Welcome to The Everything App: Twitter launches stock and crypto trading ๐ธ; A mind-blowing FTX report ๐ฑ; Ethereum's upgrade is finally complete ๐
You're missing out big time... Weekly Recap ๐
๐ Hey,ย Linas here!ย Welcome back to a ๐ weekly free editionย ๐ of my daily newsletter. Each day I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & most important money movements, itโs the only newsletter you need for all things when Finance meets Tech.
If youโre not a subscriber, hereโs what you missed this week:
Stripeโs slowing growth suggests a harsher reality for all payment firms ๐ [with lots of bonus reads + a deep dive into Adyen, the real payments beast]
Game-changer: Visa just made P2P payments interoperable ๐คฏ๐ณ [this is the biggest payments development this year!]
Affirm + Stripe is a brilliant illustration of why ecosystems are crucial in FinTech ๐ธ
India continues to disrupt financial services globally ๐ฎ๐ณ๐ณ
Coinbase considers Bitcoin Lightning Network integration โก๏ธ
WhatsApp is using Brazil to test business payments ๐ง๐ท๐ณ
As for today, here are the 3 FinTech stories that were changing the world as we know it. This week was yet another super thrilling week in FinTech, so make sure to check all the above stories.
Welcome to The Everything App: Twitter launches stock and crypto trading ๐ธ
The launch ๐ Elon Musk moves fast! Twitter will launch stock and digital asset trading in partnership with FinTech unicorn eToro ๐ณ
More on this ๐ Starting today you will be able to view market charts and buy/sell stocks, cryptocurrencies, and other assets.
Social investing platform eToro will be offering trading services of crypto and other assets directly to Twitter users via an arrangement with the social media giant.
The feature will provide Twitter users searching for "$Cashtags" such as $TSLA or $BTC with real-time prices for cryptocurrencies, stocks, and other assets, and direct them to the eToro platform to invest in them.
ICYMI: The beginnings of the most powerful FinTech company in the world ๐ณ
โ๏ธ THE TAKEAWAY
What it means & whatโs next? ๐ค This is the first notable deal for the social media giant since Musk took over as CEOย and marks Twitter's first real expansion into Finance. Looking at the big picture, this should serve as a good pilot to test how important Twitter is to the retail investing community beyond just being a public town hall. If it goes well, I'm pretty sure Elon will acquire eToro. Especially given that their last valuation of $3.5 billion is very reasonable (we must remember that a few months ago eToro raised $250M at a $3.5B valuation, a huge drop from the failed SPAC dealย that valued them at around $10B). And that would mark the birth of X, the Everything App.
P.S. many asked why eToro and not say Robinhood HOOD -0.25%โ? Hereโs why:
Bonus: Robinhood wants to be with you until your Last Dance๐บ [deep dive + 2 more reads]
The future of investing is social? Shares thinks so ๐ธ [Twitter + eToro will basically test this hypothesis]
A mind-blowing FTX report ๐ฑ
New report ๐ FTX's new management has released a crazy new 45+ pages report that delves into the failures leading up to the exchange's bankruptcy.ย
Letโs take a quick look because itโs nuts. Literally.
More on this ๐ Here are the 10 most shocking takeaways highlighting how badly FTX was run:
Hubris, incompetence, and greed were some of the root causes that led to FTX collapsing as quickly as it had grown.
Sam Bankman-Fried (SBF), Gary Wang, and Nishad Singh controlled almost every aspect of FTX โ despite the fact they were fresh out of college and had little experience in risk management and running a business.
One executive stated that if Nishad got hit by a bus, the whole company would be done. In other words, the concentration of power was crazy.
Anyone who tried to challenge SBF was rebuffed. In one case, the President of FTX US was told to apologize to SBF, and his bonus was cut after he raised basic governance questions.
56 FTX entities did not produce financial statements of any kind. 35 entities used QuickBooks as their accounting system and relied on a mix of Google Docs, Slack, shared drives, and Excel spreadsheets to manage assets and liabilities.
In internal messages, SBF described Alameda Research as "unauditable," writing:ย We sometimes find $50 million of assets lying around that we lost track of; such is life.ย
Expenses and invoices were regularly submitted on Slack โ and were approved using emojis.ย Yup ๐ณ
FTX configured the codebase to grant Alameda a limitless ability to trade and withdraw from the exchange regardless of the size of its account balance, and to exempt Alameda from the auto-liquidation process that applied to other customers.
