Advertisements



Celsius Asks To Launch New Token To Repay Creditors

A shadow of its high point of more than $8 in June 2021, Celsius Network (CRYPTO: CEL) has not been an attractive buy for most crypto investors. As of Tuesday evening, the crypto was down 6.99% at $0.5922. read more.....»»

Category: blogSource: benzingaJan 24th, 2023

Sam Bankman-Fried has serious beef with FTX"s new boss, John Ray III

Insider's Phil Rosen breaks down the latest barbs between Sam Bankman-Fried and FTX's new leadership. Good morning, Opening Bell crew. I'm Phil Rosen. At this point, maybe we should rebrand this newsletter to "FTX Watchers" or "SBF Fan Club," or something that conveys why we all seem so keen on watching the collapse and its aftermath in real time. But I get it — the drama just keeps coming. We're all rubbernecking.As our final send-off before the weekend, I'm breaking down how the two biggest players are still trading barbs about who did what with whose money, and why the other has no idea what they're talking about. If this was forwarded to you, sign up here. Download Insider's app here.John Ray, CEO of FTX Group, described a litany of amateurish business practices used to run the multibillion-dollar exchange.Tom Williams/CQ-Roll Call, Mario Duncanson / AFP1. This much we know for certain: Sam Bankman-Fried and FTX's new boss, John Ray III, are not each other's biggest fans. From their comments, we can see that they disagree on how to run a company, where certain cash went, and who can repay who. On Thursday, Ray gave the Wall Street Journal his first public interview since taking over FTX. He said he's mulling a potential revival of the crypto exchange, and that new leadership doesn't need to hold a dialogue with Bankman-Fried."He hasn't told us anything that I don't already know," Ray said.It doesn't take a stoic to make Bankman-Fried look chatty, given the extensive media tour he embarked on after FTX went under. But the founder didn't take kindly to what Ray had to say. "This is a shocking and damning comment from someone pretending to care about customers," Bankman-Fried said to the Journal via text message. He's maintained that the US branch of FTX is still solvent and can make customers whole again, but the company has denied this claim.In a Substack post last week, Bankman-Fried shared his estimation of what his crypto empire's books looked like over the last two years. But Ray pointed out that those calculations seem to include improperly diverted funds — meaning, in effect, Bankman-Fried's figures imply covering losses using customers' money."This is the problem," Ray said. "He thinks everything is one big honey pot."Here's Bankman-Fried's rebuttal to that comment: "Mr. Ray continues to make false statements based on nonexistent calculations. If Mr. Ray had bothered to think carefully about FTX US, he would likely have realized both that his interpretation is wholly inconsistent with bankruptcy law, and also that even if one were to subtract $250m from my balance sheet, FTX US would *still* have been solvent. Rather, Mr. Ray sees everything as one big honey pot—one he wants to keep."And strangely, as the boss and former boss duke it out, FTX's native token FTT is quietly skyrocketing again. It's possible that the crypto — which was invented by FTX and helped tank the whole enterprise with its massive plunge in value — is rallying as traders speculate on a potential reboot of the bankrupt exchange that Ray mentioned Thursday. The token is now up more than 160% from its December low. Three months into the saga, what are your thoughts on FTX? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know. In other news:Xinhua/Wang Ying/ Getty Images2. US stock futures rise early Friday, following a week of mixed economic data and slowing earnings. Here are the latest market moves.3. Earnings on deck: State Street Corp., Northern Technologies, and more, all reporting.4. This batch of stocks has high upside, according to Bank of America. Strategists said these 35 stocks are their best bets for 2023 and could soar as much as 20% on average. See the full list.5. Markets and the economy are staring down a meltdown in 2023 that could escalate into a new world war. That's according to a veteran strategist who called the dot-com bust. He warned that the Fed is on the brink of taking it too far with its interest rate hikes.6. The UAE and India are in talks to use rupees to trade non-oil commodities, marking another shift away from the US dollar. The move would build on an agreement signed last year, which aimed to increase trade excluding oil between the two countries to $100 billion. Get the details.7. Crypto broker Genesis has filed for Chapter 11 bankruptcy, becoming the latest casualty of the fallout from the implosion of FTX last year. Per CNBC, the company listed over 100,000 creditors in a "mega" bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion. Read the full story.8. The CIO at a $14.6 billion firm explained why hunting for bargain stocks right now could hurt investors in the long run. Yesterday's market leaders like tech could be overtaken by new companies, he explained. This is where to put your money instead.9. Goldman Sachs shared which stocks are most loved by mutual funds and hedge funds right now. In a stock picker's environment, it's good to know what the top stock pickers are looking at — here are 12 names they like most.CELSIUS stock price on Jan.20, 2023Markets Insider10. Celsius stock plummeted Thursday. The energy drink company was ordered to pay rapper Flo Rida $82 million in a breach of contract lawsuit. When he had first signed the endorsement deal, Celsius had a market valuation of about $10 million. Today it's worth roughly $8 billion. Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

Sam Bankman-Fried is now writing his own newsletter while under house arrest at his parents" $4 million property: "I didn"t steal funds"

Insider's Phil Rosen breaks down what the FTX founder is up to now with his new Substack and his estimates of Alameda's balance sheet. Howdy. I'm senior reporter Phil Rosen. This morning I am beside myself that, on the heels of a pivotal inflation report, the biggest story in markets is still the absurd, ongoing FTX saga. As of Thursday, Sam Bankman-Fried is not only a fallen billionaire accused of orchestrating a years-long fraud to the tune of billions, but he's also Substack's latest celebrity newsletter writer.The plot thickens perpetually, it seems. By the way: Today at 11:30 a.m. ET I'll be hosting a one-hour Q&A session on Reddit about FTX and crypto — I'll be posting the link to join on Twitter 30 minutes before we start.If this was forwarded to you, sign up here. Download Insider's app here.Sam Bankman-Fried in federal court in Manhattan on Thursday.David Dee Delgado/Getty Images1. Presumably writing from his parents' $4 million property in Palo Alto, California near Stanford, Sam Bankman-Fried published a lengthy newsletter yesterday, titled "FTX Pre-Mortem Overview."One statement stood out to me: "I didn't steal funds, and I certainly didn't stash billions away."That sentence was buried in the middle of his post. It's right in line with his not guilty plea from January 3 in the Justice Department's criminal case, and represents his most recent denial of regulators' allegations that he defrauded investors and used customers' cash for vague, illicit things like buying real estate in The Bahamas. In the note, Bankman-Fried highlighted that both FTX and Alameda Research were raking in billions in profits in 2021. A key to the collapse, he explained, was 2022's crypto bear market that left just about every token worth dramatically less than the year prior.Alameda lost "about 80 percent" of its assets' value last year, Bankman-Fried said, which then dragged down FTX in a similar fashion to how Three Arrows Capital pulled down Voyager and other crypto firms.In expressing his regret for FTX's bankruptcy filing, he also said that the international branch of FTX had $8 billion in assets when the new CEO, John Ray III, took over, and that a "very substantial recovery" remains on the table."I believe that, had FTX International been given a few weeks, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole," Bankman-Fried maintained.Those comments come a day after lawyers for FTX said in a bankruptcy hearing that the company has located more than $5 billion in assets to repay creditors.  Another fascinating tidbit: This entire FTX fiasco kicked off on November 2 after a CoinDesk report revealed troubling details of Alameda's balance sheet — remember?Well, Bankman-Fried yesterday outlined two versions of the hedge fund's balance sheet, one from each of the past two years. (You can see screenshots of them here.)He estimated that in 2021, Alameda's net asset value soared to about $100 billion. That year, he said the firm had roughly $8 billion in net borrowing from venture capital investments, interest payments to lenders, and buying out Binance's stake in FTX.So before 2022's crypto winter, it would have taken a 94% market crash to pull Alameda underwater, in his view, because it was "massively overcollateralized." In other words, it had deep enough coffers to account for any liquidity issues — but that led to the decision to maintain its long position, and they failed to hedge against the risk of an extreme crash."Alameda's assets–a combination of altcoins, crypto companies, public equities, and venture investments–fell around 80% over the course of the year," Bankman-Fried wrote, "raising its leverage bit by bit."What is your view on cryptocurrency investments this year, after last year's sell-off and in light of the FTX drama? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.In other news:Congress is considering banning its members — and their family members — from trading stocks.Kolderal via Getty Images2. Global stocks are up early Friday, as the European STOXX 600 index touched its highest level since April. Meanwhile, US stock futures are steady, after data showed inflationary pressure could be easing. Here are the latest market moves.3. Big bank earnings: JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America, all reporting.4. Buy these high-quality stocks that will beat the market as a recession hits in the next six months. Bank of America strategists picked out 15 great names that investors can pile into ahead of a downturn — see the list here.5. Expectations for the Fed to ease its pace of monetary tightening have soared. Following the December CPI report that showed inflation cooled last month, investors are turning more bullish — and are now pricing in more than a 90% chance of a smaller rate hike in February.6. Stocks could see a 18% jump this year as long as inflation keeps coming down. According to Piper Sandler's chief market technician, if the Fed backs from its aggressive policy, the S&P 500 could rise to 4,625 in 2023.7. FTX's bankruptcy judge ordered the Miami Heat's arena to take the crypto exchange's name off the building. In 2021, FTX paid $135 million to sponsor the NBA team's stadium, but both sides have been trying to cancel the deal since Bankman-Fried's empire collapsed. Get the full details here.8. Vanguard's global head of portfolio construction breaks down why the 60/40 portfolio still offers the best bet at long-term success. Even after that classic balance faltered big in 2022, it could bounce back to net high returns. He laid out the key investments to make right now.9. These two brothers quit their Wall Street jobs to build ETFs that help everyday investors reach their money goals. And they were able to outperform most of their competition over the last 12 months. They explained how a Ray Dalio-inspired strategy fueled gains and helped them beat the S&P 500 in a year of dismal returns.Bed Bath & Beyond stock price on Jan. 13, 2023Markets Insider10. Bed Bath & Beyond is in the midst of an epic short-squeeze. Bearish traders are playing a game of chicken with a potential bankruptcy. The stock has skyrocketed 230% in four days.Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 13th, 2023

FTX says it has recovered $5 billion in assets, greatly increasing the amount the failed crypto exchange has hunted down to pay back creditors

FTX's new management had previously said it located more than $1 billion in assets as part of its work toward repaying creditors. Photo by Michael M. Santiago/Getty Images) FTX said Wednesday it has now located more than $5 billion in assets as part of its work toward repaying creditors.  The failed crypto exchange had previously located more than $1 billion in assets.  FTX said it's building financial statements "from the ground up." FTX has recovered more than $5 billion in various assets, substantially increasing the amount identified by new executives as the failed crypto exchange works to repay creditors.The assets include cash, liquid cryptocurrency, and liquid investment securities, FTX's lead attorney Adam Landis said at a judicial hearing Wednesday as part of the company's bankruptcy proceedings. The $5 billion figure is higher than the more than $1 billion in assets executives said in December they had tracked down. The new amount doesn't ascribe any value to holdings of dozens of illiquid cryptocurrency tokens, Landis said. Such holdings "are so large relative to the total supply that our positions cannot be sold without substantially affecting the market for the token," he said. The new figure also doesn't include $425 million held by the securities regulator in the Bahamas, where FTX was based. Despite finding more assets, FTX still has a large hole to fill. FTX in a November filing indicated it owed nearly $3.1 billion to 50 of its largest FTX's largest creditors, but the total number of creditors tops 1 million and the overall shortfall in assets is seen at several billions of dollars.FTX also said Wednesday it has identified more than 9 million customer accounts with about 120 billion associated transactions and that it's trying to recreate petition date claim values for every customer. "We are building financial statements from the ground up using the general ledger and bank transaction records rather than the previous incomplete and unreliable financial statements of the debtors," Landis said. "This will put us in a position to describe the financial results of the debtors accurately for the first time." The now-defunct exchange said it has started a strategic review process for its assets in establishing "data rooms" and soliciting interest for four operating subsidiaries, Landis said. Court documents reviewed by Insider showed 117 parties have expressed an interest in buying at least one of the four FTX businesses. "We also are well underway on plans to monetize over 300 other nonstrategic investments, with a book value of over $4.6 billion," Landis said.  Wednesday's hearing took place two months after FTX filed for Chapter 11 bankruptcy protection in the US in the wake of allegations of misuse of customer funds and a surge in withdrawals. FTX founder Sam Bankman-Fried is currently facing eight criminal charges, including conspiracy to defraud the US and violate campaign finance laws. He pleaded not guilty earlier this month.FTX on Monday released a list of its top equity holders who have likely seen their stakes wiped out, including high-profile names like NFL legend Tom Brady, New England Patriots owner Robert Kraft, and model Gisele Bündchen. Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 11th, 2023

FTX Post Mortem Part 3 Of 3: The Contagion

FTX Post Mortem Part 3 Of 3: The Contagion Authored by Scott Hill via BombThrower.com, The Contagion: Fallout and Lessons from FTX and SBF This is the third and final part in our recap of the collapse of FTX. In the first two issues we covered what happened in the weeks leading up to the failure of the exchange and how Alameda Research and FTX became so entangled and fraudulent in the first place. Today we’ll cover the contagion and fallout throughout the Crypto industry and some lessons learned by Crypto investors and industry insiders. Leveraged Unwind The Contagion that we are seeing from the failure of FTX is mainly an unwind of built up debt between Crypto companies. This is acting with a lag as a majority of companies with financial problems were already on the ropes from earlier in the year as a result of the collapse of Luna/Terraform labs and Three Arrows Capital. The list of Crypto lenders that have so far filed for bankruptcy as a result of these earlier problems include Voyager, Celsius and BlockFi. Gemini’s yield program has halted withdrawals. Nexo has announced that they will exit US markets but have not yet announced financial problems. If you haven’t already, you should strongly consider whether any of the yield generating accounts at Crypto companies are worth the risk.  These failures are all a result of counterparties defaulting on loans. Essentially, Crypto hedge funds and other entities took on loans from these lenders during the bull market and have failed to repay this year. To compound this issue towards the end of 2021 and in early 2022 the Crypto lending space was so competitive that loan terms were extremely favorable. Lenders were growing rapidly and courting new investors. To be successful they needed to grow their loan book at any cost. Kyle Davies, a co-founder at Three Arrows Capital explained in this interview that his Fund was offered billions of dollars in loaned funds on an uncollateralized basis. Other lenders were making loans on low quality collateral. Some were slow to liquidate loans as collateral value dropped. This mechanism was a large part of the story of the FTX collapse. It appears that loans from other companies were being taken using FTT tokens and FTX stock as collateral with no plausible way to liquidate those assets anywhere near book value. This is widely speculated to be the reason why FTX CEO Sam Bankman Fried attempted to bail out insolvent lenders like Voyager and BlockFi earlier this year, to ensure that they did not liquidate his FTT collateral. This means that the contagion is very different to previous eras of Crypto collapse. It’s not hacks that are causing issues as happened in 2014. It’s not voluntary selling of assets as we saw in 2017 with ICO treasuries. It’s insolvent companies with giant holes in their balance sheets from defaulted loans. DCG and Genesis This brings us to the Genesis of all of the leverage in the Crypto industry, Digital Currency Group (DCG) and their subsidiary lending and prime broking service, Genesis. So far Genesis appears to have at least $1.8B owed to creditors. Its parent company DCG is on the hook for $575M that comes due in May next year and another $1.1B owed to Genesis in 2032. Details are limited and DCG has gone quiet, but it appears that DCG has already committed to backstopping part of the faltering Genesis loan book. We have no real idea how deep the hole is at Genesis. In early 2021 we learned that their total loans outstanding stood at $3.8B. This had increased by more than 5x since June 2020. It’s not inconceivable that Genesis had $10B in loans owed to it when it halted withdrawals in November. With so much carnage rippling through the industry it’s impossible to know how many of those loans are still performing and how many have defaulted leaving bad debt on the books. For the first time since its 2013 founding, the DCG empire could be crumbling.  While you aren’t all that familiar with Genesis as their dealings are mainly with other large Crypto firms, you are definitely familiar with the family of DCG companies. DCG owns Coindesk and Grayscale, which operates the Grayscale Bitcoin Trust. They also hold one of the largest venture portfolios in the industry, with fingers in almost every pie. Among other things, Genesis loans are used as the counterparty to many yield products throughout the industry. The first shoe to drop was Gemini’s yield program, which simply passes through Genesis loans onto consumers, which is why they were forced to gate withdrawals shortly after Genesis. Problems at DCG are problems throughout the Crypto asset class. As the major Crypto prime broker and lending provider, the halting of withdrawals at Genesis is a major problem. Even if the lender can tidy up its books and continue to operate, their pause in normal operations likely means that Credit and business operating loans throughout the industry are much more constricted than normal. How will Genesis Shake Out Problems at DCG are not the same as problems at smaller Crypto Firms. The company has a wide range of assets that they can sell off to recapitalize the business and can seek outside investment if push comes to shove. There have been rumors about fundraising attempts while an offer to purchase Coindesk for $300M was apparently rejected as too low a bid. The main point is that DCG appears to need additional funding to maintain operations, but it might not be at a crisis point where the whole company is about to go under. For example, early rumors that the Grayscale Bitcoin Trust could be liquidated seem to be unfounded. That’s not to say that there aren’t deep problems. It would not be at all surprising if Genesis were sold off or allowed to enter bankruptcy. A sale of Coindesk would not be surprising. The total collapse of DCG and the sale of Grayscale, one of the major revenue sources for the corporate group, would be surprising to say the least. With all that said, we just don’t know. DCG has been uncharacteristically quiet for weeks and nothing they have said inspires any confidence. Silvergate Another institutional Crypto company having problems is Silvergate bank. Silvergate is a US registered and publicly listed bank whose place in the industry was providing banking services to Crypto companies. In 2017 Crypto companies had awful trouble finding reliable banking services who would not close accounts. Silvergate fixed that and gained most of the banking business in the industry. They claim not to have any exposure to FTX, but they were the banking partner This opens up two big problems. Firstly, a major part of the FTX story was the dubious banking arrangement, where customers were asked to wire funds to the affiliated hedge fund, Alameda Research, rather than to FTX bank accounts. CEO Sam Bankman-Fried claims that FTX did not have access to banking at the time, but it appears that this practise carried on far longer than could be considered reasonable. If Silvergate were aware of this arrangement and allowed it to continue, regulators will have some serious questions to ask. The second and more minor issue is that banking naturally carries significant settlement risk as funds are debited and credited across accounts, sometimes opening up short term loans as settlement finalizes. It doesn’t appear that FTX has left a big gap in Silvergate balances through settlement failures, but it’s a possibility. The other angle here is that if Silvergate had a major part to play in improper banking for FTX, they could find themselves liable for fines and even clawbacks of funds into the FTX bankruptcy. Members of Congress have already asked for information and it seems likely that a regulatory investigation is coming. Solana Ecosystem and Wrapped Tokens It’s no secret that FTX and Alameda had a big role in investing in and guiding the Solana ecosystem. Sam Bankman-Fried and associates had an outsized position in several ecosystem tokens like Serum and Maps. Solana token price has already been cut in half since FTX failed and ecosystem tokens are even more badly down. The less obvious problem in Solana was that the major wrapped assets were custodied by FTX. Sollet, the wrapped Bitcoin token is currently trading at a 95% discount to Bitcoin. Most traders missed this small but important point as the FTX collapse was happening, but it’s a useful piece of information to keep in mind. Not all wrapped assets are created equal.  If you participate in DeFi you no doubt use wrapped assets. They allow you to trade and use assets from one blockchain on a different one or sometimes just provide a different token standard as a wrapper. The major wrapped assets to be aware of are wBTC and wETH. The differences are important and useful to understand. In the week after the FTX collapse there was a Twitter joke about wETH having problems. This led the asset to depeg from normal ETH tokens, despite being exchangeable 1 for 1. Articles were written in an attempt to calm panicked sellers of the wrapped token after the joke was reported seriously by Bloomberg. Types of Wrapped Tokens Wrapped ETH is a token which places an ERC-20 wrapper around ETH token, allowing it to take advantage of more advanced features of the Ethereum Blockchain. This process is handled entirely by a smart contract. The stash of ETH tokens can be viewed on the blockchain. The total supply of wrapped ETH can be audited in real time to monitor for problems. Nothing can go wrong with this system and funds can’t be stolen unless there is a smart contract exploit. A big part of what makes wETH extremely safe is that it is self contained in the Ethereum ecosystem. These sorts of smart contract wrapped tokens are similar to bridged assets. These wrapped tokens also operate by smart contract, but across different blockchains. They feature smart contracts on both blockchains which will custody native tokens and mint wrapped tokens on a different blockchain as requested by users on a 1 for 1 basis. At least that’s what they do when they’re operating properly. Bridged tokens often break and have security exploits, the technology is extremely complicated and open to hacks. Bridge exploits are by far the most common DeFi hack, with more than $2.5B stolen from bridges in the last two years. The final type of wrapped asset is a custodial wrapped asset, which includes the Solana wrapped assets which were custodied by FTX and other more commonly used wrapped assets like wBTC and stETH on Ethereum. wBTC is custodied by BitGo and operated by a DAO, they have fairly good transparency and seem unlikely to suffer problems, but it’s important to be aware that if BitGo goes into bankruptcy, wBTC could have issues. stETH is issued primarily by Lido and is set up in a similar way with similar risks. The main point is that if you are using wrapped assets, you should understand who holds the custody of the underlying token and whether they are at risk of financial problems. Solana Wrapped assets are trading at a giant discount and unlikely to be fully convertible. I don’t think there’s a high likelihood that wBTC or stETH have similar issues, but it’s worthwhile being aware that they could have problems. If you’re holding wrapped tokens, know who the counterparty that can unwrap them is and whether or not they are trustworthy and solvent. Lessons Here are the big take-aways from all this… Self Custody The first and most important lesson out of this giant mess is that every investor in Crypto needs to know how to self-custody their assets. It’s the same lesson that was learned out of the 2014 Mt Gox collapse. It’ll likely be the lesson from the next Crypto crisis. There is no excuse. Learn how to take custody of your Crypto. Easy self-custody is the major innovation. There’s a range of options, if you’re only dabbling then use a software wallet like Metamask or Exodus. If you’re a little more serious you’ll want a hardware wallet like a Ledger or a Trezor which are available for less than $100. At the high end it might be worth considering a shared recovery service like Casa. Whichever way you go, know how to Self Custody. Know how to move your Crypto off an exchange and onto your wallet. Practice doing it so that you can remove your funds when things go poorly. During the FTX collapse, the people that could remove their Crypto the day that things started looking bad kept their coins. Others lost theirs. Know Your Counterparty The firms in the Crypto industry are not like banks or stock exchanges. They don’t have anywhere near the same regulatory scrutiny. They don’t have the same insurance. They don’t do the same audits. This isn’t the wild west, but it’s still close. If you’re giving your money or your Crypto over to an exchange or custodian know your counterparty. Know their counterparty. Read the terms of service and see what the risks are. The most surprising failure out of the FTX collapse was Gemini Earn closing down. They weren’t exposed to FTX but they used Genesis who suffered losses in the FTX collapse. As a general rule, if you’re earning yield then your Crypto is being lent out. At the moment most of the yield products are closed down or bankrupt, but keep this in mind for next time. It doesn’t even have to be your chosen custodian that has problems, this industry is small and most firms have exposure to a wide range of counter-parties. Always gauge whether the risk associated with the yield you’re getting is worth it. During this cycle plenty of investors lost their entire investment because they were chasing 10% yields. When the next bear market starts, your first thought should be whether you still want exposure to lending firms. Know what you own Not all Crypto assets are created equal. If you’re dabbling in altcoins and DeFi, know how the tokens you own are connected to the larger ecosystem. As we already covered, wrapped assets have unique risks and that needs to be recognized. Ecosystem tokens, that is altcoins within a broader protocol should be viewed as having a strong correlation to the ecosystem they live in. Problems in one place can easily spread. Understanding how these tokens move together and how problems in one part can affect other parts is vital as the Crypto token ecosystems get more and more interlinked. Proof of Solvency While my advice would be to not have any tokens on any exchange or with any custodian at the moment, that’s not practical for everyone and people do need to trade sometimes. Ryan Sean Adams at Bankless has coined a phrase that I think explains how to think of exchanges at the moment: Think of an exchange like a public restroom. Go in, do your business, and get out. This isn’t the period where you want to hold assets on an exchange without a good reason. We’re heading into Christmas which is historically a low liquidity period. While a lot of insolvent firms have been flushed out, it feels decidedly like there are more shoes to drop. While Binance has performed a proof of reserves there are numerous problems with their approach and some weird activity on their order books has left traders nervous. It’s unthinkable that Binance could be insolvent, but I wouldn’t want to have any funds there at the moment. Kraken is the exchange that has the longest history of doing proof of reserves. Their CEO has recently been pointing out problems with other firms auditing, including Binance. He has also been advocating self custody. If you need to keep assets on an exchange, Kraken appears to be safer than most, but their CEO is telling you not to keep your assets on any exchange. Coinbase is the other big exchange. They’re publicly listed. They’re rigorously audited. Does that mean they’re safe? No. Do I trust them not to have problems? No. But they’re also safer than most. There should be no real reason to keep a lot of Crypto assets on an exchange at the moment. If you plan on doing so, make sure you know how to get them off the exchange in a hurry. Watch out for the next blowups This all could be over. It also might not be. The blow ups in the first half of this year were fast and destructive. Luna and Three Arrows Capital blew up and took out huge chunks of the industry overnight. This time around the blow ups are slow and large. Genesis looks like it’s going to take December off and then come back and talk to creditors next year. Their parent company DCG is a multi-billion dollar behemoth. If they are going to blow up they are going to do it slowly. It takes forever to unwind an entity as large as Genesis. The good news if you don’t have exposure to any of the already bankrupt firms is that most of them have already gone through the period where they sold off all of their assets in a fire sale. FTX was the poster boy for this phenomenon, ending their life with zero Bitcoin on their balance sheet, despite billions in Bitcoin owed to customers. If more things explode, there likely won’t be a fire sale of coins rushing to market. I fully expect there to be at least two additional offshore exchanges blow up in the next 6 months. I don’t expect them to have a large amount of assets to sell off, but things could get weird and an exchange blowing up will impact the price of tokens. The Tail Risk is still out there The Stablecoins are the biggest question mark still left on the board. After years of assurances, we still haven’t seen Tether’s books with any real certainty. Circle recently canceled its public market debut and will no longer be providing public financial reports. The less said about Binance USD the better and the other more minor stablecoins are plagued with questions. Stablecoins are not dollars in a bank. If you want US dollars, own US dollars. US short term government treasuries are currently yielding almost 4%. Bank accounts have insurance. There’s really no reason to be holding a large amount of stablecoins in this environment unless you’re using them in DeFi. I don’t want to bet against Tether. Shorting Tether is the widowmaker trade in Crypto. Even if you’re right, your counterparty will likely be insolvent and won’t pay out. I don’t even really think that Tether will fail in this cycle, but it’s a tail risk to be wary of. Stick around for the next cycle The biggest takeaway from all of this is that Crypto isn’t going anywhere. Bitcoin isn’t dead. If you’re here already, stick around. Fortunes are made in bear markets and collected in bull markets. Learn about the space. Hone your strategies. Figure out what you want to own and why. Get ready to deploy funds when the Crypto winter is waning. The Federal Reserve can’t stop printing money forever. *  *  * Today’s post is from contributing analyst Scott Hill. To receive further updates of this series and our overall investment thesis for digital assets (even in this climate), subscribe to the Bombthrower mailing list.  Tyler Durden Sun, 12/11/2022 - 10:30.....»»

