SEC's "WhatsApp" Investigation Hits PE Firms

SEC’s WhatsApp Probe Reaches Into PE With Apollo, Carlyle, KKR

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 Street’s electronic communications.

Apollo Global Management Inc., Carlyle Group Inc. and KKR & Co. said in regulatory filings this week that they received letters from the Securities and Exchange Commission on their use of electronic messaging for business.

Binance to Buy FTX in Megadeal of Crypto Exchanges

The cryptocurrency world was rocked on Tuesday as one of the largest exchanges for digital currencies, seemingly on the verge of collapse, was bailed out by a major rival in a deal that underlined the perils of the industry’s volatility.

Binance, the world’s largest cryptocurrency exchange, said it had reached an agreement to buy its competitor FTX, which struggled to meet a surge of withdrawals in recent days as the crypto market teetered on the edge of another meltdown. The size of the acquisition couldn’t immediately be determined, but the privately held FTX was once valued at $32 billion.

The emergency deal-making highlighted the persistent instability of the crypto industry, which was buffeted this spring by a $2 trillion crash that drained the savings of many amateur investors….

Binance’s Zhao vanquishes crypto rival Bankman-Fried with FTX deal

The billionaires who run the two largest crypto trading platforms have set themselves apart from one another at every turn, often acidly.

That rivalry reached a surprise conclusion on Tuesday. Not long after Zhao posted a tweet criticizing FTX’s crypto tokens and lobbying efforts, Bankman-Fried unexpectedly announced that Binance probably would acquire FTX. “I’m sorry I didn’t do better,” Bankman-Fried later wrote in a letter to investors.

The maneuver takes Zhao — CZ, as he’s widely called by industry insiders — from an influential figure little known by the general public to the crypto world’s undisputed king.

The SEC’s enforcement regime may soon undergo a constitutional revamp

Cochran and Jarkesy threaten the viability of the SEC’s home courts. But the reported death of the SEC’s enforcement regime at large has been greatly exaggerated. Before the enactment of the Dodd-Frank Act in 2010, the SEC could bring securities fraud actions against non-registered parties only in federal court. While the SEC increased its use of administrative proceedings post-Dodd-Frank, the SEC has resorted more often to litigating in federal court post-Lucia. And many administrative proceedings have historically been follow-on actions where the SEC seeks additional penalties based on facts already established in a civil or criminal action.

Until the Supreme Court has the last word on the possible constitutional defects in the SEC’s enforcement regime, respondents facing the SEC and other agencies with comparable ALJs should preserve the rights the Fifth Circuit has recognised, both as to the timing of constitutional challenges and the substance of those challenges.

Crypto-Traceability: Don’t Believe The Hype

Yesterday’s exciting news from then U.S. Department of Justice (DOJ) regarding the seizure of over 50,676 bitcoin hidden in the home of Silk Road defendant James Zhong was certainly worthy of praise and celebration, especially given the tremendous effort by the DOJ together with Criminal Investigation’s Western Cyber Crimes Unit of the Los Angeles Field Office of the Internal Revenue Service (IRS), and the Athens-Clarke County Police Department in Athens, Georgia.

All of over LinkedIn, Twitter and in the headlines, crypto-enthusiasts celebrated their wares, boasting how crypto has evolved into a boon for law enforcement and not a hindrance. But they are all dead wrong.

Yes, DOJ, IRS and the rest deserve praise and applause for their efforts — which were exceptional and worthy of congratulations. But Zhong’s bitcoin seizure was a unique situation and far from the norm. Crypto remains a horrendous plague that has ushered in a high-tech crime wave of epic proportions and presents extraordinary challenges for law enforcement to trace and to recover.

At least for now, the stark reality is that most criminals who use crypto to facilitate their crimes will likely never get caught and their ill-gotten crypto will likely never be recovered. That is axiomatic — and to state otherwise is not just irresponsible, it’s just plain false.

The Drama’s Back in Crypto, and Nobody’s Happy About It

The incident also demonstrates the importance of enduring and trusted institutions to markets. Any asset class needs a few clear rules and some kind of referee who actually enforces them, or eventually people will stay away. Cryptography was supposed to inject the necessary security to each transaction, and obviate the need for trusted institutions — but as the asset class matures that’s getting harder and harder to sustain. Here’s Sylvia Jablonski, chief investment officer at Defiance ETFs, who explains why this move is bringing investors a different kind of anxiety:

“Prior to today, FTX was the JPMorgan of banking, in the crypto world… While there have been several bankruptcies in the crypto space, this one hit particularly hard. The issue is that there is now this high level of uncertainty about the system itself. Longer term, I think investors who are bullish on crypto and the value of blockchain technology will continue to hold on to assets, or even gather additional crypto currency exposure as prices have slipped, but the lack of visibility around these recent collapses by major players in the space does not bode well investor confidence.”

Robinhood Gave Customers Access to IPOs That All Flopped

A Bloomberg analysis of the program, IPO Access, suggests it has been a flop for investors so far.

he initiative, which allowed users to buy shares of buzzy companies like Sweetgreen Inc. and Allbirds Inc. before they debuted on stock exchanges, resulted in losses for customers who still hold the shares. In an already dismal market for IPOs, those offered by Robinhood have performed even worse.

All 23 IPOs that Robinhood opened up to its customers have declined by double-digit percentages since the stocks debuted. Five — Iris Energy Ltd., Sono Group NV, Vaxxinity Inc., Stronghold Digital Mining Inc. and Argo Blockchain Plc — lost at least 89% of their value.