You can subscribe at this link, or read the archive at this link. Log in to access all of your BLAW products. Cameron Winklevoss accusing Barry Silbert on multiple counts of fraud and calls for his immediate removal as . 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. Mr. Levines favorite subjects include insider trading statutes, bond-market liquidity and the ubiquity of securities fraud, but his columns are never boring. 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. [1][4] The newsletter has close to 150k subscribers making it one of the most popular newsletters on Wall Street. A bond plus CDS should be a (credit-)risk-free combination. And that that went wrong in roughly the way I have outlined. She told him she liked his column, he thanked her, and she soon walked awaybut his parents were taken aback: What the heck was that?, Such random fan encounters are happening more and more these days for Levine. The way it works is roughly that you open an account and send dollars to Coinbase, and then you tell Coinbase Id like to buy some Bitcoin with those dollars, and Coinbase buys Bitcoin and holds on to it for you and charges you a fee for that transaction. It was a cleareyed, colorful distillation of something almost no one had contemplated. Thu, 06 Aug 2020. Are all those debts coming due? Mr. Levine writes about Wall Street in a way that makes its denizens feel as if he is writing for them. If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Sign up for Verge Deals to get deals on products we've tested sent to your inbox daily. 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. 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. Download. Matt Levine is a Bloomberg Opinion columnist covering finance. If thats the case, then a crash in the price of FTT will destabilize FTX. Above the Laws sister blog Dealbreaker, focusing on Wall Street gossip was hiring. I encouraged him to use his own voice, Ms. Levin said. Dylan LeClair / @dylanleclair_: Heavy hitting stuff. 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. Money and stuff. 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. matt levine is a columnist for Bloomberg News covering finance and business. Recommended reading: Matt Levine's Money Stuff. 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 . 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. DLA Piper > The Legal 500 Rankings Corporate and commercial > Corporate and commercial: Birmingham Tier 1 Known for its 'excellent transactional capabilities', the Birmingham We have talked a few times recently about Hovnanian Enterprises Inc., which got favorable financing from Blackstone Group's GSO Capital Partners through some credit-default-swap market machinations. But selling billions of dollars of Tesla stock to fund a weird quest to buy Twitter would I mean, be a distraction at least. And all of this is self-fulfilling: If you are worried about FTXs business, then the price of FTT should go down. ; What Does It Mean?, in which he discusses generalizations of Bitcoin, such as Ethereum. Read deeply reported stories from the largest newsroom in tech. 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. 102 Production . He seasoned his analyses with humor and a nerdy, confident tone. There was a joke told by Rodney Dangerfield about trying to catch your profile as you walk by a store window, thinking that you could, you see yourself, if only for a nanosecond, in a state of not being aware that you're being observed. After graduating from Harvard in 2000, with a major in classics, Mr. Levine taught Latin at a high school in a Boston suburb. The SEC may have more power over airlines than Secretary Buttigieg.However the SEC has not (yet) gone after Southwest. On April 20, something occurred that was unprecedented in the history of financial markets: The price of oil went negative. This means that funds are available to our customers 24 hours a day, 7 days a week, 365 days of the year. Not for dummies. By on December 16, 2021, 10:24 am. He was an editor of Dealbreaker, an investment banker at Goldman Sachs, a mergers and acquisitions lawyer at Wachtell, Lipton, Rosen . 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. 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 Theres Nowhere to Put the Oil.. Oliver Keens asks: has our morality changed or are we just too deferential, confused or downright hypocritical to discuss it any more? I type really fast! Levine says. It is just a weird sort of one-off tax on big banks, like a backdoor windfall profits tax. If the price of FTT goes down, then FTXs business is riskier, because it has less collateral. 