Category: blogSource: zerohedgeDec 11th, 2022

FTX Goes Bankrupt in Stunning Reversal for Crypto Exchange

Sam Bankman-Fried’s crypto empire filed for Chapter 11 bankruptcy in Delaware Sam Bankman-Fried’s crypto empire filed for Chapter 11 bankruptcy in Delaware, capping rapid downfall for the companies. Entities tied to FTX.com, FTX US and trading firm Alameda Research Ltd. were part of the filings, according to a Twitter statement Friday. Chapter 11 bankruptcy lets a company continue operating while it works out a plan to repay creditors. Bankman-Fried resigned as chief executive officer as part of the filings, and John J. Ray III was appointed to replace him, the statement said. Crisis quickly befell FTX this month after prices for the exchange’s native crypto token, FTT, plummeted and users raced to withdraw their assets. Rival crypto exchange leader Changpeng “CZ” Zhao had earlier said he would sell some $529 million of FTT coins due to “recent revelations that came to light.” Zhao’s Binance Holdings tentatively agreed to buy FTX.com amid the exchange’s liquidity crunch, but backed out of the deal following a short period of due diligence......»»

Category: topSource: timeNov 11th, 2022

An ex-employee at a crypto-lender that"s holding customer deposits hostage has sued the company, calling it a "Ponzi scheme"

Jason Stone, the CEO of a firm that Celsius acquired, says the cryptocurrency lender failed to hedge risk, manipulated the market, and has a "loose relationship with the truth." Celsius CEO Alex Mashinsky.Piaras Ó Mídheach/Sportsfile for Web Summit via Getty Images A new lawsuit alleges that embattled crypto platform Celsius is a Ponzi scheme. Jason Stone, the CEO of a firm Celsius acquired, says it failed to hedge risk and manipulated the market. The suit comes after Celsius stopped allowing users to withdraw their holdings. A former investment manager at Celsius is suing the crypto lending platform, alleging it committed fraud and calling it a Ponzi scheme. Jason Stone, the CEO and co-founder of the Defi firm KeyFi, later Celsius acquired in 2020, filed the complaint in New York on Thursday. His team was tasked with receiving "hundreds of millions of dollars of customer deposits" from Celsius to invest — but the acquisition came with no formal written agreement, according to the lawsuit. Stone accuses Celsius of lacking basic security and risk management systems in place, and says the firm now owes money to his company and hundreds of thousands of customers.Celsius did not immediately respond to a request for comment.Celsius offerered users interest in exchange for their crypto holdings that it then lent out to others. According to the lawsuit, it also used those customers' holdings to artificially raise the price of its own coin, the "Celsius token" or CEL, and failed to account for certain payments that it owed to its users, resulting in a $200 million hole. The platform viewed those funds as its property, the lawsuit alleges, as is displayed in the terms of service: "Celsius does not hold any Digital Assets on your behalf" but instead are "owned, held and/or controlled by Celsius."The company then lured in new crypto holders with higher interest rates to try to repay initial depositors and creditors, per the lawsuit."The recent revelation that Celsius does not have the assets on hand to meet its withdrawal obligations shows that Defendants were, in fact, operating a Ponzi-scheme," reads the complaint. Crypto critics have long compared the market to Ponzi schemes, which rely on new investments to repay early ones, all while being a fraud. Stone — who left Celsius in March 2021 — also took to Twitter to describe the timeline of events, starting in early 2021 when he and his team discovered Celsius had lied about properly hedging potential losses that KeyFi may have seen, he said. Celsius also hadn't been hedging against the fluctuations crypto markets are known for, Stone said. When Stone told Celsius it wished to cease partnership and detached its Defi tools, he said the lending platform saw "impermanent loss," which it blamed on Stone."Given the public speculation about the company's solvency, and my observation of Celsius' loose relationship with the truth, I feel it is only prudent to finally set the record straight," Stone wrote on Twitter. "I have brought legal action against Celsius to settle this issue once and for all."The news comes after Celsius was one of a handful of companies that have stopped allowing customers to withdraw their money, amid a huge selloff in cryptocurrencies. Celsius customers previously told Insider they have no idea what will happen to their money that's now been trapped on the platform for nearly a month.In June, FTX was seeking to buy Celsius but abandoned those plans when it noticed a $2 billion hole in its balance sheet, The Block reported. FTX and its founder, billionaire Sam Bankman-Fried, have been deploying cash to floundering firms as the crypto winter rages on.Read the original article on Business Insider.....»»

Category: worldSource: nytJul 8th, 2022

Shark Tank star Kevin O"Leary says his crypto holdings now make up 10% of his portfolio thanks to the appreciation of those assets

Shark Tank's Kevin O'leary told a Reddit Talk session his crypto holdings now made up 10% of his portfolio. Kevin O'Leary. Mark Davis / Staff / Getty Images "Shark Tank" star Kevin O'Leary told a Reddit Talk session his crypto holdings now make up 10% of his portfolio. He said this was down to the appreciation in value of the cryptocurrencies he owns, rather than his increasing his exposure. O'Leary said he owns bitcoin, ether and stablecoin USDC. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. "Shark Tank" star Kevin O'Leary's cryptocurrency holdings now make up 10% of his portfolio, he said on a Reddit Talk session Thursday.Once a crypto skeptic, now a vocal supporter of the sector, O'Leary said he has bought bitcoin, ether and USD coin, a stablecoin pegged to the dollar. But he declined to share all of his holdings in the online discussion about his investment strategy.His portfolio has grown "remarkably," he said, but put this down to the appreciation in value of the cryptocurrencies he owns, rather than an increase in his exposure."At the beginning of the year, I was at 3% weighting," he said. "The target was to get 7% by year-end. However, because of the appreciation of so many of the assets I have now, we're almost at 10% today.""So, we're going to end up at the end of the year with a very significant holding in crypto assets, and it's not just bitcoin," O'Leary said.Bitcoin has notched new all-time highs in recent weeks, thanks to enthusiasm for the launch of related ETFs from ProShares (BITO) and Valkyrie (BTF), and for the upcoming "taproot" upgrade to its network. Meanwhile, ether - the native token for the ethereum network - has steadily risen to fresh records as more financial products backed by the coin look set to launch.While the Canadian businessman holds ether, he acknowledges other cryptos also promise to play a part in decentralized finance. He has said the ethereum network is too slow. Solana is seen as faster and cheaper."Some people think the game is over, and ethereum is it, but I don't agree. There are many other alternatives, whether it be solana or anything else," he said. "If you're an investor like I am, you want diversification. That's the key."O'Leary said he has holdings in companies developing crypto products such as decentralized wallets. He explained that he looks at the technology underlying the asset or product and its use cases."I am a software investor," O'Leary said. "I am going to put an allocation into the software of crypto because I believe it will change and be disruptive to a lot of different markets all around the world."Questions he asks himself are: "Can I identify the best teams? The best developers? How do I invest in them? What ledger is that? Should I own a piece of that, too?"Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 12th, 2021

Russia and Iran plan a gold-backed stablecoin, while Brazil and Argentina seek a shared currency. Here are 5 rising threats to the dollar"s dominance of global trade.

King dollar's dominance of global trade faces new threats in the form of currency projects led by countries from China and Russia to India, Iran and Brazil. The dollar's dominance of global trade and reserves is facing several new threats.Getty Images The dollar's supremacy in global trade faces fresh challenges as several countries float plans to use local currencies in commerce.  Russia and Iran are working to create a gold-backed stablecoin, while China is increasingly using the yuan in its oil trades.  Here are 5 rising challenges to the greenback's dominance of international trade and investment flows. The dollar's dominance of global trade and investment flows is facing a slew of new threats as many countries push plans to boost the use of alternative currencies.Nations from China and Russia to India and Brazil are pushing for settling more trade in non-dollar units – with plans ranging from the use of local currencies to a gold-backed stablecoin and a new BRICS reserve currency.For decades, the greenback has reigned supreme as the world's reserve currency and is widely used in crossborder trade, especially for commodities such as oil. Thanks to its relative price stability, investors see it as a safe-haven asset in times of heightened economic and geopolitical uncertainty.The dollar was further bolstered last year by a surge in US interest rates that made it attractive to foreign investors seeking higher yields. It surged 17% during the first nine months of 2022, but has since lost some of its shine on the prospect that the Federal Reserve may soon end its rate hikes as inflation cools rapidly. Against this backdrop come the latest threats to the greenback's reign — here are five currency projects from across the world that are ultimately aimed at undermining the dollar's supremacy.Brazil and Argentina plan a common currencyArgentina's president Alberto Fernandez (left) and Brazil's new leader Lula.Eraldo Peres/AP PhotoBrazil and Argentina recently announced they are gearing up to launch a joint currency, named the "sur" (south), that could eventually become a euro-like project embraced by all of South America.A common currency could help boost South American trade, the countries' leaders said in a joint statement, because it evades conversion costs and exchange rate uncertainty. That could erode the dollar's dominance in the region, given the greenback accounted for as much as 96% of the trade between North and South Americas from 1999 to 2019, according to the Federal Reserve.  Russia and Iran eye a gold-backed stablecoinRussian President Vladimir Putin.Sputnik/Sergey Bobylev/Pool via REUTERSRussia and Iran are working together on a cryptocurrency backed by gold — a 'stablecoin' that could replace the dollar for payments in international trade.The two countries, both of which have been hit by Western sanctions, want to issue a "token of the Persian region" for use in crossborder transactions, with a plan to launch it in a special economic enclave in Astrakhan in southern Russia, which already handles Iranian shipments.But the project can move forward only once Russia's market for digital assets is fully regulated, according to a Moscow lawmaker.Russia and Iran have stepped up their push to "de-dollarize" in recent months, according to think tank the Jamestown Foundation. They aim to increase their volume of trade to $10 billion per year via moves such as developing an alternative international payments system to SWIFT, which they are banned from.UAE, India look at using rupees in non-oil tradeThe UAE and India signed a free trade agreement last year with a goal of increasing non-oil transactions to $100 billion by 2027.Bloomberg Creative PhotosMeanwhile, the United Arab Emirates and India have floated the idea of conducting non-oil trade in rupees. The move would build on a free trade agreement signed last year, which aims to boost trade excluding oil between the two countries to $100 billion by 2027.China has also pondered on the idea of settling non-oil trade in local currencies that exclude the greenback, according to minister of state for foreign trade of the UAE Thani bin Ahmed Al Zeyoudi. China pushes for the yuan to replace the dollar in oil tradesRussian President Vladimir Putin (L) and Chinese President Xi Jinping pose for a photograph during their meeting in Beijing, on February 4, 2022.Photo by ALEXEI DRUZHININ/Sputnik/AFP via Getty ImagesChina, for another, is looking to weaken the dollar by pushing for the yuan to replace the greenback in oil deals, given its increased trade with Russia after it invaded Ukraine. The move looks to chip away at the petrodollar regime in place since the 1970s, where global oil transactions are largely settled in dollars. Toward the end of last year, Beijing began buying Moscow's crude at steep discounts, completing those purchases in yuan rather than dollars, giving rise to the so-called petroyuan. With a stronger greenback, oil contracts become more expensive because the deals are largely priced in the US currency, and this also explains China's shift away from the dollar.Kpler analyst Viktor Katona said Russia has effectively become "an Asian nation that in my opinion has introduced the yuan into large-scale oil trade."Russia, China propose a new reserve currencyLeaders of BRICS countries — Chinese President Xi Jinping, Russian President Vladimir Putin, Brazilian President Jair Bolsonaro, Indian Prime Minister Narendra Modi, and South African President Cyril Ramaphosa — at the BRICS summit in Osaka, Japan, on June 28, 2019.Sputnik/Alexey Nikolsky/Kremlin via ReutersLast year, Russia and China kickstarted talks to develop a new reserve currency with other BRICS countries in a challenge to the dollar's dominance. The new reserve unit would be based on a basket of currencies from the group's members: Brazil, Russia, India, China, and South Africa.The dollar's reign as the chief reserve tender is already on the wane as central bankers diversify their holdings into currencies like the Chinese yuan, the Swedish krona and the South Korean won, according to the International Monetary Fund.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 29th, 2023

Goldman Sachs, JPMorgan, Wells Fargo are among Wall Street giants named as possible FTX creditors

The 116-page document lists thousands of entries and redacted names of individuals who could be possible creditors to the exchange, per Bloomberg. FTX.NurPhoto/Getty Images The 116-page document connects some of the biggest names on Wall Street to FTX's bankruptcy case.  The list doesn't disclose the size or kind of debts the collapsed crypto firm might owe the banks, Bloomberg reported.  Other elite financial institutions on the list were Deutsche Bank, HSBC Bank and MUFG Bank.  Newly released documents from FTX's bankruptcy case name Goldman Sachs, JP Morgan Chase, Wells Fargo and other Wall Street giants as possible creditors the cryptocurrency exchange might owe money following its collapse. The document filed on Wednesday is made up of 116 pages that list thousands of entries and redacted names of individuals, all of whom could be possible creditors to the exchange, Bloomberg reported. Other elite financial institutions on the list were Deutsche Bank, HSBC and MUFG Bank. The filing is standard procedure in bankruptcy processes to broadly alert as many actual and potential stakeholders who could pop up in FTX's records for any reason, according to a Thursday statement filed by the crypto exchange's lawyers to the court. "As a result, inclusion of a name on the Matrix does not necessarily indicate that the party is a creditor of any of the Debtors," FTX's lawyers wrote. Still, the latest development shows some sort of link between Wall Street's biggest banks and the now-collapsed crypto empire built by Sam Bankman-Fried. Both Goldman Sachs and Deutsche Bank have distanced themselves from the crypto exchange so far, according to Bloomberg, with a representative from the former saying it had not filed a claim against FTX and the latter saying the German investment bank had no credit exposure to it. "Goldman Sachs has not filed a claim against the debtors," a spokesperson for the bank told Bloomberg. "This type of creditor matrix is prepared by the debtors for the purpose of providing notice to interested parties in a bankruptcy proceeding and is not necessarily evidence of a creditor relationship."Meta, Apple, and Netflix were among the big names in the tech industry included in the list of possible creditors, as were some of the major commercial airlines, including United, American, Southwest and Spirit, the filing showed.FTX recovered more than $5 billion in assets early January that could be used to repay creditors, a figure higher than the initial $1 billion-plus assets executives said they had tracked down in December. When the failed cr yto exchange went bust in November, a bankruptcy filing showed that it owed nearly $3 billion to 50 of its largest creditors — all of whom were customers. But the total number of creditors FTX is seen to have tops over a million.Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 27th, 2023

