Receive a summary of the day's top tech newsdistilled into one email. Matts the perfect complement to Bess, Felix Salmon, another financial blogger, wrote in October 2011. articles a month for anyone to read, even non-subscribers! Also SBFs Substack and premium bond taxation. Simply selling billions of dollars of Tesla stock would have upset his fans, driven down the stock price and undermined his image as a committed true believer. It might be a reason for the price of FTT to go down, if you think that Alameda has too much of it and might need to sell it. Also GTX claims trading, Goldman golfing and Razzlekhan. . Hes a very smart guy who is very much not a lawyer, and that is very fruitful, Levine says. So Levine was back the next day to write about it. He left that profession for law school and became a mergers and acquisitions lawyer for the law firm Wachtell, Lipton, Rosen & Katz. I was writing more about the gossipy side of Wall Street and more the culture of it, and I thought it was a great opportunity for him to use his incredible knowledge of how the business works. Mr. Levine regrouped. Hovnanian will refinance its In August, Musk had said he was done offloading Tesla stock and that it was important to avoid an emergency sale of the shares in case he was forced to close the Twitter acquisition and struggled to bring in additional equity partners. October 7th, . [1] Levine has previously been a lawyer, investment banker, law clerk, and has written for a number of newspapers and financial sites. One is that FTX is an exchange for levered traders, offering products like perpetual futures and leveraged tokens that build in margin lending. We use cookies for a number of reasons, such as keeping The Information reliable and secure, personalizing content and ads, providing social media features and to analyze how our sites are used. Why subscribe? @matt_levine + Get alerts for Matt Levine Robinhood Markets Inc. is in the business of getting people to trade stock (and options, and cryptocurrencies) on their phones. Today's challengers: Alex, Tracy, Matt. ; What Does It Mean?, in which he discusses generalizations of Bitcoin, such as Ethereum. Just a weird business all around. BeSpacific - 3rd Place. Mr. Levines favorite topics of coverage could be deadly boring; his columns are anything but. Coinbase does offer a noncustodial wallet where you can trade on Coinbase and hold your Bitcoins yourself. [1][4], After graduating Harvard, Levine was a high school Latin teacher. If youre worried about that, you should take your money out of FTX before the crash. Coindesk reported on Alamedas FTT exposure, and then Changpeng CZ Zhao, the founder of Binance Holdings Ltd., the largest crypto exchange, raised eyebrows by tweeting that Binance would sell its FTT holdings due to recent revelations. People worried that this would tank the price of FTT and put pressure on FTX, so they started withdrawing money from FTX. [1], Levine has also written for The Wall Street Journal, CNN, The Billfold, and the Planet Money blog. . This is the story of his ascension. A $2.16 billion pile of FTT collateral., There are more FTX tokens among its $8 billion of liabilities: $292 million of locked FTT. (The liabilities are dominated by $7.4 billion of loans.). The Corporation is for sale. 3. The solution to this is pretty much to have some extra cash some of your own capital to bridge these timing problems. This makes FTT kind of like stock in FTX: The higher FTXs profits are, the higher the price of FTT will be. It makes for a tricky decision for Zhao, known in the crypto world as CZ: Follow through with rescuing his onetime top rival and shoulder the financial and regulatory burdens, or let FTX crumble and sort through the potential wreckage? It would actually have enough money to give all the customers their money back, because it kept all the customers money in their own envelopes the whole time. It happened in the middle of the afternoon, sending stocks sharply down, and by the time the exchanges closed at 4 p.m., many financial news outlets were still struggling to explain why. Jun 23, 2021. This means that funds are available to our customers 24 hours a day, 7 days a week, 365 days of the year. On top of that, US regulators are circling FTX, investigating whether the firm properly handled customer funds, as well as its relationship with other parts of Bankman-Frieds crypto empire, Bloomberg News reported Wednesday. So much business is about personal relationships, and texting and WhatsApp can feel more personal than your firm email account. And so, at 33, Mr. Levine