM EDT

[ad_2]

Source link

September 14, 2023
JPMorgan Chase to offer online payroll services as it steps up fight with Square, PayPal

[ad_1]

Co-founders Eddie Kim, Josh Reeves, and Tomer London of fintech startup Gusto, which handles payroll services for small businesses.

Courtesy: Kelly Boynton | Gusto

JPMorgan Chase is stepping up its appeal to small business customers by planning to offer digital payroll processing, CNBC has learned.

The bank has picked San Francisco-based fintech player Gusto to provide the underlying technology for the feature, according to Gusto CEO Josh Reeves.

“If you’re a customer of Chase payments solutions, you can go to payroll from the same exact place you do banking,” Reeves said. “It’s the same experience, with the same login and credentialing; all that stuff becomes easier when it’s in a one stop shop-type environment.”

JPMorgan, the biggest U.S. bank by assets, has poured billions of dollars into technology in recent years. It’s part of a larger battle for the loyalty of American retail and business customers as fintech players including PayPal and Square morph into do-everything providers that threaten traditional banks. Both companies have their own payroll services.

JPMorgan has previously rolled out fintech features, including a Square-like credit card reader for small businesses and early direct deposit for consumers.

Everyone needs to get paid

When it came to payroll services — a universal chore for small business owners, some of whom still use paper checks to pay workers — JPMorgan decided to partner with Gusto rather than build its own solution.

A fintech partner like Gusto is better able to manage the complexity of offering payroll services nationally. There are nuances to individual states, cities and counties that make the sector difficult to crack, according to Reeves.

Using Gusto will help JPMorgan to speed its time to market for this service, which will go live by the end of 2024, according to a person with knowledge of the situation. The offering will disburse salaries to employees, generate tax documents and pay stubs, and file to local and national agencies.

JPMorgan has 5 million small business customers and more than 200,000 users of its payments-solutions offering, according to the person.

Gusto was founded in 2011 and serves 300,000 small and medium businesses. It was last valued at $9.6 billion. The startup competes with traditional and newer providers including ADP, Intuit, Paychex and Rippling.

–CNBC’s Jon Fortt contributed to this article.

[ad_2]

Source link

September 14, 2023
Early Revolut backer Lakestar leads $40 million investment in French fintech startup Swan

[ad_1]

Swan co-founder and CEO Nicolas Benady.

Swan

European venture capital giant Lakestar, an early supporter of fintech unicorn Revolut, has emerged as a prominent backer of French fintech startup Swan.

Swan raised the funds in a series B investment led by European venture capital giant Lakestar. The latest fundraise takes Swan’s total money raised to 58 million euros. Accel, another venture capital firm, previously led Swan’s series A round in 2021.

Swan CEO and co-founder Nicolas Benady said that, when he started out, it was “incredibly complex” to integrate banking and other financial services into existing platforms that didn’t have any financial components.

“What we had in mind with our co-founders was that it shouldn’t be that complex,” he told CNBC. “If it’s easy to accept payments — like the Stripes the Adyens, the Mollies of this world enable — it should be as easy to set up banking.”

“If you develop a big idea … at 2 a.m., it should be possible to come onto our website and have something up and running in the morning,” Benady added.

Swan will initially use the money to expand its operations in the Netherlands in the coming months, before later expanding its operations in the Italian market in 2024.

Benady said the Dutch market has unique features that set it apart from other European countries, making it more complex as a country to launch digital banking and payment capabilities in for its customers.

For example, the Netherlands has its own payments system, called iDEAL, which lets consumers pay online through their own bank and is supported by all the country’s major lenders including ABN Amro and ING Group.

Georgia Watson, a principal at Lakestar based in the firm’s London office, said the firm had been tracking Swan “for about a year.”

“We really like that they’re giving their clients the ability to create new product lines, new revenue lines, with attention for their end users,” she told CNBC.

She added that Swan’s clients “don’t have to think about the regulatory aspects when they want to add on new products, which can be very time consuming and create additional risk for the company.”

Swan is able to set up embedded financial solutions with businesses in as little as two weeks compared to many months for other competitors, according to Watson, who was previously with Goldman Sachs as a vice president managing the investment bank’s growth and venture deals.

Plans to forge partnerships

Luca Bocchio, partner at Accel, said Swan had proven its model was more scalable than competitors in the embedded finance world, such as Railsr and Solarisbank, which have faced struggles in their mission to plug payments and other financial products directly into companies’ platforms. Railsr earlier this year entered bankruptcy protection via a sale to a consortium of investors led by D Squared Capital.

Swan is able to handle large volumes of payments and run know-your-customer (KYC) checks with “very few people,” Bocchio told CNBC.