Elon Musk is mulling over ways to whittle down some of his Twitter debt

Insider's Phil Rosen breaks down what's going on with Elon Musk's latest move to potentially raise funds for the social media platform. Good morning. I'm Phil Rosen, reporting from Los Angeles. The good weather here has left me postponing my return to wintry New York. After weeks of sunshine, a few seconds of Manhattan air just might give me frostbite at this point.And speaking of cold hard reality, the Wall Street Journal reported that Elon Musk is trying to raise fresh funds to pay off some of the pricier bits of his $13 billion Twitter loan.If this was forwarded to you, sign up here. Download Insider's app here.Elon Musk.Screenshot via YouTube/The Boring Company1. New fundraising to the tune of $3 billion could help Musk repay the obligations he took on in his Twitter takeover. Sources told the Wall Street Journal yesterday that the Chief Twit's team has been exploring options for an equity raise that could be used to pay down the most expensive slice of the $13 billion debt.Twitter's unsecured bridge loans, which total about $3 billion, carry a 10% interest rate in addition to the secured overnight financing rate, which has soared in recent months. For every quarter that goes by without refinancing, the interest rate goes up by an additional 0.50 percentage point, regulatory filings show. That said, if Twitter can pay back those unsecured bridge loans, meeting its debt obligations would be much more manageable.Still, there's no guarantee that fundraising comes through, as investors remain wary of Twitter's ability to generate cash-flow. In December, former credit analyst Jeffrey Davies predicted that Twitter's total interest expense is roughly $1.25 billion per year. That comes out to just about $3.4 million per day in interest payments.Musk predicted in December that Twitter's business will break even in 2023 thanks to cost-cutting measures (including letting go of some 6,000 staffers). Remember, it's been four years since Twitter notched an annual profit, and it's posted a loss in eight of the last 10 years. Musk knowingly took on a sinking ship, and securing more investors to help him do so will play a key role in how his social media gambit plays out.What are some ways you think Elon Musk could boost revenue at Twitter? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know. In other news:Reuters / Brendan McDermid2. US stock futures rise early Thursday, as investors digest the latest release of corporate earnings. Both Tesla and Levi's were among stocks that beat revenue expectations. Meanwhile, traders will also be watching for data on jobless claims, gross domestic product, and durable goods — all due out today. Here are the latest market moves.3. Earnings on deck: Visa, MasterCard, and Diageo, all reporting.4. This contrarian value fund manager beat 99% of his competitors last year. He explained the four rules that helped him become one of the best managers on Wall Street — and eight of his favorite stocks to buy right now.5. The short-seller who exposed fraud at Nikola is now targeting a conglomerate owned by the fourth-richest person in the world. Hindenburg Research released a report Wednesday that alleged the billionaire chairman of Adani Group is "pulling the largest con in corporate history."6. Mortgage applications jumped for a third straight week. Housing-market activity is trending toward a rebound as interest rates ease. Currently, the 30-year fixed-rate mortgage is at a four-month low.7. Don't rule out further inflation surprises just yet. At least that's what Goldman Sachs analysts are saying. They explained three signals that investors can study to better predict price movements. 8. Credit Suisse's stock chief said investors are piling into all the wrong sectors. Markets seem to be anticipating a recession that won't come, in his view. He broke down three areas to pile cash into for the best returns.9. Evercore recommended these 12 oversold growth stocks to take advantage of China's reopening. This batch of Chinese companies look poised to recover some of their recent losses, as evidenced by rising earnings estimates. Get the list.Bitcoin price on Jan. 26, 2023Markets Insider10. Bitcoin and other cryptocurrencies pared some of their January gains in the last 24 hours. Still, the crypto market as a whole has regained its $1 trillion valuation in 2023 — and the world's most popular token has seen a 36% jump this month.Curated by Phil Rosen in Los Angeles. Feedback or tips? Tweet @philrosenn or email prosen@insider.comEdited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 26th, 2023

How Equifax Became A Private IRS

How Equifax Became A Private IRS Authored by Matt Stoller via BIG (emphasis ours), The movie The Big Short is about the housing crisis and its collapse, along with all the fraudulent activity up and down the financial system that abetted it. It is as much a cultural story as it is one about finance, a film about what banking corruption does to human beings and the law itself. In it, there’s a famous scene where fund investors betting on a housing collapse are trying to learn about the Florida housing market, and are interviewing some frat-boy type Florida real estate agents. The agents keep discussing their self-serving and illegal behavior, like falsifying paperwork or selling to people who knowingly can’t pay back loans. At a certain point, the main character asks his colleagues, ‘why are they confessing?’ to which the others respond, “they’re not confessing, they’re bragging.” The point of this scene is to show that people in the industry during the housing bubble weren’t just breaking the law, but saw the law itself as irrelevant. Enforcement was so weak that those in finance and real estate would just openly brag about all the crime they were doing. It was a true story. And it continues to be a true story in most white collar areas. Late last year, the CEO of Equifax Mark Begor presented at a Goldman Sachs conference for investors, and openly told the investors how much market power his firm has in the business of selling income verification services to creditors. “We have meaningful pricing power,” he said, because “only Equifax has that income and employment data.” Equifax aggressively raises prices on the Work Number product line annually, and has, according to Begor, “already got our January 1, 2023 price increases in the market.” Long term, he says, “we have an ability to grow price well in excess of GDP.” This is fairly shocking stuff from a CEO, who should know better than to confess to monopolization. Only, it seems as if Begor wasn’t confessing, he was bragging. Here's the audio. Still, why wouldn’t Begor brag to investors? Equifax’s controversial behavior is near-legendary. The firm is an important credit bureau, and credit data is exactly what we wouldn’t want to fall into the hands of hackers, who could then easily use it to engage in identity theft, en masse. But in 2017, Equifax had a massive scandal, one of the biggest data breaches in history, when it accidentally exposed the personal data of 147 million people. The Federal Trade Commission fined the company more than $575 million, and the CEO, CIO, and chief security officer were all forced out. Yet the firm didn’t suffer any long-term reputation damage. And in all the hoopla around the scandal, there really wasn’t a lot of discussion about why that is, and how Equifax actually makes money. So looking at Begor’s braggadocio around the firm’s market power is useful. The product Begor told investors about at the Goldman Sachs confab is called The Work Number, which is a business line that bundles data about the incomes of hundreds of millions of people and sells it to interested parties, like lenders, landlords, employers, and government agencies. Payroll and data is by some estimates a $10 billion market, and now brings in a majority of the firm’s domestic revenue. Equifax used to be a firm, which, along with Experian and TransUnion, focused on keeps tabs on all of us and whether we pay our debts. But over the last four years, it has transformed itself into a sort of tax information agency, which sells information about our salary and income to third parties. It’s a better business than just credit data, because while three firms have information about whether you pay back your credit card company, only Equifax has complete information about where you work. And a monopoly, as Begor bragged, is better than an oligopoly. BIG is a reader-supported newsletter focused on the politics of monopoly and finance. This is journalism and advocacy that challenges power, so please consider a paid subscription. You can always get lies for free. The truth costs a few bucks, but in the long run it’s much cheaper. You can subscribe by clicking here. The Work Number First let’s start with why this business exists. Sharing information about where you work and what you make is something we all need to do on occasion. If a bank or auto dealer wants to lend someone money to buy a home or car, they need a verification that the person works where he says he works and makes the income he says he makes. Sometimes a potential employer or landlord needs to check work history, or a public agency needs to ensure someone qualifies for government assistance, or they have to update immigration status. How do third parties verify this information? Employers don’t like it when their HR departments are getting constant requests from lenders about their employees and what they make. And getting this information from the IRS is illegal (or least has been since progressives in the 1920s temporarily had tax returns made public.) So for decades, employers have been sending data on this to brokers, who sell the records to interested parties. Today, the biggest and in some ways only meaningful broker in this space is Equifax. If you are trying to find out someone’s work history and income, it’s pretty likely Equifax has it, and it’s unlikely anyone else does. (Experian is the second player in the market, but they just started their product line in 2021, and as I’ll explain, they are far behind.) And we’re not just talking about the data the IRS has, we’re talking about data on pay for every payroll cycle, your overtime amount, the start and end date for your job, your title, your health care provider, whether you have dental insurance, and if you’ve ever filed an unemployment claim. There are network effects in this business; the more data Equifax gets from employers, the more likely it is to be the place lenders and government agencies seek to do income verification. In addition, having lots of data about workers also allows Equifax to build services for firms, such as managing unemployment compensation. When a firm lays off a worker, that worker is supposed to have rights to unemployment compensation, which the firm has to pay for. But if that employee was fired for cause, or quit, then that worker isn’t entitled to unemployment payments, and the firm is off the hook. There are lots of grey areas here, it’s a quasi-legal setup between the state, the business, and the employee. Managing this process, along with appeals, is also something Equifax does, as it’s a natural extension of its data business. Because of this extensive warehouse of data and set of services, firms and agencies then integrate themselves into the Work Number. So one could argue this business has natural barriers to entry. But the story here isn’t just one of scale efficiencies. The Work Number is a legacy business, started decades ago. With the internet, however, there’s no technical reason for a centralized repository of employment and verification data, or at least not the way it’s set up today. It’s quite possible to set up a system allowing any verifier to ask the individual for his or her records. But that would cut against Equifax’s business model, which involves not only taking your data without you knowing about it and selling it, but also, crucially, preventing any other third party from innovating to build a more privacy-safe version of the same service. Indeed, the story here is monopolization. Fifteen years ago, Equifax had already run into the Federal Trade commission, not for privacy violations, but for antitrust violations. Only, because its income verification business was a sideshow to its main credit reporting revenue line, people didn’t really notice. Today, however, Equifax is now a monopoly income verifier with a side credit information business. The original Work Number product came from a company called TALX Corporation, which was founded in the 1970s and that Equifax bought in 2007. From 2002-2005, TALX had bought up seven rivals, consolidating the verification of income and employment business. Immediately after this acquisition spree, TALX raised prices and forced customers to move from buying annually to signing long-term multi-year contracts. Additionally, TALX had non-competes and non-solicitation agreements with its employees, which further locked up the market. In 2008, the Bush administration FTC sued Equifax over acquisitions and unfair methods of competition. It was a creative complaint, with the Chair of the commission - Bill Kovacic - looking skeptically at a series of small acquisitions, instead of one big one. But the FTC didn’t seek to undo any of the mergers. Instead, it signed a consent decree forcing TALX, now Equifax, to let customers out of long-term contracts and employees out of non-compete agreements. These consent decree obligations ended in 2017. Ultimately, this FTC action, because it didn’t require a break-up, didn’t restore competition in the market, allowing Equifax to fortify its monopoly. Equifax’s TALX subsidiary was even caught for violating of the Fair Credit Reporting Act just two years later. And the company is still a merger machine, purchasing small and large firms nearly every year. For instance, just in 2021, it made $3 billion in acquisitions, buying HIREtech and i2Verify. After the consent decree ended, the exclusive arrangements came back. ADP, Intuit, Paycor, PrismHR, Rippling, and many other providers of outsourced payroll services have deals with Equifax to turn over or sell records. So do large companies. In 2017, Joel Winston at Fast Company reported that “75% of the Fortune 500 companies, 85% of the federal government workforce, entire state governments and agencies, courts, colleges, and thousands of small businesses nationwide” handed over data. Facebook, Amazon, Oracle, Google, Wal-Mart, Twitter, AT&T, Harvard Law School, and the Commonwealth of Pennsylvania do too. The number of entities handing over this data has only gone up since then. And Equifax pays many of these entities for their employee data, turning human resources into a revenue generator. Of course, the employees don’t know their own data is being sold by their employer, and even small businesses who use payroll services like ADP don’t realize their data is being sold. (Small businesses can opt-out, but they have to tell their payroll provider.) The net effect of these arrangements is that smaller players in the market, such as ExperianVerify, Truework, Thomas & Company, and Certree, simply cannot get the data that Equifax has. They are boxed out. If you are doing income verification, and you put someone’s Social Security number into Equifax, you have a 50-70% chance of getting a successful conversion. For other brokers, it’s much lower. There isn’t so much a market for employer/income verification information, there’s a market for information about each specific person. To a lender, it doesn’t matter if a rival to Equifax has information on 30% of the country, it matters if that rival has information on the individual to whom they are considering loaning money. If they don’t, you have to use Equifax. On the other side, Equifax has also erected barriers to entry. If you are a frequent buyer of income and employment data, Equifax sometimes offers a loyalty discount if you move all your business to the Work Number. One background check provider, SwiftCheck, explained Equifax offered that “if our organization performs The Work Number Verification on every employment verification, a discount is offered.” This is a classic loyalty discount, what looks like an unlawful mechanism to exclude competitors. So that’s how Equifax establishes its market power, by blocking rivals from getting data and by locking in customers of that data. And we can see this market power at work in the pricing, as their CEO noted in December. Equifax has been raising prices substantially for years. How much? Well like an airline or any firm with market power, Equifax doesn’t just have one price. It can engage in price discrimination depending on the willingness to pay. But the price hikes that are public, are extreme. In 2017, the price for a record was $20, in 2020 it was $41.95. Today, it lists its price as $54.95 for a record of where you currently work, and potentially up to $200 for records with more historical information. And it’ll keep going up. The Real Cost: Equifax as Private Government Consumers pay for this cost in ways they don’t see. When you get a loan or rent an apartment, the lender or landlord has to pay Equifax’s toll, and will include that extra cost in the price of your loan or rent. But more than just higher prices, Equifax’s database is powerful. The Work Number can, according to the government, help determine “an applicant’s social service eligibility” or “inform child support collections and enforcement.” There are often errors, and getting your own data from Equifax can be difficult if not maddening. Just read this thread of frustrated consumers trying to do so, and often encountering mistakes in the process. And as we know, Equifax is prone to hacking. People don’t know that their employment data is being sold to Equifax, and they tend to be upset when they find out. Google workers were outraged about it, which is ironic. It’s also prone to abuse; Apple told the Work Number that every worker who left was automatically given the title “associate,” regardless of whether they were a top engineer. According to one former Apple worker, this error “delayed the hiring process at a prospective employer by nearly a week, during which time the company rescinded the offer.” I don’t tend to focus on privacy, but though Equifax claims there are controls on who can buy this information, security researcher Brian Krebs noted in 2017, that it’s easy for pretty much anyone to learn your salary. These flaws are all quality harms, standard for any monopolist who isn’t subject to competition. The Work Number is so important that Equifax is engaged in the work that should be reserved to a government. Generally speaking, people would get really upset if the IRS shared our tax information for a fee. Effectively, Equifax is doing that, because for most people, employment and income is our tax information. But since it’s a private monopoly, the anti-government types don’t notice or care. At the height of the Great Recession in 2010, Equifax’s TALX division was processing 30% of the unemployment claims in the country. Though originally intended to automate the process, what Equifax ended up doing was automating the refusal to pay out unemployment claims. It systemically denied applications regardless of merit so its clients - employers - would have to pay less in unemployment taxes. And this goal is on the firm’s investment documents, which uses the anodyne wording of “reduce the cost of unemployment claims through effective claims representation” to describe the service it provides to employers who give it data. It’s perhaps no exaggeration to note that Equifax is a quasi-governmental agency, a monopoly provider of evidence that you work, where you work, and what you make. If there’s an error, or if someone lies about you, too bad. If Equifax itself is paid to harm you, too bad. If a government agency gets the wrong data and denies you assistance or screws up your immigration status, that’s on you, well, you have limited to no rights in this situation. In some ways, you might have more to fear from Equifax than the IRS. It Need Not Be This Way As is always the case, most things created by people can be unmade by people. And so too with Equifax. I learned about the Work Number from a contact on Wall Street who pays attention to monopolies. He told me the Work Number is one of the purest examples of market power he’s seen, which of course, the CEO of Equifax helpfully confirmed in public. I’ve also talked to a number of people in the industry trying to compete in the payroll data space. Two firms - Certree and Argyle - recently sent letters to the Federal Trade Commission asking for an investigation into this market, pointing at the abuse of consumers by Equifax (and to a lesser extent Experian). The strategies for each small rival are different, but both give the consumer control over who can access their data, instead of building a giant centralized repository controlled by a monopolist. Certree gives each employee a ‘personal vault’ where his or her data resides. While they verify that the data came from an employer, only the employee can give permission for a third party to look at what’s inside - even Certree can’t see it. Certree is paid when a lender or third party successfully verifies an employment or income record. Argyle has a totally different model. It isn’t even a data broker, but a ‘data transfer agent.’ It lets third parties ask consumers about their income and employment information by sending them a link, and then gets consumers to give them their passwords for their employment information. Argyle doesn’t keep any data on hand, but is controversial because it engages in screen-scraping of your employer’s website, which can be a security risk. And yet it is weird to think it’s problematic for employees to take their own data from their employer, but fine for employers to sell that data to Equifax. Both Certree and Argyle charge much less than Equifax for their service. Regardless, the overall point is that having a centralized data broker that has a quasi-monopoly over income and verification data, and sits largely unregulated, is ridiculous. Breaking up Equifax’s monopoly wouldn’t be that hard, at least conceptually. Many of the practices that it engages in today are things the FTC banned in its old consent decree with the firm. And it’s obvious that Equifax is immune to competitive forces. Despite the price hikes and devastating and routine news stories about hacks, errors and problems, as well as public polling showing increasing concerns over privacy, Equifax marches on, unbothered and unchastened. That’s the classic monopoly position, a recognition that there is no alternative. Beyond the monopoly problem, however, why not have a system where individuals control their own data? Prior to the internet this would have been impossible, but today it’s quite doable. Giving individual control over their data would probably require both antitrust law and an aggressive reading of the Consumer Financial Protection Bureau’s authority over Credit Reporting Agencies, or a new Congressional statute for ownership and control of employment data. Regardless, I’d like to thank Equifax CEO Mark Begor for bragging last month about his firm’s market power. Without that, I never would have taken the time to learn why Equifax can act as a private IRS, put out a middle finger to each one of us, and collect our money regardless. * * * Thanks for reading! Your tips make this newsletter what it is, so please send me tips on weird monopolies, stories I’ve missed, or other thoughts. And if you liked this issue of BIG, you can sign up here for more issues, a newsletter on how to restore fair commerce, innovation and democracy. And consider becoming a paying subscriber to support this work, or if you are a paying subscriber, giving a gift subscription to a friend, colleague, or family member. cheers, Matt Stoller Tyler Durden Wed, 01/25/2023 - 23:00.....»»

Category: blogSource: zerohedgeJan 26th, 2023

E-cig startup Juul is talking to Philip Morris, Altria, and Japan Tobacco about its future, WSJ reports. Here"s a rundown of the startup"s rise and fall.

