What we’re reading (11/9)
“Binance Walks Away From Deal To Rescue FTX” (Bloomberg). “Crypto exchange Binance reversed course on a rescue offer for FTX Wednesday, leaving the prominent digital firm with an uncertain future as it faces a shortfall of up to $8 billion, according to people familiar with the matter. Binance chose not to go ahead with the nonbinding offer following a review of the company’s finances, the exchange said. ‘In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,’ Binance said in a statement.”
“Is This Crypto’s Lehman Moment?” (New York Times). “FTX’s fall — including a failed attempt to sell itself to the rival crypto exchange Binance — may turn out to be the most gripping crypto narrative of the year, a “Succession”-level drama involving feuding billionaires, rumors of sabotage and high-stakes battles over the future of the industry. It’s a stunning, sudden fall from grace for one of the crypto world’s biggest celebrities. And it signals that the industry, already reeling from a brutal year of losses, may be in for even tougher times.”
“While It Waits For That Fee Information, SEC Decides To Have A Look At Private Equity Firms’ Messaging Hygiene” (Dealbreaker). “If the private-equity industry thought that Securities and Exchange Commission couldn’t get any meaner toward it, what with all of the insistence that they stop lying to their investors, refusing to be a bit more transparent with them, and passing on the bill for their own alleged misdeeds to them, well, as with the still-uncertain outcome of an election it invested a record $146.8 million in, they’re likely to be disappointed. Because having extracted a cool $1 billion from the world’s banks for failing to properly police and track their employees’ use of messaging apps on their personal devices, to say nothing of actually retaining those messages as required by law, Gary Gensler & co. have a sneaking suspicion there’s equally ripe fruit to be plucked from the hands of p.e. firms.”
“Tech CEOs All Made The Same Dumb Mistake, Thinking The Pandemic Boom Would Last Forever. Now Employees Are Paying The Price With Massive Layoffs.” (Insider). “[W]e're in the middle of what can only be described as a bloodbath, as the tech giants shed jobs by the thousands. This week, Meta (formerly Facebook) and Salesforce made major cuts, joining firms like Stripe, Snap, Netflix, and Oracle, which have all held their own layoffs recently. Those are all very different companies, but they have one thing in common: They grew fast as the pandemic drove demand for digital products and services — and were caught flat-footed when the combination of a return to (relative) normalcy, rising interest rates, and inflation brought the good times to a halt.”
“Short Sellers Faced Off Against Big-Name Hedge Funds in Carvana — And Won” (Institutional Investor). “The fate of the already beaten-down Carvana turned particularly dire in recent days, as its stock fell 50 percent after a longtime bullish analyst at Morgan Stanley looked at its earnings and pulled his rating on the stock, saying the company might be worth only $1 per share. The analyst, Adam Jonas, may have been late to realize Carvana’s problems: He had a $420 price target on Carvana as recently as March. But a plucky short seller had called the company sketchy as early as November of 2019 — pitting himself against the biggest names in hedge funds.”