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. Mr. Levine says the book may have changed his life. Has it been borrowing elsewhere against FTT? Expert Institute Award for Best Legal Tech Blog When FTX.com, one of the largest crypto exchanges, was instantaneously vaporized yesterday, Coinbase put out a statement, the gist of which was dont worry, we are not going to be instantaneously vaporized. The part that I want to focus on is this paragraph: There cant be a run on the bank at Coinbase. Anyway it is still early and confusing but that seems to be the story of FTX. His newsletter, Money Stuff, is one of the most popular on Wall Street with over 150,000 subscribers as of October 2020. 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.. "[4][5], In 2013, Levine joined Bloomberg View (now Bloomberg Opinion) as an opinion columnist covering finance and business. Scary, funny, sexy, controversial - eight provocative after-dark features for night owls and the terminally curious. It is concerned with western North American region mysteries, but the conference itself travels worldwide, having been held in Canada and the United Kingdom, as well as different parts of the United States. 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. Carl Tack. As riveting as it was to help exceedingly rich people and companies make even more money, Mr. Levine was not happy. ext. The worst outcome is that you dont have enough capital, you go bankrupt, and Customer B does not get his money back. Now, he's accelerating his move from player to team owner. Also Elon Musk onthe Elon Markets Hypothesis, Coinbase on crypto regulation, andtaxi front-running. How Is That a Good Thing? Eventually he called CZ himself, and they announced a non-binding letter of intent for Binance to acquire FTX and make customers whole. "I write a lot about people who have gotten in trouble with the SEC or the Justice Department. Bloomberg's web site requires a subscription but you can also get the Money Stuff articles as an occasional email.It arrives at most once per day. (Asked about the Etruscans, Mr. Levine said he thought Mr. Mystal might be referring to one of his favorite anecdotes from Herodotus. But the other weird thing about this bank is that, every day, you come in and say hey Id like to exchange my dollars for euros or my euros for pounds or whatever, and each time you do that the bank charges you a dollar. 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. But sometimes market moves are catastrophic, and in particular, sometimes securities broker-dealers and crypto exchanges will have run on the bank risks. Yes. Its neurotic, commenting on the nature of modernity itself. saving money or hanging out which in itself is a fantastic offer. 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. There, he wrote about the "deals, scandals, complexities and personalities of the financial services industry." But one general point is that while some customers will want to borrow dollars to buy Bitcoin, other customers will want to borrow Bitcoin. 2. Thank you! And . The problem is that FTX took its customers money and traded it for a pile of magic beans, and now the beans are worthless and theres a huge hole in the balance sheet. Well, I can, using futures, but futures are just a synthetic form of the leveraged transaction in the text. Im doing a bit, he says. Your dollar loan to Customer A is now underwater: You loaned her 50% of the value of her Bitcoin, but Bitcoin fell by 90%, so she owes you more than her collateral is worth. 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. To contact the author of this story: Matt Levine at mlevine51@bloomberg.net. You take some of Customer As Bitcoin and lend it to Customer B, and you take some of Customer Bs dollars and lend them to Customer A. It is a death spiral. Martin Shkreli tells Do Kwon Jail is not that bad.. So the more people who sign up for Robinhoods service, and the more they trade, and the more volatile the stocks that they trade are, the more money Robinhood makes. One is that FTX is an exchange for levered traders, offering products like perpetual futures and leveraged tokens that build in margin lending. Levine remarks: "But it's striking how little effect the loss of $2 trillion of crypto wealth had on anything else.". Barclays Joins Rivals in Culling Investment-Banking Staff. We will never repurpose your funds: We do not lend or take any action with your assets, unless you specifically instruct us to. You have 100 Customer As who are long Bitcoin on margin: They each have 1 Bitcoin in their accounts and owe you $10,000. Today's episode title: "Trivia, Smarts & a Drumline". 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 was born in 1978 and grew up in the suburbs of Long Island. Coinbase always holds customer assets 1:1. [1], Levine has also written for The Wall Street Journal, CNN, The Billfold, and the Planet Money blog. Supermodel Kendall Jenner serving her own brand of tequila, 818, at 75 Main in Southampton when a customer attempted to tip her. When I was an investment banker, one thing that I did was pitch convertible bond offerings to companies. Some of Mr. Levines readers write to him and attempt to mimic his style, as if he were J.D. But that was kind of fun! So much business is about personal relationships, and texting and WhatsApp can feel more personal than your firm email account. But who are the lenders? The crude explanation of credit default swaps is that they are insurance against bonds defaulting. 