“Banking-as-a-service providers usually need to take care of many of their customers, who piggyback on their licenses. They need to take care of anti-money laundering, KYC and compliance costs for their customers.”

“Depending on what they’re serving, it means a high volume of requests if you’ve not created a fully automated platform,” Bocchio said. “It requires you to have lots of manual processes.”

Bocchio said that, where Swan differed to competitors was with its ability to process lots of tractions with more automated compliance processes. Railsr, he said, struggled to allocate the right number of people to figure out the challenge of developing an embedded finance experience while also considering how to scale it with compliance in mind.

Railsr, at the time of its restructuring announcement, said that it had “best-in-class technology” and would “get back to basics and manage the business methodically and constructively.”

Swan will also look to forge partnerships with more large, multinational corporates with an aggressive sales strategy following the fundraise. The company already works with the French retail chain Carrefour, which used its technology to develop a cashback project.

Swan plans to broaden its product offering out to include more payment collection methods such as direct debit and card payments, as well as new lending capabilities. As it rolls out these new products, Swan anticipates it’ll begin to serve new industries like travel, insurance and business-to-business marketplaces.

The proportion of payments that are embedded in platforms is expected to grow to 40% in the next few years, according to a note from Bain Capital Ventures. Embedded finance is expected to become a $384.8 billion market by 2029, according to data from Reportlinker.

[ad_2]

Source link

September 12, 2023
Catawba Nation breaks into banking, will lead to first outside business at reservation

[ad_1]

The Catawba Indian Nation’s South Carolina reservation near Rock Hill and Charlotte has never been accessible to outside businesses — until now.

For the first time, banks are invited to work under the Catawba’s jurisdiction by way of banking charters.

Last year, Catawba legislators created a Catawba Digital Economic Zone within the reservation which can establish commercial codes to do business with outside organizations, increasing the tribe’s economic development.

The board that oversees the economic zone created a banking code in April, allowing banks to create charters in the reservation. The board is focused on online banking, but could provide options to have brick and mortar branches and standalone ATMs on the reservation in the future, economic zone CEO Joseph McKinney said.

Tribal members always have been able to open an online banking account. The code provides the opportunity for commercial banks to do business on the reservation. Entrepreneurs within the Catawba Nation will have access to services like taking out loans to finance business projects on tribal land, McKinney said.

The code’s main objective is to provide the tribe with economic development through the fees banks will pay in exchange for the charters, and to provide commercial banking services for Catawba citizens.

The Catawba Indian Nation established a banking code in April, allowing banks to create charters to do business inside the reservation. This is the first time any outside business will be able to operate inside Catawba territory. David T. Foster III dtfoster@charlotteobserver.com

The code mandates the creation of a banking commission, which will include banking experts and regulators who will decide what the rules for banks will look like. Eventually, the tribe hopes to create a public bank backed by and run by the tribe.

Public banks are owned and operated by a governing body, like the Federal Reserve. Establishing a public bank is difficult due to the amount of money needed to launch it. But once it’s created, it can help the community by issuing loans or lowering interest rates during times of financial crisis.

Why did the Catawba turn to banks?

The Catawba’s business expansion is focusing on projects that require a low cost of infrastructure, McKinney said, such as online financial institutions.

Banks are advantageous for early-stage economic development because they have a lot of growth potential, he said.

“(Indian tribes) have the least access to banking services out of any other group in the United States,” McKinney said. “So being able to have an ecosystem of banks to help service them would be very important.”

Through the Catawba tribe’s authority over the business on its land, it hopes to increase competition among banks, McKinney said. The bank code announcement also referenced a Federal Reserve statement on the consolidation of banks, and how the industry needs more small, independent banks.

A representative of the tribal leadership did not return repeated requests for comment from The Charlotte Observer.

The Catawba’s new banking code allows for the possibility of the tribe establishing its own public bank. There are only two other public banks in the country, the Bank of North Dakota and the Federal Reserve. Tracy Kimball tkimball@heraldonline.com

Forging ahead with banking plans

The Catawba banking code combines elements of regulations from North Dakota, South Dakota and Wyoming.

The recognition that South Dakota’s banking system has received caught the attention of the Catawba. “Its probably the most successful banking code United States, measured by assets under management,” McKinney said.

South Dakota has over $3 trillion in commercial bank assets as of 2020, the most of any state.

Wyoming’s banking structure influenced the code through its focus in technology. The state’s Sandbox act allows a fintech like Ally bank or Paypal to seek a waiver for a “sandbox period,” which makes the service available to select customers for up to two years on a trial basis before it is officially authorized.