Juul rebranded three times, sold assets, and attracted nontraditional investors. Now, it's reportedly in partnership talks with big tobacco companies. Eva Hambach/Getty Images The e-cigarette company Juul reportedly is in talks with three big tobacco companies about its future. The talks with giants like Philip Morris are aimed at securing a possible sale, strategic investment, or other deal, the Wall Street Journal reported. Here's a rundown of the company's history, from its $38 billion valuation to legal settlements. Juul is looking for a fresh start.The e-cigarette maker is talking to some of the biggest names in the tobacco industry, including Altria, Philip Morris, and Japan Tobacco, about options for its future, the Wall Street Journal reported on Wednesday. The talks were in early stages and covered a range of potential options, ranging from an outright sale to one of the larger companies to licensing deals, distribution deals, or a strategic investment, the Journal reported.Juul did not immediately respond to a request from Insider for comment.Over the last several years, Juul has gone from a darling of Silicon Valley to a company beset by legal challenges. It also fell from a valuation of $38 billion in 2018 to just $1 billion last October, according to the Journal.Scroll down to see Juul's rise and decline:2004: At Stanford, the product-design grad students James Monsees and Adam Bowen create the idea for Ploom, Juul’s precursor.Juul.com / YouTubeMonsees and Bowen have said they were smokers who met on smoke breaks while pursuing master's degrees in product design at Stanford University. Their thesis presentation, now posted on Juul's website, describes their product as "the rational future of smoking."2007: Monsees and Bowen found the vaporizer startup Ploom in San Francisco.YouTube / Hyphy SF By February 2008, Ploom raised $900,000 in venture funding, putting its valuation at roughly $3 million, according to PitchBook.A 2011 description of the Ploom device, which sold for $75, described it as a heat-not-burn product that could be filled with single-serve refills called "Ploom Pods." The pods could include tobacco or non-tobacco ingredients, it said. Aug. 1, 2013: Ploom debuts the Pax with a launch party in San Francisco.Ploom at Robin Thicke's album-release party in 2013 in New York.Andrew Toth / Getty ImagesAfter raising close to $5 million, Ploom launched a device called the Pax, a vaporizer for loose-leaf tobacco that could also be used for cannabis.To debut the device, Ploom hosted a launch party in San Francisco's trendy Mission District.At this time, Ploom investors included Japan Tobacco, the maker of Winston and Salem cigarettes, along with the software company Originate and the angel investment group Sand Hill. Feb. 16, 2015: Monsees and Bowen sell the Ploom brand and a vaporizer line to the Japanese tobacco company JTI. They rebrand as Pax Labs.Japan Tobacco Inc.'s president and CEO, Mitsuomi Koizumi, using a Ploom during an interview with Reuters at the company's headquarters in Tokyo in 2017.Toru Hanai / ReutersAs part of the deal, JTI said in a statement that Ploom would buy back JTI's minority stake in the startup.June 1, 2015: Pax Labs launches the Juul with a party in New York City.SRITAPax introduced the Juul with a launch party in New York City.A trove of images collected by Stanford researchers suggested that the campaign focused on a young audience. Guests were invited to try Juul's products free and share selfies on social media, Business Insider reported."Juul's launch campaign was patently youth-oriented," Robert Jackler, a practicing Stanford physician who was the principal investigator behind the tobacco-image collection, told Business Insider.2016: Juul sales skyrocket 700%.An ad on Juul's website from 2016.Juul devices gained popularity. Sales rose 700% in 2016, ABC 7 News reported.July 1, 2017: Monsees and Bowen spin out Juul Labs as an independent company and name former Pax Labs CEO Tyler Goldman CEO.Pax Labs; Melia Robinson/Business InsiderGoldman came to Pax from the music-streaming startup Deezer then took over Juul Labs.Nov. 2017: Juul is the best-selling e-cigarette on the market.Pax LabsJuul said it'd sold 1 million units. The company also captured a third of the e-cigarette market, according to Nielsen data.Dec. 11, 2017: CEO Tyler Goldman leaves Juul. The company replaces him with Kevin Burns.Juul's new CEO, Kevin Burns.Juul/YouTubeGoldman left Juul to "pursue new entrepreneurial activities." The company hired Burns from the yogurt company Chobani.Dec. 2017: Juul raises $112 million in venture funds and adds Nicholas Pritzker to its board, according to PitchBook.The industrialist A.N. Pritzker in 1982. The wealthy Pritzker family owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. They also founded and expanded the Hyatt Hotels chain.AP PhotoThe fresh funds came from firms including Tao Capital, Fidelity, and Evolution, according to PitchBook.Nicholas Pritzker, Tao's cofounder, joined Juul's board, CNBC reported. Pritzker is a member of the wealthy Pritzker family, which owned the chewing-tobacco giant Conwood before selling it to the tobacco giant Reynolds. The Pritzkers also founded and expanded the Hyatt Hotels chain.On an undisclosed date, Tao Capital sold its stake in Juul to the hedge fund Tiger Global and Manhattan Venture Partners, PitchBook said.The venture fund M13, another early Juul investor, sold its shares in the spring of 2018.This slide has been updated with new information about M13's investment.March 2018: Dozens of outlets report that 'Juuling' is an epidemic at high schools.A Juul ad from 2016.Pax LabsNational news outlets including National Public Radio, USA Today, and Business Insider reported that the Juul had a loyal and growing following among young people.All of the reports said teens were taking to social media to brag about being able to sneak puffs in class or in the bathroom thanks to Juul's discreet design.April 2018: Led by Commissioner Scott Gottlieb, the US Food and Drug Administration starts an 'undercover blitz' to crack down on sales of the Juul to minors.Scott Gottlieb, then the FDA commissioner.ReutersIn what the FDA said was the largest coordinated enforcement effort in agency history, the FDA issued more than 1,300 warning letters and fines to retailers who it said were illegally selling Juuls and other e-cigarettes to minors. The FDA found the retailers by conducting what it called "a nationwide, undercover blitz.""Let me be clear to retailers," Gottlieb, then the FDA's commissioner, said in the statement, "this blitz, and resulting actions, should serve as notice that we will not tolerate the sale of any tobacco products to youth."April 2018: Wall Street analysts warn that Juul is starting to encroach on Big Tobacco's financial terrain and could negatively affect Altria stock.A close-up view of cigarettes on June 10, 2015 in Bristol, England. Health campaigners have asked for a levy on the tobacco industry to help fund anti-smoking measuresMatt Cardy/Getty ImagesIn a research note, Citigroup analysts warned investors that the Juul was beginning to disrupt tobacco stocks.The note suggested that the rise of the Juul could bode poorly for tobacco companies — including Altria, British American Tobacco, and Imperial Brands — as sales were falling faster than expected."The US tobacco market is beginning to be disrupted by Juul," the analysts wrote, adding, "We don't expect underlying cigarette trends to improve much in the rest of 2018."May 2018: Juul doubles its staff to 400 people.Pax LabsJune 2018: San Francisco bans flavored e-cigs like the Juul, prompting an endorsement from Michael Bloomberg.An ad from the California Department of Public Health supporting San Francisco's ballot measure to ban the sale of flavored e-cigarettes like Juul.California Department of Public HealthBloomberg, the former New York City mayor who is CEO of Bloomberg Philanthropies, called the move "an important step forward for public health" and said it should embolden other cities and states to follow suit.July 8, 2018: Wall Street analysts say Juul is reviving the formerly comatose e-cig market, which had been slumping since 2014.AP Photo/Craig MitchelldyerIn a research note, Morgan Stanley analysts credited Juul with "driving a revival in the US e-cig market," adding that sales of Juul devices "accounted for almost the entire incremental increase in US e-cig sales as a percent of total cigarette and e-cigarette sales in the last year."July 10, 2018: Juul raises $1.2 billion in a round that values the company at more than $16 billion, according to PitchBook.Bowen and Monsees at the Hotel Tortue in December 2018 for Juul's launch in Germany.Getty Images / Picture AllianceThe seven investors in the round included a maker of marijuana therapeutics, called Applied Biosciences, along with the the venture firm Bracket Capital, the hedge funds Darsana Capital and E Squared Capital, the investment giant Fidelity, the angel investor Sand Hill, and Tiger, according to PitchBook.Aug. 21, 2018: Israel bans Juul products, calling them a 'grave risk to public health' because of their high nicotine content.A package of the Juul device and flavored Juul nicotine Pods.JUUL LabsIn a statement, Israel's Health Ministry said it's banning the sale and import of Juul devices because they contained more than 20 milligrams per milliliter of nicotine and presented "a grave risk to public health," Reuters reported.Sept. 11, 2018: The FDA deepens its crackdown on Juul and other e-cig makers.FDA commissioner Scott GottliebReutersIn a statement, then-Commissioner Gottlieb said the FDA was working on creating a system to "properly regulate" e-cigarettes like the Juul.He said the aim was twofold: make e-cigarettes available as a less-dangerous alternative for adult smokers, but also keep them out of the hands of young people.Oct. 2, 2018: The FDA surprises Juul at its headquarters and seizes 'thousands of pages of documents' as part of an investigation into its marketing practices.Reuters/Ronen ZvulunThe agency was running an investigation into whether Juul marketed its products to teens, CNBC said.The visit was an extension of the FDA's request in April for materials related to how Juul presented its products and whether they were designed to appeal to kids, according to CNBC.Oct. 2018: Juul surges in popularity, now accounting for over 70% of the US e-cigarette market, according to Nielsen data.Reuters / Brendan McDermidNov. 13, 2018: Juul stops selling its sweet and fruity flavors at stores, making those varieties only available online.Hollis Johnson/Business InsiderJuul says it will temporarily stop selling its flavored e-cigarettes in stores.The move comes on the heels of a similar ban on flavored e-cigs that the city of San Francisco enacted over the summer.Researchers nearly unanimously praised the move, which they say could help protect young people by making the products less appealing and harder to purchase. Juul's flavored varieties will still be sold online, the company says.Nov. 15, 2018: The FDA announces plans to curb flavored e-cig sales after reports that youth vaping has ballooned 78%.A high-school student vaping near a school campus in Cambridge, Massachusetts.Associated Press2018: The Federal Trade Commission begins investigating whether Juul marketed its products to minors.Members of the Federal Trade Commission.REUTERS/ Leah MillisThe Federal Trade Commission began looking into Juul's use of influencers and other marketing tools to appeal to young people, The Wall Street Journal reported in August 2019.According to The Journal, the FTC's investigation began before it started reviewing a deal between Juul and the Marlboro maker, Altria, in December 2018.Dec. 20, 2018: Altria buys 35% of Juul for $12.8 billion, bumping Juul's valuation to $38 billion. Gottlieb accuses both companies of backing away from pledges to curb youth vaping.Packs of Marlboro cigarettes on sale.REUTERS/Brian SnyderIn what the Silicon Valley Business Journal called "the biggest investment ever in a US venture-backed company," Marlboro and the Parliament cigarette maker, Altria, paid $12.8 billion for a third of Juul. That gave Altria more combustible-cigarette market share than the next seven brands combined, according to the Centers for Disease Control and Prevention.Juul, which had an annual revenue of about $2 billion at the time, also received a $2 billion bonus from Altria to distribute among its 1,500 employees, CNBC reported. That would have been about $1.3 million a person.On the heels of the deal, Gottlieb called out both companies, saying they were backing away from previous pledges to fight teen vaping. March 5, 2019: In a surprise announcement, Gottlieb announces he's leaving his post as FDA commissioner.FILE PHOTO: U.S. Food and Drug Commissioner Gottlieb attends interview at Reuters HQ in New YorkThomson ReutersGottlieb, a well-liked figure who spent just two years steering the country's top food and drug regulator, said he was leaving in a month to spend more time with his family in Connecticut.The commissioner had made a name for himself as both a vocal critic of e-cigarette startups like Juul and a speedy approver of new pharmaceutical drugs.In a resignation letter, Gottlieb wrote that one of his accomplishments at the FDA was taking actions against "bad actors that put Americans at risk."March 13, 2019: Gottlieb announces a crackdown on flavored e-cig sales.Reuters / Mike SegarRoughly a week after announcing his departure from the FDA, Gottlieb released a plan to crack down on flavored e-cigarette sales at gas stations, pharmacies, and convenience stores. The plan would also crack down on websites without buffers against youth purchases, such as age-verification software or quantity limits.April 3, 2019: The FDA says it's looking into a 'potential safety issue' related to seizures tied to vaping.ShutterstockIn a statement, Gottlieb said his agency had seen reports suggesting that a small number of e-cigarette users (35 cases from 2010 to early 2019) had experienced seizures after vaping.By August, the FDA said it had received 127 reports — but noted that the new figure might simply mean more people were coming forward, not necessarily that cases were increasing.Gottlieb also noted that seizures were known as possible side effects of nicotine poisoning and said the agency would continue exploring whether there was a connection.April 8, 2019: Democrats in the US Senate launch an investigation into Juul's deal with Altria as well as its social media and advertising practices.Sen. Elizabeth Warren of Massachusetts.Sergio Flores/Getty ImagesEleven Democratic senators, including the party whip Dick Durbin and the presidential candidate Elizabeth Warren, wrote a letter to Juul demanding that the company answer questions about its advertising practices and its deal with Altria, CNBC reported.June 13, 2019: The US House of Representatives announces an investigation of Juul's marketing and the Altria deal.Members of the U.S. House of Representatives are sworn in on the House floor January 3, 2017.Jonathan Ernst/ReutersHouse Democrats launch their own investigation into Juul, Fortune reports.July 16, 2019: Juul's CEO apologizes to parents of teens addicted to its vaping products.CBS This MorningIn a CNBC documentary, Juul Labs CEO Kevin Burns issued an apology to parents of teens who were addicted to the company's vaping products."First of all, I'd tell them that I'm sorry that their child's using the product," Burns said.July 25, 2019: Officials in Wisconsin warn of eight cases of severe lung disease in teens who'd vaped. It's unclear what kinds of products or substances are involved.Simah Herman, 18, on September 19 with a photo of her former vaping devices in Los Angeles. Herman was in a medically induced coma and treated for pneumonia and lung-disease from vaping.Reuters / Lucy NicholsonIn July, Wisconsin's chief medical officer wrote a memo to healthcare providers warning them about a cluster of sick adolescents who had used e-cigarettes. Chest X-rays of the teens revealed similarities in lung damage, he says. The following month, the CDC released an emergency notice about 30 cases of vaping-related lung illness in Wisconsin. In mid-August, officials reported the first death tied to vaping-related lung illness: an adult in Illinois. By September, the CDC and the FDA said there had been 530 confirmed and probable cases of the mystery illness since June. Seven people died. The investigation is ongoing, and officials have yet to find a substance or brand that's common among all the cases.Aug. 16, 2019: Juul raises $785 million in equity and debt financing from Proioxis Ventures, according to PitchBook.Melia Robinson/Business InsiderThe funds will be used to speed Juul's expansion overseas, according to PitchBook. The figure brings the company to $14.2 billion in funds raised.Aug. 29, 2019: Bloomberg says Juul devices were involved in three reports of seizures linked to vaping.Brendan McDermid / ReutersIn three reports submitted to the FDA, people said they or their children had used a Juul before experiencing seizures, Bloomberg News reported. Bloomberg obtained the reports through a public records request.In two of the three reports, the FDA wasn't able to officially confirm that a Juul device was involved, according to Bloomberg.Aug. 29, 2019: Juul's CEO warns people against using Juuls and says vaping's long-term health effects are unknown.Juul's new CEO, Kevin Burns.Juul/YouTubeIn an interview with CBS, Burns said anyone who wasn't already using nicotine, the addictive drug in Juul, should not start."Don't vape. Don't use Juul," Burns told CBS.Sept. 9, 2019: The FDA slams Juul for portraying its e-cigs as 'totally safe' and marketing them to kids at schools.An ad showing a plate of food suggesting that users "save room for Juul."JuulIn a warning letter, the FDA said Juul wrongly painted its e-cigarettes, known in the industry as ENDS, as safer than cigarettes and marketed them intentionally to young people."Referring to your ENDS products as '99% safer' than cigarettes, 'much safer' than cigarettes, 'totally safe,' and 'a safer alternative than smoking cigarettes' is particularly concerning because these statements were made directly to children in school," the FDA letter said."Our concern is amplified by the epidemic rate of increase in youth use of ENDS products, including Juul's products," the letter added.Sept. 17, 2019: Juul sales are halted in China for unclear reasons.An employee at a Tmall logistics center in Suzhou, China.Thomson ReutersA selection of flavored Juul products that went up for sale on two online Chinese marketplaces, JD.com and Tmall, were removed within a week, The Wall Street Journal reported. Both retailers declined to say why.Juul had long been planning to launch in China, where more than 300 million people smoke, according to the World Health Organization. Its nicotine refills, or Juul Pods, are manufactured in Shenzhen, China.Sept. 18, 2019: India bans vaping, citing the "impact of e-cigarettes on the youth."Reuters / Neil HallIndia outlawed the production, sale, import, and advertising of e-cigarettes, citing the need to stop the "impact of e-cigarettes on the youth," BuzzFeed News reported. Penalties include jail time and fines of up to $7,000.Juul had been planning to launch in India, home to more than 106 million smokers — second only to China — by the end of 2019.Sept. 23, 2019: The US Attorney's Office for the Northern District of California has reportedly launched a criminal investigation into Juul.REUTERS/Ronen ZvulunThe Wall Street Journal reported that federal prosecutors in the US Attorney's Office for the Northern District of California were conducting a criminal investigation of Juul. Further details, such as the focus of the investigation, were not available, and Juul didn't respond to a request for comment from Business Insider.Several other investigations are ongoing, including an investigation by the Federal Trade Commission focusing on whether Juul marketed to teens and an FDA investigation focused on marketing, outreach, and Juul's uniquely high nicotine content.Sept. 24, 2019: Juul reportedly prepares to scale back its staff.A woman exhaling a puff of vapor from a Juul e-cigarette.Associated Press / Craig MitchelldyerJuul began preparing to restructure its staff as it faced slower sales resulting from increasing reports about the mysterious vaping-related lung illness, the proposed US ban on flavored e-cigarettes, and a variety of other investigations, The Wall Street Journal reported.The company employs roughly 3,900 people, according to The Journal, up from the 200 it had in 2017.For now, Juul plans to hire less aggressively and start outlining plans to cut some jobs, according to The Journal, but will still continue to expand. Sept. 25, 2019: CEO Kevin Burns steps down and is replaced by longtime tobacco executive K.C. Crosthwaite.Former Juul CEO Kevin Burns.CBS This MorningCrosthwaite was most recently chief growth officer at Altria, and has worked in tobacco for more than 20 years.In announcing the change, Juul also said it would suspend US advertising and some lobbying efforts. Crosthwaite said he would "strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate."Oct. 7, 2019: A crop of school districts across three states sues Juul.ShutterstockFour school districts sue Juul in what appears to be the beginning of a trend.The districts include Three Village Central in New York, La Conner in Washington, Olathe in Kansas, and Francis Howell in Missouri. In separate suits filed on Monday, the districts argue that Juul created a public nuisance by intentionally marketing to kids; misrepresenting its products' nicotine content; and endangering teens' health, according to public documents that Business Insider viewed.Cindy Ormsby, an attorney for the Missouri case, told the Riverfront Times that the Francis Howell lawsuit is "part of a coordinated package of litigation filed by school districts across the country, each dealing with a similar crisis of students addicted to nicotine." In September, Kansas City school district Goddard became one of the first to announce that it was preparing a lawsuit against Juul.The lawsuits seek unspecified damages and legal fees.Oct. 17, 2019: Juul extends its ban on sweet and fruity flavors to include online sales.SRITAJuul announces that it is stopping online sales of its mango, fruit, cucumber, and cream varieties. Last fall, the company temporarily banned sales of those varieties in stores. As of Oct. 17, those flavors can't be purchased in-person or online.In a statement, Juul says it "will continue to develop scientific evidence to support the use of these flavored products."Oct. 28, 2019: Juul reportedly plans to cut 500 jobs before year's end. Its chief marketing officer departs the following day.Robyn Beck / AFP / Getty ImagesJuul looks to eliminate roughly 500 jobs by the end of the year, the Wall Street Journal reports.The cuts are part of a company-wide reorganization effort, according to the journal, and will involve anywhere between 10-15% of Juul's total workforce. "As the vapor category undergoes a necessary reset, this reorganization will help Juul Labs focus on reducing underage use, investing in scientific research, and creating new technologies while earning a license to operate in the US and around the world," KC Crosthwaite, Juul's new CEO, said in an emailed statement provided to Business Insider.The following day, the Journal reports that Juul's chief marketing officer is departing."Craig Brommers, an incredibly talented marketing executive, has asked to transition out of Juul Labs in the coming months so that he can pursue opportunities with other companies," a Juul spokesperson told the Journal.The spokesperson also said that as a result of Brommer's departure, the CMO position would be cut.Oct. 29, 2019: Juul names a new chief financial officer after its existing CFO asks to leave.Smith Collection/Gado/Getty ImagesJuul appoints Guy Cartwright its new chief financial officer after CFO Tim Danaher asks to leave the company, the Wall Street Journal reports.Cartwright previously served as managing director of the investment firm TowerBrook Capital Partners LP, and joined Juul in July, according to the Journal. Danaher had served as Juul's CFO since 2014.Oct. 31, 2019: Marlboro maker Altria, which owns a third of Juul, slashes the value of its stake in the company. Juul is now valued at $24 billion instead of $38 billion.Justin Sullivan / Getty ImagesMarlboro maker Altria, which last December purchased a 35% stake in Juul for $12.8 billion, cuts the value of its investment in the company by $4.5 billion.The move reveals that Juul is now worth $24 billion, down from $38 billion.On a conference call, Altria cited unexpected market shifts like regulatory crackdowns abroad and a proposed US flavor ban."We're not pleased to have to take an impairment charge on the Juul investment," Altria CEO Howard Willard said on the call. "We did not anticipate this dramatic a change in the e-vapor category," he added.November 7, 2019: Juul stops selling mint flavored options, leaving only menthol and tobacco flavored refillable cartridges.A screenshot shows 2015 advertising for Juul products displayed in a print magazineReutersJuul announces it will stop selling mint-flavored refillable cartridges, or Juul pods. In a press release, the company said it would immediately stop accepting orders for the mint-flavored pods from retail partners and stop selling mint-flavored pods online.According to the release, Juul's decision was based partially on new research  which suggested that mint and mango were the most popular flavors among high school students who Juul."These results are unacceptable," Juul Labs CEO KC Crosthwaite said in the release, adding, "that is why we must reset the vapor category in the US and earn the trust of society by working cooperatively with regulators, Attorneys General, public health officials, and other stakeholders to combat underage use."2020: Amid the pandemic, Juul lays off 40% of its workforce in April, 2020. It then lays off over half of its remaining staff, resulting in about a further 1,000 employees being cut.Shopkeepers stand inside a Juul shop at a shopping mall in Jakarta, Indonesia, December 30, 2019.REUTERS/Ajeng Dinar Ulfiana2021: By 2021, Altria slashes its valuation for Juul to $5 billion, while Juul itself asserts it was worth $10 billion. Two years prior, the company was valued at $38 billion.A hand with a cigarette is seen in front of displayed logos of Philip Morris and Altria in this picture illustrationReutersSeptember 30, 2021: The CDC and FDA releases a study that finds that over 2 million middle-and-high-school students in the US were using e-cigarettes.Eva Hambach/Getty ImagesThe study found that eight in 10 of those students used flavored e-cigarettes."These data highlight the fact that flavored e-cigarettes are still extremely popular with kids," said Mitch Seller, the director of the FDA's Center for Tobacco Products. "And we are equally disturbed by the quarter of high school students who use e-cigarettes and say they vape every single day."February, 2022: A judge rules that Altria can keep its investment in Juul.FILE - In this Dec. 20, 2018, file photo Juul products are displayed at a smoke shop in New York. The company that makes Marlboro cigarettes will take a $4.1 billion hit from its investment in Juul. Altria took a 35% stake in the e-cigarette company at the end of 2018 at a cost of almost $13 billion. The Richmond, Va., company on Thursday, Jan. 30, 2020 cited burgeoning legal cases that it expects to grow. (AP Photo/Seth Wenig, File)Associated PressAn administrative judge ruled that Altria didn't break antitrust laws by taking a 35% stake in Juul. The Federal Trade Commission had sued in 2019, and can still appeal the ruling. June 23, 2022: The FDA bans Juul from selling and distributing its e-cigarette products in the US, and also orders that all products currently in the market be removed.Markets InsiderAltria's stock plunged 10% on news of the ban. The FDA did briefly prohibit Juul products in the US, though an appeal of the decision forced the agency to put its decision on hold.December 6, 2022: Juul agrees to settle roughly 5,000 lawsuits that accused the company of marketing its products to teens and children.Julia NaftulinJuul got an equity investment to pay for the settlement costs, though the financial terms were not disclosed, the Wall Street Journal reported at the time.January 25, 2023: Juul executives were in discussions with major tobacco companies, including Philip Morris, Japan Tobacco, and Altria, the Wall Street Journal reported.Close-up of logo for e-cigarette or vape company Juul on glass window of convenience store in San Ramon, California, December 6, 2019.Smith Collection/Gado/Getty ImagesThe talks included multiple possibilities, including an outright sale of Juul as well as strategic investments and licensing and distribution deals, the Journal reported.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 25th, 2023

