How FTX Missed a Potentially Profitable Opportunity

How FTX Missed a Potentially Profitable Opportunity

Working through the bankruptcy of FTX, Sam Bankman-Fried’s bankrupt cryptocurrency exchange, is proving increasingly complicated. The latest evidence: a potentially lucrative missed opportunity that came to light after FTX discharged warrants to buy an obscure crypto token.

The token is called Sui and made its commercial debut on May 3. FTX — which is now managed by John Ray III, the restructuring expert who rescued billions from creditors victimized by the mega-bankruptcies of Enron, Fruit of the Loom and Nortel Networks — sold its Sui warrants just before the token began to be traded. traded.

If FTX had exercised the warrants, it would, as of this morning, have an asset valued at more than $1 billion, even after a 75% drop since trading began last week.

Here’s what happened to Sui:

  • FTX invested about $101 million in Mysten Labs last year. Mysten was building a blockchain platform called Sui that relied on technology developed for Diem, Facebook’s aborted crypto project. Mysten attracted investors including Silicon Valley venture capital firm Andreessen Horowitz and cryptocurrency exchange Coinbase, raising its valuation by one point to around $2 billion.

  • FTX led the fundraiser this past summer. Its equity stake included guarantees for 890 million Sui crypto tokens that would be exercisable once the Sui platform was launched. But FTX collapsed months later.

  • In March, FTX asked the bankruptcy court for permission to sell its stake in Mysten for about $96 million, or $5 million less than the initial investment.

  • In April, that deal closed. On May 3, Sui tokens began trading, with prices skyrocketing. This morning, Sui was trading at $1.13.

FTX is in a race to recoup every penny as the list of creditors grows. Bankman-Fried himself said that, given enough time, he could find the valuable assets in his vast empire to start repaying customers and investors.

Last month, the IRS filed nearly $44 billion in “priority” tax actions against the FTX estate and its sister trading firms, reports CoinDesk.

FTX has already found billions for lenders. “The situation has stabilized and the dumpster fire is over,” the company’s lawyers told a bankruptcy judge last month, revealing they had recovered more than $7 billion.

Among the crypto community on Twitter, however, there were some giggles that FTX missed a great opportunity in Sui.

A major investor advisory firm reverses Jamie Dimon’s payout. Institutional Shareholder Services, which last week recommended that JPMorgan Chase shareholders oppose the bank’s compensation plan for its CEO and other executives, changed its mind, citing errors in its analysis. It’s a notable reversal for ISS, which also objected to JPMorgan’s payout policies last year.

SoftBank posts a record $32 billion loss on its Vision Fund. O The Japanese conglomerate’s tech-focused investment vehicle missed a broader rally in stocks. The bearish report came as Masa Son, founder of SoftBank, said the company was halting new investment and focusing on the IPO of Arm, its chip creator.

Disney cuts streaming losses. The media giant attributed the improvements to cost cuts and increases in subscription fees, and said it would begin bundling Hulu content into its Disney+ app. But to save money on waste payments, it will also start removing some content from its streaming platforms.

George Santos pleads not guilty to 13 counts of fraud. New York’s first-term Republican lawmaker has been charged with wire fraud, money laundering, theft of public funds and lying on federal disclosure forms. But spokesman Kevin McCarthy said Santos could continue to serve in Congress pending the outcome of a trial.

Shares in Carl Icahn’s publicly traded investment vehicle fell 15 percent on Wednesday after it revealed that federal prosecutors in Manhattan sought documents following the allegations of short seller Hindenburg Research.

But Icahn, the octogenarian billionaire who is known for a decades-long career of aggressively shaking up companies, has made it clear he won’t go down without a fight.

A recap: Hindenburg, who makes his money by betting that a company’s stock will fall, said in a report last week that Icahn Enterprises was managing “Ponzi-type economic structures” by paying unjustifiably high dividends funded by stock sales. The short seller also said the company was fundamentally overvalued.

The allegations have left their mark: the share price of Icahn Enterprises has dropped 40% since Hindenburg published his report. This also hits Icahn squarely, as most of his shares in the company — he owns 84 percent of it — are pledged as collateral for bank loans.

