Crypto exchange FTX bails out lending platform BlockFi [FT]
[FTX CEO Sam Bankman-Fried] announced on Tuesday that his crypto trading platform FTX has extended a $250mn loan to BlockFi. Just last week, Bankman-Fried helped crypto broker Voyager Digital pull back from the brink with a loan that totalled about $485mn in cash and bitcoin…. “If you have a few ‘Lehman’ events at the same time, concentrated, then it could impose crypto winter for a very extended period of time. FTX has the balance sheet to support these businesses, and it’s in their long-term vested interest to see this ecosystem survive.”
The Fire Burning Beneath Crypto’s Meltdown [WSJ]
The cryptocurrency implosion currently under way followed rampant creation of new digital money, something that never ended well in the traditional world either.
The question for crypto enthusiasts is which lesson they should take from history. Are bitcoin and other crypto tokens crashing because of the usual excesses that accompany advances in finance? Or do they have the sort of fundamental flaws that will see them join cowrie shells and Sweden’s 20 kg (44 pound) copper coin as historical relics?
Stock Rally Follows Biggest Hedge-Fund Shorting Binge Since 2008 [Bloomberg]
There are signs that short covering may be at work during Tuesday’s market bounce. As the S&P 500 climbed more than 2% as of 12 p.m. in New York, a Goldman basket of the most-shorted stocks surged by almost twice that…. “Managers increased micro and macro hedges amid the sharp market drawdown,” Goldman analysts including Vincent Lin wrote in a note. “With the sole exception of staples, all sectors saw increased shorting.”
The Ferocious, Well-Heeled Battle Against the SEC’s New Rules on Hedge Fund Activism [II]
That effort is the brainchild of Frank Partnoy, a law and finance professor at the UC Berkeley School of Law, who decided the SEC’s new aggressiveness was a good reason to create a nonpartisan, nonprofit institute — he named it the International Institute of Law and Finance — that could influence policy by convincing other professors to sign on to comment letters that he, and his colleague Robert Bishop, would draft…. The chairman of the institute’s board is Stephen Fraidin, a corporate attorney and partner at Cadwalader who has also long worked for Pershing Square. He serves on the hedge fund’s advisory board and was the firm’s vice chairman between 2015 and 2018…. Ackman told II that he has donated to the institute — which is not required by law to disclose its backers — but had no role in its creation.
Apple Isn’t Priced for a Recession [WSJ]
Apple’s shares are currently valued at 21 times forward earnings, a 38% premium to the S&P 500. That is 29 percentage points above Apple’s five-year average premium to the index—a wider gap relative to history than any of its trillion-dollar tech peers, Microsoft, Amazon and Google-parent Alphabet…. Apple may not be as immune to a sharp global downturn as many seem to think…. Morgan Stanley… warned last week that 55% of high-income respondents in its most recent consumer survey expect to cut back spending on electronics in the next six months because of inflation.
South Korea puts crypto company Terraform Labs’ staff on no-fly list [Reuters via CNBC]
TerraUSD’s paired token, Luna, plunged in value last month, sparking a sell off and igniting a chain reaction that has pushed some major institutions in the crypto sector into severe difficulties…. An official at South Korea’s Supreme Prosecutors’ Office, who declined to be named as is customary in South Korea, said multiple Terraform Labs staff had been put on a no-fly list.