sat down to write. Often, a significant chunk of the newsletter is devoted to a legal battle between sophisticated counterparties, or a complex financial product. "[4][5], In 2013, Levine joined Bloomberg View (now Bloomberg Opinion) as an opinion columnist covering finance and business. On April 20, something occurred that was unprecedented in the history of financial markets: The price of oil went negative. It is not a plot-driven novel. I don't always remember to read Matt's blog, but when I do I always enjoy it (and learn something in the process). Now lets add one more crypto element. You have one Customer C who says hi I would like to borrow 50 Bitcoins and $1 million, I will secure that loan with 150,000 FTT, each of which is worth $20.. The attributes of this token are, like, it entitles you to some discounts and stuff, but the main attribute is that FTX periodically uses a portion of its profits to buy back FTT tokens. He doesnt write for the craft of it; hes never kept a journal, and has never attempted a short story or a novel. But like they say, . Then he starts to write. . Morgan 38-3 Richmond / Sea of Cortez Mthe straight stuff on . His answer, at least for now, is that the financial hole appears too deep. All Rights Reserved, By submitting your email, you agree to our. Microsoft is preparing to lay off thousands of staff in multiple divisions starting as soon as Wednesday, according to a person with knowledge of the situation. (He also says that if he were to take more time to write, hed use fewer words.). And a surprising subset of them will email me. And then if one day every single customer walked into the bank at the same time and said we would like our money back, the bank would just hand them all their envelopes. As of yesterday's close, it had a stock price of $0.0004 and a market capitalization of about $98,000; it trades an average of about $13.26thirteen dollars and twenty-six centsworth of stock each day, though it had a big day last week when almost $400 worth of stock traded. Opposition shadows Cerberus windfall from Albertsons supermarket deal. When I asked him what he would do if the internet went away tomorrow, he responded quickly. Well, you have to borrow it too. He structured derivatives agreements that let companies and other Goldman clients buy and sell stocks using a variety of methods meant to help them reduce their taxes or get a better price. 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Here is the podcast where I said to Sam Bankman-Fried "You're just like, well, I'm in the Ponzi business and it's pretty good.". How Is That a Good Thing? You say sure, sounds good, and hand over all your collateral. He clerked for a federal appeals court judge, and put in time as a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz. FTT goes down, leaving FTX undercapitalized, leading to customer withdrawals, leading to ruin. Real banks take deposits but dont keep the money in envelopes; they lend it out. He goes into the balance sheet including the Serum tokens. Coinbase says: Your funds are your funds, and your crypto is your crypto: Coinbase maintains internal systems, like a bank or a broker. Matt Levine would like you to know that Elon Musk does not actually ruin all of his vacations. Microsofts expected investment in OpenAI, destined to be one of the biggest startup stories of the year, comes with a whole lot of strings attached. Three Arrows, FTX/Alameda, bribes and bonuses. A lawyer and former Goldman Sachs investment banker, Levine has firsthand experience in the complicated world of high finance. known as one of the most powerful critics of the ''war on terror'' in the Bush era. 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"I write a lot about people who have gotten in trouble with the SEC or the Justice Department. And now as a writer, he makes sense of it for the rest of us. Happy Thanksgiving! Feb 11, 2021. (The best measure of his audiences devotion may not be his 112,000 Twitter followers, but rather the 3,000 that follow @MattLevineBot, a fan account describing itself as a bot that mimics his writing style.) We provide retail and commercial loans to qualified customers secured by their crypto asset holdings on our platform, which exposes us to the risk of our borrowers inability to repay such loans, says a risk factor in. Today's Master Minds: Mark "The Beast" Labbett, LaKedra Pam, Ryan Chaffee. Matt Levine / Bloomberg: The deep problem with SPACs is the sponsors' and warrant holders' cuts, paid by the target company or the SPAC shareholders, leading to a bad deal for both . [3] [4] His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October . On that note: Changpeng Zhao moved fast when Sam Bankman-Frieds FTX.com was on the brink, offering to take it over and stem any further crypto contagion. Stock Sniper Might Have Pumped and Dumped. Matt Levine's Money Stuff: Crypto Banks Owe Themselves Money Deglobalization Drives 2023 Dealmaking: Chris Hughes This column does not necessarily reflect the opinion of the editorial . "I write a lot about people who have gotten in trouble with the SEC or the Justice Department. Sign up for Verge Deals to get deals on products we've tested sent to your inbox daily. Billionaires read Money Stuff. And a surprising subset of them will email me. S&P. When I was an investment banker, one thing that I did was pitch convertible bond offerings to companies. Get back to work. When we hear on the news "$8 billion collapse!" it's all fake because of crap like the Serum tokens. Ledgers, Bitcoin, Blockchain, in which he lays out the basics of Bitcoin's technology. He is doing exactly what he has long wanted to do. If the customer defaults, you still have to pay your lender (and then you get the Bitcoin back and can sell it to pay off your customers liability to you); if you default, the lender sells the Bitcoin. Matt Levine's Money Stuff: Not Everything Is Insider Trading - Bloomberg. As of June 30, the companys assets amounted to $14.6 billion. Once I did a client call with him, Mr. Levine said. But one general point is that while some customers will want to borrow dollars to buy Bitcoin, other customers will want to borrow Bitcoin. Similarly, I find a lot of good one-off recommendations on HN; is the hit ratio 100%, or even 50%, goodness no. Its single biggest asset: $3.66 billion of unlocked FTT. The third-largest entry on the assets side of the accounting ledger? Most classically, they borrow short to lend long, taking checking deposits that can be withdrawn at any time, and using them to make long-term mortgages. Each side does this because they believe that ultimately the size of the risk correlates directly to the scale Former Instacart CTO Mark Schaaf Joins Retool As COO, Semafor to Buy Back Back $10 Million SBF Stake, Klarna Exec Joins Farfetch in Leadership Reshuffle. In the meantime, tell your friends! There has been a blow-up this week on the internet about Facebook's apps. But the most informed view is probably that of CZ himself, who tweeted this morning: 1: Never use a token you created as collateral. The analogy is: Imagine a weird sort of bank. As Matt describes it in his bio, he writes about the financial industry on the internet, an WhatsApp, everyone pay $200 million. Okay. FTX made up the Serum token on there own. Matt Levine. Customer B owes them to you ultimately youre good for it but you dont have them now. [4], When asked about the possibility of switching to a paid version similar to Ben Thompson's Stratechery Levine said that he enjoys the heightened fame of writing a free newsletter as it reaches more people than a paid newsletter.[6]. Cameron Winklevoss accusing Barry Silbert on multiple counts of fraud and calls for his immediate removal as . To contact the author of this story: Matt Levine at mlevine51@bloomberg.net. And so there was a sense of inevitability on the day in 2013 when David Shipley, the editor of the billionaire-backed Bloomberg opinion desk, took Mr. Levine to lunch and offered him a job. The SEC may have more power over airlines than Secretary Buttigieg.However the SEC has not (yet) gone after Southwest. A few months ago, Matt Levine, Bloombergs ascendant tech and finance columnist, schlepped from his home in Westchester County into New York with his wife and three small children to have weekend brunch on the Upper West Side, joined by his parents, his aunt and his uncle. Having closed the deal for Twitter and spent a few days wreaking havoc, Musk has gotten bored and moved on to some other expensive hobby, which we will hear about in due time. So you say, sure, fine, Ill take your $10,000 and put $20,000 of Bitcoin in your account. Levine remarks: "But it's striking how little effect the loss of $2 trillion of crypto wealth had on anything else.". But it would not go out of business that minute. 