Nominees to lead the Securities and Exchange Commission and the Consumer Financial Protection Bureau faced questions about the limits of their power but said they wouldn’t shy from flexing it.
Tesla’s $1.5 billion investment in Bitcoin may be good for Elon Musk, but it’s definitely risky for the company that made him the world’s richest man, according to investors, analysts and money managers at some of the country’s largest banks.
As a standard bearer for the consumer electric vehicle industry and the broader climate tech movement rallying around it, Tesla’s bet to go all in on crypto could damage its climate bonafides and its reputation with customers even as other automakers pour in to the EV market.
Given Bitcoin’s current environmental footprint, the deal flies in the face of Tesla’s purported interest in moving the world to cleaner sources of energy and commerce.
Until the energy grid decarbonizes in places like Russia and China, mining bitcoin remains a pretty dirty business (from an energy perspective), according to some energy investors who declined to be identified because they were not authorized to speak about Musk’s plans.
“We were talking about people doing this in Russia back in 2018 and how they were tapping coal power to run their mining operations,” one investor said. “The cost per transaction from an energy intensity standpoint has only gotten more intense. I don’t see how those things coalesce, climate and crypto.”
The stake makes Tesla one of the largest corporate hodlers of Bitcoin but represents a massive portion of the company’s $19 billion in cash and cash equivalents on hand.
“Given the size of their treasury it feels irresponsible, IMO,” wrote one investor whose firm backed Tesla from its earliest days. The company’s move could be seen as another example of the absurdity of U.S. capital markets in today’s investment climate — and the underlying cynicism of some of its biggest beneficiaries.
Meanwhile, Bitcoin investors welcomed the move, which sent the value of their holdings rocketing up by roughly 18% over the course of the day.
“The announcement that Tesla has diversified its treasury through the addition of bitcoin is not surprising, nor is the assuredness implied by an 8% allocation of cash-on-hand. Equal to Tesla’s R&D expenditure for 2020, this investment is significant to the Company and shows a commitment to maximizing shareholder returns,” wrote Stillmark founding partner Alyse Killeen. “Elon Musk has a long history of operating at the precipice of what’s possible technically and setting the trend of what’s to later become common operationally. I suspect the same will be true here, and that Tesla is the first of a larger cohort of publicly-traded companies that will aim to optimize the returns of their cash via bitcoin.”
Industry observers on Wall Street also criticized the company’s big bet on Bitcoin.
“Tesla buying $1.5 billion in BTC is interesting. Am assuming they haven’t hedged it, so they will either be cash rich in the future or have a hole in the balance sheet. Elon Musk stays wild,” wrote one capital planning executive at a major Wall Street bank who declined to be identified because they were not authorized to speak to the press. “[It’s] not dissimilar from a large company throwing cash into a wildly volatile emerging market currency.”
Still, in the short term, the deal is showing dividends. The price of Bitcoin has risen nearly $8,000, or 18.73%, over the course of the day since Tesla made its announcement.
But the investment represents the equivalent of the company’s entire research and development budget, as Killeen noted. That’s… something. There’s also the question is whether any regulator will step in to punish Musk.
Musk has been tweeting his support for Bitcoin and other, more arcane (or useless) cryptocurrencies like Dogecoin for the past several weeks, in what seems to be a violation of his agreement with the Securities and Exchange Commission.
The world’s richest man has previously been fined by regulatory agencies for his tweeting habits. Back in 2018, the SEC charged Musk with fraud for tweets about privatizing the electric vehicle company at $420 per share.
Musk eventually settled with the SEC, at the price of his role as chairman of Tesla’s board and a $20 million personal fine — with Tesla paying out another $20 million to the SEC.
The volatility of the cryptocurrency could impact more than just Tesla’s bottom line, but also hit its customers should they use the currency to buy cars.
“Bitcoin jumped over 15% to a new high of $44,000 on Monday. This sort of hype-based price power should be worrying to investors and consumers alike – especially if this is to be used as medium of exchange,” wrote GlobalData analyst Danyaal Rashid, Head of Thematic Research at GlobalData.
“If Elon Musk can help dictate the price of this asset with a tweet or large order, the same could happen to send the price back down. The task of purchasing a vehicle should not be speculative. Consumers who may have thought of buying bitcoin to use as a substitute for fiat – could very easily end up with more or less than they bargained for.”
Short sellers — self-described financial detectives who make money when companies fail — were already worried about their success and safety. Then GameStop happened.
UiPath, one of the leaders in the quickly growing robotic process automation (RPA) space, announced Monday that it has closed on $750 million in Series F funding at a staggering post-money valuation of $35 billion.