And North Dakota’s banking system is a model for the Catawba because of the success the state has had with its public bank, McKinney said. It’s the only state-run bank in the country.

While private bank charters can be expected by the end of the year for the Catawba, McKinney said the long-term vision is focused on having a public bank run by the tribe.

Once a Public Bank of the Catawba Nation is established, it can help regulate bank charters. This would be one of only three public banks in the country; the others are the Fed and the Bank of North Dakota.

The Catawba want to further their goals of self-governance, members of the Catawba Digital Economic Zone said. Establishing the banking code will boost economic development and help tribal members access banking services. Tracy Kimball tkimball@heraldonline.com

What is North Dakota doing?

North Dakota established a state bank in 1919, after harsh weather conditions made it difficult for people to earn a living in its mainly agricultural market, according to the bank’s website.

The Bank of North Dakota is run by the state and functions like the Fed, meaning it can determine interest rates and make other moves to improve the financial market. It also can service North Dakota residents, state agencies or other banks.

A Catawba public bank could act in a similar way.

Lise Kruse, commissioner for the N.D. Department of Financial Institutions, doesn’t know if every state would be successful in creating a public bank. North Dakota’s bank found success partly because it was established so long ago. It takes a lot of capital, she said, and is run very conservatively.

The Bank of North Dakota “just is,” said Kruse. “It’s something we’ve always had, or had for over 100 years.”

As a state agency, the bank can provide assistance during crises like droughts or floods, bolstering the local economy.

“We haven’t had a bank failure for over 30 years,” said Kruse. “Some of that credit can go to the Bank of North Dakota because they’re a stable partner for our local community banks.”

Catawba tribe’s banking future

The Catawba are in the process of identifying potential investors for a public bank, Catawba Corporations President, Chris Shrum said. Catawba Corporations was established in 1996, and was the first organization dedicated to economic development in the reservation.

It will take hundreds of millions of dollars to establish the Public Bank of the Catawba Nation, Shrum said.

A public bank also would further the Catawba’s goals of financing tribal projects and lending money to the tribe and its citizens, Shrum said. “It’s a big undertaking,” he said. “Our hope is that we collectively realize financial gain for everybody, and provide a service for not just Catawba citizens, but to the country.”

The Catawba Digital Economic Zone received applications from banking professionals interested in sitting on a board overseeing the banking charters. Catawba Indian Nation

Audrey Elsberry is a business reporting intern this summer as a part of the Dow Jones News Fund. She graduated from the University of South Carolina in May and reported on development and small businesses for her student newspapers, The Daily Gamecock and the Carolina News and Reporter.
Support my work with a digital subscription

[ad_2]

Source link

September 12, 2023
What it’s like in Europe’s popular crypto haven Portugal as the U.S. cracks down

[ad_1]

Alexander Spatari | Moment | Getty Images

LISBON, PORTUGAL — Matadors and bitcoin maximalists are regulars at Campo Pequeno, a neo-Moorish bullring in the northernmost reaches of the Portuguese capital city.

The two aren’t all that different. Both are typically defiant and stubborn, engaged in a seemingly hopeless battle that pits man against beast, where the goal isn’t just survival but total domination. Each fights against the status quo — one against the laws of nature, the other against the financial establishment. In the case of the maxis, these rebels don cryptographic code instead of capes, pinning their revolution on the decentralized ledger technology they believe will change the world as we know it.

Every month, bitcoin’s biggest fans in Lisbon — an eclectic bunch of mostly expat digital nomads — descend on this 19th century arena to sip Licor Beirão, talk shop and extol the virtues of a world run on bitcoin. The storied venue is also a fitting metaphor for the bull run that many of these bitcoiners hold out hope for during crypto winter, the name given to the period of prolonged, depressed pricing in digital assets that can last for years.

Software engineer Lorenzo Primiterra has been living mostly in Lisbon for the past two years.

CNBC

Software engineer Lorenzo Primiterra has been going to the gatherings since they began. He’s a Peter Pan-type with black chipped nail polish and small black hoop earrings complimenting the tattoo on his right inner forearm that reads, in all caps, ‘WHAT’S MY AGE AGAIN?”

Primiterra hails from Italy but has spent two of his last seven years on the road in Portugal. Sitting at a picnic table adjacent to the 10,000-person capacity arena, he tells CNBC that the inaugural bitcoin gathering took place in this same venue in spring 2022, the weekend after the collapse of Terra Luna — a popular U.S. dollar-pegged stablecoin project that imploded overnight, erasing half a trillion dollars from the sector’s market cap in the process.