Crypto market breaks above $1 trillion for the first time since FTX"s collapse, with bitcoin set for its best month since October 2021

The crypto market is now valued above $1 trillion for the first time since the FTX implosion in November, signaling a strong rebound in sentiment even as the industry faces headwinds. Total cryptocurrency market capitalization breaks above $1 trillion for the first time since FTX's collapse.  Bitcoin is up almost 40% in January, and is set for the best month since October 2021.  The rally reflects a pickup in sentiment across risk assets as cooling inflation fuels hopes that an end in sight to the Fed's interest-rate hikes. The cryptocurrency market is now valued more than $1 trillion for the first time since the collapse of FTX in November, signaling a strong rebound in investor confidence even as the industry faces headwinds. Bitcoin, the world's largest cryptocurrency, hit a five-month high above $23,000 over the weekend and is up almost 40% in January, on course for the best month since October 2021. The total market capitalization of virtual currencies has climbed by almost $250 billion so far in January.It reflects a U-turn in sentiment after a dismal 2022 — a year dubbed 'the crypto winter' — that saw market cap crash by more than $1.4 trillion, and bitcoin lose 64% of its value as the industry suffered a string of high-profile bankruptcies including FTX and Three Arrows Capital.The gains come even as shockwaves from the FTX collapse continue to be felt across the digital asset industry. As recently as last week, crypto lender Genesis Global filed for bankruptcy protection.Crypto market capitalization had slid to a low of about $745 billion in late November, in the aftermath of the FTX implosion. A year earlier, the measure briefly topped $3 trillion at the height of the digital-asset frenzy in late 2021.The latest crypto rally reflects a pickup in investor optimism across riskier assets including stocks, as cooling US inflation stokes hopes an end is in sight to the Federal Reserve's most aggressive cycle of interest-rate increases since the 1980s. News that FTX has recovered more than $5 billion in assets to repay creditors also lent some support.The annual rate of consumer-price increases in the world's largest economy slowed to 6.5% in December, the latest data show, from a 40-year high reached last June. The Fed reduced the size of its rate hike to 50 basis points last month, after four consecutive increases of 75 basis points each.An end interest-rate increases would bode well for risk assets, as that means funding costs for investors and businesses would stop rising.Read the original article on Business Insider.....»»

Category: dealsSource: nytJan 24th, 2023

The rise and fall of Elizabeth Holmes, the former Theranos CEO found guilty of wire fraud and conspiracy who prosecutors say still shows "no remorse to her victims"

Holmes was sentenced to over 11 years in prison in November. She appealed her conviction, and in the meantime, she's living on $13,000-a-month estate. Elizabeth Holmes leaves after a hearing at a federal court in San Jose, California, on July 17, 2019.Reuters/Stephen Lam Elizabeth Holmes dropped out of Stanford at 19 to start blood-testing startup Theranos. The technology was praised as revolutionary and Holmes was hailed as the next Steve Jobs.  Theranos' value grew to $9 billion until flaws in the technology were exposed and Holmes was charged with fraud. After a months-long trial, Holmes was found guilty.  Here's how Holmes went from precocious child, to ambitious Stanford dropout, to an embattled startup founder sentenced to prison. Elizabeth Holmes was born on February 3, 1984 in Washington, D.C. Her mom, Noel, was a Congressional committee staffer, and her dad, Christian Holmes, worked for Enron before moving to government agencies like USAID.@eholmes2003/TwitterSource: Elizabeth Holmes/Twitter, CNN, Vanity FairHolmes' family moved when she was young, from Washington, D.C. to Houston.Washington, D.C.Getty ImagesSource: FortuneWhen she was 7, Holmes tried to invent her own time machine, filling up an entire notebook with detailed engineering drawings. At the age of 9, Holmes told relatives she wanted to be a billionaire when she grew up. Her relatives described her as saying it with the "utmost seriousness and determination."Theranos CEO Elizabeth Holmes.REUTERS/Carlo AllegriSource: CBS News, Bad Blood: Secrets and Lies in a Silicon Valley StartupHolmes had an "intense competitive streak" from a young age. She often played Monopoly with her younger brother and cousin, and she would insist on playing until the end, collecting the houses and hotels until she won. If Holmes was losing, she would often storm off. More than once, she ran directly through a screen on the door.Elizabeth Holmes, CEO of Theranos, attends a panel discussion during the Clinton Global Initiative's annual meeting in New York, September 29, 2015.REUTERS/Brendan McDermidSource: Bad Blood: Secrets and Lies in a Silicon Valley StartupIt was during high school that Holmes developed her work ethic, often staying up late to study. She quickly became a straight-A student, and even started her own business: she sold C++ compilers, a type of software that translates computer code, to Chinese schools.Tyrone Siu/ReutersSource: Fortune, Bad Blood: Secrets and Lies in a Silicon Valley StartupHolmes started taking Mandarin lessons, and part-way through high school, talked her way into being accepted by Stanford University’s summer program, which culminated in a trip to Beijing.Yepoka Yeebo / Business InsiderSource: Bad Blood: Secrets and Lies in a Silicon Valley StartupInspired by her great-great-grandfather Christian Holmes, a surgeon, Holmes decided she wanted to go into medicine. But she discovered early on that she was terrified of needles. Later, she said this influenced her to start Theranos.Hollis Johnson/Business InsiderSource: San Francisco Business TimesHolmes went to Stanford to study chemical engineering. When she was a freshman, she became a "president's scholar," an honor which came with a $3,000 stipend to go toward a research project.STANFORD, CA - MAY 22: People ride bikes past Hoover Tower on the Stanford University campus on May 22, 2014 in Stanford, California. According to the Academic Ranking of World Universities by China's Shanghai Jiao Tong University, Stanford University ranked second behind Harvard University as the top universities in the world. UC Berkeley ranked third. (Photo by Justin Sullivan/Getty Images)Justin Sullivan/GettySource: FortuneHolmes spent the summer after her freshman year interning at the Genome Institute in Singapore. She got the job partly because she spoke Mandarin.An office worker walks along the Singapore River front during the lunch hour.Wong Maye-E/APSource: FortuneAs a sophomore, Holmes went to one of her professors, Channing Robertson, and said: "Let's start a company." With his blessing, she founded Real-Time Cures, later changing the company's name to Theranos. Thanks to a typo, early employees’ paychecks actually said "Real-Time Curses."Getty ImagesSource: Bad Blood: Secrets and Lies in a Silicon Valley StartupHolmes soon filed a patent application for a "medical device for analyte monitoring and drug delivery," a wearable device that would administer medication, monitor patients' blood, and adjust the dosage as needed.Reuters/Brian SnyderSource: Fortune, US Patent OfficeBy the next semester, Holmes had dropped out of Stanford altogether, and was working on Theranos in the basement of a college house.Jeff Chiu/APSource: Wall Street JournalTheranos's business model was based around the idea that it could run blood tests, using proprietary technology that required only a finger pinprick and a small amount of blood. Holmes said the tests would be able to detect medical conditions like cancer and high cholesterol.Theranos Chairman, CEO and Founder Elizabeth Holmes (L) and TechCrunch Writer and Moderator Jonathan Shieber speak onstage at TechCrunch Disrupt at Pier 48 on September 8, 2014 in San Francisco, CaliforniaSteve Jennings/Getty ImagesSource: Wall Street JournalHolmes started raising money for Theranos from prominent investors like Oracle founder Larry Ellison and Tim Draper, the father of a childhood friend and the founder of prominent VC firm Draper Fisher Jurvetson. Theranos raised more than $700 million, and Draper has continued to defend Holmes.Investor Tim Draper (right).CNBCSource: SEC, CrunchbaseHolmes took investors' money on the condition that she wouldn't have to reveal how Theranos' technology worked. Plus, she would have final say over everything having to do with the company.JP Yim/GettySource: Vanity FairThat obsession with secrecy extended to every aspect of Theranos. For the first decade Holmes spent building her company, Theranos operated in stealth mode. She even took three former Theranos employees to court, claiming they had misused Theranos trade secrets.Kimberly White/GettySource: San Francisco Business TimesHolmes' attitude toward secrecy and running a company was borrowed from a Silicon Valley hero of hers: former Apple CEO Steve Jobs. Holmes started dressing in black turtlenecks like Jobs, decorated her office with his favorite furniture, and like Jobs, never took vacations.Steve Jobs.Justin Sullivan/Getty ImagesSource: Vanity FairEven Holmes's uncharacteristically deep voice may have been part of a carefully crafted image intended to help her fit in in the male-dominated business world. In ABC's podcast on Holmes called "The Dropout," former Theranos employees said the CEO sometimes "fell out of character," particularly after drinking, and would speak in a higher voice.Former U.S. President Bill Clinton and Elizabeth Holmes, CEO of Theranos, during the Clinton Global Initiative's annual meeting in New York.Lucas Jackson/ReutersSource: Bad Blood: Secrets and Lies in a Silicon Valley Startup, The CutHolmes was a demanding boss, and wanted her employees to work as hard as she did. She had her assistants track when employees arrived and left each day. To encourage people to work longer hours, she started having dinner catered to the office around 8 p.m. each night.TheranosSource: Bad Blood: Secrets and Lies in a Silicon Valley StartupMore behind-the-scenes footage of what life was like at Theranos was revealed in leaked videos obtained by the team behind the HBO documentary "The Inventor: Out for Blood in Silicon Valley." The more than 100 hours of footage showed Holmes walking around the office, scenes from company parties, speeches from Holmes and Balwani, and Holmes dancing to "U Can't Touch This" by MC Hammer.Theranos founder Elizabeth Holmes at the company's headquarters.Courtesy HBOSource: Business InsiderShortly after Holmes dropped out of Stanford at age 19, she began dating Theranos president and COO Sunny Balwani, who was 20 years her senior. The two met during Holmes' third year in Stanford’s summer Mandarin program, the summer before she went to college. She was bullied by some of the other students, and Balwani had come to her aid.Footage of Sunny Balwani presenting."60 Minutes"Source: Bad Blood: Secrets and Lies in a Silicon Valley StartupBalwani became Holmes' No. 2 at Theranos despite having little experience. He was said to be a bully, and often tracked his employees' whereabouts. Holmes and Balwani eventually broke up in spring 2016 when Holmes pushed him out of the company.Sunny Balwani pictured in January 2019.Justin Sullivan/Getty ImagesSource: Bad Blood: Secrets and Lies in a Silicon Valley StartupIn 2008, the Theranos board decided to remove Holmes as CEO in favor of someone more experienced. But over the course of a two-hour meeting, Holmes convinced them to let her stay in charge of her company.Jamie McCarthy / GettySource: Bad Blood: Secrets and Lies in a Silicon Valley StartupAs Theranos started to rake in millions of funding, Holmes became the subject of media attention and acclaim in the tech world. She graced the covers of Fortune and Forbes, gave a TED Talk, and spoke on panels with Bill Clinton and Alibaba's Jack Ma.Elizabeth Holmes with former President Bill Clinton, left, and Alibaba cofounder Jack Ma.Andrew Burton/Getty ImagesSource: Vanity FairTheranos quickly began securing outside partnerships. Capital Blue Cross and Cleveland Clinic signed on to offer Theranos tests to their patients, and Walgreens made a deal to open Theranos testing centers in their stores. Theranos also formed a secret partnership with Safeway worth $350 million.A Theranos testing center inside a Walgreens.Melia Robinson/Business InsiderSource: Wired, Business InsiderIn 2011, Holmes hired her younger brother, Christian, to work at Theranos, although he didn’t have a medical or science background. Christian Holmes spent his early days at Theranos reading about sports online and recruiting his Duke University fraternity brothers to join the company. People dubbed Holmes and his crew the "Frat Pack" and "Therabros."Elizabeth Holmes and her brother, Christian.Andrew Harrer/Bloomberg via Getty ImagesSource: Bad Blood: Secrets and Lies in a Silicon Valley StartupAt one point, Holmes was the world's youngest self-made female billionaire with a net worth of around $4.5 billion.Kimberly White/Getty Images for Breakthrough PrizeSource: ForbesHolmes was obsessed with security at Theranos. She asked anyone who visited the company’s headquarters to sign non-disclosure agreements before being allowed in the building, and had security guards escort visitors everywhere — even to the bathroom.Michael Dalder/Reuters Holmes hired bodyguards to drive her around in a black Audi sedan. Her nickname was "Eagle One." The windows in her office had bulletproof glass.Source: Bad Blood: Secrets and Lies in a Silicon Valley StartupAround the same time, questions were being raised about Theranos' technology. Ian Gibbons — chief scientist at Theranos and one of the company's first hires — warned Holmes that the tests weren't ready for the public to take, and that there were inaccuracies in the technology. Outside scientists began voicing their concerns about Theranos, too.Melia Robinson/Tech InsiderSource: Vanity Fair, Business InsiderBy August 2015, the FDA began investigating Theranos, and regulators from the government body that oversees laboratories found "major inaccuracies" in the testing Theranos was doing on patients.Mike Segar/ReutersSource: Vanity FairBy October 2015, Wall Street Journal reporter John Carreyrou published his investigation into Theranos's struggles with its technology. Carreyrou's reporting sparked the beginning of the company's downward spiral.Wall Street Journal reporter John Carreyrou.CBS "60 Minutes"Source: Wall Street JournalCarreyrou found that Theranos' blood-testing machine, named Edison, couldn't give accurate results, so Theranos was running its samples through the same machines used by traditional blood-testing companies.Carlos Osorio/APSource: Wall Street JournalHolmes appeared on CNBC's "Mad Money" shortly after the WSJ published its story to defend herself and Theranos. "This is what happens when you work to change things, and first they think you're crazy, then they fight you, and then all of a sudden you change the world," Holmes said.CNBC/YouTubeSource: CNBCBy 2016, the FDA, Centers for Medicare & Medicaid Services, and SEC were all looking into Theranos.GettySource: Wall Street Journal, WiredIn July 2016, Holmes was banned from the lab-testing industry for two years. By October, Theranos had shut down its lab operations and wellness centers.Mike Blake/ReutersSource: Business InsiderIn March 2018, Theranos, Holmes, and Balwani were charged with "massive fraud" by the SEC. Holmes agreed to give up financial and voting control of the company, pay a $500,000 fine, and return 18.9 million shares of Theranos stock. She also isn't allowed to be the director or officer of a publicly traded company for 10 years.Jeff Chiu/APSource: Business InsiderDespite the charges, Holmes was allowed to stay on as CEO of Theranos, since it's a private company. The company had been hanging on by a thread, and Holmes wrote to investors asking for more money to save Theranos. "In light of where we are, this is no easy ask," Holmes wrote.Kimberly White/Getty Images for FortuneSource: Business InsiderIn Theranos' final days, Holmes reportedly got a Siberian husky puppy named Balto that she brought into the office. However, the dog wasn't potty trained, and would go to the bathroom inside the company's office and during meetings.A Siberian husky (not Holmes' dog).Kateryna Orlova/ShutterstockSource: Vanity FairIn June 2018, Theranos announced that Holmes was stepping down as CEO. On the same day, the Department of Justice announced that a federal grand jury had charged Holmes, along with Balwani, with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.Elizabeth Holmes, founder and CEO of Theranos, speaks at the Wall Street Journal Digital Live (WSJDLive) conference at the Montage hotel in Laguna Beach, California, October 21, 2015.Mike Blake/ReutersSource: Business Insider, CNBCTheranos sent an email to shareholders in September 2018 announcing that the company was shutting down. Theranos reportedly said it planned to spend the next few months repaying creditors with its remaining resources.Mike Blake/ReutersSource: Wall Street JournalAround the time Theranos' time was coming to an end, Holmes made her first public appearance alongside William "Billy" Evans, a 27-year-old heir to a hospitality property management company in California. The two reportedly first met in 2017, and were seen together in 2018 at Burning Man, the art festival in the Nevada desert.Jim Rankin/Toronto Star via Getty ImagesSource: Daily MailHolmes is said to wear Evans' MIT "signet ring" on a chain around her neck, and the couple reportedly posts photos "professing their love for each other" on a private Instagram account. Evans' parents are reportedly "flabbergasted" at their son's decision to marry Holmes.—Nick Bilton (@nickbilton) February 21, 2019Source: Vanity Fair, New York PostIt's unclear where Holmes and Evans currently reside, but they were previously living in a $5,000-a-month apartment in San Francisco until April 2019. The apartment was located just a few blocks from one of the city's top tourist attractions, the famously crooked block of Lombard Street.Lombard Place Apartments, where Holmes used to live.Rent SF NowSource: Business InsiderIt was later reported that Holmes and Evans got engaged in early 2019, then married in June in a secretive wedding ceremony. Former Theranos employees were reportedly not invited to the wedding, according to Vanity Fair.Gilbert Carrasquillo/Getty Images; Samantha Lee/Business InsiderSource: Vanity Fair, New York PostHolmes' and Balwani's cases have since been separated.Justin Silva/Getty, Stephen Lam/Reuters, Business InsiderSource: Department of Justice, Business InsiderBesides the criminal case, Holmes was also involved in a number of civil lawsuits, including one in Arizona brought by former Theranos patients over inaccurate blood tests. The lawyers representing her in the Arizona case said in late 2019 they hadn't been paid over a year and asked to be removed from Holmes' legal team.Former Theranos CEO Elizabeth Holmes leaves after a hearing at a federal court.Reuters/Stephen LamSource: Business InsiderHolmes' lawyers in the federal case had tried to get the government's entire case thrown out. In February 2020, Holmes caught a break after some of the charges against her were dropped when a judge ruled that some patients didn't suffer financial loss.Brendan McDermid/ReutersSource: Business InsiderAmid the coronavirus outbreak, Holmes' lawyers asked the judge in April 2020 to deem the case "essential" so the defense team could defy lockdown orders and continue to travel and meet face-to-face. The judge said he was "taken aback" by the defense's pleas to violate lockdown.Reuters/Robert GalbraithSource: Business Insider It soon become clear that the pandemic — and the health risks associated with assembling a trial in one — would make the July trial date unrealistic. Through hearings held on Zoom, the presiding judge initially pushed the trial back to October 2020 and later postponed it further to March 2021.Passengers wear masks as they walk through LAX airport.Reuters/Lucy NicholsonSource: Business Insider In March 2021, Holmes requested another delay to the trial because she was pregnant. She asked to push back the trial to August 31, and her request was granted. Holmes reportedly gave birth to the child in July.Nhat V. Meyer/MediaNews Group/Mercury News via Getty ImagesSource: Business Insider, CNBCHeading into the trial, Holmes felt "wronged, like Salem-witch-trial wronged," says a person who used to work with her closely.Holmes, right, leaving the Robert F. Peckham Federal Building in San Jose, California with her defense team on May 4, 2021.Nhat V. Meyer/MediaNews Group/Mercury News via Getty ImagesSource: Business InsiderThe trial kicked off in September. In opening statements, prosecutors argued that, "Out of time and out of money, Elizabeth Holmes decided to lie." Meanwhile, the defense argued that although Theranos ultimately crumbled, "Failure is not a crime. Trying your hardest and coming up short is not a crime."Theranos founder Elizabeth Holmes arrives at the Robert F. Peckham Federal Building with her defense team on August 31, 2021 in San Jose, California.Ethan Swope/Getty ImagesSource: Business Insider The list of possible witnesses for the trial named roughly 200 people, including the likes of Rupert Murdoch, Henry Kissinger, James Mattis, and Holmes herself.Theranos founder Elizabeth Holmes leaves the Robert F. Peckham U.S. Courthouse with her mother, Noel Holmes, during her trial.Brittany Hosea-Small/ReutersSource: Business InsiderIn the end, the trial featured testimony from just over 30 witnesses.Vicki Behringer/ReutersSource: Business InsiderOver the course of 11 weeks, prosecutors called 29 witnesses to testify — including former Theranos employees, investors, patients, and doctors — before resting their case in November.Vicki BehringerSource: Business Insider The defense then began making its case, calling just three witnesses, including Holmes herself.Jane Tyska/Digital First Media/The Mercury News via Getty ImagesSource: Business InsiderOn the stand, Holmes said Balwani emotionally and sexually abused her during their relationship.Former Theranos COO Ramesh "Sunny' Balwani leaves the Robert F. Peckham U.S. Federal Court on June 28, 2019 in San Jose, California.Justin Sullivan/Getty ImagesSource: Business InsiderHolmes also admitted that she added some pharmaceutical companies' logos to Theranos' reports without authorization. Investors previously said they took some reassurance in those reports because, based on the logos, they thought major pharmaceutical companies had validated Theranos' technology. Holmes said she added the logos to convey that work was done in partnership with those companies, but in hindsight she wishes she had "done it differently."Justin Sullivan/Getty ImagesSource: Business InsiderHolmes also acknowledged on the stand that she hid Theranos' use of modified commercial devices from investors. She said she did this because company counsel told her that alterations the company made to the machines were trade secrets and needed to be protected as such.Brittany Hosea-Small/ReutersSource: Business InsiderHolmes spent seven days on the stand before the defense rested its case in early December.Theranos founder Elizabeth Holmes arrives to attend her fraud trial at federal court in San Jose, California, U.S., December 16, 2021.Peter DaSilva/ReutersSource: Business InsiderIn closing arguments, prosecutors argued that Holmes "chose fraud over business failure" while the defense argued she was "building a business, not a criminal enterprise."Elizabeth Holmes walks into federal court in San Jose, Calif., Friday, Dec. 17, 2021.Nic Coury/Associated PressSource: Business InsiderAfter 15 weeks of trial, Holmes' case headed to a jury of eight men and four women on December 17, 2021.Elizabeth Holmes, founder and former CEO of blood testing and life sciences company Theranos, leaves the courthouse with her husband Billy Evans after the first day of her fraud trial in San Jose, California on September 8, 2021.Nick Otto/AFP/Getty ImagesSource: Business InsiderJurors deliberated for a total of seven days over the next few weeks before telling the court on January 3, 2022, that they were deadlocked on three of the 11 charges against Holmes. The judge read off some jury instructions to the group in court before instructing them to go back and deliberate further.Kate Munsch/ReutersSource: Business InsiderHours later, the jury returned a mixed verdict for Holmes, finding her guilty on one count of conspiracy to defraud investors and three counts of wire fraud. They found her not guilty on four other counts and failed to reach a verdict on the remaining three counts.Justin Sullivan/Getty ImagesSource: Business InsiderThe counts Holmes was found guilty of were all related to investments; she wasn't convicted on any of the charges involving patients who received inaccurate test results.David Odisho/Getty ImagesSource: Business InsiderHolmes faced the possibility of decades in prison. Each count carries a maximum 20-year prison sentence, a $250,000 fine, and a requirement to pay victims restitution.AP Photo/Nic Coury, FileSource: Business Insider Legal experts told Insider it was unlikely Holmes would get 20 years at sentencing, but she probably wouldn't get off without serving any time either.Justin Sullivan/Getty ImagesSource: Business InsiderHolmes was not taken into custody following the verdict and was to remain free until her sentencing on a $500,000 bond secured by property.Peter DaSilva/ReutersSource: Business InsiderSince the conviction, Holmes and Theranos have been the focus of a Hulu limited series, "The Dropout," based on the ABC News podcast of the same name.Amanda Seyfried in "The Dropout" (left); Elizabeth Holmes (right)Beth Dubber/Hulu; Steve Jennings/Getty Images for TechCrunchSource: Business InsiderHolmes is played by Amanda Seyfried in the dramatized series, which asks the question, "How did the world's youngest self-made female billionaire lose it all in the blink of an eye?"Amanda Seyfried in "The Dropout."HuluSource: HuluThe show premiered March 3, 2022, and also stars Naveen Andrews as Balwani, Holmes' right-hand man at Theranos.Beth Dubber/Hulu; Michael Short/Bloomberg via Getty ImagesSource: Business Insider In May 2022, Holmes pleaded with a judge to toss her conviction.APSource: Business Insider In a 24-page filing on May 27, Holmes' attorneys argued for her acquittal, saying the evidence was "insufficient to sustain the convictions."Nick Otto/AFP via Getty ImagesThey wrote, "Because no rational juror could have found the elements of wire fraud and conspiracy to commit wire fraud beyond a reasonable doubt on this record, the Court should grant Ms. Holmes' motion for judgment of acquittal.""Even if Ms. Holmes committed wire fraud against an investor (she did not) and even if Mr. Balwani committed wire fraud against an investor, that does not prove a conspiratorial agreement between them, nor does it prove that Ms. Holmes willfully joined any agreement," the attorneys continued in the filing.The presiding judge tentatively denied Holmes' request in September.But that wasn't the end: Holmes filed three motions requesting a new trial, one of which centered on the testimony of a prosecution witness who allegedly went to Holmes' house in August and expressed regret that he helped convict her.David Odisho/Getty ImagesSource: Business InsiderThe witness was former Theranos lab director Adam Rosendorff. According to an account of the incident from Billy Evans, Holmes' partner, Rosendorff showed up at their home looking "disheveled" and said he felt "guilty."David Odisho/Getty Images"He said when he was called as a witness he tried to answer the questions honestly but that the prosecutors tried to make everybody look bad (in the company)," Evans recalled in an email to Holmes' attorneys about their interaction. "He said that the government made things sound worse than they were when he was up on the stand during his testimony. He said he felt like he had done something wrong. And that this was weighing on him, He said he was having trouble sleeping."In another of Holmes' motions for a new trial, she says the prosecution portrayed her relationship with Balwani differently in their respective trials, to her detriment.In the final motion, Holmes said she was denied emails showing prosecutors failed to take appropriate steps to preserve a Theranos database that she claims would have helped her defense, even though the government furnished these materials when Balwani was on trial.Holmes notched a small victory when the presiding judge ordered an evidentiary hearing regarding Rosendorff's testimony and appearance at her home. This hearing meant that Holmes' sentencing was postponed from October 17, 2022, to November 18 of that year.Dai Sugano/MediaNews Group/The Mercury News via Getty ImagesSource: Business InsiderThe evidentiary hearing proved useless to Holmes, though, as witness Rosendorff said he stood by his initial testimony and only went to her home because he was "distressed" at the idea of Holmes' child growing up without a mother.Justin Sullivan/Getty Images"At all times the government encouraged me to tell the truth and only the truth," Rosendorff clarified at the hearing."I don't want to help Ms. Holmes," Rosendorff added. "The only person that can help her is herself. She needs to pay her debt to society."On November 8, the presiding judge denied all three of Holmes' motions for a new trial, paving the way for sentencing.Chris Ryan/GettyDays before her sentencing, Holmes' attorneys asked that she get no more than 18 months, preferably under house arrest. They submitted 130 letters from friends and family — spanning everyone from Senator Cory Booker to even an ex-CDC chief — pleading for leniency.In the end, they didn't get their wish. On November 18, 2022, Holmes was sentenced to 135 months, or 11.25 years, in prison with three years of supervised release beginning on April 27. "I stand before you taking responsibility for Theranos. I loved Theranos, it was my life's work," Holmes said through tears at the hearing.Justin Sullivan/Getty ImagesSource: KRON, InsiderMeanwhile, Balwani's trial began in March 2022 and also returned a conviction. He was found guilty in July on all 12 counts brought against him, and in early December Balwani was sentenced to nearly 13 years in prison with three years of probation. As with Holmes, restitution will be decided at a later date. The judge ordered Balwani to self-surrender on March 15, 2023.Former Theranos COO Ramesh "Sunny" Balwani and his legal team leave the Robert F. Peckham Federal Building on July 7, 2022 in San Jose, California.David Odisho/Getty ImagesSource: InsiderHolmes appealed her conviction in December 2022, and US prosecutors said in recent court filings that she "continues to show no remorse to her victims" and is currently living on an estate that costs $13,000 a month.Holmes attending a court hearing.Justin Sullivan/Getty ImagesSource: InsiderMaya Kosoff, Paige Leskin, and Áine Cain contributed to earlier versions of this story.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 20th, 2023