Existing backers Alkeon Capital and Coatue co-led the round, which also included participation from other returning investors such as Altimeter Capital, Dragoneer, IVP, Sequoia, Tiger Global, and funds and accounts advised by T. Rowe Price Associates, Inc. The financing brings the New York-based company’s total raised to nearly $2 billion since inception, according to Crunchbase.
UiPath was founded in 2005 but didn’t raise institutional capital until 2015, according to Crunchbase. CNBC reported in December that the company had annual revenue of about $360 million and over 6,300 customers including Amazon, Bank of America and Verizon.
UiPath’s self-proclaimed mission is “to unlock human creativity and ingenuity by enabling the Fully Automated Enterprise and empowering workers through automation.” Its Automation Platform aims to “transform the way humans work” by giving companies a way to build out and run automations across departments.
The company uses artificial intelligence (AI) and machine learning in an effort to “automate millions of repetitive, mind-numbing tasks for business and government organizations all over the world, improving productivity, customer experience and employee job satisfaction.” Its goal is to give workers the mental energy and time to focus on more complex jobs. Competitors include Microsoft Power Automate, Blue Prism, Automation Anywhere. SAP also recently entered the space.
The company has been growing like crazy. Back when I covered its $568 million Series D in April of 2019, UiPath had 400,000 users in 200 countries. At the time, the company said it had increased its annual recurring revenue (ARR) from $8 million in April 2017 to over $200 million. UiPath said then it had grown its headcount by 16 times over a two-year period, to more than 2,500 employees. It also hinted that it was considering an IPO.
True to its word, UiPath in December submitted a draft registration to the Securities and Exchange Commission for an initial public offering. So it’s especially interesting that it raised such a huge round now.
For some, UiPath’s going public could be the Snowflake IPO of 2021. Alternative payments provider Affirm followed a similar path recently – raising $500 million before filing for an IPO weeks later.
UiPath declined to comment on its latest funding round beyond a press release.
There is broad agreement that the capital markets have been distorted but less consensus on what, if anything, the S.E.C. should do about it.
There is broad agreement that the capital markets have been distorted but less consensus on what, if anything, the S.E.C. should do about it.
Robinhood pitched itself to investors as the antithesis of Wall Street. It didn’t say that it also entirely relies on Wall Street. This past week, the two realities collided.
The rules are in flux as a new U.S. administration takes over.
The Biden administration is also expected to name Rohit Chopra as the head of the Consumer Financial Protection Bureau, in moves that would bring Obama-era regulators to oversee key financial agencies.
The Securities and Exchange Commission has broad powers that could be used to regulate trades by members of Congress, avoiding the need for legislation.
Steel production accounts for roughly 8 percent of the emissions that contribute to global climate change. It is one of the industries that sits at the foundation of the modern economy and is one of the most resistant to decarbonization.
As nations around the world race to reduce their environmental footprint and embrace more sustainable methods of production, finding a way to remove carbon from the metals business will be one of the most important contributions to that effort.
One startup that’s developing a new technology to address the issue is Boston Metal. Previously backed by the Bill Gates financed Breakthrough Energy Ventures fund, the new company has just raised roughly $50 million of an approximately $60 million financing round to expand its operations, according to a filing with the Securities and Exchange Commission.
The global steel industry may find approximately 14 percent of its potential value at risk if the business can’t reduce its environmental impact, according to studies cited by the consulting firm McKinsey & Co.
Boston Metal, which previously raised $20 million back in 2019, uses a process called molten oxide electrolysis (“MOE”) to make steel alloys — and eventually emissions-free steel. The first close of the funding actually came in December 2018 — two years before the most recent financing round, according to chief executive Tadeu Carneiro, the company’s chief executive.
Over the years since the company raised its last round, Boston Metal has grown from 8 employees to a staff that now numbers close to 50. The Woburn, Mass.-based company has also been able to continuously operate its three pilot lines producing metal alloys for over a month at a time.
And while the steel program remains the ultimate goal, the company is quickly approaching commercialization with its alloy program, because it isn’t as reliant on traditional infrastructure and sunk costs according to Carneiro.
Boston Metal’s technology radically reimagines an industry whose technology hasn’t changed all that much since the dawn of the Iron Age in 1200 BCE, Carneiro said.
Ultimately the goal is to serve as a technology developer licensing its technology and selling components to steel manufacturers or engineering companies who will ultimate make the steel.