7. Oil is voluminous and oozy and poisonous and flammable and smelly, Mr. Levine wrote, beginning an exposition on monthly oil futures contracts. Sign up now so you don't miss the first issue. Welcome to Matt Levine by me, Matt Levine. He writes the newsletter Money Stuff for Bloomberg, which is published every weekday. Other Stuff. Learn more about a Bloomberg Law subscription. But that was kind of fun! Matt Levine is a Bloomberg Opinion columnist covering finance. DLA Piper > The Legal 500 Rankings Corporate and commercial > Corporate and commercial: Birmingham Tier 1 Known for its 'excellent transactional capabilities', the Birmingham In the olden days the values were all different! But sometimes market moves are catastrophic, and in particular, sometimes securities broker-dealers and crypto exchanges will have run on the bank risks. Nobody cares very much about how culpable each bank is, or how many bad messages it sent. Here is my author page, possibly. Levine's analysis in his column have been widely covered by other newspapers. But Mr. Levine was never a high roller. It wasnt the case that the cost of a barrel had fallen to some scary-low number. Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. Twitter Manager: Daily Revenue Has Dropped 40%, 500 Top Advertisers Have LeftRead Now. Bankman-Frieds fortune basically vanished, as did his emperor aura. Venture capital investors in FTX which last raised money at a $32 billion valuation are probably getting zeroed, the price of FTT collapsed, and now regulators are investigating. Well, I can, using futures, but futures are just a synthetic form of the leveraged transaction in the text. There are footnotes lots of footnotes. The problem with this is that it is wrong-way risk. But in theory a cryptocurrency exchange could work that way, and at a high level of generality Coinbase sort of does. Do you think that there is a big financial firm in the US that got through the entire pandemic without any employees doing any business over WhatsApp or text messages from their personal phone? You have 100 Customer As who are long Bitcoin on margin: They each have 1 Bitcoin in their accounts and owe you $10,000. I write the Money Stuff newsletter at Bloomberg Opinion. If people start to worry about the investment banks financial health, its stock will go down, which means that its collateral will be less valuable, which means that its financial health will get worse, which means that its stock will go down, etc. I feel like people who are true celebrities must have some charming repartee they can just kind of spin up automatically, said Levine, and everyone sort of leaves feeling good about the interaction. This site requires JavaScript to run correctly. Then he went to Yale Law. I love the shtick I do, Elon keeps ruining my life. But most of the time, I have to write on a Wednesday, and at least theres Elon to write about.. It is not actually stock in FTX in fact FTX is a company and has stock and venture capitalists bought it, etc. ChatGPT Sounds Exactly Like Us. It read like a bedtime story about West Texas Intermediate Crude. Apple announces updated 14-inch and 16-inch MacBook Pros with M2 Pro or M2 Max, Wi-Fi 6E, 8K HDMI, up to 96GB of RAM, and more, starting at $1,999 and $2,499 Apple today announced the next-generation 14-inch and 16-inch MacBook Pro models with faster 5nm-based M2 Pro and M2 Max chips If everyone is worried about that, they will all take their money out of FTX. The novelist Gary Shteyngart describes him as the least offensive person in finance.. The worlds richest person followed through with his takeover of the social-media platform in October, after spending months trying to get out of it. 2: Dont borrow if you run a crypto business. 102 Production . He will come to you and say heres my Bitcoin back, Id like to withdraw my dollars. But you dont have his dollars, or not all of them; half of them are with Customer A. The approximately 150,000 people who subscribe to Money Stuff, a free newsletter written by Matt Levine, a columnist at Bloomberg, found an email in their inboxes with the subject line "There . You have Customer A who has Bitcoin and wants to borrow dollars, and Customer B who has dollars and wants to borrow Bitcoin. Money and stuff. His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150k subscribers. It is called The Crypto Story. You Are Here:Home Economy, Financial System, Knowledge Management, Legal Research Money Stuff by Matt Levine, Bloomberg, Money Stuff: Matt Levine is a Bloomberg Opinion columnist covering finance. Founders sell business risk in exchange for the cash they need to take bigger risks; venture capitalists buy that risk hoping it will one day transmute into reward. The SEC is sort of . I asked Mr. Levine for some examples, wanting to see exactly what shape this took, but he declined, because he considers these correspondents to be sources. Googles cloud computing unit on Thursday made