“A lot of people got burned in that,” Primiterra said of the stablecoin’s failure. “I guess a lot of people became bitcoiners from that event. They understood the importance of self custody of bitcoin, bitcoin on bitcoin blockchain, not on other chains.”

The cascade of crypto bankruptcies, failed tokens and the revelation that some of the titans of the industry were running allegedly criminal enterprises laid bare to many that bitcoin is king.

But Lisbon as a city remains largely blockchain agnostic.

Every night of the week, there is some sort of industry gathering — recurring events like Web3 Wednesdays and Crypto Fridays at The Block, a popular clubhouse where industry enthusiasts can rent out co-working space. The city also plays host to major industry conferences like Web Summit and NearCon.

“I remember, two years ago, there was supposed to be an ethereum event here, and then solana organized another event and then they said, ‘Well, let’s do a blockchain week,’ and then it became a blockchain month,” said Primiterra.

“I went to the other blockchain events during the bull market, because every blockchain was offering drinks, and I’m like, ‘Why not?’” he said.

Aerial view shot of the April 25th Bridge and the Tagus River at sunset, Almada, Lisboa Region, Portugal

Simonskafar | E+ | Getty Images

Crypto investment firm Greenfield recently named Lisbon the most important crypto hub on the planet, outranking New York, Berlin and Singapore. In the recently released State of European Crypto Report, researchers point to its “profound DeFi scene” and the country’s tax breaks as two big reasons for its top status.

Even as the government looks to roll back aggressive incentives for foreigners, the tax regime is still a lot more favorable than elsewhere on the continent — especially as the collective crypto market cap is nearly 60% off its all-time high. Add perks like the newly launched digital nomad visa and the fact that the city offers lower prices than other Western European hubs, and Lisbon has all the fixings of an ideal expatriate enclave for tech enthusiasts looking to save cash while they talk code.

This is a big part of why Primiterra, who has been in roughly 50 countries in seven years, is staying put in Portugal. He bought an apartment during the pandemic in an up-and-coming neighborhood outside the main city center — and has no plans to uproot anytime soon. Another big draw? A community of like-minded people.

“I like tech in general, so even if I know that a project is terribly coded tech wise — I’m like, ‘OK, tell me how you plan to solve that double-spend problem,’” he said. “I can listen to it, I can counter-argue some of the stuff.”

“I have friends in the ethereum community, and it’s totally fine for me,” added Primiterra, though he noted that one of his big side projects of the moment is looking to launch a co-working space dedicated to bitcoin.

Sunrise over Lisbon, Portugal

Alexander Spatari | Moment | Getty Images

The San Francisco of Europe

A walk through Portugal’s capital feels eerily similar to a stroll in San Francisco. Both boast a cityscape defined by steep streets and sudden vistas; hilly terrain sloping down to beaches dotted by kite surfers and sailboats; red, dual-towered suspension bridges marking the edge of the city bounds; and brightly colored old-fashioned trams snaking through narrow streets.

The two coastal cities are also honey pots for techies.

Jemson Chan is a software tester from Singapore who has been living in Portugal for nine months. Chan is currently working for a company that is not crypto related, but he says his passion firmly lies in bitcoin and decentralized tech.

“I came to Lisbon for the quality of life, the number of tech startups and the very burgeoning tech scene,” said Chan.

Jemson Chan is a software tester from Singapore who has been living in Portugal for nine months.

CNBC

Guy Young, the CEO and founder of crypto startup Ethena Labs, says the ambience drew him to Lisbon, calling it one of those ideal cities that strikes a good balance between picturesque architecture, a rich history, top-notch restaurants, great weather — and a solid community of crypto people.

Young’s anecdotal take on the Iberian Peninsula reflects a common sentiment. In 2022, Portugal ranked sixth on the Global Peace Index, and it tops the list of best countries for expats. The number of foreign residents in Portugal has been on the rise for seven straight years, increasing by more than 40% in the past decade.

It also helps that there are clear ground rules on crypto in Europe, thanks to a law known as Markets in Crypto-Assets, or MiCA. While the guidelines aren’t Portugal-specific, the comprehensive regulatory framework for digital assets makes it easier to navigate operating a crypto business or investing in virtual tokens in the eurozone.

Chan, who has a side hustle hosting his own educational podcast on bitcoin called Orange Pill Uncensored, says Portugal is a far more hospitable backdrop than the U.S. with its regulation-by-enforcement tactics deployed by the Securities and Exchange Commission.

“Ever since the FTX collapse and the current ongoing attacks by especially the U.S. government on centralized exchanges, there have been efforts from the grassroots level to create more decentralized platforms that deal with the on- and off-ramps to fiat,” added Chan, pointing to decentralized marketplaces like Pocket Bitcoin, RoboSats, Bisque and Peach that allow users to buy and sell bitcoin.