For Boston Metal, the next steps on the product roadmap are clear. The company wil look to have a semi-industrial cell line operating in Woburn, Mass. by the end of 2022, and by 2024 or 2025 hopes to have its first demonstration plant up and running. “At that point we will be able to commercialize the technology,” Carneiro said.
The company’s previous investors include Breakthrough Energy Ventures, Prelude Ventures, and the MIT-backed “hard-tech” investment firm, The Engine. All of them came back to invest in the latest infusion of cash into the company along with Devonshire Investors, the private investment firm affiliated with FMR, the parent company of financial services giant, Fidelity, which co-led the deal alongside Piva Capital and another, undisclosed investor.
As a result of its investment, Shyam Kamadolli will take a seat on the company’s board, according to the filing with the SEC.
MOE takes metals in their raw oxide form and transforms them into molten metal products. Invented at the Massachusetts Institute of Technology and based on research from MIT Professor Donald Sadoway, Boston Metal makes molten oxides that are tailored for a specific feedstock and product. Electrons are used to melt the soup and selectively reduce the target oxide. The purified metal pools at the bottom of a cell and is tapped by drilling into the cell using a process adapted from a blast furnace. The tap hole is plugged and the process then continues.
One of the benefits of the technology, according to the company, is its scalability. As producers need to make more alloys, they can increase production capacity.
“Molten oxide electrolysis is a platform technology that can produce a wide array of metals and alloys, but our first industrial deployments will target the ferroalloys on the path to our ultimate goal of steel,” said Carneiro, the company’s chief executive, in a statement announcing the company’s $20 million financing back in 2019. “Steel is and will remain one of the staples of modern society, but the production of steel today produces over two gigatons of CO2. The same fundamental method for producing steel has been used for millennia, but Boston Metal is breaking that paradigm by replacing coal with electrons.”
No less a tech luminary than Bill Gates himself underlined the importance of the decarbonization of the metal business.
“Boston Metal is working on a way to make steel using electricity instead of coal, and to make it just as strong and cheap,” Gates wrote in his blog, GatesNotes. Although Gates did have a caveat. “Of course, electrification only helps reduce emissions if it uses clean power, which is another reason why it’s so important to get zero-carbon electricity,” he wrote.
The U.S. government is failing us with regard to fintech and blockchain regulation.
Devoid of any regulatory framework in the past four years we’ve been operating in limbo when it comes to the development and advancement of crypto products. Innovators in the fintech and blockchain industries have the ability and vision to build products that solve real problems for everyone from individuals to large banks to governments, but without a clear path forward, these products are unable to grow and scale to their full potential.
Regulation shouldn’t be a guessing game. Since 2019, when the Securities and Exchange Commission declared that neither Bitcoin (BTC) nor Ethereum (ETH) are securities, the industry’s been at a standstill. Without clarity, blockchain innovation will be limited to just two coins — the industry is much larger than this. A lack of regulation stifles the immense potential that crypto and blockchain provide.
If we know the rules of the game we’re playing, we can keep doing what we do best: innovating.
A new administration presents a new opportunity for elected officials across the political spectrum to develop clear policies and regulations enabling banks, fintechs and corporations to custody and use crypto to improve efficiencies and to provide a better customer experience.
We can learn a lesson from recent history here. In 1991, we saw the passage of the High Performance Computing and Communications Act (HPCCA), a bipartisan effort led by Senator Al Gore and signed into law by President George H.W. Bush.
This legislation paved the way for companies like Amazon, eBay, Yahoo, Google and others to boom and made the U.S. an early internet leader. By 1993 we saw the introduction of web browsers, and shortly after, the start of the dot-com era in 1994 that cemented the U.S. as a symbol of innovation.
The browser changed everything. It’s created new jobs, new economic opportunities and new categories in technology that we couldn’t have predicted 30 years ago. In looking at the top 100 Fortune 500 companies in 1991, technology was barely a blip on the radar with IBM standing as the lone tech company. By 2020, it’s a drastically different picture, with the list completely dominated by technology giants like Microsoft, Apple, Alphabet, Facebook and Salesforce.
Technology companies in the top 100 have contributed close to three million jobs, with many leading in market value. Despite an unconventional year, we’ve continued to see successful technology IPOs like DoorDash, Snowflake, Asana and Palantir.
Products and services that we take for granted now like Google, the iPhone, Uber, Salesforce, Spotify, Postmates and more were made possible by the HPCCA. We now have another chance to create a bipartisan effort focused on crypto innovation, one with public and private sector support to ensure clear regulatory frameworks. Regulation will make it easier for innovators to create new products that keep the United States competitive with other countries and attract more investment.