Neither Singh nor Wang had the training or experience to handle FTX's cybersecurity needs โ and the company didn't have a chief information security officer or anyone with the skills to fulfill the responsibilities of such a role.
Virtually all crypto assets were kept in hot wallets connected to the internet, meaning they were far more susceptible to hacking, theft, misappropriation, and inadvertent loss.
Thatโs not it. On to the crazy part!
โ๏ธ THE TAKEAWAY
Whatโs next? ๐ Despite all of this, bankrupt FTX has recovered $7.3 billion in assets and is considering relaunching the digital asset exchange in Q2 this year ๐ณ According to recent reports, the exchange that was at the epicenter of one of the biggest financial scandals ever committed, officially recovered $1 billion in both cash and digital assets. More importantly, a bankruptcy court hearing that took place today noted the increase in recovered funds. A recovery effort that saw an increase of more than $800 million since January. The crazy part? FTX is considering restarting the exchange in the second quarter of 2023. Less than 6 months ago, John Ray, the new CEO hired to oversee the bankruptcy process, called FTX a bigger fraud than Enron. Would you trust FTX if it relaunches?
ICYMI: The mindblowing collapse of FTX-linked stocks ๐คฏ [+6 bonus reads]
Ethereum's upgrade is finally complete ๐
The news ๐ Ethereumโs Shanghai upgrade (aka Shapella) is complete.ย This means validators now have the freedom to withdraw their staked ETH if they so wish.ย
Some have had their crypto locked away since December 2020.
More on this ๐ The latest figures from Nansen suggest thatย 93,300 ETHย has been withdrawn over the pastย 24ย hours โ that's barelyย 0.5%ย of what has been sent to the deposit contract.ย So far, this is highly unlikely to have a detrimental impact on Ether's price.
ETH surged byย 6.3%ย in intraday trading as the markets digested the news, withย $2,000ย proving somewhat elusive. Yet, at the point of writing Ether is trading at over $2,000.
โ๏ธ THE TAKEAWAY
Whatโs next? ๐ค Shapella is one among other top priorities for Ethereum that are focused on making the blockchain more scalable and reducing transaction fees. As noted earlier, this is a pretty huge development and ETH has too much upside potential to ignore. Despite the strong momentum as of late, the second-biggest cryptocurrency is still down more than 50% from its ATH in November last year. However, the fact that weโre starting to see a sustained period of ETH being deflationary AND given the new upgrades are about to be implemented, it is very becoming very interesting. If these and other post-Merge promises will continue to be delivered, we might indeed start seeing the emergence of the ultimate Internet Money. More thoughts here:
The Merge: Ethereum's Netscape moment? ๐คฏ
Ethereum post-Merge: what investors need to know ๐ง
๐ What else Iโm watching
SME focus ๐ Mastercard MA 0.67%โ has launched a tool that helps financial institutions set up international payments for their customers - including consumers and SMEs - in more than 60 currencies to over 100 markets. Mastercard Cross-Border Services Express promises a simple integration that helps deliver cross-border payments to places covering 90% of the world's population. Mastercard is working with Fable FinTech and Payall Payment Systems on the service, offering users flexibility in how they pay by delivering funds to bank accounts, mobile wallets, cards, and cash payout locations. It seems that Mastercard is more focused on SMEs now while Visa is on retailโฆ ICYMI: Game-changer: Visa just made P2P payments interoperable ๐คฏ๐ณ
Another DeFi hack ๐ฌ DeFi protocolย Yearn Finance lost $11.6Mย Thursday following an exploit of an older version of its contracts. Security firm PeckShield said the exploiters were able to mint over 1.2 quadrillion yUSDT, a yield-paying version of the USDT stablecoin, in early Asian hours using a $10,000 initial deposit, and then tricked the protocol to cash out millions in stablecoins. Decentralized lender Aave was previously thought to be affected, though the malicious transactions were only routed through an out-of-date version of the platform.
๐ธ Following the Money
Seychelles-based crypto derivatives exchangeย Bitgetย has launched a $100M fund to support future Web3 projects.
Indian mobile payments company PhonePe has raised a further $100M in an ambitious attempt to complete an ongoing $1B financing round. The new funds from returning backer General Atlantic bring the total raised by the company over the past few months to $750M.
France'sย absolute labs,ย a Web3 wallet management platform, has raised anย $8Mย seed round.ย
๐ Thatโs it for today! Thank you for reading and have a relaxing Sunday! And if you enjoyed this newsletter,ย invite your friends and colleagues to sign up: