Matt Levine. 2: Dont borrow if you run a crypto business. Also a Carvana debt truce, a Tesla margin loan, title paper and AI Money Stuff. GSO had bought CDS protection that would pay off if Hovnanian defaulted. Why dont you lend me $10,000 so I can buy $20,000 of Bitcoin, so I can get more excitement? This is called a margin loan. The other is that FTX is closely associated with a hedge fund called Alameda Research. [1], Levine has received praise from the likes of Bill Ackman and Jim Chanos, with Ackman saying "His work is some of the most sophisticated analysis of what is really happening on Wall Street". Matt Levine writes Money Stuff, a brilliant daily financial newsletter on Bloomberg View. 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. Yet he gives the same impression of personalization to readers who know little about finance. The worst outcome is that you dont have enough capital, you go bankrupt, and Customer B does not get his money back. Tesla Inc. Chief Executive Officer Elon Musk sold at least $3.95 billion of the electric-vehicle makers shares just days after closing his buyout of Twitter Inc. Musk unloaded 19.5 million shares, according to regulatory filings on Tuesday in New York, his first disposals since August. Levine is known for his humorous, witty, deadpan writing style. And they both pay you interest. Conceivably, in theory, the latter price (what youd pay to not have oil now) could exceed the former (what youd pay to have oil eventually), leading to negative spot prices.. Here's a recap of the clues on Master Minds (Season 3) for Thursday, January 12, 2023 with host Brooke Burns. A statistical examination[7] that Levine cited in Money Stuff[8] showed that his newsletter has been released 4 minutes later each month since 2015 and has gotten progressively longer over time. Comments disabled. Here is a link. 3. Cameron Winklevoss accusing Barry Silbert on multiple counts of fraud and calls for his immediate removal as . Carl Tack. After graduating from Harvard in 2000, with a major in classics, Mr. Levine taught Latin at a high school in a Boston suburb. 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. Matt Levine's "The Crypto Story": Postscript . February 4, 2016. 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. Here is my author page, possibly. published Jan 18, 2018 8:39:36 AM, by Matt Levine (Bloomberg View) - Hovnanian. Realism and the Audiovisual Media is a major and entirely original contribution to contemporary scholarship on realism. It is a death spiral. Anyway it is still early and confusing but that seems to be the story of FTX. Also the Celsius bankruptcy estate and the FTX risk engine. Financial regulators are looking at the biggest private equity firms use of WhatsApp and other messaging apps for work, in a signal that the US is ramping up its push to police Wall Streets electronic communications. Money Stuff October 26, 2022 1:01 AM Subscribe. by Sabrina I. Pacifici on Sep 26, 2021. Lately my favorite read has been Matt Levine's Money Stuff articles from Bloomberg News. Also Elon Musk theories and insurance underwriting. A Columnist Makes Sense of Wall Street Like None Other (See Footnote), https://www.nytimes.com/2020/10/08/business/matt-levine-bloomberg.html, Matt Levine in Prospect Park in August. Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives. "[4][5], In 2013, Levine joined Bloomberg View (now Bloomberg Opinion) as an opinion columnist covering finance and business. And so, at 33, Mr. Levine sat down to write. The more people who sign up for accounts, and the more they trade, the happier Robinhood is. FTX didnt have the money, and Bankman-Fried started calling around asking for a loan or a bailout. 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But it is held in a custody account for you. 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. View stories on our mobile app and tune into our weekly podcast. Money and stuff. Salinger and they cant get over how Catcher in the Rye spoke directly to them. If your brother-in-law is a senior accounting executive at a public company, and that public company is secretly in negotiations to be acquired at a premium, and your brother-in-law is working on the deal, and you talk to him . One reason to borrow Bitcoin is to buy dollars, that is, to short Bitcoin: I borrow one Bitcoin, I sell it for $20,000, a week later Bitcoin drops to $18,000, I buy back the one Bitcoin for $18,000, I return it to my lender and I keep the $2,000. Part of the problem was that he couldnt really access a contempt for Wall Street titans. Journalist. Matt Levine is a columnist for Bloomberg News covering finance and business. [1], U.S. Court of Appeals for the 3rd Circuit, "A Columnist Makes Sense of Wall Street Like None Other (See Footnote)", "No One Who Works At Twitter Uses Twitter (with Matt Levine)", "HALB presents Matt Levine: Money Stuff and Life Stuff", "At Goldman, Pressure on Staff to Keep a Low Profile", "Bloomberg's Matt Levine Talks on Being a Finance Columnist", "Bloomberg's Matt Levine explains Wall Street, WeWork, and how to leave Goldman Sachs for a much lower-paying job", https://en.wikipedia.org/w/index.php?title=Matt_Levine_(columnist)&oldid=1122312552, Short description is different from Wikidata, Creative Commons Attribution-ShareAlike License 3.0, This page was last edited on 16 November 2022, at 23:13. No actual bank works that way. His answer, at least for now, is that the financial hole appears too deep. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Depends how you define "Blog Post". 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? Are all those debts coming due? Cheating will always be a gut-wrenchingly awful thing to do. Alameda has lots of FTT, and last week Coindesk reported on its balance sheet; the gist of that report was wow its balance sheet is mostly FTT: The financials make concrete what industry-watchers already suspect: Alameda is big. He is doing exactly what he has long wanted to do. Any institutional lending activity at Coinbase is at the discretion of the customer and backed by collateral. Historically not so much now, but until early this year anyway cryptocurrencies were volatile and exciting and people were jazzed to trade them a lot, so you could make a lot of money by just charging fees without doing anything else with customer assets. 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. 2023 Vox Media, LLC. Before long, Mr. Levine was charming readers who considered themselves experts in the subjects he was addressing, whether by distilling a subtle legal truth or simply explaining the significance (or absurdity) of something that had been out in the open yet overlooked. Within hours, he was forced to reconsider. A group of fans once made themselves T-shirts bearing the text of one of his tweets about cryptocurrencies. Today's episode title: "Trivia, Smarts & a Drumline". (Asked about the Etruscans, Mr. Levine said he thought Mr. Mystal might be referring to one of his favorite anecdotes from Herodotus. Hes a very smart guy who is very much not a lawyer, and that is very fruitful.. A bond plus CDS should be a (credit-)risk-free combination. There are web pages / articles I still read - I'll check out things by Derek Sivers, Patrick McKenzie/Bits About Money, Money Stuff by Matt Levine, all by local HN recommendations. Money and stuff. This is Matt Levine at Goldman, and also Matt Levine at Goldman.. October 7th, . Mayor pete may be a dunce, but he knows how to get money; . . 16. It is an FTT whale, and FTT is now worthless. Elon does some shit every day, and thats how I get the newsletter done, Levine says. Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. He just has so much else going on. Get Breaking News, Relevant Stories, and Special Event & Editorial Invites. By this standard, the last week of January 2021 was incredibly, incredibly good for Robinhood, an amazingly perfect week. ChatGPT Sounds Exactly Like Us. You can subscribe at this link, or read the archive at this link. 00:00. If you are a sophisticated modern crypto exchange like FTX, you will have automated 24/7 margining systems that automatically liquidate trades that have gotten too risky, so that only the rarest catastrophic market moves could get you in trouble. The last time Ilooked at Yahoo, in December, I calculated that the after-tax equity value of its actual businesses, outside of Alibaba and Yahoo Japan, was about $1.7 billion. However we do have the inevitable by a computer glitch in June 2020 but then failed to inform investors of risk to its business from IT failures. Binance is unlikely to follow through on its takeover of FTX, according to the person familiar, who wasnt authorized to publicly discuss the matter. The crude explanation of credit default swaps is that they are insurance against bonds defaulting. Today's Master Minds: Mark "The Beast" Labbett, LaKedra Pam, Ryan Chaffee. Now lets add a few more FTX-specific elements. The first source of tension occurs when the man gets onto the escalator in his building lobby and forgets what he has in a shopping bag hes holding. Hes the least offensive person in finance, said Gary Shteyngart, the author of Super Sad True Love Story. When Mr. Shteyngart was working on his latest book, Lake Success, a darkly comic novel about a hedge funder spiraling out of control, he asked Mr. Levine to review a draft for accuracy. [3][4] His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October 2020. Dealbreakers main writer, Bess Levin, had become an essential industry read with a caustic style that punctured Wall Streets most inflated egos, pointing out their contradictions and weaknesses. 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. Supermodel Kendall Jenner serving her own brand of tequila, 818, at 75 Main in Southampton when a customer attempted to tip her. 103 Production . Technology's news site of record. Also SBF's Substack and premium bond taxation. Robinhood Markets Inc. is in the business of getting people to trade stock (and options, and cryptocurrencies) on their phones. He delights in Musk, actually! Thanks! By uncritically mentioning crypto's multi-trillion dollar market cap 9 times, Levine, a Harvard educated financial expert, embeds a lie into the unconscious of the reader. One classmate, the journalist Elie Mystal, had a lot to say about Mr. Levine as an undergraduate that he was the valedictorian of their class; that he partied, too; that he once suggested applying Etruscan decision-making processes to the question of what to do next during a late night out but he placed a special emphasis on the footnotes. Money Stuff. He fetched his copy of The Histories and read it to me.). the SEC doesn't do that stuff. If you are a crypto exchange, you might issue your own crypto token. You won't have to worry about missing anything. Mr. Levines favorite subjects include insider trading statutes, bond-market liquidity and the ubiquity of securities fraud, but his columns are never boring. Matt Levine (born 1978) is a columnist for Bloomberg News covering finance and business. His column discusses current events in corporate finance and market. His column discusses current events in corporate finance and markets, with an insightful, nuanced lens and a dry wit. (It is also, at least sometimes, illegal.) 5. For starters, Binance executives quickly found themselves staring into a financial black hole -- a gap between liabilities and assets at FTX thats probably in the billions, and possibly more than $6 billion, according to a person familiar with the matter. As a legal/contractual matter, you may or may not have recourse against her you may or may not be able to sue her for the extra money but as a practical matter you are a crypto exchange, dont count on getting that money back. S&P. When I was an investment banker, one thing that I did was pitch convertible bond offerings to companies. Matt is one of the best writers today chronicling the ironies, paradoxes and absurdities of modern business and finance, wrote one of them, the hedge fund manager Jim Chanos, in an email. He doesnt write for the craft of it; hes never kept a journal, and has never attempted a short story or a novel. Oliver Keens asks: has our morality changed or are we just too deferential, confused or downright hypocritical to discuss it any more? Subscribe to get full access to the newsletter and website. Be part of a community of people who share your interests. Archive - Matt Levine. Matt Levine is a finance columnist for Bloomberg News. The US Securities and Exchange Commission and Commodity Futures Trading Commission have concluded that thats illegal, and fined all the banks for doing it, because they all did it. Whenever he got particularly frustrated he would fantasize about quitting and becoming a writer. Matt Levine has a specific tone to his articles, but I find that he does an incredible job of breaking down really . 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. 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. If thats the case, then a crash in the price of FTT will destabilize FTX. Matt Levine's Money Stuff: Not Everything Is Insider Trading - Bloomberg. The Corporation is for sale. There is even an RSS. Log in to access all of your BLAW products, last week Coindesk reported on its balance sheet. Why subscribe? A coverage banker an investment banker whose job was to know companies and advise them on financial topics would bring me to a meeting with the chief financial officer of one of her companies to talk about convertible bonds. . Click to read Matt Levine, a Substack publication with hundreds of readers. / Sign up for Verge Deals to get deals on products we've tested sent to your inbox daily. Thanks! 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. Dont use capital efficiently. He wants things to work in an engineer-y way, and he butts up against things that run in a lawyer-y way. You can imagine a lawyer trying to tell Musk, about his SEC settlement, for instance, that he ought to act in a good-faith way toward regulators and not piss people off. We have no gating for client loan recalls or withdrawals. Some possibilities: One popular, odd theory of Musks deal for Twitter is that he just wanted to diversify his Tesla holdings. But that was kind of fun! Levine has previously been a lawyer, investment banker, law clerk, and has written for a number of newspapers and financial sites. If everyone is worried about that, they will all take their money out of FTX. Also SBFs Substack and premium bond taxation. Levine remarks: "But it's striking how little effect the loss of $2 trillion of crypto wealth had on anything else.". Martin Shkreli tells Do Kwon Jail is not that bad.. Matt Levine is a Bloomberg Opinion columnist covering finance. You call her up and ask her for more money a margin call but she, sensibly, doesnt answer the phone. It took Mr. Levine exactly one week to find his voice. To find out more about the company that provides the tech for this newsletter, visit Substack.com. Nobody cares very much about how culpable each bank is, or how many bad messages it sent. ext. Expert Institute Award for Best Legal Tech Blog EDF Employees Challenge Chairmans Role in $10 Billion Buyout. Log in to access all of your BLAW products. . And a surprising subset of them will email me. It would go out of business in fairly short order. 4. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen & Katz, and a clerk for the U.S. Court of Appeals for the 3rd Circuit.". I joke that people want a lock of his hair.. Today's edition of Money Stuff has good posts on two topics that I have or will write about . Bloomberg, Money Stuff: "Matt Levine is a Bloomberg Opinion columnist covering finance. Much further down are sidewalks, followed by friends are unworthy of me, and way at the bottom, with a yearly occurrence factor of 0.5, birds regurgitate food and feed young with it and Kant, Immanuel.. If you read an upper-level math textbook, it starts from the dumbest thing, like, This is what a number is, he says. Levine took several months off in 2020 for parental leave after the birth of his second child. Colleen Levine . This is sort of a dumb joke but presumably a new generation is coming up just intuitively assuming that $1 = 1 = 1, which is very convenient. It is called The Crypto Story. Also a Twitter markdown and a SPAC CFO YOLOs GME. Sign up for Verge Deals to get deals on products we've tested sent to your inbox daily. If you are a crypto exchange, this is a nice opportunity. He used 100% of the proceeds of his previous sales to pay for Twitter, and now is selling more to pay his year-end tax bill on those previous sales. Mr. Levine was born in 1978 and grew up in the suburbs of Long Island. Actually thats the best outcome. He left that profession for law school and became a mergers and acquisitions lawyer for the law firm Wachtell, Lipton, Rosen & Katz. Clients of WPP-owned GroupM, the worlds largest ad-buying firm, have cut their spending on Twitter by between 40% and 50% since Elon Musk took control of the company in late October, according to people familiar with the matter. (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.) Coinbase says: Your funds are your funds, and your crypto is your crypto: Coinbase maintains internal systems, like a bank or a broker. 7. Binance has never used BNB for collateral, and we have never taken on debt. Also the fact that Customer C had all that FTT in the first place is not a great sign. It actually went below zero, meaning there were traders out there who would pay you to own oil. Mr. Levine wasnt always a darling of business media and finance Twitter. 2016, 2017 and 2018 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. To contact the author of this story:Matt Levine at mlevine51@bloomberg.net, To contact the editor responsible for this story:Brooke Sample at bsample1@bloomberg.net. The floor of the New York Stock Exchange in March, as the coronavirus continued to spread. It just takes the $100 out of your envelope and replaces it with 99, etc., always keeping exactly the right amount of money (in whatever currency you like that day) in exactly your envelope. 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. If the price of FTT goes down, then FTXs business is riskier, because it has less collateral. When I was an investment banker, one thing that I did was pitch convertible bond offerings to companies. 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. The solution to this is pretty much to have some extra cash some of your own capital to bridge these timing problems. Tyson Foods CFO Arrest Adds to Governance Challenges for Board. As a gift to Levines superfans, here is a compilation of him trying to take time off from his newsletter during the Twitter acquisition saga: I dont know if Levine will get stuck writing about Musk this Saturday, but I do believe hell be perfectly happy doing it. So you say, sure, fine, Ill take your $10,000 and put $20,000 of Bitcoin in your account. The tone, though, is anything but pedantic. 2016 Bloomberg View O1Z5LV6KLVRT (Bloomberg View) Yahoo!?? Thank you! known as one of the most powerful critics of the ''war on terror'' in the Bush era. If it's a $100 bond, you should get $100 back, no matter what. Learn more about a Bloomberg Law subscription. You keep the other 50 Bitcoins and $1 million as collateral. 7. The Businessweek story is structured like a math textbook, something Levine wants to do and sometimes cant do in his newsletter due to time and space constraints. That was the height of the GameStop Corp. meme-stock mania: The whole worlds attention was focused on the soaring price of GameStop stock, which was leading a lot of people to sign up for Robinhood and trade GameStop, and GameStop was very volatile and so Robinhood got paid a lot for trading it. So how could this happen? Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. That is not in itself a reason for a run on FTX! I type really fast! Levine says. You have loaned 50 of the Customer As Bitcoins to the Customer Bs, and $1 million of the Customer Bs dollars to the Customer As. She caught Levine off guard, and it took him a couple seconds to figure out how to respond. About. If everyone knows that you are in this situation that you have a lot of Bitcoin collateral and Bitcoin prices are falling people will expect you to have to liquidate your Bitcoin collateral, so they will expect Bitcoin prices to fall, so they will sell Bitcoin, which will cause Bitcoin prices to fall, which will cause your long-Bitcoin customers to default, which will cause you to liquidate Bitcoin at lower and lower prices, etc., until you are bankrupt. There, he wrote about the "deals, scandals, complexities and personalities of the financial services industry." Then he went to Yale Law. Matt Levine. It was like a combination of everything Mr. Levine had done before: Emailing friends, teaching, clerking, problem-solving on behalf of rich actors. Everyone knows this, which is why crypto exchanges and securities broker-dealers, who have the same basic business model spend most of their time thinking about risk management. (With one exception: Bank of America Corp. paid a bit more for being a bit more culpable.) It wasnt the case that the cost of a barrel had fallen to some scary-low number. My life has not been ruined by having to write about Elon Musk on Saturdays, the former mergers and acquisitions lawyer told me. Lets accept, for the purposes of this essay, that founders and venture capitalists are engaged in a simple trade. Southwest had IT issues with rebooking in summer 2020 as well, yet subsequently-filed SEC disclosures, outlining the usual litany . But who are the lenders? I wrote a story about crypto for Bloomberg Businessweek. Levine's coverage and analysis of the 2012 JPMorgan Chase trading loss was featured in the Columbia Journalism Review's anthology "The Best Business Writing 2013. 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. Mr. Levine deconstructs the topics in a way that is less like a conventional business column and more like he is providing an introductory course on the subject. Well, I can, using futures, but futures are just a synthetic form of the leveraged transaction in the text. The co-founders of Instagram, which Facebook Inc. bought in 2012, quit on Monday (Sep. 24) out of frustration with Facebook's efforts to make Instagram (which is good) more like Facebook (which is bad). Well, you have to borrow it too. You wont have to worry about missing anything. Also gambling on redemption and customer shrugs. FTT goes down, leaving FTX undercapitalized, leading to customer withdrawals, leading to ruin. Coinbase does offer a noncustodial wallet where you can trade on Coinbase and hold your Bitcoins yourself. chris@latitude38.com . saving money or hanging out which in itself is a fantastic offer. Every new edition of the newsletter goes directly to your inbox. Once I did a client call with him, Mr. Levine said. [3] [4] His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October . Matt Levine is a Bloomberg Opinion columnist covering finance. But the timing problem is also connected to a real economic risk. This week Zohar is joined by Matt Levine, Bloomberg Columnist and author of Money Stuff, to talk about the emotional life of the writer, what we can learn from the lyric poet Archilochus, the ethics of Jacob's trade with Esau, the tension between truth and politics in the workplace, the history of finance, and why delight is its own reward. The Crypto Financial System, in which he discusses financial technologies such as exchanges, stablecoins and . Ledgers, Bitcoin, Blockchain, in which he lays out the basics of Bitcoin's technology. [1], Levine has also written for The Wall Street Journal, CNN, The Billfold, and the Planet Money blog. Get back to work. The footnotes, he said, are the only way Mr. Levine can convey so much to his readers in a space as small as an email. Levine seems fond of Musk. Addded Sep 28, 2018. Mr. Levines favorite topics of coverage could be deadly boring; his columns are anything but. The idea of leaving Wall Street for a precariously capitalized blog would probably strike a lot of financiers as romantic, quaint, even idiotic. If all of the banks customers do this every day, then the bank makes plenty of money to pay for real estate and tellers and vaults and executive bonuses, without doing anything else with your money. 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. But then if the value of FTT drops to zero, you have nothing. 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? Also a Twitter stock offering, Voyager, crypto auditors, muni blockchain and Bored Ape theft. Sorry, comments are closed for this post. Some of the novels contents are conveyed in footnotes that go on for several pages, as well as long lists. One of the most successful and controversial athletes of his generation, Alex Rodriguez built a real estate empire over two decades. @matt . If one of the banks main assets is its own stock is a leveraged bet on its own stock then it is easy to bankrupt it by shorting its stock. 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. He began by combing through the complex legal battles stemming from the 2008 financial crisis over who deserved to be paid and who deserved not to pay, testing the strengths and weaknesses of the combatants claims. Mr. Levine writes about Wall Street in a way that makes its denizens feel as if he is writing for them. Levine's analysis in his column have been widely covered by other newspapers. 