Primiterra used to spend his days working to measure global internet censorship as part of his work with a sub-project of the dark web browser, Tor. But nowadays, he volunteers his coding skills to Bitcoin Map, an open-source tool that lets you search for merchants that accept bitcoin anywhere in the world.

Lisbon may be crypto-friendly, but businesses don’t appear to be all that interested in accepting bitcoin as a form of currency. Primiterra says the list includes a handful of merchants including a ramen place and a dentist.

Seb True is a full-stack engineer who made the move to Lisbon over the summer.

CNBC

Seb True is a full-stack engineer who made the move to Lisbon over the summer. The British national initially traveled to Portugal on what was meant to be a short trip to make a presentation at the monthly bitcoin gathering. Soon after his arrival, he was hooked and committed to a three-month sublet.

True quit his full-time job so he could focus on traveling the world and teaching people about bitcoin from the perspective of sound money and the philosophy of libertarianism. He has dubbed his educational modules The Bitcoin Student, and he’s looking to expand the brand by capitalizing on his engineering background.

Lisbon has been a relief for True, who previously ran underground workshops in Egypt where bitcoin is illegal.

“Apparently they throw people in jail for talking about it and just working on it or doing anything with it,” he said. “That’s actually the first place I started giving presentations on bitcoin.”

He says he knew the risks but ultimately ignored warnings about his safety, because he felt the population could greatly benefit from learning more about decentralized virtual money that existed outside the reach of governments or central banks.

“It’s a country that has experienced over 50% inflation just this year, people are suffering, they don’t understand why and they don’t know who to blame,” continued True.

“Their view was, ‘Oh, bitcoin, someone controls that, too, surely, so it’s not going to be any better,’” he said, adding that it didn’t take long to “orange pill” them, a phrase used by bitcoiners to describe the process of indoctrinating someone in the ways of bitcoin.

True has now shifted his focus to Portugal, describing Lisbon, in particular, as the ideal base to grow his enterprise.

“The people here that I’m meeting are doing things, actually creating content, they’re active about making a difference, and they are interested in collaborating,” True told CNBC.

“I’ve already had people contacting me asking to make content for me or for my project, not for any money, not for any fame … but just because they’re passionate, because they believe in the mission,” continued True. “They believe in the idea, and that’s really what’s made me think, ‘Wow, I should really stay here. This is where the community clearly is.’”

Lisbon’s skyline, showing the city’s Ponte 25 de Abril spanning the river Tagus.

Stephen Knowles Photography | Moment | Getty Images

Tax breaks on bitcoin

Before making the move from Asia to Europe, Chan pored over tax law in the European Union, narrowing down the ideal jurisdiction to either Switzerland or Portugal.

“If you know anything about Switzerland, it’s a millionaires’ and billionaires’ paradise,” said Chan. “Looking at me, I don’t think I’ve achieved that level of success yet, so I chose the poor man’s Switzerland.”

The tax perks in Portugal are certainly a big draw.

The resident-non-habitual (NHR) status is a fiscal regime that in some cases grants expats living in Portugal total exemption from paying taxes on their income for a period of up to 10 years.

In addition, unlike the U.S., which treats virtual currency as property, taxing it in a manner similar to stocks or real property, Portugal views cryptocurrencies as a form of payment. That distinction is a game-changer with respect to taxes.

Up until the end of 2022, capital gains resulting from crypto transactions, such as cashing out and crypto-to-crypto trades, were not subject to personal income taxes. The government has since added more caveats to its crypto tax breaks, including a requirement that an investor hold a digital asset for more than a year before selling in order to avoid paying taxes on the sale.

This means that gains from buying or selling cryptocurrency, as with other fiat currencies, are not taxed if the trader holds on to their coins for at least 12 months. Meanwhile, profits made on crypto held for less than a year is taxed at a rate of 28%.

“This makes Portugal a really attractive place for crypto users to live,” explained Shehan Chandrasekera, a CPA and head of tax strategy at crypto tax software company CoinTracker.io.

The only exception to the country’s generous crypto scheme relates to companies registered in Portugal that deal in crypto. These businesses face some taxes under certain circumstances, like if they earn cryptocurrency by providing services in Portugal.

Cyclists photographed in Lisbon, Portugal, in October 2018.

Kamisoka | Istock Unreleased | Getty Images

Expats tell CNBC the process of establishing residency is relatively smooth. It doesn’t require owning any property, and unlike other crypto tax havens, such as Puerto Rico, foreigners aren’t required to spend a certain number of days in the country.