There’s no disputing that the adoption of crypto and blockchain is on the rise. Major companies including PayPal, Square and Robinhood are leaning in to crypto and pushing it to the mainstream. With the validation from these brands, interest in the utility of cryptocurrencies and the ability of crypto to better serve businesses and their customers, continues to grow.
Leading crypto companies such as Ripple, Coinbase, Gemini, DCG and Chainalysis are currently based in the United States. However, unclear regulation will keep new entrepreneurs from innovating in the United States. While other countries move forward with defined regulatory frameworks, it’s possible that we will see new entrepreneurs and companies forgo setting up shop in the U.S. in favor of jurisdictions where the rules are clear.
If we know the rules of the game we’re playing, we can keep doing what we do best: innovating. We are only at the beginning — developers can build on open-source technologies, entrepreneurs can launch new companies and develop new products, and investors can invest in those companies.
We want the most innovative crypto and blockchain companies to be built and to grow here in the U.S., where they can create value and opportunities for U.S. citizens. Similar to the early days of the internet, we don’t know what the industry will look like in 5-10 years, but with flexible frameworks the opportunity is massive.
There’s a big opportunity for the Biden administration to influence new policies and new legislation and provide clear guidance that will accelerate innovation in fintech and crypto for many generations to come. The administration can:
- Create a national digital banking licensing charter (similar to Singapore’s Digital Banking Charter), to streamline the process for fintechs to apply for crypto, lending and payments licensing. Today companies in the U.S. are left to apply state-by-state for licensing, which costs millions of dollars in legal fees and years to accomplish.
- Define clear classifications for digital assets, derivatives (created via smart contracts) and stablecoins.
- Create a bipartisan public and private sector group led by tech-savvy thought leaders such as Andrew Yang, to collaborate on landmark legislation that will do for fintech what the HPCCA did for internet companies.
- Appoint an SEC chair that understands how to truly advance innovation while protecting consumers and the markets. The pro-innovation lip service we have been getting from this SEC is just that — lip service. Every crypto project this SEC has touched has ended up fleeing the U.S., in bankruptcy or left holding worthless tokens.
Regardless of how policymakers and regulators decide to approach the issues that our industry faces, we need to continue to work alongside the government to ensure that the rapidly growing number of people who use fintech and blockchain products continue to get the best-in-class solutions with appropriate consumer and market protections in place.
It’s clear that this technology is here to stay, and I hope that elected leaders will recognize the power that it has to effect massive financial industry progress. Similar to the HPCAA, smart regulation can both protect our consumers and markets while allowing proud U.S. companies to create life-changing innovations.
Ripple, the company behind the third most valuable digital token, is expecting to be sued by regulators as cryptocurrency values skyrocket.
Casa Verde Capital, the investment fund co-founded by cannabis connoisseur Snoop Dogg (also known as Calvin Broadus), has closed on $100 million for its second investment fund, according to documents filed with the SEC.
The fund, whose managing director, Karan Wadhera declined to comment for this article, has managed to raise more cash just as the market for cannabis-related products seems poised for another period of expansion.
“What happened to the public perception of the cannabis industry is not too dissimilar to the dotcom bubble of the late ’90s, where there was a lot of hype — a lot of it driven by public companies — and a lot of speculative trading and valuations that weren’t really founded in reality. [We’re talking about] projections multiple years out into the future, and then crazy revenue multiples on top of that,” Wadhera said of the last bust when he spoke to TechCrunch in July. “Things just got really frothy, and that eventually burst, and last April or May was sort of the apex of that moment. It’s when things started to trade off. And it’s been those names, the public names in particular, that have been hit particularly hard.”
Since then, the industry has come roaring back.
“Sitting here today, four-plus months into COVID, cannabis has really proved itself to be a non-cyclical industry. Cannabis has been deemed an essential business everywhere across the U.S. We had record sales in March, April and May, and the trend has continued,” Wadhera said in July. “And now that we are getting into an environment where governments are going to be looking for additional sources of tax revenue, the potential urgency around cannabis legalization is going to be there, which is going to be massively positive for the industry.”
There’s no indication of the target for the new venture capital fund, but with the new fundraising, Casa Verde more than doubles the size of its initial investment vehicle.
Since Broadus, Wadhera and a third partner and the founder of Cashmere Agency and Stampede Management Ted Chung launched their debut fund in 2018, weed businesses have endured a roller-coaster business cycle of boom and bust.