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. But your competitors probably offer loans, and it is tempting for you to do it too. The problem with this is that it is wrong-way risk. 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. I write the Money Stuff newsletter at Bloomberg Opinion. 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! I mean, theres a little bit of differentiation, but not too much. Futures, risk, fraud, securities fraud and Wirefraud. If everyone takes their money out at once, you have the money. Or something; you might set the margin requirements higher or lower, letting customers borrow 25% or 50% or 95% of the value of their FTT token collateral. If you own a bond, and you buy CDS, and the bond defaults, you should be made whole. Anyone can read what you share. The popular messaging app Telegram has brought in so much money from a small group of private investors that it is calling off a planned sale of cryptocurrency to the wider investing public, according to a person familiar with the matter. This makes FTT kind of like stock in FTX: The higher FTXs profits are, the higher the price of FTT will be. You have Customer A who has Bitcoin and wants to borrow dollars, and Customer B who has dollars and wants to borrow Bitcoin. I dont want to sell my Bitcoin, because I am a true believer and also do not want to realize gains for tax purposes. But even if I post, like, $30,000 of collateral, there is still the risk that Bitcoin goes above $50,000, etc. Now, he's accelerating his move from player to team owner. Your accounts show that you owe clients 100 Bitcoins and $2 million and 150,000 FTT, and they owe you back 100 Bitcoins and $2 million, and you have 150,000 FTT of collateral, so everything balances. Money Stuff by Matt Levine A daily take on Wall Street, finance, companies and other stuff. "I write a lot about people who have gotten in trouble with the SEC or the Justice Department. 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. One of the most successful and controversial athletes of his generation, Alex Rodriguez built a real estate empire over two decades. You just have to call up Customer C and say hey we need all those dollars and Bitcoins back. But Customer C will not want to give you back all those valuable dollars and Bitcoins in exchange for now-worthless FTT. The fine is $200 million per bank (SEC and CFTC combined). Customer B owes them to you ultimately youre good for it but you dont have them now. But selling billions of dollars of Tesla stock to fund a weird quest to buy Twitter would I mean, be a distraction at least. He used the disputes to explain how certain segments of the financial system really operated. But there are risks. Almost all the big investment banks paid the same fine, and there was a lower tier of fine for smaller banks. Also private-market marks, ransomware ethics, Coinbase KYC and Celsius crypto ownership. And that that went wrong in roughly the way I have outlined. Twitter has to pay more than $1 billion a year to service its debt and seems to be driving away advertisers; maybe Musk is planning to pay its bills for a while, and needs this cash to do that. On April 20, something occurred that was unprecedented in the history of financial markets: The price of oil went negative. The main problem, actually, was that he was working on a 40,000-word Bloomberg Businessweek story about cryptocurrency. [1][4], In 2011, Levine started writing about economics and finance for the financial news site Dealbreaker. One other point here is that if this is the story, then it is not a liquidity crisis but a solvency one. An icon used to represent a menu that can be toggled by interacting with this icon. Now you have 150,000 of FTT, worth $3 million, as collateral (and no Bitcoins or dollars). You come to the bank with $100 in paper bills, and you deposit it in the bank, and the bank takes your paper bills and sticks them in an envelope with your name on it. articles a month for anyone to read, even non-subscribers! So whereas the basic model of Coinbase is they buy Bitcoin for you and put it in an envelope, the basic model of FTX has to be they lend you money to buy crypto and then make use of your crypto to get the money. In financial terms, they have to rehypothecate your collateral; you cant expect them to just keep it in an envelope if theyre lending you the money to buy it. I'm here to make sure you don't give up, because I think there's always something that's working and this show is all about helping you identify those trends and learn to find them on your own. Twitter filed its lawsuit against its now-owner, Robloxs new Creator Hub could make things a lot easier for developers. Some of Mr. Levines readers write to him and attempt to mimic his style, as if he were J.D. ; What Does It Mean?, in which he discusses generalizations of Bitcoin, such as Ethereum. One group of news consumers got a more comprehensible take. Programming note: Money Stuff will be off for the rest of the week. Real banks take deposits but dont keep the money in envelopes; they lend it out. Never use a token you created as collateral suggests, to me, that FTX accepted its FTT token as collateral, probably from Alameda, probably in exchange for borrowing assets that it owes to customers. Yet we seem more relaxed than ever when the great and good have done it. Matt Levine: No, I agree. There has been a blow-up this week on the internet about Facebook's apps. In modern US stock markets, buybacks are the principal way of returning profits to shareholders, meaning that the connection between stock prices and corporate profits is in practice when there are profits the company buys back stock just like with FTT. Your accounts show that you owe clients 100 Bitcoins and $2 million, and that they owe you back 50 Bitcoins and $1 million, and you have 50 Bitcoins and $1 million on hand, so everything balances. If the price of Bitcoin falls by 90%, Customer B will be thrilled. There was already a regular financial system, a set of abstractions and procedures built up on real-world stuff that allowed people to do things like exchange their labor for money and the money for sandwiches, or get a loan to buy a house, or start a technology business in their garage . 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. (He also says that if he were to take more time to write, hed use fewer words.). It was a cleareyed, colorful distillation of something almost no one had contemplated. Everybody used WhatsApp and now everybody writes checks. Oil is voluminous and oozy and poisonous and flammable and smelly, Mr. Levine wrote, beginning an exposition on monthly oil futures contracts. "I write a lot about people who have gotten in trouble with the SEC or the Justice Department. You have no Bitcoins to give to the customers to whom you owe Bitcoins, no dollars to give to the customers to whom you owe dollars. Today's challengers: Caroline, Matt, Indra. [1] Levine has previously been a lawyer, investment banker, law clerk, and has written for a number of newspapers and financial sites. ChatGPT Sounds Exactly Like Us. 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 Hi, I'm Matt Levine. Here's a recap of the clues on Master Minds (Season 3) for Wednesday, January 11, 2023 with host Brooke Burns. I have a daily newsletter called Money Stuff, which you can read here and subscribe to here. The SEC may have more power over airlines than Secretary Buttigieg.However the SEC has not (yet) gone after Southwest. The documents didnt indicate that the transactions were pre-planned. He goes into the balance sheet including the Serum tokens. Used with permission. So really it is like I want to trade dollars for euros and you want to trade euros for dollars so the bank takes $100 from me and gives $99 of it to you (and keeps $1) and takes 100 from you and gives 99 of it to me (and keeps 1). Barclays Joins Rivals in Culling Investment-Banking Staff. But like they say, . Levine has previously been a lawyer, investment banker, law clerk, and has written for a number of newspapers and financial sites. As Matt describes it in his bio, he writes about the financial industry on the internet, an By 2011, Mr. Levine had decided to leave Goldman. If they all take their money out, thats a bank run. Sales Execs Depart in Shakeup as Profits Remain Elusive, By Jon Victor, Kevin McLaughlin and Amir Efrati, Microsoft + OpenAI: Inside Techs Hottest Romance, By Erin Woo, Aaron Holmes and Jessica E. Lessin, What OpenAIs Bonkers Deal Structure Means For Silicon Valley, Musks Twitter Intentionally Suspended Tweetbot, Third-Party Apps, Messages Show, Microsoft Prepares to Lay Off Thousands of Employees, Including in Azure-Related Units, Twitters Efforts to Court Advertisers Turns Them Off. Mr. Levine, of course, is not a conventional writer. When I asked him what he would do if the internet went away tomorrow, he responded quickly. Before the price of Bitcoin drops too far, you will be calling up Customer A for more margin, and if she doesnt answer the phone you will liquidate her position to pay back the loan you made. [1][4] The newsletter has close to 150k subscribers making it one of the most popular newsletters on Wall Street. I just hope he doesnt get poached by some deep-pocketed mainstream news organization which will end up stifling the very thing hes best at.. And all of this is self-fulfilling: If you are worried about FTXs business, then the price of FTT should go down. Which he lays out the basics of Bitcoin & # x27 ; s & amp ; P. I!, because it has less collateral wrong-way risk how certain segments of the and! The same impression of personalization to readers who know little about finance scandals, complexities personalities... Yet we seem more relaxed than ever when the great and good have it. The bond defaults, you should get $ 100 bond, and he butts up against things that run a! 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That FTT in the first place is not in itself is a finance columnist for Bloomberg Businessweek about! Keens asks: has our morality changed or are we just too deferential, confused or hypocritical. In summer 2020 as well as long lists Billion Buyout have enough capital you.
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