Swisher v. Scaramucci: Is Elon Musk Killing Twitter?

This week’s Intelligence Squared U.S. debate asks the question: Is Elon Musk Killing Twitter? Journalist Kara Swisher argues Yes. Investor Anthony Scaramucci argues No. Wired’s Steven Levy and Insider’s Monica Melton chime in as well with questions. Is Elon Musk Killing Twitter? Kara Swisher vs Anthony Scaramucci Debate Transcript Guests: Arguing Yes: Kara Swisher Arguing […] This week’s Intelligence Squared U.S. debate asks the question: Is Elon Musk Killing Twitter? Journalist Kara Swisher argues Yes. Investor Anthony Scaramucci argues No. Wired’s Steven Levy and Insider’s Monica Melton chime in as well with questions. Is Elon Musk Killing Twitter? Kara Swisher vs Anthony Scaramucci Debate Transcript Guests: Arguing Yes: Kara Swisher Arguing No: Anthony Scaramucci Moderator: John Donvan John Donvan: Hi, everybody, and welcome to Intelligence Squared. I’m John Donvan. And in this program, we are debating the impact that one man is having on the future of an enterprise you have all heard of. That enterprise is called Twitter. And the man, I know you’ve heard of him, is Elon Musk. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Boy, have we heard of him and from him, especially since he became sole owner of Twitter last fall, paying $44 billion for it, firing half of its employees, and vowing for the 230 million users of Twitter to make it better. His words: "Twitter has extraordinary potential, I will unlock it." So, has Elon Musk done that or are the steps he's made so far a lot of missteps? That is what we are debating. To be more specific, the Yes/No question: is Elon Musk killing Twitter? We recorded this one before a live virtual audience. You will not hear them but just wanted you to know that they were there. So, let's get to the debate, starting with my introduction of our two debaters. So, let's meet our debaters. Arguing Yes, Elon Musk is killing Twitter, here is host of "On with Kara Swisher," co-host of the podcast "Pivot," and editor-at-large of New York Magazine, Kara Swisher. Kara Swisher: Thank you. John Donvan: And arguing No, that Elon Musk is not killing Twitter, we have the founder and managing partner of Skybridge, former White House communications director, and host of the podcast "Open Book," Anthony Scaramucci. Thanks for joining us. Anthony Scaramucci: Thank you. John Donvan: Before we start the debate, I'm interested in your personal connections to Elon Musk because you both know him. And you've both interacted with him. And we just, as a matter of curiosity, want to sort of get a sense of how you know him. So, Anthony, why don't you go first on that? Anthony Scaramucci: Well, you know, my one of my closest friends, Antonio Gracias, is on the board of two of his companies. So, it would be SpaceX and Tesla, he was an early investor in PayPal. And so, I'm gonna say that I know Elon tangentially. We've interacted a few times over the years, but I don't have a personal relationship with Elon. Obviously, I'm very impressed with him as an investor and as a business executive. John Donvan: And what about you, Kara? Kara Swisher: Oh, I've known him since the last century, actually, when he was at a company called X.com. It was a startup, he had had other startups, he had a sort of yellow pages directory company that he sold and made a little bit of money from, and then he moved on to X. And it was competing at the time with PayPal, and where they were quite big competitors. And I covered them for The Wall Street Journal. They merged and later sold to eBay. So, I've known him for a very long time. And while the rest of them went off and did other things, he started investing in lots of interesting things like space and cars, which was unusual, because everybody else was doing a dating service and something stupid with their money. And so, he was doing some interesting things. So, I knew him for a long, long time, and covered him while he was building these companies. And I've interviewed him, I don't know dozens of times and including many live appearances at some of my events. And we've texted and emailed over the years. John Donvan: So, for neither of you is he a distant figure, you both have some connection to him. So, let's get to the debate itself. We'll go in three rounds. And our first round is going to be comprised basically of opening statements and Kara Swisher again, you are arguing Yes, in answer to the question, is he killing Twitter? So, take three to four minutes to tell us why you're a Yes. Kara Swisher: Okay. Okay, I wrote something up. So, I hope you don't mind. I think the question is not is Elon killing Twitter, but is owning Twitter, killing Elon, essentially, at least the brand, which I think has seen more deterioration in the last six months than anyone I can think of. In doing so he's created the perfect storm of self-inflicted harm. He's shot himself in the foot and then the other foot and he went back to the first foot. And while it'd be easy to focus solely on his demented daily tweets spewing homophobic misinformation to bear-hugging despicables to firing people with the stylings of the very worst of robber barons, I think the only thing you can do here is follow the money which I'm going to focus on. First of all, he blew up a stable $5 billion ad business in a few months. It wasn't that good, but it was still $5 billion losing huge opportunities like the World Cup and the holiday season. The site’s ad experience is now like 2 a.m. on cable with a series of grifty ads and come-ons and more porn than ever, which some people might like. Number two, he adopted misguided advice from one of his dumber minions to focus the company on an enterprise software company. It's failed to launch anything stable or unable not to troll corporate clients. You saw that when they did Twitter Blue and everybody faked companies. He's gotten himself into class action lawsuits and how he cloddishly handled the firing of Twitter employees. As former Twitter Blue head Tony Hale wrote: "New York's hottest club is a Zoom call with the lawyers for the Twitter class action suit." It will be a drag on him and all his companies, even if he throws lawyers at it, as he always tends to do. He's been involved in lots of lawsuits over the years, this is a big one. He's allowed the conversation to get uglier by allowing 60,000 of the very worst to return to Twitter to, wait for it, improve the conversation. That's akin to Voldemort letting all the prisoners out of Azkaban prison. He said he would make decisions for these different people via a council which doesn't exist, never happened, and it turns out it's just him late at night mainlining Cheetos, Ozempic, and conspiracy theories. So, a group of managers making decisions managers are paid to make has been replaced by essentially one guy. According to internal sources, usage has started to decline among active users, which make up a small part of the population and a large percentage of the tweets. Mine, for example, have gone from a couple hours a day to under one and it's declining every single day. I only use it for marketing and nothing else now, which as a platform I used rather actively, including where I met Anthony Scaramucci, where I trolled him for quite a lot of time. And he has such a good sense of humor that he allowed me to do so, and we've become I think friends in some way. It's allowed competitors to emerge, like Mastodon, which has been compared to a waiter handing you a gun, pointing at a cow and saying, "Get dinner." So, he's given lots of opportunity for a number of competitors to get in here when Twitter could have dominated here with someone like Elon at the top. Speaking of nothing burgers, the Twitter files. Nine, he's taking other businesses with him. Tesla has owned a lion's share of the electric light vehicle registrations in the U.S. according to a number of different measurement services, but that's down 79% in 2020. There's a surge of competition including lower price models. One Wedbush Securities person wrote, "Musk must take a more-hands on approach in 2023 at the company, as a Twitter distraction along with the current demand situation it's falling off, is a perfect storm for the stock." Tesla stock is down 70%. Even though it's way ahead in EV production, in batteries. It has four plants globally. All kinds of competitors are now– he's leaving it open to competitors to launch models from Lucid and others. He's certainly trying to do so, but his eye is definitely off the ball there and they're facing the more competition they've ever had in a really bad economic environment. And lastly, follow the money. Let me read from Bill Cohan [William D. Cohan]. Just he just wrote a piece yesterday about this. 'The banks, Morgan Stanley and Bank of America will be reporting what it's doing with the debt it has,' the $13 billion in debt, 'and what the banks will be revealing, if I'm right,' this is according to Bill Cohan, 'is that thanks to the demand of the Federal Reserve, Wall Street's prudential regulator, the Twitter bank debt has been marked on the books of both Morgan Stanley and Bank of America at 50 cents on the dollar.' That means the $13 billion of Twitter debt is now worth about half that amount, or 6.5 billion thanks to a combination of rising interest rates and Twitter's shrinking EBITA, as well as questions about whether Elon will be able to make roughly $600 million of interest payment due on the Twitter bank debt in April. And following the logic here, if the bank debt is only worth half its face amount, it has now been recorded as such, it means Twitter equity, which is owned mostly by Elon and a bunch of his rich friends is virtually wiped out after a mere two months under Elon's rule. To put it bluntly, this is an astounding and virtually unprecedented outcome in the world of leveraged buyouts. But he is doing something about income inequality, I guess. Anyway, that's my argument. John Donvan: Thanks Kara, Kara Swisher. And now, the No answer comes from Anthony Scaramucci. Anthony, it's your turn. Anthony Scaramucci: Well, I'll start out by saying that if the definition of friendship is that you can be critical of somebody and still like and enjoy their personality, then we are definitely friends, Kara, because you have been very critical of me. And I do like and enjoy your personality. And I will say this, you've made my life more interesting as a result of our relationship. But I think the specific question, Is Twitter, dying, yes or no? And I'm going to say no, for several reasons. And the main reason is something that Warren Buffett has said long ago about businesses, if it's a high-quality business, even a very bad management team or bad decisions, the high-quality business can endure, they'll take the high-quality business any day. And I think the facts are indisputable about Twitter being a high-quality business in the following sense. It is a pervasive part of our Zeitgeist, now. It is the town square, proverbially. And I think there are more active users today if you look at their numbers. This is an important metric for social media, as we both know. In addition to that, things happen on Twitter. The interaction, the FTX debacle as an example, a lot of micro-journalists covered nuances to that story on Twitter. The World Cup, while not advertising there–and we'll get into the advertising in a second. Lots of the drama that played out in social media related to the World Cup happened on Twitter. And of course, most recently, the Damar Hamlin situation in the NFL, which my heart goes out to him and his family. And seems that he's doing well, also happening on Twitter. So, I think it's indisputable that we're talking more about Twitter as a result of Elon Musk, and the user base is up, you know, you and I both know, Twitter Spaces is a pretty effective medium today, sort of replaces Clubhouse, if you will. When Elon's on Twitter Spaces, there could be upwards to 100,000 people in that town square listening and potentially asking questions. So, you are bringing up things, though, that I think are true. And so, I do, I do want to validate those things. I think you said once on CNN, I was watching, that he may have spent $44 billion for a $7 billion company. That may or may not be true. I think the financials, if they're marking down the debt, certainly people believe that there's a deterioration in the financials. And both of us know, because of our years of experience, either on Wall Street or in journalism, that large scale corporations are typically risk averse. And they certainly don't want to be caught in a negative spotlight. And there's something that Elon Musk is doing right now, that would cause those people to pull away and I just want to spend one minute on it. And then we'll go back to the debate. And that is our discussion in Zeitgeist about free speech. Ultimately, you're either a believer of free speech or not, I know that you are a believer, you know, I am. I once worked for a president of the United States that called the press the enemy of the people. Of course, I had to write an op-ed in The Hill, responding to that saying, 'Mr. President, the press is not, in fact, the enemy of the people.' But what free speech actually does for our society is not only keeps our politicians honest, but it creates economic innovation. John Donvan: More from Intelligence Squared U.S. when we return. Welcome back to Intelligence Squared U.S., let's get back to our debate. Anthony Scaramucci: We teach our second-grade children that they can think and speak freely, they go on to create Facebook and Twitter and Google and Apple Computer. In societies where that free speech is suppressed, where they're not allowed to talk about their government, or certain potential dramatic things that are going on in this society. They get curtailed, and then they end up stealing our intellectual property rights. So, for me, what Elon Musk is doing, by opening it up. You mentioned 60,000 criminals coming out of the asylum, I think we've got a big problem in our society, right now, I grew up in a blue-collar neighborhood, lower middle-class neighborhood. And I can tell you, there's a very large group of people in our society now that feel left out. And if you're going to shut those people off on Twitter or shut those people off on other realms of social media, I think that's very long-term damaging, if anything, we have to embrace those people and figure out a way to bring them back into the social contract. And I think Elon Musk is trying to do that. I see him as a radical moderate, by the way, self-described in terms of my conversations with him. And I think it's early, we'll have to see how this thing plays out. But it's far from dead. In fact, if anything, it's more vital than ever. And over the next 6, 12, 36 months, I think we'll see really good progress ahead for Twitter. John Donvan: Anthony, I have a very quick question of clarification, when you say you think Twitter is more vital than ever, are you saying it's more necessary than ever? Or are you saying it's more thriving than ever? Anthony Scaramucci: Well, I think it's a combination. Certainly advertising, corporate advertising revenues are down. The business itself has been impaired. But if you look at social media data in terms of the usage and the vibrancy of the network, that, in fact, is up. And so, it's a mixed bag, but yes, I do believe it's more vital than ever. And I think he's going to figure it out. I think it's very early in the process of him taking the company. John Donvan: Alright, thanks, Anthony. So, thanks to both of you for your opening statements. And what I think I hear are two kinds of arguments about what we mean by the survivability and the viability of Twitter. One is an argument for the business for the numbers and the direction that's taking, and the other is a description of Twitter's vitality and vibrancy having to do with its place in the culture and its relevance, its appeal to people as a place to continue to go to as a kind of public square as it's been described. So those are two different framings. They do overlap, but I want to separate them just for the start of the conversation and start with the business argument that you made Kara. Kara, do you anticipate this company being on the road to bankruptcy? Is it that extreme? Kara Swisher: Well, he's talked about it himself. I didn't– not the one to say it. Who knows if he's telling the truth when he says that? Because he often just spouts out something just to cause, you know, and Anthony should know about this, just to say something to cause a news cycle to happen. So, he's talked about bankruptcy. I don't believe it will be bankrupt, because he's one of the world's richest people. I don't believe he's the world's richest man anymore because of what's happening here. But I do think that he has plenty of rich friends who will save him from disaster. But he does have to come up, at some point, you don't love throwing good money after bad, but he will come up with money over the next year at least to pay off these bank debts. I think the danger is that this bank debt goes on Wall Street, and it's bought up by an Apollo or someone else who were much tougher on. They don't want to have lunch with Elon Musk, as other rich people, as you noticed in the text tend to want to do including Sam Bankman-Fried wanted to sort of hang out with Elon. So, I think it depends on who gets a hold of this thing. If he's unable to– if this debt goes on the market, and if he's unable to pay his debt obligations– I don't think the latter is going to happen. But he certainly puts himself at risk. That said, he could buy the debt himself and throw more of his money at this thing, and then own it completely. So, there's ways that he can keep it in business. It's just, it never was a very good business. And now it's a really bad business. And as to Anthony's thing about vitality, it's a very small business, even though it gets the attention of the media and politicians. Most people do not live their lives on Twitter. And so, it's a very small business that has a very outsized profile because of the users who are on it. John Donvan: Anthony, your response to that? Anthony Scaramucci: Again, so you know, I always want to be fair to Kara and the facts. I think she's right about the size and scale of the business. You know, listen, I have– I think Kara has 1.4 million Twitter followers. I have a million Twitter followers. I am on Twitter; I do look at it. I do scroll through it, and I sometimes tweet, I think it would be impossible– and she would have to answer this better than me as a journalist. But I think most journalists would find it to be relatively impossible not to have access to that site, because there are things that are going on. Kara will remember this. There was someone in Pakistan that basically said on Twitter, 'I hear the rumblings of helicopter, there seem to be aircraft over my house.' Shortly thereafter, Osama bin Laden's house was invaded. And so, there's relevancy to Twitter, again, going back to the original premise: is Twitter dying or not? We can debate whether it's a large or small business, we can debate whether or not Elon Musk has impaired the business. But is it dying or not? I'm going to take the position that no, it is not dying, even if Elon Musk were to leave the business and we were to write a story about the abject failure of his management team, I think Twitter goes on to live. And I think Twitter has found its niche in the society where celebrities are on there, politicians are on there, average users are on there to gather information. John Donvan: And you think that that position is somewhat ironclad? You think that's unassailable, that that can't be changed by anything? Anthony Scaramucci: Well, nothing in our lives, unfortunately, is unassailable. But I do think that this has levels of resiliency as a result of the organic nature of Twitter over the last 15-ish years. Kara Swisher: On that, Anthony, I have a couple words for you: AIM, AOL, Yahoo, MySpace. You ever heard of ‘Oy?’ – Yo, excuse me– Yo, Peach. It goes on and on and on. And now unfortunately, the conversation has moved away from Twitter and so– it was a small conversation. It never took advantage of the opportunities that it had, because of a lot of reasons. It was badly managed before. But now it's sort of malevolently managed and so it's trying to take a business that it had and change it into something else. It is, you know, you don't want to use a rocket thing, but he's building the rocket in flight. And he's also doing things that are causing the rocket to go the other direction, which is downward. And so, you wonder how these decisions are being made and who they're being made by? And it turns out, it's just literally one guy and so that's a real problem when you don't have a team around. John Donvan: Why– What do you mean by downward? Kara Swisher: Well, I think, you know, you don't kill– I'm perplexed as to why you would insult advertisers when you have a very– an okay advertising business. It's certainly tiny in comparison– John Donvan: Remind listeners what exactly you're referring to? Kara Swisher: He started tweeting. Well, it was so random and so abrupt each time. When he got there, he started insulting advertisers, and told them– and said they were un-American not to– I think that was one of them. He had, like, there's so many. It's like Trump, there's so many I don't remember the last one he did. But he basically insulted advertisers and said they were woke if they didn't advertise on Twitter. It seems to me that they would advertise on you know, 'Satan.com,' if it would sell them a Fitbit. I just– I feel like advertisers will go anywhere. And so, he insulted them. And then they got him on a call with advertisers where he seemed to have been somewhat medicated in some fashion, where he was somewhat nice to them. And then the very next day, he insulted them again. And so, a lot of these people, they really don't want controversy. They just want to sell things, and they're not woke, they're capitalists. He did that with a– He's doing that very Trump-like in insulting people. Sometimes, it doesn't make any sense why he's doing it. And maybe Anthony can talk to this because he's been with someone who does that. It is a strategy to do that, on some level, is to create chaos almost continually. So, you take away– it's sort of jazz hands in a weird way. Anthony Scaramucci: Alright, so let me just respond to the AOL, MySpace. If we're taking that standard, then listen, everything, the Roman Empire, you know, you pick– Kara Swisher: The Roman Empire! Anthony Scaramucci: We can go– I mean, it did decline, Kara. So, you know what we do know– Kara Swisher: I did, I heard. I read that.   Anthony Scaramucci: You know, in General Electric, who had started in the Dow, I think it was out of the Dow for a few years in the 1920s, and was the longest tenured Dow member, is no longer part of the Dow. So, we do know that none of these businesses are eternal. I guess what I'm saying is, in the next half a decade to decade is Twitter dying, I think it's not dying. I think if anything, it will become more relevant. And I think ultimately, as he executes this plan, and whatever the erratic nature is of his personality, we can go back to the situation with Elon Musk in 2008, where he was on the verge of bankruptcy in two companies: SpaceX and Twitter. He was able to use his guile, his relationships to save those two companies. Those two companies propelled him to be the richest person in the world. We just went through one of the worst market environments in 50 years. At least the first half of 2022 was the worst since 1970. The entire year was the worst that we've had in stock market since 2008. The NASDAQ as we both know, is down 30%. So, Elon Musk's high-growth, Tesla stock down a lot, no surprise to me. If you're going to make the case that it's down even more as a result of his erratic behavior– If Elon Musk was listening to this and he asked me that as a friend, I would say, "Yes, it is." You've got to figure out a way to comport yourself better. You don't want to be accused of being Donald Trump, by anybody, just trust me. It's not a good comparison. Because ultimately, anybody that worked for Donald Trump knows about the insanity and knows about the instability. And so, Elon Musk is a brilliant guy. He's a brilliant visionary. You certainly know him better than me. John Donvan: Well, let me jump in. Anthony Scaramucci: Let just finish this one sentence. When I step back and look at his vision for the company, despite whatever missteps he's having right now, I'm making the bet on Elon Musk, this could be 2008 SpaceX and Tesla. Kara Swisher: What is that actual vision? Because a lot of these things he's doing– Listen, I had been very critical of Twitter for years and had suggested subscriptions, we've suggested something that was more of a value, you know, a value proposition that you could pay for that'd be worth it like Amazon Prime is. I certainly pay for it. I'm very happy paying for it, because it's worth it to me. I know a lot of his ideas are retreads of ideas that lots and lots of people have had, and he's unable to execute on any of these ideas. And everyone, because he's Elon Musk, thinks he's a genius and therefore, because he's good at rockets and cars, which are physical, and have physical aspects, that he's going to be fantastic at media. Media is hard. And this is a media company. And so, I think it's a very different situation. He's got to find another business or sell something that's worthwhile in order to make it a business. Or else it’s just a plaything for a rich person. John Donvan: Kara, you're somewhat answering the question I was going to ask both of you because Anthony was kind of alluding to this. That he has been highly unpredictable in the choices he made in terms of businesses to take on and the ways that he did that. And the question was going to be: could this be one more case of that? That it's looking sort of erratic at the moment, but he's pivoting? Obviously, he's floated ideas like the blue checkmark and then pulled it off and then put it back again, that he's responding to mistakes quickly, that that's kind of his way. And that there's something about him, this thing that you refer to as the genius that I think you think is overrated, but nevertheless, it's there. Kara Swisher: I don't think it's overrated. I think it's just you assume because someone is good– It's like saying, "I'm gonna be good at basketball because I'm good at journalism." It's just not the same. I'm not good at basketball, by the way. But you know, it's just one of these things that we just take it for granted. Steve Jobs, who really truly was a visionary, stayed in his lane and kept expanding from that. Now, he certainly said controversial things over the years. Mostly– his biggest– compared to Elon Musk, he parked badly. That's