Mr. Icahn took off his gloves, calling Hindenburg a hawker of “disinformation campaigns to distort the image of companies, damage their reputations and bleed the hard-earned savings of individual investors”. He added that “unlike many of his victims, we will not stand idly by.”

Meanwhile, Icahn Enterprises noted in a securities filing that federal prosecutors had not charged the company or Mr. Icahn of any impropriety and that he was cooperating with the investigation. Hindenburg himself did not accuse either of them of fraud.

But Icahn is also shifting gears. He attributed his company’s poor financial performance to bets against the stock market and said he would focus more on shareholder activism, the investment strategy that made Icahn a billionaire.

Speaking of which, Icahn scored a victory in his fight against gene sequencing company Illumina on Wednesday after proxy consulting firm Glass Lewis recommended that investors approve two of its nominees for Illumina’s board.

For months, Google has preached a more cautious approach to artificial intelligence, even as rivals and the public embraced ChatGPT and other new technologies as the cutting edge of the future.

But at its annual developer conference on Wednesday, the Silicon Valley giant unveiled a slew of AI-infused products as it seeks to embrace technology that, in the hands of competitors, could erode its highly profitable business.

Research was the star of the show. Google was eager to talk about the long-awaited overhaul of its flagship service, which it hopes will steal back the buzz Microsoft generated when it unveiled a ChatGPT-enhanced Bing in February. The updated search engine will incorporate AI-generated results and allow users to ask follow-up questions. (Please note, however, that it is not a chatbot.)

Two dozen other Google products, including Gmail, are also being enhanced by AI to help automate user tasks. But perhaps more importantly, the company unveiled its work on more powerful AI models, including what it called PaLM2, which could power an even wider and more sophisticated range of services.

“We are at an exciting tipping point,” Sundar Pichai, CEO of Google, said Wednesday. But his long-held caution about a hasty adoption of AI — particularly a wariness of products that spread false or misleading information — remained. The new search engine clearly classifies its AI aspects as “experimental” and to access it, you need to subscribe to the Search Labs service.

That said, investors liked what they saw: Shares in Alphabet, Google’s parent, rose 4% on Wednesday, lifting its market value by $56 billion.

donald trumpthe top Republican presidential candidate, urging his party to take a tough stance in negotiating federal budget spending cuts, even if doing so ultimately sends the country into default.

The political debate over the investment approach known as ESG – short for environmental, social and corporate governance issues – turned national on Wednesday, as a fight that took place largely in state capitals was transferred to Congress.

From the start, the House Oversight and Accountability Committee hearing was contentious, with Republican and Democratic lawmakers feuding with witnesses and each other.

Republicans called the ESG “an undemocratic tax” on Americans, designed to force the adoption of climate-focused policies that would increase costs for many. Witnesses at the hearing included the attorneys general of Alabama and Utah, who are opposed to letting their state’s retirement funds go into ESG-oriented investments.

For Sean Reyes, Utah’s attorney general, the ESG was “an open conspiracy to circumvent Congress and instead impose costly changes on American consumers,” driven by unelected financial institutions like BlackRock, which pushed to include concerns climate in many investment decisions.

His Alabama counterpart, Steve Marshall, argued that the focus on ESG has led to higher energy prices because it discourages the use of cheaper fossil fuels, risking hurting important sectors like agriculture.

Democrats defended ESG as just another investment strategy. Calling out opposition to the concept of a “widespread, highly coordinated, politically motivated attack” against investors and average Americans, Illinois State Treasurer Michael Frerichs said ESG was simply a different way of assessing risks and opportunities.

That meant an investor could weigh whether a carmaker was prepared for a market shift to electric cars or whether to buy a drugmaker facing a barrage of lawsuits over its role in the opioid epidemic, he said.

Representative Jamie Raskin, Democrat of Maryland, said asset and pension managers who weighed ESG angles for investments were simply being smart — and not thinking about those angles was “a reckless and inattentive investment strategy.”

Expect the fight to continue. The committee’s Republican chairman, Representative James Comer of Kentucky, said lawmakers would “continue to expose and investigate harmful ESG practices and hold unelected bureaucrats accountable for imposing their interests on the American people.”

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