Citizens of the European Union have the right to permanent residence in Portugal, and for non-EU citizens, it offers expats a few paths to residency, including the golden visa and the D7 Visa (also known as the retirement visa or passive income visa), both of which tend to attract wealthy foreigners.

The Portuguese golden visa is given to those who buy property, or invest a certain amount of money in the country.

There are also steps that involve getting a tax identification number, opening a bank account and formally applying for residency. Companies such as Plan B Passport streamline the application process for expats.

Plan B CEO Katie Ananina tells CNBC the company has helped hundreds of people from countries such as the U.S., the U.K., Australia and Canada obtain a second passport in one of seven countries, including Portugal. Plan B works in tandem with each government’s residence- or citizenship-by-investment programs.

One drawback to Lisbon’s burgeoning popularity: As more crypto fans flood the city, some of the longtime natives are complaining about rising prices, similar to other tech hubs around the world.

“There’s been quite a sort of influx of foreigners that have come in recently,” says Ethena’s Young. “And there’s been a bit of pushback around property prices, what’s going on with sort of the prices in some of the restaurants and stuff like that. But as a foreigner who’s come here, I have no complaints.”

‘It’s just paradise’

Wout Deley — who has been researching cryptocurrencies and their underlying technology since 2013 — was working as an international sales manager for a galvanization company in Ghent, Belgium, when he decided to sell his house, invest in tokens and hit the road.

After a few months traveling through Europe during the early days of the Covid pandemic, he ultimately settled in Portugal.

Deley invested two-thirds of the house-sale proceeds in cryptocurrency and then lived off the final third.

“At any given time, I have maybe — at a maximum — 10,000 euros ($11,450) in my bank account,” said Deley. “All the rest is always in crypto.”

For Deley, establishing residency in Portugal was a no-brainer.

“Cryptocurrencies in Belgium are massively taxed, and I was looking at seven figures of profit,” said Deley, who said that he would have faced a tax obligation of close to 40% had he remained in Belgium.

“You want to double your profit? Just move to Portugal,” he said.

Praça do Comércio is a popular tourist destination in Lisbon’s city center.

Imazins | Image Bank Film | Getty Images

Deley lives in Lagos in the southwest tip of Portugal. He says that he found a villa available as a long-term rental which was “very cheap” and that was enough to establish residency.

The living is easy in Portugal, according to Deley, who says the southern coastline of the Algarve offers the perks of Los Angeles — a warm climate and great surf — but without the traffic jams. And there is a solid social scene.

“It’s full of expats. It’s just paradise,” continued Deley. He says that he knows of at least three bitcoin billionaires who live nearby — plus another 12 people at least, mostly from the U.K., who are moving to Portugal in the next few months for the crypto tax benefits.

Deley doesn’t speak Portuguese, but he says that’s not a problem because everyone speaks English. He is also surrounded by a lot of like-minded crypto investors. “Everyone has cryptocurrency here. Everyone knows bitcoin. Everyone has it,” he said.

Deley says the crypto investor migration is good for Portugal, too.

“They have a huge brain drain. Younger people are leaving. So they’re trying to be more open to people with capital, digital nomads,” said Deley.

Meanwhile, Didi Taihuttu of the ‘Bitcoin Family’ wants to disrupt the typical expat experience in Portugal by building a crypto village.

The family is currently shopping for real estate. They’ve narrowed their options down to three different plots of land, one as big as 250,000 acres, in the Algarve.

The plan is to run the community in a decentralized fashion, in which the land is divvied up by the square meter and sold as non-fungible tokens, or NFTs, in order to signify ownership.

Taihuttu also wants to mine for bitcoin with solar and wind power and then use the heat produced by the rigs to warm houses in the winter, in a sort of closed-loop system.

The working plan, for now, is to use a decentralized autonomous organization, or DAO, to govern the community. DAOs run on blockchain technology.

“We want to build a decentralized lifestyle, which is the future,” he said.

In the meantime, the Taihuttus found an abandoned inn and are retrofitting it to be the first web3 hotel in the Algarve that is financed and owned by the community.

[ad_2]

Source link

September 9, 2023
Stripe rival Adyen secures banking license in the UK

[ad_1]

The Adyen logo displayed on a smartphone.

Rafael Henrique | SOPA Images | LightRocket via Getty Images

Dutch payments giant Adyen on Thursday said it won approval for a banking license in the U.K., marking a deeper push from the company into the banking sector.

The company said its new license would allow its merchants to offer cash advances to small and medium-sized enterprises in the U.K.