In spite of those market vagaries, Casa Verde has managed to build a portfolio that is now worth at least $200 million, according to people with knowledge of the firm. That money has come through several special purpose vehicles and other fundraising mechanisms raised alongside the flagship fund.
The overall market for cannabis and cannabinoid derivatives is expected to hit $34 billion by 2025 according to an analyst report seen by TechCrunch from the investment bank Cowen.
With Arizona, Montana, New Jersey, and South Dakota all passing adult-use cannabis legalization measures in their states, the investment bank predicted roughly 30 percent growth to their total addressable market estimates.
For its part, Casa Verde has always taken a broad view on the potential addressable market that cannabis and its chemical compounds could capture.
Nowhere is that more on view than in the firm’s latest investment in the sleep company, Proper.
“[Cannabis] is an input as well and its use case will go beyond how people think of cannabis stigmatically,” Wadhera said. “At its core, [Proper] is a company that’s helping us target this sleep epidemic. We think CBD and cannabis at large can play a big role in addressing that in a way that traditional products haven’t been able to.”
And what’s true for sleep is true for a number of other different applications as well, Wadhera has said in the past.
Casa Verde has already invested heavily across the pure-play opportunities in cannabis, with investments spanning delivery, supply chain logistics, brands, and retail.
But the health benefits that cannabinoids could have for all kinds of ailments open up a much larger market — as do the broad consumer opportunities should Congress accede to the wishes of more than 60 percent of the American electorate and legalize recreational cannabis use nationally.
And, as Wadhera told us in July, a Biden administration presents a potentially much more positive regulatory environment for the industry than the previous Trump administration did.
“I think Biden will be very helpful. He has laid out many of the things that he wants, and [while] he isn’t taking it as far as full-scale legalization, he’s certainly in favor of full-scale decriminalization, [meaning] letting states have full authority over what happens with their businesses, and also the rescheduling of cannabis down from the current Schedule 1 level,” Wadhera had said. “So all of that will be incredibly helpful and will bring a lot more players who will feel comfortable investing in the space and, potentially, acquiring some of these businesses, too.”
Millions of investors have turned to Robinhood in recent years, lured by a sales pitch of no trading fees. The charges announced on Thursday apply to Robinhood’s disclosures from 2015 to late 2018, the regulator said.
Investigators focused on a sale of at least $1 million of stock in Cardlytics, a financial firm whose board the senator once sat on. They closed the case this summer without charges.
Jay Clayton, who has led the securities regulator since 2017, will leave by the end of the year.
The president-elect has chosen proponents of stronger regulation to begin reviewing financial agencies.
All told, Goldman will pay billions in penalties and disgorgement in Malaysia, the United States and Hong Kong for its role in the looting of the 1Malaysia Development Berhad fund.
Noted cybersecurity eccentric John McAfee is under arrest in Spain awaiting extradition to the United States after being indicted on federal tax evasion charges.
The filing alleges that McAfee deliberately not only avoided paying federal taxes from tax years 2014 through 2018 but also tried to hide considerable assets from the IRS. He allegedly hid those assets—including a yacht, a vehicle, real estate, bank accounts, and cryptocurrency—by purchasing and titling them under “the name of a nominee.”
Trevor Milton, founder and executive chairman of Nikola, resigned after an investment fund accused him of making false assertions about the company’s technology.
She championed the advancement of women in business, and, in a career studded with precedent-setting appointments, she set her own example.
The Dodd-Frank financial law succeeded at making banks safer, but empowered shadowy corners of finance that nearly wrecked the system in March.
Financial regulators should act to avoid economic disaster, according to a letter from pension funds and other investors representing almost $1 trillion in assets.
A new standard established by the Securities and Exchange Commission may sound better than it actually is, consumer advocates say.
A remarkable snapback rally, after a deep coronavirus-induced plunge, took stocks into rare and, in some ways, troubling territory.
Mr. Clayton, the chairman of the Securities and Exchange Commission, answered questions from House Democrats about his unusual nomination to be the top federal prosecutor in Manhattan.
But the justices rejected a request that they rule the agency can never sue for disgorgement of profits obtained by fraud.
Law enforcement officials told three senators that they would not be pursuing charges, but an investigation into trades by Senator Richard Burr of North Carolina appears to be proceeding.
Moncef Slaoui, a former pharmaceutical executive, is now overseeing the U.S. initiative to development coronavirus treatments and vaccines. His financial interests and corporate roles have come under scrutiny.
The move is a major escalation in the investigation into the senator’s sale of stocks that came as President Trump and other Republicans were playing down the threat of the coronavirus.