really pretty much the controversy around Steve Jobs. There's a bunch of them, but one of the things that's– He stayed within his lane, and you understood the daisy chain of what he was doing. Here, it's just, it's erratic. Let Kanye West on, kick him off, do this, do that, and everything is– nothing– everything is hypocritical to everything else. And so, it doesn't make– it becomes exhausting. Twitter was already exhausting. Now it's, I find– I am a very heavy Twitter user. I was– my numbers are going down from, again, a couple hours a day, to an hour a day to six minutes. John Donvan: Why is that? Kara Swisher: Because it's exhausting. I turned off comments on Twitter, because I suddenly started getting– I put up something around the shooting in Colorado. And I got the most repulsive group of comments, which I'd never gotten. And I don't need it. I don't. I don't have the time. John Donvan: Anthony, are you still tweeting as before? Anthony Scaramucci: You know, I'm a yes. I mean, the answer is: I'm tweeting as before. I'm probably– you know, I get yelled at by my wife staring at my phone too much, so I'm probably not looking at it as much as I used to. But I think Kara's bringing up an interesting point about a circle of competence. And if you're inside the circle of competence, you do way better. And if you're outside the circle of competence, you may do less better. And so, I just want to validate something that she's saying because she is right, the media is quite different. Because you get an image in the media, it is very hard to change or turn that image. Okay. And so, the media, the mainstream establishment media, has declared a personal foul on Elon Musk and a personal foul on Twitter. Okay, why are they doing that? That's what you have to ask yourself the question of: are they doing that because he's bringing back controversial characters? Whether it's Michael Flynn, Carpe Donktum, Donald Trump, is that the reason why they're doing it? Are they doing it because they don't like his personality and some of the things that he's saying? Okay, and I think, again, if I was on Elon's board, what I would be saying to him, "Hey, listen, it is a little bit different than rockets. And it's a little bit different than cars. Because if you're in the media business, whether you like it or not, the media is going to have a say about your business. You're going to have a constant slew of critics, analyzing and critiquing your business." But you guys asked about the vision, let me just give it in less than a minute. Because I did read through the PowerPoint presentation. And through Cathie Wood's fund– I just should also point this out: I am an investor, although it's a very small amount of money, in Cathie Wood's fund that's been directed towards Twitter. The vision for the company, and Kara may say this is a retread, but I at least find it interesting that he wants to broaden the base of the social media. He wants to be more inclusive as it relates to the free speech dynamic. And he eventually wants to create a 'super app,' which is somewhat similar to WeChat, where you could have a payment structure going through Twitter. And you could have other things going on inside of Twitter, in terms of way more robust, WhatsApp-like communication. And so, when I look at all those different things, and I look at the install base of Twitter, if he gets that right– John Donvan: Let me just– I want to jump in for a point of clarification, Anthony, because you've been arguing against the argument that Twitter is dying. What we're really arguing is whether Musk's impact on Twitter is good or bad for it, is driving it to higher or lower places. Anthony Scaramucci: Well, temporarily, it's driving it lower. I think Kara is right about that again. The question was, “Is it Twitter dying?” I'm saying no, it's not dying. John Donvan: No, no, the question is: is Musk killing Twitter? Anthony Scaramucci: Is Musk killing– Musk is temporarily hurting Twitter. But I believe that Musk will be an agent for formidable positive change. John Donvan: When he wrote– when he wrote his letter to the board last year, he wrote, "Twitter has extraordinary potential. I will unlock it." Do you think he is unlocking potential there now, Anthony? Anthony Scaramucci: But you see that– but you see this is the problem with our society, okay. We're– you know, you talk about technology? We're in 100,000-year-old pieces of machinery that haven't evolved in 100,000 years. My iPhone went from one to 14 in 15 years, but we think linearly. So right now, if he's not doing well, we think that's going to be the permanent state, the same way we thought in 2008 that Tesla and SpaceX were going out of business. John Donvan: Okay, I think that's a fair point. I want to take that very point to Kara. Kara Swisher: Tesla's not at a– Tesla is buoyed by this stock that is way out of line with the other stocks and there are competitors now catching up to him. He's still ahead. Let me be clear, they're still way ahead. But it's like Netflix. Right as Disney and others started getting involved in streaming– Anthony Scaramucci: No, no. But, Kara, I'm making the point that Tesla looked like it was out of business in 2008. Kara Swisher: Yes, but making those comparisons aren't the same thing. Let me just say, when you say 'super app,' let me give you an– Guess what the 'super app' is. TikTok, right now. New apps will come in and do this. 'Super apps' have never worked in this country. It works in China. It has never worked in this country. Do you trust Elon Musk with your payments, money? I don't. I would trust Apple with it. I would trust Amazon with it way before I would do that. Each of these companies has tried to do a 'super app' or is doing a version of it. It's another retread idea that is very difficult to pull off. Because you need people, you need people behind you. You need to build this up. You have to get people using it. Let me just tell you, young people are not flocking to Twitter to use their 'super app.' And they're not going to. They're using Snapchat for communications. They're using TikTok for entertainment. They're using Facebook less and less. John Donvan: Is that Musk's fault, though? Is that Musk's fault? Kara Swisher: No, it's just the– it's just the state of competition. Now he's in a state of competition in cars, where GM, Ford, Mercedes, Volkswagen, everybody is in now the business and now they're, you know, they're not doing as well as Tesla. But they will do as well as Tesla. John Donvan: This is Intelligence Squared U.S. More debate in a moment. John Donvan: Welcome back to Intelligence Squared U.S. I'm John Donvan. Let's get back to our debate. I want to go to the point that, Anthony, you made in your opening. You said, as sort of a side point, about the fact that Musk is saying that he wants to restore free speech to the platform. Critical of some of the people who were taken down, Kara– obviously describing them as 60,000 deplorables coming back to the site. But the fact is that– Kara Swisher: Despicables. John Donvan: –Despicables, I apologize. I want to talk about its impact as we head into a new election cycle. Where Twitter is in this process. Where we are and what Musk's challenge will be in moderating or not moderating. He's obviously not a free speech absolutist because– Even since he's taken over, he's kicked people or suspended people over the platform for criticizing him and for impersonating him. So, just how free speech-y is he, really, Anthony? And where does that– where does that take us and, you know, the role of Twitter in our political cycle right now? Anthony Scaramucci: You're the moderator. You're supposed to be impartial and indifferent to the to the question, but you're fortifying me right now. And so, just want to caution you about that, because what you're basically saying is the upcoming election, Twitter is going to have this unbelievable influence in the upcoming election. And I obviously believe that it will. And so here we are. Eighteen months from now, Twitter will be very vibrant and a very big part of the upcoming election. John Donvan: So, you're saying, I'm taking your side? Anthony Scaramucci: You're making my point, you're making my point, John, that Twitter is not dying. So, I just want you to go back to your impartial position that you are supposed to be in. But I thank you for making the point. John Donvan: Well done. Well played, Anthony. Anthony Scaramucci: But here we are right now. We're discussing this, okay. And so, there's big problems. Okay. We all know that there's robotic technology on Twitter, we know there's Russian and Chinese and other adversarial states– adversarial disinformation on Twitter. We know that there's got to be a cleanup of that. We also know that there's electioneering that's done on Twitter that's loaded with disinformation. Look at this guy, George Santos as an example. He's almost the apotheosis now of The Great Lie being manifested into an individual. But here's what I would say to everybody listening. Okay. We are a free speech country. It was grounded in free speech for a lot of different reasons. But the main one would be for all of us to be free. And a result of which, when you're in a free speech country, you do have qualifications. We do know the case law, about free speech, hate speech is not protected. A threat to the public is not really protected. You know, the debate about yelling fire in the theater would be an example of that. So, we know that there has to be guardrails on free speech that you brought up the fact that Elon Musk doesn't like people being critical of him. And so, he took some of them off the platform, and he deplatformed them. But if you remember, it was a– temporary deplatform. I think one thing we can say about Elon Musk and maybe Kara will agree or disagree. But when he gets things wrong, good entrepreneurs, typically when they get something wrong, they don't stay– Kara Swisher: –Why get it– Anthony, why get it wrong in the first place? It just seems like the peak of a man at night who had too much sugar. Like that's what happened. Anthony Scaramucci: That may be the case. And I ceded those points to you, that there's some managerial erraticism that's going on. And you are right about that. But I'm talking about the broader point about the vitality of Twitter, and what will Twitter look like in 2024 and 2028, etc. And I also bring up the point, is– even with the erratic behavior, does Elon Musk manifestly get things right? Is he a value generator for his investors and for himself? And you've made the point. Yes, and rockets. Yes, and cars. But likely not in the media– John Donvan: Anthony, let me jump in because to return to the point you were making that his commitment to, to make it very blunt, to allow people like Donald Trump back in after they were suspended and others– Kara Swisher: Who's not coming, who's not showing up. John Donvan: Who you said, were in your communities, that there's a sort of disconnect and disaffection with the wokeness that you said was, to some degree, you feel influencing the decisions that Twitter made prior to Musk's takeover. And I want to know, is the return of those individuals, and I'm not sure if I'm characterizing how you would put it correctly, but the broadening of the spectrum of allowed speech on the site, going to be one of the things that he makes better about Twitter? Anthony Scaramucci: I hope, I hope so. But let me say this, you okay, John? And I got this wrong. Donald Trump got it right. So, you should really listen. I grew up in an aspirational blue-collar family. Thirty-five short years later, those very same families, they went from economically aspirational, to economically desperational, okay? And we've left them out of the story. And they're very angry about it. And somebody like Donald Trump saw that. And he became an avatar for their anger. Now, he didn't offer any policy solution for them. But when he was sticking a finger in the eye of the media establishment, the political establishment, the business establishment, they loved it. And I'm just making the point that if you want a fairer, better, broader society, we have to get those people back into the fray. Kara Swisher: But you see, Anthony, the issue is– they're not– those people aren't on Twitter. They're not using Twitter, look at the– look at the recent election, rife with election denialism on that platform, on Twitter, and many other platforms. What did the voters do? They didn't vote for that. They voted out those people, the people that were screaming. Kari Lake screams on Twitter, didn't work for her, you know. Michael Flynn screams wherever he happens to be, didn't work for him. So, I don't think it has an impact. Because I don't think these people are using the platform. Anthony Scaramucci: Kara, you just made my argument even better then, because you're just saying that those people, them being brought back on Twitter, somebody like Michael Flynn, they're not really having that big of an impact. Kara Swisher: Now it isn’t because it's a tired product. That's what I'm arguing is that it's a product that's now noisy and angry. Anthony Scaramucci: I want to beat these people– I want to beat these people in the free marketplace of ideas. I want to beat Michael Flynn or Donald Trump in the free marketplace of ideas. You brought out that Donald Trump's not back on Twitter. He's not for a specific reason. He's getting paid on Truth Social not to be back on Twitter. John Donvan: Okay, we're wandering a little bit now from the topic of whether Musk is killing Twitter. And I have to break in, Anthony, because we need to move along– Anthony Scaramucci: –Go ahead. John Donvan: –to bring in some members of the press, media– Kara Swisher: –Okay. John Donvan: –to join the conversation now. So, I want to welcome Steven Levy. Thanks for joining us. Tell people who you are and then enter the conversation please with a question. Steven Levy: Yeah. Hi. This is a fascinating debate. I'm editor-at-large at Wired Magazine. I've been writing about technology for a long time, following Twitter for a long time. And so first for Kara, you know, to me– we ask is Elon killing Twitter. As a Twitter user, I'm super concerned about whether this is going to still be usable for me. And throughout Twitter's history, it really has been the users to shape how Twitter works. They invented all kinds of stuff like the reply, the retweet and other things. And I'm wondering whether Twitter, despite Elon, might not be some sort of cockroach, where the users can figure out how to get around whatever mischief he does and, you know, erosions he does to the platform. So, I'm wondering, you know, how do you respond to say, you know, look, as a user, there's a way I can kind of like, fix my– who I follow and other things change to make that happen? Kara Swisher: I think you can do that. Sure, sure. But because, like a lot of products, you know, from using stuff, I have a box full of products that I used to use that I don't use anymore. A lot of physical products, a lot of software products, that just became either onerous or difficult or something better came along. And so, I do think you can sit there and fiddle with it. But one of the dirty secrets of Twitter for media people, as you may know, as I know, having run sites is that it doesn't really give you much business and one of the reasons you want to use this is so that you get people to listen and read what you're doing. Maybe virtue signal to other journalists of what you're up to and things like that. But in general, if I had to look at the stuff which actually got me money, like made money as a journalist, it was always Apple podcasts for example, references from them, or Facebook or LinkedIn. Twitter was always way down on that scale. And so, the question is, do you realize, suddenly, that you're putting way too much work into something that doesn't give something back? And I do think the more exhausting it gets, and the easier that other competitors make things that are attractive, the more you move to them– it's the same thing with cars. As there's more choices for Tesla, Tesla's market share is going to inevitably and should go down, because people, you know, don't want the Tesla look. They want to be in a Porsche, they want to be in, like me, a Chevy Bolt, they want to have a lesser price of something. And so, I think he's opening it up to other competitors in a lot of ways and he's made the experience more difficult to use. And why would you want to do work arounds? He himself said it. He said it to advertisers that day when he was nice to advertisers. He said, if you use it for an hour, and you feel bad, why would you come to that product? Exactly. John Donvan: Okay. Thanks, Steven. And you had a question also for Anthony. Steven Levy: Yeah, another thing that's been going on in Twitter for a long time, and early in its time, and when it first began to take off, it was sort of an assumption that they would get a billion users, right, which is really what it takes for a social media site to break through and become successful more than what Kara says is an okay business. Now, they've never been able to do that. And it seems to me that what Elon is doing by, you know, sort of arguing for his subscriptions, which is a great way to kill the number of people you have, basically creating this privileged class, which is going to like flood your timeline, if you don't pay $8, you're not getting the whole experience. It seems to me between that and the things he does, which people just don't like and make your timeline more toxic, it's going to be even tough to keep what he has now, let alone build up to that billion, which would make it a successful enterprise. How do you answer that? Anthony Scaramucci: It's one or the other, right? He's either a cockroach, where he's going to survive the nuclear blast or these types of things. So, I'm just saying to me, maybe he's just an upsetting cockroach. You know, ultimately, you know, what you're looking at is a short-term window of the Elon Musk behavior as owner of Twitter. And I'm saying to you, if you look at Elon Musk's past behavior, as owner of SpaceX and Tesla, there were near death experiences of both those great companies. And he was able to figure it out and execute bold and grand visionary strategies for those companies. The question before us right now: is Elon Musk killing Twitter? And I'm saying Elon Musk may be hurting Twitter in the short term, but I think long term, if you look at his management skill set and his capability, he is going to regrow and create great vibrancy in Twitter. I'm saying three things. I'm saying that the business is incredibly durable. I cede that to Kara that it's smaller than he would like it to be, but it's incredibly durable. Number two, it's very relevant. We're already talking about 2024. And number three, his track record is such that I do not want to bet against him. And I believe he's going to create this free intellectual marketplace of ideas that's growing and very vibrant. It may not become the 'super app' that he wants, but I bet it could become a 'Superboy-ish' app, as opposed to a 'Superman-ish' app, and I'm betting on him. John Donvan: Want to bring in Monica Melton also to jump in with a question and can you tell folks who you are and go for it? Monica Melton: Hi, everyone. I'm Monica Melton, a senior tech editor at Insider Business, formerly Business Insider. Kara, you nicely laid out how Twitter may be killing Elon. While Anthony, you mentioned Elon sort of leveraging relationships to propel himself after 2008. But do either you think Elon's reputation not only as a techno king, but as a businessperson in general is being irreparably harmed by the chaos he's created at Twitter? How does he realistically come back from this moment? Kara Swisher: Well, I don't think anyone's irreparably harmed in this society, honestly. I mean, look, Bill Gates used to be Darth Vader, and now he's the biggest giver of philanthropy. I think people can recover their reputation. And there's a whole lot of forgiveness around certain business behavior. I mean, there's certain people that aren't– Harvey Weinstein's not coming back, but lots of people can, so I don't think it's irreparable. I just think that why do it? You know, he sort of styled himself after Iron Man, right? That's what he was trying to go for here. And I think that's a very pleasant way to think of him. And I think a lot of stuff he's done, as I've said, time and again, is visionary and really interesting. That said, there's something happening here there's something– some demons that follow this guy that he has to create controversy and contrarianism just for the sake of it. And I don't know his personal life. I don't know what's going on. But one of the people I interviewed who worked for him, Yoel Roth, said it was– when you deal with them 90% of the time, it used to be very reasonable. And I think Anthony's right, it was very reasonable and interesting and sometimes odd things, he'd say odd things off the top of his head. And then 10% of it was really quite mad, like angry for no reason, overly sensitive to criticism. That part seems to have grown enormously. Unless it's all a performative act, and the other parts seem to have died down. I wish he had just stuck with the part that made him that way. He was the one most capable of doing this. And what he's doing now makes no sense to me, and it's turned his brand into something that's really unattractive. It's having impact on Tesla. It's having impact on lots of things. John Donvan: I have to call for time, we're gonna wrap up this round. I want to thank Steven and Monica, for joining us in the conversation. In our final round, you each get 90 seconds to summarize your position or move it forward on why you're a Yes or why you're a No. Anthony, I'm going to let you go first. You're the No on the question of whether Elon Musk is killing Twitter. So take 90 seconds, please. Anthony Scaramucci: Well, you know, I'll probably take less than 90 seconds, because I think I've made my points and I'll make three last ones. We'll be looking at Twitter for the 2024 election, we certainly will be looking at what candidates are writing on Twitter. And we'll be looking for what journalists are potentially reporting or getting out onto Twitter first, because that seems to be a medium of delivery for journalists that are trying to break stories. Number two, I do believe Elon Musk is a very successful and very effective executor and manager. And despite his current erraticism, I think he's going to self-correct. And I think he's going to find his way to making that 'Twitterverse,' if you will, better. And the last point, I think it's the most important point, you can call it the 'cockroach theory' or whatever you want to call it.   This is a durable business; it may be smaller than he wants it to be. But it's a durable business, and it can take a lot of hits before it quote unquote, gets killed off. So Elon Musk is not killing Twitter. If anything, we'll be looking at Twitter, in the 2024 presidential election. Kara Swisher: I'm sure we'll be looking at that. I think the politicians will be the last people out the door, to turn out the lights there. They enjoy, they're narcissistic, and they get to yell at each other. It's a perfect medium for that. The question is, 'is it an actually good product?' And it is not as good a product as it was. And they have no signs of showing anything that's valuable to a vast majority of people, except for political journalists and politicians. And increasingly, celebrities are coming off of it. Journalists that don't have anything to do with politics are coming off of it. It's become somewhat of an amusement. Now it's become a more toxic amusement, it's like sort of watching stuff that– or eating stuff that isn't very good for you, at some point, you sort of feel sick, doing it. He's got to make it a great product. That's the only way out of this as it is with most things. If it's not a great product, it, like all the other bad products, will die as every other tech product has died over time. We're not using all those things because either something better came along, or the product just wasn't as good, it wasn't as enjoyable, wasn't as relevant. You have to be relevant to a vast amount of people to be successful. And when you say you can't do that? Whatever you think of the Chinese ownership of Tiktok, it's an incredibly enjoyable product. It's really fun to use. It's addictive. It's interesting, it's creative, and he's got to do those things. Instead, he wastes his time in some sort of weird personal vendetta against himself. That's really what's so sad about it, is that, you know, I sometimes feel like that he just– I feel like some days, he just needs a hug, so he could stop doing this and actually make something beautiful. He has done in the past. He's absolutely capable of it. I'm not so sure media is as easy as building a rocket. I know it sounds crazy. But he's got to really stop the nonsense and make a product that's worth it to people and worth paying for. It's a very basic thing of capitalism. This is not about wokeism. This is not about the mind virus and all these other tiresome, petty grievances against people, it's about making a great product and making a product that people want to pay for or use in some way that's enjoyable to them. And it's as easy as that. And so, and by the way, tech is the young eats its old. What's coming next is what's going to be the cool thing, not Twitter. Twitter's had enough lives. And we'll see if he can transform for a little while longer, but it's not going to be much longer. John Donvan: And that concludes our debate. And not only did I really, really enjoy this conversation, but the way that the two of you conducted it totally embodies what we aim for when we do these debates, the fact that the two of you could disagree, and still be so, not just respectful, but amicable with one another. We appreciate that you did homework on this and that you came and you actually listened to one another. So, thank you very much for being part of this debate with us. Anthony Scaramucci: Well, it's an honor to be here, John. Kara Swisher: Thank you. John Donvan: Thank you for tuning into this episode of Intelligence Squared, made possible by a generous grant from the Laura and Gary Lauder Venture Philanthropy Fund. As a nonprofit, our work to combat extreme polarization through civil and respectful debate is generously funded by listeners like you, the Rosenkrantz Foundation and friends of Intelligence Squared. Robert Rosencrantz is our chairman. Clea Conner is CEO. David Ariosto is head of editorial, Julia Melfi, Shea O'Meara, and Marlette Sandoval are our producers. Damon Whitmore is our radio producer, and I'm your host, John Donvan. We'll see you next time. This transcript has been lightly edited for clarity. Please excuse any errors......»»