Crucially, Adyen said the license would enable it to continue operating under the U.K.’s Temporary Permissions Regime — under which it can provide services in line with its EU business — after Brexit.

Adyen already has a license in the Netherlands as an acquiring bank. In this capacity, the company can process merchant payments nearly instantly, rather than relying on banking partners to handle settlements, which can often take several days.

Adyen’s U.K. merchants can already offer customers bank accounts, virtual or physical cards, and cash flow and expense management.

“The U.K. is a key market for Adyen and we’re excited to cement our position here with this banking authorisation,” said Mariëtte Swart, Adyen’s chief legal and compliance officer.

“It will strengthen our ability to help domestic and international businesses achieve their ambitions faster. It’s another stride towards Adyen becoming a full spectrum global financial technology platform.”

A competitor to U.S. payments giant Stripe, Adyen is one of Europe’s largest technology firms, with a market capitalization of 23.4 billion euros ($25 billion). The company has been recovering after its first-half earnings numbers showed the slowest revenue growth on record.

Company shares fell as much as 39% on Aug. 31, wiping 18 billion euros from the company market value. Shares of Adyen were down about 1% on Thursday.

Adyen’s permit approval comes as one of the U.K.’s own biggest fintech firms, Revolut, has been struggling to obtain a license from the Bank of England. Revolut applied for a license two years ago, but has faced numerous delays. Regulators have had numerous concerns to consider, including the company’s late filing of accounts and internal problems with corporate culture.

Revolut says it has worked to improve its corporate culture internally. The company also saw its chief financial officer, who was at the helm at the time of its delayed accounts, leave the company earlier this year.

[ad_2]

Source link

September 7, 2023
Buy now, pay later firm Klarna cuts losses in first half but falls short of profit

[ad_1]

Swedish buy now, pay later firm Klarna reduced its losses by roughly 67% in the first half of 2023, as the company dramatically cut costs in a bid toward profitability.

The company reported overall net operating income of 9.2 billion Swedish krona ($843.5 million), up 21% year-over-year. Failing to record a half-year profit, the firm posted a net loss of 2.1 billion Swedish krona for the period, down 67% from 6.4 billion krona between January to June 2022.

Klarna did, however, say that it recorded one month of profitability in the first half of the year, ahead of its internal target to post profit on a monthly basis in the second half.

Klarna CEO and founder Sebastian Siemiatkowski hailed the firm’s profitability milestone, saying that its results “clearly rebut the misconceptions around Klarna’s business model, evidencing that it is incredibly agile and sustainable,” and supporting a “healthy consumer base.”

“Some claimed Klarna would face difficulties in the tough macro-economic climate with high interest rates, but having led the company through the 2008 financial crisis I knew we had a strong and resilient business model to see us through. Despite the volatile environment, we have done exactly what we set out to do,” Siemiatkowski said.

Credit losses, a measure of how much the company sets aside for customer defaults, sank by 39% to 1.8 billion krona from 2.9 billion.

Buy now, pay later, or BNPL, firms allow shoppers to defer payments to a later date or purchase things over installments on interest-free credit.

These firms are able to offer zero-interest loans by charging merchants, rather than customers, a fee on each transaction — but as interest rates have risen, the BNPL funding model has been challenged.

Siemiatkowski previously told CNBC the company was planning to achieve profitability on a monthly basis in the second half of 2023, suggesting that an aggressive cost-cutting strategy in 2022 — which included hundreds of redundancies — had paid off.

Klarna cut 10% of its workforce in May last year.

“To some degree, all of us were lucky that we took that decision in May [2022] because, as we’ve been tracking the people who left Klarna behind, basically almost everyone got a job,” Siemiatkowski said at an interview in Helsinki, Finland, at the Slush technology conference last November.

“If we would have done that today, that probably unfortunately would not have been the case.”

Klarna said that cost optimization was a key factor behind its ability to churn out a monthly profit in the first half of the year.

The company said that operating expenses before credit losses improved by 26% year-on-year, thanks in part to its push into artificial intelligence.

Klarna said a recently-launched customer services feature “made solving merchant disputes for customers more efficient, saving over 60,000 hours annually.”

Like other fintech companies, Klarna has made a big push into AI lately, as it looks to capitalize on the growing boom in the industry’s growth, following the birth of OpenAI’s ChatGPT.

In April, the company revamped its app with a host of new personalized shopping features. It is trying to make the software similar to TikTok, which has a discovery feed for users to find content suited to their preferences.

David Sandstrom, Klarna’s chief marketing officer, told CNBC at the time that the aim was to “offer people products and brands before they knew they wanted them.”

Klarna last year saw 85% erased from its market value in a so-called “down round,” taking the company’s valuation down from $46 billion to $6.7 billion.

Some of the company’s peers, like PayPal, Affirm, and Block, also saw their shares plummet sharply amid a wider sell-off in technology valuations.

Klarna at the time blamed deteriorating macroeconomic conditions, including higher inflation, rising interest rates, and a shift in consumer sentiment.

[ad_2]

Source link

August 31, 2023
First bitcoin ETF could be coming soon as court rules in favor of Grayscale over SEC

[ad_1]

The U.S. Court of Appeals for the D.C. Circuit has paved the way for bitcoin exchange-traded funds.

On Tuesday, the court sided with Grayscale in a lawsuit against the Securities and Exchange Commission which had denied the company’s application to convert the Grayscale Bitcoin Trust to an ETF. The decision could impact other companies that want to create bitcoin ETFs, like BlackRock and Fidelity.

A spot bitcoin ETF would be traded through a traditional stock exchange, although the bitcoin would be held by a brokerage, and would allow investors to gain exposure to the world’s biggest cryptocurrency without having to own the coin themselves. Many crypto bulls believe that approval of a spot bitcoin ETF will lead to more mainstream institutional adoption.

Bitcoin, ether and other major cap crypto coins surged on the news, and Coinbase, which is listed as the custodian partner in multiple spot bitcoin ETF applications, was up more than 14% on Tuesday.

“The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP,” the court said, referring to exchange-traded products. “In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”

Grayscale Investments, which manages the world’s biggest crypto fund, initiated its lawsuit against the SEC in June 2022 after the agency rejected its application to turn its flagship bitcoin fund, better known by its ticker GBTC, into an ETF. The company decided to pursue the ETF, which would be backed by bitcoin rather than bitcoin derivatives, after the SEC approved ProShares’ futures-based bitcoin ETF in October 2021.

The ruling faced multiple delays but the SEC ultimately rejected the application last summer, citing failure by Grayscale to answer questions related to concerns about possible market manipulation and investor protections.

“We are reviewing the court’s decision to determine next steps,” the SEC said in a statement.

A spokeswoman for Grayscale called Tuesday’s ruling “a monumental step forward for American investors, the Bitcoin ecosystem, and all those who have been advocating for Bitcoin exposure through the added protections of the ETF wrapper.”

“The Grayscale team and our legal advisors are actively reviewing the details outlined in the Court’s opinion and will be pursuing next steps with the SEC. We will share more information as soon as practicable,” continued the written statement.

One expert says the SEC’s enforcement action is basically dead in the water.

“The bottom line is that while the SEC can try to take the case to the Supreme Court, they have no other avenue to deny Grayscale’s application,” said Renato Mariotti, a former federal prosecutor in the Securities and Commodities Fraud Section of the United States Attorney’s Office — and now a trial partner in Chicago with Bryan Cave Leighton Paisner.

“If the SEC changed their rationale for denying their application, it would appear even more arbitrary. The SEC already put their best argument forward, and the Court of Appeals rejected it,” continued Mariotti.

Castle Island Venture’s Nic Carter agrees, adding that while the SEC can go back and try to deny the application on different grounds, the best next step is for the agency “to accept the decision as a way to ‘save face’ and allow the spot ETF in a way that shows they disagree with the decision but respect the court’s ruling.”

CoinRoutes CEO, Dave Weisberger, tells CNBC it could even net SEC Chairman Gary Gensler a political win — a spot bitcoin ETF would grant the regulator some oversight of the bitcoin spot market even though the token is not considered a security.

GBTC, which has $16 billion in assets under management as of Tuesday, was the first crypto product investors could trade in their brokerage accounts to get exposure to bitcoin. It was launched in 2013, well before the approval of bitcoin ETFs in Canada or bitcoin futures ETFs in the U.S. Grayscale charges a 2% annual fee to investors, making it a cash cow for parent company Digital Currency Group, led by Barry Silbert.

“It virtually guarantees they will approve BlackRock and Fidelity,” said Dave Weisberger, CEO of CoinRoutes, a platform that provides algorithmic trading and consolidated market data products for digital assets across multiple exchanges and liquidity providers. “Grayscale may need to refile, but they will almost certainly be approved as well.”

Firms have been applying for spot bitcoin ETFs for more than two years, but so far, the SEC has denied more than 30 proposals since 2021 — a 100% rejection rate. But investor sentiment was buoyed in June when BlackRock, the world’s largest asset manager with some $9 trillion in assets under management, put in an application. The firm has had all but one of its previous 575 ETF applications accepted.

— CNBC’s Jordan Smith contributed to this report.

[ad_2]

Source link

August 29, 2023