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. 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. The Difference Is That Biden Gave the Documents Back, That Giant Sucking Sound Is theExit From US Stocks, Europe Is Winning the Winter War by Sheer Luck, For Ukraine to Win the Maneuver War, Germany Must Move First. Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. The idea of leaving Wall Street for a precariously capitalized blog would probably strike a lot of financiers as romantic, quaint, even idiotic. Within hours, he was forced to reconsider. Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. Matts the perfect complement to Bess, Felix Salmon, another financial blogger, wrote in October 2011. . But it would not go out of business that minute. 1. They may be the only entertaining words a financial markets professional reads all day. 3. You know Im good for it: If I dont pay you back, you can sell my Bitcoin and pay yourself back from the proceeds.. FTT is a bet on FTXs future profits. GSO had bought CDS protection that would pay off if Hovnanian defaulted. I felt both that the job was bad and that I was bad at it, he said. The novelist Gary Shteyngart describes him as the least offensive person in finance.CreditBenjamin Norman for The New York Times. 5. Also WWE governance, VC shame and the origins of the jury. ChatGPT Sounds Exactly Like Us. tt , , , ' , J with the who s who of the sailing scene? Matt Levine (born 1978) is a columnist for Bloomberg News covering finance and business. He is doing exactly what he has long wanted to do. You can subscribe at this link, or read the archive at this link. but it is a lot like stock in FTX. Terrible. And in M&A, everything happens on the weekend. You have to pay Customer B out of your own capital, and you dont get it back from Customer A. Youve just lost money. Then he went to Yale Law. His newsletter is Money Stuff. 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. 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. And now as a writer, he makes sense of it for the rest of us. High up is brushing tongue, a thought that occurred 150.0 times per year, and earplugs, at 100.0 times per year. This makes FTT kind of like stock in FTX: The higher FTXs profits are, the higher the price of FTT will be. He makes readers feel in on the savage joke that is late capitalism. One group of news consumers got a more comprehensible take. It actually went below zero, meaning there were traders out there who would pay you to own oil. 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.. That 0.5 Bitcoin is, in the general case, held by Coinbase; it has possession of the Bitcoin. 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. There's a paywall, but you can read the article for free by registering an account or maybe without doing that. 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. For the rest of you: Money Stuff will be off tomorrow and Monday, back on Tuesday. I wrote a story about crypto for Bloomberg Businessweek. Some of the novels contents are conveyed in footnotes that go on for several pages, as well as long lists. And in fact Coinbase does have other revenue models besides charging trading fees, some of which are more run-vulnerable than what I say in the text. Part of the problem was that he couldnt really access a contempt for Wall Street titans. Zhao himself admits there was no master plan to take over FTX. Colleen Levine . S&P. When I was an investment banker, one thing that I did was pitch convertible bond offerings to companies. Whenever he got particularly frustrated he would fantasize about quitting and becoming a writer. My life has not been ruined by having to write about Elon Musk on Saturdays, the former mergers and acquisitions lawyer told me. Now lets add a few more FTX-specific elements. Coinbase Global Inc. runs a cryptocurrency exchange. 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. Please Click the Donate button and support BeSpacific. Lets start with Coinbase. Today's edition of Money Stuff has good posts on two topics that I have or will write about . Technology's news site of record. Never miss an update. 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.". Left Coast Crime is an annual conference organised by mystery fiction fans for mystery fiction fans, first held in San Francisco in 1991. Billionaires read Money Stuff. [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". 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. Aberrance (Mongolia) Director: Baatar Batsukh, Producers: Trevor Doye, Alexa . But FTX doesnt have their money; it has FTT, and a loan to Alameda. 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. 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