Category: blogSource: valuewalkJan 20th, 2023

NFT Marketplace Blur Delays Native Token Launch

The platform, which targets pro NFT traders, said it would launch its BLUR governance token on February 14 after months of incentivized airdrops......»»

Category: forexSource: coindeskJan 19th, 2023

I"m a top OnlyFans creator who sold $30,000 worth of NFTs in one month. I love that it gives me ownership of my content, and I don"t plan to leave Web3 anytime soon.

Elsa Jean hopes to grow her Web3 content larger than her other platforms and is considering mentoring other women looking to get into NFTs. Elsa Jean started minting NFTs in November.Maddie Cordoba Elsa Jean is in the top 1% of OnlyFans creators by earnings.  In just one month, she sold $30,000 worth of NFTs priced at about $250 USD.  Jean says she has no plans of leaving the Web3 space.  This as-told-to essay is based on a conversation with Elsa Jean, a 26-year-old OnlyFans creator and NFT minter. It has been edited for length and clarity.I'm in the top 1% of OnlyFans creators which means I earn more than 99% of other creators. I retired from the mainstream adult film industry about a year ago. After retiring, I had extra time to explore my interests and began minting NFTs in November 2022.An Elsa Jean NFT.Artist credit: MeaI sold over $30,000 worth in just one month, and I don't plan on leaving the Web3 space anytime soon. I decided to launch my own NFTs to give my fans something that holds value and that they could invest in that was different from my other content. I started by asking tech-savvy friends and people on Twitter for advice.My NFTs are limited and allow my fans access to exclusive content. It also offers utility for them. There are a limited number of NFTs so I give them something that can be successful and valuable for all of us.  The exclusive content I offer for holders isn't available anywhere else; I host virtual parties, post voice notes, and other things. I also make sure the videos are of higher quality. My NFTs are priced at about $250 USD each. This is different from other Web2 platforms I use like OnlyFans where fans buy a monthly subscription. With NFTs, there's a limited number of "tickets" available, and fans could sell them down the line and make money. NFTs help me take ownership of my content I want other women to know that NFTs are different and you can have full ownership and control of the content you put out there. NFTs are verified so people can't just take them. With other content I've made on Web2 platforms, people steal it and can put it up anywhere in a matter of seconds. But with Web3, holders of my digital collectibles are less incentivized to copy and share my exclusive token-gated content with the world because it devalues the content and access that their NFT unlocks. And for me, it keeps my content exclusive and more valuable to my community who invests in it.I particularly enjoy making content for my NFT holders because I'm excited to have full ownership of something for the first time. I helped my fans learn how to use Web3When I launched, a lot of my fans were confused because it was not what they were used to seeing me promote. But on the other hand, they are very loyal and were interested in seeing me do something different. I brought a lot of my fans to the Web3 space for the first time. I did tutorials about how to open up crypto wallets and how to verify NFTs because most of my fans didn't know how to yet. I think it's important to know that this technology is only getting easier to use. I think when NFTs first dropped you couldn't even use credit cards to make purchases and now you can. I was excited and surprised by how supportive other women were of me Sadly, never in my life had other women and I come together as a team. But rather suddenly, other women were standing up for me on Twitter. Some people in the Web3 space were attacking me, and they were nervous I would come in to launch NFTs and then never talk about them again. It was my understanding that other people had come in and promised they were dedicated to Web3 but didn't actually follow through. But women in the space defended me and were really inviting. Now, I can talk with them and feel a part of the community.I want to be in Web3 long term I'm not really worried about the crypto downturn. When things dip, it motivates me to work a bit harder to turn things around. I don't think NFTs are going to fall off. I think they're here to stay, and so am I. I'm pushing for NFTs and promoting them hard. I hope to grow my exclusive content larger than my other content pages and maybe even want to help manage other girls with their NFT launches. I really want people to know that I'm not going to do a quick drop and run away with the money I made. I want people to know that this is an investment for me and something I am really dedicated to. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 18th, 2023

FTX lost $415 million worth of crypto in hacker heists, the collapsed exchange"s new bosses say

"It has taken a Herculean investigative effort from our team to uncover this preliminary information," FTX's acting CEO John Ray said. FTX lost $415 million worth of crypto in hacks, the collapsed exchange's new bosses said Tuesday.NurPhoto/Getty Images FTX lost $415 million worth of crypto to hackers, its new bosses said Tuesday. The failed exchange has identified around $5.5 billion of liquid assets to be recovered. "It has taken a Herculean investigative effort from our team to uncover this preliminary information," acting CEO John Ray said. Hackers stole $415 million worth of crypto from FTX – accounting for just under a tenth of the assets that the collapsed exchange is trying to recover, its new bosses said Tuesday.In a presentation seen by Insider, FTX lawyers and advisors said they had tracked down around $5.5 billion worth of liquid assets to be recovered, made up of $3.5 billion in crypto, $1.7 billion in cash, and $300 million in tradable assets like stocks and bonds."We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information," acting FTX CEO John Ray III said."We ask our stakeholders to understand that this information is still preliminary and subject to change," he added. "We will provide additional information as soon as we are able to do so."Around $415 million of the assets for recovery had been lost in crypto hacks, FTX's new bosses said.Hackers stole $323 million from the Bahamas-based parent company FTX.com, $90 million from FTX, and $2 million from sister trading firm Alameda Research, according to the presentation.The missing crypto could be linked to a hack that took place just hours after FTX filed for bankruptcy – when prosecutors said over $370 million in crypto had vanished from the exchange.FTX collapsed in November after a sell-off in its native FTT token triggered a solvency crisis.Former chief executive Sam Bankman-Fried was arrested in the Bahamas and extradited to the US the following month to face eight criminal counts including fraud, money laundering, and violating campaign finance laws.Lawyers are now working to track down assets that could be sold to help FTX to repay its debtors – including customers who lost funds when the exchange collapsed.As well as the exchange's crypto and cash holdings, they identified $253 million worth of real estate in the Bahamas as potential assets for recovery in Tuesday's presentation.Read more: Here's how the collapse of Sam Bankman-Fried's FTX empire stacks up against other corporate failures like Lehman Brothers and EnronRead the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 18th, 2023

FLEX"s Subsidiary Nextracker Files for an IPO Offering

Flex's subsidiary, Nextracker, plans to launch an IPO to offer Class A common stock. Flex Ltd’s FLEX subsidiary, Nextracker Inc, has filed a registration statement with the U.S. Securities and Exchange Commission for a proposed initial public offering (IPO) of shares of Nextracker's Class A common stock.The common stock listing will be on the Nasdaq Global Select Market under the ticker symbol "NXT".Nextracker is a company that designs, manufactures, and installs advanced solar tracking systems for utility-scale solar power plants. Their systems use software and hardware to optimize the alignment of solar panels with the sun throughout the day, increasing energy output and reducing the cost of solar power.Flex Ltd. Price and Consensus Flex Ltd. price-consensus-chart | Flex Ltd. QuoteThe proceeds from the IPO will likely be used as working capital to fund potential acquisitions and strategic investments and to repay debt.The timing, number of shares to be offered and price range for the proposed offering have not yet been determined, and the offering is subject to market and other conditions.JP Morgan, BofA Securities, Citigroup, and Barclays are joint book-running managers for the offering, and Truist Securities, HSBC, BNP PARIBAS, Mizuho, Scotiabank, and KeyBanc Capital Markets are joint book-running managers. SMBC Nikko, BTIG, UniCredit and Roth Capital Partners are also acting as co-managers.Nextracker has been a major contributor to sales growth. In the second quarter, Nextracker group’s revenue went up 40% year over year to $0.5 billion, owing to strong industry demand amid panel availability shortage. Also, the adjusted operating margin was 9.1%, up 187 basis points, year over year.Flex provides design, engineering, manufacturing and supply chain services to original equipment manufacturers in various industries, including aerospace and defense, automotive, healthcare, industrial, mobile and computing.The industrial business is likely to gain momentum owing to ongoing secular trends. Also, the company’s Automotive segment is expected to gain traction owing to increasing demand for electric vehicles.  The company has raised its revenue outlook for fiscal 2023 owing to the above-mentioned factors. It now expects revenues between $29.1 billion and $30.1 billion compared with the earlier guidance of $28.4 billion to $29.4 billion.However, stiff competition and rising uncertainties in the global macroeconomic environment are likely to affect margins.At present, FLEX has a Zacks Rank #3 (Hold). Shares of the company have gained 31.6% in the past year against the sub-industry’s decline of 31%.Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks from the broader technology space are Arista Networks ANET, Jabil JBL and Calix CALX, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.The Zacks Consensus Estimate for Arista Networks 2022 earnings is pegged at $4.37 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have declined 10.1% in the past year.The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.31 per share, rising 1.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 8.7% in the past year.The Zacks Consensus Estimate for Calix’s 2022 earnings is pegged at $1.06 per share, unchanged in the past 60 days.Calix’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 19%. Shares of CALX have soared 17.2% in the past year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Jabil, Inc. (JBL): Free Stock Analysis Report Flex Ltd. (FLEX): Free Stock Analysis Report Calix, Inc (CALX): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Category: topSource: zacksJan 17th, 2023

Russia and Iran are working on a gold-backed cryptocurrency to take on the dominant dollar, report says

The new stablecoin would replace the dominant US dollar and other government-issued currencies in international trade, according to Vedmosti. Russian President Vladimir Putin on a July 2022 visit to Iran.ATTA KENARE/Getty Images Russia and Iran are working together to launch a cryptocurrency backed by gold, Vedmosti reported. The stablecoin could replace the US dollar for payments if Russia legalizes crypto in crossborder trade. A "de-dollarization" trend has already begun as the greenback's dominance makes purchases more expensive. Russia and Iran are reportedly working together to launch a cryptocurrency backed by gold, with the idea the "stablecoin" could replace the US dollar for payments in international trade.The two sanction-hit countries want to issue a "token of the Persian region" for use in cross-border transactions,  Russian news agency Vedmosti reported Monday. The plan is to launch it in a special economic enclave in Astrakhan in southern Russia, which already handles Iranian shipments.Those payments are typically done in government-issued currencies such as the US dollar, Russian ruble and Iranian rial. But the joint project will only be able to move forward once Russia's market for digital assets is fully regulated, according to a top Moscow lawmaker. In September, the Bank of Russia accepted the need to legalize crypto for international payments to soften the impact of financial sanctions, but has yet to clarify its plans.Stablecoins are cryptocurrencies that source their value from an asset like the US dollar or gold, which are less volatile in price than digital assets. That protects investors against wild swings in the wider crypto market.In recent months, Russia and Iran have accelerated their push to "de-dollarize" — to move away from using the greenback in commerce — think tank the Jamestown Foundation has said. They aim to increase their volume of trade to $10 billion per year via moves such as developing an alternative international payments system to SWIFT, which they are banned from.The US dollar remains dominant as the top currency for trade and foreign reserves, even though it soared over 12% in 2022, fueled by Federal Reserve interest rate rises. But a trend toward de-dollarization has begun, analysts say, as that appreciation makes trade more expensive for buyers holding less robust currencies and as countries seek to move away from US exposure.In recent months, Russia and Iran have accelerated their push to de-dollarize — to move away from using the greenback in commerce — think tank the Jamestown Foundation has said. They aim to increase their volume of trade to $10 billion per year via moves such as developing an alternative international payments system to SWIFT, which they are banned from.China, for another, has started to push for the yuan to replace the dollar in oil deals, given its increased trade with Russia after it invaded Ukraine. The rise of the so-called petroyuan could spread its influence across Asia for crude transactions. Meanwhile, Russia and China have joined forces on another de-dollarization project. In June, President Vladimir Putin said Russia was looking to develop a new reserve currency with other BRICS nations .Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 17th, 2023