sweeping changes to its leadership, including replacing its top U.S. Three years ago, as Microsoft sought to overtake Amazon and Google in cloud computing and artificial intelligence, the company made a major move. Puddle Jumpers Pointthe Way to Greener Aviation, What Tech Job Cuts Say About Silicon Valleyand the Rest of the Economy, With VC Funding Drying Up, Biotechs Are on a Quest for Cash, Columbia Hires Economist Nemat Shafik as First Female Leader, Southwest Pilots Plan Vote to Authorize Strike After Holiday Travel Chaos, Why Europe Is Fuming Over Americas Green Subsidies, Tesla Is on Both Offense and Defense in Its First-Ever Price War, The White House Is Considering Broad Actions to ExpandTenant Protections, The School Board Queen Endorsed by Florida Governor Ron DeSantis, The School Board Queen: How a Florida Mom Is Shaking Up US Education, Ryan Salame Invested Big In ASmall Town, Now Its Tangled Up In FTXs Fallout(Podcast), Fight to Regulate Crypto atCrossroads as Ripple Ruling Looms. I dont have that.. Also gambling on redemption and customer shrugs. But then one day a customer comes to you and says I have $10,000, but I am really bullish on Bitcoin, so I would like to buy $20,000 worth of Bitcoin. Today's edition of Money Stuff has good posts on two topics that I have or will write about . Every new edition of the newsletter goes directly to your inbox. Matt Levine's "The Crypto Story": Postscript . 2023 Bloomberg L.P. All rights reserved. High up is brushing tongue, a thought that occurred 150.0 times per year, and earplugs, at 100.0 times per year. Subscribe to get full access to the newsletter and website. (With one exception: Bank of America Corp. paid a bit more for being a bit more culpable.) But it is also a crypto token, which means that a customer can come to you and post $100 worth of FTT as collateral and borrow $50 worth of Bitcoin, or dollars, or whatever, against that collateral, just as they would with any other token. Research updates provided daily since 2002, with an emphasis on primary sources. Martin Shkreli tells Do Kwon Jail is not that bad.. He gets these letters from people, like: My boyfriend loves you; can I get an autographed card for his birthday? said his friend, the journalist Mary Childs. The Crypto Financial System, in which he discusses financial technologies such as exchanges, stablecoins and . You might just say no, thats dumb, Bitcoin is volatile, buying $10,000 of Bitcoin is plenty of excitement. (In fact Coinbase shut down margin trading in 2020.) Today's episode title: "Trivia, Smarts & a Drumline". It took Mr. Levine exactly one week to find his voice. 103 Production . FTX didnt have the money, and Bankman-Fried started calling around asking for a loan or a bailout. You dont have her Bitcoin, or not all of them anyway; some of them are with Customer B. I type really fast! Levine says. You can subscribe at. 8. He is an experienced journalist covering Wall Street, and is also one of the few people in the press who can both understand and explain complicated economic issues! Ordinarily the way that you will borrow it is by putting up the customers Bitcoin as collateral to your lender, just as the customer puts up its Bitcoin as collateral to you. Some of Mr. Levines readers write to him and attempt to mimic his style, as if he were J.D. He said he thinks he might not exist as a writer if he didnt have his audience, if he couldnt sit down on weekday mornings and write his Wall Street exegeses directly for them. In this description I have drawn on Twitter threads from Jon Wu, Lucas Nuzzi and an anonymous Wassie Lawyer, who make arguments along these lines, as well as this Substack post from Byrne Hobart. One other point here is that if this is the story, then it is not a liquidity crisis but a solvency one. but it is a lot like stock in FTX. 2023 Vox Media, LLC. But there are risks. The mysterious outage of Tweetbot and other third-party Twitter clients that began Thursday night was an intentional suspension, according to internal messages viewed by The Information. There is a timing problem. . Matt Levine. It is just a weird sort of one-off tax on big banks, like a backdoor windfall profits tax. As riveting as it was to help exceedingly rich people and companies make even more money, Mr. Levine was not happy. If they all take their money out, thats a bank run. That is, the problem is not a timing mismatch, in which FTXs customers asked for their cash back but FTX did not have enough ready cash because it had long-term but money-good loans out.
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